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Montebello Hands Athens Exclusive Hauling Contract

Posted By admin On August 7, 2008 @ 12:00 am In General News, Montebello | No Comments

[1] Another man’s trash just became Athens’ treasure.

At least that’s the view of several local businesses and residents, now that the Montebello City
Council has voted to give Athens Disposal Services a 15-year exclusive contract — a $150-million
agreement — to haul away the garbage of area businesses.

The decision was reached following hours of heated debate during the packed July 23 City Council
meeting.

Athens, which has an exclusive contract with the city to haul residential trash, already has contracts
with a number of Montebello businesses. The new contract will allow the company to add the
remaining businesses in the city to their routes by 2016. But not everyone is happy with the new
agreement, and some residents and businesses are already petitioning to overturn the council’s
decision.

Councilmembers Robert Urteaga, Kathy Salazar and Rosie Vasquez cited comparable prices, a higher
diversion rate—the percentage of trash that is recycled and not disposed in landfills—and an added
source of revenue for the city as reasons for voting in favor of the contract.

Mayor William Molinari and Councilwoman Mary-Anne Saucedo-Rodriguez opposed the contract,
calling it a violation of free enterprise and blatant disregard for the independent haulers who reside in
Montebello.

“The residents need to understand that they are getting better quality at the same price,” Urteaga
said. “This city is a business, and this contract will also provide a substantial revenue source for
Montebello.”

As part of the contract, Athens will pay a one-time $500,000 fee to the city as well as 7.5 percent of
gross receipts from contracts on a quarterly basis.

But Aron Petrosian, owner of the independent hauling company Commercial Waste Services, argues
that because many independent haulers’ are headquartered in Montebello, they purchase fuel in the
city, and that generates added revenue Montebello will not get from Athens, which is headquartered
in unincorporated L.A. County.

Councilwoman Vasquez told EGP she favors the agreement because “it makes good business sense
for the city.”

“The fees to be paid by Athens provide a guaranteed, stable source of income to the city, which you
know is in need of a lot of infrastructure repairs. By having one company, and a defined revenue
source, we can go out and borrow money, bonds. This makes it easier. We have a lot of needs and
this will benefit the city in the long run, I have to think about the future, not just what’s in front of me
right now,” Vasquez said.

Petrosian said he is looking at the future as well.

“Once they have a monopoly over the city, who’s to say they don’t jack up their rates?” Petrosian
said. “Businesses can’t refuse and negotiate because they’ll be the only service in town.”

“Free enterprise is the foundation on which our country is built,” Molinari said.

“This lucrative $150 million contract is absolutely contrary to any sound business practice and
fundamentally wrong.”

But Urteaga said “free enterprise” is already limited in the city since only 13 haulers were granted
rights to compete in Montebello.

Because of Athens’s exclusive residential contract, the other 12 haulers permitted in the city don’t
have access to that line of business. Montebello residents pay $19.82 a month under the contract,

1 of 2 1/20/2009 12:34 AM
egpnews.com » Print » Montebello Hands Athens Exclusive Hauling Contract http://egpnews.com/?p=262&print=1

while the cities of Downey, Cerritos and Paramount pay $11.88, $14.40, and $15.20, respectively,
according to Petrosian. Resident’s fees will go up to $23.82 by July 2009.

As the sole company for residences and businesses, Athens can provide more efficient recycling for
Montebello, making it easier to maintain the 50 percent diversion rate mandated by the state,
according to Urteaga.

Molinari said, however, that city data shows Montebello already has a 68 percent diversion rate.

“But ultimately the city is responsible for the 50 percent rate, not the haulers,” said Salazar. “Athens
will pick up any fines the state will impose if we fall under the 50 percent.”

“Athens provides the best bang for your buck,” Vasquez said at the July 23 meeting. “The company
has the best, state-of-the-art technology with their Materials Recovery Facility (MRF) that even
Waste Management has been seen using. And this is at no extra charge to residents.”

“While we may be meeting diversion rates now, there are other cities that aren’t and I feel
comfortable that the agreement with Athens will keep us in compliance,” Vasquez told EGP.

Proponents of the contract also argue that the city will achieve added administrative savings and
achieve greater efficiency by not having to deal with 13 separate companies, and 13 separate
reports.

A point echoed by nearby Monterey Park, which also has an exclusive 15-year contract with Athens.
The relationship has been “very successful,” said Elias Saykali, Director of Public Works City
Engineer. “But at the end of 15 years, we open up the contract bid in the city,” added Saykali, who
says the city opted out of an “evergreen type contract,” a sore point with many of the opponents to
the Montebello contract.

An evergreen contract renews every year for the full 15 years, without the need for outside bids,
unless one of the parties wants to cancel the agreement.

Montebello’s contact could roll over for an additional 15 years, say opponents.

“The contract wouldn’t be so bad if the city had had a bidding war or something similar,” Haik
Petrosian, Operations Manager at Commercial Waste Services, said. “But they just picked Athens
without doing their research, just really irresponsible.”

Several of Montebello’s independent haulers have begun a referendum of the decision, according to
Aron Petrosian. They have 30 days to gather signatures from 10 percent, or 2,400, of the city’s
registered voters’ signatures, to either force the City Council to rescind its decision or bring the
matter to a vote by the people.

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