Fw Fwd WM's Franchise Fee Underpayments Revisited-- the plot thickensCommissioners (and Mr. Redman):
The longer the wait is for a make sense, detailed explanation why Mr.
Redman's 54,612 monthly commercial cubic yards of containerized,
non-compacted service raises a serious question about the FF revenue
Delray has been receiving, the more I dig.
In WM's presentation to the Commission at the 8/17/12 Commission
Meeting, Mr. Carter stated at the 47 minute mark, "the City gets about
40,000 cubic yards of commercial service a month". In the 2001 Bid
Takeoffs, the City claimed it had "34,259 C.Y monthly non-compacted
service and 1,032 containers in service (my estimate in an email below
is 1,042 now)".
Here's the topper. I went to the SWA Jan 2013 Bid Sheet with takeoffs.
It lists 209,503 annual commercial container yards (17,458 monthly
comparable to Delray's 54,612) for Service Area 4. I submitted a PRR
yesterday to the SWA for the underlying customer by customer service
breakdown. The SWA responded the same day within 3 hours. Lo and behold
there is a 4 page WM customer by customer listing with a 9,608.27
monthly yards that is a part of the 17,458 compilation. So, WM can
obviously produce the listing!
For Mr. Redman to cite "54,612 monthly C.Y. of non-compacted container
service" in his 12/4/14 Report, he most likely had to get that exacting
number from a WM customer by customer listing. If not, it only seems
logical that someone from WM has a customer by customer trial balance
that totals 54,612. Once that is available, it can be compared with the
WM monthly FF remittance. This isn't a 'rocket science' investigation
and it should have been put worth and completed last week. Instead, the
drama/intrigue lingers!
P.S.-- It is section 6 "Waiver of Past Claims" in the Settlement
Agreement which precludes any retroactive FF shortfall claims to after
3/28/14. I have copied Atty. Cole herein. Maybe he can check his files
and determine for you who wanted that paragraph inserted in the
Settlement. I'll bet you the best drink in town it was WM!
----- Forwarded Message -----
From: Kenneth MacNamee <kjmacnamee@yahoo.com>
To: Mayor Commissioners <commissioners_mayor@ci.delray-beach.fl.us>;
Redmen <bredman@rcgusaonline.com>
Cc: Jack Warner <warner@mydelraybeach.com>; Terrance Stewart
<stewart@mydelraybeach.com>; Noel Pfeffer <pfeffer@mydelraybeach.com>;
"ddbcooper@aol.com" <ddbcooper@aol.com>; "randy@bocamag.com"
<randy@bocamag.com>; Gottesman Marisa <mgottesman@sun-sentinel.com>;
Lantigua John (CMG-WestPalm) <jlantigua@pbpost.com>;
"mbuczyner@cbs12.com" <mbuczyner@cbs12.com>; Chaz Stevens
<chazstevens@gmail.com>; Vince Dole <gelod3@yahoo.com>
Sent: Friday, December 26, 2014 9:39 AM
Subject: Fw: Fwd: WM's Franchise Fee Underpayments Revisited-- It gets
WORSE!
Commissioners (and Mr. Redman):
Whenever I ask the City a thoughtful, analyzed question and receive a
defensive, whiny, non-analytical response like in Mr. Stewart's 12/18/14
email below highlighted in Red, I'm usually on to an important issue.
So, I dig deeper and get more analytical.
I went over the emails below with Mr. Archambo at the SWA. He confirmed
that my question of why the City isn't getting $577K in Franchise Fee
(FF) instead of only $433K has merit.
In fact, the apparent $144K (577-433) FF shortfall could be even WORSE.
The $577K anticipated FF revenue is calculated based on Mr. Redman's
takeoffs on page 16 of his 12/4/14 Bid Evaluation Report. The FF revenue
extrapolation is based solely on commercial collection and disposal
charges. However, FF revenue also includes 10% of monthly "container
maintenance charges". These are $19.40, $22.21, $25.53, and $27.09 for
two, four, six, and eight cubic yard containers, respectively.
So, if one conservatively estimates the average monthly container
maintenance charge is $22, then the additional "missing(?)" FF would be
calculated at $22 X 1,000 est. containers X 12 mos. X 10%= $26,400. This
would take expected FF revenue up to $603K (577+26) and the unexplained
annual shortfall up to $177K (603-433).
Let's go back to page 16 of Mr. Redman's Report. The primary takeoff
quantity is the top number in the 3rd column, "54,612" cubic yards of
containers serviced monthly. For an amount that specific, one would
think there have to be detailed customer by customer back up and that
Mr. Redman obtained it from WM.
