Seven garbage hauling companies were awarded Los Angeles contracts potentially totaling $3.5 billion Friday, completing one of the final steps as the city converts from a competition for customers to one that grants each company an exclusive business franchise zone.
The changeover eliminates the competition among about four dozen different companies. Some critics fear the change could result in higher prices, because property managers will no longer be able to hire whichever hauler offers the best terms or schedule.
The city will be divided into 11 zones in which one company, an exclusive franchisee selected by the city, gets all the business — with prices and performance standards set by the city.
The franchised zone system was approved in 2014, and the contracts for what could amount to $3.5 billion in collections over the next 10 years were approved Friday.
The system was intended to reduce the problems associated with trash collection — noise, the hazard posed by trash trucks and bins that might have to be rolled out or placed in the street — to a single day per week, and to increase the percentage of L.A. trash that goes to landfills. The franchise companies are required to provide blue recycling bins to some 65,000 customers, including about 18,000 apartments. The system will roll out in July, city spokeswoman Tonya Durrell said.
California state law requires the city to divert 75 percent of its solid waste away from landfills by 2020. The city's own goal is to be a zero waste city by 2030. The new system is expected to produce $200 million to be spent toward improvements in recycling systems.
The city's Sanitation Bureau will continue to pick up garbage from single family homes and small apartment buildings with up to four units.
Granting exclusive franchises for trash pickup is already a popular model in California. Ventura County also parcels out franchise zones where private companies have the exclusive right to collect garbage and bill residents for the service. Businesses in unincorporated areas have the choice of several pre-approved waste haulers.
In 17 Orange County cities, exclusive trash franchises generated nearly $300 million in revenue for haulers — and those businesses paid nearly $30 million in franchise fees to the cities that granted the franchises. In some cases, prices dropped, but not uniformly.
In San Jose, commercial garbage collection is run through a franchise system that brings about $11 million per year into the city, spokeswoman Jennie Loft said.
Read more about the plan here, and see a map of the new zones below: