Dive Brief:
- The Apartment Owners Association of California and building owner Chuck Betz have filed a lawsuit against the City of Los Angeles in an effort to block its imminent waste franchise system, as reported by the Los Angeles Business Journal.
- The lawsuit alleges that fee increases tied to the system count as new taxes, which would require voter approval under California's Proposition 218, and will have unequal effects. "While appearing to benefit all city residents, (the program) actually illegally and dramatically increases for waste hauling on commercial property owners and certain multifamily property owners, not all citizens or property owners equally," reads the lawsuit.
- Based on these grounds, the lawsuit asks for an immediate injunction to block the franchise system until it can be changed to comply with Proposition 218. The city attorney's office told the Journal that it was reviewing the lawsuit and had no comment yet.
Dive Insight:
The potential for a legal challenge was expected, though the timing is far from ideal for the city. The labor and environmental advocacy group that was a key player in driving this plan has said they view the lawsuit as nothing more than an effort to delay the inevitable. Preparations for the "RecycLA" program have been underway for months and official implementation is set to begin in July.
As seen with recent cases in Oakland, CA and Kansas City, MO, among others, it can be common for real estate owners or associations to challenge city collection policies. Though because the Los Angeles franchise system will be the largest of its kind, no direct recent example of a challenge at this scale is available. Depending on the outcome, the interpretation of whether this system goes against California's Proposition 218 could have a direct effect on early efforts to enact a franchise system in nearby Long Beach. Some players in New York's real estate community have also been skeptical of their own city's plans, though no legal action has been taken yet.
Waste Dive will continue to follow what effect, if any, this lawsuit has on Los Angeles' pending multi-billion dollar franchise contracts and the seven companies that hold them. With major companies such as Waste Management and Republic Services involved, and an estimated $200 million in infrastructure investment allocated, the apartment association behind this effort can expect stiff resistance.
