HomeMy WebLinkAbout1997-05-27; City Council; 14179; CONSENT TO ASSIGNMENT OF SOLID WASTE SERVICESAB# I’/,f’)9
MTG. 5/27/97
DEPT. CM
TITLE: DEPT. HD.
CONSENT TO ASSIGNMENT
OF SOLID WASTE SERVICES CITY ATTY.
CITY MGR
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RESOLUTION NO, 97-463
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, CONSENTING TO THE
TRANSFER OF STOCK OF COAST WASTE
MANAGEMENT TO USA WASTE SERVICES, INC.
WHEREAS, Coast Waste Management, Inc. (“Coast Waste Managen
locally owned and operated waste services company which has for mz
provided solid waste services to Carlsbad and its residents and businesses pi
that certain REFUSE AND RECYCLABLES COLLECTION SERVICES CC
dated August 1991 (the ‘Contract”), a copy of which is on file in the Office c
Clerk; and
WHEREAS, said contract was entered into in August of 1991 betwee
and Coast Waste Management for an original 19 month term, with ye;
extensions thereafter, and with an extension from February 28, 1997, to April
an extension again to May’ 31, 1997, and an extension to June 30, 1997,
contract scheduled to terminate on the close of business June 30, 1997; and
WHEREAS, Coast Waste Management has proposed a stock transfer
Waste as set forth in the materials on file herein provided by Coast Waste Mat
and USA Waste and as addressed in the staff report and in the report of
outside consultant, Hilton, Farnkopf, & Hobson, and said stock transfer req
consent of the City pursuant to the terms of said contract; and
WHEREAS, Coast Waste Management and USA Waste understand tha
contract rights existing expire on June 30, 1997 unless Carlsbad, in its sole d
determines to further extend the contract; and
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WHEREAS, the City Council has duly considered the request of Coz
Management and of USA Waste for approval of the proposed stock transfer,
considered the staff report and recommendation, and has duly considered tl
analysis, and recommendation of the outside consulting firm of Hilton, F;
Hobson;and
WHEREAS, this action is exempt from CEQA because it can be !
certainty that there is no possibility of a significant environmental effect resu
consent to the stock transfer because the same waste service activities wil
whether or not the stock transfer is approved, as only the operator and contrac
will change; and
WHEREAS, this matter was duly considered at a public meeting o
Council held on May 27, 1997, at which Coast Waste Management, USA v\i
interested members of the public were heard and at which City staff and
outside consultant were present to answer questions and make their reports; i
WHEREAS, having considered all of the information on file hc
representations and assurances of Coast Waste Management and USA VI
public comments received at the public meeting, and the reports of the staff ar
consultant, the City Council finds, subject to the terms and conditions he
approval of the stock transfer is consistent with the above-referenced contrac
furtherance of the public health, safety, and general welfare; and
WHEREAS, the City Council further finds that, subject to the tc
conditions hereof, Coast Waste Management under its new ownership by U:
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can and will provide good quality service to the City and its residents and busii
reasonable rates.
NOW, THEREFORE, BE IT HEREBY RESOLVED AS FOLLOWS:
1. The foregoing recitals are true and correct.
2. Consent to Stock Transfer.
Pursuant to section 12.0 of the REFUSE AND RECYCLABLES COL
SERVICES CONTRACT dated August 1991 as extended through June 30,
City Council hereby grants its consent to the stock transfer between Coz
Management and USA Waste resulting in the ownership of Coast Waste Mal
by USA Waste, in conformance with and in reliance on the representations
Waste Management and USA Waste on file herein and subject to the
conditions which the City Cquncil finds and determines are necessary to (1) el
the level of service to Carlsbad and its residents and businesses is not E
decline; (2) ensure that the cost to ratepayers does not increase as a result of
transfer; (3) ensure that there is a clear understanding on the part of all partie
rights under the contract expire on June 30, 1997, unless further extended ii
discretion of Carlsbad; (4) ensure that the public health, safety, and general w
protected:
a. The Contract Term; Termination.
The rights of Coast Waste Management under its new ownershi
Waste pursuant to Resolution are limited to the rights set forth in the above-r
REFUSE AND RECYCLABLES COLLECTION SERVICES CONTRACT as
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through June 30, 1997, and Coast Waste Management and USA Wa
represented to Carlsbad that they understand, acknowledge, and agree th
Coast Waste Management nor USA Waste has any rights under said contrac
or implied, extending beyond June 30, 1997. Coast Waste Management
Waste have further represented to Carlsbad that they understand, acknowk
agree that Carlsbad, in its sole discretion, may or may not determine to ex
contract beyond June 30, 1997, and that Carlsbad has made no repre
express or implied, that it will extend said contract beyond June 30, 1997. Col
Management and USA Waste have further represented to Carlsbad
understand, acknowledge, and agree that unless extended in writing all rig
said contract shall automatically expire effective June 30, 1997.
b. Possible Longer Term Agreement; Possible New Franchis
Carlsbad, Coast Waste Management, and USA Waste t
preliminary discussions about the possibility of negotiating a longer term
relationship and about the possibility of revising the terms of the contract. Co
Management and USA Waste have represented to Carlsbad that they ur
acknowledge, and agree that no promise in this regard has been made by
express or implied, and that such discussions about a longer term relations1
revisions to the contract may or may not occur in the future. Coast Waste Ma
and USA Waste have further represented to Carlsbad that they acki
understand, and agree that any such discussions which may have occurred ir
or which may occur in the future, have not and will not alter the fact th
extended by Carlsbad as provided herein, all contract rights in Coa
Management and USA Waste will expire as of June 30, 1997.
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C. Service to Customers.
In adopting this Resolution, the City Council acknowledges tl
Waste Management has, historically, provided good service to Carlsbac
residents and businesses under the above-referenced contract, and Carlsba
and will insist that the customer services provided by Coast Waste Managem
its new ownership by USA Waste will continue to provide as good or better
customers.
d. Financial and Other Reporting.
In adopting this Resolution, the City Council acknowledges tl
Waste Management has, from time to time in the past, been deficient in it:
reporting and other permitting and reporting obligations under the COI
distinguished from its delivery of services to customers. In adopting this Reso
City Council is relying on the representations of Coast Waste Management
Waste that Coast Waste Management, under its new USA Waste owne
improve reporting and eliminate such deficiencies in the future by providing a
and other reports required by the contract in a timely manner.
e. Rates.
In adopting this Resolution, the City Council relies on the repres
understanding, acknowledgment, and agreement of Coast Waste Manage
USA Waste that there will be no request for an increase in rates as a result 0'
transfer and change in ownership of Coast Waste Management. Further
Council relies on the representations, understanding, agreement, and acknov
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of Coast Waste Management and USA Waste that, in the event that Carlsb
discretion determines to extend the existing contract beyond June 30, 1997, t
be no request for rate increases prior to June 1, 1998, except (1) periodic req
increases in conformance with an accepted inflation index; (2) requests to pass
any increase in landfill disposal charges; (3) requests to pass through any in(
taxes or fees directly applicable to the performance of services under the cor
(4) reflecting other significant and unforeseen cost increases which the City
reasonably determines are beyond the control of Coast Waste Managemer
USA Waste. Coast Waste Management and USA Waste represent, unc
acknowledge, and agree that the foregoing restrictions on rate increases st
notwithstanding any provisions of section 6.0 of the above-referenced contrz
contrary.
PASSED AND ADOPTED THIS 27th DAY OF May ,199i
THE FOLLOWING VOTE:
6
AYES: Council Members Lewis, Finnila, Nygaard, Kulchin, and E
NOES: None
ABSENT: None
ABSTAl N: None
CLAUDE E. LEWIS, MAYOR
ATTEST:
ALETHA L. RAUT
-6-
< $ W w
COAST WASTE MANAGEMENT, INC.
LIBERTY RECYCLING
5960 EL CAMINO REAL PO
CARLSEAD, CA 920 18-0947
TEL 6 19-929-9400 p@ 6 1 9-452-98 10
FAX: 6 19-93 1-02 19
BOX 947
@O'REOt&
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April 8, 1997
Frank Mannen
Assistant City Manager
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
RE: Consent to Change in Stock Ownership
Dear Mr. Mannen:
As we discussed, I am pleased to inform you that Coast Wac
Management has agreed to merge with U.S.A. Waste Services, Ir
(11USA11) . As you may know, USA is a publicly traded company engas
in the waste services industry throughout the United States. COE
Waste Management is excited about becoming a member of the USA tc
and we expect that this will enable us not only to continue, L
also to improve our services to the public.
<
Coast Waste Management, Inc., the holder of the franchise, wj continue to exist and I, as well as most of my current employe€
will continue to be actively involved in the company and day-to-c
services in the community. Nevertheless, since the merger WI
result in Coast Waste Management becoming a subsidiary of USA,
are requesting your consent to the change in stock ownership
required by Section 25 of our contract.
It is our hope that this matter can be processed expeditiously 2
that the transition can be accomplished smoothly and withpFkt>i
*t'
IC\ / +) \I'
s i/,,,,{)(i? I**<
( ,)I I I ( 111 ri - IP*\~,I I I . I<I ,~~IJI>( I
1 -v 0 .
Frank Mannen Assistant City Manager
City of Carlsbad
Page 2
disruption of employees or customers.
Should you have any questions regarding this matter, please do I
hesitate to contact me.
sze> 4
Arie de Jong
Chairman of the Board
Coast Waste Management, Inc.
2
Date: May 28, 1997
Exhibit 3 ’ Y e e
HILTON FARNKOPF & HOBSON, LLC
Advisory Services to
~ Municipal Management - -
2201 Walnut Avenue, Suite 280 1 Frernont, California 94538-2334 Newpoi Telephone 510/713-3270 Sac]
Fax 5101713-3294
www hfh-consultants corn
May 20,1997
Mr. Frank Mannen
Assistant City Manager
City of Carlsbad
1200 Carlsbad Village Drive
Cdsbad, CA 92008
Re: Consent to Change in Ownership of Coast Waste Management
Dear Mr Mannen:
On November 22, 2996, Mr. de Tong signed a letter of intent to sell all of the capital
stock of Coast Waste Management to USA Waste Services, IXC. On April 8, 1997,
Mr. de Tong submitted to the City of Carlsbad a request to consent to this change in
stock ownership. The Ciw of Carlsbad engaged Hilton Farnkopf & Hobson, LLC tc
review the request.
This report documents our analyses and conclusions, performed in accordance wj
our April 28, 1997 engagement letter. Following are our major conclusions and
recommendations.
1. Mr. de jong’s request is not unreasonable. USA Waste Services, Inc. has simila
operations elsewhere, is the third largest solid waste company in the United
States, and has a strong credit rating.
2. If the City is comfortable with USA Waste Services’ assurances regarding future
rates, and if USA provides additional documentation described in this report
which is satisfactory to the City, then the City would have a reasonable basis to
consent to the change in stock ownership of Coast Waste Management.
