Should the Ratto Group Pay More for Exclusive Rights to Haul Novato's Garbage?

It’s no secret that the city of Novato is struggling financially, starting this fiscal year $300,000 in the hole.

The economy is partially to blame, with lower property and sales taxes while pension obligations continue to grow. 

But City Manager Michael Frank says there is another reason Novato doesn’t have as much money as it could: it gets no revenue from the Ratto Group, the local garbage hauler, despite the fact that the company’s dump trucks use city streets.

“As far as I can tell, we are the only city in the state that is not receiving a significant amount of (garbage) franchise fees,” Frank said. “I think it’s outrageous.”

Cities typically receive franchise fees from waste haulers in exchange for operating as a monopoly within the jurisdiction. Petaluma collects $500,000 a year, plus 10 percent of all receipts, from its garbage hauler (Petaluma Refuse & Recycling, also owned by the Ratto Group.) It also gets a cool $1 million a year in vehicle impact fees, money spent on road repairs.

The same is true in San Rafael and Mill Valley, which collect $1.6 million and $900,000, respectively, from a combination of garbage franchise and vehicle impact fees.

Meanwhile, Novato gets nothing.

That’s because garbage service is handled by the Novato Sanitary District, a separate agency created 40 years before the formation of the city. The district has its own board, which according to sources, has for years declined to extract franchise fees from Ratto in lieu of higher refuse rates.

The argument has been that by not forcing the company to pay a franchise fee, it’s keeping rates low for Novato residents. But while it’s true that Novato pays less each month for garbage than other Marin cities, the rate is still higher than Petaluma, Windsor, Santa Rosa and Rohnert Park. 

“It’s the city’s belief that not even the Sanitary District is receiving appropriate compensation from the hauler for the franchise rights,” Frank wrote in the city's Draft Fiscal Sustainability report, released in June.

As a result, he concluded, the Ratto Group “shares only a minor amount of the gross receipts and keeps almost 100 percent of their profit” while providing no compensation for road impacts.

The grumbling about whether the company is paying its "fair share" is not new. But on Tuesday, the issue will be taken up at the sanitary district meeting, which will consider implementing a road impact fee.

The Novato Sanitary District meets Tuesday at 3pm at 500 Davidson St., Novato.

What do you think? Do you think the Ratto Group should be required to pay a franchise fee for doing business in Novato?