CR&R, Republic Services and Valley Vista head to final negotiations for a 10-year waste deal; council orders Republic to drop a $10 million payment, with a decision expected in September.
The Fullerton City Council voted Tuesday unanimously to advance three companies — CR&R Environmental Services, incumbent Republic Services and Valley Vista Services — to final negotiations for a 10-year residential and commercial trash contract, and directed that a proposed $10 million upfront payment from Republic be stripped out and folded back into customer rates.
The 5-0 vote narrowed a field of six shortlisted haulers and set up a final decision expected in September. The council also lifted a self-imposed “embargo” that had barred members from meeting directly with the bidders, and required the three finalists to appear at two public meetings before any award.
The decision came at a special meeting convened at 4:00 pm Tuesday on short notice — an unusually early hour that several residents said locked working people out of a contract that will shape their weekly service and bills for a decade. One resident opened public comment by disputing whether the meeting had even been properly noticed. Council Member Ahmad Zahra said he wished it had been scheduled differently and given the public more notice, calling the contract an issue that would affect residents not just now but for the next generation.
The contract would run 10 years, with two optional five-year extensions tied to performance. Solid Waste and Recycling Specialist Michelle Durant said the timeline is driven in part by a state deadline: Fullerton is operating under a CalRecycle corrective action plan, extended to June 30, 2027, on the condition that the city complete a procurement complying with SB 1383, California’s organics-recycling law. Durant said the state could cancel that extension and open a compliance audit, with penalties of $500 to $10,000 a day dating to Jan. 1, 2022, if the city falls out of step. She said Fullerton’s overall waste-diversion rate stands at 15.81%.
The sharpest exchange of the night centered on “enhancement” offers in which two bidders proposed large upfront payments to the cash-strapped city — $15 million from EDCO Disposal and $10 million from Republic — in exchange for terms that would raise rates faster over time.
Zahra repeatedly pressed staff and outside counsel to explain who ultimately pays, saying he was getting legal explanations but not answers.
The city was trying to hire a trash hauler to keep neighborhoods clean, he said, “not to clean up the city’s financial messes.” He noted that the person who first floated the concept had elsewhere called it a hidden tax.
Solid waste consultant Mike Valley said the upfront offers were tied to steeper annual escalators. The city’s rate schedule has risen about 3.48% a year over the past decade, he said, while the two firms offering upfront money proposed schedules of roughly 4.1% and 4.15%. Over a 20-year horizon, he said, rates would climb close to 100% for all bidders, but 10% to 20% more for those two.
Patrick Muñoz, the mayor’s special counsel on solid waste, said the payments raised unsettled legal questions under Proposition 218 and the California Supreme Court’s decision in Zolly v. City of Oakland, which addressed when franchise fees become an unlawful tax. The test, he said, is whether the fees “reasonably reflect the value of the franchise” — an analysis he said would require a closed-session discussion if the council pursued one of the offers. City Attorney Richard Jones added that the city would need assurances it could legally defend such an arrangement.
Mayor Fred Jung said EDCO’s package, which sought a 20-year term and a 4.01% compounding annual increase, would add about $1.3 million a year — nearly $42 million over the term — a cost he said was unacceptable. Mayor Pro Tem Nick Dunlap took a harder line on two of the three offers, saying they amounted to “essentially an illegal tax — high-interest loans that the city or ratepayers are financing over the long term.” He said he was not opposed to upfront money tied to a defined public benefit, such as CR&R’s proposed road funding.
Public comment
More than a dozen residents and industry representatives addressed the council over roughly an hour, most urging caution and several defending Republic’s record. Union labor was a recurring theme. Republic and CR&R employ union workers; Valley Vista and Universal Waste Systems do not. Several speakers warned that choosing a non-union hauler could cost Fullerton residents their jobs — a concern shared by Council Members Zahra and Charles. “For me, being non-union is a nonstarter; it just is,” Charles said. Durant said all bidders committed to offer jobs to Republic’s workforce if the incumbent is not chosen.
Lori Bruno, a resident and former Republic risk director who said she now works on school safety, faulted bidders for not addressing safety and urged the council to scrutinize haulers’ safety records and fleet condition.
Jeff Otter, treasurer of the Craig Park East Homeowners Association, argued the proposed commercial rate structure would fall disproportionately on apartment and condominium residents, citing his analysis that identical container service could cost 480% to 1,400% of single-family rates. He urged interim rate parity and a formal cost-of-service study within 24 months to comply with Proposition 218.
Other speakers pressed the council to keep unlimited bulky-item pickup, questioned the wisdom of a long contract and asked for cleaner trucks and better street repair. A longtime resident who gave her name as Lucy said the early start time made it hard for working people to attend.
“Everything feels last-minute, and that’s not fair,” she told the council.
Mike Valley, the city’s consultant, called CR&R “the best overall offer,” citing its low commercial rates and competitive residential pricing, and ranked Valley Vista second on the strength of its organics-processing facility. He said Republic’s commercial rates were “by far the highest” and flagged unresolved compliance issues, though he praised the company’s operations generally.
Council members diverged over how many finalists to keep and how hard to press the incumbent. Council Member Jamie Valencia said she wanted to give Republic a fair chance to keep the account but rejected the priciest bids. “We’re in a financial crisis, and I don’t want to add more on our residents,” she said.
A substitute motion by Charles to advance only CR&R and Republic — and to weigh Valley Vista separately — failed 2-3, with Charles and Zahra in favor. The council then passed the main motion unanimously, sending CR&R, Republic and Valley Vista into final negotiations, lifting the embargo which will allow council members to meet with representatives openly, requiring two public meetings and directing Republic to drop its $10 million payment. The council is expected to select a hauler in September.
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