New York aims to launch commercial waste zones in 2022, industry’s biggest change in decades

Dive brief:

  • The New York City Department of Sanitation (DSNY) on Tuesday released the final part of a request for proposals, launching a timeline to finalize contracts for 20 non-proprietary commercial waste zones and a container service to the city-wide starting next summer. Customer transitions in some areas could start by the end of next year, with final implementation likely complete by 2024.
  • DSNY qualified 50 bidders to submit final proposals by March 17, based on an initial tender earlier this year. Waste Management, Waste Connections, Action Environmental Services (a subsidiary of IWS), Winters Bros. Waste Systems and a series of other local players will be vying for 10-year contracts that could be extended until 2042.
  • At the same time, DSNY recently finalized the rules governing security, customer service and third-party waste audits for the system. The agency also announced the launch of a Commercial Waste Safety Working Group, made up of members such as the Solid Waste Association of North America (SWANA) and the Teamsters, whose first meeting is scheduled for December.

Dive overview:

Almost two years after Mayor Bill de Blasio signed a law to establish commercial waste zones, which followed many years of fierce advocacy and debate, the outgoing administration has taken a crucial step in bringing the one of the biggest changes to the city’s waste industry in decades.

While the city was originally aiming to start implementation this year, the pandemic resulted in multiple delays as well as temporary budget constraints at the DSNY that slowed the process. Continuing uncertainty about the pace of economic recovery in New York has led some carriers and business groups to call for further discussions, but the actions taken by DSNY this week are a clear sign that implementation is moving forward.

In a hearing of the New York City Council Sanitation Committee on Tuesday, Deputy Commissioner for Policy and External Affairs Gregory Anderson described the already extended deadline as appropriate.

“I think so [was] important that we take the time to do it right and understand the impact that COVID-19 had on the commercial waste industry and sort of allows them to get back on their feet before continuing, ”he said, stressing the importance of moving to a program that“ will shape the future of this industry over the next decades ”.

DSNY plans to award up to 65 contracts; each of the 20 zones can have up to three carriers and five city-wide contracts will be available for containerized waste. Companies can service a maximum of 15 zones, plus a city-wide contract. Currently, New York has an open market system where businesses can serve customers anywhere in the five boroughs as long as they retain a municipal license.

Depending on how the process unfolds, the local market could see new or returning players (Winters Bros. and Waste Management), the consolidation of large existing positions (Waste Connections and Action) and a range of results for many other local carriers from long time. Some companies are also making plans for one-time joint ventures or subcontracting arrangements as part of their offerings.

The National Association for Waste and Recycling said members and local carriers are still evaluating the glut of new information, but other initial reactions indicate this was generally what the industry expected.

“Carters should be happy with the final audit rules, which are much less onerous than what was originally proposed,” said SWANA CEO David Biderman, describing the removal of a proposed requirement for carriers. to reimburse the cost of third party waste from their customers. checks. “The industry and others opposed it, and the department wisely revised it. “

Supporters hope the new system can increase recovery rates for recyclables and organics, while limiting the number of kilometers vehicles travel through a more efficient route by zone. According to the RFP, DSNY “strongly prefers” that the prices offered for the collection of recyclable and organic materials are at least 30% lower than those for solid waste. The criteria for judging bids are made up of 35% on the basis of price, 35% on technical plans and 30% on the capacity of a bidder to provide the service and its operational history.

Currently, carriers are subject to a price cap set by the Business Integrity Commission – a holdover from New York’s crackdown on organized crime in the 1990s – but that rate has not increased for several years, despite demands by industry. Carriers that win zonal contracts will still operate under a new “maximum price”, but their contracts will have the option of automatically increasing annual fares.

Council member Antonio Reynoso, main sponsor of the waste zone bill and outgoing chair of the sanitation committee, told the hearing he was optimistic prices would not go up for customers, but “the pandemic concerns me and I don’t know if we’re going to get prices that we may have to lock in for a long time, which are more of the timing than the norm.” “

Anderson of DSNY said that carters and customers will be able to negotiate within the maximum price and that “there is always a level of competition in the system.” The agency also noted plans to engage closely with customers as they potentially see new carriers and different requirements in the years to come.

Biderman said the implementation period would present challenges for everyone involved and that an increase in the current tariff cap was “overdue.” He noted that higher rates under the zoning system are likely, adding that “it may well cost a little more to have your waste removed safely and in an environmentally friendly manner.”

The largest public companies in the North American industry, including Waste Management and Waste Connections, all indicated that price increases were a key strategy to offset inflationary pressures in the latest round of quarterly earnings calls.

Another area to watch, among many others, is that of the types of forward-looking investments proposed by bidders. DSNY is looking to see fleets with at least 50% “zero emission vehicles” by 2030, as well as new or expanded processing capacity for recyclables and organics. While local industry has made recent investments in these areas, zoning proponents say much more work is needed.

“In addition to negotiating aggressively with waste management companies, to ensure that they build the right facilities and invest heavily in customer education, we urge the city and the sanitation department to continue to seek solutions. ways to ensure that independent waste and expert auditors are available to every business client, ”said Justin Wood, director of policy at New York Lawyers for the Public Interest, during the hearing.

While a handful of companies have extensive experience with municipal tenders, many local carriers do not and some hire industry consultants. DSNY has scheduled meetings on December 8 and January 11 for bidders to ask questions before submitting proposals that could lock in the fate of some of their companies for years to come.

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