MOORPARK CITY COUNCIL AGENDA REPORT
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1 Item: 8.B. MOORPARK CITY COUNCIL AGENDA REPORT TO: FROM: DATE: Honorable City Council Teri Davis, Program Manager 12/19/2018 Regular Meeting SUBJECT: Public Hearing to Consider a Resolution Establishing New Maximum Solid Waste Rates to be Effective January 1, 2019, and Rescinding Resolution Nos and BACKGROUND Moorpark Municipal Code Section grants the City Council the authority to establish, by resolution, a ceiling on the charges a solid waste franchisee may charge for solid waste services at the conclusion of a public hearing. At the June 6, 2018 City Council meeting, Council granted an exclusive Franchise Agreement to USA Waste of California, Inc., a subsidiary of Waste Management Holdings, Inc. (Waste Management), for the collection, management, and disposal of solid waste and recyclables within the City limits. On July 1, 2018, the new Franchise Agreement became effective as did new maximum allowable solid waste rates that Waste Management could charge. DISCUSSION Prior to the July 1, 2018 rate increase, the solid waste fees had not increased since January 1, 2011, as the solid waste franchisees agreed to voluntarily defer rate increases until new agreements, or as it turned out, one exclusive new Franchise Agreement, was negotiated. The rates that went into effect on July 1, 2018 were essentially the 2018 rates intended to be implemented for the entire calendar year of 2018 but actually went into effect for only half of 2018 and ratepayers were relieved of paying the 2018 increase throughout the entire year. The new Franchise Agreement allows Waste Management to request an increase in the maximum rates on or before November 15 of each year, beginning with November 15, On November 14, 2018, the City received such a request from Waste Management. 21
2 Honorable City Council 12/19/2018 Regular Page 2 The Franchise Agreement contains an explicit formula to be used whenever the maximum rate is recalculated and takes into consideration a calculation of the Consumer Price Index (CPI) which is defined by the United States Bureau of Labor Statistics as a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The calculation, referred to as the CPI adjustment in this report, specifies using 70% of the amount derived by multiplying the previous (the current) maximum rate times the CPI percentage rate for the September Los Angeles-Long Beach-Anaheim area compared to the prior year. The calculation also considers a percentage of the adjusted tipping fee. The tipping fee typically increases each January and in 2019, the Simi Valley Landfill and Recycling Center (SVLRC) will be charging franchise haulers a tipping fee of $65.45 per ton, which includes the County s $3.15 surcharge, for the disposal of collected solid waste material into the landfill. The tipping fee is set by SVLRC and is intended to cover costs and provide profit for allowing materials to be hauled to, and processed at, the landfill. The formula in the Franchise Agreement for the annual adjustment is limited to no more than a 5% increase per year unless a justifiable extraordinary adjustment is requested by Waste Management. Pursuant to the Franchise Agreement, an extraordinary adjustment can be requested by Waste Management when certain conditions exist, including impacts from recyclable materials market conditions. The California solid waste industry is required to comply with new contamination standards recently established by the Chinese government whereby recyclable commodities may only have a certain amount of contamination, or the recyclable will not be accepted in China. For example, a recyclable pizza box should be mostly cardboard without food waste material attached. This results in domestic recycling companies, such as Waste Management, spending more for processing collected material prior to exporting the material to China, driving up the cost of doing business. A secondary condition affecting costs is that recycling companies are expected to have fewer options to sell materials, thereby reducing the prices previously received. Waste Management is only requesting an extraordinary adjustment for residential rates to account for the added expenses of cleaning recyclable materials prior to export. This extraordinary adjustment will add $0.17 to the residential CPI adjustment. Even though Waste Management is forgoing a request for an extraordinary adjustment on commercial rates, the same extraordinary pressures that apply to residential recyclables affect commercial recyclables. Waste Management originally requested an extraordinary adjustment for both residential and commercial rates, to compensate for the rising costs of processing recyclable material coupled with a decrease in the value of recyclable material, which would have increased rates by more than 5%, ranging from approximately 7 40% rate increase, for commercial customers. During discussions between staff and Waste Management, both parties agreed that additional large increases on commercial recycling rates, especially when rates were recently increased by quite a large margin in July, would be burdensome. For example, some commercial users would experience 22
