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New Trash Firm With No Trucks Wins Huntington Park Contract

July 03, 1988|RICHARD HOLGUIN | Times Staff Writer

HUNTINGTON PARK — A split City Council recently awarded a lucrative trash contract to a new hauler with no equipment or experience in the rubbish business, officials said.

The new firm, headed by a former Las Vegas casino operator, also will pay the city tens of thousands of dollars less in franchise fees than other firms had proposed. The council did not thoroughly consider the other proposals, various city officials said.

Councilman Herbert A. Hennes Jr. bristles when he recalls the June 20 vote.

"It was unconscionable not to consider the other bids," Hennes said. He and Councilman James Roberts opposed the 10-year agreement with H.P. Disposal Co., which was incorporated May 23. Councilmen Thomas E. Jackson, Jack W. Parks and William Cunningham approved the contract to collect rubbish from the city's businesses. The contract for residential service was not affected.

"This contract is about service," said Jackson, who engineered the agreement with H.P. Disposal. "We're tired of having a dirty town. We didn't go out looking for dollars and cents."

H.P. Disposal is owned by Eugene C. Fresch, a former casino operator and father of Eric T. Fresch, president of the Huntington Park Club Corp. The Huntington Park Club Corp. runs the Huntington Park Casino, which provides the city with about $500,000 in revenue annually, an official said.

Jackson said Eugene Fresch had an edge on the trash contract because he had become acquainted with city officials as a result of his son's position with the casino. But Jackson denied that the casino's economic importance to the city sealed the deal.

"It's obvious he had an inside track," Jackson said. "I see nothing wrong with that."

The card club leases land from the city's Redevelopment Agency. It pays 8% of its gross revenues, or about $500,000 a year, into the city's general fund, City Administrator Donald Jeffers said. The general fund, which pays for salaries, police and fire protection, and other general city services, operates on a $9.6-million budget, Jeffers said.

Service was the issue that prompted Huntington Park to look for a new hauler to pick up trash from city businesses, officials said.

Laidlaw Waste Systems Inc., a Canadian firm with U.S. headquarters in Hurst, Tex., has held the commercial refuse contract since 1966.

But recently, the city had received numerous complaints about billing problems, missed pickups and trash left scattered on the ground after pickups, said Alfredo F. Perez, the city's community service representative. He also said Laidlaw was unresponsive when contacted by city officials about improving its services.

On June 6, the council voted to terminate Laidlaw's contract, effective Oct. 1. Parks, whose business is served by Laidlaw, abstained. Kirk Muter, a Laidlaw vice president, said the city never explained why the contract was being terminated and said there were no problems with service.

The firm held a five-year contract extension that was to expire in 1991, Muter said. The contract allows for termination for poor performance or violation of other terms. The firm continues to hold the city's residential trash contract. Perez said Laidlaw's residential service has been satisfactory.

The commercial contract generates about $150,000 a month--or $1.8 million a year--in gross billings, Perez said. The residential contract generates about $360,000 a year in gross billings.

Two weeks after it terminated Laidlaw's commercial contract, the council accepted H.P. Disposal's proposal. Under the agreement, H.P. Disposal will charge the same rates Laidlaw is charging. Laidlaw was seeking a 6% rate increase when its contract was terminated.

Under the agreement, H.P. Disposal will pay the city a franchise fee of $75,000 a year or 5% of its gross billings, whichever is more. The firm has agreed to pay the city a $300,000 advance on franchise fees.

When other firms discovered Huntington Park dismissed Laidlaw, they submitted unsolicited proposals, which also were on the council's June 20 agenda.

Agen Disposal of Los Angeles offered a 10% franchise fee with a $500,000 advance. A Gardena-based firm, Western Waste Industries, offered a 10% franchise fee with a $600,000 advance. Western Rubbish Service of Montebello offered even more. The firm proposed a 12% franchise fee with a $1-million advance.

But the council rejected the proposals virtually without consideration in favor of H.P. Disposal, a firm that was hand-picked from the outset, Jackson said. State law does not require cities to seek competitive bids on solid waste contracts, and Huntington Park only sought the bid from H.P. Disposal, officials said.

"We decided what we needed . . . was a local garbage company," Jackson said. "We knew up front that they (large area firms) would try to buy the bid."

No Staff Recommendations

City Administrator Jeffers said city staff made no recommendation on the agreement with H.P. Disposal.

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