Let's further analyze 54,612 to see if it is a make sense. I heard there
were 1,042 containers being serviced (please adjust that number if it is
wrong) so that means there is on average 12 C.Y. per week serviced per
commercial container customer ( 54,612 / 1,042 customers / 4.33 weeks
per month). This would mean the weighted average customer has a four
yard container picked up 3 times per week. It sounds reasonable to me
since the smallest container customer is two yards, once a week. The
largest is eight yards serviced 7 days a week (56 total yards).
Here is another analysis to demonstrate how "short" $433K in actual and
budgeted FF revenue appears to be. From $433K, subtract the $26K for the
container maintenance portion of FF revenue, leaving $407K for
collection and disposal based FF Revenue. That would reduce the 54,612
C.Y. takeoff to approximately 44,000 C.Y.
I can't fathom that Mr. Redman (and WM) would be over 10,000 C.Ys
(19.4%) off! It would be irresponsible/unprofessional. Furthermore, it
would mean the average customer only has 9.8 yards of service weekly.
That doesn't make sense either.
Mr. Redman's silence on this important FF shortfall question is
deafening. I can understand his apparent shortcomings in drafting an RFP
so that the City had to engage Atty. Dee but I would think takeoffs
would be his strength. Apparently, the acquiring and analyzing critical
commercial bid component takeoffs is not within City staff's purview
because they apparently haven't provided you with any detailed
statistical explanation justifying the $177K shortfall question. Nor did
staff catch and correct the $9.38 (should be $9.98) recurring error in
WM's bid compliation in Mr. Redman's Report.
Commissioners, there has to be a verifiable explanation. Right now I am
haunted with the WM litigation Settlement Agreement you approved. Why
was the contentious, litigious WM so cooperative to sign off on no
appeal and paying the City's $135K in legal expenses? I was told WM
wanted the City's goodwill for the current bid process. But, in the
Settlement Agreement, I recall WM getting closure for no other
retroactive claims. Maybe WM knew about this FF "shortfall" exposure and
feared a new hauler would expose how under remitted FF have been!
Remember, WM has a proven record of under remitting FF to the City. It
totaled $52,989 in 2007 and 2008 and was so egregious that it resulted
in a unanimous Commission "Vote of No Confidence" for Messrs. Harden and
Safford on 1/19/2010. The SWA also caught WM shorting the County $715K
on tipping in 2012. See the attached SS article below "WM Caught
Cheating..."
Finally, one should expect and understand staff's "lack of urgency" to
investigate the unexplained $177K FF shortfall. 4 staff members just
recommended WM to remain as the City's hauler which will cost Delray
trash customers $1,171,473 more annually ($8.7M over the 7 year life of
the contract) above the lowest bid. Also, I detailed on a 10/15/14 email
how Mr. Stewart's flawed and lacking 2015 Sanitation Budget review left
$934K "on the table". Considering those two matters, I guess a $177K
annual shortfall does not seem that pressing or significant after all!
----- Forwarded Message -----
From: "Petrolia, Shelly" <petrolia@mydelraybeach.com>
To: "Stewart, Terrance" <stewart@mydelraybeach.com>
Cc: "Warner, Jack" <warner@mydelraybeach.com>; "ddbcooper@aol.com"
<ddbcooper@aol.com>; Kenneth MacNamee <kjmacnamee@yahoo.com>
Sent: Friday, December 19, 2014 3:25 PM
Subject: Fwd: WM's Franchise Fee Underpayments Revisited
Good Afternoon Mr. Stewart,
Considering Mr. MacNamee's email was reviewed and responded to within
several hours of receipt, I am disappointed my question has gone
unanswered since late yesterday. I merely requested an explanation of
the failure in Mr. MacNamee's calculations, something already reviewed
by you and Mr. Warner. This should have received a quick response and
not required a second inquiry on my part.
Please send me an explanation as to why Mr. MacNamee's calculations
fail. I expect to hear something today since the email in question was
reviewed yesterday.
Respectfully,
Shelly Petrolia
Vice Mayor
City of Delray Beach
100 N.W. 1st Avenue
Delray Beach, FL 33444
Petrolia@mydelraybeach.com <mailto:Petrolia@mydelraybeach.com>
Phone: (561) 243-7010
Note to Mayor & Commissioners. This message is for your information
only. To comply with the Sunshine Law, please do not reply to this
message.
PUBLIC RECORDS NOTE: Florida has a very broad public records law. Most
written communications to or from local officials, employees, or the
general public regarding city business are public records available to
the public and media upon request. Your e-mail communications may
therefore be subject to public disclosure.
PLEASE NOTE: Pursuant to Florida�s Government in the Sunshine Act
(a.k.a. �Sunshine Law�), e-mails containing city business should be
directed to either: all City Commissioners or only 1 City Commissioner
at a time and should not include prior responses from the other
Commissioners in order to avoid the perception that a third party is
acting as a liaison between Commissioners.
