Dublin City Council
August 20, 2024

Agenda Item 6.3
DATE: June 21, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Adoption of Rates for Garbage Collection, Disposal, and Recycling Services Provided by Amador Valley Industries and Establishing the 2022-23 Annual Assessment
Prepared by: Jay Baksa, Assistant Administrative Services Director EXECUTIVE SUMMARY:

The City Council will consider adopting two separate resolutions establishing the garbage rates effective July 1, 2022 and establishing the Fiscal Year 2022-23 refuse-related property tax assessment. The proposed rates include the costs associated with implementing California State Senate Bill (SB) 1383, which created regulations to increase the diversion of organic waste from landfills.

STAFF RECOMMENDATION:

Conduct a public hearing, deliberate, and adopt the Resolution Approving and Establishing the Collection of Minimum Residential Garbage and Recycling Service Fees for Fiscal Year 2022-23; and adopt the Resolution Amending the Schedule of Service Rates for Integrated Solid Waste Services.

FINANCIAL IMPACT:

The rate adjustment for the Fiscal Year 2022-23 will result in a 5.66% increase for all nonconstruction and demolition rates; 3.30% of the increase is attributed to the annual rate adjustment, with an additional 2.36% increase due to the additional services required of Amador Valley Industries (AVI) to ensure compliance with SB 1383’s requirements. The construction and demolition (C&D) rates will be adjusted by the annual rate adjustment, 3.30%, as those services are not affected by the additional SB 1383 related costs. The residential garbage and recycling service fees, which are collected on the Property Tax bill as an annual assessment, will increase by $2.17 per month on the required residential 32-gallon can to a total of $40.56 per month. The proposed Dublin commercial rate increases vary based on the service level selected. The proposed rate of $196.81 represents the average service level for a one-yard bin collected once per week.

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DESCRIPTION:

Background
In January 2005, the City executed an Agreement with Amador Valley Industries, LLC (AVI) for service that began July 1, 2005 and continued to June 30, 2020. On June 16, 2020, the City Council approved an Amended and Restated Agreement (Agreement) with AVI, which extended the term of the agreement until 2035, addressed capital equipment replacement needs and started incorporating local and state requirements. In addition, as part of the Amendment, a new rate model approach was agreed to that addresses annual rate adjustments, component cost separation, and regular financial reviews, to help deal with the volatility of the market in which haulers now operate.

FY 2022-23 Rate Adjustment
The rate adjustment for the FY 2022-2023 rates includes two separate components - 1) The Annual Rate Adjustment and 2) The SB 1383 Adjustment. Implementation of the requirements of SB 1383 will require additional services be provided as well as an increase in reporting requirements to ensure compliance with the regulations. Section 27 of the Agreement anticipated additional cost increases resulting from SB 1383 and provided that the City would adjust the rates to reflect those additional costs. As a result of these additional services and reporting requirements, the City and AVI, consistent with their obligation to “negotiate in good faith, a reasonable and appropriate compensation adjustment,” have been meeting over the past year to determine the best and most cost-effective way to implement these requirements. The terms and costs have been agreed upon by the City and AVI, and the proposed “SB 1383 Adjustment” reflects the result of that negotiation. In addition, the parties’ SB 1383-related negotiations under Section 27 of the Agreement have resulted in a proposed amendment to the Agreement. The proposed amendment has been agreed in principle by the parties, but it is currently subject to legal review by the City Attorney’s Office and AVI’s counsel, which is not anticipated to result in any changes to the 2022-2023 proposed rates. The Amendment will to be presented to the City Council at a future meeting for approval.

Annual Rate Adjustment
The current garbage rates became effective July 1, 2021. The Agreement with AVI provides a process for addressing the compensation generated from all rate classes on an annual basis. The Agreement establishes a total annual revenue requirement for AVI with the City retaining responsibility for establishing the rates for all categories. The Agreement contains a provision that rates must be reasonably forecasted to provide AVI with an appropriate level of compensation based on a formula detailed within the Agreement. The forecasting methodology compares customer counts between the two most recent calendar years to calculate revenue generation based on the level of services provided multiplied by the appropriate rates. Rates are adjusted as appropriate across all service sectors to meet the calculated revenue requirement as set forth by the rate model.

As required in the Agreement, the City has provided AVI with information showing the rate calculations and assumptions. Section 5.13.1 states “…the final decision of the rate structure rests solely with the City.” The proposed rate structure for Fiscal Year 2022-23 is estimated to meet the compensation requirement of $25,774,765. This compensation is possible as a result of a Attachment 3
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proposed 3.30% average increase to all categories. A detailed description of the methodology required by the Agreement is included as Attachment 4.

SB1383 Adjustment
Implementing the requirements of SB 1383 requires additional resources in two areas, organics collection and information reporting. Staff is recommending the following SB 1383 implementation costs, as agreed upon and in coordination with City Staff, AVI and the City’s consultant HF&H Consulting:

Cost Type Amount*
Carts (Organics) $96,882
Recycling/Reporting Coordinators $419,165
Organics Disposal $71,961
Total $588,008
*Includes City Fees
$96,882 –Additional organic carts, organic (food waste) pails and battery boxes. There are currently over 3,840 customers that do not subscribe to recycling/organic service. SB 1383 requires such customers to subscribe to recycling/organics service, and this will necessitate AVI’s purchase of additional collection carts.
$419,165 – One additional recycling coordinator to perform additional outreach audits, to ensure compliance and 1/2 (0.5) Full Time Equivalent (FTE) reporting coordinator to track and prepare the additional monthly/quarterly and annual reports to the City, County and State required by SB 1383. The costs include the purchase of an electric vehicle for the recycling coordinator use. $71,961 – AVI received notice from Waste Management that they would no longer accept commercial food waste material, due to the projected increase in organic waste because of SB 1383. This will require that commercial organic waste be taken to an alternate facility, which has a higher cost.

