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Hawaiian Gardens Will Terminate Trash Hauler Contract Due to “Material Breaches”

Among several other breaches, City alleges Commercial Waste Services inaccurately reported its diversion rates.

BY BRIAN HEWS • Nov. 11, 2019

The Hawaiian Gardens City Council, at its regular meeting tommorow night, will terminate its trash hauling contract with Montebello-based Commercial Waste Services deeming Commercial in default “for numerous material breaches including monetary and non-monetary.”

The City Staff report cited the most significant defaults to be: inaccurate reporting to the City regarding its waste collection and diversion; continual misrepresentations and/or omissions to the City, including the failure to purchase a new clean air fleet to service the City and the failure to obtain the requisite insurance; and non-compliance with California laws, including AB 939, AB 1826, and AB 341. 

AB 939, also known as the Integrated Waste Management Act of 1989, compels all California municipalities to divert 50% of the waste from landfills, whether through reduction, recycling or other approved means. 

AB 341 requires mandatory multi-family and commercial recycling programs; the purpose of this law is to support an effort to reduce greenhouse gas emissions.

AB 1826 requires businesses to recycle their organic waste, depending on the amount of waste they generate per week. AB 1826 also requires that cities implement an organic waste recycling program to divert organic green waste generated by multi-family buildings. 

The City stated that staff has attempted to work with CWS to cure the breaches and defaults and has provided CWS with numerous Notices of Default from March 25, 2019 through November 4, 2019, each of which gave CWS steps to resolve the defaults.

In addition to the default notices, the City also attempted to arrange meetings with CWS but CWS did not attend most meetings.

The first default notice issued in March informed CWS of two material breaches resulting from CWS’s failure to pay the 2018 fourth quarter Franchise Fee, which is 10% of its gross revenues, and its failure to a pay the one-time administrative fee of $100,000.

The second notice sent in June identified breaches resulting from CWS having failed to ensure the City met the diversion rates required by AB 939. 

CalRecycle, in a “Reporting Conference” call with the City, indicated the diversion reports submitted by CWS were not successfully implemented or maintained. Due to the discrepancies, CalRecycle asked the City submit an informal action plan to address the deficiencies or receive a formal non-compliance notice. 

The notice also accused CWS of “inaccurate” diversion rates and provided reports comparing CWS’ diversion rates to California’s rates.

CWS reported diversion rate was 42.21% while California’s report showed 18.13%

In response, CWS attempted to resolve the breaches by providing: proof of insurance coverage; receipts showing it had placed an order for the new clean air fleet but did not provide proof of a delivery date before August 1, 2019; a performance bond for the period of June 13, 2019 through June 12, 2020; and paying the late penalties for the Administration Fee.

But the situation became increasingly worse and the City was forced to implement an audit of CWS financials and diversion rates.

The City hired MuniEnvironmental to conduct an audit, but during the course of the examination, CWS “failed to provide the requested documentation, or provided documentation that was incomplete.” 

During that time, CWS once again failed to pay several fees to the City, including a $20,000 payment for AB 939 programs and a $25,000 audit program fee.

Further the City would later learn that CWS was in obvious financial trouble when they investigated and found that CWS’ general insurance and worker’s compensation insurance had been cancelled.

“You could see this coming from the beginning,” said one industry consultant who did not want to be identified, “the consultant the City hired told the Council the cost they were charging was far below their overall costs, CWS charged $14 per household and it probably cost over $20. But former Mayor Barry Bruce, former Councilwoman Marianna Rios, and current Councilman Hank Trimble voted yes and now the City is paying for it.”

It has been reported by residents that the service has become increasingly shoddy in recent weeks with “dumpsters overflowing” in some areas.

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Californians’ need a Statewide proposition to prohibit trash collectors from making any kind of monetary contributions to elections campaigns. Sad, read a about these trash collectors all the time, tainting the elections. Hawaiian Gardens, hundred years ago used to be a public sanitation dump, the city really should start monitoring the methane gas coming up from the soil in many neighborhoods throughout the city; more then convinced lot of deadly toxic fumes are coming out of the soil underneath city limits. Shame, shame, that a City compared to Hawaiian Gardens, close-by to the ocean, has not improved its housing or… Read more »