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AGENDA BILL Agenda Item No. 6 Date: November 18, 2014 To: El Cerrito City Council From: Garth Schultz, Operations + Environmental Services Manager Yvetteh Ortiz, Public Works Director/City Engineer Subject: Proposed Integrated Waste Management Fees and East Bay Sanitary Garbage & Green Waste Collection and Processing Rates Effective January 1, 2015 ACTIONS REQUESTED 1. Conduct a public hearing and upon conclusion adopt a resolution setting Integrated Waste Management (IWM) Fees, effective January 1, 2015. 2. Conduct a public hearing and upon conclusion adopt a resolution setting maximum allowable East Bay Sanitary (EBS) garbage and green waste collection, disposal and processing rates, effective January 1, 2015. BACKGROUND & ANALYSIS Integrated Waste Management Fee In 1990, the City of El Cerrito established IWM Fees to cover integrated waste management services. Services funded by IWM Fees include the City-run operations of the El Cerrito Recycling + Environmental Resource Center, curbside collection of recyclable materials, and other waste collection, reduction, recycling and environmental programs currently operated by the Department of Public Works, Operations + Environmental Services Division (OESD). IWM Fee revenues are collected by EBS as a component of the charges for solid waste collection, processing and disposal services, via EBS’s regular billing cycle. After collection, these revenues are transferred to the City of El Cerrito’s IWM Fund. Over the past eight years, the City Council has considered and adopted annual increases to the IWM Fees. As part of the Fiscal Year (FY) 2014-15 Budget the City Council approved a forecast for the IWM Fund that included increasing IWM Fee revenue by from the $1,805,266 budgeted for collection in calendar year 2014 to $1,949,687 in calendar year 2015, an increase of $144,421. This increase in needed revenue is primarily due to a $74,500 increase in vehicle maintenance service expenses, as authorized by the Council on October 15, 2013 (Resolution 2013-57) and again in August 19, 2014 (Resolution 2014-41). As reported to the Council in the staff reports that accompanied the aforementioned resolutions, no prior adjustments have been made to IWM Fee revenue to cover these increased vehicle maintenance service expenses. The remaining amount of additional revenue ($69,921 or 3.87% of the proposed 8% ---PAGE BREAK--- Agenda Item No. 6 Page 2 increase) is required to cover normal increases in expenses, most of which is attributable to personnel costs. The proposed 2015 IWM Fees necessary to generate $1,949,687 in IWM Fee revenues during calendar year 2015 are included in Attachment 1. East Bay Sanitary Garbage and Green Waste Collection Rates In contrast to IWM Fees (which the City sets and EBS collects), EBS sets and charges the rates for garbage and green waste collection based upon maximum rates authorized by the Council, pursuant to El Cerrito Municipal Code Chapter 8.12. EBS rates have been adjusted annually for many years. Most recently, EBS rates were increased effective January 1, 2013 and 2014; there was no adjustment made in 2012. In late 2012, the City and EBS completed a Rate and Operations Review that culminated in Council’s adoption of a Fifth Amendment to the East Bay Sanitary Franchise Agreement (Resolution 2012-89, November 20, 2012). The Amendment provided for lower rates, greater services, and an extension of the Franchise Agreement through December 31, 2025. The Review process resulted in the development of an annual adjustment to EBS’s annual revenues via a Refuse Rate Index (RRI). EBS has calculated and proposed a 2015 RRI revenue adjustment of 3.49%, which combined with an additional $15,618 due to the EBS as a result of projected under- collection of revenue in 2014 (which is in keeping with the terms of the Fifth Amendment) would result in a 2015 revenue requirement for collection operations of $4,242,299, an increase of $158,155 over the adjusted 2014 revenue requirement of $4,084,1441. Staff has reviewed the RRI adjustment figure and the proposed 2015 collection revenue requirement for accuracy, consistency, and reasonableness. The proposed 2015 Collection Rates necessary to generate $4,242,299 in EBS Collection revenues during calendar year 2015 are