FY 2022-23 Adjustment (Annual Rate + SB 1383)
FY 2021-22 FY 2022-23 Annual
Adjustment (Only)
FY 2022-23 – Annual
Adjustment + SB
1383
Total Compensation $23,939,196 $25,774,765 $26,362,772
Residential Rates
(Monthly)
$38.39 $39.66 $40.56
Difference YOY ($) $1.27 $2.17
Difference (YOY) (%) 3.30% 5.66%
As previously mentioned, the residential service fees are collected on the Property Tax bill. Staff has included the SB 1383 costs with the FY 2022-23 rate adjustment, as any adjustment that Attachment 3
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occurs after June, would not go in effect until the following rate adjustment for FY 2023-24. The annual garbage assessment must be provided to the County, within a specified period, for the County to include the fee on that year’s tax roll. City Staff, AVI and HF&H are continuing to meet, as with any new program as large as SB 1383, the actual costs of implementation may change, and any addition fee adjustments, if necessary, will be included in future rate adjustments.

Detailed Comparison of Current and Proposed Rates
Attachment 5 compares the proposed rates to the current rates for service levels that represent a majority of the subscribers in the City. The proposed rates would be effective July 1, 2022.

Competitiveness of Dublin Rates with Neighboring Agencies Historically, Staff has included a comparison of the Dublin rates compared to rates charged for similar services in surrounding communities. This comparison has focused solely on the garbage rates, as historically, recycling and organic waste were seen as smaller complimentary services.

This is no longer true with the implementation of SB 1383, as well as other regional and statewide laws. Looking specifically at garbage rates no longer offers a clear “apples to apples” comparison.

For example, Livermore now charges recycling at 80% of the garbage rate, Castro Valley a rate of 71% the garbage rate, and San Ramon at 50%, where Dublin charges 25%. The same pattern is now occurring with Organic Waste, in which Dublin charges 50% of the garbage rate, but as regulations change and options for disposal become more limited these services have become more expensive and cities are adjusting for that reality.

Overall, Dublin remains competitive, and the services offered are at least comparable to, and are often better than, the surveyed cities especially when factoring the type of service (garbage, recycling, organics, etc.), that is being provided. The current comparison is included as Attachment 6 and in this year’s comparison Staff has included Castro Valley Sanitation District, in place of Pleasanton, to include three service areas, that offer similar services. The Pleasanton costs and cost structure have become an outlier in the Tri-Valley and when incorporating their costs into an “area average”, made it appear, that Dublin was significantly higher, when in reality Dublin was very competitive with the other two cities included (Livermore and San Ramon).

Minimum Residential Garbage Service
All properties in the City are required to subscribe and have a weekly minimum garbage service (Dublin Municipal Code Section 5.32). This minimum service includes weekly curbside collection of a 32-gallon garbage container; up to two organic waste carts, including food scraps (96 gallons each); up to two recycling carts (96 gallons each); recycling collection of used oil and filters; an annual household hazardous waste drop-off event; and three on-call bulky waste pick-ups per year. Residents desiring larger garbage carts are billed directly by AVI for the incremental rate difference. The City pays AVI for the service cost of the minimum residential service with monies collected from the property tax bill.

The City Council will need to establish the annual fee, which is collected with the property tax bill for residential properties, separately from the rates for other levels of service. The proposed fee for basic residential service for Fiscal Year 2022-23 is $486.72, which is collected in two installments on the property tax bill. This equates to $40.56 per month, which is $26.04 per year ($2.17 per month) more than the rate levied in Fiscal Year 2021-22, as shown here:

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Historical Annual Fee for Minimum Garbage Service Collected with Property Tax Bill
2020-21 2021-22
Proposed
2022-23
Annual
Change
Monthly
Change
$421.32 $460.68 $486.72 $26.04 $2.17
This base rate includes $0.45 per month to cover the cost associated with the collection being included on the property tax bill. These funds are not paid to AVI but are retained by the City to offset the administrative cost in preparing the tax roll. In addition, the cost of collection and delinquencies for the basic service is expected to be covered by prior year fund balance, penalties and prior year taxes collected by the County Tax Collector, and interest on funds held prior to payment to the Company.

Resolutions
Included in this Staff Report (Attachments 1-3) are the annual resolutions that, with City Council adoption, will establish the solid waste collection rates and the required minimum level of garbage service for the next fiscal year.

STRATEGIC PLAN INITIATIVE:

None.

NOTICING REQUIREMENTS/PUBLIC OUTREACH:

A notice was placed in the East Bay Times on June 11, 2022 and June 18, 2022, notifying the community of the City Council’s consideration of the proposed rates and the City Council Agenda was posted.

ATTACHMENTS:
1) Resolution Approving and Establishing the Collection of Minimum Residential Garbage and Recycling Service Fees for Fiscal Year 2022-23
2) Resolution Amending the Schedule of Service Rates for Integrated Solid Waste Services 3) Exhibit A to the Resolution – Proposed Adjustment to Garbage Company Rates 4) Methodology used for Fiscal Year 2022-23 Annual Garbage Rate Adjustment in Accordance with Agreement Between City of Dublin and Amador Valley Industries 5) Proposed vs. Current Rates
6) Local Area Rate Comparison
Attachment 3
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590 Ygnacio Valley Road, Suite 105
Walnut Creek, California 94596
Telephone:925/977-6950
August 13, 2024
Michelle Sung
Environmental Technician
City of Dublin
100 Civic Plaza
Dublin, CA 94568
Managing Tomorrow's Resources Today
Northern California
Southern California
www.hfh-consultants.com
Subject: Franchise Assignment Review- Amador Valley Industries, LLC. - FINAL REPORT Dear Michelle Sung:

HF&H Consultants, LLC (HF&H) is pleased to present the enclosed findings of HF&H's due diligence review ( Review) conducted for the City of Dublin ( City) focused on the potential assignment of the Amended and Restated Collection Service Agreement between the City and Amador Valley Industries, LLC (AVI) executed September 10, 2020 (Agreement) to Livermore Sanitation Inc., LLC (LSI), a company wholly owned by Waste Connections, Inc (Waste Connections). Although LSI is the acquirer and considered the assignee, LSI was recently acquired by Waste Connections and HF&H has focused its evaluation on Waste Connections as the parent company and the entity that owns LSI. This report presents the scope of our Review, the findings of our Review, and our recommended proposed conditions to the assignment of the Agreement based on our Review.

