CITY OF SIGNAL HILL SUBJECT: RESOLUTION APPROVING SOLID WASTE COLLECTION SERVICE RATE ADJUSTMENT
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1 CITY OF SIGNAL HILL 2175 Cherry Avenue Signal Hill, CA AGENDA ITEM TO: FROM: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL STEVE MYRTER, P.E. DIRECTOR OF PUBLIC WORKS SUBJECT: RESOLUTION APPROVING SOLID WASTE COLLECTION SERVICE RATE ADJUSTMENT Summary: Staff is recommending the City Council confirm proposed Signal Hill Waste and Recycling Services (EDCO) solid waste collection rate adjustment for FY Recommendation: Waive further reading and adopt the following resolution, entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, PURSUANT TO SIGNAL HILL MUNICIPAL CODE SECTION (I), ESTABLISHING MAXIMUM RATES FOR SOLID WASTE COLLECTION SERVICES FOR EACH RESIDENTIAL UNIT AND COMMERCIAL/INDUSTRIAL ESTABLISHMENT Fiscal Impact: The proposed services levels are shown in the table below: Service Type % Increase Single Family Residential $14.66 $ % Multi-Family Residential $58.59 $ % Commercial $62.17 $ %
2 2016 EDCO Services Levels Page 2 Strategic Plan Objective: This resolution serves Strategic Plan Objective No. 4: Maintain and improve the public infrastructure. Background: EDCO AGREEMENT In February 2010, the City and EDCO (dba Signal Hill Waste and Recycling Services) entered into an Amended and Restated Solid Waste Management Agreement (Agreement) with a term of 15 years ending in Under the terms of the exclusive franchise Agreement with the City, EDCO collects, transports, processes, and disposes of all solid waste and recyclables which are generated or accumulated within the City. As part of the Agreement, residential rates were frozen for three years starting February 2, Per the terms and conditions of the Agreement, solid waste collection service rates may only be increased for cost of living adjustments, extraordinary circumstances, and/or fee increases at solid waste disposal sites, such as landfills, transfer stations, and material recovery facilities. The Agreement specifies that solid waste collection service base rate adjustments are determined by a formula utilizing two cost components: Disposal Tipping Fees and the Consumer Price Index (CPI). EDCO s right to adjust the solid waste collection service rate is contingent upon EDCO providing written notice containing a revised schedule of rates to the City Manager. Once this notice is received along with the required justification, the City must review and confirm this documentation. In addition any changes to the solid waste collection service fees charged to City residents and businesses must be compliant with the requirements of Proposition 218. This requires the City conduct a noticed public hearing protest vote for the consideration of any EDCO s requested solid waste collection service rate adjustments. SEPTEMBER 2, 2014 PROPOSITION 218 PUBLIC HEARING PROTEST VOTE In March of 2014 the City Manager received notification from EDCO seeking approval for annual (weighted) rate adjustments to their refuse rates for the next five years starting fiscal year 2014 through fiscal year After staff completed their review and confirmed the justification documentation provided, the City conducted a noticed public hearing protest vote for the consideration of EDCO s requested solid waste collection service rate adjustments as part of the September 2, 2014 City Council Meeting. At the conclusion of this public hearing, the City Council, by Resolution No , established the following method of calculating rate increases:
3 2016 EDCO Services Levels Page 3 1. Solid waste collection service rates for residential and multifamily units and commercial industrial establishments shall be adjusted in the future by a formula pursuant to the Agreement. Per the terms of the Agreement, EDCO may request to adjust rates based on a change in All Urban Consumer s Price Index (Los Angeles Metro area) and disposal facility tipping fees. 2. Annual CPI rate adjustments pursuant to the Agreement would be allowable for the next five years, starting no earlier than July 2014 up to and including July 1, 2018, without requiring an additional Proposition 218 proceeding. The maximum CPI factor to apply is three and one-half percent (3.5%). Since this is only one of two adjustment factors (see item 3 below for the other adjustment factor), the final Solid Waste Collection Service Rate will likely be different from the CPI rate applied. 3. EDCO may also request an increase in the residential, multi-family, and commercial refuse rates due to an increase in the refuse disposal/tipping fees at solid waste facilities. This increase is applied along with the CPI adjustment factor to the current rate to arrive at a weighted rate adjustment for the period. The maximum allowed increase in the disposal/tipping fee component is ten percent (10%). As noted above, this factor is the other component of the weighted formula to arrive at the final Solid Waste Collection Service Rate and thus will likely be different from the disposal tipping fee charge. 