included in Attachment 1. East Bay Sanitary Post-Collection Rates: Processing and Disposal Prior to 2014, processing and disposal rates – which fund the transfer, transport, processing and disposal of garbage and green waste, household hazardous waste programs, and other post-collection services – were set by the West County Integrated Waste Management Authority (RecycleMore). RecycleMore historically set theses rates for El Cerrito because the City was party to the Integrated Resource Recovery Facility (IRRF) Agreement, which was administered by RecycleMore and expired on December 31, 2013. Prior to the expiration of the IRRF Agreement, the City Council approved the Post-Collection Agreement between the City and Republic Services for processing and disposal services (Resolution 2013-54) effective January 1, 2014. The Council also set Post-Collection Rates (Resolution 2013-64) to cover expenses for processing and disposal of 11,402 tons of waste at a cost of $90.30 per ton, totaling to $1,029,601, as stipulated by the Post-Collection Agreement. 1 The original 2014 Revenue Requirement, which included increasing EBS’s Franchise Fee from 12% to 15% of applicable rate revenues, was calculated to be $4,106,331. This figure has been revised down to the $4,084,144 stated in this report as a result staff’s analysis of the proposed 2015 rates, with EBS’s agreement. ---PAGE BREAK--- Agenda Item No. 6 Page 3 Per the terms of the Post-Collection Agreement, Republic Services has calculated and proposed 2015 Post-Collection costs of $1,046,267, at a rate of $93.40 per ton over a projected 11,202 tons. Staff has reviewed the proposed 2015 per ton rate and the projected 2015 tons for accuracy, consistency, and reasonableness. The proposed 2015 Post-Collection Rates necessary to generate $1,046,267 in Post-Collection revenues during calendar year 2015 are included in Attachment 1. STRATEGIC PLAN CONSIDERATIONS Adoption of the IWM Fees, EBS Collection Rates, and Post-Collection Rates would help fulfill Goal F (Implement the City’s Climate Action Plan, including reducing the amount of waste generated in El Cerrito) of the City of El Cerrito Strategic Plan. Specifically, the proposed rates and fees will support continued reductions in the amount of El Cerrito waste sent to landfills. ENVIRONMENTAL CONSIDERATIONS The services being funded by the proposed 2015 IWM Fees, EBS Collection Rates and Post-Collection Rates will continue to enable El Cerrito to reduce its environmental impact via further decreases in the number tons of solid waste sent to landfill. Specifically, the proposed rates and fees will enable the City and EBS to continue expanding and improving the range of diversion services to commercial businesses and multifamily dwellings, and maintain services for all other solid waste customers. FINANCIAL CONSIDERATIONS The proposed IWM Fees and EBS Collection and Post-Collection Rates are included in Attachment 1 (2015 Garbage, Green Waste and Recycling Rates) and, respectively, in Attachments 2 and 3 (Resolutions). Adoption of the proposed combined IWM Fees and EBS Rates, will result in total cost increases of $1.21 for 20 gallon customers (39% of cart subscriptions), $1.69 for 35 gallon customers (57% of cart subscriptions), and $3.64 for 64 gallon customers of cart subscriptions). Bulk commercial collection costs will increase $14.60 to $28.66 per month for once weekly pickup of garbage (including recycling fees). Collection of commercial green waste (and collection of residential green waste over the 64 gallons per week included in the base residential rates) will increase by $0.98 to $1.90 per month for once weekly pickup (97 subscriptions total). The primary reason for the proportionately larger increase to commercial rates – as compared to residential rates – is that commercial subscriptions continue to have the greatest potential for diversion and migration towards smaller container sizes. Adopting the rates as proposed supports both the recovery of rate revenue from the appropriate waste sectors and provides incentives to reduce waste generation while also mitigating the effects of continued migration (due to higher rates). LEGAL CONSIDERATIONS The City Attorney has reviewed proposed actions and found that legal considerations have been addressed. Notices of public hearing were publicly posted and were ---PAGE BREAK--- Agenda Item No. 6 published in the November 8, 2014 and November 13, 2014 editions of the West County Times. Reviewed by: Scott Hanin, City Manager Attachments: 1. 