Council terminates contract with one commercial solid waste franchise hauler, continues another to future meeting

By SARA HALL

City Council this week unanimously agreed to terminate one non-exclusive franchise agreement for commercial solid waste and, following a passionate plea from another hauler, continued another contract until the next council meeting.

“It’s not an insignificant task for us to take away someone’s ability to do business inside the city,” said Mayor Will O’Neill.

“We don’t usually have folks come in and actually try to solve deficiencies. We usually have what’s happened with the first hauler, they just don’t show up because they’re done. The fact that you’re fighting hard to stay in our city,” is commendable, O’Neill said. “I’d like to see you stay in our city, but I also need you to comply.”

He hopes they can work out the compliance issues because the council will have to vote on it when the item returns. They need to take this extra time and figure out the specific documentation required by the city.

“There are things in here that I know can be remedied,” O’Neill said.

The city issued notices of intention to terminate to Haul-Away Rubbish Service Co. and Key Disposal & Recycling, Inc., on March 8.

On Tuesday (March 26), councilmembers voted 7-0 to terminate the Haul-Away contract, but continued the Key Disposal agreement item until the council meeting in two weeks.

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Courtesy of City of Newport Beach

City Council allowed a commercial solid waste franchise hauler two weeks to settle non-compliance issues before they consider terminating the agreement

According to staff, Newport Beach utilizes a non-exclusive commercial franchise waste hauling system for the collection of municipal solid waste, recyclables, organic waste and construction and demolition debris. Council previously approved a model agreement amending the 2020 franchise agreement to include explicit state diversion compliance requirements and revised insurance requirements for franchisees.

There are currently 22 commercial waste haulers authorized to operate within Newport Beach under the agreement.

“Prospective hauling firms undergo a rigorous review and approval process to become franchise haulers. Once approved, franchise haulers can provide fixed route and/or temporary waste collection and diversion services to clients within the city,” the staff report reads.

City staff also regularly reviews franchise haulers to ensure compliance to the 2020 agreement.

Staff also noted that CalRecycle, the state agency responsible for managing statewide recycling and waste management programs, has placed Newport Beach under a corrective action plan due to the city failing to meet waste diversion requirements established by state laws that set statewide waste diversion targets for organics, green waste and food scraps, and recyclable waste. Under the CAP, the city is required to demonstrate “significant progress” in meeting the waste diversion requirements established by the legislation.

Both Haul-Away Rubbish Service Co. and Key Disposal & Recycling, Inc. failed to comply with multiple terms in the 2020 franchise agreement, which prompted the request for termination.

According to Charles Springer, the city’s refuse manager, Key Disposal failed to comply with 10 terms of the 2020 franchise agreement and did not provide the city-requested deliverables after issuing the notice of default.

Key Disposal officials attempted to cure the default, but either did not supply what was asked or did not supply sufficient response to four of the seven items listed, Springer said.

The four unresolved issues include:

–Provide a source separation implementation plan that includes a summary of outreach efforts to the generator, a list of efforts made in 2023 to divert collected material from landfills, and a documented approach to implementation going forward.

–Provide results of on-site load checks, route reviews and waste characterizations for reported generator for 2023.

–Provide the city with a completed exhibit of the franchise agreement for implementation tracking for the serviced account (Springer explained that this is if a non-compliant generator is refusing or if a hauler is attempting to make good faith efforts toward compliance with a generator or business, that effort should be documented and then submitted to the city.).

–Provide updated insurance information that meets requirements set forth in the franchise agreement (the non-compliance issues pertain to endorsements and incorrect policy numbers on endorsements, Springer noted).

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That last issue is a problem, Springer said. Technically, it’s a breach of contract, he added.

The three resolved items were related to information about the business license, vehicle fleet and routes.

Key Disposal also failed to file an appeal within the allowed 10 days after the notice of default was issued.

In a letter to the council, John Katangian, president and owner of Key Disposal, wrote that the non-compliant items are being addressed.

“While Key admits mistakes were made, most of the non-compliant items have been or are being corrected. Key is not error-free as all companies, municipalities and California struggle with a changing landscape,” the letter reads.

Katangian also acknowledged that several monthly reports missed 2023 deadline, and added that it was a staff error that has been corrected.

On Tuesday, Katangian said the company has been providing waste and recycling service for the business located in Fashion Island since 1995.

He explained that the contract for the service is done through a national broker. Key Disposal handles the trash compactor, which does not contain recyclables or organics, he confirmed, while the broker provides the recycling service (now including organics). Their outreach program is to have contact with the national broker, he said.

Katangian also emphasized that the company’s insurance has not lapsed in coverage.

He also pointed out that city staff reached out to the wrong person at the retailer and received incorrect information.

O’Neill asked how Katangian plans on ensuring that Key Disposal is compliant with the necessary documentation for the source separation implementation plan and outreach going forward.

These requirements are coming from California, he explained.

“We have a series of compliance from the state,” O’Neill said. Newport Beach wants to “make sure that we have the ability to tell the state agency that we are holding people compliant, which allows us to stay compliant because there are real ramifications for a city not to be compliant.

“That’s why we hold our haulers to standards that are set forth in the contracts and that’s why we go through this on a compliance side,” he added.

He’d go directly to the store manager, Katangian answered. They would cold call them, evaluate what they’re doing, make suggestions, and educate them on the requirements of the state law, he added.

“Same as we do in every other city where we’re licensed or permitted,” Katangian said.

Regarding insurance, which Katangian reiterated had not lapsed, O’Neill clarified that there is very specific documentation that is required to be provided to the city.

Katangian explained that Key Disposal’s insurance agent provides it to a broker or a consulting firm for the city.

They have insurance documents and emails from the insurance company that shows a certificate of coverage and that there was no lapse, added Shelly Katangian.

“We went above and beyond for Newport Beach. We want to stay in the city,” Shelly Katangian said.

They are willing to do whatever it takes to stay in the city, she added.

While he appreciates that, they need to send in the required records, which includes specific documents, O’Neill responded.

“There is a difference between showing that there is not a lapse in coverage and showing the specific endorsements that have been requested,” O’Neill said.

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Sara Hall covers City Hall and is a regular contributor to Stu News Newport.


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