The 65,000-square-foot, $7.4 million recycling plant built and operated by Sunset Waste Paper Co. in West Fresno (Calif.) is at the heart of the city's ambitious recycling program.
It also is at the heart of what figures to be the first controversial issue tackled by the Fresno City Council in 2002.
Sunset Waste signed in March 2000 a five-year contract to process all of Fresno's recyclable materials except green waste. These include aluminum and tin cans, newspaper, catalogs and glass bottles.
Now, Sunset Waste officials are seeking a 15-year contract extension, saying they need the extra time with a guaranteed revenue stream to get a fair return on their sizable investment. The new contract, they pledge, will be financially beneficial to the city.
Sunset Waste's competitors, though, strongly oppose the extension, saying the recycling program should be put out to bid again when the current contract expires in 2005. The integrity of the city's bid process is at stake, they say, and besides, Fresno might get an even better deal in the arena of open competition.
The council was divided, 4-3, when it voted last August to authorize the city staff and a consulting firm to negotiate terms of a new deal with Sunset Waste. The proposed deal is nearly done and should go before the council for approval or rejection Jan. 15.
Sunset Waste general partner Anthony Lisenko said there is no downside to his company's request. He said Sunset Waste has helped jump-start industrial growth in west Fresno with construction of its state-of-the-art recycling center. It has 48 employees, many coming from neighborhoods near the center, and could expand to employ 85 workers if a planned second shift begins next month, he added.
Asking for a contract extension is a common practice in his industry, Lisenko said. He hopes the council sees the financial and social benefits in granting the extension: "If you're doing a good job and meet all the requirements and everybody is happy and there's no obvious reason to change, they're going to reward you for that."
Among Sunset Waste's competitors, though, not everyone is happy. Jerry Murphy, district manager of USA Waste Management of California, said Fresno likely could strike a better deal if the contract is rebid in 2005: "I think [city officials] are going to lose that ability ... if they roll over on this."
Richard Caglia, head of corporate development for the Caglia family-owned Industrial Waste and Salvage of Fresno, said a five-year deal is a five-year deal.
Also, Caglia said, the city has made noises for the past year about reforming its bidding process. To grant Sunset Waste's contract extension, he said, would be a step back: "I feel [the extension request] undermines the integrity of the city's bid process."
Clovis Assistant Public Utilities Director Jim Palumbo said Sunset is correct when it says contract extensions are not unheard of in city government. In 1997, he said, Clovis gave a three-year extension to 2004 on BFI Waste Systems' green-waste contract.
Late last spring, competitors claimed that Sunset Waste's generosity in handing out campaign contributions may be a factor in how the City Council votes. In November 2000, The Bee reported that Sunset Waste and several top officials, including Lisenko, had contributed $21,000 to local campaigns. Late last week, though, the competitors backed off any suggestion that campaign contributions will be a factor. They acknowledged that their companies and top officials also have contributed to campaigns over the years.
Caglia is a District 7 City Council candidate in the March 5 primary. The seat is held by Council President Henry Perea, who will relinquish his seat because of term limits. Caglia is running against Keith Chun and Henry T. Perea, the incumbent's son.
The Bee contacted all seven council members; each said he will decide the extension request on its merits and is not afraid to vote against a campaign contributor's wishes if the public interest demands it.
Also last spring, Sunset Waste officials claimed that Mark Scozzari, then a consultant for BFI Waste, was creating a potential conflict of interest for a portion of the council since he has been active in many local political campaigns. Scozzari said at the time he had twice been a paid political consultant for Council Member Sal Quintero and his consulting firm has been involved in numerous Fresno-area campaigns, particularly with initiatives. Scozzari said Friday he is no longer a consultant for BFI Waste.
The council approved the hiring of the consulting firm of Hilton, Farnkopf and Hobson in August to hammer out details of the proposed contract extension. Public Utilities Interim Director Martin McIntyre said the current contract calls for the city to pay Sunset Waste $15 for every ton accepted and processed at the center. The city, in turn, gets 25% of the net profit from the center's marketable recyclables.
McIntyre said he would not divulge any details of the proposed extension until the deal is presented to the council. However, he added, the city wants the proposal to include a better definition of "net profit."
In the first three months of the 2001-02 fiscal year, the city received $701 in net profit from Sunset Waste, Solid Waste Division Manager Don Smith said.
If the consultant's report shows the new Sunset Waste deal would benefit the city and residents, McIntyre said, then "we would recommend it." The Fresno Bee