he Cypress City Council has voted unanimously to hire a consulting firm to conduct a “performance review” on the city’s much-discussed contract worth $100 million with waste hauler Valley Vista Services.
Through a series of extensions and rate increases, the city is now saddled to the waste hauler until the year 2037.
The solid waste hauler has enjoyed somewhat of a charmed relationship with Cypress since a proposal presented by George S. Briggeman, Jr. resulted in landing Valley Vista its first 10-year, competitively bid contract with the city in 2014.
Briggeman was fined $15,000 in 2015 by the state’s Fair Political Practices Commission for improper campaign contributions made to several candidates, two of whom were elected and voted on that agreement. Some thought they should have recused themselves because of the contributions.
Just three years later, in 2017, the waste hauler came back to the Council seeking an “Extraordinary Adjustment” worth $776,000 in additional revenue, citing “extraordinary expenses.”
A consulting firm retained by the city did find some valid extraordinary expenses, but not to the level requested by the company, according to their June 15, 2017 analysis presented to the Council.
Although Valley Vista, at that time, shared significant financial data to the city attempting to justify its request, the consulting firm hired by the city said they could find no basis to approve the request.
In a detailed analysis presented to the Council, R3 Consulting Group, Inc. concluded that “the collector (Valley Vista) was not able to demonstrate how the items it cited in support of its extraordinary adjustment warrant the levels of adjustment to the residential, commercial and roll-off rates that it has requested.”
Nevertheless, the City Council approved the rate hike. The vote was not unanimous. In addition, the Council extended the Valley Vista Franchise Agreement an additional two years, then making it valid through 2027.
According to the city’s staff report, the Council again intervened in the agreement in 2021 in order “to comply with new, unfunded State mandates, the City Council was required to direct VVS to implement organics recycling programs.”
The staff report, approved by city manager Peter Grant, said the Council extended the Valley Vista Franchise Agreement’s term to 2037 “to amortize the start-up cost of the new programs” required by the state.
While in popular nomenclature some citizens termed it a “no-bid” contract, the city staff has another view.
“This action is often mischaracterized as the City having awarded a ‘no-bid’ Franchise Agreement extension to VVS,” said the staff report, “when this approach to expanding the services is part of the original, competitively bid Agreement.”
Former Mayor Jon Peat has aggressively defended the action, even publishing his own white paper defending the city’s actions.
Other than price, there have been few complaints about the service provided by the firm, at least in public meetings.
Now, the city wants to retain another consulting firm, this one to conduct a “performance review” of the entire agreement and investigate and assess how the firm has performed under their agreements.
“The purpose of this review,” said Public Works Director Nick,”Mangkalakiri at the Council’s most recent meeting, “is to ensure compliance with the franchise agreement by both Valley Vista and the city, to verify financial reporting and payments, check service performance and diversion targets. ‘
Mayor David Burke asked about the potential of adding additional questions about finances and how the firm was stacking up against other cities and some generalized industry standards.
“My thinking is, if we’re going to do it, we might as well try and get as much information as we can. So would it be possible to include comparing the performance to industry benchmarks, and then the financial audit of annual profit or loss,” said Burke.
“We can add that,” said Mangkalakiri, however, “I would like to perhaps invite up the Valley Vista CEO to make sure they agree with that,” he said.
With Valley Vista CEO David Perez walking up to the podium, Council member Bonnie Peat made it clear she would not support requiring any non-standard financial information.
“Personally, I think if it is not required, I am not comfortable asking for something they are not required to provide,” she said.
While the company is willing to provide some financial information, the competitive nature of the waste hauling industry is cause for concern, said Perez once he reached the podium.
“Industry standards are nebulous,” Perez told the Council.
“There’s national standards, local standards, and there are all kinds of things, but, but we would welcome any comparison to any sort of other haulers or any sort of other contract,” he said.
“I think we’re performing very well in this contract. I think we would welcome any sort of comparison with regards to financials as a comport to this contract, to a degree, obviously, we’re willing to disclose,” said Perez.
“You know, the rates. You can see the billings. You can see the franchise fees paid, so you can get a feeling for what our net earnings are, I mean net, but as far as profitability, that’s a dangerous thing, because all of this is public record, and we’re in a very competitive field,” he said.
The company could be damaged if their financials were released, Perez told the Council.
Regarding the industry standards, Council member Kyle Chang said he would appreciate seeing some benchmark comparisons, and signaled he was okay with a regional 25-mile look at waste-hauler comparisons, given the divergent technologies employed by waste haulers nationwide.
Grant told Burke there will be other opportunities to resolve financial questions as the process moves forward.
“If the council moves forward with this, we could work with the consultant that we ultimately recommend developing as comprehensive and broad a look at those financial agreements as Valley Vista is comfortable with and is consistent with the way that these reviews are conducted across the industry,” said Grant.
“If the City Council approves the recommended scope of work, a Request for Qualifications will be issued in July/August with the expectation that a firm to conduct the performance review will be recommended to the City Council in September,” Grant said.
“It is anticipated the performance review will be complete in the first quarter of 2026,” according to the staff report.
In addition, Grant said Valley Vista has already agreed to reimburse the city for the entire cost of the firm’s performance review.