American Rescue Plan Act

ZURIK: Ousted contractor says Cantrell administration orchestrated trash crisis

By Lee Zurik and Dannah Sauer

Source: FOX 8

January 17, 2023

NEW ORLEANS (WVUE) – As residents complained about garbage left to rot on the streets for weeks, the company contracted to collect that trash in several neighborhoods was pleading with the city of New Orleans to fully pay the bills.

The owner of Metro Service Group, Jimmie Woods, admits that his service was less than what customers expected, but blamed the city and its decision to bilk him out of millions of dollars.

Metro entered into a contract in 2006 to pick up trash in Service Area 2, which includes New Orleans East, Gentilly, and Lakeview.

Between 2013 and 2018, New Orleans residents consistently ranked trash collection as one of the best city services in quality-of-life surveys conducted by the University of New Orleans. However, in recent years, trash collection has become less reliable.

Woods said that residents likely don’t know all of the obstacles he was up against, and he says some of those obstacles were a direct result of Mayor LaToya Cantrell’s administration.

“First of all, I offer an apology to the citizens who felt they got less than the service that they wanted from Metro. It’s not what we were known for,” Woods said.

Woods claims the city handcuffed its trash collectors and essentially forced his company into bankruptcy.

“I would say that the garbage crisis was created by the administration,” Woods said.

FOX 8 reviewed hundreds of pages of invoices and documents related to the city’s garbage collection contracts and found the city likely shortchanged its garbage collectors millions of dollars in revenue, preventing them from hiring more workers and possibly contributing to the garbage crisis the city now faces.

Dillard University Political Analyst Robert Collins said that paying less than what the contract outlined left Metro and New Orleans residents suffering.

“It appears that we have a corporation that, for whatever reason, did not get the money that they were contracted to receive. And as a result, they could not pay, they could not deliver services to the citizens,” Collins said.

Documents related to Metro’s contract show the city agreed to pay Metro for every house it picked up trash from. The initial document estimated the house count at just over 65,000 homes. Metro billed the city for about 66,000 homes every month, even though it was actually picking up trash from more than 70,000 homes, records show.

Metro noted on many invoices that the home count was higher than the original estimate, but the city refused to pay.

The lack of payment for the additional homes cost Metro about $1 million every year, according to FOX 8′s calculations.

Woods says he tried to get a meeting with Mayor Cantrell, but she wouldn’t meet with him.

Instead, the firm Henry Consulting says the city and Metro asked it to inspect the contracts and give a third-party opinion. Henry Consulting concluded that the city was not properly interpreting the contract and that the city owed Metro an extra $900,000 per year.

Woods says despite the report, nothing changed.

“The city ignored that report, as they did our many requests to have a conversation on that subject,” Woods said.

In October 2022, the city hired two new trash collectors, Waste Pro and IV Waste, to replace Metro. It decided to pay those new companies for all the homes they collected from, more than 70,000.

The new contract also allows for a recount of homes in six months, a benefit never provided for Metro. Woods says under the new contract, the city is essentially paying the new companies what it refused to pay Metro, and he wonders if it is personal.

“This administration is working overtime to not only destroy my family, but my family name, and my business,” Woods said.

Woods said that along with underpaying his company for house collection, the city also refused to tap into federal money for extra trash pickup in the early days of the COVID-19 pandemic and following Hurricane Ida.

When stay-at-home orders were issued, trash tonnage surged.

Documents related to the Metro contract included an emergency clause for extra trash collection. For any amount of garbage over 6,495 tons during a declared emergency, Metro could charge an additional $250 per ton.

While the city declared emergencies for both COVID and following Hurricane Ida, it refused to pay Metro and its other trash contractor, Richard’s Disposal, any additional money for the extra tonnage the companies picked up.

Month after month, despite Metro collecting more than 6,500 tons of trash, the city refused to follow the emergency clause and pay additional funds.

FOX 8 calculated the extra tonnage and estimates the city underpaid Metro by $7 million.

“Obviously, our reputation has been tarnished, in part by the actions of the city. I think the general public doesn’t understand that we were basically working with our hands cuffed behind our back because the city refused to enact the emergency clauses like the surrounding governments did around New Orleans,” Woods said. “So, we were at a disadvantage. And I think that, in addition to that, I don’t think the general public understands that Metro had been, along with Richard’s, has been woefully underpaid since 2017, and that obviously affects your service levels.”

FOX 8 found many other cities and parishes paid garbage collectors extra money during the pandemic. Slidell paid $43 extra for each additional ton, Terrebonne paid $125 extra per don, and St. Tammany Parish paid an extra $2.50 per house, per month.

After Hurricane Ida, Jefferson Parish paid its garbage collector an additional $1.3 million, while Lafourche Parish paid an extra $471,000.

