Salem City Council Shows No Mercy For Local Business

Four years and a life’s investment have become nothing more than a cautionary tale, with the Salem City Council striking the final blow against 1-800 Got Junk?.

(SALEM, Ore.) - This story seems too “wrong” to be true. Not that those are terribly uncommon, but this one, about a well-meaning businessman, may shake the core of confidence in our city leaders. And it’s all over garbage, literally.

Most of us would never believe that a simple task such as cleaning out your basement could cause a business to be fined, sued, or disallowed from servicing customers in our fair city. Unfortunately, that is the case for one such business: 1-800 Got Junk?.

Ken Gotlib with 1-800 Got Junk? said, “We’ve closed down. We’re not taking any more jobs. We’re referring calls to the city manager, or the local hauler.”

On August 25th, 2008, the Salem City Council voted to accept a new ordinance which essentially eliminates this company from doing business in Salem.

“The City Council did not have to take the action they did. They cut our throats, they left us with no leverage.” Ken Gotlib owns the 1-800 Got Junk? franchise in the Salem area. He and his wife Cindy have been growing their business for over 4 years, and have gotten a great response from the community. But now their services are no longer available.

“The city is literally monopolizing who you are allowed to have come into your home, what services you can use," Gotlib said. "You will no longer have the right to choose who you have dispose of your personal items.”

A REFRESHER ON ORDINANCE BILL No. 126-07

In early 2007, Ken Gotlib was told by a Salem city official that there was a proposed solid waste ordinance change, and that he should be aware of it. They told him they would send him the information, and he could call with any questions. He was surprised to receive ninety pages for the one ordinance. Gotlib said when he called back for some clarification; the city official who said he would be available had left for a 10-day vacation.

June 2007: Ken Gotlib was diagnosed with Hodgkin's Lymphoma for the third time. He had to have a number of surgeries during that time to diagnose and prepare for the treatment, which started in the fall of '07. He underwent chemotherapy treatments throughout the initial discussions regarding the new ordinance, until December.

December 3rd, 2007: Staff recommends that City Council advance Ordinance Bill No. 126-07 to second reading, scheduled January 7th. Jason Brandt from the Salem Area Chamber of Commerce spoke to the city council on behalf of an ill Ken Gotlib.

December 14th, 2007: Mr. & Mrs. Gotlib met with the City Attorney and Manager of General Services in person at city hall via wheelchair, and due to his poor health, requested that the next hearing scheduled for January 7th be postponed until January 28th.

January 7th, 2008: Staff recommends that City Council continue the public hearing on Ordinance Bill No. 126-07 (revising Chapter 47 of the Salem Revised Code pertaining to solid waste management) to January 28, 2008 to permit time to prepare testimony from an affected business. Ken Gotlib was not present at this meeting, as he believed it was being rescheduled. The question of whether or not to approve the continuance appeared to draw little interest from the council, and their vote would fail to address the serious illness that an affected business-owner was fighting.

After testimony from several organizations partial to the ordinance had been given and evidence received, Councilor Nanke made a motion to approve the changes in the bill, and advance it to second reading. Councilor Sullivan seconded it, and ne’er a word was spoken about the continuance request necessary for Ken Gotlib to represent his own interests. Councilor DeHart was the only “nay” vote, and it passed without any difficulty.

Against the wishes of the city of Salem staff, the council decided not to extend their time, and voted on the issue during that very meeting, without the Gotlib’s present. Ken was in treatment, fighting for his life, while the Salem City Council disassembled the product of his life savings.

Councilman Bennett told Salem-News in January, "Nothing in the ordinance puts anyone out of business. The same rights, opportunities, limitations, etc. that exist in current city refuse collection laws continue in effect. The only reason the business you mentioned or any other business would go out of business is because they are in violation of the law. It's that simple."

August 25th, 2008: 1-800-GOT-JUNK? put in their Request for Franchise Exemption. The odds were stacked against them in hindsight, as those “against” allowing their exemption were substantial, including John Lattimer, Marion County Chief Administrative Officer, representing Garten Services, Art Kuenzi, President, Suburban Garbage Service, Curt Christiansen, Pacific Sanitation, Mary Kanz, Executive Director, Mid-Willamette Valley Garbage Haulers, and Estle Harlan, Consultant, Mid-Valley Garbage and Recycling Association.

After some discussion, Councilor Bennett moved to deny the exemption. Councilor Clem seconded the motion, therefore directing staff to come back with a written order that denies 1-800 Got Junk? (Junque Busters) an exemption from the City’s solid waste franchise requirement. The vote was Unanimous in favor to deny this business owner an exemption from needing to be a city franchise. There was no compromise, no negotiations, no future for the Gotlibs' business in Salem, Oregon.