Sincerely,

HF&H CONSULTANTS, LLC
Rob Hilton
President
Attachment 4
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Attachment 1:

AVI Performance
Review
990
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Managing Tomorrow’s Resources Today
590 Ygnacio Valley Road, Suite 105 Northern California
Walnut Creek, California 94596 Southern California
Telephone: 925/977-6950 www.hfh-consultants.com
July 23, 2024
Michelle Sung
Environmental Technician
City of Dublin
100 Civic Plaza
Dublin, CA 94568
Subject: AVI and City of Dublin Performance Review – FINAL REPORT Dear Michelle Sung,
HF&H Consultants, LLC (HF&H) provides the enclosed report on our due diligence audit and performance review (Review) of the performance of Amador Valley Industries, LLC (AVI) during calendar year 2022.

HF&H evaluated AVI’s performance under: 1) the signed and executed Amended and Restated Collection Service Agreement (6th Amendment), between the City of Dublin (City) and AVI, and 2) the negotiated and unsigned Amended and Restated Collection Service Agreement (SB 1383 Amendment), for which AVI began receiving increased compensation beginning July 1, 2022 to meet the increased obligations under SB 1383. This report presents the scope of our due diligence review, the findings of our review, proposed conditions to the performance of AVI based on our review, and our recommendations.

Sincerely,

HF&H CONSULTANTS, LLC
Rob Hilton Dave Hilton
President Senior Project Manager
Sincerely,

HF&H CONSULTANTS, LLC
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EXECUTIVE SUMMARY
HF&H was engaged by the City of Dublin to complete a Performance Review (Review) of AVI in accordance with the Franchise Agreement(s), including the executed Amended and Restated Collection Service Agreement dated September 10, 2020 (6th Amendment) as well the negotiated but unsigned Amended and Restated Collection Service Agreement (SB 1383 Amendment) for which AVI was compensated. The period of this Review was for calendar year 2022 in order to review the most recently completed calendar year for ease of quarterly and calendar year annual report reviews. Additionally, this period was selected in order to review both the period prior to, and after, July 1, 2022, when compensation adjustments were made in order to implement new services in accordance with the SB 1383 Amendment.

HF&H performed the Review and analysis of AVI’s performance and compliance with the 6th Amendment and the SB 1383 Amendment in five key areas. The requirements and relevant sections of each Amendment and HF&H’s determination of compliance are summarized in the table below and the narrative immediately following the table, with the remainder of the report describing what was reviewed and the basis used to determine compliance.

Customer Service
Findings: HF&H’s review of AVI’s performance and adherence to customer service requirements suggested AVI has largely been properly documenting and reporting customer complaints in accordance with the 6th Amendment; however, the review revealed that AVI was not properly 993
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documenting and reporting customer complaints in accordance with the SB 1383 Amendment related to SB 1383 compliance.

Recommendations: HF&H recommends AVI review the reporting requirements detailed in the 6th Amendment as well as the additional requirements in the SB 1383 Amendment to identify the requirements and proactively manage customer service compliance to ensure Agreement standards are met.

Public Education and Outreach/Technical Assistance
Findings: HF&H’s review of AVI’s performance of public education and outreach activities, which included multiple sections and obligations in both the 6th Amendment and the SB 1383 Amendment, revealed each section reviewed had several requirements that were not being met.

Recommendations: HF&H recommends AVI align the framework of each Public Education and Outreach Plan (PEOP) with each specific requirement of the then-current Agreement to more clearly demonstrate the requirements are met and that the City and AVI develop quantitative metrics to establish what success means with regard to reaching outreach requirements.

Diversion and Facility Operations
Findings: HF&H’s review of AVI’s performance for Diversion and Facility Operations found that while AVI is in compliance with the use of approved facilities, it does not appear that AVI is on track to meet its diversion goals outlined in the SB 1383 Amendment.

Recommendations: HF&H recommends the City meet and confer with AVI to establish expectations around programs and outreach to achieve the diversion requirements stated in the 6th Amendment and SB 1383 Amendment moving forward.

Reports and Records
Findings: HF&H’s review of AVI’s performance regarding the submittal of recurring reports in both the 6th Amendment and the SB1383 Amendment revealed that timelines were missed on numerous occasions. HF&H’s review of AVI’s quarterly reports also revealed that AVI is not meeting the 50% diversion rate requirement prescribed in the SB 1383 Amendment.

Recommendations: HF&H recommends AVI submit a new template for the City to review and approve that cites and clearly identifies each reporting requirement under the SB 1383 Amendment. Any requirements left out from the 6th Amendment in the current reporting templates should be noted and included in the new template.

Notification Procedures
Findings: HF&H reviewed relevant materials on AVI staff, supervisors, and management internal protocols for monitoring AVI’s compliance with the requirements of the 6th Amendment and found that AVI is in compliance with regard to solving complaints within the number of days allowed.

Recommendations: The City should continue to ensure that AVI is in compliance with the SB 1383 Amendment. This includes timeliness of information request and any upon request material. 994
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Limitations of the Analysis
The scope of HF&H’s analysis was limited as follows:

A. HF&H’s Review is different in scope than an audit of financial statements; such audits are performed by the independent certified public accountants retained by AVI.

B. While the recommendations identify potential areas for improvement, the scope of work for the Review did not include development of specific remedies other than those incorporated into the amendments already under consideration and this report. 995
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PERFORMANCE REVIEW

1. Customer Service Analysis
The 6th Amendment and SB 1383 Amendment both establish specific performance standards on customer service, which must be performed by AVI. The SB 1383 Agreement included the same requirements as the 6th Amendment, as well as adding reporting requirements based on SB 1383 regulations such as complaints and detailed documentation on resolutions involving SB 1383 non-compliance. HF&H reviewed the 2022 quarterly reports, and more specifically, the customer service report to verify compliance with service quality, reliability, and customer service performance standards.

