Over the objection of one of its members, the Chino Hills City Council this week disregarded the three lowest bids of seven competitors for the city’s trash franchise, instead electing to consider the highest bidders in choosing the four finalists for the contract that is to go into effect as of July 1, 2022.
Republic Industries, formerly known as Taormina, is the city’s current garbage hauler. Republic’s franchise contract with the city expired in January, but the city extended that contract with Republic until June 30, 2022 while it carries out a competitive bid process for refuse handling in the city of 85,081 over the next seven to nine years.
Republic applied to remain in its current capacity, and Athens Services, Waste Management, Burrtec Waste Industries, Valley Vista Services, Ware Disposal, and a joint venture involving Urbaser and American Reclamation offered competing proposals.
Mayor Brian Johsz, who is employed with Athens Services as a director of government affairs, did not participate in the selection process based on a legal conflict of interest his participation would embroil him in were he to vote on the matter.
City staff is intent on ushering the city council to a decision by July 1 of next year. The city contracted with the consulting firm HF & H, which bills itself as a public agency consultant with waste handling industry analysis expertise, making it capable of cutting through the thicket of laws and regulations as well as the financial issues pertaining to the disposal of both refuse and recyclables.
According to HF& H, all seven competing companies – Athens Services, Waste Management, Burrtec Waste Industries, Republic, Valley Vista Services, Ware Disposal and Urbaser/American Reclamation – meet the requirements specified in the bidding documents and can be considered responsible bidders.
HF & H acknowledged that Urbaser/American Reclamation was what could essentially be categorized as the “low bidder” for the franchise contract, having agreed to deliver comprehensive trash service to the city’s customer base for $8.075 million annually. Further, according to HF & H, Ware was the second lowest bidder at $10.084 million, and Valley Vista had the third lowest bid at $10.257 million. Nevertheless, according to HF & H, the city should spurn the three lowest bidders, and instead consider only the four highest bidders, those being Waste Management at $10.582 million, Athens at $11.242 million, Republic at $12.885 million and Burrtec at $13.483 million.
Both City Manager Benjamin Montgomery and HF & H Senior Vice President Laith Ezzet told the council that Waste Management’s,  Athens’, Republic’s and Burrtec’s extensive collection experience in Southern California along with their company sizes and financial resources made them better suited to serve as Chino Hills’ trash hauler.
Somewhat paradoxically, according to HF & H, the consideration that Urbaser/American Reclamation, Valley Vista and Ware were going to charge less than the other four companies indicated they were less suited and less qualified for the franchise. Another factor that favored Waste Management, Athens, Republic and Burrtec, HF & H calculated, was that the Chino Hills trash hauling franchise represented a much smaller portion of Waste Management’s, Athens’, Republic’s and Burrtec’s overall operations, at least in the United States, than it represented to Urbaser/American Reclamation, Valley Vista and Ware.
According to a staff report presented to the city council prior to the November 9 meeting, the amount of money Republic and Waste Management stood to make off of the Chino Hills contract stood at less than one percent of those companies’ total revenue and less than 3 percent of Athens’ total annual revenue. Burrtec did not provide data to make any comparison, but it appears that Chino Hills would represent under 5 percent of that company’s operations if it were to obtain the contract. In the cases of Valley Vista and Ware, the amount of money those companies stand to make off of the Chino Hills franchise is far greater in terms of their overall annual revenue, at 16 percent and 22 percent, respectively. In the case of Ubaser, which has partnered with American Reclamation in California, the Chino Hills franchise revenue would be less than one percent of its earnings worldwide, but would be far greater than that in terms of its revenue from local operations, as the company is just now seeking to establish a toehold in the United States. FH & F and city staff interpret dependence upon Chino Hills for that much of a company’s revenue to be a show of potential weakness, instability and questionable corporate and financial resiliency.
“While the proposal from Urbaser/American Reclamation has the lowest overall cost as measured by total annual rate revenues at approximately $8.1 million, HF & H believes the proposed rates may not be sustainable over the term, particularly since Urbaser/American Reclamation [chose] to offer street sweeping services at no additional charge,” the staff report for Tuesday’s meeting stated, implying the Urbaser bid was an unrealistic one. Staff suggested the case was the same with Valley Vista’s and Ware’s bids.
John Gasparian, an owner and vice president of American Reclamation and an American representative of Urbasser, spoke before the Chino Hills City Council on Tuesday night, and questioned why Urbaser/American Reclamation was being stepped over. He said that Urbasser/American Reclamation was here to stay in Southern California. “Were looking to make a name for ourselves,” he said, intimating the city was missing an opportunity to save its residents a substantial amount of money on their trash bills and simultaneously get quality service equal to or greater than that being offered by the competition. Gasparian said his company “had not underbid the project.” He said the city and its consultant had erroneously suggested that Urbasser/American Reclamation “underestimated our cost. I am very confident we did not do so.” As the company with the “lowest responsive bid,” Gasparian questioned why “we were not considered among the four finalists.”
“We’re not saying anyone’s not qualified,” City Manager Benjamin Montgomery stated, saying rather the city was striving to find the company “highest qualified.”
