Los Angeles Business Journal

L.A. Council Approves Huge Trash Franchise System

By Howard Fine Friday, December 9, 2016

The Los Angeles City Council on Friday approved a multibillion-dollar waste hauling franchise system for commercial and multifamily properties.

The 13-0 vote represents the culmination of a four-year effort by labor unions and environmental groups to convert the current open market for trash collection from commercial and multifamily properties to a tightly controlled system of exclusive franchises. The aim is to reduce the number of trips made by garbage trucks and more easily impose strict labor and environmental standards on the industry, all towards a city mandate to divert 90 percent of waste from landfills by 2025.

“When 70 percent of our waste in the City of Los Angeles comes from commercial buildings and apartments, it was imperative to overhaul such a high polluting industry,” said Councilman Jose Huizar, one of the co-authors of the plan.

The plan, which was first approved in concept two years ago, does not include single family residential homes and apartment buildings with four or fewer units. Those properties will continue to be served by the city’s Bureau of Sanitation.

Business groups and apartment landlords opposed the plan, saying it will reduce competition, increase prices, and drive several smaller waste haulers out of business.

The final plan calls for seven waste haulers to hold 10-year franchise contracts worth an estimated $3.2 billion to collect trash from roughly 65,000 commercial and multifamily accounts in 11 franchise zones throughout the city, starting in January 2018. The haulers will collectively pay $35 million in franchise fees to the city each year for the right to be the sole waste hauler in their franchise zones.

The seven haulers were selected from a pool of 15 applicants. They include Athens Services; CalMet Services; NASA Services; Republic Services; Universal Waste Systems; Ware Disposal; and Waste Management Inc. Athens will service three franchise zones, while Republic and Waste Management will service two zones; the rest will service one zone each.

Public policy and energy reporter Howard Fine can be reached at hfine@labusinessjournal.com. Follow him on Twitter @howardafine.