Joint Special Council/BFPD
06/20/22 07:00 PM
Environmental Services
Jessica Reed
Public Hearing
Doc ID: 5009
COUNCIL RESOLUTION
AGENDA MATTER:
BURRTEC WASTE FRANCHISE AMENDMENT AND RATE UPDATES FOR SB 1383 PROGRAM
IMPLEMENTATION
EXECUTIVE SUMMARY:
SB 1383 requires that jurisdictions provide organic waste collection service to all residents and businesses, conduct education and outreach, meet procurement targets, establish a monitoring and enforcement program, establish an edible food recovery program, maintain a detailed implementation record, provide periodic reports, and plan for capacity in support of the State's plan to considerably reduce and recycle organic waste. SB 1383 is the most significant solid waste/recycling mandate in the last 30 years.
As the City's exclusive franchise hauler, Burrtec Waste will be providing assistance with implementation of the organics collection program and other regulatory compliance activities, which means that the current franchise agreement must be amended to reflect the services being provided in accordance with the law. Additionally, rates must be updated as a direct result of the changes in service requirements, as well as for the annual Consumer Price Index (CPI) adjustment pursuant to the existing franchise. If approved, the service changes and rates would be effective July 1, 2022.
DISCUSSION:
Senate Bill 1383 was signed into law in 2016, regulations were finalized in late 2020, and the mandates went into effect on January 1, 2022. The law sets aggressive targets, requiring Californians to reduce organic waste disposal by 75% by 2025 and increase edible food recovery by 20% by 2025.
On December 6, 2021, the City Council adopted Ordinance 983-2021, expressing its commitment to support the statewide efforts to reduce emissions of short-lived climate pollutants and mandating organic waste disposal reduction and recycling in our community.
The City of Barstow and other jurisdictions across the state continue to work diligently towards achieving compliance with SB 1383 and doing their part to protect the health of local communities and the environment via new programs. The City has an existing organics recycling program for commercial entities as required by AB 1826 and now with SB 1383, the requirements will be expanding to residents.
The City has conducted outreach and education to the community about the ordinance and proposed program via bill inserts, standalone mailers, a new web page, social media platforms, radio, presentations, and Channel 6 in preparation of this implementation.
Under the residential program, each single-family dwelling and each unit of multi-family dwellings of 2 to 4 units will be provided one (1) 35-gallon green barrel to collect source-separated organic waste (bagged food scraps and loose yard waste). Burrtec will provide weekly pickup of the organics on residents' regular trash & recycle pickup day and transport the material to its expanded Material Recovery Facility, Victor Valley Compost, where it will be processed into compost/mulch and sold to farmers, thereby giving back to the environment rather than causing adverse impacts. Burrtec is prepared to immediately deliver containers with program guides to all affected residents should this program be approved, and collection would begin on the regular service day following container delivery. Postcards are being mailed to residents to inform them of the pertinent information.
Joint Special Council/BFPD
06/20/22 07:00 PM
Environmental Services
Jessica Reed
Public Hearing
Doc ID: 5009
COUNCIL RESOLUTION
In addition to Burrtec providing the new residential organics route, which includes the collection, vehicle(s), equipment, containers, labor, and material processing, they will also be assisting with other obligations stipulated in the regulations, including but not limited to:
Education & Outreach Activities
o Burrtec will assist with the development and distribution of print and electronic material in English and Spanish, participate in community meetings and events, and provide information on the city’s programs when dealing with the public. Record Keeping and Reporting
o Burrtec will utilize a new, innovative software system to maintain all SB 1383 related activities to meet the regulations. City staff will have full access to the system at all times in order to view and/or update data as needed to achieve compliance. Procurement
o Burrtec will coordinate and cooperate with the City to meet its annual procurement target as required by the regulations, including holding periodic compost/mulch giveaway events.
Monitoring & Enforcement
o Burrtec will assist in meeting contamination monitoring requirements including conducting waste evaluations in a manner which complies with the law. They will assist the City with identification of any non-compliant accounts and communications with those responsible for achieving compliance.
Capacity Planning
o Burrtec will assist the City with preparing an Organic Waste Recycling Capacity Plan for San Bernardino County, who is responsible for leading the efforts to ensure jurisdictions within its boundaries are taking specific steps to guarantee access to capacity in the future.
Burrtec has demonstrated to the City and CalRecycle, their commitment to work collectively on developing a comprehensive SB 1383 compliance program designed to fulfill the state-mandated requirements. The program is a massive undertaking for jurisdictions and similarly, this is no simple task for haulers. A strong partnership is essential in taking this on; therefore, we must continue to work together to meet the regulations in the most efficient and cost-effective manner.
Although the State is imposing these extensive requirements upon jurisdictions, it is not providing the significant financial support needed to fully implement the many facets of the program, which means a rate increase is necessary in order to cover costs associated with these legal obligations.
