In a hastily scheduled special meeting, the City of Industry extended its exclusive trash hauling agreement with Valley Vista Services for at least another 20 years without inviting bids from other companies or comparing rates.
The new evergreen franchise agreement, which now automatically extends every July, revived longstanding allegations of corruption among the city’s leadership and the company’s owners, the influential Perez family, whose ties to Industry date back to the city’s founding.
City officials, meanwhile, say the new deal is mutually beneficial and will keep rates down for the city’s sprawling business community. Valley Vista will pay 7 percent of its gross revenues to the city under the new terms, a decrease from the 10 percent paid previously. In exchange, the company will begin providing street sweeping to the city at no additional cost and take over the customer billing and debt collection services that Industry has managed on Valley Vista’s behalf for decades.
While Industry will save roughly $300,000 by not providing those services, the decreased franchise fee makes the agreement effectively a net loss for the city. Based off numbers in the 2021 budget, the city will lose about $300,000 to $500,000 annually from the lower franchise fee.
“It’s the only trash company we’ve ever used and we’re very happy with their services,” said outgoing City Manager Troy Helling.
While he believes other cities may receive higher franchise fees, Helling said he wanted to avoid a situation where additional costs may be passed on to the city’s businesses. Helling, who will retire Aug. 2, pushed for the special meeting so the agreement he negotiated could be considered before his final day, he said.
Contract extended to 2040
Valley Vista has been Industry’s trash hauler since 1970, approximately 13 years after the city’s incorporation. That relationship will now extend until at least 2040, with one additional year added every July unless the council votes to terminate the agreement 120 days in advance.
“They know the city well; we have confidence in them,” Mayor Cory Moss said about the vote. “I look at what I believe is the best for the city that I serve and I am confident that we did that today.”
Though the business-focused city is one of the richest in Los Angeles County, it has less than 300 residents, with nearly all living in housing either controlled by City Hall, or by the Perez family. This has led to longstanding allegations, from various sources, that the city’s limited housing allows for tight control over its relatively few voters and, by extension, the City Council.
On Thursday, Councilman Michael Greubel had to recuse himself from voting on the trash contract because he rents his home from the Perez family.
‘Par for the course’
David Gilmore, an attorney for former Councilman Abraham Cruz, described Valley Vista’s exclusive agreement as “par for the course” for Industry. Cruz is suing the city, alleging, among a slew of accusations, that Valley Vista’s owners have orchestrated the ouster of anyone who challenged their control of the city or the trash contract. Cruz was recalled last year and didn’t receive a single vote in his favor.
The lawsuit alleges the city’s payments to Valley Vista and other contractors that employ City Council members are gifts of public funds.
“What they’re doing is exactly what we predicted they would do,” Gilmore said in an interview. “They’re going back to the old way of doing business that led to the removal of (former city manager) Kevin Radecki and ultimately led to the removal of (former city manager) Paul Philips and his group of reformers.”
The Perez family’s attorney, Stephen Larson, called Gilmore’s allegations “spurious and defamatory.”
“Valley Vista has demonstrated in Industry and elsewhere throughout Southern California to provide extraordinary service at highly competitive rates,” he said.
Multiple investigations
The family’s ties to Industry have been investigated by the state controller, the district attorney and the U.S. attorney, and no wrongdoing has been uncovered, Larson noted.
“This company and this issue have been looked at from every single angle possible,” Larson said. “And there’s nothing there.”
Gilmore said he had attempted to block the city from changing its contracts with Valley Vista in light of Cruz’s lawsuit, but that a judge had denied his request because the contract was not set to expire until 2025. Gilmore alleges the city made assurances in court that it was not planning to change the contract any time soon.
City Attorney Jamie Casso denied Gilmore’s representation. Thursday’s decision is a “restatement of the current contract” between Industry and Valley Vista and was not required to go out to bid, Casso said.
“Mr. Gilmore is mistaken, he has a record of being mistaken in the litigation he has against the City of Industry, time and time again,” Casso said.
History of corruption allegations
Corruption allegations have dogged the Perez family for at least a decade, dating back to when patriarch David Perez, who died in 2020, was the city’s mayor. Perez stepped down from office in 2012. Earlier this year, the Industry City Council renamed the street where City Hall is located to “Mayor Dave Way” in Perez’s honor.
In 2015, an audit by the firm KPMG alleged Industry had paid $326 million to various companies owned by the former mayor and could not provide clear accounting for all of the payments. In response, Radecki’s administration ended a street sweeping contract with Zerep Management, another company run by Perez at the time, and pledged to review Valley Vista’s rates. A state controller’s audit the following year found $12.3 million paid to Zerep did not have adequate invoices or authorizations.
That review wouldn’t come to pass. A historic election — one of the few contested elections in the city’s history — resulted in a new majority, all publicly backed by the Perez family. Radecki was fired by the new council.
The new administration promised sweeping reforms, partially in response to threats from a state legislator. They hired Philips as the new city manager and former state Attorney General William Lockyer as its reform monitor. The council passed new rules around competitive bidding, increased rents at the subsidized housing offered by the city, and reestablished an in-house finance department, among other reforms.
Philips, Lockyer, and others, however, were all fired years later during the fallout from a failed solar project. The city had paid $20 million to the developer on that project and now alleges it received nothing in exchange for that funding. Lockyer alleged at the time that he was being forced out because the Perezes did not want additional housing to be built in Industry.
Gilmore, who is the personal attorney of one of the accused developers, alleges Philips was fired after attempting to review the trash contract with Valley Vista.
Helling, Casso and Moss denied Philips’ firing had anything to do with the trash contract and all said he never brought the matter to the City Council. Helling, however, said he believed Philips wanted to use the contract as leverage to “strong-arm the Perezes” into supporting the solar project.
The Los Angeles County District Attorney’s Office is currently investigating the solar project and raided the homes and offices of the developers, and Philips, last year. No charges have been filed.
