Landlords sue over recycling program

Two landlords filed a lawsuit Thursday against the city of Los Angeles, saying a key element of its new commercial trash pickup system is an illegal tax under state law.

Malcolm Bennett and Frederick Leeds, both owners of rental properties, contend in a lawsuit that the city’s RecycLA program violates Proposition 218, which prohibits local governments from imposing taxes that have not received voter approval.

In their lawsuit, they described RecycLA, which serves roughly 70,000 customers, as an “unmitigated disaster” — one that has caused customer bills to go up and the quality of trash pickup to decline. “Make no mistake, the financial harm has and will be widespread,” the lawsuit says.

The filing comes roughly a year after the Bureau of Sanitation began implementing RecycLA, which covers such buildings as offices, restaurants and any apartment complex with five or more units.

Landlords and their advocacy groups have been longtime foes of RecycLA, which was championed by Mayor Eric Garcetti and the City Council. Two other lawsuits have already been filed over the program.

Elena Stern, spokeswoman for the Bureau of Sanitation, said she could not comment on the latest lawsuit. But she said the program had seen major improvements in recent months, including on-time pickup for more than 99% of its trash collections.

“Admittedly, RecycLA had a bumpy launch, but the past six months have seen a stabilization of services and increase in positive outcomes,” she said.

Stern said RecycLA has resulted in the replacement of 450 privately owned diesel trash trucks with newer, cleaner-burning models. In addition, she said, the city has diverted 740 tons of food waste away from landfills.

Labor leaders and environmental organizations spent nearly a decade working to put RecycLA into effect for commercial businesses. Under the program, seven trash-hauling companies received the exclusive right to operate in designated sections of the city. The citywide recycling initiative includes new regulations on workplace safety, hourly pay, diversion of food waste and the types of trucks used to collect refuse.

RecycLA customers pay the city’s designated trash haulers, who in turn provide “franchise fees” to the city. City officials are expecting roughly $35 million per year in franchise fees from the program, which would go to the city’s general fund to pay for basic services.

In their lawsuit, Bennett and Leeds contend those franchise fees are illegal taxes. RecycLA, they argue, offers “no reasonable relationship” between the size of the fees and the cost of operating the trash collection program.

“If anything, it appears that the increased fees are nothing more than the price the waste haulers had to pay to purchase their monopoly — and not for the legitimate values that can comprise a franchise fee,” the lawsuit states.

Attorneys for the two landlords want the city to issue refunds to RecycLA customers to cover the cost of what they say are illegal taxes. They also want the case to be designated as a class-action lawsuit, which would spare tens of thousands of potential plaintiffs from the cost of waging a legal challenge against the city.

Rob Wilcox, spokesman for City Atty. Mike Feuer, said his office is reviewing the lawsuit.