What's at stake:
In 2004, city leaders said outsourcing trash hauling would be a money saver.
20 years on, nobody's asking if the deal was actually worth it.
The Fresno City Council is set to vote Thursday on a second extension of a controversial trash deal that has prompted other waste haulers to demand rate increases of their own.
The proposed agreement with Orange Avenue Disposal, a company owned by the politically influential Caglia family, would extend its contract by one year to dispose of city residential waste to a facility near Kerman through 2035. The deal also includes provisions for future price hikes, tied to new regulations, that would be charged to the city.
The deal represents the latest chapter in how the city’s two-decade-old experiment with privatizing trash hauling has helped fund political campaigns but not the city’s finances.
Mid-Valley Disposal, a different private trash-hauling company in the Fresno area, sent a letter to the city earlier this week requesting its own rate increase after learning of the proposed Caglia deal, according to a city official with direct knowledge of the letter.
The Caglia family’s relationship with City Hall has been marked by political connections and disputed amendments since securing their original contract in 2004. Campaign finance records show company principal Richard Caglia was former Mayor Lee Brand’s largest campaign contributor, according to The Fresno Bee.
Those ties received public scrutiny in 2018, after Brand and then-Councilman Paul Caprioglio attended a Yellowstone National Park trip with Richard Caglia, the company’s chief executive, in July.
Three months later, in October 2018, the City Council declined to change trash rates in a narrow 4-3 vote. That vote would become significant only two weeks later – when Caglia scored a new deal with the Brand administration.
Brand continues to deny any connection between the Yellowstone trip and the Caglia deal.
“You don’t have to go to Montana to make a deal. You can do it in a house, you can do it in a restaurant,” said Brand in a phone interview Wednesday with Fresnoland. “That’s a trip Paul planned. He made the invitation.”
Caglia did not respond to a request for comment.
After the council vote, Brand and the City Council greenlit an amendment allowing Caglia to pass more construction costs for a waste transfer station directly to the city through higher fees – essentially forcing residents to underwrite infrastructure that only existed because of privatization. The Brand Administration also carved out a new “fuel” surcharge for Caglia
When the city handled trash disposal itself prior to 2004, it simply hauled waste directly to Kerman without needing any transfer facility. But Brand’s amendment increased a so-called “transfer station surcharge” which meant the city had to pay for Caglia’s infrastructure expenses on top of the trash-hauling service itself.
Because the trash rates had been frozen in place, but Caglia was charging the city more for the same service, the city’s trash department soon had a $12 million deficit.
The current dispute which is likely to be resolved on Thursday stems from Brand’s final, lame-duck days in office. In the final months of the Brand administration, the city granted Caglia a 10-year contract extension – which grandfathered in the waste transfer surcharge – through 2034.
When the Dyer administration reviewed that inherited agreement, officials concluded the city had overpaid Caglia by $3.4 million. In response, the city began withholding payments to Caglia starting in May 2023, accumulating more than $1.5 million in suspended funds.
City insiders say Thursday’s vote represents a quiet settlement to avoid litigation. They also say Caglia has strong grounds for a breach-of-contract claim over the withheld payments, and the city would likely lose if the matter went to court, according to sources familiar with the negotiations.
A City Hall source tells Fresnoland that the council’s vote on Thursday would, in addition to the new surcharges, would also add an additional year to Caglia’s contract worth roughly $7 million.
A separate closed-session vote Thursday is expected to award Caglia approximately $1 million to resolve the payment dispute.
For city residents, the financial benefits of privatization remain unclear. No analysis has been undertaken by the city to answer the question of whether privatization has delivered on its promised savings to ratepayers or instead simply enriched a politically connected contractor at ratepayers’ expense.
When the city first outsourced residential trash disposal to Caglia in 2004, officials promised residents $1.2 million in annual savings. Caglia’s company originally agreed to handle waste at $35 per ton, $5 less than the city’s internal cost of $40 per ton.
But after the Brand amendment, Caglia’s rates went up by 22%, according to city contracts. The per-ton cost Caglia ended up charging the city exceeded what the city had been paying when the original agreement was signed.
The contract will be discussed by the Fresno City Council during their regular meeting, which begins at 9 a.m. on Thursday at City Hall.
