Search This Blog

Friday, August 31, 2018

Forest Lake: It's a bunch of garbage.

(lawsuit data is listed below all of the background videos)

In 2014 a Request For Proposal (RFP) was opened for bidding on the monopoly contract for residential garbage service in Forest Lake.  Two bids were made by companies both headquartered in adjacent counties, SRC in Chisago County and Walters in Anoka County.  After receiving bids rather than accept the lower bid the city choose to enter into negotiations only with SRC to see if they would reduce pricing, among other contractual language, to be in line with Walters lower bid.  While both contracts varied in some relatively minor details the major difference after this exclusive negotiation left Walters at 15% less expensive than SRC.  A split council at the time negotiated some details with SRC and ultimately signed an exclusive 5 year contract that ends in August of 2019.  The contract included that SRC provide annual reports to city hall and they could be granted an increase based on CPI.  Margaret Strand, owner of SRC, agreed and signed the contract.

SRC has since been the only provider to residents of the area and online searches reveal quite a few complaints about the business.  Many of those complaints, as well as those we've heard, circle around what many believe to be unethical billing practices.  While it's impossible to obtain just how many people have complained to SRC over time, we have discovered that court records show at least 910 court cases, including 61 businesses, were filed by SRC / Forest Lake Sanitation / Town & Country Disposal towards residents and businesses in the Forest Lake region.  Many of these cases were for amounts less than $75.  We are unaware of any other business in the region that uses the court system to file lawsuits in the volume that SRC has weighed on the public and local business.

Here's some history on the current contract:
May 19, 2014: City Council Meeting - SRC Contract Agreement
 (1 of 2 council discussion on 5.19.2014, 65 minutes) 

 (2 of 2 council discussion on 5.19.2014, 12 minutes)

A Walters representative spoke in open forum about the benefit in residential rates, annual washing of carts and transitioning fleet to natural gas fuel which was described to reduce decibel noise by 80% along with being more environmentally friendly.  City benefits included city garbage services without charge along with rebating the city 50% of all recyclable profits.  He promised to partner with the city in an open, cooperative and transparent manner.

Marge Strand of SRC said they've been a service provider since 1985.  She noted in this meeting they have no history of complaints from residents.

Aaron Parrish, (now former) Forest Lake City Administrator presents (29 minutes) - Walters would also offer a less frequent service, every other week for low volume customers.  14% less expensive for small, 15% savings for residents for medium and 14% savings for large container services.  He equated it to be equivalent to a 4% tax increase on the average home.

He went on to present that SRC was unwilling to match a performance payment bond to address liability.  Cart washing was not included in SRC contract but was in Walters.  Walters would offer free service to city buildings, public works, parks be provided at no cost of trash and recycling service.  8-9,000 savings directly to city.  He said that SRC would not negotiate with the city.  SRC would not provide revenue sharing for recycling but Walters would.  It was unknown how much this would generate.  SRC would accept 100% of the risks and 100% of the rewards on recycling.

Council members had various comments and concerns over a rather long discussion that included tabling the item to later in the meeting so that the administrator could step out and present later.  Some key comments during the meeting included:

"Any information not provided that's required; then they would be in violation of contract." - Ben Winnick, then council member and current mayor.
It appears that SRC has not fulfilled the requirement with an annual report of what they are contractually obligated to provide to the city.  
Susan Young, then council member and current mayoral candidate questioned if SRC had provided quarterly and yearly reporting and where that information is located.  It was apparent in the discussion that these reports were not provided to the city.  Subsequently Mayor Chris Johnson along with (then) council members Ben Winnick and Mike Freer voted no on accepting the Walters proposal.
Later in the meeting (1:40:00) a motion to reconsider contracts restarted discussion and following additional conversation a motion (1:52:00) passed on a 3-2 vote.  It was to approve the SRC Refuse and Recycling Agreement provided the bond amount is increased to 500,000 the first year and then drops 375,000 the second year assuming no claims or liquidated damages and the contract is revised to include curbside collection. In addition, a signed contract needs to be delivered to city hall by 12:00 p.m. on (the following) Wednesday or the contract would be awarded to Walters.

August 13, 2018: City Council Meeting - SRC Request
(full council discussion on 8.13.2018, 44 minutes)

Marge Strand requested, some might suggest demanded, that the city council allow SRC to increase the fees charged to residents on her monopoly services provided to residents.

Her basis of the rate adjustment as a result of due to contractual arrangements with their tipping fees, self-described 'crisis' with the recycling market, and wants the CPI infiltrator that is in the current contract.  She claimed that neighboring communities had much greater costs of service.  (below is information this is false)
City of Forest Lake, 8.27.2018 City Council Meeting Agenda Packet
Marge Strand when questioned responded to the council, "It makes me angry you wouldn't support a Forest Lake business."  Her business is located in neighboring Chisago County and with her history filing lawsuits on at least 61 local businesses her business support is questionable.
City of Forest Lake, 8.27.2018 City Council Meeting Agenda Packet

Organized collection has Forest Lake in the middle of the pack when compared to other nearby cities and with the rate increase it would be pennies from the most expensive and nearly twice the cost to residents than White Bear Lake.

