Following a few months of dispute and a little rate hike in residents’ garbage bills, the city of Sparks and Waste Management have settled a dispute over an exclusive franchise agreement. However, the agreement left the city with a significant drop in franchise fee revenue from the garbage collector, meaning a lower bottom line for city coffers.

To remedy the revenue drop, the city has implemented a 5 percent business fee on all trash hauling companies in Sparks.

Businesses that haul trash must now pay 5 percent of their gross revenues to the city.

Trash haulers generally carry away dry construction and commercial waste whereas garbage collectors pick up residents’ wet waste.

Waste Management still has the exclusive right to pick up garbage in the city of Sparks through a 10-year franchise agreement with the city.

“We have no problem with it at all,” said Steve Duque, owner of CastAway Trash haulers. “We think the city is entitled to that money.”

CastAway is one of four major trash haulers in Sparks, all competing for the same business. Other haulers include Empire Waste Systems, Rubbish Runners Waste Solutions and Waste Management.

Last year, CastAway would have contributed about $60,000 to the city through the fee, Duque said. This past fiscal year, Waste Management contributed $323, 462 in franchise fees to the city of Sparks, said Dan Marran, purchasing manager for the City of Sparks.

The History of The Agreement

In December 2008, Sparks residents faced uncertainty about their garbage collection rates as Waste Management of Northern Nevada battled with the city of Sparks and third-party trash haulers over the terms of an exclusive franchise agreement.

For many years, Waste Management had the exclusive franchise agreement. But a small loophole left the waste collection business open to those who wanted to haul trash, or dry waste. Giving Waste Management the renewed franchise agreement would have essentially put local trash haulers out of business. But opening up the trash market would have decreased Waste Management’s revenues, meaning higher rates for the customer.

Six months and many meetings later, the dispute has been settled, residents are paying slightly more for their garbage collection and Waste Management is no longer the exclusive collector of all trash in the city of Sparks.

The negotiations left Waste Management with the rights to the exclusive collection of garbage only. In exchange, the company gives the city of Sparks 5 percent of its gross revenues.

What Now

According to Waste Management spokesman Justin Caporusso, the change in the agreement has cut into Waste Management’s revenues. However, he added that the company is hoping they don’t have to raise rates for customers again.

“We are not anticipating a rate increase for customers,” Caporusso said. “We are going to try our best and we are pretty confident.”

Representatives from the city of Sparks are not sure that the city will break even, or even increase profits, with the new trash business fee.

“We are recouping the best we can the money that was lost when we opened up the franchise,” Marran said.

He added that how much money the city gets in franchise fees depends on how much revenue the businesses are brining in.

“The numbers are unknown,” Marran said.

The last time that the city of Sparks saw any increase in franchise fees raised was in 2007, Marran said. At that time the city saw a 9 percent jump in franchise fee revenue.

This year saw a drop of 22 percent, Marran said.