Wednesday, July 19, 2006

Whither Commercial Trash?

One of the unresolved issues that the city's SWMP fails to adequately address is the fate of the roughly 12,000 tons of daily commercial garbage produced by this town's businesses. The building of a transfer station on West 59th Street is supposed to siphon off a good portion of Manhattan's commercial waste that is currently being sent to Brooklyn and the Bronx, and the other stations are supposed to take some private garbage as well.

Left unsaid, however, is the fact that the city has no ability to force private carters to dump anywhere it tells them to. This is the subject of a piece ($) in this week's Crain's New York Business where author Erik Engquist points out that the private waste haulers not only have no incentive to divert their garbage to a city-owned facility, they are also convinced that it will inevitably be more costly to do it.

Crain's quotes one of our old friends, carter Dominick Incantalupo, saying, "It would send costs through the roof...They could effectively double my tipping fee." He goes on to point out that these added costs would have to be passed on to his customers.

Given these facts it is clear, as Sanitation Chair Mike McMahon points out, "haulers won't use the proposed transfer stations unless the city subsidizes the cost." In addition, if the city tries to mandate their use (called "flow control") a court battle will be inevitable, and carters have won most of these in the past.

Of course as Engquist highlights the city could come down in a draconian fashion on the existing private transfer stations by "strictly" enforcing environmental codes, thereby making it more costly to operate these stations. This is exactly the scenario that we have been predicting: the city builds expensive marine transfer stations, effectively puts the private ones out of business, and then forces the local businesses to subsidize the cost of all the city's garbage removal.

This is not the result that that well recognized expert on garbage costs, Partnership president Kathryn Wylde, feels will happen. Wylde believes that the mayor's plan "would actually lower trash-hauling fees." As she told Crain's, "Each new transfer station has additional capacity for the commercial haulers...That should give the carters more options and overall lower costs."

This is a totally irresponsible statement from the head of a group whose mission is to promote the interests of the city's business community. In the first place, her view of the laws of supply and demand are simply inapplicable to an industry that not only is controlled by an oligopoly but one where the city is in charge if setting rates.

If NYC controls, along with WM, the tipping and export of commercial waste there simply is no free market at work to lower costs. As Incantalupo cogently points out, "My clients will end up having to pay."