New Orleans didn’t pay any extra money to Metro or Richards’. That’s despite the fact that the money would have come from federal funds so it would not have cost the city or New Orleans ratepayers extra.

The city also received millions of dollars in federal COVID relief money. However, former Congressman and White House Advisor Cedric Richmond, as well as The Bureau of Governmental Research say the city still has $194 million it hasn’t yet spent.

Woods says he facilitated a call between Richmond and Ramsey Green, who at the time, was the deputy chief administrative officer for infrastructure for the city, but the city still refused to tap into the money.

Woods said he struggled to retain and hire new staff, despite a salary increase. He said the city’s refusal to pay him for all the homes he serviced, as well as the refusal to use emergency funds during the pandemic and post-Ida bankrupted his company.

In October, he filed for Chapter 11 bankruptcy.

“I mean, obviously, service suffered. We just didn’t have enough bodies to get the waste off the street. And you compound that with everybody staying at home, and there’s more waste. So there’s more waste and fewer staff to get it up. And yes, something’s going to give,” Woods said. “That’s why it’s so unfortunate that the city didn’t make additional resources available to where we could have doubled our efforts to try to get more people in.”

The new contracts are costing residents more for fewer services.

The city paid Metro $13.60 per home each month for twice-a-week garbage and recycling pickup. Under the new contract, IV Waste and Waste Pro are being paid about $22 dollars per home each month for once-a-week pickup. The contract that previously cost taxpayers about $11 million each year now costs $19 million a year.

Woods said the new contract not only hurts taxpayers but could have been completely avoided if his company was paid for all the homes it collected from.

“And it didn’t have to be if the city had just paid Metro that $1 million or so a year more. Our contracts would still be in place. And that would be to the benefit of citizens, over the next seven years, for about $70 million… About $10 million a year,” Woods said.

Woods believes the entire situation could be political. He believes Cantrell’s administration orchestrated a trash crisis in order to move and rework the contracts.

Woods was a strong supporter of Cantrell’s opponent in her first mayoral election, Desiree Charbonnet. Cantrell inherited the contracts for Metro and Richard’s Disposal from former Mayor Mitch Landrieu.

“It feeds into the analysis that this is political. That is somebody trying to help create a crisis in order to move contracts from one firm to another one. Because there’s no other. It can’t be such a high level of incompetence. I mean, obviously, the administration is aware that there were federal dollars out there to pay. We’re not even talking about money to come out of the city’s budget, we’re talking about federal dollars that were available to where it would have never been a garbage crisis. So, it almost makes you think that certain people want it to have this crisis in order to move these contracts because it was totally unnecessary. Federal funds available, other parishes cities used it, the city of New Orleans chose not to do it, and obviously, it hurt the companies in the city. Both Metro and Richard’s haven’t received one penny additional for collecting all of that additional waste behind COVID as well as Ida,” Woods said.

Metro took the city to court over the contract.

The city reached a $4 million settlement, essentially agreeing it owed Metro money for past service.

Collins says whatever the motivation behind the lack of payment, the city failed to pay what it owed, which left trash piling up on the streets, and forced a locally owned company to file for bankruptcy.

“It appears that somewhere a policy decision was made not to pay them the full amount of that money, and they really were owed that money. I mean, if the city didn’t think they were owed that money, they wouldn’t have settled out of court, and paid them the money at the end after they went bankrupt,” Collins said. “I think someone made a decision in the mayor’s office or someone in City Hall. We don’t know if it was a political decision or some other type of decision to not pay Metro the full amount of their contract. And that decision, caused a lot of grief to a lot of citizens because their services did not get delivered. Their garbage did not get picked up.”

FOX 8 sent the city an email asking why it didn’t use the federal money available to offset the extra tonnage collected by the garbage companies and why it paid Metro for fewer houses than it collected trash from. The city never responded to that email and declined our request for an on-camera interview.

In October and November 2022, the city’s sanitation director Matt Torre criticized Metro’s service saying, “Anybody who’s lived in Metro’s Service area for the past year or looked in from the outside could tell you that clearly the services that residents deserve are not being provided.”

He also said, “Whether Metro believes that they are being held to a different standard, or other companies are not being held to the same standard, is irrelevant.”

However, Woods says that is relevant. He says the city’s stance will cost taxpayers tens of millions of dollars and caused trash to pile up on city streets.

“The city made it very difficult for us to do business. Some might say that it was intentional because obviously, the beneficiary of Metro’s plight is a political supporter of the mayor. I’ve heard that from many places. On the other hand, perhaps it was just mismanagement on the city’s part. One of those two things is correct. I’m not sure which,” said Woods.

The city recently threatened to advertise the Richard’s Disposal contract for competition but has now apparently softened that stance. Instead, the city is now working to restructure the contract, working on what it calls a “get well” package for the company. Woods says that is further proof that the city underpaid him and didn’t properly interpret his contract.

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