(October 4) The specter of the return of the FBI’s interest in Upland hangs over the City of Gracious Living as its city council finds itself being ushered toward making an extension of a no-bid contract with its franchised trash hauler for at least another 15 years.
Burrtec, a company founded in 1955, currently has exclusive trash hauling franchise contracts with the sixteen of San Bernardino County’s 24 cities – Adelanto, Apple Valley, Barstow, Fontana, Grand Terrace, Highland, Montclair, Ontario, Rancho Cucamonga, Rialto, San Bernardino, Twentynine Palms, Upland, Victorville, Yucca Valley and Yucaipa. Additionally, the company provides trash pick-up service to the  unincorporated San Bernardino County communities of Amboy, Angeles Oaks, Baker, Barton Flats, Bloomington, Cima, Crestline, Daggett, Del Rosa, Devore, Dumont Dunes, East Highlands, El Rancho Verde, Forest Falls, Fort Irwin, Halloran, Helendale, Hinkley, Kelso, Lake Arrowhead, Landers, Lenwood, Lucerne Valley, Ludlow, Mentone, Mountain Pass, Mt. Baldy, Newberry Springs, Nipton, Oak Glen, Running Springs, San Antonio Heights, Silver Lakes and Yermo.
For 12 years, from 2001 until July 1 of this year, Burrtec held the contract to run the county’s landfill system, a $17 million per year job that solidified its position as San Bernardino County’s major refuse handler and put it at or near the forefront of trash haulers in Southern California.
But in April, the company was dealt a blow when the county board of supervisors followed a recommendation by county public works director Gerry Newcombe to confer the contract for the operation of the county landfills for the next ten years on Los Angeles County-based Athens Services. As a consequence, Burrtec is now seeking to secure its future viability and profitability by locking the jurisdictions and service areas where it now has franchises into long term commitments.
The city of Upland represents one of the first tests of whether Burrtec’s new corporate strategy will succeed. Affluent but scandal plagued, Upland represents for Burrtec a particularly lustrous jewel in its crown. In addition to the $9.6 million the company currently collects annually in compensation for its refuse handling in Upland, the franchise contract it has had with the city since 2000 was amended in 2007 to involve a highly favorable seven-year “evergreen” clause. Under the terms of the current contract, the franchise renews for seven years every year. Upon the city’s notification to the company that it does not wish to renew the franchise, the franchise will then have seven years to run. Thus, at present, Upland is locked in to keeping Burrtec as its trash hauler at least until 2020. If the city does not give notice to Burrtec by July 1 of next year, the contract will run through 2021.
The seven-year evergreen clause was inserted into the contract in 2007, during the administration of then Upland Mayor John Pomierski and his hand-picked city manager Robb Quincey. For ten years Pomierski dominated the city politically, enjoying the unwavering support of three of his council colleagues and exercising near dictatorial power with regard to city commission and committee assignments and appointments. He ruled City Hall with an iron fist, going beyond the traditional role of working as a member of the city council to set general municipal policy. Instead Pomierski directly influenced day-to-day decisions, including those related to zoning, land use and contract issues. In 2011, Pomierski was indicted for having solicited and received bribes that involved backroom deals and City Hall-orchestrated favors to those who greased his palm. In 2012, he entered a guilty plea to those charges and is now in federal prison. Quincey, who at Pomierski’s direction amended the Burrtec contract with the seven-year evergreen clause, has been charged with three felony corruption charges, including unlawful misappropriation of public money, gaining personal benefit from an official contract, and giving false testimony under oath. The official contract in question did not involve Burrtec. The case against Quincey remains open. He has not been convicted.
Burrtec and several of its principals and employees were among Pomierski’s major political campaign donors. Burrtec and its employees and principals have also been among the largest of political contributors to other Upland city council members as well as the mayors and council members of other cities in San Bernardino County where it holds trash hauling contracts. The company’s largesse has extended to members of the county board of supervisors, who sign off on the trash hauling franchises in unincorporated county areas.
In May of this year, Burrtec executive vice president Michael Arreguin wrote a letter to Rosemary Hoerning, Upland’s public works director, proposing a revision of the existing franchise contract for Upland’s waste hauling.
Central to that proposal is increasing the terms of the evergreen clause by eight years, thus ensuring that Burrtec will remain Upland’s trash hauler for at least 15 years, until 2028. Burrtec is offering to add street sweeping to the trash hauling service it is currently providing and providing the city a pavement impact fee to compensate it for any damage done to city streets as a result of the weight of its trash trucks as part of the exclusive franchise arrangement being extended.
