For City Council Meeting [June 26, 2018]
TO: Honorable Mayor and City Council
APPROVAL: Robb R. Steel, Interim City Administrator
FROM: Robert G. Eisenbeisz, P.E., Public Works Director/City Engineer
Title
Request City Council to Adopt Resolution No. 7360 Approving Municipal Solid Waste Collection, Recycling and Disposal Service Rates for Fiscal Year 2018/2019, Effective July 1, 2018.
(ACTION) POWERPOINT
Body
BACKGROUND:
In April 1996, Council approved a franchise agreement for trash collection, a curbside mixed recyclables program to meet the mandates of AB 939, and unlimited green waste removal. Resolution No. 4217 established the base residential and commercial disposal rates. The franchise agreement allows the franchise hauler to request rate adjustments based on changes in the Consumer Price Index (CPI) and changes in operating costs, such as landfill tipping fees.
ANALYSIS/DISCUSSION:
On July 8, 2014, the City Council conducted a Public Hearing in accordance with Proposition 218 procedures and adopted the Five Year Municipal Solid Waste Collection, Recycling and Disposal Rates for Fiscal Years 2014/2015 through 2018/2019. These rates incorporated a new Commercial Recycling Program and implemented the Pavement Maintenance Fee (PMF). Although the City Council adopted the new five-year rates, Council directed staff to bring the PMF fee increase to the City Council annually for approval. The Notice of Public Hearing for the five-year rate increase is attached hereto as Attachment 1.
Organic Material Recycling (Commercial Accounts) Update Summary
On October 2014 Governor Brown signed AB 1826 Chesbro (Chapter 727, Statutes of 2014) <http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB1826&search_keywords>, which required mandatory commercial organics recycling throughout the State. Starting April 1, 2016, this act required businesses that generate more than 8 cubic yards of organic waste per week to arrange for recycling services for their organic waste. Starting January 1, 2017, the state lowered the threshold to include businesses that generate 4 cubic yards of organic waste per week. The act defines organic waste as food waste, green waste, landscape and pruning waste, nonhazardous wood waste, and food-soiled paper waste mixed in with food waste.
Why Require Organics Recycling?
One strategy to achieve California's aggressive greenhouse gas (GHG) emission reduction goals and solid waste diversion goals is to implement mandatory organic material recycling. California disposes approximately 30 million tons of waste in landfills each year, of which more than 30 percent is divertible for compost or mulch. Organic waste such as green and food materials are recyclable through composting and mulching, and through anaerobic digestion, which can produce renewable energy and fuel. Reducing the amount of organic materials sent to landfills and increasing the production of compost and mulch are part of the AB 32 (California Global Warming Solutions Act of 2006) Scoping Plan <http://www.arb.ca.gov/cc/scopingplan/scopingplan.htm>. Reducing organic wastes sent to landfills is also necessary to meet California's 75 Percent Initiative, which sets an ambitious goal of 75% recycling, composting, or source reduction of solid waste by 2020. The State implemented a new compliance measurement metric using pounds per person per day, or (PPD). Based on this metric, Rialto’s most recent diversion PPD is 2.4 with a target of 5.7 PPD. Rialto complies with the current PPD requirements.
Burrtec Waste (Burrtec) has developed commercial organic processing programs that include composting and anaerobic digestion to comply with AB 1826. The proposed commercial rates incorporate food waste diversion programs including modified watertight trucks and containers, education and outreach, and program administration. AB 1826 compliance efforts also include promotion of best use alternatives such as food rescue programs. The City updated Cal Recycle staff on Rialto’s progress with diverting food waste, and Cal Recycle acknowledged the City’s organic waste program demonstrates a good faith effort towards compliance. The commercial rates include the food waste program and the recycling program.
Burrtec serves approximately 1,200 commercial and multi-family customers in Rialto. Utilizing the state approved service based methodology, Burrtec estimates that there are 196 customers (130 commercial and 66 multi-family) affected by the organics legislation at the 4 cubic yard threshold. The estimated 4 cubic yard threshold customer count represents 16% of the total. The 4 cubic yard threshold became effective on January 1, 2017.
The equalized food waste rate approach will encourage participation by all commercial customers at a reasonable rate. It is similar to the commercial recycling program where all customers assume the cost for program operations regardless of the obligation to subscribe. Ultimately, it offers an affordable program that will help the City comply with the law while reducing organic disposal at the landfill and reducing greenhouse gas emissions.
Multi-Family Bulky Item Collection Program
This year’s review also includes a proposed multi-family bulky item collection program. Currently, multi-family establishments must call Burrtec to schedule and pay for bulky item collections. Burrtec records show that a small percentage of multi-family locations actually request said service. The proposed program will provide for 52 hours per week of multi-family bulky item collections. When servicing multi-family bin serviced locations, Burrtec drivers will report bulky item materials left adjacent to the trash bin. Burrtec’s call center initiates a scheduled pickup of the reported bulky item materials in the system for collection and recycling or disposal as warranted. Staff anticipates that this program will greatly reduce illegal dumping that is prevalent near multi-family locations requiring City forces to arrange pick up on a regular basis. The bulky item collection program is incorporated into the bin pricing structure on a cubic yard basis at $1.49 per yard and it only applies to the multi-family accounts.
Pavement Maintenance Fee
As recommended by the Utilities Commission on June 19, 2018, the proposed rates do not include any increase to the pavement maintenance fee. At the current rates, the estimated revenue is $1,030,736 for the 2018/2019 fiscal year. The City will use these funds for the annual residential street slurry seal program.
