LA Sanitation and Environment is close to hitting the reset button on its recycLA commercial waste and recycling franchise system, citing a stalemate in contract extension negotiations with private haulers.

On Friday, the Los Angeles City Council’s Energy and Environment Committee said companies must submit final offers by Monday. If negotiations don’t advance this month, then LASAN will focus all of its efforts on releasing a new RFP for contracts that will begin in 2027.

"We need the management and staff of Sanitation to not be distracted by these prolonged negotiations, but instead working to move this program to its next phase,” said Councilmember Katy Yaroslavsky, chair of the committee.

The recycLA system encompasses more than 66,000 accounts including commercial buildings and multifamily buildings of five units or more. Its 11 exclusive zones are serviced by six haulers: Athens Services handles four; WM and Republic Services each have two; Ware Disposal, NASA Services and Universal Waste Systems each have one. LASAN provides service for all other residential buildings.

LASAN previously said the recycLA program, launched in 2017, has been successful in multiple ways but also has structural issues that need attention. Its goal to cut 1 million tons of landfill disposal by 2025 will likely not be met, due in part to slow adoption of organics service which was optional when the program began. Plus, the contract structure has resulted in significant cost increases for many customers.

The agency began negotiating a contract amendment and extension with haulers in October, including at three meetings with each company and communications that continued into last week. LASAN is seeking multiple changes, such as making organics part of a bundled service price, eliminating access and distance fees, requiring fleet electrification and more. 

During the hearing, representatives from companies such as WM and Republic said negotiations were close and some agreements had been reached. They advocated for finalizing an amendment that could address the agency’s concerns sooner than a new contract in 2027.

LASAN Director Barbara Romero said she originally hoped to maintain the current program with an extension, but that had become a less attractive option due to proposed concessions from haulers and sticking points on multiple items requested by the agency.

"I just don't know at this point what I can do to get them to say yes to all of them,” said Romero. “They've made some attempts, but they're not enough to [not] go out to the market and see if we can get a better deal for our customers as we're trying to achieve our environmental goals.”

Companies are asking for a 10-year extension, versus LASAN’s preferred five-year extension, and seeking higher rates in future years to offset certain changes.

"To continue those concessions for an additional five years on top of the five years we're talking about, as opposed to being able to fix them in an RFP, it just is not a place we think is long term best for both the city and our customers,” said Dan Meyers, LASAN’s division manager for the recycLA program.

Cost is a key element, cited in recent comments by groups such as the California Apartment Association and the regional division of the Building Owners and Managers Association.

Meyers said that in some cases the access and distance fees haulers are allowed to charge for reaching black and green bins can potentially double a customer’s bill. In addition to ending those fees, LASAN also wants to cut fees for overweight and overfilled bins as well as other categories.

A 2019 contract amendment provided relief for access and distance charges on blue bins, but at the city’s expense. Haulers have said they’re open to waiving such fees for blue and green bins.

Organics service is another key issue, in part because recycLA was designed before California’s SB 1383 organics recycling requirements were finalized. Currently, recycLA customers must pay for organics as an extra service rather than a bundled option. Following enforcement delays due to the pandemic, LASAN said 40% of customers are now compliant with state and local organics regulations by either paying for service or having an approved waiver.

Fleet standards have also shifted since recycLA launched. Haulers replaced diesel vehicles with 543 compressed natural gas vehicles, but the California Air Resource Board now requires electric refuse vehicles by 2042. LASAN wants to see a faster timeline for recycLA vehicles to go electric, while recognizing that cost and technology development are factors.

Council members repeatedly asked whether price increases would be higher in a contract amendment versus an RFP, given that many of the same companies would likely bid on a new contract. LASAN believes the latter option may give it more leverage.

"We think an RFP will help reset the field and probably some of the [recycLA service providers] will be also competitive,” said Alex Helou, assistant director for solid resources program development at LASAN.

LASAN has already taken initial steps to prepare an RFP, as previously directed by the council, due to what staff describe as a tight timeline. New contracts would need to be awarded in 2026, ahead of a 2027 start date, to avoid a repeat of the program’s initially bumpy rollout.

“That time is necessary to ensure that there is a smooth transition and planning so that if any customer winds up with a new service provider that this is a very seamless effort,” said Meyers.

The number of awardees could also go down with a new RFP. The program started with seven companies, until Athens acquired CalMet Services in 2022.

A Feb. 20 report from LASAN said having more companies “did not result in better customer service or in attaining or exceeding the city’s environmental goals” and managing seven contracts “strained existing resources.”

LASAN could also take over service for certain multifamily buildings, as it already does at some properties under longstanding agreements. Staff said their rates are often significantly lower than what recycLA haulers currently charge due to the access and distance fees, price index escalators and organics being billed as a separate service.

If it moves ahead on an RFP, LASAN will commission a pricing study to see how the current recycLA rates compare with other commercial waste systems throughout the state. Officials believe the rates may be higher than in other jurisdictions, but they also recognized there was a fine line in trying to manage pricing.

“We're gonna have to be disciplined in what things we ask in the new RFP. So can I guarantee that it's gonna be lower? I hope so. I can't guarantee that,” said Romero. “If we put too much on it it's going to go up again."

While negotiations are technically ongoing, elected officials and city staff appear to favor the RFP option.

"I need to hear from you by the end of this month that there's any reason to continue limping along with the negotiations,” said Yaroslavsky.