A battle over San Diego’s “living wage” law could leave the city with no one to run its recycling center next to the Miramar Landfill, which serves 125,000 customers a year.

The company operating the center since 2001 wants to sign a four-year extension of its expiring contract, despite uncertainty about future revenues caused by China’s new restrictive policy on buying recycled goods.



For the record: This story has been amended from its original posting, which contained incorrect information about funding for the Center on Policy Initiatives.

Democrats on the City Council say they won’t approve the extension unless the contractor, Allan Co. of Baldwin Park, agrees to abide by San Diego’s living wage law, generally requiring city contractors to pay a certain rate to their employees.

Company officials say they already pay all of their employees at least the city’s living wage, which is $15.41 per hour, but that they’re unwilling to abide by the law based on fear that the council might sharply increase the living wage.


The city’s living wage increases each year based on inflation. For example, the living wage climbed from $14.66 to $14.95 in July 2017, and to $15.41 this past July.

The council last week rejected the proposed four-year extension of the contract, which expires Dec. 31, in a 4-4 party-line vote, with Republicans in favor of the extension and Democrats opposed.

Democrat David Alvarez, the council’s ninth member, was absent.

An aide to Republican Mayor Kevin Faulconer said city staff will try to broker a compromise before the contract expires, which would force San Diego to either close the recycling center or take over its operations using city employees.


“We’ll try to work with the owners of the company on a creative solution,” said the aide, Jessica Lawrence, after the council’s vote on Oct. 16.

Unlike most city contractors, Allan Co. isn’t forced to pay its employees the city’s living wage. That’s because the recycling contract generates revenue for the city, unlike most other contracts, which cost the city money. So the living wage law doesn’t apply to the city’s contract with Allan Co.

The council can include a stipulation in the contract extension that Allan abide by the living wage law anyway.

In a surprise move, council Democrats decided last week to add such a stipulation after months of negotiations on the contract, which got unanimous approval from the council’s environment committee last month without living wage language.


The proposed amendment was prompted by a letter submitted to the city by the Center on Policy Initiatives, a local think tank funded primarily by private foundations.

“We should apply these regulations and hold them accountable like we do other contractors,” CPI research director Peter Brownell told the council.

Gary McGrath, an Allan Co. manager, told the council that owner Stephen Young is unwilling to sign an extension that subjects the company to the city’s living wage law.

“Sometimes the bar moves,” McGrath said. “That’s the only problem. It might be $1 over minimum wage today. If there is a vote about it, it might go up to $5 tomorrow.”


Councilwoman Barbara Bry of La Jolla, a Democrat, said that’s not how it works, explaining the law’s incremental increases based on inflation.

“It’s not something that’s arbitrary,” she said.

Bry said it wouldn’t be appropriate to make an exception for Allan Co.

“We have to treat everybody the same,” she said.


Council Republicans said it was inappropriate to add the living wage requirement at the last minute.

“The city should not be conducting business this way,” Councilwoman Lorie Zapf of Bay Ho said.

The stalemate puts the city in jeopardy of potentially having to close its recycling center.

Mario Sierra, director of the city’s Environmental Services Department, said volatility in the recycling market had already made that a possibility even before the dispute over living wage.


China’s new policy on recycled goods banned the importation of 24 recyclable items including mixed paper, newspaper, plastic and some metals.

Because China has historically purchased most of the recyclable items from California and the U.S., the new policy is projected to wipe out entirely the $4 million per year in revenue that San Diego had been receiving from sales of recycled cans, paper and other items collected from city residents.

As part of the proposed four-year extension, Allan Co. would agree to $500,000 worth of infrastructure upgrades required to meet state stormwater regulations.

Sierra said the need for those upgrades could complicate city efforts to find another operator for the recycling center.


In addition to paper, cardboard, beverage containers, scrap metal and other recyclable items, the center also handles computer monitors, TVs and appliances.

It’s located at the entrance of the Miramar Landfill, providing residents with what city officials call a “one-stop shop.”

david.garrick@sduniontribune.com (619) 269-8906 Twitter:@UTDavidGarrick