Santa Rosa narrows search for new garbage company

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Santa Rosa’s search for a new garbage hauler is shaping up to be a David-versus-Goliath garbage showdown.

The city has narrowed its list of companies vying for the lucrative contract down to two finalists, and they couldn’t be more different from one another.

The big dog is Waste Management, the largest garbage company in the nation and one that had a strong presence in Sonoma County until the mid-2000s. The publicly traded, Houston-based company serves more than 21 million customers in 48 states and Canada, generating $13.6 billion in revenue last year.

Its scrappy little competitor is GreenWaste Recovery, a San Jose-based company that serves about 20 communities in Santa Clara, San Mateo, San Cruz and Monterey counties. The privately held company, which does not disclose its revenue, was founded in 1991 and serves some of the toniest cities in Northern California, including Pebble Beach, Carmel-by-the-Sea and Capitola.

Noticeably missing from the mix, however, is Recology, the San Francisco-based garbage firm that has agreed to buy The Ratto Group, Sonoma County’s dominant but embattled garbage hauler.

The Ratto Group’s contract to serve the 55,000 accounts in Santa Rosa runs out at the end of the 2017. Recology officials had hoped to win the new contract with Santa Rosa, one of the company’s largest contracts. It was valued at $24 million annually when it was renewed in 2010, although revenue has likely increased following subsequent rate hikes.

Recology officials say they were “dumbfounded” to hear recently they had fallen out of contention but still plan to move forward with the purchase, said Eric Potashner, vice president and senior director of strategic affairs at Recology.

“Santa Rosa made the transaction more desirable, honestly, but the sale is still something that we’re going to pursue,” Potashner said.

The competition for the lucrative contract began in late January when five companies submitted bids. The city formed a five-member review panel and got to work sorting through the voluminous presentations.

One bidder, Waste Connections Inc., a Toronto-based company with operations in 37 states and Canada, didn’t make the first cut. That bid was deemed “non-responsive” because it didn’t meet the needs the city outlined in its request for proposals, explained Gloria Hurtado, deputy city manager.

That left four companies: Waste Management, GreenWaste Recovery, Recology and Sonoma County Resource Recovery, a new partnership backed by the owners of garbage companies in Marin and San Jose.

The city’s five-member review panel is made up of three city staff, Councilman John Sawyer, and Patrick Carter, executive director of the Sonoma County Waste Management Agency. The panel studied the proposals in detail and interviewed a team from each bidder in an effort to further flesh out the proposals, Hurtado said.

“I think it’s going well,” she said, “and I think we’re being very thoughtful in the process and want to make sure we get a good quality and a good price for the residents.”

The city has declined to make the proposals public, or even to name which companies have advanced to the final two.

Hurtado said the city’s legal team has determined the competitive process needs to be a secret one to protect its integrity.

“It’s a closed process, so I can’t go into the details,” Hurtado said.

The Press Democrat confirmed the two finalists by contacting the bidders. Recology and Sonoma County Resource Recovery officials both confirmed they’d been passed over.

“We were kind of shocked we were not asked to come back,” said Joe Garbarino, owner of Marin Sanitary Service, a San Rafael company that is one of the partners in Sonoma County Resource Recovery.

Kevin Walbridge, a veteran refuse industry executive who helped put the new partnership together specifically to bid for Santa Rosa, said the company isn’t convinced it’s out of the running completely. The way he sees it, Santa Rosa may have “skipped a step” by not giving all the bidders a chance to compete based on the price.

“We didn’t talk about price at all,” Walbridge said.

Hurtado declined to detail the review process or confirm how price is being factored into the review. Whoever wins, city residents are likely to see significant increases in the cost of hauling garbage, recycled materials and yard waste, according to waste consultants hired by the city. Hurtado said the review panel is expected to schedule visits to the finalists’ operations soon, followed by a recommendation of a preferred option to the City Council sometime in late May.

Walbridge said his partnership has secured properties in Cotati where it would build a recycling facility as well as a compressed natural gas fueling station. He said they plan to keep developing those properties in case they might still have a role to play in the county’s changing refuse landscape.

“We’re optimistic people and we’re going to keep moving forward,” Walbridge said.

Officials at The Ratto Group have long pointed out that it is the only company with a local recycling operation. But questions from the review panel suggested some may have been concerned that Recology might not be able to perform if its purchase of The Ratto Group fell through or is delayed, Potashner said.

While the purchase, announced in late January, is a bit behind schedule, the deal is still on to close this summer, Potashner said. Recology is already involved in upgrading the Santa Rosa recycling facilities that have drawn scrutiny and steep fines from regulators over permit violations. Even if there are delays, the company could lease property from Ratto before the sale closes, if necessary, he said.

“We have viable backup options if needed, but the city for their part decided not to ever really look at those with us,” Potashner said.

Ratto spokesman Eric Koenigshofer declined to comment on what losing the Santa Rosa contract might mean for the value of the sale. But he pointed out that staff recommendations are just that — recommendations that elected officials can accept or reject.

You can reach Staff Writer Kevin McCallum at 707-521-5207 or kevin.mccallum@pressdemocrat.com.

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