4. Each year, commencing no earlier than July 2015, annual refuse disposal rate adjustments are allowed, without requiring an additional Proposition 218 proceeding. 5. In accordance with Proposition 218 provisions, refuse rate adjustments for residential, multi-family, and commercial accounts (including CPI and/or refuse disposal site tipping fees) may be made for four years without requiring a subsequent public hearing each of the four fiscal years commencing with July 1, 2015 and continuing through and including July 1, In each subsequent year, EDCO shall, on behalf of the City, provide notice of the proposed increase in refuse rates at least 30 days prior to the increase taking effect. NPDES FEE An NPDES fee was established in 2004 in response to an unfunded state mandate to eliminate trash from storm water runoff. NPDES revenue is utilized to offset the program costs for compliance with NPDES requirements. This 5.6% fee is added to the base waste disposal rate. Analysis: City Resolution Number , approved as part of the Public Hearing Protest Vote, allows for a solid waste collection service rate adjustment without conducting an additional Proposition 218 protest hearing for fiscal year As specified in the
4 2016 EDCO Services Levels Page 4 Agreement, EDCO s right to adjust the solid waste collection service rate is contingent upon EDCO providing written notice containing a revised schedule of rates to the City Manager and confirmation by the City Council. On April 19, 2016, EDCO provided this notice to the City Manager for review. EDCO is seeking a rate adjustment effective August 1, Pursuant to the Agreement and the 2014 Rate Increase Resolution, rate adjustments are determined by using a (weighted) formula comprised of a Consumer Price Index (CPI) component and a disposal/tipping fee component. As shown in the Collection Fee Summary Table below, application of the rate formula containing the CPI and tipping fee adjustments raise residential refuse rates by a total of 3.92 percent, and multi-family and commercial accounts by 4.26 percent. Roll-off rates, (also known as the temporary bin or dumpster rentals used for home or tenant improvements) are increasing by 7.47 percent to $58.56 per ton from $54.49 per ton. Type of Service FY EDCO Solid Waste Collection Fee Summary Table FY Requested Increase FY Monthly Rate ($) 1.46% CPI Weighted Increase (%) Tipping Fee Weighted Increase (%) Overall Weighted Increase (%) FY Monthly Rate ($) Single Family $ % 2.46% 3.92% $15.23 Multi-family $ % 2.95% 4.26% $61.09 Commercial $ % 2.95% 4.26% $64.82 Note: The NPDES Storm water Trash Fee is included in the base rates shown on this table. Staff has reviewed the documentation submitted by EDCO verifying this requested rate increase. Staff also retained an independent financial consultant to further assist in analysis of this documentation. The analysis concluded that the requested CIP component was consistent with the published CPI for Los Angeles County and the tipping fee component increases have been confirmed. Accordingly, the City confirms that requested solid disposal rate adjustment is within the requirements as set forth in the Agreement and 2014 Proposition 218 rate increase resolution. If approved, the single-family residential customer s total monthly charge will increase by $0.57 per month effective August 1, Exhibit A shows the current and proposed rates for the additional levels of service to City customers. Other charges, such as those for an additional cart, are not shown in the tables, but are available upon request. BENCHMARK SURVEY OF SOLID WASTE RATES Public Works staff conducted a benchmark survey of seven other cities to obtain their solid waste collection service rates. This information was used to compare Signal Hill
5 2016 EDCO Services Levels Page 5 rates for the most common levels of service. The table below shows the City of Signal Hill s proposed rates remain competitive in comparison to other cities, with the residential monthly rates the lowest of the eight cities shown. Residential Rate Survey Table City Signal Hill $14.66 $15.23 South Gate $15.24 $15.24 Paramount $16.95 $17.29 Downey $17.31 $17.58 Cerritos $17.36 $17.60 Bellflower $18.56 $18.56 Lakewood $19.16 $19.16 Long Beach $24.11 $24.11 In Signal Hill, residential rates include one cart for refuse and one cart for recycling. Multifamily and commercial rates are based on a customer service level of one 3-yard bin, collected one time per week. The rates shown in the Rate Survey Table are monthly rates. SCHEDULE OF IMPLEMENTATION California Government Code Section requires that customers be notified thirty days in advance of charging the rate new rates. Section of the code allows the refuse service to send out this advance notice with regular customer billing statements or through a separate rate notice to the customer billing address. Council confirmation of this rate adjustment on would allow EDCO to immediately mail out a rate increase notice announcing an effective date thirty days later. Reviewed: Terri Marsh Approved: Charlie Honeycutt Prepared by: Travis Brooks, Management Analyst
