Los Angeles’ Lucrative Trash Deal Draws Pacific Palisades’ Ire

The Los Angeles City Council has awarded 10-year contracts to seven trash companies and their subcontractors. In exchange, the companies, which take care of waste disposal from stores, restaurants and apartment buildings (with more than four units), will pay the city an estimated $3.5 billion over the next decade. These are commercial haulers, not residential.

The city contract also sets rates for the haulers, which could then be passed onto businesses. Prior to this new arrangement, haulers paid the city 10 percent of their annual gross receipts, according to L.A. Solid Resources Manager Reina Pereira. The city currently received about $20 million per year from the permitted haulers.

At the Pacific Palisades Business Improvement District meeting on April 5, members queried Pereira about the agreement, which was approved, 13-0, by the City Council.

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“With no competition, it will raise the price and lower the standard of service,” said BID member Rick Lemmo, a senior vice president at Caruso. “This will raise the cost for businesses. It will raise the maintenance fees for tenants.”

“The staff spent 1,600 hours and looked at 15 haulers before choosing seven,” Pereira said.“There is a chance that rates will increase. But, the rate you get this year will not go up more than five percent of the annual indices.”

She said that by giving out contracts to specific haulers, “It allows the city oversight that it never had before.”

“It is Stalinesque; we have no ability to negotiate, there is no competition,” said BID Director Laurie Sales. “What can we as property owners do to fight this?”

Lemmo pointed out that it takes away the ability for a company, such as Caruso, to use a hauler that works for the company in several areas, thereby lowering the trash-hauling price. He said it eliminates the ability to negotiate for a lower fee, when a business is assigned a trash company.

“There are no benefits for businesses,” Lemmo said about the new city contract. “Our price goes up across the board for a business already following city recycling and storageregulation.Thereisnoupsideforus.”

The new franchise system is opposed by the California Apartment Association and the Los Angeles Area Chamber of Commerce because of the higher costs.

According to a December 9 L.A. Times story, Chamber of Commerce CEO Gary Toebben called the contract a “politically motivated 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.

Nonplussed by criticism from the BID board, Pereira noted that as part of the requirement of getting the contract, haulers must use clean-fuel trucks and there is an incentive to recycle.

“The city wants to divert trash from landfills,” she said. “The state is now holding locals [cities] to comply.”

Blue recycling bins will now be required at all commercial and apartment buildings. Athens, the waste-hauling company that will service Pacific Palisades, received a $1.02-billion contract, and according to the Times, will build a new $10-million wastehandling facility.

The city will start notifying customers this month about the changeover, which is slated to begin in July.

“There is no choice here,” said BID member Leland Ford, the property owner of Ralphs, Norris Hardware and Pharmaca. “It’s like a dictatorship.”

Lemmo suggested that the BID legally request a stay on implementation until customers have a public forum where they can ask questions and see the proposed fees.

“This was down in the bowels of City Hall,” Lemmo said.“Nobody is interested in trash.”

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