DWR to Sell to Recology in October – City Refuses to Waive Right of First Refusal

The Vanguard has received correspondence between Davis Waste Removal and the City of Davis indicating that the current owners of DWR are retiring and have sold the waste removal business to Recology, Inc., which company “would purchase all of the assets of DWR and continue DWR’s operations in the City of Davis.”

In the letter, the owners Paul Hart and Paul Geisler indicate, “Recology is a local company (founded in San Francisco) with operations only in California, Oregon and Washington. Recology is an employee owned company and we believe that they will be able to continue providing the same excellent service that we at DWR have given you for the last 45 years.”

As noted, “Section 9 of our contract with the City of Davis allows the City first right of refusal in the event of a sale. We ask that the City waive this right. It is the intention of both Recology and DWR that the transaction be completed by October 31, 2017.”

The city of Davis has an exclusive franchise waste agreement with Davis Waste Removal, a local private hauler.  DWR collects trash, recyclables, organics, yard material piles, and performs street sweeping within the city limits.

They have provided Davis with solid waste service since 1976 and most recently updated their contract in 2015.

In the response letter from City Manager Dirk Brazil, he indicated, “Since our meeting, we have reviewed the DWR Franchise agreement regarding the proposed transfer of the assets of DWR to Recology and the continuation of service under the Franchise.

“As you are aware the Franchise contains two provisions relevant to your proposal. First, section 19 grants the City a right of first refusal to purchase all or any portion of the DWR’s business operations facilities and/or equipment and improvements. Second, section 16.h. provides for the process and standards for City approval of any proposed change in ownership, transfer or assignment of the Franchise.”

Dirk Brazil stated that “we do not believe the City is in a position to waive its right of first refusal at this time.”

Instead, he cited “several pending issues,” and these include “a review of the current organics 1 loose on the street pick up program, organics disposal feasibility study, solid waste rate study, and changes at the Yolo County Central Landfill…”

Rather, Mr. Brazil stated that “we believe the orderly way to proceed is for DWR and Recology (to) make a request to transfer under section 16.h, together with a request to waive the right of first refusal under section 19.”

He continued, “[T]his request would include the information that would support the City finding that Recology, as the proposed transferee, ‘has the prior experience in cities of similar complexity and the capacity to perform, the reputation, responsibility, reliability and integrity equal to or better than the current Franchisee and that the assignment or transfer is in the public interest.’”

The city manager states, “This request must be accompanied by a non-refundable deposit of $75,000 to cover the city ‘s costs, as set forth in section 16.h.  Once this request and the supporting materials are provided and the deposit is made, the City will commence an evaluation of the transfer and an analysis of whether the City wishes to exercise its right of first refusal in whole or in part.

“We will, in good faith, proceed as expeditiously as possible but we cannot, at this time, state that we will be able to complete this review and bring the matter to the Council for a final decision, prior to your proposed closing date of end of October. Once we receive the complete request, we will be in a better position to provide an estimate of the time it will take to complete the review and bring it forward to the Council.”

—David M. Greenwald reporting