OAKLAND -- The City Council handed over Oakland's $1 billion garbage and recycling franchise to a homegrown upstart that will charge homeowners lower rates than its top competitor but might not be able to deliver service when the contract begins next July.

The unanimous vote late Wednesday to pick California Waste Solutions over Houston-based Waste Management sparked an uncharacteristically joyous scene at City Hall.

Several council members hugged, gave each other high-fives and posed for group photos. Chants of "Oakland" and "Cal Waste," rang from inside and outside of the council chamber.

Johnny Santillanes, a commercial driver for California Waste Solutions, makes his rounds in San Jose on June 21, 2007.
Johnny Santillanes, a commercial driver for California Waste Solutions, makes his rounds in San Jose on June 21, 2007. (Maria J. Avila/Mercury News file)

"I think part of why people are so excited is that this is a victory people didn't think we could achieve," Councilwoman Rebecca Kaplan said after the vote. "This means lower rates, more local jobs and a billion dollars that will recirculate in Oakland."

California Waste Solutions, which currently has a share of the city's curbside recycling business, has enjoyed widespread political support since it was founded 29 years ago by Oakland resident David Duong.

On the other hand, Waste Management, which has held the city's garbage contract for more than a century, appeared to have worn out its welcome. The company engendered ill will for a 2007 lockout of its workers that left trash sitting on curbsides for days. And council members faulted it for being reluctant to partner with East Bay Municipal Utility District and the nonprofit Civicorps, which provides job training and runs a program collecting food waste from restaurants.


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Company spokesman David Tucker said Waste Management was "disappointed" by the vote and cited a report from city staffers cautioning that the risks associated with selecting California Waste Solutions "outweigh the monetary benefit that might accrue to the ratepayers."

Garbage bills were guaranteed to go up considerably no matter which company got the contract, but the $84-a-year increase for homeowners next year is about half as much as first anticipated and about $23 less than Waste Management's final offer.

The 10-year contract, however, does allow higher-than-anticipated rate increases from 2016 through 2019.

Rising fees stem in part from requirements that the company will divert more waste from landfills, provide green bins to apartment dwellers and do more to halt illegal dumping on city streets.

Duong said he was able to offer a better price because he got low rates to use a local landfill and had less overhead than Waste Management. "We don't have to send back profits to headquarters in Texas," he said. "Our headquarters are here in Oakland."

California Waste Solutions, which also provides curbside recycling pickup in San Jose, has never held a domestic garbage contract. The council decision to pick the company over Waste Management came against the recommendation of top city staffers, who, citing an independent consultant's report, warned that the company might not be ready to do the job when the contract begins next July.

Public Works Director Brooke Levin said the city will have to hire more workers to handle the transition because California Waste Solutions doesn't have facilities or a billing system in place.

"They are on an extremely tight time frame," she told council members. "There aren't even a few days of wiggle room in this process."

The company must now go out and buy trucks, bins, build a facility to sort waste, hire workers and boost its administrative capacity. Council members say their concerns about the transition were satisfied when the company struck a deal with Republic Services, a national garbage and recycling firm, to provide backup support if the sorting station isn't completed.

Duong said that 69 percent of his workers are Oakland residents. The city has encouraged the firm's growth over the years as a local alternative to the major national garbage companies. Council members treated Wednesday's vote almost as if Duong was a surrogate son on his graduation day.

Councilman Larry Reid, whose daughter worked for California Waste Solutions, spoke about first meeting Duong and how proud Duong's father would be if he were alive to watch the council vote. Reid then praised his colleagues for their willingness to take a risk on the firm. "I am just proud that we are not turning our backs on a local company that has its roots here in the city of Oakland," he said.

Contact Matthew Artz at 510-208-6435.