O.C. Cities’ Cozy Trash Contracts Drawing Fire

As one who faced the issue twice during a decade on the City Council, former Mayor Gordon Bricken has a ready explanation why Santa Ana routinely seeks competitive bids for everything from janitorial supplies to $3 baseball caps, but for 30 years has never rebid a trash hauling contract that now runs $26 million a year.

First, he said, the contract issues have always been deemed too complex.

And then there’s the “drip, drip, drip” of political campaign contributions to the City Council members who would have to vote to seek competitive bids, and the friendships that the trash company executives and their lobbyist have carefully cultivated with council members over the years.

“They’ve had you out to dinner, they’ve played golf with you, they’ve invited you here and there, and they’ve just been your pals,” Bricken said. “They’ve been almost as loving as your dog. So how can you kick your old dog?”

Given the politics, the company’s generally good service record, the lack of public clamor for a change, and dire warnings that other qualified bidders might not be found, “you might as well take the devil you know,” said Bricken, who has decided to run again in November for a council seat.

Santa Ana’s situation is not unique. The mere idea of seeking competitive bids for garbage collection has rarely come forward publicly in Orange County. But now, officials in some cities are facing pressure from citizens and potential bidders to bargain for a better deal.

In Mission Viejo, the city is shopping around after a rival trash company raised questions about the city’s contract with Dewey’s Rubbish Service, a subsidiary of Waste Management Inc., the corporate parent of the company that collects garbage in Santa Ana. Mission Viejo officials concluded that they were about to be overcharged $1.2 million during the current five-year contract which ends in August, 1995.

Another Waste Management subsidiary, Great Western Reclamation, recently refunded almost $110,000 to the city of Tustin, and rates took an unusual drop after officials found that the total tonnage of trash collected last year was less than the contractor’s rates were based upon.

And council members in the newly incorporated cities of Laguna Hills and Lake Forest have taken steps to protect their option to end current contracts when they expire in four years. The contracts were inherited from the County Board of Supervisors, which approved the pacts last year, one week before the cities voted to incorporate.

Even in Santa Ana, city officials cool to the idea of competitive bidding are attempting to renegotiate better terms with Great Western in one of the largest trash-hauling contracts in the county.

With the issue surfacing in the midst of an election year, Mayor Daniel H. Young says he has not ruled out competitive bidding, while his opponent, Councilman John Acosta, is trying to make the Waste Management contract a campaign issue.

Councilman Miguel A. Pulido Jr., who voted for the current pact in 1986 and is not up for reelection in November, has been advised by his political committee treasurer to reject Waste Management’s donations.

For its part, Waste Management downplays the ongoing review of some its Orange County contracts, claiming the scrutiny is no more intense than usual.

“I think, in general, this is an industry that is more and more in the public light, and for our purposes, we think that’s just fine,” said Robert J. Coyle, western region manager for Waste Management of North America Inc. “We would not have 1,750 contracts across the country if we did not do a good job.”

That view is shared by officials in two Orange County cities that contract with Waste Management subsidiaries.

Laguna Beach, which enjoys the lowest residential rates in the county thanks to higher than normal trash hauling rates for businesses, recently extended its contract for 10 years with little discussion. And in Irvine, Waste Coordinator Cindy Asher said officials feel they have a “very good contract.”

“I believe if the city thought it could do better, it would go out to bid,” she added.

Part of what usually fuels debate over the waste industry nationwide is a checkered past that includes close ties to organized crime, cases of public corruption and periodic disclosures of company practices that were harmful or damaging to the environment.

But it is Waste Management’s business practices that have been highlighted again in recent months, following investigations in two California counties.

In San Diego County, where the company wanted to open and operate a landfill, the district attorney’s office issued a report last spring that recounted a history of civil and criminal violations and alleged ties to organized crime. It urged government agencies to use “extreme caution” before doing business with the firm.

The company issued a point-by-point rebuttal, called the report “superficial and one-sided,” denied any links with organized crime, and maintained that past violations were the actions of “renegade employees.”

In July, the Santa Clara County grand jury accused Waste Management of California of dumping garbage from other cities in landfill space allocated to and subsidized by San Jose, thereby cheating the city and landfill operator, Browning-Ferris Industries, out of at least $850,000 over a six-year period.

Waste Management denied the grand theft charges. “No one was disadvantaged, no one sought personal gain, and if this is a crime, it is a ‘crime’ without a victim,” according to a company statement released the day the criminal charges were filed.

Defending the long and unbroken relationships between many cities and their garbage collectors, one major hauler in Orange County likened the relationship to a marriage.

“If you have a good marriage, you do not look for another spouse. You do not get a divorce. And if you get a divorce, those can be nasty,” said Vince Taormina, whose family has held the Anaheim trash contract for 40 years and picks up 30 percent of Orange County’s residential trash.

It is a marriage, the experts note, built on attentive courtships.