September 8th, 2008: Ordinance changes takes effect; 1-800 Got Junk? closes it’s doors.

QUEST FOR AGREEMENT

“We attempted to enter into a subcontracting agreement with the Salem franchisees which was our only option left to keep our business alive after the council’s vote August 25th,” Ken Gotlib said.

“We received a subcontracting agreement from the haulers on September 5th. Within 3 days we replied with a list of questions about the agreement. During the remainder of that week, everything we asked or explained, they rejected, citing questionable regulatory reasons,” Gotlib explained. “It wasn’t even close to a good faith negotiation.”

The crux of the subcontracting agreement presented by the haulers seems to have been the requirement that 1-800 Got Junk? place garbage receptacles at every job site where they would possibly have materials that would not be recyclable or reusable.

“On September 15th, we met at my request with the haulers and city staff to resolve three outstanding issues in the subcontracting agreement: placement of receptacles at customer locations; rates for our services; and billing, invoicing, collection of payments.”

“They insisted that we order a receptacle from them for our jobs. We were to fill it up instead of putting things in our truck. This creates a host of problems, so we offered them an alternative. We figured it was a revenue point, so we offered to pay the haulers the equivalent percentage of net profit for an associated receptacle placed for every job in which we have materials that are not recyclable or reusable." Basically to pay the costs for the dumpster that wouldn't be needed.

"They rejected this negotiation, without any consideration," Gotlib said. "They told us, ‘We insist you have a dumpster, and we won’t allow you to haul solid waste.’ ”

“It became apparent we had received a ‘take it or leave it document’ where no changes suggested by us would be acceptable.”

“We can’t believe this, really. If we agreed to this, it would obviously result in tons of unnecessary coordination with customers and haulers; it would increase expenses with everything associated with receptacle delivery and pickup, and take up valuable time. Not just ours, our customers’,” Gotlib said. “This would impact rates and reduce customer service. More trucks driving around Salem unnecessarily means more pollution and more wear and tear on the city streets.”

The Gotlibs felt they had no choice but to fully reject the agreement.

IN-HOME GARBAGE SERVICE BROUGHT TO YOU BY THE CITY OF SALEM

For years, Salem’s franchise agreement with Allied required them to do weekly garage collection, but did not require them to do in-home service, such as 1-800 Got Junk? has provided. One of the many amendments to the ordinance changes that.

“Now,” Gotlib says, “they’re going to require the haulers to do in-home service. We all know this has never been available in the past, though that point is somehow bypassed in services available to residents.”

An interesting point is that haulers do not provide weekend or holiday service. This is when clean up services are the busiest and when many people need this type of help.

Confidence in the city’s choice of in-home service does not seem high according to a Salem-News.com random survey. The collective group strongly agreed that only limited services from the city franchisee were known to be available. Regarding Allied Waste’s in-home services, one Salem citizen surveyed said, “They wouldn’t move my refrigerator 25 feet when I moved. I had to return on garbage day and push it to the curb myself, and then they charged me an arm and a leg for taking it at all.” Another commented, “There’s no way they’d come into the back yard and take apart a swing set, or move my pile of broken furniture. I’d hate to even ask them to, they’d just laugh!” And, “Have you ever tried to get them to take extra stuff? I don’t even want to bring it up...no way. I’ll take it to the dump myself.”

Luckily, moving your own belongings is not yet regulated by the city of Salem. But, can they stop someone from hauling their own garbage?

Actually, the city decides who can use their streets. The public has the right, because of the “public right of way”, but businesses that conduct commerce are at the discretion of a city’s “police power”. Gotlib said, “If they don’t want our trucks on them, they can stop us. They have stopped us.”

“After working and putting our hard-earned money into this business for the last four years, our business is practically worthless, thanks to the vote of the Salem City Council. The Salem City Council is preparing to make the 'in home clean out service' a required service, which the garbage haulers will exclusively provide. This is a market we worked four years to create. The city is giving away our business by allowing only the city created 'cartel/monopoly' to provide in home clean out services.”

A “BUSINESS DECISION” TO END A BUSINESS

But, what was behind the decision to not leave any way for 1-800 Got Junk? to continue to exist? Naturally, the Gotlibs wanted to know.

“We questioned them on their reasons,” Ken Gotlib said. “We asked if it was because of the solid waste rules and regulations, or if it was that they wouldn’t have a way of checking to see if all the revenue was being captured, for example. Anything that we could help resolve.”

"They replied that it was a 'business decision' that they had made," Gotlib said, "and had nothing to do with the revenue or regulations. Just like that.”