3. If the City does consent but is reluctant to enter a long-term relationship with
USA Waste Services based on the current franchise agreement, then it could
condition its consent on either:
recycled Q paper
I ’ Mr. Frank Mannen a 0
May 19,1997
Page 2
Announcing its intent to competitively award a longer-term franchise
agreement during the next twelve (12) months;
- or
Preparing a multi-year (perhaps five years) franchise agreement to
provide adequate contractual controls over USA’s operational and
financial performance.
We have appreciated this opportunity to be of continued service to the City of
Carlsbad.
Very truly yours,
HILTON FARNKOPF & HOBSON, LLC *%Q&
Robert D. Hilton, CMC
President
RDH:smb
Enc.
HILTON FARNKOPF & HOBSON,
I 7 0 e
BACKGROUND
Request for Consent to Assiment
In a letter dated April 8, 1997, Mr. Arie de Jong, Chairman of the Board of Coast
Waste Management, Inc. (CWM) submitted a request to consent to the change in
stock ownership as required by the contract between the City of Carlsbad (City) and
CWM.' With the exchange in stock, Mr. de Jong explained, CWM would become
subsidiary of USA Waste Services Inc. USA is Houston, Texas based and is the
third largest solid waste management company in North America.* Mr. de Tong
assured the City, in his request, that "he and most of his current employees would
continue to be actively involved in the company and day-to-day services in the
community".
Terms Related to Assimment in Collection Services Contract
This agreement requires CWM to provide refuse, recyclable and yard waste
collection from residents and business in the City, in exchange for the right to bill
these customers at rates set by the City. The current solid waste services contract
was executed in August 1991 between the City and Coast Waste Management with
an original nineteen-month term and year-to-year extensions thereafter. Since
February 28,1997, the agreement has been extended twice, to April 30,1997 and
again to May 31,1997.
Section 12.0 Assignment of that agreement provides for both the subcontracting o
work by CWM and the sale of ownership of CWM. In both cases, the consent of tl
City is required. Further, the agreement states:
It is mutually agreed that the personal qualifications of the parties
controlling the corporation named herein as CONTRACTOR are a part
of the consideration for the granting of this Contract and said parties do
hereby agree to maintain active control and supervision of the
operation of the corporation.
The Countjr of San Diego owns the Palomar Transfer Station Site which is located
in the City and leased to CWM by the County. During 1994, disputes arose among
the parties as to their respective rights and duties related to the Palomar Transfer
Station. In June 1996, the Parties filed a stipulation for Settlement and Mutual
Dismissals without Prejudice. The stipulation provides that the 1984 Lease to
CWM be extended for a period lasting until May 31, 1997. The parties have been
negotiating a full, finai ar-d complete settlement of the disputes.
1 According to the audited financial statements, Mr. de Jong signed a letter of intent to sell all of the
capital stock of CWM to USA Waste, on November 22,1996. * Standard Srr Poors Credit Analysis Report dated May 10,1997.
HILTON FARNKOPF & HOBSON, Page 1
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DESCRIPTION OF COMPANIES
Coast Waste Management
CWM is a California c~rporation.~ CWM collects and disposes of residential,
commercial and industrial waste and collects and processes recyclable materials.
CWM has the exclusive right to collect and haul waste in franchised geographic
areas (including the city*)5 and competes with other companies in non-exclusive
areas (e.g., City of San Diego). CWM’s affiliate, Coast Transfer and Hauling (CTH)
a California limited liability company that operates a waste transfer station and
hauls waste for CWM and other waste collection companies located in San Diego
County3. In 1996, CWM and its affiliate CTH earned $24 million in revenues on
$3.9 million in asset^.^
USA Waste Services, Inc.
USA Waste Services, Lnc. is a Delaware corporation whose principal offices are
located in Houston, Texas. USA provides non-hazardous solid waste managemer
services consisting of collection, transfer, disposal, recycling and other
miscellaneous services to municipal, commercial industrial and residential
customers. The Company conducts operations though subsidiaries in multiple
locations throughout the United States, primarily, and in Canada, Puerto Rico anc
Mexico. In 1996, USA earned $1.3 billiop- in operating revenues on $2.8 billion in
assets6.
Combined Company
Marc Empey, Esq. of Best, Best Rr: Krieger, LLC, which represents USA, describes thr
transaction between Mr. de Jong and USA as a purchase of Mr. de Tong’s stock by
USA. He represents that CWM will continue in business and will continue to be
the franchise holder. Only the ownership of common stock will change, accordin!
to Mr. Empey.
3 Coast Waste Management, Inc. and Affiliates Combined Financial Statements for the year ended
June 30,1996.
4CWM receives approximately 37% of its total revenue from the City of Carlsbad per the June 30,199
Combined Financial Statements.
5 On December 18, 1995, the City of Del Mar voted to termlnate the existing solid waste franchise agreement with CWM effective December 20,2000. The City of Del Mar intends to develop a fixed
term agreement in 1997 to replace the existing agreement, per the June 30,1996 Combined Financial
Statements.
6 USA Waste Services, Inc. 1996 Annual Report
HILTON FARNKOPF & HOBSON, 1 Page 2
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FINANCIAL ANALYSES OF COMPANIES
As part of our analyses, we calculated six (6) financial ratios which portray the financial positions of the two companies. These ratios are presented on Exhibit 1
and described below, in three major categories:
Liquidity
Capital Structure; and,
Operating Results
Liquidity
CWMs ”current” and “quick” ratios compare more favorably to the industry
median ratios than do USA’s. This means that if the companies needed to liquid2
their current liabilities, USA would have to increase its charges for service, dispos
of under-utilized assets, obtain additional equity, or increase its long-term debt
more quickly than would CWM.
Capital Structure
Again, CWM’s ”debt-to-equity” and ”interest coverage” ratios compare more
favorably to the industry median ratios than do USA’s, although USA’s ratios are
relatively strong.
Operating Results
While CWM’s “return on assets” is significantly better than the industry median,
its “profit margin” was lower, 2nd even lower than USA’s, which was below the
median for the industry.
Conclusion
While the financial ratios of CWM are generally stronger than USA’s, the larger
size of USA should mean that its weaker ratios should not be a short-term concer
to the City, if it consents to the assignment. However, in the intermediate to long
Inc.’s experience of, once having gained market share, seeking to improve
profitability by increasing rates, reducing expenses, and selling unproductive asset
term, USA may replicate Browning-Ferris Industries’ and Waste Management,
HILTON FARNKOPF & HOBSON, Page 3
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CREDIT INFORMATION
We obtained and reviewed the Standard & Poors credit report dated April 4, 1997,
wherein USA's senior debt rating was reported as BBB. The Standard & Poors
outlook for USA was that its "strengthened business and financial profile and a
disciplined financial policy are expected to offset the risks of a high-growth strateg
resulting in a stable outlook for USA."
KEY MATTERS OF CONCERN TO CITY
The City has two primary concerns regarding the change in ownership:
1. Continuity of service quality; and,
2. Maintenance of relatively low rates with reasonable and predictable
adjustments.
Assurance of the maintenance of these qualities is a prerequisite to the consent
requested by Mr. de Jong.
Continuity of Service Oualitv
With the exception of certain administrative matters, the City staff believes that
CWM provides a high-quality service. CWM provides a variety of services that ax
necessary for the sound management of solid waste generated in the City. They
believe these services are provided with relatively few complaints and those
complaints which are received are dealt with in a timely and satisfactory manner 1
CWM.
Maintenance of Reasonable Rates
City staff believes that CWM's operating practices and thoughtful responses to
changing conditions have allowed the customers in the City to enjoy relativeiy lo-
rates that are fair to CWM, with reasonable adjustments to those rates over time.
CWM operates with the active participation of Mr. de Jong, its owner, and its
President and General Manager, Mr. Pawelski. It does not have a large
management and supervisory organization with its attendant costs. Additionally
CWM has attempted to operate cost effectively through such practices as purchasii
used rather than new vehicles. When local landfill rates dramatically increased,
CWM management sought to take advantage of competing rates elsewhere to
minimize the effect on customers' rates. This commitment to the maintenance o
indexed rate methodology, which allows CWM to earn, but does not guarantee, a
reasonable profit while providing rate stability to its customers in the City.
these relatively low, stable rates is reflected in CWMs cooperation with the City's
HILTON FARNKOPF & HOBSON, Page 5
0 0
EVALUATION OF THE PROPOSED REOUEST
In order to diligently review and thoughtfully consider the impact of Mr. de Tong’:
request on CWM’s customers in the City and on the performance of CWM
obligations to the City, as franchisee, the City retained the law firm of Worden,
Williams, Richmond & Ellis and the consulting firm of Hilton Farnkopf & Hobso
LLC (HF&H). After meeting with the City staff and reviewing certain related
documents, and based on its prior experience with the City and CWM, HF&H
submitted a request for information to Mr. de Tong on April 30, 1997 (Attachment
A).
The areas about which information was requested, and the purpose of requesting
the information, are presented below:
Management Personnel and Experience:
USA and key employees should
demonstrate experience in directly
managing and operating a company
which provided the same services
offered by CWM within the past five
years.
To ensure that operations and new
programs will be conducted by
competent individuals who have
displayed success in operating a simila1
type company.
Transition of Ownership: USA should
provide a comprehensive ownership
and operations transition pian.
To ensure that management of the nev
entity has given careful consideration t
the consequences of the change in
ownership on the relationship with
customers, CWM employees, and the
City.
An owner or key employee with a
history of civil or criminal violations
could negatively affect CWMs
operations and finances.
Past and Pending Actions: USA and key
employees should not have a history of
being party to adverse judgments
resulting from any criminal or civil
litigation, or adverse rulings received
from any regulatory or administrative
bodies
HILTON FARNKOPF 6, HOBSON, Page 6
0 e
Compliance with Environmental
Regulations: USA and key employees
should not have a history of being a
party to environmental and/or solid
waste violations or citations.
An owner manager or other key
employee with a history of not
complying with federal, state or local
environmental regulations could
negatively affect CWMs operations an!
finances.
Contingent Environmental Liabilities:
USA should have a thorough
understanding of any known or
potential environmental liability and
remediation issues related to the
acquisition of CWM.
To ensure USA’s due diligence and
negotiations have revealed any and all
potentially extensive and costly liabilit7
and remediation projects. Any
potentially significant liabilities and
remediation projects should be
identified prior to completion of the
assignment because financial
responsibility for the liability or
remediation may affect the financial
ability of the new entity to perform its
obligations under the agreement.
Financial Assurance: USA must obtain To comply with the franchise agreeme
a performance bond and insurance and the sublease and ensure that the
policies in accordance with the coverage City and its rate payers are protected
limits detailed in the franchise from any potential unforeseen events
the City against any future claims which operational and financial ability to
may arise which are the result of CWM perform under the franchise agreemen
operations and actions taken prior to the or sublease.
purchase date.
agreement. USA should also indemnify which could adversely affect the entity’
HILTON FARNKOPF 6. HOBSON, Page 7
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Acquisition Financing: USA should To ensure that the proposed purchase
submit a copy of the proposed purchase agreement is economically viable, give
agreement or a summary of the terms the terms and conditions of the
and conditions of the proposed purchase franchise agreement, and that the
agreement. USA should demonstrate proposed purchase agreement does not
the ability to obtain the necessary contain terms and /or conditions whic
financing to complete the acquisition of are not in the best interests of City’s rat(
CWM and provide adequate working payers.
capital, necessary reserves, and financial
assurance of performance. To ensure that the financing plan will
not, at some time during the franchise,
impair CWM’s ability to provide all thc
services required of the franchise
agreement and sublease. Too much del
financing could significantly affect
CWMs future cash flow, which could
hinder the implementation of new
programs or its ability to adequately
fund existing services.
