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Labor question puts off cola decision

Friday, April 15, 2005 by

Pitch for Pepsi raises Mayor's hackles

The Cola Wars have arrived at Austin City Hall, with the Council considering an exclusive contract to provide sodas in vending machines at all city-owned facilities. While the move could irritate city employees used to having their choice among Coke, Pepsi, Dr. Pepper, and other selections, it could also result in a financial boost for the city.

It is common practice in the soft-drink industry for suppliers to pay a premium for exclusive rights to service a facility, whether it be a hotel, theme park, airport, or office building. Under the city's current system, each city building or city department negotiates its own contracts. That means selection and price can vary from building to building. The city put out an RFP last summer, and identified the response from the Pepsi Bottling Group as the best option. Pepsi is promising the city an up-front fee of $50,000 for the first year and $50,000 or more for each additional year for the exclusive rights to sell its product at 226 city-owned or city-controlled facilities. Since the city would also receive money based on the amount of product sold, the Purchasing Department estimated the revenue from the initial term of the deal at more than $3 million. With two five-year extensions, the total estimated revenue could total more than $10 million over the life of the contract.

Although the Purchasing Department relied only on the numbers when making its recommendation, some Council members had questions about whether city employees and visitors to city facilities would be willing to make the switch from Coke to Pepsi. "My understanding is the Coke-Dr. Pepper combination has a substantially higher market share," said Mayor Will Wynn. He asked if that preference could impact sales and revenues if vending machines were to be stocked with the less-popular product.

The consultants retained by the city in 2003 to help with the project confirmed what the Mayor suspected about the local market share of Coca-Cola and Dr. Pepper compared to Pepsi. "It could be as much as two to three times as much," said Ed Augustine of the Pathfinder Group, an Atlanta-based firm specializing in public-private partnership deals. "Those statistics are gathered from convenience stores and supermarkets, where the customer comes in and there's a huge choice," he explained. But he added that "in situations where there is a captive audience, generally the market share information kind of goes out the window."

In large office buildings, city facilities, amusement parks, hotels, and other locations where it is inconvenient for workers or guests to seek out alternatives, industry data has shown that people will buy whatever soft drink is available. "Generally, the same amount of product is purchased, although it might be a different product," said Augustine. "If a person is really, really wedded to Coke or Dr. Pepper, the person may buy water or a sports drink." While other cities have experienced a slight drop in the initial months following the conversion to a single provider for soft drinks at city facilities, city Deputy CFO, Vicki Schubert said consumption usually rose back to its original levels after six months.

The Mayor's attempt to get at the data regarding the popularity of Coke versus Pepsi provided some unexpected sparks during what was otherwise a quiet meeting. He initially requested the information from representatives of Pepsi, who used the opening to extol the virtues of the company's diverse product line. "Mayor, we know you've really pushed the Austin in Motion initiative ( http://www.ci.austin.tx.us/news/2004/fitnesschallenge_04.htm)," said Donnie McDanie l, Food Service Sales Manager for the Pepsi Bottling Group in Austin. But as McDaniel launched into a speech on how Pepsi also offers Aquifina bottled water, Gatorade, and Sobe energy drinks, he was abruptly cut off. "Sir, I asked what is the market share for Pepsi in Austin today. If you're not going to answer that question, sit down. This is not a chance for you to come lobby this Council," he said. "Our citizens don't get fit by drinking a lot of Dr. Pepper, Cokes, or Pepsis," he concluded. The Mayor later apologized to McDaniel for his abruptness.

But based on Thursday's discussion, neither the strong consumer preference nor the potential financial boost for the city will be the deciding factor in the Council's decision on the cola question. Council Members seemed most interested in claims by Louis Malfaro, president of the Austin Central Labor Council, that the company was treating its union members badly. "The drivers at Pepsi voted to form a union out there in 2002 (joining Teamsters Local 657), and Pepsi has been dealing with them in bad faith," he said. He presented several complaints that had been made to the National Labor Relations Board by the union regarding the company's tactics in dealing with its Austin unionized employees, who account for about 70 members of the 180-member workforce. "Austin is the only Pepsi distribution plant right now in Texas that has union representation, and Pepsi has made it clear that they do not want to reach a bargaining agreement with the workers here."

The charge of bad faith dealings prompted a swift denial from Pepsi representatives. Jim Head, sales manager for Pepsi in Austin, said the company had been bargaining in good faith and was eager to reach an agreement. "Pepsi's intention in the whole negotiation is to resolve this," he said. "I do not like, nor does Pepsi like, having this go on for 22 months. We just feel adamant about three or four issues, and they just feel adamant about three or four issues. It’s a two-sided street."

Malfaro requested a six-week delay to give the talks more time. "We're not asking you to spike the deal," he said. "We want you to send a message that this city respects its citizens, and this city expects its companies to respect the law, and deal in good faith." The Council vote 7-0 to postpone the item until its May 28 meeting, requesting further information from Pepsi about its negotiations with local union members.

