CC 2024-11-12_11a South County Sanitary Rate Adjustment_PP
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Receive presentation on recommended adjustments to solid waste rates effective January 14, 2025
Set a public hearing for January 14, 2025, pursuant to Article XIIID of the California Constitution (Proposition 218)
Provide direction to issue 45-day notices to solid waste customers regarding rate adjustment public hearing and protest instructions
Recommended Action
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Executive Summary
Solid waste services are critical services and are required for health and safety as well as compliance with State laws
The City’s solid waste collection operations are contracted out to South County Sanitary Service (SCSS) and are funded through solid waste rates
Rate revenues are adjusted per the City’s rate setting methodology – every 3 years based on SCSS’ actual costs and otherwise annually by CPI
The City may authorize up to 5-years of solid waste rate adjustments at a time – there are no ongoing automatic adjustments outside of Council authorization
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Executive Summary
Existing rate adjustment methodology was established in 1994 and is outdated
The last cost-based adjustment occurred in 2022, with CPI adjustments in 2023 and 2024
SCSS submitted a cost-based rate adjustment application for 2025 per existing methodology and schedule
The City along 9 other Agencies in San Luis Obispo County and SCSS’ parent company (Waste Connections) all see benefit in a new approach to annual rate adjustments
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2025 Cost-Based Rate Adjustment
Projects future costs based on recent actual costs per audited financial statements
Increases in organics processing costs
Increases in landfill disposal costs
Inflation-related increases in collection costs
Removal of prior limitations on corporate overhead
Updated profit allowance
2025 Rate Adjustment and New Methodology
A doubling of post-collection costs for organics processing since 2022 due to updated costs for processing infrastructure to meet the requirements of Senate Bill (SB) 1383.
Market rate adjustment of post-collection costs for landfill disposal, which have remained flat since 2016. Landfill disposal costs have been below market at $41 per ton since 2016 and
will increase to a fair market cost of $70 per ton in 2025.
Cost-of-living changes in collection costs, which include labor, capital, operating expenses, insurance, and overhead costs, for 2025 increases over 2024 amounting to approximately 4.21%.
Additional costs for regional service enhancements
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2025 Cost Projections
2025 Rate Adjustment and New Methodology
A doubling of post-collection costs for organics processing since 2022 due to updated costs for processing infrastructure to meet the requirements of Senate Bill (SB) 1383.
Market rate adjustment of post-collection costs for landfill disposal, which have remained flat since 2016. Landfill disposal costs have been below market at $41 per ton since 2016 and
will increase to a fair market cost of $70 per ton in 2025.
Cost-of-living changes in collection costs, which include labor, capital, operating expenses, insurance, and overhead costs, for 2025 increases over 2024 amounting to approximately 4.21%.
Additional costs for regional service enhancements
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2025 Rate Adjustment Outcomes
2025 Rate Adjustment and New Methodology
A doubling of post-collection costs for organics processing since 2022 due to updated costs for processing infrastructure to meet the requirements of Senate Bill (SB) 1383.
Market rate adjustment of post-collection costs for landfill disposal, which have remained flat since 2016. Landfill disposal costs have been below market at $41 per ton since 2016 and
will increase to a fair market cost of $70 per ton in 2025.
Cost-of-living changes in collection costs, which include labor, capital, operating expenses, insurance, and overhead costs, for 2025 increases over 2024 amounting to approximately 4.21%.
Additional costs for regional service enhancements
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2025 Monthly Residential Rates
2025 Rate Adjustment and New Methodology
A doubling of post-collection costs for organics processing since 2022 due to updated costs for processing infrastructure to meet the requirements of Senate Bill (SB) 1383.
Market rate adjustment of post-collection costs for landfill disposal, which have remained flat since 2016. Landfill disposal costs have been below market at $41 per ton since 2016 and
will increase to a fair market cost of $70 per ton in 2025.
Cost-of-living changes in collection costs, which include labor, capital, operating expenses, insurance, and overhead costs, for 2025 increases over 2024 amounting to approximately 4.21%.
Additional costs for regional service enhancements
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Service Enhancements
Customer Assistance Program: 20% low-income discount provided to residential customers using 32-gallon cart service (or below) and using existing District practices on low-income relief
for their offered utility type services
Free Bulky Waste Collections: No charge collection for one bulky item during clean-up weeks
Annual Cart Exchange: Once annual exchange of a residential garbage, recycling, or organics cart per customer account
2025 Rate Adjustment and New Methodology
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2025 Rate Adjustment and New Methodology
Overall Look at Solid Waste Costs
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New Rate Adjustment Methodology
Enhances rate stability, predictability, fairness, transparency, ease of administration, and cost-effectiveness
Capped CPI adjustments to MCD Collection and Post-Collection Services – 2% floor, 5% ceiling with roll-overs
Revenue balancing mechanism – surplus or shortfall revenues carries forward to future years
Less frequent cost-based adjustments – no more frequently than every 5 years
Extraordinary Adjustments – E.g., CARB fleet electrification mandate
2025 Rate Adjustment and New Methodology
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Regional Comparison
Monthly 32-Gallon Cart Rates
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Regional Comparison
Monthly 64-Gallon Cart Rates
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Regional Comparison
Monthly 96-Gallon Cart Rates
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Regional Comparison
Monthly 2-CY Bin Rates
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Recommended Action
Receive presentation on recommended adjustments to solid waste rates effective January 14, 2025
Set a public hearing for January 14, 2025, pursuant to Article XIIID of the California Constitution (Proposition 218)
Provide direction to issue 45-day notices to solid waste customers regarding rate adjustment public hearing and protest instructions
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