Additionally, the City should be made
aware of any loan covenants, so that Ci
that could affect the City’s ability to takt
over CWM’s operations and continue
providing, in an emergency, basic refus
collection services.
staff can be informed of any contracts
Five Year Capital Requirements: USA
should demonstrate a thorough
understanding of the new construction,
capital improvements, and equipment
additions and replacements required at
CWM for the next five years.
The City benefits from knowing, prior
completion of the assignment, the
capital requirements which may be
needed to be funded through higher
rates during the next five years.
Financing of Existing and Future
Programs: USA should demonstrate
how existing programs and services will
be financed particularly with regard to
assumptions regarding rate increases.
The City should know, prior to the
assignment, future rate increases
required to fund existing and future
programs and services.
HILTON FARNKOPF & HOBSON. Page 8
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USA REPRESENTATIONS
USA ResDonse
On May 5,1997, Marc Empey, Esq., on behalf of USA, provided the City an initial
submitted to Mr. de Jong. This initial response was followed on May 12,1997 wit1
the same response placed on Best, Best & Krieger, LLP letterhead and signed by MI
Empey, and this version of the response is included as Attachment B.
Mr. Empey prefaced his response by stating that USA would “work diligently to
timely provide you with all information ... necessary to obtain your
approval ... however, we do want to emphasize that our request for consent does n
involve any assignment of the Franchise Agreement.” Of the 28 questions or
requests for documents, we found Mr. Empey’s response fully responded to seven
On May 8,1997, Ms. Ross and Mr. Mannen of the City and Messrs. Worden and
Hilton informed Mr. Bruce White, Mr. de Jong’s attorney, that the Empey respons
left many important questions unanswered.
On May 9, 1997, Mr. Worden discussed the matter more fully with Messrs. White
expect to happen following USA’s acquisition of CWM. Mr. Empey explained to
Mr. Worden that many questions were hard to respond to because CWM will
remain the franchisee and therefore no change will occur. Other questions (e.g.,
those related to the purchase) dealt with confidential matters. Finally, others
requested prospective capital and operating costs which have not been prepared ai
are, therefore, not available.
Also, on May 9, 1997, Mr. Hilton spoke with Mr. Empey. Mr. Empey reiterated hi!
desire to be responsive to the needs of the City and that he found the questions
difficult to respond to because of the nature of the transaction, the proprietary
nature of the subjects, and the lack of available analyses regarding the impact on
rates over the next five years resulting from the acquisition. Mr. Hiiton suggested
to Mr. Empey that, if the specific questions could not be responded to, he should
request USA management to prepare representations covering at least the
following major issues:
unsigned response to the April 30,1997 request for information and documents
and Empey, stressing that the City needed to understand what it can reasonably
The future effect on rates of the acquisition of the CWM and the
implementation of USA policies;
The qualification of USA personnel who will perform a key role in the
management of CWM (e.g., Mr. Rich Acuna); and,
HILTON FARNKOPF & HOBSON, Page 9
0 e
0 The past and pending legal actions regarding USA owners and key
employees.
Mr. Empey agreed to have a further response from USA management, which was
received and reviewed on May 20,1997, and is incorporated as Attachment C.
Conclusion
The USA responses are in some areas complete; however, the following four
questions remain:
(1) Who will perform the management
experience?
USA has represented that Mr. de Tong
Mr. Pawelski will act as a liaison with
the City. They will now report to Mr.
Rick Acuna. While USA has referred t
Mr. Acuna’s long experience in the
industry, it has not provided his specifi
qualifications related to management o
refuse, yard waste and recyclable
collections, as well as transfer station
operations.
functions at CWM, and what is their will continue in a consulting role and
(2) What past and pending civil and
criminal actions have involved USA
owners and key employees?
The City has no basis to determine
whether USA owners and key
employees have a history of criminal o
civil violations which might affect
CWM’s operations and finances in the
City.
The City has no basis to determine
whether USA owners and key
employees have a history of
environmental violations which migh
affect CWM’s operations and finances i
the City.
(3) What non-landfill past and pending
environmental actions have involved
USA owners and key employees?
HILTON FARNKOPF 6r HOBSON, I Page 10
0 e
(4) What is the likely impact of the
acquisition on future capital
requirement changes in operating
policies on rates?
While USA has not provided the
specific information requested, it has
made the following representations:
(1) ”...there will be no added costs or
requests for fee increases due to any COS
associated with this acquisition.”
(2) ”While we do anticipate replacing
some ... equipment, we believe USA
Waste can gain certain operating
efficiencies.. . ”
(3) Barring unforeseen increases in
landfill rates ... the institution of new
programs, increased taxes or fees, or
other unforeseeable costs, we do not
believe requests for rate increases ... will
exceed the reasonable cost of living
adjustments in the San Diego area.
HILTON FARNKOPF 6. HOBSON, 1 Page 11
0 0
CONCLUSION
Mr. de Tong’s request to the City to consent to the change in stock ownership is no
unreasonable. USA is the third-largest solid waste company in North America,
with comparable solid waste operations. USA’s size and credit rating should
mitigate any concerns raised by its weaker financial ratios, when compared to CWM, at least in the short term.
If the City is comfortable with USA’s assurances regarding future rates, and if USA
provides documentation of Mr. Acuna’s qualifications to manage these operation!
and that USA owners and key employees have no history of criminal, civil or
environmental actions, then, the City would have a reasonable basis to consent to
the change in stock ownership.
If the City does consent to the change in stock ownership, but is reluctant to enter
long-term relationship with USA based on the current franchise agreement, then
could conditions its consent and either:
Announce the City’s intent to competitively award a long-term (five-year)
franchise agreement; or
Complete the staff‘s recent work on the revised franchise agreement to providf
adequate controls and have it executed by USA.
E****
HILTON FARNKOPF & HOBSON, Page 12
e 0 Attachment A
HILTON FARNKOPF & HOBSON, LLC aJ Advisory Services to
B- Municipal Management - -
2201 Walnut Avenue, Suite 280 F
Fremont, California 94538-2334 Newpor
Telephone: 5 101713-3270 Sacr
w. hth-consultants.com Fax: 5101713-3294
April 30, 1997
Mr. he DeJong, Jr.
President
Coast Waste Management
5960 El Camino Real
Carlsbad, CA 92006
Re:
Dear Mr. DeJong:
The City of Carlsbad (the "City") understands that the owners of Coast Waste
Management (CWM) wish to sell their interest in CWM and, in connection
therewith, wish to assign certain agreements between the City and CWM. You
have informed the City that USA Waste Services has indicated an interest in
acquiring your Company and in obtaining such assignments. (Such assignments
are hereinafter referred to collectively as the "Agreements.") Further, the City has
been negotiating an arrangement with CWM and the County regarding the
operation of the Palomar Airport Road Transfer Station.
As you know, the Agreements contain a requirement that no assignment thereof
shall occur without the prior written consent of the City. The City intends to
conduct appropriate due diligence with regard to the proposed assignment. The
City has retained Hilton Farnkopf & Hobson, LLC, to assist in that due diligence. 1
connection with such due diligence, the City must obtain complete and correct
information as described below. Based upon its evaluation of the information
received in response to this letter, the City Council of the City will make a
determination as to whether to consent to any such assignment.
A. DESCRIPTION OF ACQUIRING COMPANY
Request For Information - Assignment of Carlsbad Agreements
1. State the name of the legal entity to whom you are requesting the
assignment be made.
State the nature of the legal entity to which the assignment would be
made; i.e., corporation, partnership, sole proprietorship, etc.
2.
recycled 8 paper
0 z Mr. Arie DeJong, Jr. I) April 30, 1997
Page 2
3. State the number of years the entity described in A.1 above has been
organized and doing business under ihs legal structure.
4. State the jurisdiction in which the entity described in A.1 has been
organized.
B. OWNERSHIP
Please list with regard to each of the top twenty-five (25) owners of record oi
the entity described in A.1 the following:
The name, number of shares or percentage interest held, nature of legal
entity, state of incorporation (if a corporation), jurisdiction under the laws c
which it was formed (if a partnership), address of record, and, if known, the
names of any entities on behalf of which record ownership is held, includir
partnership interests. Include the principal occupation of each individual, :
known. If the entity described in A.l has not yet been formed, and
commitments to acquire ownership interests have been made, please
provide the above information with respect to each committing party.
C. MANAGEMENT
1. Provide the full names, occupations, and business addresses of any
persons who are directors of any corporate entity described in A.1, or,
a partnership, the members of any partnership committee. Provide
names of all officers of any such entity, by title. If such directors or
officers have not yet been elected or appointed, furnish such
information with respect to any such persons intended to be so elect€
or appointed.
Provide the names of other key management and supervisory
personnel who will be assigned to the City’s operations who were no
identified in C.I. (The City will expect the Company to follow throut
on hiring any individuals set forth herein, or any positions projectec
to be hired. hv material deviation from these personnel plans
without first obtaining City approval may be considered a breach of t
assignment and, as such, the City may reserve the right to cancel the
franchise agreement.)
Identify any of the former shareholders of Coast Waste Management
whom the new ownership group anticipates employing or engaging
through the use of consulting agreements. For each individual so
identified, describe their duties, the amount of time to be dedicated ti
2.
3.
HILTON FARNKOPF & HOBSON.
1 Mr. Arie DeJong, Jr. 0 April 30, 1997
Page 3
these duties, the basis for their compensation (e.g., hourly rate), and
the number of months or years the individual will be covered by the
employment or consulting agreement. State whether the entity
described in A.1 above expects rate payers to reimburse the company
for maintaining these employment and consulting agreements.
D. MANAGEMENT EXPERIENCE
1. Please describe for each individual identified in C.1 or C.2 above thei:
experience directly supervising the collection of residential and
commercial solid waste. Such information should be within the pas.
five (5) years in any city or other entity serving a population of 50,OOC
or more. Please include the following information:
a.
b.
C.
d.
The city and state where the activities were performed;
What services were provided, the type of equipment used, etc.
The dates during which the services were performed;
The number of households or commercial establishments
served; ana,
The name, address and telephone number of the city
representative primarily responsible for administering the
contract.
e.
2. Please describe for each individual identified in C.l or C.2 above thei
experience directly supervising a yard waste collection program and i
residential and commercial recycling program within the past five (5
years in any city or other entity serving a population of 50,000 or mol
Please include the following information:
a.
b.
c.
d.
e.