3 Honorable City Council 12/19/2018 Regular Page 3 an increase of more than $300 per. The decision was made by Waste Management to request the extraordinary adjustment for residential rates only. The requested rate increase using the CPI adjustment is under 5% for all services. With an extraordinary adjustment of $0.17 per added to all residential service accounts, the increase for residential services will still fall below a 5% increase. Waste Management determined the extraordinary adjustment of $0.17 by taking the $5.00 per ton, or 10% of $50.00 per ton, increase for processing recycled material during 2018 and applying it to the tonnage of residential recyclable material typically collected. The $0.17 is expected to provide approximately $20,000 more than the CPI adjustment to Waste Management in 2019 and will be used as compensation for the escalating costs associated with processing recyclable materials. Table 1 illustrates a snapshot of the proposed rate increase based off of the request for increase the City received from Waste Management. All of the maximum rates being proposed are provided in Exhibit 1 of the attached resolution. Table 1: Comparison of Moorpark Current and Proposed Rates Customer Type Current Rate Proposed Rate Difference Percentage Residential, Standard Service $30.63 $ $ % Residential, Standard Service Senior $25.64 $ $ % Commercial Trash (3.0-cu. yd. bin, 1x/ week) $ $ $ % Commercial Recycling (3.0-cu. yd. bin, 1x/week) $ $ $ % Inflation is on an upward swing, which is why the request for a rate increase is relatively large. The Moorpark Franchise Agreement is similar to the Simi Valley Franchise Agreement with GI Industries, a subsidiary of Waste Management Holdings, Inc. Simi Valley will also be considering a 2019 rate increase this. Simi Valley s proposed rates are expected to include a $1.35 increase from $29.88 to $31.23 for standard ly residential services. The City of Thousand Oaks anticipates a 2019 rate increase for standard ly residential services from $32.35 by $1.17 to $ Even though Thousand Oaks has higher rates, the increase is lower than Moorpark s, because Moorpark has slightly higher Assembly Bill 939 (AB 939) fees and franchise fees. AB 939 requires, among other things, the City to implement a solid waste management plan, maintain the plan, inspect facilities, and divert recyclables from landfills. AB 939 allows the City to impose AB 939 fees in solid waste rates that reimburse some of the City s costs for implementing AB 939 requirements. A benefit of having higher AB 939 and Franchise fees is that Moorpark can continue providing more 23
4 Honorable City Council 12/19/2018 Regular Page 4 services such as E-Waste and Paper Shredding days and Neighborhood Enhancement Cleanups. The majority of the proposed rate increases reflect a change of %, and none of the proposed rates exceed 5%. After applying the proposed rate increase, Moorpark solid rates will still be among the lowest in the region, and residents will still continue to receive greater services as described above. Staff concurs with Waste Management s assessment of escalating costs associated with exporting recycled materials and recommends the City Council approve the proposed rates which include an adjustment for CPI and an additional adjustment related to recycling for residential rates. FISCAL IMPACT By increasing the solid waste rates, the City will see a very slight increase in the franchise fee paid by Waste Management to the City. STAFF RECOMMENDATION ROLL CALL VOTE 1) Open the public hearing, accept public testimony, and close the public hearing; and 2) Adopt Resolution No , adopting new maximum solid waste rates to be effective January 1, Attachment: Resolution 24
5 RESOLUTION NO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, UPDATING THE SOLID WASTE COLLECTION SERVICE FEE SCHEDULE AND RESCINDING RESOLUTION NOS AND WHEREAS, the City provides residential and commercial solid waste and recycling collection services; and WHEREAS, Moorpark Municipal Code Section grants the City Council the authority to establish, by resolution, a ceiling on the amounts of charges a franchisee may charge for solid waste at the conclusion of a public hearing; and WHEREAS, on June 6, 2018, the City Council granted an exclusive Franchise Agreement to USA Waste of California, Inc., a subsidiary of Waste Management Holdings, Inc. (USA Waste), for the collection, management, and disposal of solid waste and recyclables within the City limits; and WHEREAS, the Franchise Agreement allows USA Waste to request a rate increase in November of every year in which the Franchise Agreement is in effect; and WHEREAS, USA Waste submitted to the City a request for a 2019 rate increase in compliance with the Franchise Agreement; and WHEREAS, at a duly noticed public hearing on December 19, 2018, the City Council took public testimony, closed the hearing, and declared its intention of maintaining reasonable rates for collection, management, and the disposal of solid waste and recyclables within the City limits, with the revised rates to be effective on January 1, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. Effective January 1, 2019, the maximum solid waste service rates that may be charged by a franchisee shall be as shown in Exhibit 1. SECTION 2. The annual Self-Haul Exemption Permit fee shall continue to be $60.00 for the initial application for an annual Self-Haul Exemption Permit and $30.00 for an annual Self-Haul Exemption Permit renewal. Residents who qualify as seniors, age sixty-two (62) or older, receive a twenty percent (20%) discount on both the initial application for an annual Self-Haul Exemption Permit and renewal fees. SECTION 3. This resolution shall be effective on January 1, SECTION 4. Resolution No is hereby rescinded in its entirety upon the effective date of this resolution. 25
