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Recology Wars: Proposition A Backers Look To Take Down San Francisco's Biggest Monopoly

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SAN FRANCISCO -- The first thing you need to know about Proposition A is that it's not going to pass.

Maybe that's a little harsh.

Let's just start by saying the June ballot measure aimed at ending California waste management titan Recology's monopoly on every aspect of San Francisco's trash collection system faces a serious uphill battle.

It's opposed by the local Democratic Party, the local Republican Party (yes, it exists), business groups, labor groups, environmental groups and, most of all, Recology itself.

On the other side, a handful of activists--including a former supervisor candidate, a retired judge and the CEO of a competing garbage management firm--believe San Francisco shouldn't allow a private company to automatically control the city's trash system in perpetuity based on rules put in place nearly a century ago.

"We don't even have a contract with Recology for what they do," Tony Kelly, one of Prop A's authors, told The Huffington Post. "[As a result], we pay too much for our services. San Francisco pays $220 million a year, San Jose pays less than half that with a higher population and a bigger land area."

Critics of the measure charge that, despite the lack of competitive bidding, Recology does a remarkably good job of managing the city's waste. San Francisco recycles 77 percent of its refuse, the highest diversion rate of any major city in the country. And provisions in Prop A could very well put the city's stated goal of diverting 100 percent of its waste by 2020 in jeopardy.

TALKING TRASH

Prior to 1932, San Francisco had multiple competing trash collectors operating on a house-by-house basis throughout the city. The system led to conflict and confusion.

No one wanted to see their trashmen fighting, so voters passed a measure that year aimed at making things more orderly. The city was divided into in 97 separate parcels, and whichever company held the rights to a particular zone became the exclusive garbage collector in said area.

Over the course of the next 80 years, the company that would eventually call itself Recology (a portmanteau of "recycle" and "ecology") acquired the rights to every single parcel in the city, largely though mergers an acquisitions.

Recology took its monopoly on garbage collection and grew it into nearly universal control over the city's entire refuse system. In addition to trash, the company also runs recycling, owns and operates the city's transfer station in Visitacion Valley (where the waste is sorted) and distributes it to its eventual home in a landfill.

Since the 1932 law was passed by voters and written into the city charter, it can't be changed by legislative fiat. It must go back before the public.

A LOCK ON LANDFILL

The one part of the city's waste system that Recology doesn't control (or at least didn't until last year) is the landfill itself. That contract is instead awarded by the Department of Environment and approved by the Board of Supervisors.

For years, the final resting place of San Francisco's trash has been Livermore's Altamont Landfill operated by international trash behemoth Waste Management. But when Waste Management's contract came up for renewal in 2011 based on a projection that the city's landfill would be completely full by 2015, Recology submitted a bid for the city to switch to its own facility in Yuba City.

As it does when it makes any major decision, the Board turned to the city's budget analyst Harvey Rose to run the numbers.

And he did a good bit more than that. He called for the outright repeal of the 1932 law.

Rose noted in his report that while "it may be advantageous for a city to have the collection of refuse provided exclusively by a single firm...such a firm should be selected through the city's normal competitive bidding process."

The dry language belies the severity of the Rose's point. Instead of simply ruling on which landfill option was going to be the most cost effective for the city, the man who may be the single most universally respected figure in all of San Francisco politics politely called for burning the city's garbage contracting process to the ground and starting from scratch.

"In a way, it was really Harvey Rose who got Measure A on the ballot," Kelly said.

The Board seemed all set to hand the landfill contract to Recolgy until Rose dropped his bomb, causing them to instead deliberate for two months. Recology eventually won out in a nine-to-two vote, and will soon assume total control over every aspect of the city's trash.

DOWN AND DIRTY

A common refrain among local experts? Reforming the system to make it more competitive isn't necessarily a bad thing, but Prop A might not be the best way to do it.

The measure would divided the city's into five separate contracts: residential collection services, waste collection services, recycling, operation of the transfer facility and operation of landfill/dump sites. Each of these contracts would be competitively bid upon. Prop A's backers note that when a municipality introduces competitive bidding into its trash system, rates typically drop by 25 percent.

"Under the measure, Recology is still going to win virtually every contract that they seek," said Kelly, who explained the proposition is primarily aimed at making the city's relationship with Recology work better. "If we wanted to write this in a way that would push Recology out of town, we would have done that. Instead, the measure has a number of provisions regarding zero waste and worker protection that only Recology can produce."