The city and state where the program(s) were implemented;
The type of program(s) implemented;
The type of equipment used;
The length of time it took to fully implement the program(s);
Experience in training employees in such a program(s);
HILTON FARNKOPF & HOBSON,
’ Mr. Arie DeJong, Jr. 0 0 April 30, 1997
Page 4
f. The number of households or commercial establishments
served; and,
The public education program conducted. g.
Please describe for each individual identified in C.1 or C.2 above theiI
experience directly managing transfer station operations within the
past five (5) years. Please include the following information:
a. The city and state where the activities were performed;
b. What services were provided (transfer, recycling, sort
line, etc.);
The dates during which the services were performed;
The number of refuse haulers served;
The average tonnage volume per day; and,
The name, address and telephone number of the city
representative primarily responsible for administering
the contract.
3.
c.
d.
e.
f.
E. TRANSITION OF OWNERSHIP
1. Describe how the entity described in A.1 above will assure an effectiv
cite past jurisdictions for which the individuals identified in C.l and
C.2 above were part of a transition team and what their role was.
Describe who will be the main liaison between the new ownership
and the City during the transition. Describe what experience this
person has in serving in such a capacity.
Describe which current management and supervisory personnel the
new owners expect to retain to assist with the transition.
Submit a chart describing each major task, the amount of time to
perform each task, and the critical path for the successful transition tc
the new management. Also, submit any documents and informatio
describing management’s transition plans.
trouble-free and timely transfer of operations in the City. Specifically
2.
3.
4.
HILTON FARNKOPF & HOBSON,
Mr. Arie DeJong, Jr. 0
April 30, 1997
Page 5
F, PAST AND PENDING ACTIONS
1. For each of the individuals and/or companies described in A.1, B.l, C
and C.2 above, provide a detailed fist of any past or pending civil litigation wtuch resulted in an adverse final judgment or settlement
involving the payment of a sum in excess of One Hundred Thousanc
Dollars ($lOO,OOO), criminal actions (except minor traffic violations),
adverse regulatory rulings (National Labor Relations Board, etc.),
and/or any other adverse rulings by administrative bodies against th:
individual or company during the past ten (10) years. Describe the
following information:
a.
b.
c. The plaintiff and defendant;
d. The type of action;
e.
f.
g. The case number; and,
h.
For any actions identified in G.l above with a claim in excess of One
Hundred Thousand Dollars ($100,000), please provide a brief statemen
of the current status of such litigation.
The name of the action;
Describe the date(s) of the action;
A brief description of the cause of action;
The court or government office of jurisdiction;
The amount of the claim (if any).
2.
G. COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
1. For each of the individuals identified in C.1 and C.2 above, please
provide a detailed listing of all federal, state and local environmental
and/or solid waste violations or citations involving activities in
which any individuals identified had direct management authority.
This schedule should include the following:
a. The name of the agency and the agency employee
responsible for issuing the violation or citation;
HILTON FARNKOPF & HOBSON. LL
Mr. Arie DeJong, Jr. 0 April 30, 1997
Page 6
bl The location at which the violation occurred;
C.
d.
e.
The nature and date of the violation or citation;
The amount of fine imposed (if any);
The actions and amount of time taken to mitigate the
violation; and,
The date on which the violation or citation was corrected
according to the governing agency.
f.
H. CONTINGENT ENVIRONMENTAL LIABILITIES
Describe the efforts taken by individuals identified in C.l and C.2 above to
(such as underground gas tanks). For each of the identified remediation
projects, identify the estimated cost associated with each of these projects.
State whether the new owners anticipate requesting from the City an
increase in rates to fund these projects.
determine any potential compliance issues which may need remediation
I. FINANCIAL ASSURANCE
1. Provide documentation (e.g., commitment letter to provide a
performance bond from a third party) of the ability of the legal entity
identified in A.1 above or individuals identified in C.l to provide a
Five Hundred Thousand Dollars ($500,000) performance bond.
Provide documentation (e.g., commitment letter to provide the
following policies in the amounts prescribed below from a third part
of the ability of the legal entity identified in A.l above or individual:
identified in C.l to provide the following insurance coverages:
a.
b.
2.
Workers’ Compensation - Not less than required by statute.
Commercial General and Auto Liability - Not less than
$10,000,000.
Hazardous Waste & Environmental Impairment Liability -
Not less than $10,000,000.
c.
HILTON FARNKOPF & HOBSON,
l Mr. Arie DeJong, Jr. 0 0 April 30, 1997
Page 7
Because the Company may also operate the Palomar Airport Road
Transfer Station as part of the franchise, the legal entity identified in
A.1 or the individuals identified in B.1 must demonstrate their abilit.
to obtain insurance coverage which guarantees the replacement cost i
the facility as well as provides coverage for public liability and proper
damage.
Describe the method by which the legal entity identified in A.l or the
individuals identified in 8.1 will indemnify the City against any
potential claims which may arise in the future which are the result o
Coast Waste Management operations prior to the purchase date.
3.
J- ACQUISITION FINANCING
1. Please provide a copy of the proposed purchase agreement or a
summary of the terms and conditions of such an agreement includin
but not limited to, the following information:
a.
b.
c. Sources of funding;
d. Terms of payment;
e. Short-/long-term consulting agreements;
f. Any indemnification clauses;
g. Hold harmless agreements;
h. Due diligence periods; and,
I. Any other significant terms.
Provide a detailed financing plan for the acquisition of Coast Waste
Management that, at a minimum, includes the following:
a.
Nature of acquisition (e.g., exchange of company stock);
Amount of proposed purchase price;
2.
The total purchase price and the amount that will be
provided from personal contributions of the owners
and the amount that will be financed through debt;
HILTON FARNKOPF rSr HOBSON,
, Mr. Arie DeJong, Jr. m 0 April 30, 1997
Page 8
b. For all amounts provided from debt financing, describe
the following:
1)
2)
3)
The source of the financing;
The amount provided from each source;
The projected interest rate at which these funds
will be borrowed;
4) The number of years over which each loan will
be repaid;
Collateral which will be pledged against the loan
amounts; and,
L.oan covenants (if any) which will be required by
the lending institution.
5)
6)
c. For all amounts provided from personal assets, please provide
a detailed listing of how much capital will be contributed by
individual; and
For each individual listed as contributing capital to the
statement or, if unavailable, a non-certified personal net
worth statement with supporting documentation (tax
returns, etc.). This statement should specifically identify
those assets which are to be used to make the contribution.
d.
Company, please provide a certified personal net worth
3. Describe how the new ownership group proposes to finance the
working capital requirements of the entity described in A.l above.
K. FIVE-YEAR CAPITAL REQUIREMENTS
1. Provide a schedule detailing all construction projects which will nee
to be completed during the next five (5) years.. The schedule should
include the following information:
a.
b.
The type of construction project;
The estimated cost of the project;
HILTON FARNKOPF & HOBSON,
a Mr. Arie DeJong, Jr. @ 0 April 30, 1997
Page 9
c. The estimated useful life of the project; and,
d. The year in which the project will be undertaken.
Provide a schedule detailing all capital outlays for vehicles and
the following information:
a.
b.
c.
d.
e.
2. equipment during the next five (5) years. The schedule shall include
The type of vehiclets) or equipment;
The estimated cost of each vehicle or equipment;
The number of each vehicle or equipment to be purchased;
The estimated useful life of each vehicle or equipment;
The age of the vehcle or equipment being replaced
(if applicable); and,
The year in which the vehicle or equipment will be purchased f.
L. FINANCING OF EXISTING OPERATIONS AND IMPLEMENTATION
AND OPERATION OF NEW PROGRAMS
Provide a pro forma income statement and balance sheet projecting the nex
five (5) years’ revenues and expenses. The pro forma income statement sh;
include the effects of any projected capital requirements, any projected
expense reducticns related to operating efficiencies realized, all other
expenses deemed necessary by the new ownership group, and revenue
projections for the next five (5) years. The revenues projected shall cover a
projected costs and provide the Company with a reasonable profit. All key
assumptions, including the timing and amount of any rate increases, shall 1
documented for review. All documentation prepared in support of these p
formas must be available for review.
****x-
All information submitted in response to this Request For Information is being
submitted to a governmental agency, with potential penalties for the submittal of
false information. If any such information proves to be materially incorrect, it
would be a breach of the undertaking of the assignment and provide grounds for
HILTON FARNKOPF &a HOBSON,
, Mr. Arie DeJong, Jr. e 0 April 30, 1997
Page 10
revocation of the consent to the assignment. Hence, all individuals providing
responses to this Request For Information will be required to cerhfy that the
penalty of perjury.
While this request is intended to be as complete as possible, we anticipate that
additional requests for information and documents may be made based on your
response; however, the City reserves the right to make its decision solely on the
basis of the response to this Request For Information.
Please assemble the requested data as soon as possible and forward to me at the
Fremont address shown on ths letterhead. It would also be helpful to know
approximately when I might expect to receive this material. Please call me at 520-
713-3272 to let me know your estimate, and if you have any questions, I would be
happy to respond to them at the same time.
Very truly yours,
HILTON FARNKOPF & HOBSON, LLC
answers grven in response to the foregoing questions are true and correct under
>fd-&.&- +
R bert D. Hilton, CMC
President
RDH:smb
cc: David Davis, Hilton Farnkopf & Hobson
Frank Mamen, City of Carlsbad
D. Dwight W-orden, Esq., Worden, Williams, Richmond & Ellis
HILTON FARNKOPF & HOBSON,
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May 12, 1997
VIA FACSlMlLE (510) 713-3294
Robert D. Hilton, CMC
lIiIton Farnkopf& Hobson, T,LC
2201 Walnut Avenue, Suite 780
Fremont, California 94538
KE: Request for Information-City of Carlsbad
Dear Mr. Hilton.
Our office represents USA Waste Servlces. In response to your Apd 30, 1997 letter we want
to assure you that we mill work diligently tu timely provide you with all information and other items
necessary to obtain pour conscnt to a change in ownership of Coast Waste Management. Given some
of your requests, however, we do want to emphasize that our rcquest for conscnt does not involve
any assignmenr of the Franchise Agreement.
The transaction is structured as a purchase of Mr. de Jong's stock by USA Waste Services,
Inc. Therefore, Coast Waste Management, lnc. will continue in business and will continue to be the
firanchise holder. Mr. dc Jong will continue with the company as will most, if not all, of the current
employees. Only thc ownership of the shares of common stock will change. With the foregoing in
mind we provide you with the following information in the format set forth in your letter.
A. DESCRIPTION OF ACQUIRTKG COMPANY
1. Again, thc franchise will railairi with Coast Waste Mangement, so we are no1 requesting an
assignmcnr of the franchise to a new entity. USA Waste Services, Inc., a Delaware
corporation traded on the Ncw York Stock Exchange will be acquir-ing the stock of Coast
Waste Managcment, Inc.
2. No assignment will be made to a new entity.
II br.Ml~.l~.:L)88 1 1
@ a LAW OFFICES OF
BEST BEST & KRIEG LLP
3. Coast Waste Managcmcnt has been organized and doing busiiiess as a curporation under
that name sincc 1977.
