New Trash Firm With No Trucks Wins Huntington Park Contract

A split City Council recently awarded a lucrative trash contract to a new hauler with no equipment or experience in the rubbish business, officials said.

The new firm, headed by a former Las Vegas casino operator, also will pay the city tens of thousands of dollars less in franchise fees than other firms had proposed. The council did not thoroughly consider the other proposals, various city officials said.

Councilman Herbert A. Hennes Jr. bristles when he recalls the June 20 vote.

“It was unconscionable not to consider the other bids,” Hennes said. He and Councilman James Roberts opposed the 10-year agreement with H.P. Disposal Co., which was incorporated May 23. Councilmen Thomas E. Jackson, Jack W. Parks and William Cunningham approved the contract to collect rubbish from the city’s businesses. The contract for residential service was not affected.

“This contract is about service,” said Jackson, who engineered the agreement with H.P. Disposal. “We’re tired of having a dirty town. We didn’t go out looking for dollars and cents.”

H.P. Disposal is owned by Eugene C. Fresch, a former casino operator and father of Eric T. Fresch, president of the Huntington Park Club Corp. The Huntington Park Club Corp. runs the Huntington Park Casino, which provides the city with about $500,000 in revenue annually, an official said.

Jackson said Eugene Fresch had an edge on the trash contract because he had become acquainted with city officials as a result of his son’s position with the casino. But Jackson denied that the casino’s economic importance to the city sealed the deal.

“It’s obvious he had an inside track,” Jackson said. “I see nothing wrong with that.”

The card club leases land from the city’s Redevelopment Agency. It pays 8% of its gross revenues, or about $500,000 a year, into the city’s general fund, City Administrator Donald Jeffers said. The general fund, which pays for salaries, police and fire protection, and other general city services, operates on a $9.6-million budget, Jeffers said.

Service was the issue that prompted Huntington Park to look for a new hauler to pick up trash from city businesses, officials said.

Laidlaw Waste Systems Inc., a Canadian firm with U.S. headquarters in Hurst, Tex., has held the commercial refuse contract since 1966.

But recently, the city had received numerous complaints about billing problems, missed pickups and trash left scattered on the ground after pickups, said Alfredo F. Perez, the city’s community service representative. He also said Laidlaw was unresponsive when contacted by city officials about improving its services.

On June 6, the council voted to terminate Laidlaw’s contract, effective Oct. 1. Parks, whose business is served by Laidlaw, abstained. Kirk Muter, a Laidlaw vice president, said the city never explained why the contract was being terminated and said there were no problems with service.

The firm held a five-year contract extension that was to expire in 1991, Muter said. The contract allows for termination for poor performance or violation of other terms. The firm continues to hold the city’s residential trash contract. Perez said Laidlaw’s residential service has been satisfactory.

The commercial contract generates about $150,000 a month--or $1.8 million a year--in gross billings, Perez said. The residential contract generates about $360,000 a year in gross billings.

Two weeks after it terminated Laidlaw’s commercial contract, the council accepted H.P. Disposal’s proposal. Under the agreement, H.P. Disposal will charge the same rates Laidlaw is charging. Laidlaw was seeking a 6% rate increase when its contract was terminated.

Under the agreement, H.P. Disposal will pay the city a franchise fee of $75,000 a year or 5% of its gross billings, whichever is more. The firm has agreed to pay the city a $300,000 advance on franchise fees.

When other firms discovered Huntington Park dismissed Laidlaw, they submitted unsolicited proposals, which also were on the council’s June 20 agenda.

Agen Disposal of Los Angeles offered a 10% franchise fee with a $500,000 advance. A Gardena-based firm, Western Waste Industries, offered a 10% franchise fee with a $600,000 advance. Western Rubbish Service of Montebello offered even more. The firm proposed a 12% franchise fee with a $1-million advance.

But the council rejected the proposals virtually without consideration in favor of H.P. Disposal, a firm that was hand-picked from the outset, Jackson said. State law does not require cities to seek competitive bids on solid waste contracts, and Huntington Park only sought the bid from H.P. Disposal, officials said.

“We decided what we needed . . . was a local garbage company,” Jackson said. “We knew up front that they (large area firms) would try to buy the bid.”

No Staff Recommendations

City Administrator Jeffers said city staff made no recommendation on the agreement with H.P. Disposal.

“We only had the one proposal and I did not have any instructions to go out, receive or evaluate any other proposals,” Jeffers said. He said he listed the other offers on the agenda because “I did not want the council to make a decision without at least having the opportunity to see there were other proposals submitted.”

Jackson said he was approached by Eugene Fresch a couple of months ago with a proposal to form a company to handle the city’s commercial garbage contract. Jackson said he at first dismissed the idea, but approached Fresch when complaints mounted over Laidlaw’s service.

Fresch, 66, of Palos Verdes Estates, incorporated H.P. Disposal on May 23, and became the firm’s president, vice president, secretary and treasurer, according to company records. The firm’s agent is his son, Eric.

H.P. Disposal submitted its first written proposal to the city on June 2, four days before the council voted to terminate the Laidlaw contract, Jeffers said.

Jackson said the firm is still trying to find a headquarters and has not yet acquired seven trucks it plans to use to service Huntington Park’s businesses.

Attempts to contact Eugene Fresch were unsuccessful.

Need for Money

Councilman Hennes said the decision to award the contract to H.P. Disposal will deprive the city of money at a time when it is still trying to balance its budget for the 1988-89 fiscal year, which started Friday. Money problems forced the city to eliminate more than 10 municipal jobs last year.

“I voted against it (the H.P. Disposal agreement) because with the city needing money . . . we would be derelict if we accepted the low bid,” Hennes said.

But Jackson said providing good trash service to the city’s businesses was the most important factor in the decision to award the garbage contract. He said Eugene Fresch’s background as a former casino operator and a businessman indicated he would run the new trash business well.

“He’s been retired and his wife tells me he’s going crazy,” Jackson said.

Jackson said Fresch’s plans included repainting graffiti-marred rubbish containers and sweeping up rubbish after pickups.

The councilman said firms that offered to pay the city more would be inclined to cut corners in their service.

But competing haulers balked at that suggestion and said they were incredulous that the city would award a contract to a firm with no track record.

“I was absolutely floored,” said David L. Haugh, vice president of Agen Disposal. “This guy has no trucks, no equipment.”

Jackson said another key factor in the council’s decision to use H.P. Disposal was the fact that the operation will be managed by Jack Leonard, a Huntington Park resident and a former Laidlaw division manager who resigned June 3.

Jackson noted that Fresch’s lack of experience in the trash business would be a drawback, but he said Leonard would ensure a smooth transition.

“If there’s a negative to all of this, it’s the fact that he’s (Fresch) never been in the trash business,” Jackson said. “That’s it.”

PROPOSALS FOR RUBBISH CONTRACT

Franchise Fee to City Advance Firm (% of Gross Billing) Payment H.P. Disposal * 5% $300,000 Agen Disposal 10% $500,000 Western Rubbish 12% $1 million Western Waste 10% $600,000

* (or $75,000 a year if greater) Note: Laidlaw Waste, the current contractor, does not pay a franchise fee and did not submit a new proposal after its contract was terminated. Source: City of Huntington Park documents