Mission Viejo Acts to Cancel Contract With Trash Hauler

Claiming that a trash firm has dramatically overestimated the amount of garbage it collects here, city officials are taking steps to cancel the company’s multimillion-dollar contract, which would allegedly overcharge residents $1.2 million over five years.

In a letter expected to be delivered today to the Irvine office of Dewey’s Rubbish Services, the city charges the waste hauler with inflating by more than 30% the amount of Mission Viejo refuse brought to county landfills and denying city auditors access to key records.

The notification, required by the city’s contract with Dewey’s Rubbish, a subsidiary of Waste Management Inc., the nation’s largest trash company, gives the firm 30 days to rectify the alleged improprieties. But city officials said that full compliance would be almost impossible.

“They can’t do it,” Councilman Robert D. Breton said. “They’re in breach in so many ways, it’d be virtually impossible for them to rectify what they’ve done.”

Officials with the trash hauler, however, said they’ve made a strong effort to address any problems.

“Reasonable people have reasonable differences,” said David Ross, general manager of Dewey’s Rubbish. “We’ve done everything in our power to meet the city’s demands.”

To halt the contract termination, the firm would be required to roll back trash rates, compensate the city for more than $100,000 in expenses and acknowledge an alleged “pattern of deception,” Breton said. The city would then have the option of either canceling the agreement or entering binding arbitration.

“Like in poker, it’s time to show our hands and see what we’ve got,” he said. “This whole process has left a sour taste in my mouth, and it’s time to end it.”

The city’s action could end 18 months of often acrimonious negotiations that have colored municipal politics since a new City Council majority was elected in November, 1990, and began closely scrutinizing the trash contract.

The action comes just three weeks after San Diego prosecutors urged “extreme caution” in contracting with the Illinois-based trash giant, saying it has a history of environmental problems and public corruption.

In an unusual move last August, Mission Viejo officials hired an accounting firm to review the waste hauler’s records. After weeks of research, city officials say, they found proof that Dewey’s Rubbish hauled 31,564 tons of trash in 1991 instead of the 41,441 tons estimated by the company.

That difference cost Mission Viejo homeowners about $250,000 last year and would overcharge the city $1.2 million by the expiration of the contract in 1995, Breton said.

A refusal by Dewey’s Rubbish officials to allow city auditors to continue researching company records was the final straw, city officials said. The letter, which was not made available Thursday, was said to contain more than 20 other breach-of-contract allegations.

But the firm’s general manager painted a different picture.

“First of all, we didn’t refuse to give an auditor information,” Ross said. “They asked for information; we requested some clarification from the city that we didn’t get.”

Ross acknowledged that there was a difference in the estimated and actual tonnage figures but disagreed that there was a breach of contract.

“The city knows that those estimates were based on the best available figures,” he said. “They agreed with our estimates. There has been no overcharge.

“The negotiations have been a very difficult, arduous process. But there has never been any deception or lack of cooperation from us.”

Ross said he wasn’t aware of the city’s plans to issue a termination letter and declined to comment on the document. He said Dewey’s Rubbish was trying to resolve the dispute as recently as last week, when the company allegedly requested that the city accept third-party arbitration.

The city’s trash controversy began in August, 1990, when Western Waste Industries, a competing waste firm, circulated a citywide mailer calling for competitive bidding on the municipal trash contract.

But in a 3-2 vote witnessed by more than 150 residents, the contract was awarded to Dewey’s Rubbish without competitive bidding.

The issue didn’t die there, becoming instead a hot issue in city elections that followed a few months later. Competitive bidding became the central plank on a platform that Breton, Mayor Sharon Cody and Councilwoman Susan Withrow all rode to victory in November.

One of the council’s first acts was to call for city staff to inspect the trash contract.

Councilman Robert A. Curtis, Cody and Breton were later criticized for receiving campaign contributions indirectly from Western Waste. The trash company gave $8,000 to two political action groups, the Southern California Caucus and the Supervisors’ Committee, which donated $4,000 to Breton, $3,000 to Curtis and $975 to Cody. Cody later returned her contribution.

But Curtis said that he and the other council members wanted competitive bidding long before receiving donations from the PACs.

“My political motivation is to get the lowest rate and best service for Mission Viejo residents,” he said. “The only way to do that is get competitive bidding in this city.”

Both sides have long been preparing for a protracted legal battle. The city has set aside $500,000 in a defense fund and last year hired Terry Trumbull, an environmental law specialist and former chairman of the state Waste Management Board.

Dewey’s Rubbish hired a public relations firm to present its side of the story and brought a court stenographer to each of the numerous public hearings about the trash contract in the last 18 months.

“They’re the politicians, and we collect the garbage,” Ross said. “This has never been political to us, and we hope it never will be.”

Road to a Trash Controversy

Dewey’s Rubbish estimates that it hauls 41,441 tons of residential trash each year from Mission Viejo households. A city audit maintains that the total is 31,564, a discrepancy that would cost residents more than $1 million during the span of the five-year contract. Events leading to the disagreement:

August, 1990: Citywide mailer sent by political consultant for Western Waste, a Dewey’s competitor, urging competitive bidding for residential trash contract.

Aug. 27, 1990: Before a crowd of 150, City Council votes 3 to 2 to award five-year contract to Dewey’s without competitive bids. At that time, the $11.85 monthly rate is highest in county.

November, 1990: Three new City Council members are elected after campaigning on a platform calling for competitive bidding for city contracts of more than $50,000.

December, 1990: City Council asks staff to inspect trash contract for irregularities.

August, 1991: City sponsors several hearings on trash issues, ends series by calling for non-binding competitive bids on trash contract. City conducts audit showing alleged discrepancy in tonnage hauled.

September, 1991: Dewey’s calls for arbitration over tonnage dispute, sends notice of rate increase to Mission Viejo residents.

October, 1991: City Council blocks rate increase, freezes rate at August, 1990, level. Dewey’s conducts survey showing residents satisfied with garbage service; city issues its own poll that shows opposite results.

Source: City of Mission Viejo, Times staff reports