4. Coast Waste Management is a California corporation. USA Waste Serviccs, Inc. is a
Delaware corporation.
D. OWNERSHIP
Coast Waste Wanagemcnt wit1 have USA Waste Services, Inc. as its sole shareholders As
set forth in the Annual Report and other materials accompanying this memorandum, USA Waste
Services, lnc. is a publicly traded company and it believes that as of March 25, 1997 it had in excess
of 34,000 beneficial owners.
C. MANAGEMENT
1. Coast Waste Managemcnt will be wholly owned by USA Waste Services, Inc. The
executive ofKcers and direcrors of USA Waste Services, Inc. are set forth in the Annual
Report and other materials accompanying this memorandum.
2. Kcy management and supervisory personnel for Coast Waste Management will remain
unchanged foilowirig the acquisition.
3. As notcd above, the proposed rransaction calls for an acquisition of the slock or Cuast
employment agreements, if any, of my employees will be unaffcctcd by the change in
ownerstup of Coast Waste Management, lnc. Most, if not all, ofthc employees, are “at will”
and therefore USA Waste cannot make any representations that such employees will desire
to continue their employment with the company after the closing. Likewise, USA Waste must
retain discretion after the closing. to assess the company’s needs with respect to staffing and
the performance of individual employees. As a general rule. the vast majority of ernployecs
stay on following the closing providing no change in the day-to-day services of the company.
We do not expect this transaction to be any different. This is particularly true in this case
since USA Waste has only one other small operation in the San Diego area. Therefore. there
is no potential for “consolidation”, elimination of duplicative duties or loss of jobs at Coast
Waste :Management through coveragc by other local employees of USA Waste.
Waste Management, Inc. thcrcby kccping all contractual arranEements in place. Thus, the
D. MANAGEMENT EXPERIENCE
1. As noted above, the management and supervisory personnel of Coast Waste Management
with wllich [he cily is familia, concemng collection of residential and coinmercial solid waste
for the Ciry. The management experience of USA Waste is set fwth in the Annual Report.
will remain unchanged. Employees of Coast Waste Management have extensive experiencc,
UQA,lliEW811
Ib 0 LAW OFFICES OF
BEST BEST d KRIEG LLP
2. As noted abovc, the management and supervisory persorinal uf Coast Waste Management
will rcmain unchanged. Employees of Coast Waste Management have cxterisive experience,
with which the City is familiar. conccrning yard waste collection and residential and
commercial recycling for thc City The management expericncc of USA Waste is set forth
in the Annual Report.
3. As noted above, thc management and supervisory personnel of Coast Wastc Management
will remain unchanged. Employees of Coast Waste Management have edensive experience,
with which the City is familiar, concerning managing transfer' station operations. The
management expericnce of USA Waste is set forth in the Annual Report.
E. TMSITIOPJ OF OWNERSHIP
I. As discussed above, there will be no uansfer of the franchse to a new entity and the
management and supervisory personnel of Coast Waste Management will remain unchanged.
The main liaison with the City will continue to be Conrad Pawelslu, whose experience is well 2.
known to the City.
3. & noted above, the management and supervisory personncl of Coast Waste .Management
will remain unchanged.
4.
I;. PAST AND PENDNG ACTIONS
1.
in light ofthe foregoing, no transition plans at: necessary.
None known for any management or supervisory personnel of Coast Wastc Management;
[Coast Waste Management to provide additional information if necessary].
2. Not applicable.
G. COMPLIANCE WITH EN\IIRONMENTAI, REGCZATIOYS
1. Again, Coast Waste Management will remain the holder of the franchise and its management
and supervisory personnel will remain the same; Coast Waste Management's compliance
record is known to the City [Coast Waste Management to provide additional information if
necessary].
With respect to the landfill operations of USA Waste, a comprehensive list of enforcement
actions is attached. USA Waste is the third largest integrated solid waste management company in
North Amcrica and serves municipal, commercial, industrial and residential customers in 30 states,
Canada. Mexico and Puerto Rico. At December 31, 1996, USA Wastc owned or operated 123
collection operations, 61 transCer staliuns, 101 tandfills, and served more than 2 million cuwomers.
In light of the size of these operations we are proud that thc ciicloved summary of enforcement
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0 0 LAW OFFICES OF
BEST BEST & KRIEGER LLP
actions consists largely of ininor items such as tarp i*epiac;crnsnts, trailer rcpairs, daily cover issues
and the like. It is also important to note that USA has grown from its beginnings in 1990 largely
through acquisitions of othcr companies. Thus, it should be noted that most of the actions reported
relate to opcrations under the direction of previous owners such as Chambers Development, Co., Inc.,
Sanifill, Inc., Grand Central Sanitation, Inc., Empire Sanitary Landfill, Tnc.. and M.C. Arnoni
Company, Inc.
E-I. CONTINGENT ENVTRONhENTAL. LlABlLITLES
In connection with USA Waste's due diligence investigation for this transaction a Phase I
audit of Coast Waste Managcment properties was undertaken. The audit did not identifi any
necessary remediation actions.
I. FlNANCIAL ASSURANCE
1 Coast Waste Management will maintain its status 8s a legal entity with all bonding and
financial assurances in place. USA Waste Services, k., as a publicly traded company with expected revenues of over 52 billion dollars for 1997 is capable of providing all required
financial assurances. .I'he financial statements of USA Waste are included in the Annual
Report accompanying this memorandum.
2. Coast Waste Management through its new parent company USA Waste will providc
insurance coverages meetinvp or exceedirig those required by the City.
3. The Balance Shcct of USA Waste Senlices, Inc. is included in the Annual Report
accompanying this memorandum.
J ACQLTSITION FINANCING
1. Thc specific terms and conditions of the acquisition of the stock of Coast Waste
Management are confidential. In general, however, the acquisition is structured as merger
with Mr. de Jong receiving publicly traded stock of USA Waste and USA Waste receiving
all of the stock of Coast Waste -Management. The agreement contains customary warranties
and representations and indemnities. Mr. de Jong will be retained with Coast Waste
Mmagement pursuant to the terms of a consulting agreement.
2.
3
No financing is rcquired for the acquisition.
The financial Statements of USA Waste are set forth in the Annual Report accompanying this
memorandum.
K. FIVE-YEAR REQUIREMENTS
R~l'&EC38811
0 0 LAW OFFICES OF
BEST BEST d KRIEGER LLP
1 Coast Waste Management does not expect to have other than ordmary capital requirements
for normal replacerncnt of equipment or as otherwise required by the contract.
2. Coast Waste h/Ianagement expects capital outlays for vehicles and equipment during the next
five years tv be in line with the previous operations of the company
L FINANCING OF EXISTIhG OPERATlONS AND LMPLEMENI'ATTON AND
OPERATION OF NEW PROGRAMS
As a publicly traded company, we must be extremely conservative and cautious about forward
looking statements. The income statement and balance sheet for USA Waste as well as limited
information about hturc operations are included in the Annual report accompanying this
memorandum
As always, should you have any hrther questions, or if you require addtional information,
please do not hesitate to contact me
Very truly yours 4&&&-----
Marc E. Empey
of BEST BEST & E(RIEGE& LLC
cc' Dirk Dudgeon
K\RVEE'SBB I1
21061 S. Wes
Torrance, CA
(3 10) 222-87t
(310) 212-705
0 0 USA WASTE
.u- PACIFIC I .I REGION 8 e.
May 15, 1997
Mr. Robert D. Hilton
President
Hilton, Farnkoff & Hobson, LLC
Fremont, CA 9453 8
2201 Walnut Avenue, Suite 700
RE
Dear Mr. Hilton:
Following discussions with our counsel, Marc Empey, we understand that you would
like some additional information concerning USA Waste Services, its plans for the Coast
Waste franchise over the next five years, and its ability to provide quality responsive
services to the citizens of Carlsbad. At the outset, we want to assure you that USA
Waste is committed to providing top quality and responsive service to the City of
Carlsbad, pursuant to the Franchise Agreement, and the high standard of performance
that we demand of ourselves.
As you are aware, the proposed transaction calls for an acquisition of the stock of Coast
Waste Management, thereby keeping the employment arrangements of all employees
intact. While USA Waste cannot guarantee that all employees will wish to continue in
their jobs, and we must retain discretion to make continued reviews regarding staffing
and performance of individual employees, we anticipate that the people providing day-
to-day services for the company will remain unchanged. Mr. de Jong will remain with
the company for a minimum of five years pursuant to the terms of a consulting
agreement. Conrad Pawelski will continue in his current hll-time position and will
continue to be the primary contact between Coast Waste Management and the City of
Carlsbad.
We also anticipate that the drivers and other employees who provide direct services to
the City wjll remain on the job, thereby providing continuous uninterrupted services to
the citizens of Carlsbad. The retention of operating personnel is very common in our
mergers and acquisitions. The Coast Waste Management facility will become the main
office for our San Diego operations. We do have a small operating truck yard in
National City which will continue to help us serve that area of the County and which will
report to the Carlsbad office. Thus, we hlly expect the transition to be totally
transparent to City residents.
Response to Request for Information
BH-123.97
0 e
Robert D. Hilton
Page 2 of 5
May 15, 1997
With respect to the next five years, we would expect that the franchise will be operated
very similarly to the way it was run prior to the acquisition. Barring unforeseen
increases in landfill rates (which have fluctuated wildly in the San Diego area), the
institution of new programs, increased taxes or fees, or other unforeseeable costs, we do
not believe requests for rate increases, if any, will exceed the reasonable cost of living
adjustments in the San Diego area. Certainly, there will be no added costs or requests
for fee increases due to any costs associated with this acquisition. While we do
anticipate replacing some of the more aged equipment, we believe that USA Waste can
gain certain operating efficiencies through its arrangements for insurance, truck routing,
accounting, billing, and reporting systems.
In addition to Mr. de Jong and Mr. Pawelski, who will remain active in their roles with
the Company as previously outlined, Mr. Rick Acuna, an industry veteran and resident of
operations. Mr. Acuna has over twenty years experience in the industry, and was
previously employed with a private waste company, BFI, in Arizona and Southern
California, and with Sanifill, before joining USA Waste in 1996 as part of the Sanifill
merger. Mr. Acuna reports directly to me and I in turn report directly to Rodney R.
Proto, President and Chief Operating Officer of USA Waste Services, Inc. I have
worked in the industry for over fifteen years, and was with BFI until April 1996, when I
was asked by USA Waste’s Chief Executive Officer, John E. Drury, to join USA Waste
to assist in the transition and restructuring of Western Waste upon completion of that
acquisition. I currently serve as Regional Vice President for the Pacific Region of USA
Waste.
