Shock and Anger Over the L.A. City Waste Haulers’ 6.15% Increase

Written by Landlord Property Management Magazine on . Posted in Blog

By Albert Mass

I was shocked and angered that the City of Los Angeles’ City Council has allowed the City’s waste haulers to increase trash removal fees by 6.15% effective in January while rent increases are frozen, late fees and interest are banned, and evictions are prohibited.  Because I am unable to increase rent at my building (let alone collect it from tenants now living for free under the disguise of a COVID impact) during this global pandemic, the City should require its monopolistic waste haulers to freeze prices.  This is especially so, and the City should take responsibility, because is was the City that established its anti-competitive monopoly arrangement known as “RecycLA” that set and imposes upon me and thousands of other property owners ever-increasing waste hauling fees.  It was the City that has negotiated the waste hauling rates and that has chosen my waste hauler, not me.

All this started back in 2017 when property owners were shocked and dismayed by the huge fee increases rolled out along with horrible service levels so that the City could extort a $25 million to $35 million franchise fee from property owners based upon a “10% take” of the waste haulers’ gross receipts.  Gone were 100’s of waste haulers competing for our business leaving us with just 7 each granted exclusive rights to service designated territories within the City.  For the City, there’s no skin of its back – the more property owners pay, the more the City earns.  But there is no doubt about it.  A 10% franchise fee is no more than a tax on property owners.

The City has the right to establish service criteria that trash hauler must comply with such as diversion rates, and force licensed trash haulers to comply.  But the City has no right to tell us which waste haulers that meet the City’s standards we must use at any cost.  By choosing the “one and only” trash hauler that we must agree use, the City has created a monopoly which will surely lead to more price gauging and continued corruption.  The corruption here is that the City has negotiated a kick-back of 10% of the trash haulers’ gross receipts.  The corruption here is that the City has established the pricing and eliminated competition.  The corruption here is the City negotiated price increases such as the initial 200% to 400% rate increases and now the mandatory 6.15% increase with more to follow in the future.  The crime here is now forcing property owners to pay these exorbitant rates to the monopolistic waste haulers while our revenues are frozen and for many, not collectible.  The City’s corruption full blown.   

Normally, if we were not dealing with a global pandemic and living under emergency orders,  property owners could recover some of the increased costs by raising our tenants’ rent let alone have a much better chance of collecting rent in the first place under the terms of our rental contacts.  However, Los Angeles’ Mayor Garcetti has issued an emergency order that prevents rent increases, evictions, and charging of interest and late fees, whether governed by contact or not, at this time. 

Recently, I contacted Los Angeles City Council Member, Paul Koretz, about this issue.  As I put in my letter to Mr. Koretz along with a copy of my latest trash hauling bill, “I am shocked and dismayed at the City Council’s lack of concern and the inappropriateness of a 6.15% price increase by waste haulers when there is a rent freeze and economic hardships being shared by all  businesses in the City of Los Angeles.”  I then suggested the “6.15% price increase must be rescinded.”  Council Member Koretz’s office responded, “I will speak to the Council member about other avenues we can take to address this issue, as I and we do realize it is another burden that our landlords are facing.”  Later, I received the following from one of Council Member Koretz’s staff members:

Hello Mr. Mass, thank you so much for sharing your frustrations with our office about this fee increase.  The Council Member realizes how frustrating this situation is for so many of our landlords, especially during the pandemic, when rents are frozen and many renters are not paying full or any rent.  After investigating your request, I am sorry to say that we cannot freeze this fee increase.  It is written into the contract we have with the hauling companies, and we are unable to alter it.”                                                                                                    

Sure, I can understand that the waste haulers’ expenses may be increasing, but so are mine.  My expenses such as property taxes, utilities, insurance, labor costs for repairs and maintenance and more, are always increasing.  Yet, unlike the waste haulers, we property owners are never let off the hook and must merely deal with it irrespective of the financial stress and hardship we are being placed under.

The real problem here is that the City is practically broke due to bad financial decisions and bloated pension obligations, and in its desire to create income, the City has chosen to negotiate a “sweet deal” for itself with trash haulers and create for them a monopoly that forces property owners to use only the trash haulers the City has chosen for us and eliminate competition we had enjoyed for decades and with that, our ability to choose a trash provider for ourselves.

When the City of Compton raised fees, its mayor went to jail.   The City of Los Angeles has no business dictating the vendor property owners must use and eliminating the competition the City enjoyed for decades.  The City only has the right to set the standards that each of the vendors must comply with, but not choose the vendor and dictate the terms to users so that the City can get a “kick-back” in the form of a hidden tax.  Sadly, and more and more apparent, the City Council has turned into a “good old boys club”  whereby their vote is unanimous on pretty much every issue before them.  All I can say to the City Council is that each of you can all slap each other’s back for your abominable voting history and camaraderie – hopefully, for the next election, we can place some independent thinking into your offices who will not follow your re-treaded, corrupt policies.

I do know that there are many good, well-meaning, and conscientious staff members and employees working at City Hall.  But I cannot say the same for the members of the City Council, including “do-nothing” Council Member Paul Koretz.  I urge them to address this anti-competitive and price gauging scheme they concocted and revoke this inappropriate rate increase – now more than ever, is not the time for price increases you can do something about.

Albert Mass is a rental housing provider in Los Angeles, and is a member of the Apartment Association of Greater Los Angeles.

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