By Julia Scott 10/25/2009
PACIFICA - Pacifica's troubled trash hauler may be purchased by Recology if the city agrees to award a franchise to the San Francisco-based company, formerly known as NorCal Waste.
A history of delinquent franchise fee payments and shoddy accounting by Coastside Scavenger has already prompted city officials to announce they would request proposals for a new trash hauler come 2012, when the company's franchise agreement expires. That could change sooer than expected now that Coastside Scavenger is courting Recology to purchase its assets and take over its operations, provided the city agrees to sign the existing franchise agreement over to Recology.
City Council members will vote on whether to enter into negotiations for such an agreement with Recology at a meeting on Monday.
Coastside Scavenger and its sister recycling company, Seacoast Disposal, are owned by local resident Louie Picardo and have served Pacifica for 50 years.
The company will owe the city roughly $650,000 in unpaid franchise fees as of Oct. 31, according to Administrative Services Director Ann Ritzma.
Some of the company's checks have bounced over the years.
In June, the city attempted to draw on a $250,000 line of credit Picardo put in place in 2007 to keep the company afloat, but discovered that only $100,000 was available.
A carefully-negotiated agreement with Recology would resolve those money issues, said Pacifica City Manager Steve Rhodes.
"Coastside Scavenger is going to make it whole in the mix. However they work it out, that's not an issue for us. They have to pay the money before we will agree to the assignment."
Picardo approached Recology about the sale a few months ago and the city suspended its process of soliciting proposals from new trash haulers as a result.
"It would be crazy to run both processes simultaneously," said Rhodes, who added that he'd just as soon avoid the legal costs and "contentious" discussions that often accompany a request for proposals.
If the City Council decides to enter negotiations with Recology, Pacifica will hire a consultant to help with the negotiations and analyze three years' worth of audited financial statements to make sure Recology is on solid financial footing.
The city also plans to hold a public meeting to hear from residents about the kind of garbage and recycling services they want.
In addition to its rate increases -- a recent survey found that Coastside Scavenger was charging more for its service than any other trash hauler in San Mateo County -- residents have complained that the company doesn't make curbside composting and recycling easy enough.
Rhodes said the city will ask Recology to provide single-stream recycling and improved composting services, as well as keep rates down if possible. In return, he expects Recology to ask for a new franchise agreement that extends past 2012.
"If I were coming in and buying something, I would want a little longer-term agreement to amortize my investment. That will be one of the issues we negotiate over," said Rhodes. "Of course, you try to reduce your rates but the potential of trying to do that when we're trying to increase service is not certain."
Recology already serves neighboring San Bruno and is poised to greatly expand its presence on the Peninsula.
Starting Jan. 1, 2011, Recology will replace Allied Waste as the trash and recycling service provider in 12 other communities in San Mateo County, including San Mateo, Burlingame, San Carlos and Redwood City.
"We're close by. It's another logical place for us to offer our services. Pacifica seems to want the kinds of things that we can help them do, such as reduce the number of things that go into the landfill," says Michael J. Sangiacomo, president and CEO of Recology.
Sangiacomo addressed local concerns over layoffs in the transition, saying Pacifica employees would have to reapply for their jobs but the company would not be looking outside the company for replacements.
"To the extent that the business needs employees, we're prepared to keep the ones they have. Does that mean every employee will continue to be needed?" We're not planning on going in and making mass layoffs," he said. "I can't guarantee everyone will like working for us. They'll have to make their own decisions."