In response to some background data about USA Waste we are pleased to provide you
with copies of our 1996 annual report, a 10K and the following information about our
company:
USA Waste Services was founded in 1984, as a regional provider of solid waste services
in the Oklahoma and North Texas areas. In 1994, John E. Drury was named as CEO of
the company. Since that time USA Waste Services has embarked on a program of
business expansion which now makes it the nation’s third largest provider of solid waste
services. Annual revenues have grown from $275 million in 1993 to over $2 billion in
1997. This substantial growth has been accomplished through a series of acquisitions
and mergers, a commitment to performance, integrity and a local based decentralized
management philosophy. Decentralized management with local authority to meet the
needs of our customers is a mainstay in the design and operation of our Company and a
Poway will be joining the team and will be directly responsible for all of our San Diego
BH-123.97
m e
Robert D. Hilton
Page 3 of 5
May 15, 1997
major key to our success. In the case of our San Diego operation, Mr. Acuna has the
authority and responsibility to meet the needs of the City.
In addition to our merger and acquisition activities involving local and regional waste
companies, USA Waste Services has been involved in a series of acquisitions of other
public companies in the industry, or of substantial assets of other public companies.
Significant acquisitions in the past three years have included:
0 Envirofill (1994)
Chambers Development (1995)
Western Waste (1996)
0 Sanifill (1 996)
Laidlaw (Canada) (1997)
Mid-American Waste (1997) (pending)
United Waste (1997) (pending)
Waste Management (Canada) (1997) (pending)
Senior management of USA Waste Services is centered around a group of seven
executive officers, all of whom have had substantial backgrounds in solid waste industry.
They are:
John E. Drury - Chairman of the Board and CEO
Donald F. Moorehead, Jr. - Vice Chairman and Chief Development Of€icer
Earl E. DeFrates - Executive Vice President and CFO
Gregory T. Sangalis - Vice President, General Counsel and Secretary
Bruce E. Snyder - Vice President and Chief Accounting Officer
Ronald H. Jones - Vice President and Treasurer
0 Rodney R. Proto - President and COO
Biographies of the executive officers are included on page 15 of the attached 10K.
BH-123.97
a 0
Robert D. Hilton
Page 4 of 5
May 15, 1997
USA Waste has a twelve member Board of Directors. They are:
William E. Moffett
Donald F. Moorehead, Jr.
John G. Rangos, Sr.
Savey Tufenkian
John E. Drury
Larry J. Martin
0 Rodney R. Proto
Alexander W. Rangos
0 RalphF. Cox
0 Richard J. Heckmann
0 Kosti Shirvanian
0 David Sutherland-Yoest
Biographies of the directors not included in the 1 OK are attached.
Finally, USA Waste is a publicly-traded company with a large and diverse ownership.
No person, entity or group of related persons or entities holds a controlling interest. As
ofMarch 25, 1997, USA Waste had 154,110,369 shares outstanding, held by:
Like most publicly-traded companies, the majority of equity ownership is held by
of the pending United Waste merger.
institutional investors. In addition, these holdings are likely to be reduced upon closing
BH-123.97
0 0
Robert D. Xlton
Page 5 of 5
May 15, 1997
We hope that this profile answers your questions and provides the background data
required for your report to the City. Should you have any other questions or require
additional data, please let me know and we will do our best to respond quickly to your
inquiry.
One final point. As the corporate officer responsible for the Company’s business in
southern California, Arizona and Nevada, my job is to support the people who work
directly with our customers to help them meet the needs of the communities we serve. We
are committed to superior performance and work diligently to be responsive to our
customers needs. We look forward to the privilege of serving the City of Carlsbad and its
constituents.
Sincerely, G- &==-
Leslie N. Bittenson
Vice President, Pacific Region
LNB:md
Enclo sures
W 0
DIRECTORS
The Board of Directors of USA Waste is divided into three classes, each consisting of four members for a totai of twelve directors. Directors are elected for a term of three years.
The following sets forth as of March 1, 1997 certain information concerning each of the Directors of USA
Waste.
WiUiMt E Moffe# retired in 1992 as Chairman of the Board and Chief Executive Officer of Chatham
Enterprises, Inc. (real estate development) and Hazmed, Inc. (environmental services). In May 1985, he retired as
President of Gulf Oil Foundation and as Vice President - Public Affairs of Gulf Oil Corporation, having joined Gulf
Oil Corporation in 1969 and served in a number of managerial assignments for that company and its subsidiaries.
Mr. Moffett also serves as a director of Calvin Exploration Company, Inc. Mr. Moffett is 66 and has been a director
of the Company since 1995. He is a member of the Compensation and Stock Incentive Plan Committee of the Board
of Directors.
Donald F. Moorehead, Jr. has been Vice Chairman since 1995. Prior to such time Mr. Moorehead served
as Chairman of the Board and Chief Development Officer since 1994. From October 1, 1990 to May 27, 1994, he
was also Chief Executive Officer. Mr. Moorehead was Chairman of the Board and Chief Executive Officer of Mid-
American Waste Systems Inc. ("Mid-American") from the inception of Mid-American in December 1985 until August
management positions with Waste Management hc. Mr. Moorehead is 46 and has been a director of the Company
since 1990. He is a member of the Executive Committee of the Board of Directors.
1990 and continued as a director until February 1991. From 1977 until 1984, Mr. Moorehead served in various
John G. Rungos, Sr. served as Vice Chairman of the Board Directors of USA Waste from June 1995 until
December 1995. Prior to such time, Mr. Rangos served as Chairman and Chief Executive Officer of Chambers from
January 1994 to June 1995. Prior thereto, he served as President and Chief Executive Officer of Chambers kom 1973
to January 1994. Mr. Rangos is the father of Alexander W. Rangos, a Vice Chairman of USA Waste. Mr. Rangos is
67 and has been a director of the Company since 1995. He is a member of the Executive Committee of the Board of
Directors.
Suvey Tufenkiun helped to establish Westem Waste Industries ("Western") in 1955 and served a the
Secretary and Treasurer of Western since its incorporation in 1964 until its acquisition by the Company in May 1996.
In 1988, she was elected as Executive Vice President, Secretary and Treasurer of Western. Mrs. Tufenkian has been
a director of the Company since 1996. She is Chairman of the Compensation and Stock Incentive Plan Committee of
the Board of Directors.
John E Drury has been Chief Executive Officer since 1994 and Chairman of the Board since 1995. From
1992 to May 1994, Mr. Drury served as a Managing Director of Sanders Moms Mundy Inc. ("SMMI"), a Houston
based investment banking fm. Mr. Drury served as President and Chief Operating Officer of Browning-Fems
Mr. Dru~y is 52 and has been a director of the Company since 1994. He is Chairman of the Company's Executive
Committee of the Board of Directors;
Industnes, Inc. ("BFI") from 1982 to 199 1, during which time he had chief responsibility €or worldwide operations.
Larry J. rMartin was a co-founder and Vice Chairman of the Board of Directors of Sanifill, Inc. From
October 1989 to July 1991, Mr. Martin was President and Co-Chief Executive Officer of Sanifill and from July 1991
to February 1992, he was President of Sanifill. For more than five years before the acquisition of Sanifill, Mr. Martin
was the president of a group of companies involved in the waste disposal business. Mr. Martin is 55 and has been a
director since 1996. He is a member of the Audit Committee of the Board of Directors.
Rodney R Proto has been President and Chief Operating Office of the Company since August 1996. Pnor
thereto, he was President, Chief Operating Officer and a Director of Sanifill, Inc. Mr. Proto joined Sanifill in
February 1992. Before joining Sanifill, he was employed by BFI for 12 years where Mr. Proto served, among other
positions, as Chairman of BFI Overseas tiom 1985 to 1987 and President of Browning-Ferris Industries Europe, hc.
from 1987 through 199 1. Mr. Proto is 48 and has been a director of the Company since 1996. He is a member of the
Executive Committee of the Board of Directors.
1
e m
Alevander M Rangos has been Vice Chairman of the Board of Directors of USA Waste since December
1995. Prior thereto, he served as Executive Vice Resident - Corporate Development of USA Waste ffom June 1995
until December 1995. Prior to such time he served as President and Chief Operating Officer of Chambers since
January 1994. Prior thereto, he served with Chambers as Executive Vice President - Operations and Corporate
Development from 1990 to 1994, as Executive Vice President - Corporate Development from 1985 to 1990, and as
Manager of the Southern Region from 1984 to 1985. Mr. Rangos is a son of John G. Rangos, Sr. Mr. Rangos is 36
and bm been a director of the Company since 1995. He is a member of the Executive Committee and Compensation
and Stock Incentive Plan Committee of the Board of Directors.
Rdph F. Cox was a Director of Sanifill, Inc. from September 1993 until December 1996. Since February
1, 1994, Mr. Cox has been a management consultant. For four years prior thereto, Mr. Cox was President of
Greenhill Petroleum Corporation, a subsidiary of Western Mining Corporation. From 1985 through 1990, he served
as President and Chief Operating Officer of Union Pacific Resources Company, a petroleum exploration and
production company. Before 1985, Mr. Cox spent 31 years with Atlantic Richfield Company ("ARCO"), joining the
ARCO board in 1978, assuming responsibility for ARCO's worldwide petroleum exploration and production activities
and minerals exploration and production activities in 1984, and culrmnating With his election as Vice Chairman of
ARCO in 1985. Mr. Cox serves as a director of Bonneville Pacific Corporation, an independent power company, of
Daniel Industries, Inc., which manufactures oil and gas measurement and flow control equipment, of Rio Grande,
Inc., a petroleum exploration and production company, and C€32M Hill, a consulting engineering fm. He also
serves as an Independent Trustee for The Fidelity Group of funds. Mr. Cox holds a Bachelor of Science in Petroleum
Engineering and a Bachelor of Science in Mechanical Engineering from Texas A&M University. Mr. Cox is 64 and
has been a director of the Company since 1996. He is Chairman of the Audit Committee of the Board of Directors.
Richard J. Heckmutin is Chairman, President, and Chief Executive Officer of the United States Filter
Corporation ("U.S. Filter"), a position he assumed in July 1990. Prior to joining U.S. Filter, Mr. Heckmann was a
Senior Vice President - Investments and Branch Manager of Prudenital-Bache Securities in Rancho Mirage,
California. Mr. Hechann is 53 and has been a director of the Company since 1994. He is a member of the Audit
Committee of the Board of Directors.
Kosti Shirvanian has been Vice Chairman since May 1996, and he founded Western in 1955 as a sole
proprietorship. He has served as Western's Chairman of the Board of Directors, President and Chief Executive
Officer since Western's incorporation in 1964. Mr. Shirvanian is 57 and has been a director of the Company since
1996. He is a member of the Executive Committee of the Board of Directors.
David Suiherland-Yoest has been Regional Vice President - Atlantic Region since August 1996 and was
President from May 1994 until that time. Prior to joining USA Waste, he was President, Chief Executive o%cer and
a director of Envirofil. He joined Envirofil in January 1993 and was elected a director in March 1993. From
September 1989 to June 1992, Mr. Sutherland-Yoest served as President of Browning-Fems Industries, LTD. ("BFI
Ltd."), the Canadian subsidiary of BFI. From January through September 1989, Mr. Sutheriand-Yoest served as Vice
President - Corporate Development, for Laidlaw Waste Systems, Inc. From 1987 to September 1989, Mr.
