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									     Talking trash




22   MULTIHOUSING PROFESSIONAL   SEPTEMBER OCTOBER 2008   WWW.MULTIHOUSINGPRO.COM
                                                                                              ANCILLARY INCOME


                                                                                      The three young, East
                                                                                      Coast entrepreneurs, who
                                                                                      created the only nation-
                                                                                      wide, five-night-a-week
                                                                                      trash pickup and recycling
                                                                                      service for multifamily
                                                                                      communities, are rapidly
                                                                                      growing their business
At Valet Waste, it’s all about
thinking outside the trash can and
                                                                                      footprint across the coun-
that’s what (from left) VP of Sales
Dave Magrisso, CEO Mike Ferris
                                                                                      try while working hard to
and COO Brent Smith have been
doing since they founded the
                                                                                      reduce the carbon footprint
company 13 years ago.                                                                 and landfill impact of the
                                                                                      customers they serve.
                                      PEGGY SHAW                                      trash troubles, Ferris conceived the idea for
                                      The one-stop waste management and sus-          the business while egg leaked out of a trash
                                      tainability company that now takes out the      bag balanced on the hood of his car as he
                                      trash at more than 200,000 units across the     waited his turn to throw his garbage into the
                                      country, was founded in 1995 by CEO Mike        community compacter that was not within
                                      Ferris, VP of Sales Dave Magrisso and COO       easy walking distance of his apartment.
                                      Brent Smith, with the goal of providing an         “And the woman in front of me is throw-
                                      environmentally responsible system for          ing her trash bag into the compacter and it
                                      waste management that would be an attrac-       lands outside where there’s literally 300 bags
                                      tive amenity for apartment communities and      of trash lying around because the compacter
                                      would benefit their bottom lines through        is broken. The next guy behind her was
                                      ancillary income generated by the service.      complaining, ‘This is ridiculous,’ and anoth-
                                         Valet Waste’s three founders believed        er guy was driving out of the community
                                      their plan for keeping trash out of sight and   with trash on the trunk of his car because
                                      under control would increase curb appeal        he’d forgotten about it,” recalled Ferris, an
                                      and that door-to-door trash pickup almost       apartment dweller for years, who always
                                      every night of the week, combined eventu-       looked for rental housing with the best
                                      ally with recycling, would bolster resident     package of amenities, but never seemed to
                                      loyalty and improve resident retention.         find time to use them.
                                      They also believed the win-win waste man-          “So, I’m thinking about how I’m paying
                                      agement solution would attract and retain       all this money for rent and all those nice
                                      customers for their fledgling business. And     services and amenities I haven’t had time to
                                      they were right in a big way.                   use, and I decided they should be picking up
                                         The company that now counts among its        my trash,” he realized that morning and then
                                      clients apartment REITs AIMCO, Camden           took that thought one step further. If the
                                      Property Trust and Colonial Properties          community wouldn’t provide that service to
                                      Trust,     private    upscale      developer/   the residents, perhaps he could do it himself.
                                      owner/operators like Gables Residential,        As the concept fired his imagination, Ferris
                                      JMG, Lincoln Property Company and ZOM,          went back to his apartment, wrote down his
                                      and Riverstone Residential, the largest inde-   ideas and took his offer to pick up the resi-
                                      pendently run fee-management company in         dents’ trash for a fee to the manager of the
                                      the country, started out with a customer base   apartment community, who accepted his
                                      of individual residents, not property owners    proposal gladly, probably thankful that she
                                      and managers.                                   would not have to evict him for violating
                                                                                      the trash rules at the community. Ferris, who
                                      Here’s egg on your car                          candidly admits that he was fined more than
                                      Valet Waste was born in Tampa, the brain-       once for putting his trash outside his apart-
                                      child of its only employee for the first year   ment door before he went to bed at night,
                                      of its then unnamed life. Inspired by his own   took his idea door-to-door in that Tampa


WWW.MULTIHOUSINGPRO.COM                                          SEPTEMBER OCTOBER 2008       MULTIHOUSING PROFESSIONAL          23
community and, eventually, every resident           stop. And, every time you do that and you          and it would be a perfect marriage, but the
there subscribed to his service.                    stop, there are problems and you have to           money definitely came first,” he said,
                                                    scale back and change directions,” said            explaining that they hired a consulting firm,
Take me out to the trash bin                        Ferris. By early 2005, Valet Waste had             beefed up their business plan and started fly-
It was the New York Yankees who enlight-            spread throughout Florida, making headway          ing around the country, meeting with private
ened him about the hazards of the subscrip-         into Georgia and Alabama and the waste             equity groups, and banks to seek expansion
tion system. During spring training, players        stream management service’s happy cus-             funding for the total solutions provider they
like Derek Jeter, Darryl Strawberry and             tomers were pressuring its owners to expand        planned to become.