Table 1 shows the Pavement Maintenance Fees Revenue received over the last four years since implementation:
Table 1
Pavement Maintenance Fee Revenues
Table 2 lists the road maintenance projects that used pavement maintenance fees as a major source of funding. Attachment 2 provides a detailed list of the projects funded with the pavement maintenance fee.
Table 2
Road Maintenance Project Summary
Residential Rate Options
Table 3 shows the current residential rates (including the tax roll billing discount rates) with the various 2018/2019 rate options. Each option proposes no increase to the Pavement Maintenance Fee for 2018/2019. The increases requested by Burrtec along with the current PMF rate fall within the range of the approved Proposition 218 rates for Fiscal Year 2018/2019. Attachment 3 provides the full rate analysis summary.
Table 3
Residential Rate Options
Commercial Rate Options
Table 4 below shows the most common Commercial Service rates with the various 2018/2019 rate options. The Pavement Maintenance Fee remains at the current rate for each option for 2018/2019.
Table 4
Commercial Rate Options
On June 19, 2018, staff presented the Burrtec Rate Review to the Utilities Commission. At that time, the Utilities Commission recommended approval of Option 2 for both Residential and Commercial rates. For Commercial, Option 2 includes the CPI increase of 2.8%, the new Multi-Family Bulky Item Pick-up program, no change to the pavement maintenance fee, and no change to the Franchise Fee, AB 939 Fee and HHW fees for Fiscal Year 2018-19.
For Residential, Option 2 includes the CPI increase of 2.8%, no increase to the pavement maintenance fee, retains the Franchise fee at a fixed amount equal to the current fiscal year (FY17-18) amounts (not the typical percentage basis for FY 18/19), a $0.46 decrease to the AB 939 Fee, and a $0.50 decrease to the HHW fee for Fiscal Year 2018-19. The decrease to the AB 939 and HHW fees is pursuant to the recommendation of the Utility Commission in an effort to minimize the cost impact to residential customers.
In order to meet the San Bernardino County Auditor/Controller/Recorder’s filing deadline for the property tax rolls, the City Council must adopt any new rates no later than June 26, 2018.
ENVIRONMENTAL IMPACT:
In accordance with Section 15273 of the California Code of Regulations, CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies which the public agency finds are for the purpose of meeting operating expenses.
GENERAL PLAN CONSISTENCY:
Approval of this action complies with the City of Rialto General Plan Goals and Policies:
Policy 3-10.1: Encourage additional recycling in all sectors of the community.
Policy 3-10.4: Continue to educate the community regarding the benefits of solid waste diversion and recycling, and maintain programs that make it easy for all residents and businesses to work toward City waste reduction objectives.
FINANCIAL IMPACT:
Operating Budget Impact
Refuse revenue is collected by Burrtec Waste Industries. The City derives revenues from the adopted rates including Household Hazardous Waste (HHW) fees, and AB 939 revenues, which are used to fund the City’s Household Hazardous Waste programs and for public education on recycling and protection of the environment.
Revenues for Option 1 (standard rate review, which is the initial staff recommendation to the Utilities Commission) are estimated as follows:
• AB 939 funds are estimated to increase by $41,112/year for a total of $482,993/year, and will be credited to Account No. 212-400-7150-7544.
• HHW funds are estimated to increase by $44,389/year for a total of $503,007/year and will be credited to Account No. 212-400-7150-7542.
• Franchise fees are estimated to increase by $153,792/year for a total of $1,807,037/year and will be credited to Account No. 010-400-0001-7116.
• With the current PMF rates (no change), the annual PMF revenues are anticipated to be $1,030,736 for the 2018/2019 fiscal year.
Revenues for Option 2 (Utilities Commission Recommendation - AB939 and HHW fee reduction) are estimated as follows:
• AB 939 revenues are estimated to decrease by $100,824/year for an estimated total of $341,057; which will be credited to Account No. 212-400-7150-7544.
• HHW revenues are estimated to decrease by $107,973/year for an estimated total of $350,645; which will be credited to Account No. 212-400-7150-7542.
• Franchise fees are estimated to remain the same as the current year at the estimated amount of $1,653,245; which will be credited to Account No. 010-400-0001-7116.
• With the current PMF rates (no change), the annual PMF revenues are anticipated to be $1,030,736 for the 2018/2019 fiscal year.
Table 5 below shows the difference in revenues between Option 1 and Option 2. There is sufficient fund balance available to sustain programs funded by AB939 and HHW revenues in the coming year with the recommended reductions.
Capital Improvement Budget Impact:
Annual PMF revenues of $1,030,736 are estimated for the 2018/2019 fiscal year. These funds support the residential street slurry program, Project number 190805 proposed for FY19.
RECOMMENDATION:
Staff recommends that the City Council adopt a Resolution entitled “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIALTO, CALIFORNIA, APPROVING MUNICIPAL SOLID WASTE COLLECTION, RECYCLING AND DISPOSAL SERVICE RATES FOR FISCAL YEARS 2018/2019”, accepting the Utility Commission’s recommendation to approve the CPI increase, the new Multi-Family Bulky Item Pick-up program, no change to the pavement maintenance fee, no change to the Franchise Fee, a $0.46 decrease in the AB 939 Fee and a $0.50 decrease in the HHW Fee for Fiscal Year 2018-19, effective July 1, 2018.