Sutherland-Yoest was Laidlaw's Regional Vice President - Atlantic Region, located in Columbus, Ohio. From 1981
to 1987, Mr. Sutherland-Yoest served as District Manager - Vancouver and District Manager - Calgary for BFI Ltd. Mr. Sutherland-Yoest is 40 and has been a director of the Company since 1994.
2
mITE IT - DON’T SAYW!
5/28 Date
0 Reply Wanted
UNO Reply Necessary
- ______ To File
From Karen ______ ________
RE: PROMISSORY NOTE - COAST WASTE MANAGEMENT
The attached Promissory Note was signed during the City Council Meeting of May 27, 1997, and was given to the 6Lty Clerk during the meeting.
The original is being placed in the file with the Coast Waste Management
Contract (45 file) in the vault.
K.
c a
UNSECURED PROMISSORY NOTE
$96/?C/r Escondido, California May 27, 19s
FOR VALUE RECEIVED, the undersigned (“Borrower”) promises to pay to the Ci
of Carlsbad, at 1200 Carlsbad Village Drive, Carlsbad, California 92008, or such 0th
place as the Holder may designate by written notice to Borrower, in lawful money of tl
United States, the principal sum of .”/;.os vL y ,3,,hc,3 >., A 7 p- c vL- ~/flcc~~,+u~~ ,+,L D L’ PA( ; d:)
Dollars ($ ?&, OCQ.,?~? ), with no interest on the principal balance.
1. Time and Mode of Payment.
The entire unpaid principal balance shall be all due and payable on demar
2. Attornevs’ Fees.
Borrower agrees to pay the following costs, expenses, and attorneys’ fe
paid or incurred by Holder, or adjudged by a court: (1) reasonable costs of collectic
costs, and expenses, and attorneys’ fees paid or incurred in connection with t
collection or enforcement of this Note, whether or not suit is filed; and (2) costs of s
and such sum as the court may adjudge as attorneys’ fees in any action to enfor
payment of this Note or any part of it.
3. Manner of Notification.
Any notice to Borrower provided for in this Note shall be given by persoi
delivery or by mailing such notice by first class certified mail, return receipt request(
addressed to Borrower at the address stated below, or to such other address
Borrower may designate by written notice to the Holder. Any notice to the Holder st
be given by personal delivery or by mailing such notice by first class certified mail, reti
receipt requested, to the Holder at the address stated in the first paragraph of this Nc or at such other address as may have been designated by written notice to Borrow
Mailed notices shall be deemed delivered and received three (3) days after deposi‘
accordance with this provision in the United States mail.
1
n I* -: 0 e
4. Forbearance Not A Waiver.
No delay or omission on the part of the Holder in exercising any righi
under this Note shall operate as a waiver of such right or of any other right under thi
Note or other agreements, for the same default or any other default.
5. Assianment.
The Holder of this Note shall have the right to sell, assign, or otherwis
transfer, either in part or in its entirety, this Note.
6. Severabilitv.
If any provision of this Note, or the application of it to any party (
circumstances, is held to be invalid, the remainder of this Note, and the application i
such provision to other parties or circumstances, shall not be affected thereby, tt
provisions of this Note being severable in any such instance.
7. Time is of the Essence.
Time is of the essence for each and every obligation under this Note.
8. PreDavment .
Borrower may prepay this Note in whole or in part at any time witho
penalty, offset, or discount.
COAST WASTE MANAGEMENT C(
INC., a California Corporation
By: &/AdJ& ,9
’ /%?2Il/.O!J /625yBf& fd(&/vM.i&Z
Address:
P.O. Box947
Carlsbad, CA 92018
pn/21 O517Nate7
2
0
4
c
May 27,1997
TO: CITY COUNCIL
FROM: Assistant City Manager
ADDITIONAL INFORMATION FROM USA WASTE
Attached is additional information received from USA Waste. Included is a copy of the
resume of Rick Acuna, who will be the manager responsible for all USA Waste San Diego
operations.
3 VL
FRANK MANNEN
ma
C: City Manager
City Attorney
City Clerk
Attachments (2)
0 0 . BEST BEST 6.KRlEGER LLP
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4COIT t. intin DlNA 0 ttAlRU JAMES P MORRIS OARnAUA R, BARON KEVIN 1. COLLINS AACU 0, CLARKE. JR.
BRL4N H. LEWIS' IFIIDT) I ainnfiui TLLCCOPIER (7801 340-1 BRADLEY E. NEUFELO 'lCHARD OPAH DERLETH " Ea'En
PETER U. BAnunc4 HELENE P. nntrca CHAIbTOPHER D KEELEU MATI m MORRIS SONIA RWI10 CAPVAI Urn DAVIO W NEWHAU JEFFWr v. nii~~ JOHN 0. PINXWY
5TLvEN C. Dc0AUN JUI.IANh AWERSON OF COUN3rI ER.C 1. OARUER. DENNIS Y. CCTA JACUUELINE E. BAILEY
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~~AUCII J. BAUYx' ANNL r TIIOMAS D, WARTIN UCIHERV'
3RCOOffY L. MAROKC P.H.W.F. PEARCC IUShN 0. WIL3oN
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BASIL 1. CHAPMAN XIRK w. SMllH ZLC*ARY R. WALTON RAYMONU ecsr (:mma-~sr~i IIAYLE~ C. PEIERBON v.nroR L. WOLF KILC A, suaw DANIEL E OLlVlEfl BERNIE L WILLIAUSON SANDRA A, JACOBgOY JAHE9 H. kXICOCU (181a-18751 HOWA~O c1. cmos KEVIU K. RANOULPN ROQER U. CRAWroYrl
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VICTORVILLE :7aOl WE-z I~UGCNI: nix clWJ-I8elD
May 23, 1997
Dwight Worden, Esq.
General Counsel
City of Carlsbad
462 Stevens, Suite 102
Solana Beach, CA 92075
Re: Addilional Request for information
Dear Dwight:
Pursuant to our telephone conversation, I am providing you with the encloscd
additional information which, I understand, will satisfl the requests of Mr. Hilton for additional
information contained in his rcport to the City of Carlsbad. Again, I would like to emphasize that
Coast Waste Management wdl rcmain the fianchisec with all of its current management personnei in
place. We also believe that Mr. Hilton should be thoroughly familiar with U.S.h Waste Scrvices,
Inc. in light of his recent review and approval of our company in connection with our contracting with
another municipality ,
With respect to additional information on Mr. Acuna, enclosed please find a copy o
his resume detailing his professional experience. As you know, Mr. Acuna has over 20 year:
experience in the waste management industry including specific experience in hauling operations
transfer stations and rccycling.
Concerning any pending civil and criminal matters, we have discussed that as the thin
largest non-hazardous solid waste company in Yorth America, it is inevitable that we will be cngagec
in litigation. As a publicly tradcd company we are subject to disclosurc pursuant to the Securitie
Exchangc Act of 1934 and must file annual quarterly and other periodic reports which are generall:
available to thc public. These reports specifically require the disclosure of material pending lege
proceedings as more specifically set forth in the Annual Report Tom 10-K previously delivered ti
you. While the company is a party to various litigation matters arising in the ordinary course c
kW11 lS\M1~.1:\761
LAW OFFICES OF- 0
BEST BEST & KRIEGER LLP
Dwight Worden, Esq.
May23, 1997 =
Page 2
busiiess, manngcmcnt believes that the ultimate resolution of these matters will not have a material
adverse impact on the company’s financial position in the results of operations. This letter will further
confirm that there are IIQ reportable events with respect to IC@ proceedings since the filing of our
most recent Form 10-Q on May 15, 1997. Furthermore, this letter will confirm that there are no
pending legal proceedings (reportable or not) affecting thc company’s corporate status, right to do
busincss, or the transactivns contemplated by our subsidiary’s merger with Coast Waste Management.
As you aware, we have previously delivered a 7S-page document containing
disclosures of all enforcement actions relating to U.S.A. Waste’s nation-wide landfill operations. As
wc discussed, 1 am now supplementing that information with more recent reports relating solely to
California and Arizona, This letter will also confirm that there are no pending environmental legal
matters for Rick Acuna or uperlttions under his managemcnt.
As always should you have any further questions regarding this matter, please do not
hesitate to contact me, Your continued courtesy and cooperation are greatly appreciated,
Very truly yours,
Marc -**wQ- E. Empey
of BEST BEST & KRIEGER LLP
MEEJtd
Enclosures
cc: Mr. Dirk Dudgeon
E. William Hutton, Esq.
Mr. Frank Mannen
Robert 1). Hilton, CMC
8M111 JhiME\761
0 rn
c
E. R~CHAR~OACUNA
15720 Riverbend Court
Poway, Ca 92064
(6 19) 748-4989
Professional Exrierience;
Over twenty years experience within the waste management industry. Heavy
experience in collection operations, landfill management, municipal contracts, transfer
stations, recycling collection and processing, and commercial / municipal street
cleaning. My career began a a commercial driver for a small independent cokction
firm in 1977 and I have risen to my current position as Division Manager for USA
Waste Services in the County of San Diego.
s
1/4/1994 to 5/1/1997
Country Manager-Mexico
Sanifill, Inc. (USA Waste Services)
In January 1994,I was recruited by Sanifill, Inc. to assume the position of Country
Manager of Mexico. This was a new market entry for Sanifill and after three years
we have successfully grown, from two collection and one landfill operation in Baja
California, to seven collection operations and two landfills. This growth arose from
acquisitions and municipal public tendering.
12/1991 to 1/1994
District Manager
BFl Gardena, Ca.
Profit and loss responsibility for one of BFl's largest commercial and municipal
collecdon companies with annual revenues of over $35 million dollars. Additionall)
I was given responsibility of hancial overview of two transfer stations and a materialr
recovery facility within the Los Angeles market. During my tenure, our company wa!
successful in the acquisition of two local hauling companies, award of two County 0. L.A. residential collection contracts, as well as manage five other independent City
or County contracts. Managed 30 management staff and over 400 employees.
CY1989 to 12/1991
Uis tric t Manager
BFI Phoenix, Az..
Profit and loss responsibility of a $14 million solid waste hauling operation, whicl
included management of single largest automated municipal residential contract
within BFI for the City of Chandler, Az..
x- 3a TII~INVS OOOCVC Wd II:CTT& coo lpJ
0 0
c
7/1/1986 to 61’1989
General Manager
BFI-Sweep Kleen Division Phoenix, Az.
Managed BFI’s largest municipal street and commercial parking lot sweeping service
company. Directed all operations, maintenance, sales and accounting departments
which maintained a municipal street weeping contract with the City of Mesa, Az., as
well as over 1,100 commercial parling lots in the Phoenix metropolitan area.
41 1/1981 to 7/1986
Operations Manager BFI Phoenix, Az.
Managed collection operations of 3.5 commercial, residential and industrial routes
within an open competitive market. Job responsibilities included, supervision of 3
supervisors, 40+ drivers and helpers, safety training, environmental compliance,
customer service, as well as route analysis and department budget forecasting.
