DSNY: Commercial franchise zones will be non-exclusive
New York still has many details to sort out for its proposed commercial zone system, but one key point is now official — it will be non-exclusive.
So far, the Department of Sanitation (DSNY) estimates the city could be carved into 15-25 zones. Each one could be serviced by two to five companies, and companies could operate in multiple zones. Specific details can be expected in an implementation plan this summer.
"One of the reasons why we're trying to do non-exclusive is I want the businesses and the carters to still have their primary relationship. I think that both sides feel very strongly that they need to be the ones who are responding to each other's needs," Commissioner Kathryn Garcia told Waste Dive.
According to Garcia, the consulting team led by Arcadis determined that "there wasn't a huge trade-off" in terms of vehicle miles traveled reduction. Some industry groups remain skeptical of this and are awaiting analysis from new route data provided to the city earlier this year.
During a WasteExpo panel, DSNY Director of Commercial Waste Zoning Justin Bland said this decision was the result of more than 150 stakeholder meetings in the past 10 months. The topic has also come up during ongoing zone advisory board meetings.
“Customers can still select who the best hauler that meets all of our requirements will be for their requirements," said Bland. “We want to guarantee minimum service standards to every customer.”
Service & recycling
Aside from emissions reduction, one of the city's main arguments for a zone system is to make service and pricing options more equitable.
“In getting a more efficient system you can add new contracting requirements to that. That was the real selling point to New York City to start pursuing this," said Bland.
During the panel, Bob Pfister of Advanced Disposal Services, countered that cities could achieve similar goals through a licensing system. Yet New York already has a licensing system, run by the Business Integrity Commission, with a rate cap structure and basic operating requirements.
DSNY expects some form of maximum rate will still exist, but with different pricing options for disposal alternatives. Both Bland and Garcia confirmed that this won't be driven by mandated diversion targets.
"We want to still figure out a way to incentivize and prioritize recycling," said Garcia, "but we think that it's challenging to just set an arbitrary target without really understanding what's going to happen on the participation side."
The California comparison
The bumpy transition period for RecycLA in Los Angeles has become a primary talking point for skeptics in New York, and appears to be influencing DSNY's thinking, too. During the panel, Bland said he was in close contact with counterparts on the West Coast and that rollout logistics would likely be on a longer timeline in New York as a result.
This hasn't stopped local business groups such as the powerful Real Estate Board of New York (REBNY), and various borough-based chambers of commerce, from citing RecycLA in recent op-eds. Those were written before the non-exclusive format was confirmed, but if more recent reaction from the New York Post editorial board is any indication many skeptics are still unconvinced.
Additionally, New Yorkers for Responsible Waste Management (NYRWM) sent a press notice on May 24 that business leaders, including representatives from the National Supermarket Association, the Queens Chamber of Commerce, the Manhattan Chamber of Commerce and the Food Industry Alliance of New York, have affirmed their commitment to opposing the "flawed proposal," noting it would lead to "higher costs and poorer service for New York City's vast array of businesses."
"Clearly, change is difficult," said Garcia, when asked about REBNY in April, "but they're engaged and I think that they will in the end find out that it probably will work very well for them. Because we're not trying to make it something that would make their world more difficult."
She also added the ability for more sustainability tracking would be a benefit to larger corporate customers.
The environmental angle has been a key selling point for RecycLA — in the form of universal access to recycling and organics collection, $200 million in processing infrastructure investment and a new fleet of clean-fuel vehicles. Another was the lucrative franchise fees.
DSNY currently has no plans for specific revenue-generating franchise fees. Details about any infrastructure investment or fleet requirements haven't been announced. As the list of differences between RecycLA and DSNY's proposal grows longer, the comparison start to become less relevant.
Even if RecycLA remains a foil, a seeming de-escalation in local outrage over the transition could also help New York's case. According to the Los Angeles Bureau of Sanitation, the number of service complaints in March declined to 1,174 (down sharply from a December peak). While more than $36,000 in liquidated damages have been assessed for performance issues so far, LASAN declined to provide further details pending an appeals process.
Meanwhile, questions over price increases are still being resolved but the agency touted environmental progress in the form of an inaugural sustainability award for Loyola Marymount University.
After a hectic launch, many of those same companies are now involved in the early stages of franchise plans in neighboring Glendale. Michelle Leonard, vice president of SCS Engineers, said RecycLA has weighed heavily in the discussion so far.
As all of this plays out, it has raised the question of whether any of the national companies operating in franchise markets elsewhere will want to dive into what might be the most complex one yet. Industry sources and city officials view that as increasingly unlikely.
"My assumption is it's probably going to really be who's in the market now," said Garcia. "We're really trying to make it so that the local folks don't feel like we're designing something for nationals."
Waste Management does operate multiple transfer stations in the city, but essentially has no collection operations on the ground anymore. CEO Jim Fish was far from enthusiastic about the prospect.
"I'm not going to say we wouldn't explore it, but boy that is a tough business there in the city," Fish told Waste Dive. "I don't know whether we would be interested or not. We might be, but it is one that we'd really have to look at before we got back into it."
Republic Services also has no local collection infrastructure. Waste Connections does, following its 2016 acquisition of Progressive subsidiary IESI, but has remained characteristically quiet. Action Environmental Services, the largest in the market, is seen as the best-positioned to win zones but currently favors an open market system.
Opposition from small and medium companies, represented by NYRWM, is well-documented by now. The formation of that group in 2016 has left the National Waste & Recycling Association's local chapter in a less prominent position during this whole process as it remained neutral on the subject.
Though earlier this month, NWRA chapter members voted in favor of a resolution to "affirm support for New York City to retain its effective open-market system for the management of wastes, recyclables and organics generated by the city's commercial sector, and urge the city to consider alternate means of advancing its policy, programs and safety goals through collaborations with the waste service industry."
It was understood that such "alternate means" would not include a zone system.
The Solid Waste Association of North America's local chapter, on the other hand, hasn't taken a formal position and the organization remains actively engaged in the advisory board process.
With all of these factors swirling around — and City Council politics only just beginning to percolate — New York's commercial zone collection system is still years away. Bland, the one tasked with bringing this to fruition, said that DSNY plans to organize a thorough and smooth transition, while also recognizing that New York is by far "the most difficult city to do that in."
This post has been updated to reflect a May 24 letter of opposition from New York business leaders.
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