The officials “get free meals, a bottle of wine, candy and flowers around Valentine’s Day, and for that they give a $20-million contract away,” said Terry Trumball, a San Jose attorney who recently represented Mission Viejo in its dispute with its trash hauler.

During the early 1980s, Trumball chaired the California Waste Management Board, which directed the state’s planning, permitting and enforcement programs for the waste industry. “Local government . . . recycling (and trash collection) is excessively dominated by campaign donations,” he remarked.

Although Waste Management officials call their political donations “insignificant,” campaign finance reports show contributions from the company and its representatives to Santa Ana council candidates have totaled about $59,500 since 1986, when the current garbage contract was approved.

Most of the money went to incumbents who regularly make up the voting majority.

Councilman Daniel E. Griset, a longtime ally of Waste Management, received $5,300 from the company’s associates plus $1,260 in trash collection services for his campaign during his unsuccessful race for the state Assembly in 1986--the year that the current contract was being renegotiated.

That same election year, then-Councilmen P. Lee Johnson and Bob Luxembourger together received $5,700 from the trash hauler and its lobbyist just before Election Day in November.

When Johnson and Luxembourger lost their bids for reelection, the company began channeling its donations to their victorious opponents, Ron May and Pulido, who received donations of $1,000 and $1,850 respectively, the year after they joined in a unanimous vote to approve the most recent contract.

Four years later, Waste Management hedged its bets, and gave May $1,500, while also giving $1,000 to his opponent, Robert L. Richardson, the “Establishment” candidate backed by Mayor Young and Griset. Richardson won the election and over the next year received donations totaling $2,375 from interests representing the trash hauler.

Mayor Young said the only Waste Management contribution he considers questionable involves his political rival, Acosta, who recently filed for personal bankruptcy. Court records show Acosta owing $5,000 to two Waste Management subsidiaries for bills incurred by his former masonry business.

“When he fell into financial troubles, they forgave his bills,” Young said.

Acosta disputes that. “They did not forgive them. They are a victim of my bankruptcy.”

If there is one person who has come to symbolize the lifeline between Waste Management and City Hall, it is the contractor’s lobbyist, Irvine lawyer VerLyn (Sonny) Jensen.

Friends and foes alike describe him as cunning, yet charming, and possessing political savvy. Jensen, they added, knows when to make campaign contributions, advance his agenda, or simply check with council members to make sure they have no complaints with their trash hauler.

“Despite whatever shortcomings the company may have, nobody can ever criticize them for not being attentive enough to the problems,” former Councilman P. Lee Johnson said.

And Jensen is the man who does most of the company’s courting and hand-holding.

His friendship with Young, several sources said, goes back more than a decade, when both worked closely with former Rep. Jerry Patterson, who represented central Orange County for 10 years before being defeated in 1984.

And in one notorious incident, Jensen, Councilman Griset and their wives were among seven Patterson supporters who falsely registered as residents of Patterson’s district in order to vote for him. Both couples pleaded “no contest” to the charges in 1975 and were fined between $400 and $800 and placed on probation for 90 days.

More than any other council member over the last decade, Griset has been the major beneficiary of political donations from Waste Management, Jensen and other associates. Since the creation of his first campaign committee in 1979, Griset has received almost $18,000.

Current and past council members who have voted on Waste Management’s contract say Jensen’s style is unfailingly courteous and polite, but there’s a general understanding that, if necessary, he can and will play hardball at election time.

Former Councilman Wilson Hart, whose alliance with Young and Griset led him to benefit from the trash hauler’s political contributions, said he was less “sensitive” than others to Jensen’s and Waste Management’s desires, “but I would not go out of my way to make life miserable for them for no solid reason.”

“It would have been very difficult for a little schmo like me to take on a guy like Jensen or the waste management industry,” Hart said.

Hart, former Councilman Harry Yamamoto, and Councilwoman Patricia A. McGuigan, also agreed that they did not seek to competitively bid the trash hauling contract out of fear it would be a bruising political battle, similar to what occurred a decade ago when the television cable franchise was awarded.

“I didn’t want to expose myself, or any of the rest of us, to that kind of garbage,” said Hart, referring to the trash industry as “the sunny side of sleaze.”

Yamamoto, who is running again in the upcoming council election, said he voted for a long-term contract in 1978 “so that I wouldn’t have to go through it again.”

In fact, open bidding was not an option when it was last renegotiated in 1986, because the contract was not scheduled to expire until two years later. However, according to city staff memos during that time, Santa Ana was forced into early contract talks to clear up a disputed overcharge by Great Western totaling $606,452.

The result was a new 6 1/2-year contract beginning in early 1987. After council approval, Jensen invited the mayor and other city officials involved in the contract negotiations to a dinner party.

The company and some current council members say that the company’s political involvement is no more intense than that of other firms doing business with the city, and the campaign contributions are inconsequential.