6 RESOLUTION NO xxxx A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, PURSUANT TO SIGNAL HILL MUNICIPAL CODE SECTION (I), ESTABLISHING MAXIMUM RATES FOR SOLID WASTE COLLECTION SERVICES FOR EACH RESIDENTIAL UNIT AND COMMERCIAL/INDUSTRIAL ESTABLISHMENT WHEREAS, effective February 2, 2010, the City of Signal Hill (City) entered into the Solid Waste Management Amended and Restated Agreement (Agreement) between the City and EDCO Disposal Corporation dba Signal Hill Waste and Recycling Services (EDCO); and WHEREAS, under the Agreement, EDCO is the exclusive franchise refuse hauler for the City and collects, transports, processes, and disposes of all solid waste and recyclables which are generated or accumulated within the City; and WHEREAS, the City Council of the City of Signal Hill held a noticed public protest hearing on September 2, 2014 and adopted Resolution No approving the solid waste collection services rate structure to be applied to rate increases until July 1, 2018, pursuant to the requirements under Proposition 218; and WHEREAS, at said public hearing, all interested persons were afforded the opportunity to protest the rate increases, and a majority protest was not received by the City Council; and WHEREAS, pursuant to the actions taken at the September 2, 2014 public hearing, solid waste collection services rate adjustments for residential, multi-family, and commercial accounts may be made for four years without requiring a subsequent public hearing each fiscal year commencing with July 1, 2015 and continuing through and including July 1, 2018 in the method approved at the September 2, 2014 public hearing; and Resolution No xxxx Page 1 of 4
7 WHEREAS, solid waste collection service rates may only be increased because of fee increases at solid waste disposal sites such as landfills, transfer stations, and material recovery facilities, cost of living adjustments, or because of extraordinary circumstances; and WHEREAS, EDCO s right to adjust the solid waste collection service rate is contingent upon EDCO providing written notice containing a revised schedule of rates to the City Manager; and WHEREAS, solid waste collection service rates are calculated in accordance with the rate formula established in the Agreement. The rate formula has two components: Refuse Disposal Fee and the Consumer Price Index (CPI) Adjustment; and WHEREAS, on April 19, 2016, EDCO provided written notice to the City Manager containing a revised schedule of rates and the proposed rate increase was reviewed and confirmed by the City to be in accordance with the rate formula established in the Agreement and approved at the September 2, 2014 public hearing; and WHEREAS, commencing August 1, 2016, residential, multi-family, and commercial rates charged by EDCO are increasing due to increased refuse disposal tipping fees at various solid waste disposal facilities and each rate is also increasing by a CPI adjustment of 1.46% and the tipping fee adjustment of 2.46%; and WHEREAS, the solid waste collection service rates are comprised of a base rate and a City NPDES Trash Fee. The NPDES Trash Fee is a fixed 5.6% fee of the base rate; and WHEREAS, Chapter (I) of the Signal Hill Municipal Code states that the maximum rate for solid waste collection services shall be established by resolution of the City Council; and Resolution No xxxx Page 2 of 4
8 WHEREAS, pursuant to Resolution , EDCO shall on behalf of the City, provide notice of the increase in refuse rates at least 30 days prior to the increase taking effect. The City Council will confirm the rate by resolution each year. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: Section 1. Effective thirty (30) days after notice of the increase in refuse rates is provided in accordance with Government Code 53756, the solid waste collection service rates for residential and multifamily units and commercial industrial establishments shall be adjusted according to the rate table attached hereto as Exhibit A of this Resolution by formula pursuant to the Agreement. The City hereby approves these fees and adjustments. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council this 28 th day of June ATTEST: LORI Y. WOODS MAYOR ROBERT D. COPELAND CITY CLERK Resolution No xxxx Page 3 of 4
9 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES )ss CITY OF SIGNAL HILL ) I, Robert D. Copeland, City Clerk of the City of Signal Hill, California, hereby certify that the foregoing Resolution No xxxx was adopted at a regular meeting of the City Council of the City of Signal Hill held on the 28 th day of June 2016, by the following vote. AYES: NOES: ABSTAIN: ABSENT: ROBERT D. COPELAND CITY CLERK Resolution No xxxx Page 4 of 4
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