Notes from the campaign trail

Opponent files ethics complaint against Dunkerley

Place 4 City Council candidate Wes Benedict has filed a complaint with the Texas Ethics Commission, accusing incumbent Council Member Betty Dunkerley of filing inaccurate contribution and expenditure reports during the 2002 election. In his complaint, he claims that she took too much money from out-of-town contributors during both the 2002 election and this year’s contest, and misreported her loans. He also accuses her of filing false reports in 2003 and 2004, because she did not note the outstanding loans in each report.

Dunkerley admits there may be some errors in the reports, but calls Benedict’s complaint “much ado about nothing.”

Dunkerley has received more than the $15,000 allowed under city regulations since she started raising money for the current election. However, she said she has returned the excess money, explaining that her campaign staff did not realize that they had surpassed the city-imposed limit until after contribution and expenditure reports were filed. However, she denied that she took more than allowed in 2002, saying Benedict did not understand the circumstances that allowed her to collect more than $15,000 in non-Austin contributions.

Dunkerley ran against then Council Member Beverly Griffith and the two were scheduled to face each other in a runoff. The runoff situation allowed both candidates to collect more money, including contributions from out-of-town donors. Griffith decided to withdraw from the contest, eliminating the need for a runoff (See In Fact Daily, May 7, 2002).

Benedict’s complaint also addresses loans Dunkerley made to herself in 2002 and an eight-day gap in reports filed by the campaign’s volunteer accountant, Marilyn Fox.

Dunkerley’s reports for 2002 failed to report an eight-day time period, from April 25 to May 5, Election Day, which went undiscovered until Benedict filed his complaint this week. ”I didn’t realize there was a gap, so I didn’t know to go look for it,” Dunkerley said. The Council member said she has talked to Fox, who still has the data from the missing time period. She said the data will be transcribed and she will re-file the report for that time period. Such corrections are allowed when accompanied by an affidavit explaining the mistake.

Dunkerley loaned herself $55,000 for the campaign three years ago. In addition, she said she had $5,000 in expenditures she made on behalf of this year’s campaign, bringing the total loan amount to $60,000. That amount she reported in January. Benedict claims that the report is false because she did not file the right addendum explaining where the additional $5,000 came from. He also claims her reports from 2003 and 2004 were false because she did not note the loans in each report.

Dunkerley said it was not her understanding that the loan amount should be reported that way. But she said she would check to see if her interpretation of the regulations was inaccurate and she would correct the reports, if need be.

Benedict claims in his complaint, which appears on his website, http://wesbenedict.com, that his campaign “has been hurt by these violations,” and that Dunkerley somehow “had an unfair advantage in raising money, because donors were unaware that their contributions would go to pay off debt, not to engage in campaign activities.“ Dunkerley said she thought it was common knowledge that she loaned the campaign money from her retirement account and that much of what contributors were donating would go to replenish that account (See in Fact Daily, Jan 19, 2005 and In Fact Daily, Feb. 10, 2005). Dunkerley's campaign finance strategy was also reported in other media outlets, including the Austin Chronicle on May 10, 2002.

Most stakeholders support water plan

Development representative says plan more stringent than SOS

The Regional Water Quality Plan for the Barton Springs segment of the Edwards Aquifer was still in safe and friendly waters in Hays County on Wednesday night as public hearings continued on the document.

Local member governments have raised a number of questions about the 120-page document, which is both science-based and sets a steep price for development in the crucial areas of the Barton Springs-Edwards Aquifer recharge zone. At a meeting at the Salt Lick in Driftwood, area ranchers and homeowners expressed approval for the document and the priorities it set on preserving the Hill Country.

Engineer Hank Smith, who represented development interests in the stakeholder group, was one of the few critical of the plan, and even he had some positive things to say about the effort. Smith did question some aspects, however, including the limits on impervious cover in the recharge zone. The plan limits development to 15 percent impervious cover, regardless of any structural controls presented by the developer.

“We all agree there needs to be impervious cover limits, but what we’re saying is that we’re willing to build structural controls, yet we’re still sticking to 10 to 15 percent impervious cover,” Smith said. “We could build the right structural controls and have 50 percent impervious cover and still have no net increase in runoff.”

That wasn’t the kind of talk the pro-Hill Country audience wanted to hear. Under the plan, the impervious cover ranged from 5 to 15 percent in the recharge zone, stepping back by increments up to 45 percent impervious cover in the contributing zone. In many areas, developers must limit development or purchase transfer development rights to gain the kind of density necessary to build significant retail or commercial space.

Smith said the price of development was high. In one illustrative example used by the group, the development of four acres required the purchase of 16 acres somewhere else. Under the plan, development of land is often highly restricted, unless land or transfer development rights are purchased. Development in the recharge zone requires the purchase of land in the recharge zone. Rights to develop in the contributing zone often will require the purchase of rights in the contributing or recharge zone.

