The City Council this week hired a new operator for the city’s recycling center. The company was selected even though it was hand-picked by the existing recycler, who allegedly bilked the state out of $33 million in fraudulent claims.
The 4-1 vote came after a lengthy discussion in which Councilman David Gordon repeatedly asked for details about what role the existing contractor — Burbank Recycling — might play at the facility, given its recommendation of newcomer Burrtec Waste Industries Inc. to take over the operation.
Senior Asst. City Attorney Terry Stevenson said the contract with Burrtec can be modified to include a mandate that Burbank Recycling’s owner Geoff Folsom will not be involved in the new operation.
By going with Burbank Recycling’s recommendation to hire Burrtec, the city receives $150,000 as part of its contract to cover expenses of transferring the operation. Following negotiations last month, Folsom’s company agreed to kick in an extra $100,000 if Burbank officials went with Burrtec.
But Gordon said he had serious concerns about how much Burbank Recycling was charging Burrtec to purchase the equipment.
“Quite frankly, I think we need to run as far away from this transaction as possible,” said Gordon, who cast the lone dissenting vote.
He argued that the city should put the contract out to bid to guarantee there are no ties to Folsom or his company.
Councilmen Dave Golonski and Gary Bric said that while they understood Gordon’s concerns, soliciting bids for the contract would cost about $5.8 million over the length of the five-contract, according to staff estimates.
City officials also calculated that transporting recyclables to Crown Disposal in Sun Valley for processing would cost $6.2 million.
Going with Burrtec would cost only $3.2 million and would give the center five years to regain state certification to receive CRV funds for curbside recycling, according to city officials.
Golonski said he wished the city had more time and money to deal with the situation, but it doesn’t have either.
“I don’t think anyone’s thrilled with the way this thing has played out,” he said.
At an earlier meeting, council members had requested Burrtec simply complete the remaining three years on Burbank Recycling’s five-year contract.
But during negotiations with the city, Burrtec contended that operating the center for only three years was cost prohibitive, said Public Works Director Bonnie Teaford.
With a five-year contract, Burrtec could recover its investment in the equipment, build a client base and resume getting CRV funds from the state for the city’s recyclables. The earliest Burrtec could apply for state certification would be October 2012, Teaford said.
In March, the California Department of Resources, Recycling and Recovery — known as CalRecycle — denied the city’s application for CRV reimbursement for its curbside recycling because Folsom allegedly made $33 million in fraudulent claims involving out-of-state beverage containers that were processed at a recycling facility in Long Beach.
When the city found out about the allegations, Folsom was notified that the contract to operate the recycling center would be terminated, Teaford said. The city then began searching for a replacement, with Burbank Recycling operating the center in the meantime.
Teaford said the city has vetted Burrtec thoroughly. The company is financially sound, has no past issues with the state and no business relations with Folsom or Burbank Recycling.
City hires new recycling operator
Council members express concern, but say this is the best deal.
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