2/197O to 41 1/1981
DispatchedRoute Supervisor
Advance Copperstate Disposal Phoenix, Az.
Education and Traimne:
Arizona State University
Minor: Psychology
Phoenix Community College
Major: Social Welfare 1973 - 1975
Major: Liberal Arts 1971 - 1973
MilitarlC;
United States Army
Honorable Discharge
Specialist Grade E-5
Personal Data:
Married
Two children
Bi-lingual (SPANISH)
POOB XBPI za TTIAI~S OOOCPE XVWd II:CI 1x4
0 e
c
RESUME OF
RICHARD ACUNA
15720 Riverbend Court
Poway, CA 92064
Tel: (619) 748-4989
Professional Experience:
Over twenty years experience within the waste management industry, Heavy experience
in hauling operations, landfill management, municipal contracts and relations, and transfer
stations, recycling collection and processing, transportation. This experience has been gained
with premier environmental services companies. My career began with Advance Cooperstate
Disposal in Phoenix, AZ. After three years with Advance I was recruited by BFI for the psitior
commercial and industrial customers in an open competitive market as well as a municipal streei
sweeping contract. In 1986 I was promoted to General Manager of BFI Sweep Kleen, the largesi
company in the Southwest responsible for commercial and municipal street cleaning.
of Operations Manager. In this capacity I was responsible for 35 routes servicing residential,
In 1989 I was again promoted to District Manager of BFI in Phoenix. I had P & L
responsibility for this district with $13 million revenue base. I successful managed the first eve1
automated residential service. This municipal contract was with the City of Chandler.
As a result of the success in Phoenix, I was promoted in 1991 to District Manager in
Gardena California, This was one of BFI’s largest districts. Profit and Loss responsibility for $6
million district including two transfer stations and materials recovery facility. Direct supervisio
of 30 plus mslnagers and over 400 employees.
In January 1994, I was recruited by Sanifill (USA Waste Services) to assume the positio
of Country Manager of Mexico. This was a new market entry for Sanifill and after three years we have nine operating sites. This growth was accomplished through acquisition and municipa
public tendering. After this dramatic growth I have been appointed the Division Manager for
USA Waste Services operations in the county of San Diego.
Per. AcunaResume. 522
OOOCPC YVd 1T:CL I= 900 B xm za TTI~INVS
~ LI .LV r-lu.bi~ r. c/ ~cll e
1IHahRadwa Bvk P8u Sen Ha-, cn w (4tS) us47w 1.41 $1 47B-m R
e _- -.-
.a '
Uspl WASTR UQRTMlKST RR6lOW
MEMORANDUM
0 -- *'
Much 31,1997
To: Chunk WlIHrms
L
FROM: FmnZkbugdrn ,
cc3 F)ouglloky hdittmmtl RlckVon Peln
FIR8T QUARTER 1087 REPORT ON ~MI'ITINWEXPAWON& ALICMATlVE OAlLY
COVER U86 VIOLAT16NglFINW, ENVIRONMENTAL REBERVW ISSUES NORTHWEST REOlON AND ARIZONA WOFlUS
SUWQCR
Fallwing Is the first quarler 1897 mpmt forthe Nofthwemt Reglan and Arizona Lmcfflll ab8 wkh reqsrds t0 PmittinQ, AW8paca MadlMaths, Alternatlvs Daily Cover, NOWFlnea, and iesuaa that may lrnpact Company m~lronmentel
-DFlw
f@8(#VC)b. ,
Pamdttlng:
mare am rw current permitting activities at this rite,
AHem8tlve Dally Cover
AM= is armntly not being conaidemf but then, i8 Q rlgnlficant shodage of boll
ewer at this site H built b its po(sntial maxlrnum -city. tiowaver, we do not own \hi8 site and tho trib would have to provide a nearby borrow m#m, .
1
- . --. .- -- 0 0
FlnrdVldatlon:
None thlrs quarter,
Irnkatrmmlt4l Rswcuu:
N9W Wwndwetef mMib’iM well8 )(tsva mt!y been Installed. Initial sampiing 81 Oltc) Wll had lOW laVal flW8 then 10 ppb) hit8 al WO c)rbrimd WC’q. A maampling ia planned wlthln nexl fw daya to cunllnn.
Pennita:
No pamltting activity during the quarter for CML. New Cail ib under comtnrcbon,
Altarnrtfva Duily Covw:
ADC dnmmskation wlll be pursued 2nd guarlor 1987,
Flnsrtlflolrt)cr~~:
None thi8 quarter,
Envlronmsntal Resmnrsr:
No issues,
E c-
PItWlibl
ADEQ Is processing final Aquitw Protecttian Psnnlt (APP). No other pwmitting activity Is anwing.
A)tmo#v) wily cwerr
Site doe8 nd use ADC and Ir not planning to in ttM now futwe, Sita urns sail8 received far dlepasal aa daily cover for wash913 that require cow.
2
v. I-. 0 0
Enulronmntri b~~8:
No Issum.
T-LLaN13RLUAn, 8
PIHmltS:
Frrdlltlor Plan approival Is cwmntty boino pmrraod by ADEQ. Full apprsval Ir antlclpatad wilhln 30 duym ConaFuatbn of Module 4 (new c~ell) Ie out few biddii. C~nrtnrctlon to @?aft 2nd quartsr,
Almcrtrve Pirlly cavm
AIIC demonatratlon adivifbs wit1 b-ln 2nd quarter in mnfwrction wlvI that ot CML
RnalM8l8Honr:
None this quarter.
krvironmontal Rmervas
No issues.
hitllfig!
Permitting activltlerr k wpt wawte tkes 18 ongoing,
UtSma(hn 08iw C6VW
Permitting activities ta accept and u8e ahmdded we& tire as ADC ia ongolng.
~~##bh~~8:
NOfW.
3
. -.- . .- -- e 0
Emimd Rarerver:
No isruse.
MCKI-M-NT WE
Bennitting:
Lendlfll €xpansion:
Pwmitting activity is angoing to dsvabp the "Beck 40" BE a Clasp II landfill. SubmWif of Conditional U8r PWit ap9IhtlOn is entidpetad for 2nd qwlrter.
APC:
Cmritly, as allowed by tts pmtts, MWTS does not w daily oouw becauao it
ckoa not accept MSW,
Ftnfldstlorrr :
An I~~pdbf~ fwrt drrted Ma& 9,1997 fm tho CVRWWf3 indicated thet e Come and DesM OW 18 bdng mared and will awn bg presented at a
Public Hearlng. The Ceaae and hsM Order Will include L revbed mpllence
Wedule but will prohibit furthclr discharge of - inb dating unlined rutface knpwndmnt8. Na rarponrw, to the lnspectlon mpwt la required by the
CVRWQCB,
Envlmnmatd Fkswor:
No imum.
4
N0.627 P. b/lW 0 ~, !,.-.J. L7Zl v-*- 8' ..-ael UCUIL CI\c-C
pbnnlttirrg:
Site Ib pmpanna deihn and pmlttiM dbcuments fm a vertl~ac and latwal onpangion. Pmittfw actlvltfes for the Ca6clde Fafast Pmduct Facility 14
ongolng (Conditlond Um Permit). County i8 procereinp application. 8b b also prsparsnc1 parmlt dacumsntatlwr to continua air wkq d POW eibdga, in
ccmjunctlon with the Ca6eada Forwt Produds Facility.
ADC:
site k uelng 1 w pew Aoc.
FindVIolcltiotx
me.
kvk#r?llW?~l R9a#v08;
9
No hues.
KEKAHA:
Prntung: '
Site h88 put cm hdd parmi#inq MWitias for il8 chcpansion due to a ncmt State scipremo court deciaidn fewable to #a Unim of Publc W~rkers W wed
ageinst privat'ltatlwr at gwmrnant servi008.
ADC;
Site ir wing NC.
5
U.GLf I-. I, LW e 0
Fi nerlrlldatbs t
Nma 1
~nvironnmtd Rcmwwr:
No kuues.
,I -
POrmiW
No naw pmit advltloa thk qtartef. CanstNotion d Call Ill8 ta begin nod quarter. USCOE Is &Ill mnq 4W perm@ applicaUon for Phire 111,
AOC:
Slte Is currently using ADC.
Flnc"lOlNan8:
Site wiu dted by POW far axcaeding dbnhargo volume limitations Wlaa fhk qumf'br (Jc#rU?W and -1. A fin0 6f $1 7,000 WQ) 88m3Wd far tb Jaqwry Vlolati~~ me penalty f# the m vidation is atill being asrrsllsed and is antlcipatad to be lebs M $100, Site hm dcrolded not to purchase uddklonal cepacity but will implement other opsrationel masure8 to reduce dilMharge
baiw c#rtraot lmils,
Environmental Ro~~v~T;
No isow.
Pmitr:
Phwe Ill axpansion CUP approval expected 2nd quarter thio year,
6
N0.627 P ,8110 0 17 WJIC tXtL 7B . fl,C2.+37I -.*-I1
AM;:
Site is uslng AM.
PtnrrJvI ot adkrm:
Nom.
c
LTnviranmlrntal brlrsr:
No Irwes.
pemdpli=
Site I8 cwently pmparing ptwmit documentation for Module8 6 and 7 for submittal to OOEQ next guarter,
A WCompr don:
Site is using ADC. Compodior, basting fw 1st quarter yiddad In-p\ace density of
I552 #cy.
FimlJVlolatlon:
Site tocebed Notics of Nm-Cornplianw, (NON) dated 2/19/97 for exceeden00 of
6 #/;lacre of NW$w for irrigStion. ExCe%dcbW tuned out to bar a repcwtlng ami and W88 me4 Of! J(r3187.81t8 IS 9Wclkiflg OOEQ -89.
Envlmnmental maorurn:
No naw lswea.
t
7
rlw.bu r.y/iw
4 I 0
Permits:
Cwrdltlonaf Use Pennit application fw the 8bcm expenaion is currentiy being procsssetd bv county Heatul DBlP@rtmW\t
ADC:
Sits is wing PC sail8 and othw inert wart08 W daily cover as pr#t 91 gs m opamkn,
PlneMokttong:
None.
Environmsntd Rorsnrslr:
No Iswee,
pownlw.
8ite ham obtained approval to accept, PC soil, nan-friable &beat03 and mar
speclel wastas.
ADG;
APC Wil) be used aft€# appmval of Daaign and Operating Plan.
FlnrMdrUon8:
me.
t
EWb"w Rb80WOW I
No bSUe8-
6
4. Yc-I .CY A-
4, t 0 e
PIC m:
POfWllcunCrl.
Cummtly no permitting 0ctivRy for expenslorl or new air space,
Am:
site ig using AN,
PlnnNIolatl ma:
A Notice of Violation for eftkite leeahets dischargs wee kwd M6/97 by County. ImmedtW corrsct~ ectfon wm completed and no fim or pr~11~1tbe we amrod,
EnvSmmnrwrtd Rarmrsr:
No new lsauer rim mairger.
0