Compost and waste collection rates dramatically rose for Oakland restaurant owners in July and August, with some businesses reporting that it will now cost them $10,000 more a year for organic waste collection. The Oakland Indie Alliance (OIA), a coalition of restaurateurs in opposition to the new rates, say that for many small businesses in Oakland, their profit margins are too slim to sustain this expense.

“Compost rates are higher than trash rates,” says Maria Alderete, owner of Luka’s Taproom & Lounge in a letter addressed to Mayor Libby Schaaf, council members, and the office of the City Administrator on September 8. “Luka’s trash and compost bill went up by an additional $10,800 per year. This is an unfair financial burden and needs to be addressed.”

The rates rose this summer after the city council granted the national company Waste Management (WM) the city’s sole contract for the collection of organic waste and trash, and solidified the place of California Waste Solutions (CWS) as the only collector of recycling in Oakland.

The $1 billion waste disposal contract enacted on July 1 is part of Oakland’s “Zero Waste” program, which aims to reduce waste by 90 percent across the board, including construction waste, compost, recycling, and other trash.

Business owners initially expected rate increases, but for them to be milder than the ones that began in July. The new rates are inciting opposition from local restaurateurs, who say they are bearing the largest burden for the soaring rates. “We really got a bad deal out of this and it’s got to stop. The council won’t police themselves,” said Alderete.

“The fact that we’re paying more for compost than landfill is ridiculous,” said Sal Bednarz, owner of Victory Burger. “Our compost costs almost doubled, our total waste bill went up by about 70 percent, and we’re paying almost $2,000 a month to process our trash at this point. It’s $5,000 to $6,000 a year more in waste processing cost as a result from the new contract.”

“The city threw us under the bus and threw us into the jaws of the Waste Management machine,” he continued. “I’m really disappointed in our city government; I think they really let us down.”

“Oakland has the worst waste contract in the whole Bay Area, cost-wise,” wrote Gail Lillian, owner of Liba Falafel, in an email to Oakland North outlining her grievances. “We pay significantly more through this new contract, and even before this contract, than surrounding cities.”

Alderete said she expected trash, compost, and recycling collection rates to be shared between commercial establishments, single-family houses, and multi-tenant houses throughout Oakland. Yet, according to OIA, in an effort to shield individuals from steep costs, city council dropped collection rates for single-family homes, leaving small businesses and renters to cover the gaps.

Combined with additional rate hikes from contract add-ons such as a water and sewage treatment service and $3 million in franchise fees, Alderete claimed in her September 8 letter that “the true cost of waste disposal is hidden from the majority of resident” as restaurants, which naturally produce the highest amount of organic waste, are being pushed to subsidize the cost to single-family homes.

Alderete says such a move “might be illegal” under California Proposition 218, citing Articles XIII C and XIII D, which requires cities and counties to obtain approval from voters through a local ballot measure before levying a tax on residents, and that local jurisdictions cannot charge one group of ratepayers in order to subsidize the fees for refuse, water, or sewer usage of another group.

David Tucker, Waste Management’s director of community and public relations, cites cost increases as natural due to the cost of paying citywide services, buying and operating natural gas collection trucks, paying for required union labor, setting up of local call centers, and maintenance. “You have to understand that the rates were very low under the old contract. So when the new contract went into effect, you had almost 10 years of low rates that did not keep up costs. So now, what folks are experiencing is a reset of the rates just to be able to cover the cost,” Tucker said.

“For basic services, the rates are catching up,” he continued. “These were all things that were outlined in the Request For Proposal for the city. We did what the council asked by including [added programs] into the rates.”

Some restaurant owners say they feel the new rates penalize rather than incentivize them for their composting efforts. “We are currently boycotting compost and throwing all uneaten food into the trash until we are able to get acceptable rates that promote Zero Waste goals,” says Alderete of Luka’s.

But owners differ on how to navigate these new rates. “I’m not going to throw my food in the trash,” says Bednarz. “We’ve been composting from day one. More than 70 percent of our waste is compost. I’m just forced to pay a higher price.”

Martin Bourque, executive director for the Ecology Center in Berkeley and expert on Zero Waste programs in the Bay Area, says he thinks the contract was “not well thought out,” and that denying incentives for small businesses to compost stunts the environmental efforts of many owners who he says genuinely, “want to do the right thing.”

“Rates are complex, and this may or may not be the cost of business,” says Bourque. “When a company’s primary source of revenue is landfill, it’s no surprise composting is more expensive, but that doesn’t mean it can’t be cheaper.”

Some councilmembers have been vocal about the way the contract is affecting small businesses. Councilmember Annie Campbell Washington (District 4), called the contract “counterproductive, and it disincentives composting.”

“I’m committed to getting back to the real goals of Zero Waste, which is incentivizing composting, and reducing the overall cost of this contract so that we can bring composting rates significantly lower than our garbage rates,” she said.

Tucker says leaders of WM recognize the challenges faced by small businesses operating on minimal profit margins, and while he agrees the contract is, “somewhat counterproductive” to Oakland’s Zero Waste program, Tucker says that “these are not inexpensive services to provide,” and that WM is working with the city staff to come up with a list of options that can potentially lower rates. “Because we’re still in negotiations, it’d be premature for my part to list specifics,” he says but, “those conversations have been taking place over the past month, month and a half. We’re getting close.”

City Administrator Sabrina Landreth and Tucker are expected to submit a negotiated proposal to lower rates to a special meeting of the city council later this month, but Washington points out that changing an active agreement is challenging saying, “the City of Oakland does not have a lot of leverage.”

Members of OIA don’t expect the next proposal to satisfy their business needs, and are still pushing for change. “We will need to continue to keep pressure on the city council,” Bednarz said. “They’re going to want to negotiate something that’s easy for them to negotiate, and I’m not sure that what we need at this point is easy.”