2015 Garbage, Green Waste and Recycling Rates 2. Resolution 2014-XX (IWM Recycling fees) 3. Resolution 2014-YY (EBS Collection and Post-Collection rates) 4. Presentation Page4 ---PAGE BREAK--- Container Size Collection Post- Collection IWM Fee 2015 Total Cost 2014 Total Cost $ Change in Cost 20 Gallon Cart $ 18.13 $ 3.60 $ 9.77 $ 31.50 $ 30.29 1.21 $ 35 Gallon Cart $ 25.01 $ 6.30 $ 10.77 $ 42.08 $ 40.39 1.69 $ 64 Gallon Cart $ 50.68 $ 12.65 $ 21.10 $ 84.43 $ 80.79 3.64 $ Container Size Collection Post- Collection IWM Fee 2014 Total Cost 2014 Total Cost $ Change in Cost 35 Gallon Cart $ 27.51 Included $ - 27.51 $ $ 26.53 $ 0.98 64 Gallon Cart $ 53.20 Included $ - 53.20 $ $ 51.30 1.90 Weekly Collection of Additional Green Waste Containers (one 64 gallon container serviced weekly included in above rates) Cost based on size of additional green waste container(s) Integrated Waste Management (IWM) Fee: The IWM Fee covers curbside recycling collection for El Cerrito residents and businesses and supports the daily operations of the El Cerrito Recycling Center. The Fee is set and assessed on each trash container collected by East Bay Sanitary Company, based on trash container size. The City of El Cerrito 2015 Solid Waste Collection, Processing and Disposal Rates Residential Rates I Single Family Homes and Multi-family Dwellings up to 4 units Residential Solid Waste Services include weekly collection of recycling (grey), green waste (green), garbage (blue); limited free on-call collection of larger quanities from your home; free access to the regional Household Hazardous Waste (HHW) Facility, and free access to most services at the El Cerrito Recycling + Environmental Resource Center. Additional recycling carts are available at no extra cost. Weekly Collection of Recycling, Green Waste, and Garbage Cost based on garbage container size Agenda Item No. 6 Attachment 1 ---PAGE BREAK--- Container Size Collection Post- Collection IWM Fee 2015 Total Cost 2014 Total Cost $ Change in Cost 20 Gallon Cart $ 18.13 $ 3.60 $ 9.77 $ 31.50 $ 30.29 1.21 $ 35 Gallon Cart $ 25.01 $ 6.30 $ 10.77 $ 42.08 $ 40.39 1.69 $ 64 Gallon Cart $ 50.68 $ 12.65 $ 21.10 $ 84.43 $ 80.79 3.64 $ One Cubic Yard $ 173.03 $ 32.50 $ 75.79 $ 281.32 $ 266.72 14.60 $ Two Cubic Yards $ 329.84 $ 65.00 $ 151.58 $ 546.42 $ 517.76 28.66 $ Container Size 1 2 3 4 5 6 20 Gallon Cart $ 31.50 $ 63.00 $ 94.50 $ 126.00 $ 157.50 $ 189.00 35 Gallon Cart $ 42.08 $ 84.15 $ 126.23 $ 168.30 $ 210.38 $ 252.45 64 Gallon Cart $ 84.43 $ 168.86 $ 253.29 $ 337.72 $ 422.15 $ 506.58 One Cubic Yard $ 281.32 $ 530.53 $ 779.74 $ 1,028.95 $ 1,278.16 $ 1,527.37 Two Cubic Yards $ 546.42 $ 1,044.84 $ 1,543.26 $ 2,041.68 $ 2,540.10 $ 3,038.52 Container Size 1 2 3 4 5 35 Gallon Cart $ 27.51 $ 55.02 $ 82.53 $ 110.04 $ 137.55 64 Gallon Cart $ 53.20 $ 106.40 $ 159.60 212.80 $ $ 266.00 Container Type Collection Post- Collection IWM Fee Total Compacted Rates (per yard) $ 66.06 $ 65.00 $ 75.79 $ 206.85 Roll-off (Debris Box) Market Rate (per load) Market Rate (per ton) $75.00 (per load) Multiple Weekly Collections of Garbage Cost based on garbage container size and number of pickups per week Cost based on garbage container size The City of El Cerrito 2015 Solid Waste Collection, Processing and Disposal Rates Commercial Rates I Businesses and Multi-family Dwellings over 4 units Commercial Solid Waste Services include collection of recycling (grey), green waste (green), garbage (blue) and most services at the El Cerrito Recycling + Environmental Resource Center. Additional recycling carts are available at no extra cost. Once Weekly Collection of Garbage Pickups per week Green Waste Collection On-Call Bulk Collection (Debris Boxes and Compactors) Rates listed are per pickup, and are not inclusive of all charges for these services. Please call East Bay Sanitary for complete rates and fees at [PHONE REDACTED]. Varies - Call East Bay Sanitary at [PHONE REDACTED] for price quote. Integrated Waste Management (IWM) Fee: The IWM Fee covers curbside recycling collection for El Cerrito residents and businesses and supports the daily operations of the El Cerrito Recycling