Ken Gotlib explains, “The City Manager told us that the decision is not a financial issue. It’s also not a regulatory issue. So, the question is, what IS it? It’s easy. Preserve the monopoly. They can site codes that provide little or no substance to the issue, or they can just be straight about it. They put us out of business. Period.”

Throughout the diagnosis and treatment of Ken’s illness, he had a lot of trouble breathing, so much that he could barely make it from room to room. “When I did go out in public, I had to use a wheelchair, because of the limited capacity of my lungs. In the spring (2008) the doctors diagnosed my lung ailment as pulmonary fibrosis, probably brought about as a result of chemotherapy and radiation treatments,” Gotlib said. “It was also determined at that time that I was permanently disabled, and in all probability I will never be able to go back to work and support my family.”

Seven employees have lost their positions with 1-800 Got Junk?, seven breadwinners who are now just a few more numbers on the unemployment grid.

“The City of Salem is allowing a massive intrusion into the free market. They are tossing away American free enterprise in favor of socialism; reinforcing heavy handed government over regulation which is allowing the industry and its lobbyists to make the rules and decides who can play,” Gotlib said.

TO BE A JANITORIAL SERVICE, OR NOT TO BE…

What is solid waste? Garbage; anything unwanted or useless. Marion County contracts with Allied Waste to run the transfer station, better known as “the dump”. 1-800 Got Junk? would take solid waste to the transfer station, just as the haulers do, and pay their dumping fees.

“Solid waste is an 'incidental' to our business, not our mainstay. That was the condition actually. We were told that if the solid waste was less than 50% of our haul, we were exempt. That was fine for three years. We recycle 60 to 70 percent of the materials we pick up, so the amount of solid waste should qualify.”

Then, the rules changed.

“When we met with the Mayor and Attorney Tosh last year, they both agreed that we provided a needed and requested service and they concurred that they would like to see us continue to operate. They discussed with us the best way to move forward would be to file for an exemption, which they implied would be supported by the council,” Gotlib said.

Once they filed that exemption as suggested by the highest levels of Salem city government, they were legally no longer allowed to communicate with city council members, because it’s considered ex parte’ communication.

“The ‘other side’ is not supposed to have lobbied for their benefit either, but it seems likely it took place by the pat answers councilmen delivered on August 25th. Their willingness to allow special interests is obvious, in this case, the haulers,” Gotlib said. “It’s not a fair process, and it was not a fair hearing.”

A very important fact was inadvertently revealed at the meeting on September 15th. Another hauling company, also not subcontracting with the franchisees, is operating with the city’s blessing. The company, Clean It Up Mark, apparently met with city staff just as Gotlib did, and was subsequently defined as a “janitorial” company. Clean It Up Mark primarily services new construction sites, and no doubt has considerably more “garbage” than 1-800 Got Junk? dumped on any given day.

“Because they didn’t come forward and ask for an exemption, which we were told explicitly by the mayor and city attorney would be the very best way to approach the regulatory issues, they are allowed to operate as a “janitorial” company,” Gotlib said. “This is grossly unfair.”

“We have been singled out and forced to close our business and lose our life savings. The franchisees are now in a position, with the city’s blessing, to further monopolize the in-home clean out service market in which we have built and invested $200,000.”

FROM THIS POINT FORWARD

“When we began our business is 2004, we conducted conversations at the highest levels in the city. We were in contact with them regularly to clarify and help them understand the nature of our business.”

Last week, the Gotlib’s met with the Mayor and spoke with a couple of city councilors. “The meetings were amicable; they listened,” he said. “We continue to meet and discuss our situation with the city but there is no immediate relief for our situation.”

“The actions of the Salem City Council have resulted in stealing our life savings, turning it over to a monopoly to squander, while eliminating our services to the citizens of Salem,” Gotlib added.

“We have stopped operating and we are in the process of closing down our business. We have very few options at this time. We are attempting to meet with city council members to better understand how a business that has been working with city staff’s full understanding since we started in 2004 can have its’ business confiscated.”

“This is an extreme hardship leading to the possibility of filing for bankruptcy because we had to shut down abruptly in order to comply with the council’s order.”

Portland and Eugene have both successfully made sense of this issue already. The janitorial franchises in Oregon’s largest cities are alive and well, surviving and providing residents their service as an option without monopolistic intimidations. These progressive cities have Salem beat on common sense. Salem has opted to sit on the sidelines of this race, and likely wait for the state of Oregon to set a standard that they will then be obliged to follow.

By that time, Ken Gotlib and his services rendered to the Salem community will be a dusty piece of history. It appears that 1-800 Got Junk? was too far ahead of it’s time for Salem, Oregon.