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HomeMy WebLinkAboutItem 2a - Setting Service Rates for Collection of Residential Refuse and Recyclables DATE: May 15, 2018 TO: Honorable Mayor and City Council FROM: Tom Tait, Public Works Services Director By: Vanessa Hevener, Environmental Services Officer SUBJECT: RESOLUTION NO. 7213 SETTING SERVICE RATES FOR THE COLLECTION OF RESIDENTIAL REFUSE AND RECYCLABLES PURSUANT TO SECTION 5120.7 OF THE ARCADIA MUNICIPAL CODE Recommendation: Adopt SUMMARY In accordance with the Residential Refuse and Recycling Agreement, Waste Management Inc. (“WM”) is entitled to receive annual rate adjustments that are subject to staff review and City Council approval. W aste Management has submitted a request to adjust the single family and multi-family refuse rates by 2.25% for Fiscal Year 2018- 2019. Even with the proposed rate adjustment, the City’s residential refuse rates will remain among the lowest 1/3 in the San Gabriel Valley compared to cities with similar services. It is recommended that the City Council approve Re solution No. 7213, which will set service rates for the collection of residential refuse and recyclables. BACKGROUND In June 2016, the City Council approved a contract amendment with WM for a five-year rate adjustment schedule in accordance with Proposition 218 requirements. This is the third year of the approved rate adjustment schedule for single-family and multi-family rates. The amended contract requires that WM receive City Council approval for annual rate adjustments subject to a standardized formula. The rate adjustment formula consists of three weighted indices: Consumer Price Index (“CPI”) (65% of the total); Disposal/Green Waste Facility Index (30%); and Producer Price Index (“PPI”) for fuel (5%). Resolution No. 7213 is attached for adoption and includes, as part of the Resolution, the proposed rate schedules. Resolution No. 7213 setting Residential Refuse and Recyclable Service Rates May 15, 2018 Page 2 of 4 DISCUSSION On February 28, 2018, W M submitted a request for a service rate adjustment. The CPI change was measured from the annual average for calendar year 2016 and 2017 specific to the Los Angeles-Riverside-Orange County statistical area. The Disposal/Green Waste Facility index is based on WM’s actual collection costs for trash and green waste and the ratio of trash and green waste generated by single-family and multi-family properties in the City. The Producer Price Index (“PPI”) for fuel, as published by the United States Department of Energy, is used for the final component of the adjustment formula. Table 1 shows the percentage breakdown and weighted amount that is accounted for in each index that makes up the rate adjustment: Table 1: Rate Adjustment Formula Rate Component % CPI % of Tonnage Adjustment due to change in indices/change in disposal fees Relative Weight of Rate Weighted Rate Adjustment Percentage Service – CPI 75% 2.79% 65% 1.36% Fuel - Alternative 5.92% 5% 0.30% Disposal/ Green Waste Facility Municipal Solid Waste 56% 1.96% 30% 0.33% Greenwaste 44% 2.00% 0.26% Total 100% 2.25% For the past two years, a $0.94 pass thru fee for all residential green waste was imposed to address WM’s increased operational and hauling costs due to the Huanglongbing (“HLB”) pest. The fee will remain in effect, as the California Department of Food & Agriculture has not lifted the HLB quarantine area which includes the City of Arcadia. The Huanglongbing pest, also known as citrus greening disease, destroys fruit production, producing bitter, inedible fruit, and is ultimately fatal to citrus trees (there is no cure). The State requires that green waste generated inside of a quarantine area be separated from all other green waste and taken to either a landfill or composting facility which has been certified by the State to accep t the quarantined green waste. In the event that the quarantine area is lifted, the pass thru fee will be removed from the customer’s bill. Resolution No. 7213 setting Residential Refuse and Recyclable Service Rates May 15, 2018 Page 3 of 4 Staff worked with WM representatives and thoroughly reviewed and verified all rate adjustment data. WM has successfully demonstrated their commitment to working with the City, as well as their ability to provide the most efficient and effective refuse and recycling services to Arcadia residents. In addition, WM has shouldered the cost of programs previously paid for by the City, including the Sharps Waste program; hazardous waste materials collection generated by both residents and the City; enhanced commercial/multi-family recycling outreach/education; and pre-defined rates for emergency collection and disposal services. WM has also been a community partner by providing services above and beyond the contract terms including providing trash/recycling services during special community events (.e.g., Taste of Arcadia, Downtown Business Association Patriotic Festival, Arcadia Firefighters Association Pancake Breakfast, etc.). In accordance with the Residential Refuse and Recycling Agreement, Waste Management is entitled to an annual rate adjustment subject to rate adjustment criteria in the Agreement. Based on the contractor’s service record and their commitment to providing excellent refuse and recycling services, staff concurs with WM’s request for a 2.25% rate adjustment for single and multi-family refuse collection services, effective July 1, 2018. Additionally, a refuse rate survey conducted in April 2018 shows that the City of Arcadia’s refuse rates are among the lowest one-third of cities surveyed in the San Gabriel Valley, even with the proposed rate increase and the HLB quarantine fee. Many of the cities listed have not increased their refuse rates for FY 2018-19. Residential Refuse Rate Survey Resolution No. 7213 setting Residential Refuse and Recyclable Service Rates May 15, 2018 Page 4 of 4 ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment. Thus, this matter is exempt under CEQA. FISCAL IMPACT Residential refuse and recycling collection service rates is a fee-for-service that is paid directly to the contractor by the residential customer. The proposed rates will not impact the City’s budget; however, customers will experience a 2.25% increase in fees in the coming year. For the average residential customer, this increase will be approximately $0.50 per month. RECOMMENDATION It is recommended that the City Council adopt Resolution No. 7213 setting service rates for the collection of residential refuse and recyclables pursuant to Section 5120.7 of the Arcadia Municipal Code. Attachment: Resolution No. 7213