Findings
HF&H found that AVI is generally compliant with the customer service requirements, with the following exceptions:
• HF&H requested detailed data from AVI’s customer service log (Exhibit D, Section 2.C. of the SB 1383 Amendment). AVI did not provide a detailed list with the following information, that is required as part of the 6th Amendment: a summary of the type of complaints (e.g., missed pickups, scheduled cleanups, billing concerns, damage claims, SB 1383 non-compliance), number of complaints, complaint logs, the resolution of each complaint, including the timestamp of complaints and/or resolutions that may be seen on workorders. In accordance with Section

15.01.3 and 18.04.4 a customer call log should be provided upon request of the City. These requirements are part of the 6th Amendment and expanded in the SB 1383 Amendment to include SB 1383 non-compliance checks. In their response to the draft performance review report, AVI stated that their staff uses a City-approved template where the information requested in the template is provided on a monthly basis, however, did not provide any additional information documenting the template was approved by the City. To address these concerns, the City has agreed to provide AVI a template to use starting on the first day of the calendar month following the date the template is provided to AVI that will be considered compliant with the then-current reporting requirements.
• HF&H requested clarification from AVI on the operating hours for the local office. AVI confirmed that AVI’s office closes at 5:00 p.m., whereas Section 15.01 in the 6th Amendment requires the office be open until 6:00 p.m. The City has since confirmed that the closing time of 5:00 p.m. is acceptable. HF&H requested information on AVI’s response to missed calls and whether postcards sent to customers after three attempts. AVI validated that postcards are not sent, but proper protocols addressing missed calls are conducted in accordance with Section 15.01.4 of the 6th Amendment and SB 1383 Amendment.
• HF&H requested information on AVI’s training protocols for customer service representatives. AVI stated that they are working to update their training protocols to include training customer service representatives on common items and behaviors around the compost stream. • HF&H reviewed AVI’s website and it does not have a frequently asked questions section or map for collection schedule, as required by Section 15.01.5 of the 6th Amendment and SB 1383 Amendment.

Recommendations
HF&H recommends AVI review the 6th Amendment as well as the SB 1383 Amendment to identify the requirements and proactively manage customer service compliance to ensure Agreement standards are 996
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met. AVI needs to ensure that their website and physical office are in compliance with the office hours and other standards stated in the 6th Amendment and should only deviate with express written permission from the City. HF&H recommends the City provide AVI with a reporting template that is compliant with the 6th Amendment and SB 1383 Amendment on the date the template is provided for AVI’s use; provided, however, that the City makes no representations or guarantees that the report template will remain compliant if AVI makes any modifications, if the City requests additional information be reported, or any reporting requirements are included in the future. Additionally, HF&H recommends that the SB 1383 Amendment be updated to reflect any changes such as office hoursthat have been agreed upon, to ensure that AVI is in compliance with the contract.

HF&H recommends that AVI review the SB 1383 Amendment to proactively report SB 1383 complaints and non-compliances. AVI needs to document, at a minimum, for each complaint received: name and contact information of the complainant, if the incident is not submitted anonymously; identity of the alleged violator, if known; description of the alleged violation, including location(s) and all other relevant factors known; identity of any witnesses, if known; and, if requested by the City pursuant to Section

21.01.4, the date the Contractor conducted additional outreach or investigated the complaint (if applicable); documentation of the findings of the investigation; and, any photographic evidence collected during the investigation. Contractor shall include copies of all related reports submitted by Contractor to the City in accordance with Section 21.01.4 for the SB 1383 Amendment.

2. Public Education and Outreach Analysis
The SB 1383 Amendment establishes specific public education and outreach requirements to be performed by AVI. HF&H has crossed referenced the SB 1383 Amendment with the 6th Amendment to note where any requirements are or are not applied in both. This part of the Review was broken into nine separate sections:

1. Administrative requirements

2. Website

3. Special events

4. Schools

5. Single-family

6. Multi-family

7. Commercial

8. City facility

9. Upon request
For each section, HF&H reviewed newsletters, guides, Public Education and Outreach Annual Plans (PEOPs), monthly reports, and annual reports from 2022 that were submitted by AVI. Quarterly reports were used to identify the number of engagements AVI had with customers to offer educational and/or technical support, as well as to identify the number of non-collection tags that were distributed.

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Findings
Administrative Requirements
• Per Exhibit 8 of the both the SB 1383 Amendment t and the 6th Amendment, AVI’s education and outreach messaging plan focuses on introducing new programs to residents and businesses, as well as increasing awareness of the need to reduce, reuse, and recycle, and the importance of buying recycled content products. The residential, multi-family and commercial plans had no messaging on the importance of buying recycled content products with the latter two plans omitted the correct setout instructions.
• AVI’s program related information in public education and outreach materials was deficient as it did not include required messaging around junk mail reduction, grass recycling, or backyard composting in accordance with both the 6th Amendment and the SB 1383 Amendment.

Website Activities
• AVI met the requirements for hosting and maintaining a website, per the 6th Amendment and the SB 1383 Amendment.
• During the 2022 review period, AVI did not meet the requirements for posting residential rates on the website per the 6th Amendment and the SB 1383 Amendment. Residential rates have since been updated on the website four months after rates came into effect (completed December 2023).

Special Events Education and Outreach Activities
• Pursuant to Section 16.04 of the 6th Amendment and the SB 1383 Amendment, “AVI shall make available up to ten percent (10%) of the Compost and Mulch product (based on the weight of Organic Waste Collected of the previous year) to the City in the following categories: (i) bulk Compost and Mulch for use in City parks and City facilities; and (ii) bulk Compost and Mulch for distribution to City residents at one (1) recurring annual Compost give-away event.” HF&H determined that AVI had not been proactively tracking or reporting on the Compost or Mulch product that was required to be made available to the City, however, AVI did provide internal tracking information which documented one event held on June 18, where forty-four cubic yards were given away which was the amount requested by the City. AVI and the City agree that Compost and Mulch product has been provided when requested and the City has requested AVI begin more complete reporting on the amount of Compost and Mulch product available to the City and the amount of Compost and Mulch provided upon City request. • Exhibit B4.8.D of the SB 1383 Amendment states AVI shall prepare and pay for publication of all advertisements and public announcements regarding HHW events. As part of HF&H’s initial request, AVI provided only a sample drop-off day postcard for 2023. After AVI reviewed the draft performance review report, AVI sent a postcard for the 6/18/2022 event that was during the correct period. AVI did not provide a mailing date or customer list for review as CleanEarth is responsible for scheduling and mailing the postcards.