Begin forwarded message:
From: "Petrolia, Shelly" <petrolia@mydelraybeach.com>
Date: December 18, 2014 at 6:04:27 PM EST
To: "Stewart, Terrance" <stewart@mydelraybeach.com>
Cc: "Commissioners, Mayor"
<Commissioners_Mayor@ci.delray-beach.fl.us>, "Warner, Jack"
<warner@mydelraybeach.com>, "ddbcooper@aol.com" <ddbcooper@aol.com>,
Kenneth MacNamee <kjmacnamee@yahoo.com>
Subject: Re: WM's Franchise Fee Underpayments Revisited
Thank you for your response however there were numbers
calculated in Mr. MacNamee's assertions. Can you please tell me where
Mr. MacNamee's numbers fail?
Here is the possible "FF Underpayment" issue
facing the City NOW! Mr. Redman's takeoffs for the City's Commercial
service totals $5,773,892.22. A 10% FF on that amount should total
$577,389. But, according to its Sanitation Fund 2015 Budget, FF revenue
is only $433,000 (based on $413,611 actual for 2013 and $433,000 for
projected 2014). So, based on Mr. Redman's commercial takeoffs, WM could
be "shorting" the City again on FFs in excess of $100K annually
Shelly Petrolia
Vice Mayor
City of Delray Beach
100 N.W. 1st Avenue
Delray Beach, FL 33444
Petrolia@mydelraybeach.com <mailto:Petrolia@mydelraybeach.com>
Phone: (561) 243-7010
Note to Mayor & Commissioners. This message is for your
information only. To comply with the Sunshine Law, please do not reply
to this message.
PUBLIC RECORDS NOTE: Florida has a very broad public records
law. Most written communications to or from local officials, employees,
or the general public regarding city business are public records
available to the public and media upon request. Your e-mail
communications may therefore be subject to public disclosure.
PLEASE NOTE: Pursuant to Florida�s Government in the Sunshine
Act (a.k.a. �Sunshine Law�), e-mails containing city business should be
directed to either: all City Commissioners or only 1 City Commissioner
at a time and should not include prior responses from the other
Commissioners in order to avoid the perception that a third party is
acting as a liaison between Commissioners.
On Dec 18, 2014, at 5:29 PM, "Stewart, Terrance"
<stewart@mydelraybeach.com> wrote:
Mayor and Commissioners,
Below, you will find a response from City CFO Jack Warner in response
the latest set of assertions from Ken MacNamee. As you will note, Mr.
Warner defines those assertions as having no support.
As soon as I receive the information regarding our controls processes, I
will forward that to your attention.
Best regards,
Terry Stewart, Interim City Manager
(561) 243-7010
From: Warner, Jack
Sent: Thursday, December 18, 2014 12:06 PM
To: Stewart, Terrance
Cc: Butler, Lula; Berg, Al
Subject: RE: WM's Franchise Fee Underpayments Revisited
Manager �
Unlike previous analyses conducted by Mr. MacNamee, this is an assertion
with no support and therefore there is nothing to �look into� other than
to describe our existing controls procedures, which I will request that
CI commence.
Lula and Al � Pls see notes below and send the Manager a response with
copy to me.
Thanks
Jack Warner, Chief Financial Officer
City of Delray Beach
100 NW First Avenue
Delray Beach, FL 33444
(561) 243 � 7117
warner@mydelraybeach.com
From: Stewart, Terrance
Sent: Thursday, December 18, 2014 8:50 AM
To: Warner, Jack
Subject: FW: WM's Franchise Fee Underpayments Revisited
FYI
Best regards,
Terry Stewart, Interim City Manager
(561) 243-7010
avoid the perception that a third party is acting as a liaison between
Commissioners.
Begin forwarded message:
From: Kenneth MacNamee <kjmacnamee@yahoo.com>
Date: December 18, 2014 at 7:53:53 AM EST
To: Mayor Commissioners
<commissioners_mayor@ci.delray-beach.fl.us>
Cc: Jack Warner <warner@mydelraybeach.com>, Redmen
<bredman@rcgusaonline.com>
Subject: WM's Franchise Fee Underpayments Revisited
Reply-To: Kenneth MacNamee <kjmacnamee@yahoo.com>
Commissioners:
I reviewed WM's Power Point presentation for the 12/18/14
Meeting. On page 29 of 51, WM bodaciously states, "WM's current an prior
performance is exceptional;". The italics is WM's emphasis-- not mine.
Below is my 1/3/2010 email culminating my 10 month ordeal
uncovering WM failing to timely and accurately remit Administrative and
Franchise Fees (FF) due the City. It happened 13 times during an 18
month period (July 2007 through December 2008) and totaled $52,989,12.
