WeHo’s trash decision that could turn into dirty business

athens700
June 23, 2014

By Ryan Gierach, West Hollywood, California

A trash company with a dirty past is seeking an extended long-term contract with WeHo.

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Athens Services, West Hollywood’s solid waste management contractor since 2004, has come forward to offer the City of West Hollywood a most aggressive and enticing deal – a way to simplify recycling and re-use and divert the vast majority of this city’s solid waste away from nearly full landfills, while saving the city from $91,000 to $900,000 a year by taking on additional outdoor maintenance services.

The proposal, first floated in 20012, offers to take over the city’s street sweeping, sidewalk cleaning, dog waste station, electronic and hazardous waste removal and sidewalk trash removal services from the contractors currently serving the city in exchange for the long term contract, which Athens CEO Gary Clifford says the firm needs to get loans to build its recyclable facilities.

Currently, the City of West Hollywood diverts half of its solid waste into recyclable or re-usable base material, but much of what could be recycled and re-used goes to a landfill because people toss it into the general trash bin instead of the green or blue containers.

At the time, it seemed proverbially both “a deal to good to be…” and a bridge too far. Council members feared committing the city to long contracts

trashtruckWithin two years, they came back for more, nearly eight percent in CPI increases, and received it.

Then, in February 2006, the city was presented with a request for an “extraordinary” rate increase over and above the CPI for Athens’ citywide services.

Several aspects of the request left the business community in West Hollywood gritting their teeth, as the “extraordinary” rate increase was placed squarely on the city’s commercial sector’s shoulders.

Another part of the original contract said that any extraordinary increase must not be due to a situation in which” the contractor had inaccurately estimated its cost of operations during the time of bidding/selection.

The fee increase Athens requested was for rising costs for fuel, the city’s food waste program, and landfill costs. After meeting with staff,  Athens Services withdrew the request for the extraordinary rate increase. Instead they requested the standard increase based on the CPI.

They returned again in the following years, asking for CPI increases, receiving them and making certain to fill the coffers for local pols’ campaigns. Every campaign finance report over the past ten years shows Athens Services and the family that owns it making contributions to the incumbents on the ballot. They also contribute heavily to PACs that operate to support the incumbents.

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Finally, in May of 2008, the City Council voted a 4 percent increase in direct charges for trash removal and 3.3 percent for indirect charges for solid waste and recyclable material removal.

Then came the June 40 percent wallop.

Before going on, we should note that the contract with Athens Services prohibits increases where the majority of businesses oppose them.

So, in September, 2008, the city council presided over a spirited discussion about increasing WeHo’s trash rates 40 percent over and above the Consumer Price Index, and pay for it by raising trash rates steeply, putting the entire burden on private business.

The business community came out in force, with several Chamber of Commerce members, staff or board members stating their opposition in clear terms. Joe Clapsaddle, the Chamber’s chair, said, “You’re fragmenting the community between residents and businesses, and it’s simply unfair to put all the financial burden on the business community.”

trash6Athens Services requested the increase to stop financial hemorrhaging brought about by increases in costs they claim were unforeseeable when they made their initial bid for services, such as the loss of the La Brea Landfill.

It was a bitter pill to take at the time, with John Heilman and Abbe Land both disagreeing with the idea.

Abbe Land pointed out that she indicated she would favor some kind of increase because of unknowns in the original contract. “I did support, and I do support, some increase [but after study] I feel that this increase is a bit much.”

Council member John Heilman threw his shoulder in opposition to the whole idea of giving Athens Services more money.

“I think what troubles me about this, is that we entered into a franchise agreement and agreed upon the rates,” said John Heilman. “At the time, there were a number of other companies… who said the job couldn’t be done for the price that [Athens] bid.

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“…almost immediately after they got this contract, they started lobbying us,” he said, “…almost from the get-go, they wanted an increase, an extraordinary increase because their franchise price wasn’t meeting their expectations.”

Athens supported their need for additional money from West Hollywood by trotting out statistics that showed WeHo was paying considerably less than any other community of its type for trash removal. But far from comforting people, it raised the specter that Athens had “low balled” their bid, undervaluing it at first to beat competitors, with a plan to catch up later on.

And because Mr. Heilman and Ms. Land remained in the minority, Athens got their 40 percent increase in 2008, only to came back four years later, asking for a long term extension of 15 years with a 15 year rollover.

In the meantime, the trash firm had already been found to be corrupt.

In 1989, Athens was the loser in a National Labor Board case that led to Ronald Arakelian Sr. And his son, Ronald Jr. pleading no contest to federal price-fixing and elimination of competitors, costing the pair $500,000 in penalties. They have been, since 1994, guilty of numerous union-busting activities including spying on employees.

trash4Between 2001 and 2007, the company was found guilty of violating contracts with two municipalities. The city of Monterey Park is also agitating for an investigation into alleged inappropriate charges and add-ons in bills issued to apartment owners.

When we return to the issue at hand, does West Hollywood grant their trash service monopoly to this company for up to 30 years. In addition to handing it virtually all outdoor city services?

What the council will consider in Athens Services’ proposal for enhanced services and contract term, are the same set of enhanced services in a different package.

Whereas two years ago they sought a 15 and 15, or 8 and 8, year rollover, this year through the assistance of R3 Consulting Group of Roseville, hired by the council to bring Athens’ proposal into line with the city’s expectations, they have brought forward several plans based on the 2012 profferings.

One plan would be a total term extension would be 15 years; however it is broken up into three five-year extensions. Each five-year extension is predicated on Athens Services complying with verifiable Contractor diversion standards, a complete contract compliance audit, and two non- CPI rate adjustments ( in year 6 and year 11) subject to City approval.

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This new proposal requires Athens Services to provide 100% Materials Recovery Facility MRF) processing of all waste from the multi- unit residential sector. Athens Services would provide enhancements to the commercial food waste and green waste composting programs, as well as implement a Drop-Off Program for Compact Fluorescent Lights (CFL), as well as a number of other services.

Athens promises that during the first five year extension, Athens Services would provide the above additional services with no extra rate increase. There would only be the annual CPI adjustment for customer rates.

In the next ten years of the contract, however, Athens can return to the city for two more “extraordinary rate increases,” once each five years.

The city could put the contract out to bid, as well, but if Athens truly did underbid, the city might face an even higher increase in rates.

The decision will be made tonight in the City Council Chambers. http://www.wehonews.com/z/wehonews/athens2014contract.pdf

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