some dozen or so others Yankees lived there         into the other regions where those clients
and they all hated taking out the trash, said       operated.                                          Under the Oakleaf
Ferris. He quickly figured out why he fre-             And the company’s the list of services was      Their search ended the day they met with
quently would see Strawberry or some other          growing, too. “We would offer the door-to-         Oakleaf Waste Management, the fastest
team member, hurrying back across the hall          door trash collection, which was our core          growing waste management outsourcing
from Jeter’s apartment just before Ferris was       business, and we also would provide waste          company and overseer of the largest com-
scheduled to arrive around 8 p.m. They              management or hauling, and lease their             pacter rental company in the nation. The
were teaming up their trash.                        compacter for them.                                Valet Waste team thought Oakleaf might
   “So I’d have to knock on Derek Jeter’s              “They loved what we were doing, the res-        provide the compacter piece of the total mul-
door and Darryl’s and the other guys’ doors         idents loved the service and we were mak-          tifamily waste management solution they
and say, ‘Hey, Derek’s got the service and he’s     ing them money. They wanted us to expand           hoped to become. In fact, during their meet-
paying for it so you guys can’t do this,’” Ferris                                                      ing in January 2005 with Oakleaf President
chuckled. “So, about every week, we’d go                                                               and CEO Jim Barnes and Executive VP and
through the same scenario and I’m knocking                                                             COO Gino Porazzo, they learned that
on their doors and having to pull them out                                                             Oakleaf also had subsidiaries that offered
and we’re laughing and the whole thing and                                                             waste hauling through a vast net of service
I understood right there how the subscrip-                                                             providers and dumpster rentals. “When we
tion system definitely wouldn’t work.”                                                                 met them and discovered their capabilities
    For the first year of its life, the company                                                        and that they had a waste logistics piece, we
Ferris founded was his night job. “I’d pick                                                            just stared at each other and said, ‘This is it!’
trash up in the evening, which is more con-                                                            and they looked at us and basically said,
venient for the residents and the trash isn’t                                                          “Stop looking. We think you’ve found a
out during leasing hours,” explained Ferris,                                                           home,” Ferris recalled recently.
adding, “That’s when I used to set mine out                                                               “We were pretty excited,” he said. “We
anyhow.” And, for a year, he was the sole                                                              could really see everything come together,”
employee. But, he was seeing more potential                                                            agreed Magrisso.
for his service than he could handle alone.                                                               Oakleaf, which was born the same year as
   He and Magrisso had worked together in                                                              Valet Waste, just up the East Coast in
the restaurant business, and Magrisso had                                                              Hartford, Conn., was founded by Barnes,
some experience in the waste and recycling                                                             another waste management visionary, who
business, making him the perfect partner.                                                              believed the fee-by-location model for get-
“He’s a salt-of-the-earth kind of guy and we                                                           ting trash off a property was just as flawed as
got together and built the company in                                                                  Valet Waste found the subscription model
Tampa. It was Dave who actually got our                                                                for door-to-door pick-up to be. Barnes, who
first account,” said Ferris, explaining that he                                                        started his career in waste management with
and Magrisso and Smith started out their            Valet Waste’s rubbish collectors wear reflective   a small regional Hartford-based trash hauler
team effort using the subscription method           vests to identify them as the door-to-door trash   in the early 1990s, believed that, with the
and spent some time refining their business         pickup service's employees and drive vans          right technology systems and efficient infra-
plan and the pick-up schedule before land-          emblazoned with the company logo.                  structure in an asset-light organization, he
ing the account at Hamptons at Tampa                                                                   could provide long-term value for companies
Palms. The former apartment community               to where their other properties were located       looking for green and recycling solutions.
