Torrance to Consider Trash Hauler Franchise

The business community and city staff don’t like it, but some City Council members believe that awarding an exclusive franchise for commercial trash hauling--without competitive bidding--is at least worth a look.

The proposal, which could mean as much as $600,000 annually in added revenue for the city and $6 million for the company awarded the franchise, is scheduled for a public hearing Tuesday.

Several South Bay cities, including Carson and Inglewood, have exclusive franchises for commercial garbage pickups. The franchise fees range from 3% to 10%, depending on who does the billing. If Torrance imposed a 10% fee, it could collect $580,000, the staff estimated.

Under the current system, any company with a Torrance business license may make commercial trash collections. At least 14 companies now provide service and the city collects about $1,000 in business license fees from them.

The proposal has raised fears that heavy political contributions by large trash-hauling companies may become a factor in city politics. Already the main backer of the proposal, Councilman Dan Walker, has said he will return $6,000 in contributions from Western Waste Industries, one of the largest trash haulers in the region, after the contributions were disclosed in a local newspaper.

Walker said revenue from the franchise fee would help the city pay an estimated $800,000 in additional costs resulting from a federal court decision affecting cities’ overtime pay for emergency services. “This is an $800,000 problem for our fire and police departments that has not been budgeted,” he said.

The court ruling “is not an insurmountable problem,” said Councilwoman Katy Geissert, who along with Councilman Bill Applegate has opposed awarding a trash-hauling franchise.

The Torrance Area Chamber of Commerce has recommended that the council kill the idea. “Our recommendation is based on free-enterprise principles,” said Robert Seitz, chamber manager. “(Franchising) takes a business matter away from private hands and puts it into government hands.”

Seitz said he knows of no member business that favors a franchise.

Backers of the proposal say that franchising would help alleviate problems caused by having so many companies. “Sometimes we have five trash trucks go down an alley in the early morning, each picking up a separate bin. It would be much more efficient to have just one truck go down that alley. In the long run the efficiency of that system would reduce the cost,” Walker said.

A franchise also would give the city more control over the transportation of hazardous wastes, he said.

The city staff first came out against the idea in July after the council, at Walker’s urging, asked for a report on the subject. The staff said a franchise would indeed provide revenue, but noted that businesses would be paying the fee indirectly. The staff said the city would have more control over commercial trash collections at first, but eventually would lose control over rates because “the myriad costs associated with refuse collection lend themselves to manipulation.”

In spite of the opposition, the council asked the staff to come back with a “request for qualifications” to be sent to companies that might be interested in the franchise.

City Manager LeRoy Jackson said fees under the current system vary according to the kind of trash, frequency of pickup and other factors. Although economies of scale theoretically could lead to lower charges under a franchise system, Jackson said, the staff has warned that customers could end up paying more if the hauler inflates his costs when seeking city permission for a rate increases.

The small companies that would be affected by the change are organizing to oppose it, said Betty Adivari, whose husband Steve owns Adivari Disposal Co. in Wilmington. For some of the haulers, she said, “It means their livelihood.”