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What commercial customers can expect from new trash agreement in Hillsborough

TAMPA — Hillsborough County residents will enjoy a lower rate for trash collection costs thanks to the first new contract in 15 years, but it remains to be seen whether commercial clients will see a similar reduction.

As part of Hillsborough County's plan to overhaul the trash collection system, commercial clients have until Oct. 1 to sign a new contract with one of the three approved collection services.

Commercial collectors were allowed to solicit new contracts beginning April 1. Come June, clients can start entering into new contracts that will go into effect Oct. 1.

"What normally happens is contractors sign evergreen contracts that are automatically renewed," said Kim Byer, transition manager for the Public Utilities Department. "A lot of times, businesses won't look to renegotiate their contract, they just automatically renew into the next year. But by doing this, all the contracts are null and void, so they have to renegotiate. We're anticipating that will allow them to have a lower rate."

The goal is to drive down collection costs by adding competition. But some have doubts, especially since the three haulers are the same three that have dominated the market for years.

"If you've been the same three haulers there for the last 15 to 20 years, you know you don't have to go down, all you have to do is go up," said Brad Avery, region marketing director of WCA Waste Corp., a company that didn't get selected by the county during the residential bidding process. "There's no incentive for you, there really isn't. Unless someone on the outside starts marketing lower rates, they're not going to do it on their own."

Because there is no outside force driving competition, Avery and others doubt any real bidding war will take place. The county believes that by voiding all current contracts, it will allow companies the chance to get multiple bids. Still, there is no guarantee whether costs will stay the same, increase or decrease.

"Some of the haulers have said they thought disposal costs may go up," Byer said. "We don't feel that will be the case, however the rate study is still under review. By late June, we'll have an idea for that rate."

The county recently sent out a second mailing informing customers of the changes. By winning the residential contracts, the three haulers — Waste Services of Florida Inc., Republic Services of Florida and Waste Management Inc. of Tampa — are allowed to compete for commercial business.

"By allowing the haulers to also have an exclusive contract for commercial service, it provided us with a better rate for our residential service," said Damien Tramel, special projects coordinator for the county's Public Utilities Department. "The commercial clients hold a responsibility to make sure they do their homework and try to get multiple bids to get the best rate possible."

The haulers make a larger profit margin on commercial clients, Byer said, so the next few months and the contract negotiation period will be critical to maintaining business.

"We really hope the commercial folks are doing their due diligence and taking several bids and actually negotiating with the haulers in order to get the best price," Byer said.

Currently, Waste Management controls about 60 percent of the commercial market, Byer said. Ideally, that will drop closer to 35 percent after contract negotiations, Byer said, allowing the other two companies a more balanced share of the market.

"A lot of it is going to be almost business as usual," said Ian Boyle, government affairs manager for Waste Services. "Some customers will use the opportunity to get a better price if they feel it's not competitive. They've already gone through the open market process and they feel like they have a good price, and those customers will most likely stay with their current vendor."

The county doesn't regulate commercial collection costs, Tramel said. Unlike residential rates, commercial rates are negotiated in one-on-one contracts between the client and the hauler.

"We do step in if there's a contract issue or service issue because we ultimately do hold the franchisee contracts," Byer said. "If businesses are dissatisfied, they can always contact the county."

The county will conduct a survey after the first of the year to see how rates are affected, Byer said. A similar survey was attempted before, but this time the county will contact the businesses directly rather than try to get information from the haulers, she said. Ideally, a majority of costumers will have received better service at a better rate.

Caitlin Johnston can be reached at cjohnston@tampabay.com or (813) 661-2443.

What commercial customers can expect from new trash agreement in Hillsborough 05/18/13 [Last modified: Friday, May 17, 2013 12:54pm]
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