was converted to for-sale and came to mar-          and we really wanted to fulfill our true              Armed with a degree in business, an
ket just at the cusp of the condo crash at the      potential as a company and fulfill our             internship with IBM and determination,
end of 2006. Now Valet Waste works for the          clients’ needs,” Ferris said. The trash take-      Barnes started the business that today
homeowners association that replaced the            out trio, who knew they needed an influx of        includes five subsidiaries and sees annual
apartment manager.                                  cash to expand nationally, and turn their          revenues north of $700 million. Just over a
                                                    revolutionary vision for waste management          year ago, he recapitalized the company with
Growing pains                                       into a reality that would make their dream         private equity group New Mountain Capital
The business grew exponentially, as the cre-        of approaching zero-growth for the nation’s        in a $665 million transaction. The company
ative entrepreneurs struggled with the starts       landfills come true, took their show on the        that provides service through its network of
and stops that a small company experiences          road in 2004 in search of capital.                 more than 4,800 haulers, recyclers and
in its formative years. “We would grow, run            “And hopefully, we might even find a            waste diversion providers to more than
out of money, stop, grow, run out of money,         partner that would add resources or synergies      100,000 locations that include just about



24   MULTIHOUSING PROFESSIONAL            SEPTEMBER OCTOBER 2008                                                    WWW.MULTIHOUSINGPRO.COM
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any business that generates trash, from          tomer list and its founders are happy to be a    picked up and the community is getting
shopping centers to Cirque de Soleil, was as     part of the revolution in the way this coun-     charged for a full container.
delighted to welcome Valet Waste to its          try treats its trash.                               “So, with Valet Waste kind of being the
subsidiary family as were Valet Waste’s             “We’re truly transforming the industry, the   missing link there to close the loop, it brings
founders to join the team.                       way people think about waste and recycling,”     a lot of opportunities to the customers to,
   “Valet Waste fits perfectly with our full-    said Ferris, whose goal is whittling down the    again, improve curb appeal and create both
service waste outsourcing business model.        mountain of garbage created in this country,     hard and soft savings,” he said.
Combined with our compactor fleet rental         one apartment community at a time.
business, Greenleaf Compaction, Oakleaf can         Most recently, the company began mar-         Trash turns to cash at property level
now provide a turnkey solution to the residen-   keting the trash compacter rental service        Tracey Sulak, Lincoln Property Company
tial property management market,” Oakleaf’s      more heavily, facilitated by the Oakleaf         regional manager in Dallas, sees Valet
CEO said in a January 30, 2006 statement.        connection and Greenleaf, to the 50 per-         Waste as both a selling tool that helps
   “We thought their business was incredi-       cent of Valet Waste’s customers that still use   attract renters and an ancillary income cre-
bly smart and there could be great synergies     dumpsters. “We’re not just a solution for the    ator. “For years, properties have experienced
if we combined forces,” Barnes said at the       compacter properties, we’re a solution for       the dilemma of offering waste removal with-
end of September.                                the people that have dumpsters, so they can      out jeopardizing the integrity of the proper-
   At the time of the meeting with Oakleaf,      make sure those areas stay clean,” said          ty. Until Valet Waste, our only options were
Valet Waste was servicing around 40,000          Magrisso, adding that more and more dump-        curbside, which, oftentimes, is not picked
units. The Oakleaf connection provided           ster-laden communities are taking a hard         up until afternoon, or door-to-door, which is
Valet Waste the support needed for nation-       look at the compacter option.                    not only unsightly when touring prospec-
wide expansion and freed the company from           Those communities’ managers are realiz-       tive clients, but also stains the concrete out-
the financial roadblocks that previously         ing that by replacing all those dumpsters        side the apartment door.”
held it back.                                    with a central compacter, they can free up          Valet Waste provides its clients with a
                                                 parking spots, improve curb appeal and           choice of five styles of trash containers,
The sky’s the limit now                          avoid costly repair work on asphalt damaged      ranging from a 25-gallon standard black bin
“Now we can grow very rapidly, we have no        by big garbage trucks that don’t do much to      appropriate for an attached garage to attrac-
capital constraints and the synergies and        beautify the properties they visit. “They can    tive plastic and wood waste stations where
resources that we have now are limitless,”       put those compacters in the back part of the     residents can stash their trash outside their
said Ferris.                                     community where nobody sees them and, if         apartment doors.