Schools Education and Outreach Activities
• Section 16.02.3 of the SB 1383 Amendment and 6th Amendmentstate that AVI shall provide public schools with a standardized classroom recycling bin for every classroom and office in the district that is imprinted with the logo of the school district and the words "Dublin Schools Recycle." AVI 998
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has not provided information regarding the recycling bins program at Dublin schools for 2022. In their response to the draft performance review report, AVI stated that the schools were not interested in participating, however, no documentation was provided, and AVI asserted there is no contract requirement to continue to offer the program continually since 2005. While the City indicated they do not agree with AVI’s interpretation of this provision, the City is agreeable to removing this requirement.
• Section 16.02.2 of the SB 1383 Amendment and 6th Amendmentstate that AVI shall work with the City's public school district to implement the "Go Green Initiative," as part of its public education programs. AVI provides education and outreach to City schools through planned programs and upon request activities. The 2022 school education program was partially met. AVI continued to collaborate with the school district and attended a meeting with all sites to survey the current waste program and needs. However, site visits and outreach activities were not properly documented due to a recycling coordinator staffing change.

Single Family Education and Outreach Activities
• Exhibit 8.2.B of the SB 1383 Amendment and Exhibit 8 of the 6th Amendment state that single family newsletters for quarters one through four are available online. AVI did not include frequently asked questions (and answers), status reports on diversion levels, information regarding what is being done with the recyclables collected, or information about hard-to-market materials.
• Exhibit B1.5 of the SB 1383 Amendment and Section 8.07.3 of the 6th Amendment state “Contractor shall promote, manage, staff, operate and administer the Large Item Collection Service in a manner designed to encourage its wide use by Residential occupants.” HF&H reviewed and was not able to find any advertisements or other related promotional information regarding the large item collection service in the newsletters.

Multi Family Education and Outreach Activities
• Section 16.03 of the SB 1383 Amendment and Section 8.07.3 of the 6th Amendment both require AVI to provide annual collection service notices and manage and promote their services. HF&H requested the program notification direct mailing, distribution date, and distribution list or quantities of flyers and service notices. AVI was not able to provide this information. • Section 3.07.11 of the SB 1383 Amendment states information is to be made available on the AVI website regarding the multi-family household battery collection boxes. No information on household battery collection boxes was made available on AVI’s website. AVI provided quarter two through four 2022 newsletters on their website, with only the quarter two newsletter containing information on battery collection. HF&H noted the quarter one’s newsletter was not available on AVI’s website. While this requirement is not part of the 6th Amendment, it is a requirement under the SB1383 Amendment.
• Section 16.03 of both Amendments states each calendar year during the term of this agreement, the Contractor shall publish and distribute separate notices to all MFD Service Units regarding the MFD Collection Service programs. AVI was able to provide information on multi-family recycling door hangers and flyers regarding regular pickup reminders, bulky item pick up, and recycling but it was not clear to HF&H how, when, and in what quantity hangers/flyers were distributed.

Information on distribution of door hangers and flyers are included in the quarterly report, if any, for the reporting period.
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Commercial Education and Outreach Activities
• Section 10.02 of the SB 1383 Amendment and the 6th Amendment both state “CONTRACTOR’S full-time Recycling Coordinator shall develop an annual Commercial Waste audit plan and submit the plan to the CITY for review no later than July 1, annually. At a minimum, the plan shall include the audit of at least two (2) and as many as five (5) Commercial Service Units per day depending on the needs of the commercial community, averaging a minimum of forty-four (44) per month.” HF&H reviewed the records of commercial waste audits and found that AVI did not meet the requirements for at least two and as many as five commercial service units per day. AVI reported challenges in meeting the quarterly auditing and outreach targets due to a staffing change in the recycling coordinator role, but AVI was compensated for the position and to perform this work despite any turnover and/or vacancies.
• Section 3.07.12 of the SB 1383 Amendment and Section 3.07.10 of the 6th Amendment both state AVI and the City shall work cooperatively to implement ongoing educational and operational changes to reduce customers’ use of compostable plastic bags along with other contamination in the commercial organic materials. AVI did not provide information to demonstrate compliance with regard to compostable plastics.

Upon Request
• HF&H requested information from the City regarding AVI's submittal of information related to upon request activities. The City stated that AVI has been responsive to City requests for information, but that certain requests, such as tonnage and subscription data, take longer. The current agreement does not establish a time frame of when requested data should be received, but in the SB 1383 Amendment, new language has been included to specify submission dates of reports and response time of requested data.

Recommendations
HF&H recommends AVI align each Public Education and Outreach Annual Plan (PEOP) with the specific requirements of the Agreement in order to more clearly identify compliance with the required components of the PEOPs.

HF&H recommends the City regularly review the time of submission of PEOP to ensure requirements are met. HF&H also recommends that AVI work with the City to more proactively communicate when AVI is planning and holding events related to public education and outreach requirements.

HF&H recommends that AVI should offer programs to schools as required by both the 6th Amendment and the SB1383 Amendment. If the schools decline these services, AVI should document the reason why and continue to offer annually. AVI should regularly meet with the City to discuss how to better understand trends and how to further support school programs.

HF&H recommends the City and AVI meet and discuss priorities around campaigns and outreach to put forward awareness of the HHW and battery program.

