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Waste authority, Republic Services tussle about who controls garbage

on December 6, 2011

Richmond Sanitary Service is contesting an attempt by the county’s recycling authority to possibly select a new garbage company to manage the city’s collected trash, compost and recyclable waste beginning in 2014.

As garbage fees rise, the West Contra Costa Integrated Waste Management Authority (RecyleMore) is scheduled to vote Jan. 5, 2012, on a way to competitively select a “post-collection services” provider for the county — a company to process trash and other waste after garbage trucks have collected it. RecyleMore Executive Director Chris Lehon said on Monday that the county’s current contract with Republic Services expires Dec. 31, 2013, and in order for a selection process to be transparent, it needs to be competitive.

Also, Lehon said, RecyleMore is currently running at a net operating loss, which a new contract could solve.

But Republic Services, which operates Richmond Sanitary Service and, also, the central recycling facility where the county’s waste is processed, is contesting the right of Richmond — and most of the other cities in the county — to select a new provider.

Most of the cities have separate, older contracts with Republic Services subsidiaries giving permission to each subsidiary to take care of their collected garbage, but a 1994 agreement gave RecyleMore the authority to direct where the collected trash goes. Republic Services is arguing RecyleMore’s authority will run out.

According to a letter the company’s attorney, Scott Gordon, sent to Richmond City Manager Bill Lindsay last month, Richmond’s agreement won’t actually allow the city to select a new provider in 2014. The letter calls the ability to manage waste materials “the exclusive right and obligation of RSS under the terms of the Franchise Agreement between RSS and the City,” and suggests that RecycleMore is trying to pressure its cities to go along with a “scheme” to bid out the contract.

The letter continues: “My client has on several occasions tried to reach out to staff of (RecyleMore) to arrange times to discuss their proposed actions. RSS’s overtures have not been responded to, and thus my client finds itself having to relay our intent on this matter in a tone and framework that we wish were not necessary. RSS’s long-standing relationship with the City of Richmond has always been one based upon mutual partnership and trust. Our intent is to continue this relationship with the City, and we are prepared to take any and all actions necessary to protect our contractual rights against infringement by others under the terms of the existing Franchise Agreement.”

Gordon could not be reached by phone Monday afternoon or Tuesday.

According to Lehon, RecyleMore had to pay about $3.8 million in operating costs for recycling operations in 2010 and earned about $3 million in recycling revenue to help offset this. There was total recycling revenue of about $6.8 million that year, which was split, according to a formula, with Republic Services. Lehon said RecyleMore pays for the operating costs of the IRRF facility where the recyclable material is processed, while Republic Services owns the facility, and the two entities divide the revenue when the processed material is sold.

In addition to processing recyclable material from the county, the facility processes material the county buys from cities outside the county.

“It’s conceivable under a new agreement that we would actually be revenue neutral or revenue positive,” Lehon said. “Most other jurisdictions get paid for their recyclables — they have a net revenue as opposed to a net cost.”

The IRRF facility, which processes about 25,000 tons of waste a year, was completed in 1996.

On Nov. 15, the same day Richmond Sanitary Service sent its letter to the city, the Richmond City Council approved a resolution endorsing the competitive procurement process, but then on Nov. 17, the RecyleMore board deferred its decision on how to potentially select a new provider to a special meeting Jan. 5. If a new provider is found, it would have to find a place where it could process the recyclable waste, because the IRRF is owned by Republic Services.

Councilman Corky Booze, who sits on the RecyleMore Board, said he is also concerned about the waste dumped at the Golden Bear Transfer Station and asked whether there would be extra cost to taxpayers if a new provider couldn’t drop garbage there. “Where are they going to take it?” he asked.

Booze also said he wants to be certain the North Richmond Mitigation Fund isn’t affected.

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