   Over the past three years, Valet Waste        they don’t have the cap ex budget to build          And, Sulak continued in her letter of rec-
has added owners and managers of apart-          the compacter enclosure, if nothing else,        ommendation for Valet Waste, the compa-
ment communities in Texas, Maryland,             they can centralize their dumpsters and          ny “provides a quality service at an afford-
Washington D.C., Virginia, North                 level them out because, typically, they’re       able price, which allows the property to pass
Carolina, Arizona, Tennessee, and                picked up very inefficiently because some of     that fee on to the residents with a fair and
California to the company’s burgeoning cus-      the dumpsters are half full when they are        reasonable mark-up. As a result, the poten-
                                                                                                  tial revenue is completely up to you,” she
                                                                                                  wrote, adding that she was delighted that
                                                                                                  Valet Waste had expanded the service to
                                                                                                  the Texas market.
                                                                                                     Anne Kunick, Valet Waste’s marketing
                                                                                                  specialist, figures properties can expect to
                                                                                                  make anywhere from $120 to $200 per unit
                                                                                                  per year based on the amount they bill back
                                                                                                  to the residents, which can range anywhere
                                                                                                  from $20 to $50 a month, depending on the
                                                                                                  property, region and management company.
                                                                                                  “As an affiliate of New Mountain Private
                                                                                                  Equity Group, we’re able to afford our
                                                                                                  clients with options such as no-budget-
                                                                                                  needed opportunities for properties that
                                                                                                  want to start right away. They pay on an
                                                                                                  average number of new and renewed leases
                                                                                                  over 12 months,” she explained.
                                                                                                     And the residents don’t seem to mind the
                                                                                                  The 13-year-old, 379-unit Camden Aventura in
                                                                                                  Aventura, Fla., is just one of Camden Property
                                                                                                  Trust's 28 Sunshine State communities that
                                                                                                  subscribe to the door-to-door waste manage-
                                                                                                  ment services offered by Valet Waste, which
                                                                                                  currently takes out the trash at more than half of
                                                                                                  Camden's communities nationwide.



26   MULTIHOUSING PROFESSIONAL          SEPTEMBER OCTOBER 2008                                                  WWW.MULTIHOUSINGPRO.COM
                                                                                                             ANCILLARY INCOME


additional charge, which is wrapped into           which he was regional manager for six years      in landfills and incinerators and, if the trash
their rent because participation in the pro-       and has been with the company for 28 years,      is not going in the landfill or the incinera-
gram is mandatory. In fact, 74 percent of the      believes residents appreciate the service,       tors, they’re losing money,” he said.
apartment residents who responded to a sur-        despite the fact that it adds a few dollars to      Valet Waste is dedicated to educating the
vey conducted by the National Apartment            their rent.                                      multifamily industry about what those
Association’s UNITS magazine a year ago,              Even those who might complain at first,       haulers’ true interests are and that, if multi-
rated trash pick-up the most valued commu-         arguing that they’d rather take out their        family managers and owners want to get the
nity amenity. And residents voted Valet            own trash, come around pretty quickly, he        biggest impact on their bottom line and
Waste the number one amenity at ZOM’s              said. “Give them about a week of not hav-        make the biggest impact to the environment,
communities in a survey the company con-           ing briefcase in one hand and trash bag in       they should take a hard look at some of the
ducted recently.                                   the other, putting it on the hood of their car   things his company is offering, he said, sug-
                                                   and driving it to the compacter and they see     gesting that multifamily companies might
Camden's trash-to-cash success                     the value of it,” Malone said.                   take a look at allocating some of their mar-
Camden is more than happy for the opportu-                                                          keting budgets to creating the environmen-
nity to offer its residents the service in an      Less refuse, more re-use                         tally beneficial opportunity to recycle, which
ever-expanding number of markets and, over         Looking forward, Magrisso said, “We’re           might attract and retain the kind of environ-
the past year, has seen the program produce        really excited to be on the forefront of the     mentally conscious residents that make good
ancillary income far beyond what the apart-        recycling solutions for multifamily for a cou-   renters, and eventually provide a postitve
ment REIT expected in September 2007. A            ple of reasons. Contamination is the num-        impact to the community’s bottom line.
