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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (45570)	11/18/2011 1:23:01 PM
From: E_K_S	Read Replies (1) \| Respond to of 78568

The City of San Jose makes money on the landfill operation as they own the land and charge fees to dump garbage there. The operator (Waste Management) has prepared this landfill (obtained site license, lined the site as required per EPA rules and does day to day grading). WM also operates their multi year collection contract (I think it is a five year term) for the City. The City changed contractors about five years ago via RFP proposal. So the current operator can be replaced but it takes at least two years because of the public process (ie their moat can get a hole if they charge too much for services). Both WM and RSG bring the complete package to the municipality. They will build a new landfill (w/ all EPA licenses), do the waste collection (including recycling & integrated waste disposal), and provide what ever else (garden waste collection) is necessary to land a multi year municipal City contract. There are still a lot of privately owned garbage collectors that pick up garbage and dump at the local landfill. Landfills last about 20 years and the approval for new ones are very expensive to get approved (because of new EPA rules) and receive a site license. Therefore, new landfills are just not getting built. It can take as long as 5 years and millions of $'s to get ones sited, built and approved. Both WM & RSG have dedicated divisions that work w/ the municipalities to site, build and operate landfills. In the San Francisco Bay area, no new landfills have been approved for years. Most of the garbage is now transported to the central valley (100 miles) for disposal. The newest landfill 20 miles South of San Jose was completed about 7 years ago, has a useful life of another 40 years and that has been extended because of the aggressive curb side and garden waste recycling implemented by the City and WM over the last 10 years. This is occurring in every major City in the U.S. and I suspect that in the next 15 years many of the smaller municipalities will face having to Site new landfills. They will be overwhelmed by the up front cost and look to partner with WM and/or RSG to help build these new landfills and will also look at integrating more efficient waste disposal systems in their community. This should result in more long term multi year municipal collection contracts for these companies. EKS