HF&H recommends that metrics be developed as part of each PEOP for measuring the success of the education and outreach programs provided by AVI and include a section within each quarterly report that compares AVI’s performance against these metrics. These metrics may include, for example, increased diversion program participation in response to various targeted education and outreach campaigns. 1000
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Finally, HF&H recommends the City evaluate whether AVI has fulfilled all of its obligations under the both the 6th Amendment and the SB 1383 Amendment related to education and outreach activities and whether more explicit budgets and activities need to be identified and reviewed to ensure AVI completes these specific activities or consider whether the City should remove the obligations and compensation for these services and bring the services in house or find another contractor to perform them. 1001
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3. Diversion and Facilities Use Analysis
HF&H reviewed AVI’s quarterly reports from 2022. Section 6.01 of the 6th Amendment states “Contractor shall use commercially reasonable efforts to achieve the following minimum annual Diversion rates by the Agreement Year beginning July 1, 2025,” which is also required under the SB1383 Amendment.” With 75% by 2025 diversion from Single-Family, Multi-Family, and Commercial customers being the target, based on the diversion numbers below it does not appear that AVI is trending in the direction to achieve these diversion goals.

Findings
Table 1: HF&H Diversion Review
Reports 75% Reached? Diversion % Comments
CY Q1 2022 No 41.72% RES 49%, COM 32%
January 2022 No 42.51% RES 49%, COM 32%
February 2022 No 41.44% RES 48%, COM 32%
March 2022 No 41.18% RES 48%, COM 31%
Q2 2022 No 41.94% RES 49%, COM 32%
April 2022 No 42.57% RES 50%, COM 32%
May 2022 No 41.91% RES 48%, COM 33%
June 2022 No 41.35% RES 48%, COM 33%
Q3 2022 No 41.09% RES 48%, COM 32%
July 2022 No 41.58% RES 48%, COM 33%
August 2022 No 41.07% RES 48%, COM 32%
September 2022 No 40.65% RES 47%, COM 32%
Q4 2022 No 41.25% RES 47%, COM 33%
October 2022 No 39.67% RES 45%, COM 32%
November 2022 No 41.37% RES 47%, COM 33%
December 2022 No 42.59% RES 50%, COM 33%
CY Annual 2022 No 42.96% RES 48%, COM 32%
FY Annual 2022 No 42.19% RES 49%, COM 32%
Diversion
• The average diversion rate of the residential sector is 48% while commercial/multi-family was lower at 32%. Based on this data, it does not appear that AVI is on track to achieve the diversion goal of 75% diversion by the Agreement Year beginning July 1, 2025, as required in both the 6th Amendment and the SB1383 Amendment.

Facility
• AVI is in compliance with the facilities listed in the 6th Amendment and SB 1383 Amendment based on review of weight tickets. AVI disposes of solid waste at Altamont Landfill. AVI processes organic materials at Blossom Valley. AVI recyclables are sent to the Alameda County Recovery Facility 1002
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located in San Leandro. Material tonnages disposed at which facilities are not listed in the monthly, quarterly, or annual reports for CY 2022.

Weight Tickets
• HF&H randomly selected 40 scale tickets to review. HF&H requested invoices to confirm the correct rate was charged per the rate sheets. No incorrect billing was found.

Recommendation
AVI must meet the minimum diversion rate stated in the 6th Amendment and SB 1383 Amendment and work with the City to develop a compliance plan to ensure AVI meets the requirement. HF&H recommends the City meet with AVI to re-establish expectations around programs and outreach to achieve the diversion requirements stated in the 6th Amendment and SB 1383 Amendment, including establishing quantitative performance measures around the annual PEOP. It may be beneficial to involve outside firms to perform deeper analysis of diversion trends and support the creation of new or more targeted outreach campaigns.

4. Reporting and Record Standards Analysis
HF&H reviewed dates and times reports were sent to indicate when AVI submitted reports to the City and compared those submission dates and times to the deadlines indicated in the 6th Amendment and the SB 1383 Amendment. HF&H reviewed monthly and quarterly reports for 2022. Additionally, AVI submitted two annual reports, one for Calendar year 2022 and one for fiscal year 2022. AVI did two overlapping reports due to schedules are realigning in the Agreement. In their response to the draft performance review report, AVI stated that the reports have been provided based on a template provided to AVI and that the City has never identified any issues with the reporting. AVI did not provide any additional information documenting the template was approved by the City. As stated in Section 1 of this Report, the City has agreed to provide AVI a template to use starting on the first day of the calendar month following the date the template is provided to AVI that will be considered compliant with the then-current reporting requirements.

When reviewing monthly, quarterly, and annual reports, HF&H noted any inaccuracies from the requirements outlined in Section 18 of the 6th Amendment and Exhibit D of the SB 1383 Amendment and, despite City acceptance, and included them in the findings below.

Findings
Monthly Reports
HF&H reviewed the monthly reporting requirements in Section 18.04 of the 6th Amendment and noted the following items in the reports:
• The solid waste data was missing from the City service and construction and demolition units. The report does not list City tonnage collected and disposed of. In the monthly diversion report, City tonnage is combined with commercial tonnage, but that language is not consistent throughout the report. In their response to the draft performance review report, AVI stated they have never been asked to separate this data; however, this data was required as part of the 6th Amendment regardless of any separate City request.
• In the recycling data, Single-Family Dwellings (SFD) and Multi-Family Dwellings (MFD) are combined in the monthly services report (Exhibit 2, Monthly Tonnage Report). AVI may have combined City data with commercial, but it is not clear throughout the report. Participation rates 1003
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relative to the total number of service units by service unit type is not included in the reports. In their response to the draft performance review report, AVI stated they have never been asked to separate this data; however, this data was required as part of the 6th Amendment regardless of any separate City request..
• AVI informed HF&H that the school’s calendar year 2022 overview contained information about visits and meetings were limited due to staff turnover at AVI. • Several of the reports were one to three days late based on the dates of their cover letter.

