Cashmere tables Waste Management contract over proposed 10% rate increase

CASHMERE — The Cashmere City Council tabled a proposed 10-year contract with Waste Management on Aug. 24 after council members pressed company representatives to explain a 10% initial rate increase and asked for more information about how the figure was calculated.

The proposed agreement would increase rates by 10% in its first year, followed by annual adjustments tied to a water, sewer and trash consumer price index. Unlike the city's existing agreement, which caps annual CPI-based increases at 4%, the proposed contract would not include a cap.

Waste Management representatives said the initial increase is intended in part to account for inflation during the existing contract that the 4% cap prevented the company from passing along.

Councilmember John Perry questioned both the size of the increase and the role the company's financial performance should play in the city's decision.

“It didn't look like it's hurt Waste Management's net profits over the last decade,” Perry said.

Asked whether the company had remained profitable overall, a Waste Management representative said it had “for the most part,” while adding that individual contracts had gone underwater during periods of rapidly increasing costs.

Company representatives pointed to rising labor, fuel and equipment costs. Eric Keogh, senior district manager at the Greater Wenatchee Regional Landfill, said a specialized landfill compactor that cost about $680,000 a decade ago now costs between $1.2 million and $1.3 million. He said some composite materials used to line landfills increased by 200% during a two- to three-year period.

Waste Management representatives said the company had initially expected Cashmere's contract reset to be closer to 30%. They cited substantially larger increases in other communities, including a recent 60% increase in Kennewick, and said Wenatchee's 2021 contract renewal included an increase they recalled as approximately 20% to 25%.

They said Cashmere and other Wenatchee Valley communities benefit from having a landfill nearby, helping keep local rates below those in some other markets.

Councilmember Jeff Johnson said he saw merit in tying future increases to an index specifically reflecting utility costs rather than a broader measure of inflation.

“The reality is businesses are exposed to inflationary pressures,” Johnson said. “These are real costs that are incurred by businesses. And in the case of this CPI, it's tied specifically to this industry.”

But Johnson said the council still needed evidence supporting the initial increase.

“Now, 10%, I don't know,” Johnson said. “To me, having not seen some of the underlying data, that value seems arbitrary.”

The existing contract uses a broader consumer price index but limits annual increases to 4%. Waste Management representatives said that cap left rates behind inflation during years when the index rose substantially faster.

Johnson initially moved to approve the new agreement, but the motion did not receive an immediate second as council members continued discussing what information they wanted from Waste Management.

Perry pushed back when the discussion turned toward whether inflation had caused Waste Management to lose money under the existing contract.

“Just because they didn't keep up with that rate doesn't mean they lost money,” Perry said. “They're a business. That's their job. We're here to give the best value and service to our citizens.”

Perry said contracting services to private companies can leave the city with less control over costs.

“The priorities fundamentally change when you bring in somebody who is there to make a profit,” Perry said.

Johnson framed the question differently, saying the council should determine how industry costs have changed since the current contract was negotiated and use that as a benchmark.

“Maybe it's 10%, maybe it's less, and maybe I hope it's not something higher than 10%, which means we say yes,” Johnson said. “That's why you have a contract for 10 years, because it gives you that opportunity to reset.”

Waste Management representatives said Rock Island was considering essentially the same contract with the same 10% initial increase. They said the water, sewer and trash CPI proposed for future Cashmere adjustments has historically been more stable than the broader index used in the existing contract.

Mayor Jim Fletcher summarized the council's concern as primarily the initial increase rather than the index proposed for subsequent years.

“The water sewer trash CPI isn't the problem,” Fletcher said. “It's the first year 10%. That number for the first year 10% seems to be what we're stumbling on.”

Council members asked Waste Management to return with information showing how costs and inflation have changed over the life of the existing agreement and how those changes support the proposed increase.

The council then voted to table the contract until its Sept. 14 meeting.

Andrew Simpson: 509-433-7626 or andrew@ward.media