Sterling reacts to Rizzo acquisition, FBI news

By: Eric Czarnik, Nick Mordowanec | Sterling Heights Sentry | Published October 24, 2016

Sterling Heights city officials and residents responded to recent news concerning waste hauler Rizzo Environmental Services — namely, news of its acquisition by another company, as well as Rizzo’s name appearing in the news over an FBI corruption investigation involving Clinton Township.

GFL Environmental Inc., based in Toronto, said in an October press release that it “completed its merger” between Rizzo and GFL’s American subsidiary Sept. 30.

GFL founder and CEO Patrick Dovigi called Rizzo “a natural fit” to help GFL build its brand in the U.S., known as GFL-USA.

“The customers and employees of Rizzo Environmental will see little change in the way that Rizzo Environmental has historically operated, with its headquarters remaining in Sterling Heights,” Dovigi said.

In the press release, Rizzo CEO Chuck Rizzo Jr. said he approved the transaction and plans to “retain and expand” his equity share.

“What changes for Rizzo Environmental is our name and our capacity to grow,” he said. “Our local leadership remains the same, as does our absolute commitment to our customers.”

During an Oct. 18 City Council meeting, Sterling Heights Mayor Michael Taylor said in a prepared statement on behalf of city administrators that the city was notified Oct. 3 that GFL-USA had acquired Rizzo.

“City administration is in the process of reviewing the matter to determine whether the city will continue utilizing those services,” Taylor said.

During public comment, Sterling Heights residents responded to the acquisition news concerning Rizzo, which officially took over as the city’s waste hauler in May.

Resident Jeffrey Norgrove wanted to know if there is a way that the city can get out of its waste-hauling contract “here and now.”

“I believe that Rizzo was sold, and under the contract, we were supposed to be given 60 days on a bill of sale,” he said. “If that was violated in the contract, what is our out to get out of this contract?”

Resident Linda Godfrey said Rizzo’s waste contract says that the contract shall not be assigned or subcontracted by the contractor without the city’s prior written consent. She asked whether City Manager Mark Vanderpool received advance notice from Rizzo about the GFL deal and whether Vanderpool signed any written documents pertaining to the acquisition news.

If not, she asked whether the council would be willing to terminate the waste-hauling contract upon 30 days’ notice.

When Vanderpool’s office was contacted after the meeting and asked whether he received advance notice, Vanderpool said in an email that the city was notified Oct. 3 that “GFL-USA, Inc. had acquired an ownership interest” in regard to Rizzo.

“As such, city administration is in the process of reviewing details of the transaction with (GFL) officials and conducting related due diligence,” he said. ”There will be no interruption of service for residents in Sterling Heights.” 

When asked about whether advance notice was provided, Joseph Munem, director of government affairs and public relations for Rizzo, said his company provided the city with a press release.

“We’ve been communicating with city officials, and we are going to be able to respond to each and every one of their concerns and allay them,” Munem said.


How the council chose Rizzo
The City Council’s recent decision to use Rizzo for garbage collection was the result of several months of periodic council discussions and split 4-3 votes:

• October 2015: The council voted 4-3 to order city administrators to plan out bid specifications in order to move forward with rebidding the city’s waste hauling contract. While Councilman Nate Shannon proposed the rebidding idea as a way to cut costs, some council members in the minority wanted to extend the city’s then-existing contract with Waste Management.

• November 2015: The council approved the bid specifications 4-3.

• February 2016: In another 4-3 vote, the council rejected submitted waste hauling bids that, at the time, presented Waste Management as the lowest bidder on an option for a five-year, basic service contract. Some council members who advocated the rejection said they wanted choices for affordable curbside recycling and making trash carts voluntary.

• March 2016: The council voted 4-3 for a request for proposals while leaving open the chance to acquire an eight-year contract.

• April 2016: City officials announced that Rizzo was the lowest bidder among the new RFPs, and the council voted 7-0 to choose the cheapest of three service package options.

• May 2016: With Waste Management’s contract expired, Rizzo officially began the new trash contract as Sterling Heights’ waste hauler.

Each time a 4-3 vote occurred, Taylor, Councilwoman Deanna Koski, and Councilmen Doug Skrzyniarz and Shannon were the majority, and Mayor Pro Tem Joseph Romano, and Councilwomen Barbara Ziarko and Maria Schmidt were the minority.

Throughout the process, some residents panned the council’s decisions or talked about campaign contributions that political action committees tied to Rizzo and Waste Management gave in proximity to a November 2015 City Council election. In response, Taylor said the contributions did not influence the decision, and he pointed to the new contract’s cost savings.