Per Exhibit D.2 of the SB 1383 Amendment, AVI is required to report the following additional information:
• The organic waste report - participation rates relative to weekly set outs, average daily gross tons, and the average daily number of set outs.
• The tonnage summary - tonnage by approved facility and facility type. • The customer service log - - section detailing SB 1383 non-compliance complaints. • The residual tonnage report - residue level and tonnage for all discarded materials processed, listed separately by material type collected and approved facility used. • The recycling markets report - source separated recyclable materials tonnage by commodity, average commodity values, and processed residue tonnage. • The contamination monitoring report - a description of AVI’s process for determining prohibited container contaminants, a summary of contamination notices, and documentation of the total number of containers with contents disposed of due to observed prohibited contaminants.

Quarterly Reports
HF&H reviewed the quarterly reporting requirements in Section 18.05 of the 6th Amendment and noted the following items in the reports:
• The tonnage information is not compared to the corresponding tonnage data from the prior year’s comparable period.
• Future event information is reported in the public education and information activities, but there is no summary of historical activities.
• The total, but not the average commercial audit information is included in reports. The results of the commercial waste audits had not been reported at the time of the initial review. A sample of the commercial waste audits were provided on 5/1/2024.

Per Exhibit D.3 of the SB 1383 Amendment, AVI is required to report the following additional information:
• The progress with implementing SB 1383 programs, and descriptions of any opportunities identified or challenges faced, including plans for addressing such challenges. • A service evaluation report, including market factors, publicity conducted and needs, and descriptions of processed material loads rejected for sale. • Documentation of all materials exported out of State, as provided in 14 CRR Sections 18800 through 18813.
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Annual Reports
HF&H reviewed the annual reporting requirements in Section 18.06 of the 6th Amendment and noted the following items in the annual reports:
• Quarterly reports are summarized by the year and not by quarter. • The annual report does not include the Summary of Historical and Proposed Activities. • Organic Waste tonnage data is not listed by processing facility. • The Used Oil Program cost financial data is not segregated between SFD and MFD. The financial data does not include three of the four categories (administration, collection, and transportation). • The diversion plan is missing from the annual report. • The large item report is missing the disposal facility name and location, average price received or paid per ton and total revenue, expenditures, and total net costs or proceeds. • The textiles report is missing the disposal facility name and location, average price received or paid per ton and total revenue, expenditures, and total net costs or proceeds. • The special events report omits historical comparison of annual events (Holiday Tree Collection) and the average of all Agreement years.

Per Exhibit D.4 of the SB 1383 Amendment, AVI is required to report the following additional information:
• The documentation demonstrating that the actual percent of the material removed for landfill disposal that is organic waste is less than the percent specified in in either 14 CCR Section 17409.5.8(c)(2) or 17409.5.8(c)(3), whichever is applicable. If applicable, AVI will demonstrate compliance with the digestate handling requirements specified in 14 CCR Section 17896.5 • The summary of all data provided in the tonnage report sections, including totals and averages from the quarterly and annual data, and subscription data. • The total amount of mulch and/or compost product provided to the City. • The results of the City’s annual compost give-away event. • The total amount of SB 1383 renewable natural gas procured for use in vehicles including copies of any receipts, invoices, or other similar documentation. • The total number of SB 1383 regulatory non-compliance complaints that were received, and the total number investigated. This report will also include the total number of contamination notices categorized by sector, and copies of all contamination notices and educational materials issued to non-compliant generators.
• The list of all vehicles used in performing services under the Agreement including the license plate number, VIN, make, model, model year, purchase date, engine overhaul/rebuild date if applicable, and mileage on June 30.
• The following on education and outreach:
o A copy of all education and outreach materials;
o A record of the distribution date and recipients of direct, in-person contact; o A record of the date, number of recipients, and a copy of the information distributed through mailings or bill inserts;
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o A copy of electronic media, including the dates, posted to social media, e-mail communications, or other electronic messages;
o A summary of the status of the annual education and outreach plan; o A record of all technical assistance efforts;
o A list of all languages that education materials were provided in; and, o A copy of all special event reports.
• The documentation of written notification if the organic waste processing facility has the capability to process and recover compostable plastics throughout the term of the Agreement.

Additional Reports
Per the SB 1383 Amendment, AVI may be required to report the following information at the City’s request:
• Copies of AVI’s AB 901 reports;
• Incident reports;
• Facility capacity planning information;
• Excuse from performance; and,
• Customized reports from records AVI are required to maintain.

Recommendations
• AVI and the City should meet and discuss the importance and timeliness of certain reporting requirements and if current requirements need to be revised to better understand customer information and activity in order to create more effective programs to increase diversion. • AVI should submit a new template for the City to approve that will record and report the all the requirements in the SB 1383 Amendment, provided, however, that City approval of such a template does not relieve AVI of the responsibility to comply with the provisions of the contract.

Additionally, any requirements left out from the 6th Amendment in the current reporting templates should be noted and included in the new template.

5. Notification Procedures Analysis
HF&H reviewed relevant materials on AVI staff, supervisors, and management internal protocols for monitoring AVI’s compliance with the requirements of the 6th Amendment. HF&H obtained copies of notices transmitted to customers related to the specific noticing requirements to ensure that such notices were compliant with the requirements of the 6th Amendment.

Findings
• HF&H sampled 60 notification procedures for customer resolution from 2022 and noted AVI is in compliance with the number of days taken to resolve the complaint. • The City has notified HF&H of the slow response times from AVI. The 6th Amendment does not state required dates of submission or timeline for responses. In the SB 1383 Amendment, Section 18 and Exhibit D states the required timelines and/or dates of all requested submissions and data to the City.
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Recommendation
The City should continue to ensure that AVI is in compliance with the SB 1383 Amendment. This includes established timelines for resolving complaints and for responding to City requests for additional information and/or supporting materials.
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Attachment 2:

AVI Compensation
Review
1008
1009
Managing Tomorrow’s Resources Today
590 Ygnacio Valley Road, Suite 105 Northern California
Walnut Creek, California 94596 Southern California
Telephone: 925/977-6950 www.hfh-consultants.com

MEMORANDUM
To: Shannan Young, Environmental and Sustainability Manager – City of Dublin From: Rob Hilton, President – HF&H Consultants
Dave Hilton, Senior Project Manager – HF&H Consultants
Copy to: Debbie Jeffery, Manager – AVI
Date: June 6, 2024
Subject: Review of AVI’s Compensation – Final Report
HF&H Consultants, LLC (HF&H) provides the enclosed report on our due diligence compensation review (Review) to verify Amador Valley Industries, LLC (AVI)’s compensation under the Amended and Restated Collection Service Agreement (Agreement) between the City of Dublin (City) and AVI. This report presents the scope of our due diligence review, the findings of our review, proposed conditions to the compensation of AVI based on our review, and our recommendations.