If Burrtec’s proposal advances and is accepted by the city, Upland will presumably be able to save money by eliminating its in-house cost of providing the street sweeping service. Burrtec would enjoy a triple-fold gain. It would extend its contract by eight years. It would eliminate the requirement that it engage in a bid process in another six or seven years to extend the contract, thereby avoiding the possibility that it would need to lower its rates to maintain the contract. And its proposal would increase the rate it charges Upland’s customers by 7.2 percent for the remainder of 2013-14; another 2.1 percent in July 2014; 2.1 percent in July 2015; 2.3 percent in July 2016; and 2.4 percent in 2017. Increases beyond that would be tied to the Consumer Price Index.
Moreover, the contract would adjust the arrangement between the city and Burrtec hashed out in 2007 under the Pomierski regime that demarked recycling and green waste disposal as the city’s “responsibility” but which involved the city paying Burrtec for those specialized handling and disposal services while sharing with the company any revenues generated from recycling. The revised contract proposal gives back to Burrtec direct responsibility of the recycling and green waste programs, with annual pass-throughs to the city of the actual cost of the service, based on any changes in landfill disposal fees.
Arreguin and others touted the contract revision as advantageous to the city. And while some city officials echoed Arreguin’s statements verbally, several of the city’s highest ranking officials have made a curious avoidance of stating in writing their personal endorsement of the new contract arrangement, even as they have been moving it toward the council for approval.
City manager Stephen Dunn designated Hoerning to oversee the matter. Hoerning, however, deftly moved out from under the weight of the issue, reportedly because demands on her time prevented her from taking the matter on. Nor did assistant public works director Aquanetta Warren evaluate the city’s options with regard to the proposal, Warren is the mayor of Fontana, where Burrtec is likewise that city’s franchised trash hauler. Burrtec has been one of Warren’s major campaign contributors.
Together, Dunn, Hoerning and Warren punted the issue to R3 Consulting, a Northern California-based firm that specializes in evaluating solid waste, trash hauling and refuse issues. Dunn used his authority as city manager to expend up to $50,000 on single projects without prior council approval to hire R3, at a cost of $35,000, to make the evaluation. R3 principal Richard Tagore-Erwin had previously made recommendations to other municipalities with regard to Burrtec, including ones favorable to the company.
R3 returned a recommendation to the city that highlighted the benefits of Burrtec’s     revised franchise contract proposal. R3’s endorsement of the concept was then cited by Hoerning in her staff recommendation that the council approve the revision and extension.
A close examination of the consultant’s report, however, betrays that R3 was provided with selective and incomplete information relating to the proposal, primarily information laid out by Burrtec. The report did not engage in an exacting analysis of the full implication of contractually binding the city to its current trash hauler for the extended period Burrtec’s proposal envisions.
In the face of a growing trend among municipalities to shy away from long term contracts that stipulate rates or pricing levels that cannot be adjusted downward, R3 accepted the increase of the automatic evergreen contract renewal to 15 years without substantial comment. Also left unexamined in the report is the no-bid implication of the contract extension and providing Burrtec with the advantage of specifying a fee and rate schedule that is arrived at outside of a public forum not subject to the downward pressure that naturally comes about during a competitive bid process.
Further unexplored in the report is the rapidly changing standard in the waste hauling industry with regard to the relative expense of the disposing of recyclables and how the committing of the city to a long term arrangement with regard to this element of the contract may be disadvantageous to the city and its ratepayers. Under the proposed contract renewal, city residents are to pay Burrtec to haul away not only their trash but recyclable discards as well. Burrtec would then be able to sell those separated recyclables at a profit, making money at both ends. In recent years, companies have come into existence which will haul away recyclable material for free, or in some cases, pay to do so, turning a profit entirely on the sale of the materials. While the city is committed until 2020 to remain with the arrangement it now has with Burrtec, beginning in 2021 city residents could see a significant decline in their trash rates if the city contracts with a company that is willing to haul recyclables at no charge or provide customers with a rebate. By remaining with Burrtec under the current terms, such a savings by Upland residents would not be realized.
Whether Burrtec will be able to wangle the contract revision and extension it is proposing is unknown at this point. A key vote in favor of Burrtec, that of councilman Brendan Brandt, does not appear to be forthcoming. From 2002 until Pomierski’s ignominious departure from the city council in 2011, Brandt was a rock steady member of the Pomierski political machine and one upon whom Pomierski counted for backing during council votes. Brandt supported the franchise contract change in 2007 that boosted the evergreen clause to seven years. Brandt is an attorney and his law firm has done work on behalf of Burrtec. Accordingly, he has recused himself from participating in votes or discussions of the proposed franchise contract revision.
