Lucrative contracts for trash removal

New L.A. program could raise costs for some customers.

The Los Angeles City Council is poised to award trash-hauling contracts Friday worth billions of dollars as part of a new citywide waste collection program that could raise costs for some customers.

Seven companies and their subcontractors will be chosen by the city to exclusively collect trash for roughly 65,000 accounts from San Pedro to Sun Valley.The 10-year contracts lock in business for these companies, allowing them to collect refuse from stores, restaurants and large apartment buildings.

The city contracts also set rates for these haulers, giving City Hall a new and untested role in regulating waste pickup across Los Angeles. As part of the franchise program, the city is launching a new division to

field complaints from customers.

The franchise system was approved in 2014 by the City Council, which moved to create 11 trash-hauling zones across the city.

The vote to award exclusive contracts for these areas marks the next major step in the program, which is expected to start by the end of 2017.

The franchise program covers trash only from commercial businesses and larger apartment complexes. It doesn’t affect single-family homes and residential buildings of four or fewer units, which will continue to be served by the city’s Bureau of Sanitation.

Experts predict higher bills for some customers in the program. Limiting the number of trash companies in Los Angeles decreases competition because haulers can no longer undercut one another on costs, experts say.

“It’s going to raise prices,” said Ron Saldana, executive director of the Los Angeles County Disposal Assn., an industry group.

Supporters, including environmentalists and labor groups, compare the current trash pickup system to the Wild West. Multiple haulers mean there are more trucks on the road, and a lack of regulation results in price gouging for some customers and hazardous conditions for workers, they argue.

Under the contract, blue recycling bins will be required at all commercial and apartment buildings. The city currently doesn’t require blue bins at such sites.

The recycling element will make it easier for Los Angeles to meet its goal of keeping 90% of its waste out of landfills by 2025, supporters say. The city is also requiring the use of clean-fuel trucks by haulers.

San Jose and many Orange County cities also have similar trash franchise systems.

Daniel Meyers, a division manager at the Bureau of Sanitation, said rates in Los Angeles could rise for some businesses but fall for others after implementation of the franchise program.

The owner of a big building with many accounts, for instance, may pay more under L.A.’s franchise system because the owner will no longer be able to negotiate a lower price with a hauler, he said.

Haulers can also raise prices by as much as 5% each year, but the price increase must be tied to the cost of living.

Los Angeles will collect about $35 million annually in franchise fees from the haulers as part of the program, officials said.

The California Apartment Assn., which represents more than 50,000 building owners statewide, opposes the franchise system, believing apartment buildings should be able to pick their trash haulers rather than be forced to work with a city-backed company.

Beverly Kenworthy, the group’s vice president of public affairs, predicted apartment owners will pass on higher trash bills to renters.

“Any increase in costs is an increased burden on renters,” Kenworthy said.

The Los Angeles Area Chamber of Commerce also opposed the franchise system because of the anticipated higher costs.

In a statement, Chief Executive Gary Toebben called it a “politically moti- vated and union-driven system” and criticized the contract’s allowed yearly increases.

“Annual cost increases will raise prices over the life of these trash contracts. This is not friendly to business and will limit job creation and hurt our local economy,” Toebben said.

Athens Services, a 59year-old waste-hauling company with headquarters in the City of Industry and Los Angeles, is slated to secure a contract worth $1.02 billion to service the Harbor, West and North-Central sections of the city.

The company plans to spend $40 million on cleanfuel trucks, said President Greg Loughnane. The contract also requires the company to build a new $10-million waste-handling facility.

Loughnane praised the environmental goals of the program.

“The standards being set by this franchise have very noble requirements,” he said.

Another company slated to receive a contract is Phoenix-based Republic Services.

City policy discourages contracting with Arizona companies because of the state’s anti-immigrant stance, but lawmakers have repeatedly ignored that recommendation.