L.A.’s top money manager rebuffs labor-backed trash contract idea

In the latest salvo in a political battle over Los Angeles’ lucrative commercial trash collection business, City Hall’s top budget guru Friday urged lawmakers to reject a controversial, labor-backed plan to award exclusive hauling privileges in a series of new franchise territories.

For months, union-affiliated groups have argued that the current system of private trash haulers vying to collect waste from apartments, factories, hospitals and strip malls should give way to a franchise system that would divide the 468-square-mile city into 11 zones. The change would improve service and recycling, reduce the number of rubbish trucks crisscrossing the city, ensure predictable rates and support well-paying jobs, proponents claim.

Business leaders, apartment owners and smaller trash haulers warn that the initiative is a thinly disguised union organizing effort and only large companies with labor agreements would be able to compete for the franchises. They also say the change would mean higher rates, which would be passed on to renters and consumers, because of increased franchising costs.

The city’s coveted commercial trash pickup market is worth an estimated $224 million a year.

In February, the city’s Board of Public Works, appointed by Mayor Antonio Villaraigosa, endorsed the exclusive franchise plan backed by the Los Angeles Alliance for a New Economy or LAANE, a think tank and advocacy group with ties to organized labor. The proposal also has the backing of the city’s sanitation department.

But Chief Administrative Officer Miguel Santana, who advises the City Council and mayor on policy, took a different position in a report released Friday. A retooled, non-exclusive franchise system could achieve the same recycling goals, protect small businesses and generate up to $30 million for the cash-strapped city as early as next year. Granting exclusive franchises and making them operational would take several years, he said, meaning the city would not see new revenue until 2016.

City employees handle trash collection at single-family homes and small apartment buildings, and that service would not be affected by the proposal.

Business groups embraced Santana’s findings and announced plans for a City Hall rally Monday morning to show their support.

“We fully understand the need for a franchise system, but we don’t want to limit competition and put small family businesses out,” said Sean Rossall, a lobbyist with Cerrell Associates and a spokesman for a group fighting creation of exclusive contracting areas.

Proponents of that plan attacked Santana’s analysis as flawed and said they also will be at City Hall next week.

Greg Good, who is pushing exclusive franchises on behalf of LAANE, said Santana’s claim that non-exclusive franchises could be producing a new stream of cash for the city next year is “patently absurd.”

“The idea that you would make a decision about the long-term plan for L.A.’s waste based on a one-year money grab is misguided and counterproductive,” he said.

Both sides agree on one thing: The fight is far from over.

Trash contracting wars have convulsed many Southern California cities in recent years, figuring in recall elections in Montebello and indictments in Carson.

In Los Angeles, where the financial stakes are far higher, the conflict now moves to the City Council, where two committees are expected to take up the proposal as early as next week.

jessica.garrison@latimes.com