Trash deal is scru­ti­nized

City of In­dus­try wants to redo or cancel con­tract with ex-mayor’s firm

Los Angeles Times - - CALIFORNIA - By Paul Pringle and Kim Chris­tensen

City of In­dus­try of­fi­cials are seek­ing to rene­go­ti­ate or pos­si­bly cancel a lu­cra­tive trash con­tract with a com­pany headed by for­mer Mayor Dave Perez as they scru­ti­nize years of busi­ness deals that ben­e­fited him and his rel­a­tives.

The roughly $12-mil­lion-a-year trash pact with Val­ley Vista Ser­vices is by far the rich­est ar­range­ment be­tween the city and com­pa­nies con­trolled by ex-Mayor Dave Perez and his rel­a­tives, whose grip on the city’s pol­i­tics and purs­es­trings has spanned decades. Busi­nesses linked to the fam­ily have been paid more than $326 mil­lion by In­dus­try over the past 20 years, a city-or­dered au­dit found this month.

An­other Perez com­pany, Zerep Man­age­ment, col­lected mil­lions of dol­lars an­nu­ally from a main­te­nance con­tract for city prop­er­ties, in­clud­ing the In­dus­try Hills Expo Cen­ter. The city ter­mi­nated that con­tract last Septem­ber. Perez’s wife, Carol, man­ages the Expo Cen­ter, which has lost mil­lions of dol­lars since 2006. She is an em­ployee of a com­pany not owned by the fam­ily, of­fi­cials said.

The au­dit by the firm KPMG drew fresh scru­tiny to the fam­ily’s

busi­ness deal­ings with the tiny mu­nic­i­pal­ity, pop­u­la­tion 400. For many, the find­ings came as lit­tle sur­prise. A Times in­ves­ti­ga­tion in 2009 laid out the prof­itable ties be­tween the Perezes and City Hall, with the fam­ily fran­chises ex­tend­ing be­yond trash pickup to street sweep­ing, lawn mow­ing and other ser­vices.

An in­quiry by the dis­trict at­tor­ney’s of­fice that be­gan that same year led to no charges be­ing filed.

Shortly af­ter the new au­dit was com­pleted, City Manager Kevin Radecki de­manded fi­nan­cial records and other doc­u­ments from Val­ley Vista — for­merly known as City of In­dus­try Dis­posal Co. — a first step to­ward pos­si­bly al­ter­ing or end­ing the con­tract with the com­pany that col­lects refuse from homes and busi­nesses. The con­tract extends to 2025.

In a let­ter to David M. Perez, who helps run Val­ley Vista and is a nephew of the for­mer mayor, Radecki wrote, “Un­for­tu­nately, over the past sev­eral years, the city has re­ceived nu­mer­ous com­plaints from city busi­nesses about the cost and qual­ity of ser­vices.”

Radecki also said in the let­ter that the city in­tends to de­ter­mine if the trash-haul­ing rates and level of ser­vice meet “the sat­is­fac­tion of the city manager.” He in­sisted that the com­pany pro­duce years of records on its own­er­ship and man­age­ment struc­ture, cus­tomer ac­counts, routes and trash ton­nage.

Perez fam­ily mem­bers ei­ther could not be reached for com­ment or did not re­spond to in­ter­view re­quests.

In an email ear­lier this month to City Coun­cil mem­bers and can­di­dates, a man who de­scribed him­self as an In­dus­try busi­ness owner said he paid sig­nif­i­cantly more for trash ser­vice than neigh­bor­ing cities charge. “I sim­ply can­not un­der­stand how you can turn a blind eye to this bla­tant abuse,” he wrote. The Times ob­tained the email through the state open records law.

The spe­cific rates cited in the email could not be im­me­di­ately ver­i­fied. Radecki said his of­fice is still gath­er­ing in­for­ma­tion on the rates. Val­ley Vista has asked for more time to turn over the billing records and other doc­u­ments, he said.

“Peo­ple have al­ways com­plained that the rates are too high,” Radecki said in an in­ter­view.

In ad­di­tion, he said the city is look­ing into whether Val­ley Vista might have vi­o­lated the con­tract terms by us­ing older trucks.

In a let­ter to Radecki last Septem­ber, af­ter the city moved to ter­mi­nate its main­te­nance agree­ment with Zerep, an at­tor­ney for the firm, Mark Austin, threat­ened to sue for breach of con­tract.

Austin crit­i­cized the city for de­mand­ing, be­gin­ning in 2012 “an oner­ous level of de­tail in its bills that had never be­fore been re­quired or re­quested.” He also con­tended the city owed the com­pany $740,000 for work it had com­pleted.