6 Page 2 SECTION 5. Resolution No is hereby rescinded in its entirety upon the effective date of this resolution. SECTION 6. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. PASSED AND ADOPTED this 19th day of December, Janice S. Parvin, Mayor ATTEST: Maureen Benson, City Clerk Attachment: Exhibit 1 Maximum Rates Effective January 1,
7 Page 3 EXHIBIT 1 MAXIMUM SOLID WASTE COLLECTION SERVICE RATES EFFECTIVE JANUARY 1, Residential Service Rates BASE SERVICE Option A1: Regular Full Service Rate... $ per 64-gallon trash cart 64-gallon recyclables cart 96-gallon yard trimmings cart Option A2: Senior Full Service Rate (62+ years)... $ per 64-gallon trash cart 64-gallon recyclables cart 96-gallon yard trimmings cart Option B1: 32-Gallon Service Rate... $ per 32-gallon trash cart 64-gallon recyclables cart 64-gallon yard trimmings cart Option B2: Senior 32-Gallon Service Rate... $ per 32-gallon trash cart 64-gallon recyclables cart 64-gallon yard trimmings cart Option C1: Limited/No Yard Trimmings Rate... $ per 32-gallon trash cart 64-gallon recyclables cart No yard trimmings cart Option C2: Senior Limited/No Yard Trimmings Rate... $ per 32-gallon trash cart 64-gallon recyclables cart No yard trimmings cart 27
8 Page 4 SERVICE UPGRADES 1. Trash Service Upgrades a. Upgrade trash cart from 32-gallon to 64-gallon... $ per (Only available with Options C1, C2) b. Upgrade trash cart from 64-gallon to 96-gallon... $ per (Only available with Options A1, A2) c. Additional 64-gallon trash cart... $ per (Only available with Options A1, A2) d. Additional 96-gallon trash cart... $ per (Only available with Options A1, A2) 2. Recycling Service Upgrades a. Upgrade recycling cart from 64-gallon to 96-gallon... $ per b. Additional 64-gallon recycling cart... $ per c. Additional 96-gallon recycling cart... $ per d. Downgrade recycling cart from 64-gallon to 32-gallon. No Rate Change 3. Yard Trimmings Service Upgrades a. Upgrade yard trimmings cart from 64-gal. to 96-gal.... $ per b. Additional 96-gallon yard trimmings cart... $ per OTHER CHARGES Customer Service Level Changes... $ per request Move In/Move Out Service... $ Additional Bulky Item Pickup... $ per item (Two pickups of up to three items each per year are free) 28
9 Page 5 Commercial Service Rates DISCARD BIN RATES Option A: One 1.5 Cubic-Yard Discard Bin a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Non-contracted 1.5 cubic-yard pickup... $ f. Compacted 1.5 cubic-yard pickup... $ Option B: One 3.0 Cubic-Yard Discard Bin a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Pick up five times per week... $ per f. Pick up six times per week... $ per g. Non-contracted 3.0 cubic-yard pickup... $ h. Compacted 3.0 cubic-yard pickup... $ Option C: One 4.0 Cubic-Yard Discard Bin a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Pick up five times per week... $ per f. Pick up six times per week... $ per g. Non-contracted 4.0 cubic-yard pickup... $ h. Compacted 4.0 cubic-yard pickup... $
10 Page 6 64-Gallon Foodwaste Cart a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Pick up five times per week... $ per RECYCLING/COMPOSTING BIN RATES Option A: One 1.5 Cubic-Yard Recycling or Composting Bin a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Pick up five times per week... $ per f. Pick up six times per week... $ per g. Non-contracted 1.5 cubic-yard pickup... $ Option B: One 3.0 Cubic-Yard Recycling or Compost Bin a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Pick up five times per week... $ per f. Pick up six times per week... $ per g. Non-contracted 3.0 cubic-yard pickup... $ Option C: One 4.0 Cubic-Yard Recycling or Compost Bin 30
11 Page 7 a. Pick up one time per week... $ per b. Pick up two times per week... $ per c. Pick up three times per week... $ per d. Pick up four times per week... $ per e. Pick up five times per week... $ per f. Pick up six times per week... $ per g. Non-contracted 4.0 cubic-yard pickup... $ TEMPORARY BINS/ROLL-OFF DROP BOXES Temporary 3.0 Cubic-Yard Bin... $ Redelivery and Reinstatement... $ Roll-Off Disposal Bin... $ (Plus Landfill/Recycling Fee) Roll-Off Recycling Bin... $ (Market Value Negotiable) Roll-Off Compactor... $ (Plus Landfill/Recycling Fee) Roll-Off Recycling Compactor... $ (Market Value Negotiable) 31
12 Page 8 MISCELLANEOUS SERVICES A. Scout Service... Case by Case B. Special Bin Lids (Locking/CBL) (one-time fee)... $ C. Deodorizing/Replacing Bin (1x per calendar year)... No Charge D. Additional Deodorizing/Replacing Bin... $ E. Charge for Returned Checks... $ F. Charge for Delinquent Payments... $ G. Credit Card Convenience Fee (by Phone)... $ H. Extra Pick Up... $ per bag $ per cart I. Extra Collection on Non-Scheduled Pick Up Day... $ J. Residential Cart Re-Delivery Fee... $ K. Temporary Roll-Off Extra Day Fee... $ per day (post 7 days, trash only) L. Temporary 3.0 Cubic-Yard Bin Rate... $ per day (post 7 days, trash only) M. Permanent Customer Roll-Off Extra Day Fee... $ per day (post 30 days, trash only) N. Solid Waste Bin Locking/Unlocking Fee... $ per O. Overage Fee... $ P. Contamination Fee... $
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