Valet Waste customer for the past 10 years,        ber one issue. If there is a recycling program
beginning with its Florida portfolio, by fall of   onsite, inevitably the residents mess it up.     On the road to zero waste
last year the program was serving 26,500 res-      Containers for recyclable material typically     Currently, Valet Waste’s execs are working
idents at 69 Camden properties. The compa-         are right next to the trash compacter or         on the ideal schedule for recycling pickup.
ny saw net income/profit of $40,000 from the       dumpsters, so a resident who walks up either     “In certain markets, the trash is collected
trash pick-up amenity in August 2007, when         doesn’t pay attention or doesn’t care and        Sunday through Thursday and Tuesday is
Camden execs expected Valet Waste would            just puts trash into the recycling dumpsters,    the night designated for recycling pickup.
begin picking up the trash five nights a week      which then the owner has to pay for trash        That might change in the future, especially
at an additional 6,089 units in another 20         collection charges versus recycling.” Nor is     in the West Coast markets and maybe in the
communities by Q4 2007 and that the pro-           it a convenient system, even for conscien-       Northeast, where recycling is more popular
gram would contribute $2 million annually          tious residents, to have to haul recyclables     or even mandatory. We might end up
in net profits by 2009.                            to the communities’ waste collection areas       changing that to three or four nights for
   A year later, in September 2008, Camden         along with their other trash.                    recycling collection and only one or two
reported a $740,000 profit from the trash             “The door-to-door piece of what we do         nights for trash,” said Magrisso.
pick-up program for the second quarter,            creates a very convenient way for residents         Ferris, who believes the fragmentation of
which averages out to nearly $247,000 a            to recycle at the doorstep and not have to       recycling programs, which vary considerably
month, with more than 35,000 units at 95           worry about bringing the materials down to       today from one state or municipality to
of the REIT’s 182 communities participat-          the receptacles. With Valet Waste being the      another in their requirements and what may
ing and expectations for annual net profit of      missing link to recycling, our folks who are     be considered recyclable, will eventually
between $4 million and $5 million by 2009,         collecting the trash will control where that     turn into a national system of comingling
more than twice that expected a year earli-        material goes. In the past, you might have       recyclables in one container, which can be
er for the same target.                            had a little dumpster for cardboard at an        carted offsite for distribution of the materi-
   The REIT’s first Florida community to           apartment community and a big compacter          als to appropriate re-users.
add Valet Waste to its amenity list was the        for trash. With Valet Waste, it could end up        “Luckily, through our partnership with
454-unit former Camden Ybor City in                being flip-flopped, with those big com-          Oakleaf, we have resources to identify every
Tampa, which was sold a few years ago and          pacters being used for comingled recycling,      type of recycler in the country down to the
converted to condos. Over the past two or          where you can mix everything together, and       property level. So, we can find out, by prop-
three years, Ed Malone, Camden’s regional          that little dumpster just for the tissue paper   erty, what can and cannot be recycled, who
VP for Florida, has been rolling Valet Waste       and the Styrofoam that cannot really get         can take it away and what type of onsite
out across the company’s entire Sunshine           recycled. That’s what we see happening as        container, if any, they’ll need, from A to Z,”
State portfolio, which today consists of           far as the evolution and our company is way      said Ferris.
11,580 units in 28 communities, with the           ahead of the curve,” he said.                       His five-year goal is for Valet Waste to be
261-unit Camden Orange Court, which                   Overall, Valet Waste’s focus and that of      in every major city across the country. “We
delivered first units last January in Orlando      its parent company, Oakleaf Waste                are very excited about partnering with our
and now is 55 percent occupied, the most           Management, is the polar opposite to the         current and future clients to provide them
recent addition. The 578-unit Camden               objectives of traditional waste management       with turnkey solutions that add value for the
Renaissance in Altamonte Springs was the           and hauling companies, Magrisso said. “We        residents, decrease waste expense and gener-
28th community to add Valet Waste to its           do not own any trucks or landfills. Our sole     ate ancillary income for owners and manage-
amenity offerings, completing the statewide        interest is in the customer and making sure      ment. Through our recycling and waste
roll-out just about two months ago.                they maximize efficiencies in their waste        diversion initiatives, we’re working hard to
   Malone, who has served as Camden’s              programs and maximize recyclables collect-       increase the environmental consciousness of
Florida regional VP since June 2007, before        ed. Traditional haulers have vested interests    the multifamily industry,” he said.



WWW.MULTIHOUSINGPRO.COM                                                       SEPTEMBER OCTOBER 2008        MULTIHOUSING PROFESSIONAL           27

								
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