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The Dublin City Council voted unanimously last month to allow Livermore Sanitation Inc. to take over all of Dublin’s garbage and waste disposal needs in the wake of the sale of its former service provider.
The decision came after Dublin’s longtime garbage company, Amador Valley Industries, decided to sell the company to Waste Connections, a conglomerate in California that also owns LSI. AVI was owned by Bob Molinaro, one of the co-owners of the Pleasanton Garbage Service, who died in January 2023.
“The patriarch and founder of the company passed away and that led to an offer and we decided to sell,” Gina Molinaro-Cardera, daughter of Bob Molinaro, told the Pleasanton Weekly.
The Dublin council voted on Aug. 20 to approve a consent of assignment of AVI’s to the Livermore company, which means it transferred the existing contract AVI had with the city that had been extended to last until 2035.
Dublin Mayor Michael McCorriston said because this situation involved a large company acquiring, through its subsidiary, a relatively small company in the industry, he emphasized how important it will be for the new company to keep the status quo.
“I was assured … that service in general will not be disrupted, will not change,” McCorriston said during the meeting. “Our residents need to be assured that this is … a seamless move forward.”
Dublin first entered into a collection service agreement with AVI in July 2005. That agreement was set to expire in 2012 but thanks to five follow-up amendments to the agreement, Dublin had continued to receive AVI’s services up until recently.
The city had even amended and restated the agreement in 2020 to extend the term of the contract until 2035.
Michelle Sung, an environmental technician at Dublin’s Public Works Department, said the city had to then renegotiate the agreement with AVI in 2021 in order to support the city’s compliance with Senate Bill 1383, the “Short-Lived Climate Pollutants Reduction Strategy” that took effect in January 2022.
She said the SB 1381 amendment included collection systems updates, processing, education, customer services, record-keeping and reporting, procurement of recovered organic waste products and performance standards.
However, Sung said there were delays to the execution of the SB 1381 amendment due to AVI concerns over a multifamily bulk pickup pilot program and Molinaro’s death.
She also said that in December 2022, Dublin city staff worked with a consultant to conduct performance and compensation reviews of the garbage company.
The performance review identified shortfalls related to public education and outreach, diversion, reporting standards while the compensation review showed actual revenue collected during the 2022-23 fiscal year was higher than necessary to maintain the 90% industry standard operating margin.
All of those issues had either been addressed or remedied since then, but either way the company still notified its intent to sell to Waste Connections on March 8.
According to Sung, Waste Connections provides waste services to approximately 50 municipalities in California. It acquired the Livermore company in December 2022.
Sung said city staff then engaged with its consultant to perform a franchise assignment review in accordance with AVI’s amended and restated agreement from 2020. The review looked at both AVI and Waste Connections as well as the purchase agreement between LSI and AVI.
Sung said the Livermore company is expected to be able to maintain operations and that there is “no undue risk” anticipated by the city or its ratepayers.
However, one notable finding during the review, according to the staff report, was that “Waste Connections has been assessed $783,585 in liquidated damages for their failure to perform across five different jurisdictions and under two separate agreements.”
“The failures fell into four key performance areas: recurring issues with missed collections, failure to meet diversion standards, failure to perform the required outreach and education activities and failure to meet the minimum requirements to provide technical assistance,” according to the staff report.
The city’s consultant has provided recommendations to the council in the assignment review, which was also approved by the council, in order to mitigate these issues.
With that assignment approval, Waste Connections will have to follow certain enforcement mechanisms within the franchise agreement with the city that state the company has to perform and if it doesn’t then it would be subject to liquidated damages.
There is some hope that McCorriston said the larger company could bring newer, more updated systems, which would be a good thing. The acquisition will also promise to keep AVI employees — with the exception of leadership — and the AVI union contract will carry over to the new Livermore company.
Dublin City Manager Linda Smith also said she was hopeful that the new garbage company is here to stay for a long time, but she also said the contract has a 10-year lifespan so if the city decides it is not happy with the transition, it has time to find a new provider.
“(Waste Connections) have a reputation to uphold, both in the state of California as well as locally,” Smith said. “It’s in their best interest to please a client and so it would be my hope that … they’re here to stay.”
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