Report Faults Disposal Service Operations

Besides facing ongoing allegations of fraud, the trash and recycling companies that hold contracts with the city also have some operational problems, a consultant’s study found.

The Newport Beach-based consulting firm of Hilton Farnkopf & Hobson found that Orange Disposal Service Inc., the city’s longtime trash hauler, and Orange Resource Recovery Systems Inc., its recycling subsidiary, do not keep adequate records and lack written rules and procedures in some cases.

They may also have overcharged residents for the $4.2-million recycling plant by about $1 million, according to the report, presented to City Council members Tuesday.

Rate payers also may have been improperly charged about $1.7 million for business promotions, advertising and donations made by the companies.

Generally, operations for trash hauling were efficient, and most costs were in line with industry standards, the report said. But the recycling plant, built in 1994 specifically to meet state mandates to cut landfill waste in half by 2000, cannot meet that goal, the report said.

A “green waste” program that would recycle organic matter would have to be started to reduce the amount of trash going to the landfill. The plant is not large enough to take on that task, the report concluded.

The companies have been under scrutiny since April 1997, when police began investigating allegations that the recycling company may have misappropriated more than $6 million in municipal funds. That investigation is now being handled by the district attorney’s office.

The consultant was hired to review the operations and policies of both companies and did not consider the fraud allegations, city officials said.

The contract with Orange Disposal, signed in 1955, was not renewed and expires in 2000. The recycling contract expires in 2006.