Waste hauling is expensive. In any given municipality, costs for solid waste franchise services are not only the second largest annual expenditure but also one of the most difficult for which to account.
One key question about solid waste and recycling collection continues to stump city staff and elected officials alike: Why do trash rates continue to increase while recycling efforts rise and landfill disposal volumes decrease?
“In many municipalities,” says MuniEnvironmental CEO and Principal Consultant Jeff Duhamel, “the system is so fragmented by complex local franchise agreements, along with state and federal regulations, that it’s difficult to understand what the price represents.”
While the underlying facts and circumstances are different in each community, here is a list of six basic questions you should ask your waste hauler:
Six Questions for Your Waste Hauler
- How old is your contract?
Let’s imagine your community entered an agreement with its current waste hauler in 1990. What else do you have that’s 27 years old? You wouldn’t continue to rely on a 27-year-old computer. Examine the age of your agreement, and consider how that agreement relates and is relevant to today’s waste management standards, regulations, operational services and economy.
- How have legislative changes affected your agreement?
SB 1374, passed by the California Legislature in 2002, requires all municipalities to enact mandatory construction and demolition recycling programs targeting 75 percent diversion. In 1989, AB 939 established the current organization, structure and mission of CalRecycle. With the advent of AB 341, Mandatory Commercial Recycling, and AB 1826, Mandatory Organics Recycling, municipalities’ recycling and reporting efforts have become mandatory programs that include citywide participation, monitoring and reporting to the State of California.
How have these legislative requirements changed the overall dynamic of what’s being picked up and for what you’re being charged?
“The plain and simple truth,” says Duhamel, “is that it is significantly less expensive to collect, process and sell recyclables than it is to collect, transfer and dispose of waste in distant landfills. For example, imagine that for more than 25 years, your community has not only separated the waste stream into three sectors for the hauler but also the hauler has made fewer trips to the landfill. So why did your rates go up again this past year? Are you throwing away more trash than in prior years?”
- What attributes unique to your community affect your service and prices?
Waste is different in every community; it is not homogeneous. What is the real cost of service, and why? Some factors to consider include recycling activity, distances from and accessibility to landfill, material recovery or facilities transfer stations, and the percentage of residential versus commercial versus construction waste produced.
- How much waste are you sending to the landfill? For how much are you being charged?
Haulers typically charge by cubic yard, and often rate adjustments are based on cubic yard of service. Tipping fees are levied by processing facilities based on the quantity of waste received; these fees offset the costs of maintaining the site.
Look at the waste produced by your community—from construction and demolition projects to residential trash to commercial recycling—as a big pie, and identify all of the pieces. With State-mandated diversion and recycling programs, the pie has changed as recycling efforts have increased and landfill disposal volumes have decreased. How do your numbers align?
- Are your franchise fees covering your costs?
Most cities charge a franchise fee. Imagine that one community charges five percent, while a neighboring community charges 24 percent. Is your city charging an appropriate amount of franchise fees in order to offset impacts such as the damage trucks do to roads? Are you getting the most out of your agreement?
- What is your trash hauler doing about commercial recycling?
In many communities, third-party recyclers collect cardboard, paper, plastic and other recyclables from businesses with large trucks that do not have permits and do not report back to the city. Who is picking up these recyclables, and where do they go? Commercial recycling, mandatory in the State of California, often is a private agreement between the generator of the material and a third-party recycling company. The city, then, never gets credit for the programs, because trash haulers only count what they do.
And here’s a seventh question, for yourself: How might your community benefit from a professional audit?
Prior to agreeing to a solid waste and recycling service provider’s rate adjustment, consider these factors: A professional audit of the rate adjustment request can verify the consistency of the rate calculations with the rate adjustment provisions of the franchise agreement, including proper application of the rate adjustment indices. A professional audit also can verify that the percentage changes in the rate adjustment indices used in the rate adjustment formula have been properly calculated.
“The best way to negotiate an optimal agreement for your community is by entering the room with as much—if not more—information than the hauler,” says Duhamel. “Bring in the professionals of MuniEnvironmental, so we can help turn the agreement around so it benefits your community. We promote that the franchisee and franchisor relationship be fair and equitable to both parties. That’s what we do.”
With proven expertise in the Solid Waste, Recycling and Stormwater Industries, the experienced professional staff of MuniEnvironmental, LLC specializes in not only analyzing and debunking the flawed matrix for the continuation of unwarranted and often excessive rate increases but also helping communities recover overcharges and fees.
MuniEnvironmental provides consulting services to governmental agencies attempting to implement mandated regulatory requirements while striving to preserve their leadership and administrative role with their contract service providers and the business community. For more information, please visit munienvironmental.com or call (562) 432-3700.
