City of LA Passes - Zero Waste LA
Written by Peter Strauss of Iconic Investments
With 70 percent of the trash in Los Angeles coming from multi-family and commercial buildings, property owners should be aware of the City’s new waste collection franchise system.
On January 9th, 2017, the Los Angeles City Council Passed Zero Waste LA, which is a public/private partnership between the City of Los Angeles and private waste companies. The value of these contracts totals $3.5 billion.
The idea behind the bill, which was introduced by Councilmembers Paul Koretz and Jose Huizar, was to address the 3 million tons of trash collecting in Los Angeles annually. Zero Waste LA promises to:
- improve the efficiency of the solid waste system,
- improve air quality,
- reduce landfills and
- increase recycling.
How will it work?
Beginning in January of 2018, the City will be divided into 11 franchise zones controlled by seven companies. Private trash companies will have the exclusive right to service multi-family properties within their zone. Zero Waste LA extends this monopoly to service businesses, office, retail and industrial properties.
So property owners in the City of Los Angeles will no longer have the ability to choose their own private trash companies. They must use the company that has been awarded the franchise zone.
Notifications will be sent to property owners in June 2017. Franchise Account Setup and Customer Transition will begin in July 2017. All customers will receive franchise service starting in January 2018.
What does this mean?
At Iconic Investments, we see Zero Waste LA as a government-mandated monopoly. These arrangements are common on the East Coast and in the Bay area. Municipalities use the system to create bond measures and entitlement programs.
New York City Mayor Bill DeBlasio is pushing for a waste collection franchise system. The franchise idea has been floated unsuccessfully in the Big Apple for some time, but DeBlasio and other supporters are dedicated to the system’s potential benefits: increased recycling, fewer commercial garbage trucks on New York City’s streets, improved air quality and reduced prices for customers due to efficiencies. But Dan Brownell, chairman of the Business Integrity Commission, which regulates commercial carting in the Big Apple, believes a franchise system would cost business owners more due to reduced competition and increased regulation and mandates. New York City businesses already cope with high operating costs.
How much does it cost?
LA City claims that rates are competitive, but a monopoly, like the LADWP or Gas Company, faces little resistance when increasing rates. The franchisees can collude with one another to increase rates. Private businesses work hard to absorb ever-increasing operation costs, and price increases are a measure of last resort. Government-mandated monopolies pass along all cost increases to customers, and almost never roll them back when costs decline. Further, this would eliminate smaller trash companies that do the bulk of commercial construction trash removal.
Iconic Investments is a Los Angeles-based boutique commercial real estate brokerage firm focusing on multi-family buildings of 15 to 100 units in the Koreatown, Mid-Wilshire, Pico Union, Westlake, Hollywood, Silverlake and Los Feliz submarkets. Iconic represents apartment building owners with the sale of their investment properties.
Iconic Investments has listed for sale, Sanctuary on Kingsley, a development opportunity in LA's Koreatown submarket. The parcel of land located at 328 N. Kingsley Drive is 28,370 square feet and zoned R3-1. While the current improvements on the property are 20 apartment units, a developer can build up to 48 units