Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors, Acting as the Governing Board of County Service Area No. 8
From: Carolyn Bloede, Director, Sustainability Department
Subject: Setting a Public Hearing for 2025 Garbage and Recyclables Collection Proposed Rates in County Service Area No. 8 (North Fair Oaks Area)
RECOMMENDATION:
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Acting as the Governing Board of County Service Area No. 8, adopt a resolution:
A) Setting Tuesday, January 14, 2025, at 9:30 a.m. at the regularly scheduled Board meeting as the time and place for a public hearing on the garbage and recyclables collection proposed rates for County Service Area No. 8 (North Fair Oaks) for calendar year 2025; and
B) Direct the necessary notices for said hearing.
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BACKGROUND:
The South Bay Waste Management Authority (SBWMA) is a joint powers authority formed by eleven local government jurisdictions. This authority owns and manages the Shoreway Environmental Center and provides oversight of the contractors that collect, process, and dispose of garbage and recyclables. Recology San Mateo County (Recology) is the franchise operator that provides solid waste collection services to County Service Area No. 8 (CSA-8) and the Unincorporated Franchised Area (CFA) within the SBWMA service area (Burlingame to Menlo Park).
On October 20, 2009, the Board adopted Resolution No. 070423 which approved a franchise agreement with Recology to provide services for the collection of recyclables, organics, and garbage from January 1, 2011, through December 31, 2020. On June 4, 2019, the Board adopted Resolution No. 076641 approving the amended and restated Recology Franchise Agreement for an additional 15-year term expiring on December 31, 2035.
On November 14, 2023, the Board adopted Resolution No. 080029, which exercised the Recology Carry Forward contract provision and applied the estimated $126,087 of the 2021 surplus from the SBWMA 2024 Rate Report to offset the CY 2024 rate increase. The Board also approved a two-year rate increase strategy, with a 12.7% rise in 2024 and the remaining increase to be addressed in the 2025 rate application.
On January 23, 2024, the Board adopted Resolution No. 080117 setting the garbage and collection rates for CSA-8, which were applied and used for calendar year (CY) 2024. On August 13, 2024, the Board adopted Resolution No. 080557, approving the fiscal year (FY) 2024-25 Garbage and Recyclables Collection Service Charges Report for CSA-8. These charges appear on the tax roll for FY 2024-25 and are calculated based on the effective rates adopted in January 2024.
The adoption of the annual garbage and recyclables collection rates follows a Proposition 218 rate setting process, which allows new or increased property related fees such as the one before the Board. This includes setting a hearing and adopting a resolution of the proposed collection rates (Exhibit A and Exhibit B to the Resolution), sending notices to property owners alerting them of the public hearing to consider any new or increased property related fees (rates), and holding a public hearing and receiving testimony on the proposed rates.
Under the requirements of Articles XII C and XII D of the State Constitution (Proposition 218), notices are sent to property owners to inform them of the public hearing to consider any new or increased property related fees, and a mechanism for rejecting the fees via a majority protest at the public hearing. The Sustainability Department coordinates the noticing and explains that protests to the rates must be in writing. In addition, the Sustainability Department posts a public notice in a newspaper of general circulation about the hearing on garbage and recyclables collection proposed rates for the service area (Exhibit C to this Resolution). If there is a successful majority protest in writing from the property owners, the Board would be prevented from increasing the rates for the service area. In CSA-8, this action could lead to larger rate increases in the future due to the interest that would be assessed according to the terms in the Amended Franchise Agreement.
DISCUSSION:
The County sets the rates for solid waste collection to meet the projected SBWMA costs for the service area. The proposed rates for CY 2025 are listed in Exhibit A to the Resolution and represent an 11 percent rate increase for residential dwellings’ mandatory services (two 32-gallon or one 64-gallon cart) and for commercial cart and bin services from the rates previously set by the Board in CY 2024.
The proposed change for two 32-gallon garbage carts or one 64-gallon garbage cart for one to four residential dwelling units will increase rates by $4.56 per month, representing an increase in monthly charges from $41.46 to $46.02. For dwellings that contain over four units, or are considered a mixed-use parcel, the proposed rate increase for 32-gallon garbage carts is $4.56 per month, representing an increase from $41.46 to $46.02 per month (referenced in Exhibit A). The 32-gallon minimum service for mixed-use parcels will appear on the tax roll. The recommended rates will continue to reflect a 5 percent franchise fee that will be paid to the County from Recology to administer these programs.
The proposed rates are developed using the cost data published by the SBWMA in the “SBWMA Final Report Reviewing The 2025 Recology San Mateo County Compensation Application” (Rate Report) dated September 19, 2024, as necessary to meet the revenue cost requirements to provide garbage and recyclables collection services for CY 2025. This report was adopted by the SBWMA Board on September 26, 2024.
The garbage services costs include two components: (1) processing and disposal; and (2) the Recology collection services. The Rate Report indicates that, in CSA-8, an 11 percent rate increase is required to cover the costs, representing an estimated $336,405 revenue shortfall for collection, disposal, and processing services.
In alignment with the rate reducing strategies approved last year, the proposed 11 percent increase for CY 2025 includes the Recology Carry Forward costs that were deferred from 2024, as part of the two-year phased approach.
The proposed 11 percent rate increase of would become effective on January 1, 2025. The charges based on the rates will appear on the property owner’s tax bill for FY 2025-26 for all parcels with dwelling units, pursuant to County Ordinance Codes 4.04.200 and 4.04.220, and any additional elective services will be billed directly by Recology. Commercial parcels without dwelling units will continue to be billed by Recology directly for all services.
Unscheduled Services are in the franchise agreement and are additional elective services that are specifically requested and paid for by the ratepayers in addition to the basic collection service charges. The franchise agreement allows for a Consumer Price Index (CPI) increase to the Unscheduled Services Fees. The Unscheduled Services fees for CY 2025 reflect a 2.97 percent CPI adjustment above the CY 2024 fees charged by Recology, effective January 1, 2024. Any Unscheduled Services requested by the customer will be billed directly to the customer by Recology. These Unscheduled Services fees are not property related fees and, therefore, not subject to the Proposition 218 rate setting requirements. These fees are reflected in Exhibit B to the Resolution.
The County Attorney has reviewed and approved the Resolution as to form.
EQUITY IMPACT STATEMENT:
The proposed rate increase may have varying impacts on households in the County Service Area No. 8 (North Fair Oaks Area), including low-income households and renters, who are more vulnerable to rising costs. To ensure that all residents are informed and can participate in the Proposition 218 process, public noticing will include multilingual outreach to improve accessibility across diverse communities.
FISCAL IMPACT:
The proposed rates reflect an 11 percent rate increase ($4.56 per month) over the current rates for mandatory services (two 32-gallon and one 64-gallon) and mixed-use commercial (32-gallon) dwelling units for CY 2025. The garbage and recyclables rates are levied on leased or owned properties located in CSA-8.
Staff time involved in preparing the Prop 218 notices for CSA-8, administrative documents, and public advertisement of the hearing are part of the administrative costs associated with managing the garbage collection and recycling services in CSA-8 and are funded by the 5% Recology franchise fee which is included in the FY2024-25 Approved Budget. There is no Net County Cost associated with this action.
ATTACHMENTS:
1. Exhibit A, Proposed Garbage and Recyclables Collection Rates in County Service Area No. 8
2. Exhibit B, CY 2025 Unscheduled Service Fees
3. Exhibit C, Draft Notice of Public Hearing with the County of San Mateo, Board of Supervisors for January 14, 2025