Additionally, pursuant to the existing franchise, Burrtec may submit a request for rate review once a year, to include a gross adjustment of 100% of the percentage increase in the Consumer Price Index (CPI) for all urban consumers in the Los Angeles-Anaheim-Riverside area, for the previous 12 month period for which information is received from the U.S. Department of Labor, but not to exceed 5% per year. The proposed rate increase includes a CPI adjustment of 3.83% across all rate categories.
Pursuant to Article XIIID of the California Constitution, the City sent written notification of the proposed rate increase (Prop 218 Notice) to all owners of real property within its service area who would be directly liable to pay for trash collection services at least 45 days prior to the hearing. The notice included the basis upon which the rates were calculated, the reason for the proposed increase, and instructions on how to participate in the hearing.
Joint Special Council/BFPD
06/20/22 07:00 PM
Environmental Services
Jessica Reed
Public Hearing
Doc ID: 5009
COUNCIL RESOLUTION
The current proposed increase for standard residential service is of $8.02 per month and is based on the following factors:
A $0.57 per month increase for collection service based on the 2021 average CPI. The CPI is part of the service component of the hauler rate, which means even though the City bills it as part of the total rate, that portion gets paid to Burrtec each month for them to provide the collection service.
A $5.41 per month increase for SB 1383 implementation, which covers costs for additional collection, vehicle(s), equipment, containers, labor, and regulatory compliance activities. This is also part of the hauler service component.
A $0.60 per month increase in the franchise fee to reflect the CPI increase. Pursuant to the franchise agreement, the franchise fee is 10% of the total gross receipts; the money goes to the City and is used towards the costs associated with managing the franchise. Based on the approved rate structure stipulated in the contract, any time the service fee goes up, it will result in an increase to the franchise fee.
A $0.30 per month increase in the administrative fee to reflect the CPI increase. Pursuant to the franchise agreement, the administrative fee is 5% of the total gross receipts; the money goes to the City and is used towards the costs associated with administering the various solid waste & recycling programs. Based on the approved rate structure stipulated in the contract, any time the service fee goes up, it will result in an increase to the administrative fee. A $0.08 per month increase to the landfill disposal fee. A $1.06 per month increase for the cost of processing of the organic material into compost.
With that being said, in consideration of the significant financial impact, this increase would have on the community, particularly those fixed or low-income households, the City and Burrtec have negotiated an alternative option, which includes a 10-year extension of the franchise agreement, changing the term end date from August 31, 2033 to August 31, 2043. The extension would allow the City to spread program costs over a 3-year period, resulting in a significant decrease in the currently proposed rate adjustment while still enabling us to move forward with full SB 1383 implementation without delay.
Should the Council vote to approve the extended-term contract option (Option 2), the rate increase would go from $8.02 per month down to $2.82 per month.
Again, this program is mandated by State law, and should the City decide not to move forward with this item, we would be subject to penalties by the State of up to $10,000 per day. In order to avoid a noncompliance order and hefty fines, it is imperative that the Council take action on one of the two options being presented.
At this time, City staff is in favor of Option 2, as by spreading the costs over time, the incremental increase allows for a lesser burden on the ratepayer up front and provides a schedule for the customer to consider when planning their household budgets. Additionally, staff does not currently foresee any real potential to change haulers in the next 20 years, due to our geographical area and the presumably enormous undertaking that it would be to transfer the City’s well-established waste collection and recycling programs to another entity that would have no roots in Barstow.
Attached to this report are the following documents for review:
1. Resolution adopting the Second Amended and Restated Franchise Agreement and related exhibits
2. Redline of existing franchise agreement showing changes under the second amended restated Joint Special Council/BFPD
06/20/22 07:00 PM
Environmental Services
Jessica Reed
Public Hearing
Doc ID: 5009
COUNCIL RESOLUTION
agreement.
3. Clean version of the second amended and restated agreement with the existing term end date of August 31, 2033. (Option 1)
4. Clean version the of second amended and restated agreement with extended-term end date of August 31, 2043 (Option 2).
5. Copy of hearing notice for the rate increase
FISCAL IMPACT:
Cost for the Prop 218 notice is approximately $4,790.00 using AB 939 funds available in the FY 21-22 Budget. The proposed rate increase will result in an increase in franchise and administrative fee revenue for FY 22-23, as the City receives a franchise fee of 10% of all gross receipts excluding sewer fees, AB939/State Program Compliance Fees, and tipping fees, and an administrative fee of 5% of all gross receipts excluding the same.
RECOMMENDED ACTION:
Option 1. Adopt Resolution No. _____-2022 for the 2nd Amended and Restated Franchise Agreement with Burrtec Waste Industries, Inc., related exhibits and rate schedule at the existing term end date of August 31, 2033, and direct the City Clerk to handle the execution of the agreement; OR Option 2. Adopt Resolution No. ______-2022 for the 2nd Amended and Restated Franchise Agreement with Burrtec Waste Industries, Inc., related exhibits and rate schedule at the extended-term end date of August 31, 2043, and direct the City Clerk to handle the execution of the agreement.