The administration of Mayor Dan Sullivan in early March signed a $46,500 contract with a California-based consultant to assess the value of the Anchorage trash collection utility, before getting approval from the Anchorage Assembly to explore the utility's sale.
The contract, which did not require Assembly authorization, apparently marks the first major step in what the Sullivan administration recently called a "structured process" to sell off Solid Waste Services' trash-collections unit.
In a resolution introduced March 3, the administration asked the Assembly to support the process. Instead, the Assembly tabled the item and Chairman Dick Traini set a public hearing for April 28.
The administration's resolution said the process would first involve contracting with a "solid waste financial consultant" to produce a cost-benefit analysis of privatizing the utility. It did not say a contractor had already been identified. Bid documents provided by the administration show that an agreement with HF&H Consultants of Irvine and Walnut Creek, California, was signed by purchasing officer Ron Hadden on March 4, a day after the Assembly meeting. The senior vice president of HF&H, Laith Ezzet, signed the agreement Feb. 26.
A month earlier, on Feb. 4, the contract value was $8,924, the bid documents show. By the time it was signed, the contract had been amended to expand the scope of the work. The new price tag was $46,500, the documents show.
If the amended contract had exceeded $50,000, it would have required an Assembly vote.
Mayor Dan Sullivan said in an interview Thursday that the administration regularly commissions studies, especially ahead of Assembly deliberations. In this case, he said, the consultants' work will be finished by an April 24 Assembly work session on the subject.
"It's not unusual at all," Sullivan said of the contract.
But Assembly members on Thursday criticized the administration for a lack of transparency. Tim Steele, chair of the Assembly's enterprise committee, said he plans to introduce an amended version of the March 3 resolution that would give the Assembly an increased role in the process and allow for public testimony.
"It's just sneaky," Steele said of the contract for the financial assessment. "That's the part I don't like."
Traini said he learned late last week about the signed contract with HF&H Consultants. He said he "couldn't believe it."
"It's bad public policy," Traini said. "It's not being honest with the citizens of Anchorage."
Ever since the administration's resolution went public last week, Traini said, he's been fielding calls from Solid Waste employees worried about their jobs.
South Anchorage Assembly member Jennifer Johnston, who supports exploring the privatization of the utility, was also critical of the HF&H contract. Johnston wasn't aware of the contract when initially asked about it Thursday.
"I'm concerned with the lack of transparency, and I'm concerned with the cost," Johnston said. "It makes no sense to me."
Assembly decision
Sullivan said the contractor will be in Anchorage by next week to start the evaluation.
The bid documents for the valuation contract show that in 2013, the utility made $8.8 million in revenues and reported about $8.6 million in expenses. Solid Waste Services served an average of 10,002 residential customers and collected 36,502 tons of waste -- 9,516 tons from residential customers and 26,986 tons from commercial customers.
The municipality separately owns a landfill, transfer center and recycling drop-off stations, which Sullivan said the city is not looking to sell.
Sullivan has said the administration decided to explore the sale after receiving interest from private buyers. He said the valuation process will help show whether the trash collection service would be more valuable as a taxable asset than as a city-owned utility.
If the administration does decide to move forward with a sale, the decision would ultimately fall to the Assembly, Sullivan said. He said municipal attorney Dennis Wheeler has issued a legal opinion concluding that selling the trash collection service would not require a public vote because the utility did not exist when the borough and the city unified in 1975.
With Assembly approval, Sullivan said, the sale could be a quick process, possibly taking just a few months.
He also said that, in the event of a sale, the administration would require that the private buyer not reduce existing service in any way.