"You have no complaints, except from the people that don't pay their bill." - Marge  She then added that she'd like an extension (on the contract) too.
"I know you don't know my business but we are fair, we are dependable, we are courteous, we serve this community in many volunteer ways." - Marge
Marge ignores the fact she's been allowed to charge 15% more than the market rate and rather complained that "a measly $3/month savings in the (existing) contract" referencing the cost reduction following the 2014 RFP process and subsequent negotiations.

Mayor Ben Winnick, similar in fashion to his words in 2014, repeated several times during the meeting that he had "never received a complaint about SRC."

Marge then went on to use the overused phrase, "We're talking about a cup of coffee a month."  She then furiously responded to a question from council member and mayoral candidate, Ed Eigner.
SRC's business office manager said that another hauler has recently filed a lawsuit against the state of Indiana over recycling.  There was no apparent reason other than leading us to believe they'd do the same.  The SRC owner then came back saying they tell new customers recycling is options and she doesn't care if they just tossed all the recyclables into the garbage.

Council discussion ended without a motion as the topic was a discussion item only on the agenda due to SRC not providing information in time for meeting notification.

August 27, 2018 City Council Meeting - SRC Request Follow-up
(full council discussion on 8.27.2018, 58 minutes)

The interim city administrator gave a presentation and gave council background and answered council questions.  It was followed with SRC Marge again requesting an increase in rates.  This portion of the meeting was rather uneventful until council interaction / questions to SRC started.

Council then began debate and each member in attendance gave insight with their opinion.  Mayor Ben Winnick was absent.

Council member and mayoral candidate, Mara Bain, questioned information in the council packet as it didn't appear to reconcile as it was being presented.  She further suggested that the council go out for a RFP and make a determination of what the market will support.

Council member and mayoral candidate, Sam Husnik, said that he could see a need to give them an increase.

Council member Blaine Backus suggests that giving a 28% increase is unacceptable without shopping around.

Council member and mayoral candidate, Ed Eigner, notes that her business plan isn't sufficient and that's not the fault of the city.

Marge says "We haven't had any complaints."  Mara Bain responded that she has been inundated with complaints.  Marge then had her staff member come up to discuss their archaic payment system.  She then went on a rant.
Mara then questioned why city staff is completing the analysis and Marge blows up at the council.  Mara then questioned when the last annual report was submitted.  Marge appeared to not be aware of what the annual report even is.  City staff responds they have not received it.

Marge blows up at Blaine Backus for asking for an annual report!
Marge accused city staff of wrongdoing, then argues with council members and staff.

SRC / Forest Lake Sanitation / Town & Country Disposal Lawsuit Information

Here is a list of lawsuits that SRC has filed under SRC, Forest Lake Sanitation or Town & Country Disposal.  Those highlighted in orange are businesses.  There is a total of 910 lawsuits on the list, 471 were filed in Washington County and 61 are businesses.  We have reason to believe that this list is not comprehensive of all cases filed and have listed only those we were able to search for online.

One might wonder where these lawsuits are coming from and we've heard from numerous people that it may be a result of excessive fees, particularly those around late charges.  It turns out that if you make a payment to SRC for your bill an email will be sent confirming payment has been received and processed, however they don't post the payment until 10 days later - a time that is after they've then added on a late fee to the bill.
It seems that SRC is taking advantage of a vast number of people and according to many online complaints it's apparently a more prevalent issue with their companies.

Google Reviews has Forest Lake Sanitation at 2.2 stars on a scale that goes between 1 and 5.  The owner said she's never received a complaint, so it's interesting to see that she responds to some of those reviews online.
Running a billing system as archaic as it appears they are is one thing, to charge customers that have no other choice in service a late fee as a result, then have poor customer service when questioned about it and apparently file lawsuits for those that choose to not agree to pay - it's wrong.

Final Thoughts
Marge said in the meeting that the $5/month ($60/year) increase amounts to a cup of coffee but our calculations find it's approximately a $300,000 increase for the next year to customers.  Over the course of a 5 year contract, this amounts to $1,500,000.  Forest Lake is currently undergoing budget discussions and looking at the current plans this is the equivalent to:
  • Nearly the entire 2019, 2020, 2021, 2022 & 2023 capital budget for the fire department including 3 fire engine replacements, a tender, command vehicle and UTV.
  • The entire 2019, 2020, 2021, 2022 & 2023 capital budget for the police department with approximately a half million dollars left to spare.
  • Covers the City Center Complex (city hall, police, fire, administration...) building bonds for a year with cash to spare.
  • Covers the YMCA bonds for almost 3 years.
It's a lot of money and it's a lot more than just a cup of coffee.  In the instance of a monopoly service contract, it's akin to a tax - one that in this case the public isn't getting a benefit from.

SRC isn't the best fiscal option, isn't forthcoming in the bidding/negotiations, is hostile with council members, has sketchy billing practices, when customers complain they respond poorly and they often file lawsuits against customers - both residents and businesses and now they want to back out of an agreement and add $300,000 / year more in revenue above and beyond the special 15% premium they got over market rate pricing.  Simply put, it's a bunch of garbage.

Forest Lake's next scheduled city council meeting is on September 10th at 7pm.  The agenda for that meeting has not yet been determined and we may not know if SRC will be on it until days before.