A once lofty venture in minority capitalism that was intended to provide 200 jobs, earn the D.C. government $100,000 a year and place 10,000 colorful litter cans on the streets of Washington, is to be tossed on the trash heap today by the City Council.
The venture, Pride Environmental Services Inc., provided no more than two dozen jobs at any time and placed fewer than 3,000 of the bright blue containers on the street. It defaulted on $500,000 in government-backed loans and has not paid the city a cent in franchise fees -- even though it has sold considerable advertising space on the cans, as much as $60,000 a month at one point.
"It's been a less than desirable deal for the city," William B. Johnson, director of the D.C. Department of Environmental Services, said yesterday. "And that's why we're trying to work our way out of it."
Johnson, whose department monitors the project, is to appear today before a City Counsel committee to ask for prompt termination of the exclusive, 15-year franchise awarded in 1972 to Youth Pride Inc., the once-prominent black self-help group cofounded by Marion Barry and Mary Treadwell 13 years ago. In the last few years that it has had the franchise, Johnson said yesterday, PES has failed to provide the most rudimentary service.
In recent years, city officials have sought ways to stave off the official death of the project. At one point, while still a member of the City Council, Barry attempted to intervene on behalf of PES. At another point, the council considered awarding the group an exclusive franchise to erect and sell advertising on bus shelters in the city as a means of bailing out the project.
Barry's efforts were rebuffed by other city officials as improper, and the bus shelter franchise was abandoned by the council because of questions surrounding organizations that PES had proposed as partners in the project.
Today, the square, blue cans, bearing the slogan "Pride Keeps Our City Clean," are still on many Washington street corners, but the advertisements on them are well out of date, and many of the cans are badly in need of cleaning and repair. PES is effectively defunct.
Treadwell, who is still director of PES, said yesterday that she was "not interested in getting involved in any story about PES." Barry, who has said he severed his ties with PES in February 1978, before he was elected mayor, was in Atlanta and unavailable for comment.
In the past, Treadwell and Barry, her ex-husband, have blamed city officials for failing to empty the trash cans and protect them from vandals, and condemned the business community for not purchasing sufficient advertising on the side panels of the containers.
City officials have claimed that PES failed to keep the cans clean, concentrated them in the downtown business district rather than throughout the city and eventually refused to install anything near the number called for by the contract.
Regardless of the squabbling, which sometimes reached the name-calling, table-pounding stage, there is no question that taxpayers lost $500,000 -- $400,000 of which was guaranteed by the federal Small Business Administration and $100,000 from the District of Columbia Development Corporation. Also lost was $100,000 a year that PES contracted to pay the city beginning in 1978.
In 1975, one of its most productive years, PES was billing advertisers anywhere from $20,000 to $60,000 a month, according to informed sources.
Earnings could have been doubled, according to one of these sources. But, "there was no system down there . . . When an advertiser didn't pay his bill, they couldn't get his signs off the street . . . or, if a sale was off, they couldn't find the signs and they stayed up for weeks -- theatres, circuses, anything stayed."
Treadwell and Barry have said PES never made "one penny" of profit, and that neither of them received any compensation from the firm.
The city attempted to audit PES once, but could not determine the firm's gross revenues "due to the lack of adequate accounting records and supporting documentation," according to a report from municipal auditor David Legge on April 14, 1978.
Similar observations about other "Pride" organizations have been made by auditors from federal agencies. The numerous businesses in the "Pride" network, including PES, have been the subject of a federal grand jury investigation since the publication last year of a series of articles in The Washington Post detailing the theft, misappropriation and diversion of at least $600,000 by Treadwell and her associates from a federally financed housing project. Treadwell has denied any wrongdoing.
None of these allegations has involved Barry.
According to materials prepared by Johnson for today's hearing. Treadwell's trashcan enterprise has not undertaken any "identifiable maintenance, cleaning or repair activities" since 1978.
Instead, he said PES has referred advertisers to his department. While PES has refused to place any more trash cans, he said, there is a backlog of some 300 requests from citizens for some kind of trash receptacle. But the city is prevented from providing them because it is locked into the exclusive agreement with PES.
The attempt to abrogate that agreement is a lengthy one, which could take a year even if there are no objections. After the public hearing, there must be a committee report, council action, mayoral action, congressional review and a four-month notice to PES.
As to what will happen after the contract is terminated, Johnson said yesterday, "at the moment, we don't know." He said the city may contract with another private firm, or develop the capability to provide its own trash cans.
PES did not fall without several last-ditch attempts to save it. In a letter dated July 21, 1977, and marked "personal and confidential," Barry told then mayor Walter E. Washington that "Pride Environmental Services is about to go under." Barry, then an at-large member of the City Council, urged the mayor to take a personal role in helping the city government save PES or "the business is surely lost."
The letter became public during the heat of an intensely fought Democratic mayoral primary campaign in 1978, and Washington, facing stiff political opposition from Barry and then City Council chairman Sterling Tucker, reacted strongly when asked about it.
"It was one of the most fantastic and improper acts that anyone has ever given to me," Washington said at the time. "What he asked for wasn't possible. [Since] when am I going to commit this government to a failing business?"
Herbet L. Tucker, the city's environmental services director at the time, recommended as far back as May 1978 and the PES contract be terminated. But he was dissuaded during lengthy discussions with Treadwell.
These meetings had been taking place periodically for years, with the city demanding that Treadwell increase the number of cans, and Treadwell claiming she couldn't because a temporary city ceiling placed on the number of cans it could service had strapped PES financially.
Some of these meetings were swept up in acrimony and ended with no progress. Treadwell wrote in a letter to Washington on Nov. 5, 1976, that a meeting the day before had been marked by "fists banging on table tops and screaming by DES and cursing and screaming by PES. Non-productive chaos."
In September 1976 PES sold 632 of the trash cans to the city of Newark, N.J., in spite of the fact the cans were designated for placement in the District and were collateral for the government-backed loans. Charles W. Rinker, Jr., general manager of PES at the time, later told an interviewer that the sale "really saved us that year."
The SBA loan that enabled PES to buy some trash cans and start up business was the subject of controversy itself. The Washington SBA field office rejected the application, noting that another "Pride" company had already defaulted on an unrelated $25,000 SBA loan. But the national SBA office overrode that decision.
The SBA lost its entire investment because it has determined that the remaining trashcans could cost more to remove and process than they would return to the government.
"The loan was made to have some community impact, rather than as a loan based on sound credit principals," an SBA senior official, Al Jones, said yesterday. "The SBA was saying, let's go ahead and approve it because it might help the community. Whether it was worth the $400,000, I'd rather not comment."