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Wednesday, October 31, 2012

County changes rules to help trash hauling firm

A sometimes controversial trash hauling firm got a boost this month from Palm Beach County commissioners. A majority instructed staff to change bidding rules so that the firm could compete for millions in county business, despite its lack of experience with the biggest jobs.

At stake are lucrative hauling contracts created as the county changes its approach to how residential garbage is handled in unincorporated Palm Beach County.

Commissioners will consider easing requirements today to allow Southern Waste Systems to compete. The company’s founder, Anthony Lomangino, once was among New York City’s largest commercial haulers, but his Palm Beach County company has limited experience picking up residential garbage.

Instead of individual companies vying to service 11 districts, the county is moving to far fewer districts — possibly as few as three —with many more customers. The move, commissioners and Solid Waste Authority staff say, is meant to inject more competition by ensuring that there will be only a limited number of haulers, who will then compete by offering lower rates. Additionally, fewer haulers will result in more uniform rates.

The smaller number of haulers will be responsible for servicing tens of thousands of homes, one reason why county staffers originally wanted any winning bidder to have handled large contracts of 30,000 or more residential customers.

Southern Waste Systems handles only about 7,000 curbside households in Palm Beach County, according to the Solid Waste Authority, although the company says it services 12,500 homes in Lauderhill.

Those relatively modest numbers didn’t stop commissioners from pushing to ensure it would have a shot at the business.

Despite concerns expressed by the waste agency’s staff, commissioners agreed with Southern Waste representatives that the experience of individuals in the firm — not the track record of large accounts — should count.

Staffers cautioned that the company hasn’t demonstrated its ability to handle contracts of this size and argued that even with experienced managers, it was essentially a start up.

“It’s very likely that if you relax standards too far, someone is going to fall on their face,” said one.

Commissioners weren’t buying it.

“This is like saying if Lee Iacocca started a new company to build cars we would turn him down because (the company) has no previous experience,” Commissioner Burt Aaronson said at an Oct.10 workshop. “I don’t buy that all.”

Aaronson said he was not familiar with the company, but added, “People who have experience and people who have the financial wherewithal should be entitled to bid.” Commissioners Karen Marcus, Shelley Vana, Priscilla Taylor and Steven Abrams made similar comments of support for opening bidding to Southern Waste.

“It goes back to people,” Southern Waste Vice President Patti Hamilton said. “It always goes back to people.” She and company lobbyist Ken Pruitt, a former state Senate president, have urged the change.

Lomangino, who started Southern Waste in Lantana in 1999, was the first to launch wide-scale construction debris recycling in New York in the 1970s. He grew his family’s business into one of the largest commercial haulers in the city.

At the time, New York’s commercial waste hauling was tightly controlled by trade associations, which carved the city into districts. Some associations used violence and intimidation to force out competitors and rig bids, keeping commercial rates in that city among the highest in the nation.

The trash-hauling groups were the target of a sweeping series of indictments in the mid-1990s. Lomangino was never charged with wrongdoing. “Anthony Lomangino has never been charged with a crime, never indicted and really the reason why he left New York is because he wouldn’t play that game with the cartel people,” said Bruce Rogow, Southern Waste’s attorney.

Lomangino sold his business for about $200 million to Waste Management Inc., which kept him on. In 1997, trade industry reports said that Lomangino left that company because the New York City Trade Waste Commission had balked at approving its license.

He left because regulators “floated” the idea of requiring the company to hire an internal monitor, a burden Lomangino did not want to put the company through, said attorney Amy Galloway, who also represents Southern Waste.

The controversy surrounding the indictments — and Lomangino’s Italian nationality —worked against him, Galloway said. “It was obviously continuing to dog him in the sale of his company so the man did … seemingly made a business decision, which was, you know what? Let me just go ahead and step aside so there is no power or shadow that is going to continue to create expense or further resource commitment to your moving forward.”

Lomangino no longer has an affiliation with Waste Management, which does residential business in Palm Beach County.

Lomangino moved to South Florida and created Southern Waste. Among Southern’s key employees is Anthony Badala. In 2005, Badala was one of 23 arrested in a Broward County crackdown centering on Bonanno crime family captain Gerard Chilli. At the heart of the investigation were allegations of loan sharking, stock market scams, offshore sports betting and stealing $300,000 worth of liquor, salmon and veal.

Badala was charged with racketeering and bookmaking. The charges were dropped. Instead, Badala entered a plea of guilty to gambling for money and was sentenced to six months of probation. “That does not make him part of the folks who were running that bookmaking organization or entity in any respect,” Galloway said. “He was ultimately found guilty of placing a bet, not being part of any family or criminal enterprise.”

The company has racked up successes. As part of a joint venture, it was instrumental in opening parts of Broward County’s garbage operations to competition. Sun Recycling, an affiliated company, is the region’s top construction debris recycler. And Southern Waste has won contracts to service municipalities in Palm Beach County, including Pahokee and South Bay.

Success hasn’t come without bumps. Last August, the city attorney for Miami wrote that Southern Waste had failed to comply with its contract “in numerous respects, including, but not limited to, the payment of all franchise fees due to the city.” In 2010, Miami auditors determined Southern Waste had not paid $36,704 in franchise fees. Those fees subsequently were paid. In Miami Beach in 2011, Southern paid $13,647 in franchise fees after auditors found a shortfall.

A similar problem had cropped up in 2006 in Martin County, where Martin terminated its franchise agreement in part because Southern had not paid roughly $19,392 in franchise fees, according to county documents. The county eventually agreed to a payment of about $3,000, said Galloway, and granted the company another franchise.

In Broward in 2007, that county’s environmental protection department slapped Sun Recycling with a fine of more than $280,000 for illegal dumping. Sun already had begun to clean up some sites, but in justifying the six-figure fine, the hearing officer wrote in 2007 that, “The evidence reflects a history of noncompliance.” Galloway, who describes the resolution to the dispute as “cooperative,” said “Sun stepped up” to accept responsibility, and in a later finding, the same hearing officer said Sun’s work on remedying the problem was commendable.

The Sun Recycling plant drew complaints in 2010 from residents of the Osborne neighborhood in Lake Worth of noise, odors, vibration and dust that triggered health problems. A consultant hired by Southern Waste concluded the offshoot of debris processed at the plant did not exceed federal guidelines, and in 30 inspections by Solid Waste Authority staffers, only one violation was found.

County Commissioner Abrams, who is chairman of the county’s Solid Waste Authority, said he wasn’t concerned about Sun’s Palm Beach County plant. “They resolved the issues promptly,” Abrams said.

But it’s not complaints that worried county staff. It is the smaller size of Southern Waste’s current residential contracts. If it wins one of the contracts for county services, it could be serving as many as 90,000 customers.

“It’s really a scale issue,” SWA Managing Director Dan Pellowitz said.

Still, at the commission’s direction, the staff revised its requirements to allow Southern Waste to bid. Previous requirements called for a hauler to service at least 30,000 residences before it could be considered. The requirements to be considered today have no minimum.

That’s not a problem, said Southern Waste’s Hamilton, who expressed confidence that the company could quickly buy enough trucks to handle the work. The main point, she said, is the opportunity to bid. “We aren’t guaranteeing that we are coming in with the lowest price and we may not win, but we just want the opportunity to participate.”


1 comment:

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