Special Notice / Hearing: Complied with Notice Requirements / Public Hearing__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Jim Eggemeyer, Director, Office of Sustainability
Subject: Adoption of the 2019 Garbage and Recyclables Collection Rates in County Service Area No. 8 (North Fair Oaks)
RECOMMENDATION:
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Acting as the Governing Board of County Service Area No. 8, adopt a resolution adopting the 2019 Garbage and Recyclables Collection Rates for County Service Area No. 8 (North Fair Oaks).
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BACKGROUND:
On October 20, 2009, your Board adopted Resolution No. 070423 which approved a franchise agreement with Recology San Mateo County (RSMC) to provide services for the collection of recyclable materials, organic materials, and garbage from January 1, 2011 through December 31, 2020. The transition to RSMC collection services resulted in significantly expanded weekly collection of recyclable and organic materials and increased diversion of garbage from landfills. The increase in diversion of solid waste helps to achieve diversion goals for the Unincorporated areas of San Mateo County.
Solid Waste collection services are provided to County Service Area No. 8 (CSA-8) and the Unincorporated Franchised Area (County Franchised Area) within the South Bayside Waste Management Authority (SBWMA) service area (Burlingame to Menlo Park).
On February 13, 2018, your Board adopted Resolution No.075692, approving a 5.0% rate increase for CY 2018, for the 32- and 64-gallon garbage cart sizes for CSA-8, which were effective on February 1, 2018. On July 24, 2018, your Board adopted Resolution No.076021, approving the FY 2018-19 Garbage and Recyclables Collection Service Charges Report for CSA-8. These charges are then posted on the tax roll for FY 2018-19 and are calculated based on the effective rates adopted in January 2018. On December 11, 2018 your Board adopted Resolution No. 076318 setting January 29, 2019 at 9:00 am as the time and place for a public hearing on the garbage and recyclables collection rates for CSA-8.
The process for adopting the garbage and recyclables collection rates includes: holding a public hearing in your Chambers; receiving public testimony on the proposed rates; and after considering all written and oral testimony to the proposed rates, close the public hearing. If there is not a majority protest, (greater than 50% of the service area property owners) from property owners your Board will then consider whether to adopt the resolution and set the 2019 garbage and recyclables collection rates for CSA-8, effective January 1, 2019. Staff completed the following public notification activities: mailed the mandated Proposition 218 notices about the public hearing and the opportunity to submit protest letters to all CSA-8 residents, published a notice of the public hearing twice in local papers, and in November 2019, presented information on the proposed rate increases to the North Fair Oaks Community Council. 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, your Board would be prevented from increasing the rates for the service area. In CSA-8, 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 for CSA-8 are listed in Exhibit “A” to the resolution and represent an 8.0% rate increase for residential customers who have either two (2) 32- or one (1) 64-gallon size cart (and as noted in the Proposition 218 notice to customers who chose to subscribe to the 20-gallon cart); an 8.0% increase for mixed-use and commercial customers who have 32-gallon carts. All other solid waste rates for CSA-8 would remain at the same level as adopted by your Board in 2018. Rates represent the charges to provide residents and businesses with all solid waste services (recycling, organics, and garbage).
The SBWMA reviewed the RSMC compensation application, utilizing information from RSMC, data from South Bay Recycling (Shoreway Environmental Center operator), and information regarding member agency fees and other associated costs. Their recommendations are presented in a consolidated rate report titled “SBWMA Final Report Reviewing the 2019 Recology San Mateo County Compensation Application, September 13, 2018” (SBWMA 2019 Rate Report). The rate increases or decreases recommended in the SBWMA 2019 Rate Report represent rate adjustments for each member agency that the SBWMA believes are necessary to meet the projected revenue requirements to provide garbage and recyclables collection services for CY 2019. The SBWMA 2019 Rate Report recommends a 0.3% rate increase adjustment for CSA-8.