It was Commissioner Fetzer's sounding board for getting the Commission
"Vote of No Confidence" on Messrs. Harden and Safford unanimously passed
at the 1/19/2010 meeting.
Note how then Finance Director Safford tried to politely blow me
off before I uncovered the final $10,841.51 unpaid for 15 months in Red
below. Look how sheepishly and unrepentantly WM's Butch Carter admits it
in his 12/31/09 email. WM omitted paying on 120 customers and the City
never caught it!
Here is the possible "FF Underpayment" issue facing the City
NOW! Mr. Redman's takeoffs for the City's Commercial service totals
$5,773,892.22. A 10% FF on that amount should total $577,389. But,
according to its Sanitation Fund 2015 Budget, FF revenue is only
$433,000 (based on $413,611 actual for 2013 and $433,000 for projected
2014). So, based on Mr. Redman's commercial takeoffs, WM could be
"shorting" the City again on FFs in excess of $100K annually!
I have cced Mr. Warner so that he can inform you what
verification steps if any the City does with WM's FF. If it is like
2009, all the City does is deposit the check and nothing to check the
accuracy/completeness of WM's remittance like I spent countless hours
doing to uncover the $52,989.12 in 2009.
One way to get to the bottom of the "FF Mystery" is to engage a
new hauler!
I'll wait for the Committee's recommendation to you before I
further elaborate on and document "WM's exceptional prior performance".
________________________________
From: Kenneth MacNamee [mailto:kjmacnamee@yahoo.com]
Sent: Sunday, January 03, 2010 9:26 PM
To: Safford, Joseph; harden; Commissioner Fetzer
Cc: kevin Warner; shelly petrolia; chuck halberg; gordon wright;
bob Wiebelt
Subject: Re: WM Underpayments Report Card--Update
Messrs. Harden, Fetzer, and Safford:
In the 12/31/09 email below with neither an apology nor an
explanation, WM admits that they paid -$0- in C&D for Sept. 2008 and
owes the City $10,841.51 in Franchise Fees (from approximately 120
customers). So, their "Underpayments Report Card" now stands at:
"During the 18 month service period of Jul. 2007 through
Dec. 2008, WM under remitted to the City 13 times for a total of
$52,989.12!"
Good thing I persisted with this investigation after Mr. Safford
wanted to prematurely close it out on his Dec. 9th email and I quote:
"We (the City) are comfortable that we have analyzed
sufficient detail to confirm that we are receiving the correct amount of
franchise fees and administrative fees from WM. We are
recommending closing this issue...I wish to thank you for your diligence
in questioning these franchise fee issues."
There is still a lot of work to do to get to the bottom of WM's
transgressions in its trash dealings with the City. There are numerous
other issues. In the meantime, the City should write WM stating its
performance has been shameful and deplorable. Furthermore, the City
should put WM on notice that it expects WM's full cooperation to
coordinate with the City in the development of timely, informative
reports, in detail and summary, to enable City personnel to ensure the
accuracy and completeness of commercial franchise fee revenues. Anything
less could result in this embarassing situation happening again.
Mr. Harden, I still await the meeting Commissioner Fetzer
requested in emails to you on 12/17 and again on 12/19.
________________________________
From: "Safford, Joseph" <Safford@mydelraybeach.com>
To: Kenneth MacNamee <kjmacnamee@yahoo.com>
Cc: "Harden, David" <Harden@mydelraybeach.com>; "Fetzer, Fred"
<fetzer@mydelraybeach.com>
Sent: Thu, December 31, 2009 12:33:09 PM
Subject: FW:
Ken,
Success. WM is going to be sending us $10,841.51 for the
September, 2008 C&D accounts that they missed.
From: Carter, Harold [mailto:HCarter@wm.com]
Sent: Thursday, December 31, 2009 11:55 AM
To: Safford, Joseph
Subject: RE:
Yes, we did not pay the City the Franchise Fee for Temp Roll-off
for the month of September 2008.
The outstanding balance is $10,841.51
I have included the file for your information.
The check request will be processed and the payment should be
made to the City in January.
Thanks Joe,
Harold "Butch" Carter,
Government Affairs Manager
Waste Management Inc. of Florida
2700 N.W. 48th Street
Pompano Beach, FL 33073
561-322-5528 cell phone
hcarter@wm.com
From: Safford, Joseph [mailto:Safford@mydelraybeach.com]
Sent: Thursday, December 31, 2009 10:32 AM
To: Carter, Harold
Subject:
Butch,
Have you any kind of status report on the September, 2008 C&D
containers that were apparently missing from our franchise fees for that
month?
________________________________
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