“If I want to build a small business on four acres to put a 7,500-square-foot office building on it, then I have to purchase 16 acres somewhere else,” Smith said. “It’s very stringent. People talk about SOS but this is more stringent than SOS; it has increased costs over SOS. SOS has been in place for eight or nine years. Do you know how many commercial development projects have complied with SOS in that time? Only three.”

Still, many of the stakeholders– especially those with water interests– clearly were ready to hold fast to the rules. During a pre-hearing workshop session, Al Broun, president of the Hays Trinity Groundwater Conservation District, thanked the group for putting a premium on groundwater as well as surface water throughout the region.

Broun’s groundwater district covers a tributary of the Trinity Aquifer, which feeds into the Edwards Aquifer. People drink directly out of the Trinity Aquifer. Broun said it was already clear that the limited amount of water in his conservation district needed to be preserved.

“Any pollution we have is going to reduce groundwater,” Broun said. “We can’t afford to have any pollution that reduces that. Any reduction in groundwater is going to be a reduction in the total amount of water instream. We can’t live without it.”

©2005 In Fact News, Inc. All rights reserved.

Committee idea discarded . . . The City Council on Thursday dropped plans for its own Blue Ribbon Committee to follow the work of Group Solutions, which is hosting a series of forums to discuss the quality of life for African Americans in Austin. The schedule for those forums has just been released. The first meeting will be held on Monday, April 25th, at the Street-Jones Building, 1000 E. 11th Street. Group Solutions is scheduled to present its report to the Council at the end of May . . . Funeral duty . . . The Council broke from its meeting on Thursday so all Council Members and several city staff members could attend the funeral of long-time civil rights activist Dorothy Turner, who died last week at the age of 69. Council Member Danny Thomas presented a proclamation on behalf of the City, and Judge Sam Biscoe spoke on behalf of Travis County. Paul Hernandez of El Concilio presented the Turner family with a brown beret symbolizing her work to promote racial equality. Hernandez was a key member of the Brown Berets, the Hispanic civil-rights group that protested the boat races on Town Lake in the 1970's . . . Appointments . . . Mayor Pro Tem Jackie Goodman reappointed Mel Ziegler to the Arts Commission. The Council also reappointed Luis Ornelas to the MBE/WBE Advisory Committee. Henry Narvaez was reappointed by consensus to the Federally Qualified Health Center Board . . . Planning to adopt a pet? . . Sunday afternoon, 1-6pm, the Austin Humane Society and North Shore Animal League America will host a huge and pet adoption event at Plaza Saltillo, 412 Comal Street. Pets from the Austin Humane Society, Town Lake Animal Center/City of Austin, Humane Society of Williamson County, PAWS Animal Shelter of Kyle and Bastrop County Animal Control and Shelter will be on-site where animal lovers may see and adopt them. Sponsors promise an obedience demonstration as well as spay/neuter advice. For more information, contact Helga Diaz, hdiaz@austinhumanesociety.org, 837-7985 ext. 222 . . . Philosophical forum . . Conrad Werkenthin will discuss Flavius Josephus, a First Century writer at the First Unitarian Universalist Church Public Affairs Forum on Sunday at 11:30am at 4700 Grover Avenue. Werkenthin has lectured extensively on the works of Paul, and the Book of St. Mark, which he arranged into a play . . . A good day for Spring cleaning . . . Today is 2005 Spring Spruce-Up Day, a community service project event held as part of United Way's Day of Caring. Hosted by the city’s Neighborhood Housing and Community Development Department, the project will concentrate on painting addresses on street curbs for homes in the Anderson Hill and Robertson Hill neighborhoods. The newly painted addresses will improve public safety by allowing EMS, police and fire vehicles to find homes in a quick and efficient manner during times of emergency. The work will be done between 1-4pm . . . A new director soon . . . The Barton Springs Edwards Aquifer Conservation District is close to hiring a new general manager. The board heard from its personnel subcommittee last night that it had cut the applicant pool of 57 down to five finalists. Board members voted to hold meetings on April 19, 20 and 26 to interview the candidates, then make a final decision on April 28. Names of the finalists will be released after interviews are completed. The district has been without a general manager for several months. . . Get natural . . Saturday is Austin Nature Day, with recreational and educational opportunities throughout the Greater Austin area. More than two dozen activities are planned, including guided hikes, bird watching, gardening demonstrations, outdoor art activities, fishing, star gazing and more. Some events require pre-registration. Call the Parks Desk at 854-PARK (7275) for more information or to sign up for an event. More details for these and all other activities can be found on the Austin Nature Day website: www.AustinNatureDay.org . . . Crawfish party Sunday . . . Place 3 candidate Jennifer Kim is hosting a crawfish boil for volunteers and contributors on Sunday starting at 4pm at her headquarters, 2520 Longview St. For more information, visit http://kimforaustin.com.

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