Throwing Out the Trust with the Trash in LA

PERSPECTIVE-I don’t like surprises that adversely affect personal finances…anyone’s. The recently approved tax bill had a few, particularly the elimination of personal exemptions and capping state and local taxes. 

It’s not as if I am against such measures, but it is thoughtless and reckless to spring them suddenly. Turning individuals’ finances upside down overnight complicates lives. Fundamental changes of this nature should be transitioned over years, allowing people time to adjust. That’s not much to ask for from our government. 

It’s not just Congress. 

Exclusive franchises for trash hauling were approved by the City of Los Angeles in 2014. The contracts were awarded in late 2016, (activated in mid-2017), effectively pulling the rug out from under average citizens much in the same way the tax bill did. 

While HOAs and commercial owners expected problems, the magnitude caught many off guard. Budgets had to be adjusted and costs passed on to residents already saddled with high housing costs. 

If you have followed the news, there were 28,000 complaints filed by residents concerning poor service, and costs double or triple those under their previous contracts. That’s what happens when you replace competition with monopolies. 

Seven companies each have pieces of eleven zones. On a positive note, that is not as restrictive as the five crime families that controlled the rackets in New York City, as depicted in the Godfather. Could there be a little muscle in play as time goes on? Any offers anyone can’t refuse? Tony Soprano, the fictional waste disposal mobster of the former hit HBO series, would be proud. 

For the scheduled January 17 meeting of the Valley Village Homeowners Association, I asked Councilman Paul Krekorian’s office to send representatives from RecycLA and Waste Management, the exclusive hauler for the community. I was pleased to see them there, however, no one from Mr. Krekorian’s own staff attended. It’s worth noting that the Councilman voted for the franchise arrangement, along with twelve of his colleagues. 

Please note that the Valley Village Homeowners Association is a community organization, not a condo HOA. Membership is available to all residents. The Association works closely with Neighborhood Council Valley Village. 

There were around 60 people in attendance that night, about a dozen of whom represented condos, landlords or other affected stakeholders. They did not pull punches with their questions but did keep them civil. 

I was amused by how the RecycLA rep responded when an individual made a reference to “30,000 complaints” filed. 

She quickly responded, “There are only 28,000!” 

She added that many of the complaints overlapped as some were received from the same complexes. 

I reminded her that for every complaint – on any subject – there are usually several more that do not surface. Also, many renters may not have felt the impact yet, but will when their leases are up for renewal. I fear, though, that renters will not be as organized in their opposition. I think the city is counting on that. 

Nevertheless, the fact that 28,000 people made the effort to complain is impressive, especially in a city known for its apathy on local issues. 

It was pointed out that the city did not consider the structural limitations many commercial properties face. Most were constructed many years ago before landfills and the general environment became issues. For example, there are buildings which use trash chutes and do not have the physical capacity to separate recyclables. Timing of pickups also causes a problem. The franchisees cannot be counted on to arrive within a reasonable range of time. Building managers are thus compelled to leave their bins near the streets for hours. Trash continues to fly down the chutes. Other bins are now necessary to prevent an unsanitary pile up on the ground, an added cost on top of the higher fees. 

I take pride in recycling, but I live in a single-family home, so it’s easy. By contrast, not enough apartment and condo dwellers are likely to make special trips to dispose of recyclables. For all the talk about reducing the need for landfills, the exclusive franchise system does too little to encourage individuals to make the extra effort and use the blue bins. Having once served as a condo HOA board member for a 250-unit complex, I can assure you that effecting change among individual owners is as difficult as herding cats. 

When asked who will keep the proceeds from the sale of the recyclables, neither the RecycLA nor Waste Management representative could answer, but promised to get back to us. 

No response as of today. It was not a difficult question. 

When asked about how the $35-million franchise fee earned by the city would be used, we were told it was needed to administer the program. I suspect an inordinate share of it will go towards staffing – it is difficult to imagine the program requiring much in the way of new equipment or costly software. If this is true, there must be some well-paid positions. 

I followed up with an email asking for a breakout of how the franchise fees would be spent. I received a reply stating RecycLA would get back to me. You would think at least a budget would be readily available. After all, $35 million is a lot of money. One would assume there was a detailed plan in mind when the fee was established. I copied City Controller Ron Galperin and Councilman Krekorian on my request. 

Others expressed dismay that the city nixed a non-exclusive alternative which would have created a citywide pool of haulers. This plan was supported by former City Administrative Officer Miguel Santana. It would have facilitated competition and created environmental benefits, a real win-win. 

Awarding the franchises for 10 years under an exclusive arrangement was perceived as a slap in the face, especially given the mercurial nature of the fees charged by the haulers, many of which are in dispute. Who wants to deal with that for the long-term? 

Competition would have forced the market to sift through various pricing structures, assuring that the fairest and most sensible ones would rise to the top. Instead, residents have no leverage, and the 10-year duration will effectively crowd out any new players. 

Perhaps the response that rolled eyes more than any other was when we were told the exclusive franchise system was, after all, no different than DWP’s role in managing the city’s utilities. 

So, what’s the final score? 

The city skims $35-million per year. 

The haulers rake in more fees. 

The residents pay much more. 

A viable alternative was rejected. 

What could be wrong with that? 

We trust the mayor and City Council know what’s best for us…don’t we? 

 

(Paul Hatfield is a CPA and serves as President of the Valley Village Homeowners Association. He blogs at Village to Village and contributes to CityWatch. The views presented are those of Mr. Hatfield and his alone and do not represent the opinions of Valley Village Homeowners Association or CityWatch. He can be reached at: phinnoho@aol.com.) Prepped for CityWatch By Linda Abrams.