By REBNY President John Banks
If you’re a business in New York City, there’s a very simple process in place to get rid of your garbage.
Here’s how it works: you shop around for the best service to fit your needs and enter into an agreement with a company that will have your waste removed.
But now the City is proposing to create commercial waste zones where one service company will exclusively service the private businesses within a zone.
The well-intentioned thinking behind this collection scheme is that it would achieve three goals: reduce truck traffic and greenhouse gas emissions; promote worker safety; and lower costs for some smaller businesses.
While these are all worthy goals, private waste collection customers have seen this proposal – also known as franchising – as recently as the 1990s. The idea never gained much traction because of widespread concerns over increasing cost and declining service levels. Those same concerns hold true today.
The proposal’s timing is curious given that the current system is working just fine and the projected benefits are modest and uncertain.
The commercial waste service industry is generally efficient, is not the subject of customer complaints, and is modestly priced compared to other cities, notwithstanding the high cost of disposal in this region.
We think it’s important to examine what has happened in other cities that adopted franchising.
In Seattle and Houston, customer costs increased. Factors behind the increases vary. The bidding waste service company will add supplemental services such as expanded recycling or organics collection in the hopes of being awarded a zone. This increases pricing regardless of whether or not these services will fit an individual customer’s needs.
Even the City’s own recently released study notes that “should a franchising agreement include provisions or requirements that increase operational costs for private carters, these expenses may be passed onto customers.”
Costs also increase because some cities, such as Los Angeles and San Jose, impose franchise fees upon the service provider which are invariably passed along to the customer.
The fees are typically based on the city’s cost to administer the program, which may include educational campaigns and generally provide additional non-tax revenue.
Chicago abandoned franchising altogether precisely because of the impending price increases due to the franchise fees. But franchising also limits competition over price and could affect the customized services required by some businesses.
For example, restaurants often have very different service needs than an office building. Food service businesses might need multiple pick-ups, after closing and in the early morning hours while an office building may only need a daily pick-up. Franchising could only disrupt these businesses’ internal operations.
Lengthy, multi-year contracts are another feature of franchising that brings with it both positive and negative impacts.
The current two-year limit set by the City to promote competition can prevent a carter from making long-term investments in equipment and facilities. But long-term contracts might unnecessarily lock in consumers with little ability to terminate or engage an independent waste service company under a franchising scheme.
Clearly, some balance must be struck to align the carters’ need for certainty with the consumers’ justifiable right to flexibility.
To help guide this game-changing policy, the City recently created an Advisory Board of diverse stakeholders including carters, environmental justice advocates, commercial building owners, food industry and hospitality representatives, labor, and business associations — including REBNY.
We welcome the opportunity to work with this group and participate in proposing a new system. We look forward to raising the concerns outlined above because we remain skeptical of whether imposing commercial waste zones throughout the City is necessarily the most effective and timely means to achieve the laudable policy goals of reducing greenhouse gas emissions, promoting worker safety, and narrowing cost differentials among users.
If the current system ain’t broke, don’t fix it.
In other REBNY News:
November 10 from 11:45 a.m. to 2:00 p.m. is REBNY’s next Members’ Luncheon, located at the Hilton New York. The event’s panel discussion, moderated by Seth Pinsky of RXR, is called “New Opportunities & Challenges in Today’s Market,” and will feature panelists Charles Bendit of Taconic Investment Partners, Leslie Himmel of Himmel + Meringoff Properties, and Kevin Hoo of Cove Property Group. To register, visit www.rebny.com or contact Ossie Shemtov at OShemtov@rebny.com.
November 15 is our next Secrets of Top Brokers and Industry Leaders seminar, from 5:30 p.m. to 7:00 p.m. in the Mendik Education Center. This free seminar for REBNY members only will have a panel of notable real estate experts examine and present current trends in real estate to enhance the professional knowledge of each attending agent. Registration is required, and more information can be found on rebny.com or by contacting Yesenia Dhanraj at YDhanraj@rebny.com.
REBNY’s next Breakfast Club seminar will be on November 22 from 9:30 a.m. to 11 a.m. These seminars are open and free for REBNY’s residential members. Contact REBNYResidentialEvents@rebny.com for details.
Sustainability Boot Camp will continue this Fall with BOMA’s International Energy Efficiency Program: BEEP® Version 2.0! Taught by NORESCO, the eight-hour course will be offered at a discounted cost of $45 per person. Commercial building staff can register for courses online at www.rebny.com. Effective January 1, 2017, the law of agency has been added to the CE curriculum required for renewal of a New York State real estate license. Under the new requirement, real estate salespersons that are within the first two years of becoming licensed must take at least two hours of agency law instruction. All other real estate licensees must take at least one hour instruction. This amendment is applicable to any real estate licensee renewing their license after the Effective Date.