Austin struck a con­cil­ia­tory tone in sug­gest­ing the two sides work out a set­tle­ment, not­ing that “the long­stand­ing and mu­tu­ally ben­e­fi­cial his­tory be­tween Zerep and the city should not be tossed aside on a whim,” the let­ter states. He did re­spond to re­quests for com­ment Wed­nes­day.

Mean­while, a con­sult­ing firm hired by the city to an­a­lyze the Expo Cen­ter’s op­er­a­tions found it had lost money ev­ery fis­cal year since 2006-07, in amounts rang­ing from $752,000 that year to $1.2 mil­lion in 2010-11 and $885,000 in 2012-13, the most re­cent pe­riod ex­am­ined.

The 125-acre, gated prop­erty rents out space for wed­ding re­cep­tions, rodeos, busi­ness meet­ings, boxing matches, cul­tural fes­ti­vals and birth­day par­ties.

The re­port by PKF Con­sult­ing said the venue was un­likely to ever reach a break-even point un­less it found ways to in­crease rev­enue or cut costs.

“In short, the Expo Cen­ter is sim­ply not gen­er­at­ing enough in­come to cover the ex­penses re­quired to suc­cess­fully host its events and guests given the na­ture and qual­ity of its cur­rent client base,” ac­cord­ing to the Jan­uary 2014 re­port.

Among other things, the re­port ques­tioned an­nual main­te­nance costs of about $320,000. And at the same time it has been hem­or­rhag­ing money, the cen­ter also has given hefty dis­counts of up to 75% off its regular rates to city res­i­dents and em­ploy­ees, and oth­ers. Rates range from $450 for a wed­ding cer­e­mony at the Avalon Gar­den Gazebo to $5,000 for an all-day event at the Grand Arena.

Records re­viewed by The Times show that one city con­trac­tor, for ex­am­ple, paid $1,287 to rent space for a re­cent wed­ding re­cep­tion for 300 guests. The regular rate was $4,750.

Dis­counts were ap­proved for fundrais­ing events that sup­ported politi­cians, such as Wal­nut City Coun­cil­man Bob Pacheco and Los An­ge­les County Su­per­vi­sor Hilda So­lis. Val­ley Vista hosted the So­lis event in March 2014, city records show.

Oth­ers had their fees waived al­to­gether, in­clud­ing an In­dus­try City Coun­cil can­di­date sup­ported by the Perezes, Cory Moss, the records show.

“The prac­tice of of­fer­ing dis­counted rental rates to Expo Cen­ter em­ploy­ees and lo­cal res­i­dents and non­profit groups should be re­duced or elim­i­nated,” the con­sul­tants’ re­port noted. “We rec­om­mend that at a min­i­mum, man­age­ment con­tinue with its cur­rent poli­cies and that dis­count­ing be limited to non-peak, week­day events.”

“It’s be­ing mis­man­aged,” Radecki said of the cen­ter.

Radecki said he be­lieved the city’s re­view of the cen­ter is one rea­son the Perez fam­ily de­cided to back three coun­cil can­di­dates in next June’s elec­tion, a bid to a win a ma­jor­ity on the panel. The fam­ily’s in­flu­ence over City Hall has waned since Dave Perez stepped down as mayor in 2012, cit­ing de­clin­ing health.

In Fe­bru­ary, the rift be­tween city of­fi­cials and the Perezes in­ten­si­fied when Radecki’s staff asked the coun­cil to re­move Manuel Perez, the for­mer mayor’s brother, from the Plan­ning Com­mis­sion. The ac­tion was prompted by a fam­ily com­pany’s al­leged un­per­mit­ted use of leased prop­erty to store trucks.

Af­ter a code en­force­ment of­fi­cer re­ported the al­leged vi­o­la­tion, Manuel Perez be­rated the city plan­ning direc­tor over the phone, ac­cord­ing to a staff re­port.

“Com­mis­sioner Perez com­mu­ni­cated via yelling at the plan­ning direc­tor rather than us­ing a busi­ness-like tone, he stated that the trucks were in­deed be­ing stored for other peo­ple but that he is used to do­ing busi­ness his way and with­out city in­ter­fer­ence, and he be­lieves that the way things ‘used to be done’ at the city is bet­ter than the man­ner in which the city now op­er­ates,” the staff re­port stated.

Manuel Perez, 80, died ear­lier this month.

Luis Sinco Los An­ge­les Times

THE CITY OF IN­DUS­TRY

hopes to cancel or rene­go­ti­ate its $12-mil­lion-a-year trash con­tract with Val­ley Vista Ser­vices.

Karen Tapia Los An­ge­les Times

A SIGN on Ha­cienda Boule­vard iden­ti­fies City of In­dus­try. The tiny San Gabriel Val­ley mu­nic­i­pal­ity has a pop­u­la­tion of 400.

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