The Office of Sustainability conducted an analysis of the rates over the next five years based on the SBWMA 2019 Rate Report, the projections of costs, the indices used for cost adjustments (CPI, fuel, etc.), and the revenue collected from commercial and residential account customers. Based on this analysis, our Office is recommending an 8.0% rate increase for only residential carts (20-, 32-, and 64-gallon sizes) and mixed use and commercial 32-gallon cart size to further align rates to the cost of providing those services. All other solid waste and recycling rates for the area would remain at the same level as adopted by your Board in 2018. Rates represent the charges to provide residents and businesses with all solid waste services (recycling, organics, and garbage).
There are several factors contributing to the differences in rate recommendations between the SBWMA and the Office of Sustainability. Most notably, our analysis was conducted at a more detailed level, looking at residential and commercial rates individually rather than aggregating rates. Additionally, we do not account for projected surpluses until they are accrued. Overall, our approach to rate setting is more conservative, gradually increasing rates over time rather than relying on large rate increases as costs change from year to year. Finally, the time frame for rate recommendations from the SBWMA is limited to a single rate year, while our analysis identifies known factors that will increase costs in the next few years, such as a projected increase in the disposal rate associated with a new landfill disposal contract, and a projected increase in costs for the amended RSMC collection contract (projected 10% - 12% increase for the new landfill contract and 8.3% increase, plus fuel CPI, for the RSMC amended contract). These two large increases to costs support the need for a rate increase in CY 2019 to avoid large future rate increases.
The County has established minimum curbside service levels for CSA-8 in County Ordinance Code Section 4.04.220, for all parcels regulated for residential purposes and Mixed-Use and Commercial parcels. For a residential parcel (one to four units) the codes state the minimum level of service is two (2) 32-gallon carts or one (1) 64-gallon cart, a smaller cart can be provided, but the same rate is applied to the smaller cart. The current rate for two 32-gallon garbage carts or one 64-gallon garbage cart is $30.93, and the proposed rate will be $33.40 per month. This represents an increase of $2.47 per month for residential parcels. For mixed-use parcels (four units and above) the codes states one (1) 32-gallon cart per unit or cubic yard equivalent. The proposed rate for one 32-gallon cart will be $33.40 per month per unit. The 2019 rates are reflected in Exhibit “A” to the Resolution. The recommended rates include a franchise fee to cover administrative costs for this service area that will be paid to the County from RSMC.
The recommended increase in cart rates would be effective on January 1, 2019. The collection service charges based on the proposed rates will appear on the property owner’s tax bill for FY 2019-20 for all parcels with dwelling units, pursuant to County Ordinance Codes 4.04.200 and 4.04.220. Any additional elective services will be billed directly by RSMC. Commercial parcels without dwelling units will continue to be billed by RSMC for all services. Additionally, any Unscheduled Services requested by the customer will continue to be billed directly to the customer by RSMC.
The franchise agreement also includes fees for Unscheduled Services that we are recommending your Board reaffirm through the rate adoption process, attached as Exhibit “B” to the Resolution. The Unscheduled Services are generally those additional services that are specifically requested and paid for by the ratepayer, in addition to the basic collection service charges. The Unscheduled Service fees are not property-related fees and therefore not subject to the Proposition 218 rate setting requirements. The franchise agreement allows for a CPI increase to the Unscheduled Services Fees as reflected in Exhibit “B” to the Resolution. These Unscheduled Services Fees are effective January 1, 2019.
County Counsel has reviewed and approved the resolution as to form.
Approval of this action will contribute to the Shared Vision 2025 outcome of a Collaborative Community by informing and engaging residents in the process to adopt garbage and recyclables collection rates for CSA-8.
FISCAL IMPACT:
There is no impact on the County General Fund.
The proposed 2019 rates reflect an 8.0% increase to the residential 32- and 64-gallon cart size rates and an 8.0% increase to Mixed-Use and Commercial customers with 32-gallon cart size rates in CSA-8 over the current rates (Exhibit “A” to the Resolution). If a residential customer subscribes to a 20-gallon cart, the rate will be the same as the minimum level of service rate charged for a 32- and 64-gallon cart size.