Incentive Programs for Local Government Recycling and Waste Reduction

Other Hauler Incentives

Franchise Fees. Most of the experiments with incentives in California during the past decade have included franchise fees. Several communities have tried to use fees to encourage their exclusive and nonexclusive franchise holders to increase recycling.

In Santa Clara, California, the city charges a differential franchise fee to haulers based on whether or not they have a city-approved recycling program. All nonexclusive franchised haulers collecting waste from the industrial areas of Santa Clara must pay the city a franchise fee of 25 percent of their total gross billings. To obtain a reduction of the franchise fee to 10 percent, haulers must meet at least two of the following three conditions (see details in case study below):

1. Provide a waste audit and containers, and collect 50 percent (by weight) of customer’s recyclable materials.
2. Provide a recycling service program and a designated recycling representative to perform specified tasks.
3. Provide another certified and documentable recycling or resource recovery program that reduces the amount of waste collected by at least 50 percent.

Monrovia, in southern California, has a similar program. The city reduces its nonexclusive commercial service agreement fees directly proportional to the amount of wastes diverted. Franchise fees are 16 percent for haulers diverting 24 percent or less, 12 percent if they divert 25 to 49 percent, and 8 percent if they divert 50 percent or more.

The average franchise fee for commercial wastes in California ranges from 10 to 15 percent of gross receipts or billings. Most communities include a specific amount for franchise fees in their collection agreements. To provide more flexibility for local governments over time, a franchise agreement may reserve the right to adjust the franchise fee at any time, or at the time of any rate adjustments approved for the hauler. This enables the community to increase franchise fees to fund the implementation of other recycling programs if needed.

AB 939 Fees. Section 41901 of AB 939 authorizes local governments to raise fees specifically for the costs of implementing their waste diversion programs to comply with this law:

Section 41902 clarifies that:

Some communities have adopted AB 939 fees on haulers and others have adopted AB 939 fees on solid waste facilities in their jurisdictions.

In Santa Clara County, an AB 939 fee was levied at all solid waste facilities in the county. The countywide AB 939 implementation fee is currently $1.30 per ton of disposed waste. These monies are distributed quarterly to Santa Clara County jurisdictions based on the total waste disposed in that quarter by a jurisdiction, as reported in the Disposal Reporting System. Monies for wastes from outside of Santa Clara County are distributed on the basis of each city's share of total countywide population.

Each jurisdiction uses the countywide AB 939 implementation fee monies to fund waste prevention and recycling programs. Programs funded differ by jurisdiction. Funded projects have included purchase of rolling carts for curbside collection of yard waste, purchase of recycling bins, public outreach, staffing for special recycling projects, and other AB 939-related purposes.

Other Hauler Incentives. In addition to these economic incentives, there are numerous policies that could be included in exclusive and non-exclusive franchise agreements that could assist in waste diversion, including:

• Diversion goals. Many communities are now requiring haulers to meet certain waste diversion goals as a condition of operating and maintaining their franchise. For example, in Monterey Park, all haulers doing business in the city must have a permit issued by the Department of Public Works and a business license from the city's Support Services Division. Commercial haulers were required to recycle 25 percent of the waste that they collect in the city by June 1998. Other communities using this system include Sacramento County, Costa Mesa, Newport Beach, El Monte, Gardena, Torrance and Bell Gardens.
• Planning requirements. Some communities require haulers to develop recycling plans, either for their own services (e.g., Bell Gardens and Costa Mesa require source reduction and recycling plans), or for businesses which they service (e.g., Portland, Oregon).
• Promotions Requirements. Most communities now require haulers to assist in providing comprehensive promotional support for recycling to residents and businesses.
• Market Development Requirements. Some contracts reserve the right for cities to direct materials collected by haulers to new markets as a part of the city’s market development activities. In San Francisco, they reserve the right to do it for 10 percent of any materials. Other communities reserve the right only for targeted materials.

Next> Transfer Station, MRF, and Landfill Incentives

Table of Contents | Innovations Home | Library Home

Last updated: October 26, 2007