Dive Brief:

• California-based Ratto Group has agreed to sell all of its North Bay Corp. waste and recycling operations to Recology. While financial details are still being worked out, Ratto spokesperson Eric Koenigshofer said, "The question is what’s the price, not if there’s a deal," as reported by The Press Democrat. 
• The health of owner Jim Ratto is said to be declining and neither of his sons are interested in continuing in the waste industry. Growing regulatory and financial issues for the company were also cited as factors in the decision, as the company is facing nearly $14 million in fines from Santa Rosa for alleged contract violations.
• While Santa Rosa previously declined to renew North Bay's contract due to the results of a tough audit, the company had still planned to submit a bid. Recology will now submit a bid instead and results will be decided in June. The sale is not dependent on Recology winning the contract.

Dive Insight:

Jim Ratto earned a formidable reputation for starting out as a teenage collection worker in San Francisco and eventually building up a company with an estimated 440 employees that has contracts for all but one of the cities in Sonoma County. Yet the costs of permitting and regulatory issues with the company's fleet and facilities have been mounting over the past year. Last month, legal action ramped up over the company's decision to ignore a cease-and-desist order for one of its recycling facilities.

The company did receive positive attention for a deal to retrofit part of its fleet with Wrightspeed's new electronic powertrain system back in November. This was seen as an initial step toward modernizing operations and meeting state emissions standards. Though the full cost of updating all fleet vehicles, as well as the recycling facilities, would have been much higher.

Because of Recology's size — an estimated 835,000 customers across multiple states — the company will be better positioned to make the necessary infrastructure upgrades to the North Bay operations. The fact that Recology is employee-owned, and has a positive track record in San Francisco, are also seen as key selling points for the community. Once finalized, this acquisition will make them an even larger player in West Coast markets.