Brandt, one of two regular members of the city’s treasury and finance committee, did not attend that panel’s meeting held this week on October 1, at which the Burrtec proposal was the main topic. In attendance was the other regular member of the committee, Glenn Bozar, and councilwoman Debbie Stone, the alternate who substituted for Brandt. Also at the meeting were Dunn, Hoerning, Warren and Arreguin. Present as an observer, but not participating as a voting member, was councilman Gino Filippi.
Stone was supportive of the staff recommendation to go along with Burrtec’s proposal. In contrast, Bozar was not. Bozar subjected Dunn and Hoerning to a series of questions relating to the length of the proposed evergreen clause, noting that if it were accepted, Burrtec, which has been the city’s trash hauler since 2000, will have been given what will be at least a 28-year long contract unchecked by any competitive bidding. While Dunn spoke somewhat guardedly in support of committing to the revised contract terms Burrtec has proposed, Hoerning was less reserved in backing Burrtec, based upon the recommendation from R3. Arreguin asserted that Upland would do well to commit to the terms his company is offering, given that they will provide long term rate stability to the city’s residents. Dunn was dismissive of suggestions that future recycling revenues will manifest to render the aspect of the proposed contract revision relating to Burrtec’s ability to utilize that recycling revenue as disadvantageous to the city or its residents. Warren unabashedly was supportive of Burrtec, asserting the company had been diligent and helpful in its provision of service so far.
Stone said the city “needs to move forward” by approving the franchise contract revision. Bozar said he wanted to explore removing the evergreen clause from the contract. Because Bozar and Stone were unable to agree, no vote from the committee recommending for or against the contract revision was forthcoming.
There are indications that councilman Filippi, who counts Burrtec principal Cole Burr among his major political supporters, will support Burrtec’s proposal. But Mayor Ray Musser by phone told the Sentinel he would not be in favor of extending the contract for 15 years. Thus, the proposal appears stalled at present. And without a vote to extend the contract on terms more favorable to Burrtec, further FBI action with regard to pay to play politics in Upland, at least with regard to the Burrtec contract, would be stalled as well, even if city residents have now begun to question why so many city officials have been pushing so hard to lock them into a marriage with their trash hauler, without competitive bids, until 2028.
R3 principal Tagore-Erwin responded to questions about the propriety of the contract extension proposal and his firm’s recommendation of it.
He disputed the assertion that cities are moving away from long term contracts.
“That is not true,” Tagore-Erwin said. “The trend is  actually away from shorter contracts to longer term ones that last five to seven years. Upland is already in a seven year rollover term with Burrtec. You have to look at the rates and the level of services Burrtec is offering, which is very favorable to the city. Overall, we normally do not recommend evergreen components to a contract, whether for five years, or seven years or 15 years. But given the benefits of the totality in this package, we feel it is in the city’s interest.”
He said changing the evergreen term to fifteen years was pretty much a “moot point,” given that the city is already committed to remain with Burrtec for seven years and “has not provided notice that it wants to go out to bid.”
Tagore-Erwin said it is “up to the city council as to going out to bid,” But, he noted, soliciting bids from a wide variety of providers would be no guarantee of better rates. In fact, he said, the Burrtec proposal provides for reasonable rates for an extended period. A new bid process could result in higher rates, he said. “This locks them into what is a very good deal for the city. With rising landfill disposal costs, higher fuel costs and rising insurance rates, you see bids coming in that are anywhere from  20 to 45 percent higher than  what the previous rates were.”
With regard to the changing standards relating to recyclable handling and profitability, Tagore-Erwin said the contract will not preclude other companies from handling Upland’s recyclables. “Under state law, any companies that want to come in to do that will still be able to do so,” he said. “They just will not be able to charge for that service, under state law. The city will still have the ability to decrease costs associated with its green waste processing.”
Tagore-Erwin defended the scope of the study R3 had performed.  “We looked at Burrtec’s proposal at face value from the city’s perspective,” he said. “The overall proposal is sound and good for ratepayers. They are carrying out a rate study that will verify and validate the rates going forward. It will provide an  increase in services, including  medical waste and  household hazardous waste handling.”
As to the suggestion that there was some untoward relationship between himself and Burrtec based upon prior recommendations he had made in the company’s favor and that R3’s report was preordained and intended to serve as justification for Upland accepting Burrtec’s proposed revision terms, Tagore-Erwin said “I don’t work for them. I have never worked for them and never will. Yes, I have made recommendations favorable to them. I also made a recommendation against them last year, in Hemet. I find that [the charge of collusion with Burrtec] to be an insulting insinuation.”