In the wake of a damning audit report issued last month, the City of Santa Rosa has signaled its intentions to end a longstanding franchise agreement with North Bay Corporation, whose subsidiary Redwood Empire Disposal provides garbage and recycling collection for West Marin. The move would deal a major blow to the company, which has enjoyed exclusive collection rights for 50,000 homes and businesses in Santa Rosa that make up nearly 25 percent of its total business.
The audit, undertaken at the city’s request, found that North Bay had violated the terms of its agreement in several areas, including not meeting minimum requirements for diverting recyclables from landfill disposal, operating an unpermitted solid waste facility, failing to upkeep its fleet of trucks and not having adequate management. The company faces potential fines from the city ranging from $100 a day to as much as $100,000 annually.
The audit followed a cease-and-desist order issued by Sonoma County in August for North Bay’s Santa Rosa recycling facility, which receives more garbage than what its permit allows and has accrued fines of nearly $300,000. Several years ago, in 2007, Santa Rosa slapped North Bay with a $1.2 million fine for failing to properly maintain its aging fleet—a penalty the city’s deputy manager, Gloria Hurtado, said should have prompted the company to take a closer look at its franchise agreement.
Ms. Hurtado plans to recommend next month that city councilors not authorize an extension to that agreement, which expires at the end of 2017, and instead put the contract out for competitive bidding.
North Bay, which is owned by James Ratto of the Ratto Group, has indicated that it will not seek an extension of the current contract. Faced with mounting fines and dramatically declining profits due to a down international recyclables market, the company said it had decided not to seek an extension even before the audit report was released.
“Economically, [the Santa Rosa franchise] doesn’t make sense anymore,” said Rick Downey, North Bay’s general manager. “That’s what it boils down to.”
The company does plan to bid on a new contract, Mr. Downey said; however, Ms. Hurtado intimated that the chances of North Bay winning that bid might be slim.
“Anything is possible,” she said. “But certainly contract performance is something we would take a look at during the [bidding] process.”
Per the franchise agreement, the company may not use any collection equipment older than 10 years and must rebuild trucks over five years old. The audit noted that the company’s fleet consists of trucks around twice that age.
Further troubling to auditors was North Bay’s questionable reporting on how much recyclables, compostable materials and other reusable items it keeps out of the landfill. Though North Bay reported it diverted more than the city-required minimum of 45 percent of its collected waste away from landfills in 2013 and 2014, the audit found that tally was closer to 39 percent in 2014.
Several requests for documentation supporting the company’s diversion rates went unanswered, the audit noted. Auditors also found many more rats at the company’s recycling facility than any other similar site visited in over 20 years, as well as safety concerns that seemed like “accidents waiting to happen.”
The audit also criticized the company’s lack of managers, noting that collection supervisors each oversee an unwieldy 30 routes a day and that the company went without a general manager for over 10 years. For his part, Mr. Downey—who was hired as the general manager in October—agreed that several issues outlined in the audit were in need of correction, though he has described some as “mainly bluster.”
Despite a potential pull-out from one of its largest customers, Mr. Downey reassured that the company would continue serving West Marin. North Bay has held a contract with Marin County to provide garbage collection in West Marin and Novato since 1992. (It also serves all of Sonoma County except for the City of Sonoma.)
“It affects nobody else except our contract with the City of Santa Rosa,” Mr. Downey said. “Nothing will change for you guys.”
West Marin locals have long complained that Redwood Empire trucks have been dumping the contents of both garbage and recycling bins in the same truck compartment. The company last month responded by clarifying that drivers had been collecting recycling and garbage in single compartments so that drivers could recoup lost time and gas after a smaller truck used to navigate West Marin’s narrower roads broke down.
Company officials have reiterated that drivers have been directed to discontinue the practice and, instead, to make two trips—one for garbage, one for recycling.
The company is also awaiting approval from the Sonoma County Department of Health Services for a solid waste permit that would allow North Bay’s recycling facility to have more than 10 percent of the waste it receives be unrecyclable garbage—a benchmark that the facility currently does not meet under its current use permit. The new permit would end the onslaught of cease-and-desist fines.
Spurred on by the audit, Mr. Downey noted the company plans to hire more managerial staff and add newer trucks to its fleet. A response from North Bay on the audit is expected to arrive before the Santa Rosa City Council takes up the matter on July 12.
This article was corrected on June 11.