Tort Claim Filed Against City

A tort claim has been filed against the City of Shelton over the City’s solid waste contract with Mason County Garbage. The following was submitted by Tom Lowe and Randy Lewis as a Citizen’s Editorial:

Solid waste ratepayers have filed a tort claim against the City of Shelton.

Below is text from the tort claim, which describes egregious features of the City’s solid waste contract with Mason County Garbage, in addition to some of the misleading and false information presented to the public.    

City of Shelton utility and solid waste ratepayers intend to bring action on behalf of themselves as well as those similarly situated if these issues cannot be resolved. 

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STATEMENT OF CLAIMS

All claimants have common interest in the following issues and assert that the City and a private garbage carrier have engaged in deceptive acts and practices:

 In or around 2016 the City determined that it wished to independently contract its solid waste collection services to a third-party entity.  The city failed and refused to engage in a formal bidding process and targeted and/or was targeted by a specific entity Mason County Garbage, a subsidiary of the publicly traded international corporation Waste Connections, Incorporated for provision of services. 

Waste Connections is a private entity with its own private interest and fiduciary duty to its shareholders. 

Through gross negligence and a complete failure in exercise of due diligence, the City of Shelton and its support staff entered into an agreement with Waste Connections that puts the city of Shelton in a lucrative position for unprecedented profit to the financial peril of City residents.  This is contained in a 20-year contract with no escape clause in contrast to other cities who negotiated exit clauses. 

On July 1 2017, the City of Shelton Government privatized the solid waste service by signing off on a pre- determined deal with Waste Connections. The deal contrived was without full notice and adequate participation by City residents and the deal contrived was so poorly constructed that even after signing the document had to be reworked by legal counsel just to make the legal elements of a contract be properly supported. 

Features of the agreement included:

A record 41.9% utility tax, all but 5% initially illegally hidden on ratepayer invoices.

A guaranteed 2.5% rate increase over the first 10 years.

A rate increase based on the Seattle/Tacoma/Bellevue Consumer Price Index, a flawed proxy for the annual expense increase of hauling solid waste in the City of Shelton.

A 20-year contract, with no optionality.

An annual 4.5% cap on increases in the first ten years, disappearing in years 11 thru 20. This represents unacceptable financial risk for ratepayers. CPI clauses in solid waste contracts for other entities are not baked in for 20 years, in effect for a generation.

An expert consulted on this matter, upon hearing the facts, referred to an agreement allowing for this level of risk taking as “insane” and asserted that only an entity that could print its own money would be able to take a risk of this nature.   The individual rate payers were not given a chance to agree or disagree with this decision as it relates to individual garbage needs and payment, but the City and Waste Connections stood to earn potential record-breaking income from all of these individual rate payers combined by contriving the deal in this fashion.  Rate payers in the city of Shelton for garbage service are locked into this agreement for 20 years. 

The contract itself was never properly put forward for public consideration and comment before ratification and is at a minimum a voidable contract if not void as a matter of law.  The full ordinance was not even presented for review at all in a public forum until the day it was voted on and even on the day it was voted on it was subject to modifications.   Claimants, while asserting their own issues of harm will also be arguing to have this contract declared void.

The City made numerous misrepresentations of material fact with respect to this private agreement for garbage service.  The city, in making such misrepresentations appear to have engaged in reverse engineering of figures in order to justify the figures being approved in the agreement and/or for the logic of entering the agreement.  Subsequent requests for public record establish that there has yet to be any support whatsoever for at least one of these City Staff reverse engineered numbers other than the act of reverse engineering.  Accordingly, on information and belief, claimants believe and assert that these material numbers, presented by City Staff to the City Commission and then represented to the City Counsel are deceptive and are the foundation upon which this improper and highly damaging contract at the expense of individual citizens of Shelton has been built.

There were one or two active civil leaders who had been paying attention to this matter and went to public meetings in an effort to warn public officials that they were proceeding with less than complete information.  These speakers were ignored and public officials blindly followed the advice of staff.  Among the suggestions of civil leaders was a request that the public be properly notified and allowed to directly interact with staff to discuss the concerns about this agreement.  City officials denied this request. 

In an effort to establish that the city was truly making a huge error and improperly binding its constituents to a 20-year iron clad agreement tied to the consumer price index from much larger cities, a civic minded person who was not even a resident of Shelton came forward to discuss the major flaws that existed in what was originally a very hastily drawn – and signed – contract.  The result of that public discussion was even hastier “Amendments” to the agreement and several statements by Mayor Robert Rogers that the city had researched and that this was a “reasonable contract.”

The city had not researched.  If it had researched it would know that every other city having contracts with Waste Connections had written solid escape clauses in their agreements which did not exist for the City of Shelton.  In addition, the city blindly accepted consumer price index ratings from Seattle, Tacoma and Bellevue, Washington as the standard for the City of Shelton -for the next 20 years!  During the first ten years there was a range of 2.5% to 4.5% – but after the first ten years of this agreement there is no cap.  This ‘no cap’ formula is what persons who perform financial services related to CPI have opined to be “insane.”     

Citizens of Shelton should have the right to opt out of garbage service without fear that their water will be shut off.  The city recently tried to explain the idea of shutting off water for people who fail to pay for garbage service as health and safety related.  However, there is inadequate causal link to support a water shut off in the interest of public health because in this rural community people often save money by making their own trips to the dump.  Further, the City of Shelton has city codes and enforcement ability against persons who do not make trips to the dump without shutting off a utility.  The city has no legal basis or legal support to prevent residents who do not wish to do anything other than haul their own garbage to the dump without paying a garbage collection fee from doing so.  Further, this is a community with many homes that are vacant for personal reasons of the owners.  The City is requiring vacant homes who have no need for garbage service to continue to pay for garbage service.  

There are many issues with respect to what has been termed a “deal sweetener” arrangement between the City of Shelton and Waste Connections that also cause experts great concern.  If our information is correct the City has failed to properly segregate this unearned money in a separate long-term interest-bearing account.  The City has been holding this “carrot” of a one-million-dollar pre-paid collection tax fund out as an “incentive” when in fact this money is actually nothing more than a loan to the city.  In reality, the solid waste collection tax does not apply to anyone other than the individual consumer responsible for that tax payment.  Mason County garbage collects the garbage fee on each billing cycle.  The tax is not due until the billing cycle has taken place.  Unearned funds are sitting in the City of Shelton’s General Fund Account.  As the actual tax is earned, Waste Connections is paid back on this loan from what is now mandated consumers.  In addition to getting this loan paid back directly from what is now mandated consumers – the city has actually put in a clause in the agreement with Waste Connections that gives Waste Connections the right to enforce this tax collection directly with the consumers.   The intent of this provision in the agreement can be found by examining the history of the contract before Amendment.  Originally, this act of transferring tax collecting authority to a private entity was written into the contract with express instruction that it be hidden.  It was only after ratification and six months of hiding this hidden fee before public outcry forced the city to engage in an amendment and walk this provision back to the point of full disclosure.

Claimants and each of them wish to be made whole and seek to have the agreement entered between Waste Connections and the City to be set aside and reformed into an agreement that is more consistent with agreements for privatization of such matters by other municipalities with proper ability for citizens of Shelton to haul their own garbage if they so choose. 

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