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Junk Math: The Waste Industry’s Numbers Don’t Add Up

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February 13 was a big day for those who want Los Angeles to lead the way in greening our cities. After a contentious all-day hearing, the L.A. City Board of Public Works unanimously approved the Bureau of Sanitation’s recommendation to transform trash collection from businesses and large apartment buildings.

Under the new system, which must still be approved by the City Council, haulers will operate under an exclusive franchise system with environmental standards and accountability. This means, finally, that our city will know who is picking up trash where, when and how — and that only responsible haulers, committed to playing by the rules, will be picking up and processing our trash.

One of the themes heard repeatedly during public testimony at last week’s board hearing was that an exclusive system is going to raise costs. And there was a magic number to go along with the cry: 33 percent! A new report for an undisclosed client — later determined to be Angelenos for a Clean Environment (more on that amusingly misleading name in a future blog post), a “coalition” formed by a lobbyist, Cerrell and Associates — found that prices were more than 33 percent higher in cities with an exclusive system than in open-market and non-exclusive cities surveyed in Los Angeles County.

As someone who has dedicated a lot of time to understanding solid waste rates — and who knows that exclusive franchises help control costs, not raise them — I couldn’t wait to get my hands on this study that found the magic number. Getting to an accurate number that compares customer rates is complex and deserves a detailed methodology.

It turns out that the report includes very little explanation of their methodology. The information they do provide — that the rates were determined through a confidential survey mailed to permitted haulers — quickly raised the research red flags. A litany of questions started to run through my mind: Were these base rates or did they get a list of every single rate for every single customer in the city? Were the rates verified by getting the bills for these customers? How many haulers responded to this survey? Was there a comparison of level of service, types of trucks and diversion quality attached to these rates?

The challenge with getting accurate customer rate information for open-market or non-exclusive systems is that little information is known or accessible. The information that is available does not always provide an accurate picture. For example, we spoke with City of L.A. permitted haulers who provided us with very low base customer rates. We later discovered customers that were paying hundreds of dollars more for their service with the same haulers. We have even spoken with one city staff person after another from several of the non-exclusive cities mentioned in this study who haven’t been able to provide rate information.

The lack of information highlights one of the major concerns with a non-exclusive system: No one seems to know what is actually happening. Currently, no standards are attached to the open-market system in the City of L.A. The bar must be raised.

If anything, an exclusive system will help control costs, especially as standards are set and as disposal and fuel costs continue to climb. Exclusivity will improve efficiencies, create economies of scale and provide hauling companies with financing opportunities — all of which help reduce costs.

I hope that as the conversation moves forward, we can look past the magic numbers and the smoke and mirrors, and instead make room for discussions based on accurate information. This will allow the city to shape the best system possible for all stakeholders, not just the special interests.

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