Special Notice / Hearing: Complied with Notice Requirements / Public Hearing
Vote Required: Majority
To: Honorable Board of Supervisors
From: Carolyn Bloede, Director, Sustainability Department
Subject: Adoption of the 2025 Garbage and Recyclables Collection Rates in Unincorporated Franchised Area (CFA).
RECOMMENDATION:
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Recommendation to conduct a public hearing in consideration of the 2025 Garbage and Recyclables Collection Rates for Unincorporated Franchised Area (CFA):
A) Open public hearing
B) Close public hearing
C) Adopt a resolution adopting the 2025 Garbage and Recyclables Collection Rates for the Unincorporated Franchised Area (CFA).
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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, and support of service providers that collect, process, and dispose of materials. Recology San Mateo County (Recology) is the current franchise holder and 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, this Board adopted Resolution No. 070423 which approved a franchise agreement with Recology to provide services for the collection of recyclable materials, organic materials, and garbage from January 1, 2011, through December 31, 2020.
On June 4, 2019, this Board adopted Resolution No. 076641 approving the Amended and Restated Recology Franchise Agreement (Recology Franchise Agreement) for an additional 15-year term expiring on December 31, 2035.
On November 14, 2023, this Board adopted Resolution No. 080037 approving the County Executive or designee to exercise the Carry Forward contract provision per the Recology Franchise Agreement, Attachment K (Adopted June 4, 2019), deferring the excess compensation adjustments for Calendar Year (CY) 2024, which limits certain Recology indices increases to five percent and defers the remaining cost increase to the subsequent rate year. In this same Board action, this Board also adopted Resolution No. 080038, Request for Appropriation (ATR) No. ATR24-B0019, appropriating $96,240 from Non-General Fund Reserve to Service and Supplies to offset a revenue shortfall for the service area to Recology, for CY 2021.
On November 12, 2024, this Board adopted Resolution No. 080746 setting January 14, 2025, at 9:30 a.m. as the time and place for a public hearing on the Calendar Year 2025 Garbage and Recyclables collection rates for CFA.
The adoption of the annual garbage and recyclables collection rates follows a Proposition 218 rate setting process as defined under Articles XIII C and XIII D of the State Constitution. The County Sustainability Department completed this process for 2025 by: setting a public hearing to consider any new or increased property related fees (rates), mailing mandated notices to property owners alerting them of the public hearing and the opportunity to submit protest letters, and publishing a notice of the public hearing twice in a local newspaper. To date, no protest letters have been received by the Clerk of the Board. If there were a successful majority protest in writing from the property owners, the Board would be prevented from increasing the rates for the service area. In CFA, this could lead to larger rate increases in the future due to the amended solid waste contracts and the need to achieve cost recovery for services provided.
DISCUSSION:
The proposed rates are developed using the cost and revenue data provided by the SBWMA for the CFA service area. The proposed rates for CY 2025 are listed in Exhibit A to the Resolution and represent a recommendation for a 9.3 percent rate increase for residential services and for commercial cart and bin services from the rates previously set by the Board in CY 2024.
The proposed rate increases for one 20-gallon garbage cart for one to four residential dwelling units will increase $3.88 per month, representing an increase in monthly charges from $41.74 to $45.62. The proposed rate increase for 32-gallon garbage cart is $4.61 per month (an increase from $49.61 to $54.22 per month) (referenced in Exhibit A). The recommended rates will continue to reflect a five percent franchise fee that will be paid to the County from Recology to administer these programs.
The SBWMA provides cost and revenue data to each jurisdiction in an annual report. The report, titled “SBWMA Final Report Reviewing the 2025 Recology San Mateo County Compensation Application,” (SBWMA 2025 Rate Report), dated September 19, 2024, was adopted by the SBWMA Board on September 26, 2024. The report contains collection, disposal, and processing costs and the revenue collected for the service area. These costs are allocated each year based on the updated indices and statistics. Therefore, the percent of cost allocated to each Member Agency changes each rate year.
Garbage and recycling rates are developed to generate adequate revenues to pay for the projected costs of service in the upcoming calendar year. In CY 2024, a new contract for processing and disposal, as well as new state-mandated services, resulted in larger-than-usual annual cost increases for SBWMA members. To offset these increases, SBWMA applied rate stabilization reserves, and the County implemented a range of rate-reduction strategies:
• In January 2024, this Board exercised the Carry Forward provision allowed in the Recology contract, which limited the Recology cost increase for certain indices for CY 2024 and carried forward the excess costs to the subsequent rate year.
• In addition, this Board approved a Request for Appropriation (ATR) No. ATR24-B0019, appropriating $96,240 from Non-General Fund Reserve to Service and Supplies to offset a 2021 Recology revenue shortfall for the service area.
• Third, this Board approved the strategy to increase the rates over a two-year period to meet the new revenue requirements for CY 2024, with 13.6 percent of the increase occurring in the 2024 rate year and the remaining cost increase being included in the 2025 rate process.
Utilizing the SBWMA Rate Stabilization Reserve and the strategies outlined above, the proposed rate increase was reduced from 19.3 percent (SBWMA 2024 Rate Report) to 13.6 percent for rate year 2024.
In alignment with the rate reducing strategies approved last year, the proposed 9.3 percent increase for CY 2025 includes the remaining cost increase from CY 2024 and will conclude the two-year phased approach.
If approved by the Board, these new rates will be effective on January 1, 2025 (Exhibit A). All services will be billed directly by Recology.
The rates for Unscheduled Services are additional services beyond the basic mandatory collection services and are electively subscribed to by the ratepayers, per the Recology Franchise Agreement. The Recology Franchise Agreement allows for a consumer price index (CPI) increase to the Unscheduled Service fees. The Unscheduled Service fees for CY 2025 reflect a 2.97 percent CPI adjustment above the CY 2024 fees charged by Recology. Any unscheduled service requested by the customer will be billed directly to the customer by Recology, effective January 1, 2025. These Unscheduled Service 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’s Office has reviewed and approved the resolution as to form.
FISCAL IMPACT:
There is no impact to Net County Cost. The garbage and recyclables rates are levied on properties that are leased or owned by the County that located in the CFA.
EQUITY IMPACT:
The proposed rate increase may have varying impacts on households in the Unincorporated Franchised Areas, 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.
ATTACHMENTS:
1. Exhibit A: 2025 Garbage and Recyclables Collection Rates in Unincorporated Franchised Area (CFA)
2. Exhibit B: 2025 Unscheduled Service Fees for Unincorporated Franchised Area