Center. The Fee is set and assessed on each trash container collected by East Bay Sanitary Company, based on trash container size. Cost based on green waste container size and number of pickups per week Pickups per week ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 RESOLUTION 2014–XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO FIXING AND SETTING THE INTEGRATED WASTE MANAGEMENT FEES EFFECTIVE JANUARY 1, 2015 WHEREAS, the City of El Cerrito has established Integrated Waste Management Fees (IWM Fees) for Integrated Waste Management Services provided by the Department of Public Works Operations + Environmental Services Division (OESD), including operation of the El Cerrito Recycling + Environmental Center, curbside collection of recyclable materials, and other waste collection, reduction, recycling and environmental programs; and WHEREAS, the City Council of the City of El Cerrito sets and charges the IWM Fees, and the Fees are collected by East Bay Sanitary Company as part of the garbage bills and transferred in whole to the City of El Cerrito’s Integrated Waste Management fund; and WHEREAS, the City has reviewed and considered financial information as a part of the regular budget process to determine whether increases to IWM Fee revenues are warranted and justified; and WHEREAS, the City Council intends to adopt IWM Fees to be effective January 1, 2015, thus keeping the OESD’s Integrated Waste Management functions as an on-going concern; and WHEREAS, the City Council finds that setting IWM Fees is exempt from the California Environmental Quality Act (Public Resources Code 21000 et seq., “CEQA,” and 14 Cal. Code Reg. 15000 et seq., “CEQA Guidelines”) under the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment, and in this case it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment (CEQA Guidelines § 15061(b)(3). Additionally, setting IWM fees provides a government funding mechanism (CEQA Guidelines section 15378(b)(4) and is categorically exempt from CEQA under CEQA Guidelines section 15308 (Protection of the Environment). NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of El Cerrito that the rates for the IWM Fee shall be as follows, effective January 1, 2015: Garbage Container Size IWM Fee 20 Gallon Cart $9.77 35 Gallon Cart 10.77 64 Gallon Cart 21.10 One Cubic Yard 75.79 Two Cubic Yards 151.58 35 Gallon Green Waste 0.00 64 Gallon Green Waste 0.00 Compacted (per yard) 75.79 Roll-off (per load) 75.00 ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 BE IT FURTHER RESOLVED, that this Resolution shall become effective immediately upon passage and adoption. I CERTIFY that at a regular meeting on November 18, 2014, the City Council passed this resolution by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: IN WITNESS of this action, I sign this document and affix the corporate seal of the City of El Cerrito on November XX, 2014. Cheryl Morse, City Clerk Approved: Janet Abelson, Mayor ---PAGE BREAK--- Agenda Item No. 6 Attachment 3 RESOLUTION 2014 – XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO ESTABLISHING MAXIMUM ALLOWABLE RATES FOR THE COLLECTION OF GARBAGE AND GREEN WASTE EFFECTIVE JANUARY 1, 2015 WHEREAS, the City of El Cerrito and East Bay Sanitary Company (the Company) have entered into that certain Franchise Agreement dated September 2, 1997 (as amended, the “Franchise Agreement”); and WHEREAS, the Company has submitted a request for rate increases to be effective January 1, 2015, and that such increases were calculated pursuant to the methodology established in the Fifth Amendment to the Franchise Agreement, dated December 14, 2012; and WHEREAS, the rate adjustments submitted to the City have been reviewed for accuracy, consistency with the adjustment methodology, and reasonableness by the City’s Operations + Environmental Services Manager; and WHEREAS, the City Council finds that setting these rates is exempt from the California Environmental Quality Act (Public Resources Code 21000 et seq., “CEQA,” and 14 Cal. Code Reg. 15000 et seq., “CEQA Guidelines”) under the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment, and in this case it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment (CEQA Guidelines § 15061(b)(3). Additionally, setting IWM fees provides a government funding mechanism (CEQA Guidelines section 