FBI investigates Clinton Township
The Oct. 18 Sterling Heights council meeting also talked about the FBI’s October arrest of Clinton Township Board of Trustees member Dean Reynolds for his alleged involvement in a bribery scandal.

Reynolds is accused of demanding and taking bribes in exchange for his vote and acts as a trustee, with the alleged corruption taking place around July 2015 to May 2016.

The complaint against Reynolds alleges that he accepted multiple bribes from a representative of a company that was seeking and secured a significant contract within Clinton Township. The report states that Reynolds collected between $50,000 and $70,000 in cash from that individual.

In exchange for the money, Reynolds reportedly sold his vote as a member of the Board of Trustees. He also allegedly provided voting information related to other board members. An attorney for Reynolds, Stephen Rabaut, did not respond to requests for comment. Reynolds could not be reached for comment by press time.

In addition, Reynolds allegedly collected $17,000 in cash from an undercover FBI agent — a transaction that was reportedly video recorded.
Robert F. Beeckman, special agent of the FBI, stated that he participated in monitoring and reviewing Reynolds’ recorded calls, which allegedly revealed a “conspiracy” between Reynolds and a representative of a company.

The vendor is documented as “Company A,” though recent allegations suggest that Rizzo Environmental Services — which provides trash pickup for Clinton Township and numerous other communities — is the alleged vendor that worked with Reynolds to receive $18 million in exchange for the township contract. The Clinton Township Board of Trustees approved a contract extension with Rizzo Environmental Services, which includes new services, in February 7-0.

The complaint filed in court also alleges that the vendor provided a free divorce lawyer for Reynolds. If convicted, Reynolds faces a maximum prison sentence of 10 years and a fine of up to $250,000.

“We have been contacted by a number of people asking for our perspective on events that were reported (Oct. 14),” said Munem. “In this, as in all matters, we’re cooperating with the legal authorities. We will follow their guidance so long as it may be required in the coming weeks.

“We will continue to focus on delivery of our services, and to demonstrate to our employees, partners and customers that we remain the premier provider of environmental services in our community.”

Sterling residents respond
At the Oct. 18 Sterling Heights meeting, resident Joe Judnick urged the council members to return donated money associated with the Mitten Leadership Fund political action committee because Rizzo was a donor to the PAC.

“Before the pre-election report was filed, the Mitten Leadership PAC pumped $42,500 into the campaigns of all of you council people,” Judnick said.

“And you got quite a bit of money, Mr. Skrzyniarz … Mr. Taylor, you got $20,000 from the Mitten group — I’m requesting you return that $20,000. Mr. Shannon, you got $7,500, and you three guys were pushing this contract, this Rizzo.”

Godfrey also brought up the FBI news, adding that she was dismayed and saddened.

“I am a little apprehensive, a little sitting on the edge of my chair waiting to see which one of the four of you is going to get yourselves arrested,” she said. “And if that happens, you’d best resign.”

In Taylor’s statement at the Oct. 18 council meeting, he said Rizzo was awarded the Sterling Heights waste contract “based upon an open, public and competitive bid process whereby it was determined to be the lowest, most-qualified bidder.”

On his Councilman Doug Skrzyniarz Facebook page, Skrzyniarz wrote Oct. 14 that he is proud of the city’s decision to choose Rizzo due to service improvements and saving taxpayers money. But he said he was “very disappointed to read of apparently bad behavior displayed by some Rizzo employees with Clinton Township.”

“Until more details become available, I will not accept any and all political contributions from the Rizzo PAC or any individual associated with the company,” Skrzyniarz said.

“In the end, the bad behavior may be the result of one bad apple at the company and not systematic of the company itself, and I hope that is the case. In fact, it appears that Rizzo Environmental fully cooperated with the FBI and is not under criminal investigation.”

After the meeting, Skrzyniarz declined to comment further about the acquisition news beyond what Taylor’s statement said. But Skrzyniarz further discussed campaign finance when asked about Judnick’s request to return the Mitten Leadership Fund money.

“The great thing about campaign finance laws is that it’s all public,” Skrzyniarz said. “So I encourage people to go to the Macomb County Clerk’s website and they can see all the political contributions that I received during the course of my two campaigns, and all that information is public.”

Learn more about Sterling Heights by visiting www.sterling-heights.net or by calling (586) 446-2489. Find out more Rizzo Environmental Services, in Sterling Heights, by visiting www.rizzoservices.com or calling (586) 772-8900. Read up on GFL Environmental Inc. by visiting gflenv.com.