The "virtually" in Kelly's statement is crucial. If Prop A passes, it bars whichever company secures the contract for the transfer station from also holding the contract for the landfill. He argues that one of the reasons for Recology's impressive diversion rate is that every time the company sends a truckload of garbage to Waste Management's landfill facility, it has to pay the Houston-based company a fee, which will end in 2015 with Waste Management's contract. Splitting up these contracts would theoretically retain Recology's incentive to divert more waste toward recycling programs.

However, this division between landfill and transfer station is precisely what has Supervisor David Campos, one of the two dissenting votes for Recology's landfill bid, concerned. He worries that because the measure prohibits one firm from doing everything, the least expensive way to handle waste may not end up being an option. "If a company can do a better job serving the city with total control over the trash system, that should be a possibility," he told HuffPost.

Campos notes he's also heard grumbling from labor groups complaining Prop A doesn't contain enough worker protections for their liking. Recology has been 100 percent employee-owned since the mid-1980s.

A HEFTY TAX

Another feature of the bill would be the introduction of a franchise fee. Private companies pay franchise fees to the government for the use of their services. But because Recology, a multi-billion dollar firm with operations all over California, have never had an official contract with the city, it's exempt from paying its share to San Francisco.

Earlier this year, the Board of Supervisors' Local Agency Formation Committee discovered that of the more than 70 other municipalities around the Bay Area, San Francisco was the only one without a franchise agreement written into its garbage collection system. Retried Judge Quentin Kopp, one of Prop A's authors who has twice unsuccessfully pushed similar ballot measures, recently argued that incorporating such a fee could earn the city up to $50 million per year.

Moreover, Prop A mandates that the city build a brand-new transfer station -- and no one knows where the funds to create said facility would come from.

"There are costs embedded within this that have no identified funding source and I don't think have been fully vetted or thought through," Corey Marshall of San Francisco Planning and Urban Research Association (SPUR) told HuffPost. "The real question is whether or not the city has the desire or capacity to construct all those different types of assets and if that's something the city really needs to be taking on right now given all the other budget constraints."

SPUR issued a release urging San Franciscans to vote against the measure.

Jordan Curley, who manages the official campaign against Prop A, echoed Marshall's sentiments. "All the measure would do is create a massive bureaucracy, and there's no guarantee that it would lower rates."

GARBAGE POLITICS

Residential rates for waste collection in San Francisco are set by a three-person board comprised of the City Administrator, the City Controller and the General Manager of the Public Utilities Commission. Commercial costs, on the other hand, are simply dictated by Recology.

"It pretends not to be politicized," says Kelly, "but it is."

Recology is about as politically connected a company as exists in San Francisco. The company is funding tons of slate cards in this June's election, having placed its "No on A" ads on the backs of mailers put out by everyone from the Alice B. Toklas Democratic Club to the San Francisco Democratic Party to the teacher's union.

And Recology has maintained an exceptionally close relationship not only to former San Francisco Mayor Willie Brown and current Mayor Ed Lee, but also their electoral campaigns.

The company came under fire for coordinating with Chinatown power broker Rose Pak in the campaign to convince Ed Lee to run for a full term as mayor. It was also implicated in bribery scandals in San Jose and San Bernadino. In the latter case, a Recology executive was sentenced to 18 months in prison for his part in the scheme.

In a letter sent to District Attorney George Gascon in January, Judge Kopp attached sworn affidavit from a Prop A signature gatherer who claimed to have been threatened and harassed by operatives hired by Recology. The Recology contractor allegedly said that anyone campaigning against his company would be blacklisted from ever working on ballot initiatives again.

Curley called the allegations "unfounded and ridiculous."

Despite their potentially questionable ties, Recology's reputation in the industry is one of a company infinitely more involved in their community than their competitors. Their success in greening of the city's waste stream is nothing to be scoffed at. "Granted, they're a business first and foremost," recycling industry veteran Dylan Haas told HuffPost. "But they take their reputation as a green company very seriously."

The rub, according to Prop A's backers, is less specifically about Recology than it is about how San Francisco deals with one of its most important corporate partners.

"I have no problem with Recology’s operation," said Kelly. "This is really just about how City Hall does business."

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