15378(b)(4) and is categorically exempt from CEQA under CEQA Guidelines section 15308 (Protection of the Environment). NOW THEREFORE, BE IT RESOLVED by the City Council of the City of El Cerrito that the maximum rates that East Bay Sanitary Company may charge, effective January 1, 2015, are as follows: Garbage Container Size EBS Collection Rate Post-Collection Rate 20 Gallon Cart 18.13 3.60 35 Gallon Cart 25.01 6.30 64 Gallon Cart 50.68 12.65 One Cubic Yard 173.03 32.50 Two Cubic Yards 329.84 65.00 35 Gallon Green Waste 27.51 0.00 64 Gallon Green Waste 53.20 0.00 Compacted Rates (per yard) 66.06 65.00 Roll-off (per ton) NA – Market Rate NA – Market Rate BE IT FURTHER RESOLVED, that this Resolution shall become effective immediately upon passage and adoption. ---PAGE BREAK--- Agenda Item No. 6 Attachment 3 I CERTIFY that at a regular meeting on November 18, 2014, the City Council passed this resolution by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: IN WITNESS of this action, I sign this document and affix the corporate seal of the City of El Cerrito on November XX, 2014. Cheryl Morse, City Clerk Approved: Janet Abelson, Mayor ---PAGE BREAK--- Public Hearings on Proposed 2015 IWM Fees and EBS Rates Presentation to the El Cerrito City Council November 18, 2014 Garth Schultz Operations + Environmental Services Manager 1 ---PAGE BREAK--- Integrated Waste Management Fees Council sets IWM Fees, charged on EBS bills IWM Fees fund 85+% of curbside recycling and Recycling + Environmental Resource Center FY 14/15 Adopted Budget included a projected 8% increase in IWM Fee revenue starting 1/1/2015 increase covers new vehicle maintenance services, and other increases, mainly personnel 2 ---PAGE BREAK--- East Bay Sanitary Rates Maximum Rates set by Council, charged by EBS Collection: 3.49% revenue increase per Franchise Post-collection: Based on per ton rate of $93.40 as submitted by Post-Collection provider Republic Effects of subscription “migration” continues… 3 ---PAGE BREAK--- Subscription Migration by Year 4 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 1/1/06 1/1/07 1/1/08 1/1/09 1/1/10 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 20 Gallon 35 Gallon 64 Gallon ---PAGE BREAK--- Proposed 2015 Total Rates 5 Container Size EBS Collection Post- Collection IWM Fee 2015 Total Cost 2014 Total Cost $ Change in Cost 20 Gallon "Mini-can" $18.13 $3.60 $9.77 $31.50 $30.29 $1.21 35 Gallon Cart 25.01 6.30 10.77 42.08 40.39 1.69 64 Gallon Cart 50.68 12..65 21.10 84.43 80.79 3.64 One Cubic Yard 173.03 32.50 75.79 281.32 266.72 14.60 Two Cubic Yards 329.84 65.00 151.58 546.42 517.76 28.66 Extra Green Waste 35 27.51 Included NA 27.51 26.53 0.98 Extra Green Waste 64 53.20 Included NA 53.20 51.30 1.90 ---PAGE BREAK--- 2015 Revenue Projections $7,238,253 in overall revenues (4.61% over 2014) $4,242,299 to EBS $3,468,755 in Revenue Requirement $773,544 in Franchise Fees $1,949,688 to IWM $1,046,267 to Post-Collection 6 ---PAGE BREAK--- Revenue Streams by Year 7 $3,468,755 $1,046,267 $773,544 $1,949,688 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 2008 2009 2010 2011 2012 2013 2014 2015 EBS Collection Processing and Disposal Franchise Fee IWM Fee ---PAGE BREAK--- Conclusions and Questions 8 The proposed 2015 EBS Rates and IWM Fees: Continue reductions in waste sent to landfills Maintain high-levels of recycling and diversion service For more information, and to ask questions: Garth Schultz I Manager Operations + Environmental Services Division City of El Cerrito I Public Works Department [PHONE REDACTED] I [EMAIL REDACTED] Conduct Public Hearings ---PAGE BREAK--- Public Hearing: Proposed 2015 IWM Fees 9 Garbage Container Size IWM Fee 20 Gallon Cart $9.77 35 Gallon Cart 10.77 64 Gallon Cart 21.10 One Cubic Yard 75.79 Two Cubic Yards 151.58 35 Gallon Green Waste 0.00 64 Gallon Green Waste 0.00 Compacted (per yard) 75.79 Roll-off (per load) 75.00 ---PAGE BREAK--- Public Hearing: Proposed 2015 EBS Rates 10 Garbage Container Size EBS Collection Rate Post-Collection Rate 20 Gallon Cart $18.13 $3.60 35 Gallon Cart 25.01 6.30 64 Gallon Cart 50.68 12.65 One Cubic Yard 173.03 32.50 Two Cubic Yards 329.84 65.00 35 Gallon Green Waste 27.51 Included 64 Gallon Green Waste 53.20 Included Compacted Rates (per yard) 66.06 65.00 Roll-off (per ton) NA – Market Rate NA – Market Rate