Los Angeles Business Journal

LA Public Works Board Endorses Controversial Franchise System

By Howard Fine Tuesday, February 14, 2012

Brushing aside concerns from small private trash haulers, the Los Angeles Board of Public Works has unanimously approved a plan to convert the city’s open competition system for trash collection from commercial and apartment properties to an exclusive franchise system.

The union-backed plan approved Monday would set up 11 franchise zones, with a single franchise hauler for each zone selected through a competitive bid process. Currently, four major waste haulers dominate the $220 million market for trash collection from commercial and apartment properties, with dozens of niche operators – mostly family-owned businesses – competing for work across the city.

Supporters of the exclusive franchise proposal, which was drawn up by the labor-allied Los Angeles Alliance for a New Economy, say it would standardize rates, allow the city to more closely monitor the system and increase recycling. But opponents, including dozens of small, family-owned trash haulers and several local business groups, say the lack of competition for business accounts would push up rates and force many of the haulers that don’t get the franchise deals out of business. They claim the franchise proposal is a thinly veiled attempt by the Teamsters Union to force the industry to consolidate to make it easier to organize.

The proposal next goes to the City Council. If the council gives its approval, then city staff would draw up requests for proposals for each of the franchise zones. The franchise system would be in place by 2016.

The proposal doesn’t affect most residential pickup, which is handled by city workers.