“We, like any other company, get solicited,” said Robert J. Morris, the company’s vice president for public policy development at its regional office in Irvine. “We support good government. We have the track record, and I don’t think (contract approval) is based on anything else but the service.”

And Young flatly rejects suggestions that city officials are either too friendly with Waste Management executives or could be swayed by contributions or free dinners.

“Do I know them? Absolutely. Do I see them around town? At parades? Yes,” he said. The contributions, he added, “should not affect the decision on whether or not you go out to bid. I think it’s very possible to remain objective” in spite of political contributions.

Griset did not respond to telephone calls.

But Pulido, who normally votes with the mayor, doesn’t see eye-to-eye with Young on the propriety of taking Waste Management’s money around contract time. Pulido said he has not asked Waste Management for a campaign contribution since the fall of 1990 because he knew the contract would be coming up for renewal this year. “I think (asking for a contribution) is an impropriety . . . right around contract time,” he said.

Under the pact, both sides have until the end of the year to negotiate a new agreement. If they fail to agree, then the contract ends next summer and the city is free to seek competitive bids.

Acosta said the only way to prevent an automatic renewal of the contract is to halt the renegotiations and begin advertising for other bidders.

But Mayor Young sees the recession and the hint of competitive bidding as creating a favorable climate for the city to drive a hard bargain in negotiations.

While Santa Ana’s residential rates seem in line with other Orange County cities, commercial rates have skyrocketed and brought complaints from businesses, officials acknowledge. And critics point out that Santa Ana’s residential rate does not include a recycling program or other services offered in other cities.

Critics also note that Santa Ana’s garbage rates increased in July, even though county landfill fees remained steady this year, because the rates are adjusted annually on the basis of fees in other major cities that have cost-of-living increases in their contracts.

But Waste Management executives argue that Santa Ana’s last residential rate increase was 2.6%, below the 3.8% rise in the Consumer Price Index.

And drawing on a phrase often used when the issue is discussed, company officials said that comparing garbage collection services from one city to the next is like “comparing apples to oranges.”

Public Works Director Jim Ross, who noted that ongoing negotiations are aimed at simplifying Santa Ana’s rate-setting formula, said Tustin and Mission Viejo have been able to monitor possible overcharges because their rates are based on the actual tons of garbage collected, something that may be introduced to Santa Ana’s contract.

The city also hopes to begin collecting franchise fees for commercial and residential trash pickup. Currently, $1.40 of the $11.86 monthly residential rate goes to the city for administrative expenses.

One person who will be watching the negotiations is Dolores Otting, who has campaigned on behalf of her husband’s Costa Mesa firm, 5-Star Rubbish, to open up the market in Santa Ana and in south Orange County cities. She wants cities to do away with exclusive franchise agreements so that businesses can select a trash hauler of their choice.

As the Santa Ana contract stands now, she told the council recently, “we don’t even have a chance.”

Shirley L. Grindle, campaign treasurer for Santa Ana Councilman Pulido, said she advised Pulido to stay away from trash industry contributions until such issues are resolved in a new contract. In a perfect world, she added, council members would not be allowed to accept money from their contractors.

“It’s obviously a tremendous conflict of interest,” Grindle said. “These politicians like to say that this money doesn’t influence them, but that’s hogwash. Like hell it doesn’t. They can tell each other that, but I don’t believe it. I think the track record shows that it matters.”

Cities Contracting with Waste Management

Some residents and businesses in a few Orange County cities served by a sister corporation of Santa Ana’s trash hauler enjoy lower monthly rates for similar service. Both Dewey’s Rubbish and Great Western Reclamation are subsidiaries of Waste Management Inc., which describes itself as the world’s leading total environmental services organization.

Monthly Monthly Residential Commercial Franchise City Hauler Rate Rate Fee Irvine Dewey’s Rubbish $9.92 varies(4) 3% Laguna Beach Dewey’s Rubbish $8.58(2) $80.00 5% Laguna Hills Dewey’s Disposal $11.38(3) $74.28 (5) and Solag(1) Lake Forest Dewey’s Rubbish $13.78 $85.00 (5) Mission Viejo Dewey’s Rubbish $11.85 $59.09(6) 5% Santa Ana Great Western $11.86 $110.00 (7) Reclamation Tustin Great Western $9.75 $93.90 2% Reclamation

City Recycling Irvine yes Laguna Beach yes Laguna Hills yes, in some areas Lake Forest yes Mission Viejo yes Santa Ana no Tustin yes

(1) Not a Waste Management subsidiary (2) Rate is subsidized by local businesses (3) $13.86 in recycling areas (4) Businesses contract their own haulers (5) A variable administrative fee is paid (6) Will increase Jan. 1 by an undetermined amount (7) None, but $1.40 of residential rate goes to administrative fees Note: Commercial rate based on weekly pickup of a three-cubic-yard bin. Franchise fees are paid by the hauler to the city in exchange for exclusive rights to haul trash in the city. They are usually set at a flat percentage of the value of the contract. Source: Individual cities