As the discussion of the matter progressed, a majority of the city council, led by Art Bennett and Peter Rogers, appeared determined to adhere to the staff recommendation, which was a declaration that by virtue of the size of their operations, experience and financial staying power, Burrtec, Athens, Waste Management and Republic had drawn to themselves the most horsepower, momentum and gravity to qualify to move on to the next stage of the franchisee selection process, such that they be brought to the final stage of the competition, while Valley Vista, Urbasser/American Reclamation and Ware be shown the door.
Councilman Ray Marquez indicated that he interpreted the facts and incidentals around the qualification and bidding for the franchise in a way that contradicted what city staff and HF & H were saying, and that it was his conclusion that those companies which were among the lowest responsible bidders should make their way to final consideration for the franchise and not the highest responsible bidders to the exclusion of those willing to charge Chino Hills’ residents the least money. He endeavored to get Councilman Bennett to acknowledge that he supported giving the companies seeking the highest rates from Chino Hills’ residents a chance to secure the franchise while shutting out the companies that would provide the lowest rates for the city’s residents and businesses.
Bennett responded that he did favor going with the highest bidders, if doing so was the advice of the experts – the city’s well paid consultant in the form of HF & H, who was more familiar with issues pertaining to refuse hauling and the proper disposal of recyclable materials than the members of the city council. Once the city paid top dollar for the advice of experts, Bennett said, it should heed that advice.
Marquez urged his colleagues to consider allowing Valley Vista, Urbaser/American Reclamation and Ware to compete for the franchise.
Councilwoman Cynthia Moran took a stab at seeing whether more of the applicants beyond Waste Management, Burrtec, Republic and Athens could be included in the final evaluation. In the end, however, she voted with Bennett and Rogers in supporting Bennett’s motion to approve the staff recommendation to move forward with considering whether Burrtec, Waste Management, Athens or Republic should get the contract and excluding Ware, Valley Vista and Urbaser/American Reclamation.
The decision of the Chino Hills City Council with regard to its city’s trash hauling franchise has an implication beyond Chino Hills City Limits.
A decade ago, Burrtec was preeminent among San Bernardino trash haulers. Burrtec in 2001 was given an 11-year county contract to manage the county’s trash-disposal sites in the aftermath of a far-reaching scandal involving high ranking county officials and the prior landfill operator, Norcal. By 2012, however, the county’s landfill system was running at a loss. In 2013, Burrtec lost out in the competition to retain its contract with San Bernardino for the management of the county’s landfill system, having been underbid and outmaneuvered by Athens.  Athens, which is intent on challenging Burrtec’s primacy in San Bernardino County, swooped in to win that contract. In 2020, the San Bernardino County Board of Supervisors voted to extend Athens’ landfill management contract with Athens Services to 2031 and potentially to 2039.
Burrtec yet holds the lion’s share of trash hauling contracts in San Bernardino County, with the municipal franchises in the cities of San Bernardino, Upland, Adelanto, Apple Valley, Barstow, Fontana, Grand Terrace, Highland, Montclair, Ontario, Rancho Cucamonga, Rialto, Twentynine Palms, Victorville, Yucca Valley and Yucaipa – as well as dozens of contracts to exclusively service unincorporated communities, including 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.
Athens, which does a lot of trash-hauling in neighboring Los Angeles County, is looking to get work beyond landfill operations management in San Bernardino County.
Republic wants to hang onto the Chino Hills franchise and maintain its franchise in Colton to expand beyond that. Waste Management, which once had a far larger presence in San Bernardino County than it does at present, yet has the franchise in Chino and one unincorporated community in San Bernardino County.
It is not unfair to say that a certain cutthroat competition has developed between Burrtec, Athens, Waste Management and Republic for available and emerging trash hauling contracts in San Bernardino County. Cole Burr, the owner of Burrtec, along with his wife Tracy and several Burrtec executives, including vice president Mike Arreguin as well as the corporate entity Burrtec itself qualify together as one of the larger donors to elected politicians in San Bernardino County at both the county and municipal levels. Burrtec’s collective donations in San Bernardino County go almost exclusively to elected officials at the county level, meaning members of the board of supervisors who sign off on Burrtec’s franchise contracts in the county’s unincorporated areas, as well as to politicians/elected officials in the cities and incorporated towns where Burrtec has trash hauling franchises. Burrtec virtually never supports politicians outside of the jurisdictions where it has franchises, and it virtually never supports anyone other than incumbent officeholders. This has led to accusations that Burrtec is seeking to influence those politicians in a way that is tantamount to bribery. This is a problematic assertion in a county wherein multiple elected officials have historically been indicted or criminally charged for engaging in bribery that included payoffs, kickbacks and other graft originating with trash hauling firms and outfits involved in the refuse handling industry.
Similar accusations to those pertaining to Burrtec have been raised against Waste Management’s actions in Southern California by former San Diego County District Attorney Ed Miller in the so-called Miller Report and against the actions in Colton by Taormina Industries, a company which ultimately merged with Republic, by former Riverside County Deputy District Attorney Mark McDonald in the so-called McDonald Report.
Being permitted to operate in Chino Hills, San Bernardino County’s southwesternmost city, would change the power dynamic for any of the three companies now seeking that franchise. Managing to retain the franchise in Chino Hills it now possesses would preserve for Republic its place as a player in San Bernardino County’s trash hauling industry.
-Mark Gutglueck