Thousand Oaks Ordered to Transfer Trash Contracts

SANTA BARBARA —  Overruling a unanimous Thousand Oaks City Council decision, a U.S. Bankruptcy Court judge on Thursday ordered the transfer of the city’s trash-hauling contracts to Western Waste Industries, saying that the terms of the transfer more than adequately protect the city from harm.

In September, the City Council voted 4 to 0 to oppose the transfer of the contracts--now controlled by a subsidiary of Simi Valley-based G.I. Industries--to Western Waste Industries, saying that the company has a “rap sheet” of corruption and mismanagement.

The judge’s ruling clears the way for G.I. Industries to complete its reorganization and fight its way out of bankruptcy.

But the decision also opens up the possibility that the Thousand Oaks City Council will try to appeal the ruling to a higher court.

“It’s really up to the council now,” Assistant City Atty. Nancy Kierstyn Schreiner said outside the courtroom.

Mayor Andy Fox said city officials had anticipated the judge’s decision and negotiated terms for the transfer of the contract, worth about $3.5 million a year, that would protect the city. Fox was unsure whether he would recommend appealing the decision.

“Obviously, we’re disappointed,” Fox said. “Now we have to decide if we’ve stipulated enough conditions . . . to protect the city, and what our prospects for appeal are. I’m not ruling anything out.”

Although upset over the ruling, Councilman Mike Markey, who voiced some of the strongest opposition to the transfer, said he will wait until the council considers the decision early next month before making up his mind about what the city should do next.

City officials were concerned about Western Waste’s involvement in recent political corruption cases in Compton and Louisiana. The company has also been named as a target in an FBI political corruption probe in Riverside County.

“Western Waste Industries has notoriously violated health and solid waste laws, corrupted public officials, and has mismanaged its business to the tune of astronomical fines and landing key executives and managers in jail or on probation,” city officials argued in documents filed with the court.

But Judge Robin Riblet said during Thursday’s hearing that the council’s objections were unreasonable because Western Waste Industries was “banished from the picture” and would have nothing to do with trash hauling in Thousand Oaks.

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Under the transfer--a technicality required because Western Waste plans to take controlling interest in G.I. Industries--G.I. would continue to perform the trash hauling, and service would remain unchanged, company officials have said.

Although Western Waste will hold controlling interest in G.I. Industries, Riblet said Western will not be involved in the day-to-day operations of the firm, which also has contracts to pick up trash in Simi Valley, Moorpark and the unincorporated portions of eastern Ventura County.

The takeover is part of a complicated bankruptcy reorganization plan for G.I. that calls for Western to control about 85% of G.I.’s stock and operate the firm as a wholly owned subsidiary.

Western, California’s largest trash hauler, is being gobbled up by Dallas-based USA Waste Services, creating one of the nation’s largest waste-hauling companies. The proposed merged company would have estimated revenues of $800 million and assets of more than $1 billion, said Thousand Oaks city officials.

Western would be operated as a subsidiary of USA Waste Services. USA Waste Services would ultimately control G.I., officials with both companies said Thursday.

Riblet said USA Waste Services “has no hint of criminal activity in its past.”

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Although Mike Smith, the chief executive officer of G.I. Industries, will continue to run the day-to-day operations of G.I., Kierstyn Schreiner called the reorganization “a corporate shell game” that makes it impossible to tell who is really in charge.

The transfer includes stipulations that the Thousand Oaks City Council would be informed of any change in management at G.I. The city would also receive about $400,000 over the next 12 years that could be used for community outreach related to trash and recycling, Kierstyn Schreiner said.

Finally, USA Waste Services will guarantee the Thousand Oaks trash-hauling contract if for some reason G.I. cannot fulfill the terms of the contract.