Scope of Work
We performed the following procedures as part of our review:
• Reviewed AVI’s actual eligible costs during the prior rate period (FY 22/23), including the review of financial statements, tonnage reports, route operation statistics, and other supporting documentation to verify the accuracy and practicality of the costs associated with the Agreement; • Verified the revenue generated from customer billings in order to assess the reasonableness and accuracy of the gross rate revenues as reported by AVI; • Reviewed the current customer subscription data received from AVI multiplied by the current rated in order to calculate revenue received;
• Tested a limited judgement sample of commercial and residential customer accounts to verify the rates matched the current City-approved rate schedules; • Applied the RRI methodology to convert 2023/24 eligible expenses into 2024/25 dollars; and, • Determined the City’s revenue requirement.

Findings
HF&H reviewed financial statements from AVI to verify AVI’s compensation is consistent with an operating ratio not greater than 90%. This included reviewing financial statements, tonnage reports, route operation 1010
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statistics, customer subscription, and other supporting documents. HF&H compared these financial ratios to what is allowed. Based on this review and the information obtained for AVI, HF&H has provided the results of this analysis to ensure that rate payers are not over-funding this operating ratio through collection rates.

HF&H reviewed the following sections described below:

Cost and Expenses Determination
Financial Statement
HF&H reviewed AVI’s audit financial and verified the amounts with supporting documentation. HF&H reviewed operating expenses in the audited financials to actuals for the year to test the audited financials were accurate. We found no discrepancies during this section of the review.

City Fees
Section 4.04 of the Agreement states Contractor shall make payment to the City of a franchise fee, administrative fee, and such other fees as may be specified. Monthly fee remittances to the City were recalculated and verified per the language in the Agreement. We found no discrepancies during this section of the review.

Figure 1: Summary of Fees Recalculated by HF&H
Tonnage Reports
HF&H reviewed AVI’s annual and quarterly tonnage reports to the City and verified the amounts with supporting documentation. HF&H recalculated the tonnages in the reports and selected 40 weight tickets Date Franchise Fee Administration
Fee
C&D Fee Total City Fees
Jul-22 $ 235,209 $ 100,701 $ 43,094 $ 379,005
Aug-22 244,302 104,594 42,129 391,025
Sep-22 233,662 100,039 69,119 402,820
Oct-22 294,646 126,148 51,049 471,844
Nov-22 254,444 108,936 44,506 407,885
Dec-22 232,311 99,460 51,156 382,928
Jan-23 921,892 394,694 38,756 1,355,342
Feb-23 259,306 111,018 33,329 403,652
Mar-23 326,979 139,991 22,766 489,735
Apr-23 253,144 108,380 47,380 408,903
May-23 913,823 391,239 25,578 1,330,640
Jun-23 233,543 99,988 49,110 382,640
Jul-23 258,916 110,851 11,068 380,835
Aug-23 240,537 102,982 38,565 382,085
Sep-23 266,976 114,301 44,589 425,865
Total $ 5,169,689 $ 2,213,322 $ 612,194 $ 7,995,205
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to verify the correct weight and tipping fee is applied. AVI provided the receipt with the correct tonnage and rate amounts. We found no discrepancies during this section of the review.

Route Operation Statistics
HF&H reviewed AVI’ssubmitted operation statistics form for reasonableness and accuracy. We compared approximate jurisdictions to AVI’s account, labor, and route information. Account information matched the subscription data provided. We reviewed route information for reasonableness by comparing route hours and the efficiency of lifts per route to jurisdictions with similar ratios. We found no discrepancies during this section of the review.

Revenue Review
HF&H reviewed customer services data to determine the accuracy of gross rate revenue reported by AVI.

We utilized customer subscription data from AVI and multiplied by the 2022 service rate to verify AVI’s audited financial. HF&H reviewed the reasonableness of AVI’s method of calculating revenue and performed our own build-up of rate revenue based on actual fiscal year 2022-2023 revenue and determined the accuracy. We found no discrepancies during this section of the review.

Billing Review
HF&H reviewed 45 total invoices provided by AVI to test for systemic billing errors. We tested 15 residential, 15 multi-family, and 15 commercial class customers and noted the correct charge for each line item. We found no discrepancies during this section of the review.

Figure 2: Billing Testing
Contractor Compensation
HF&H worked with AVI to adjust the current fiscal year (FY) 2022 – 2023 to reflect the audited financials and removal of excess profit. Figure 3 shows prior years rate application with HF&H’s agreed compensation amounts in FY 6/30/23 column. AVI is in agreement with HF&H regarding the methodology of the financial review and the calculation of projected compensation elements moving on.

Exhibit 2 states the methodology used in calculating the following eight elements: 1. Collection Compensation Element; 2. Commercial Recycling Incentive Element; 3. Disposal Compensation Element;

4. Container Compensation Element; 5. Recycling Material Diversion Compensation Element 6. Organic Waste Diversion Compensation Element; 7. Vehicle and Administration Element; 8. Fee Compensation Customers
Accounts
Tested
Number of
Errors
Residential 15 0
Mulit-Family 15 0
Commercial 15 0
Total 45 0
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Element. HF&H review AVI’s FY2023 and FY2024 rate application. No discrepancies in calculation were found during this section of the review.

Figure 3: HF&H True Up Compensation
For Rate Change Effective 7/1/2022 7/1/2023
Approved Budget for FY 6/30/23 FY 6/30/24
Current Needed
Calculated
Contractor
Contractor Compensation Contractor Compensation
Compensation Ref. Page 2
Collection Compensation Element Excluding Officer Compensation $ 13,537,422 $ 14,892,240 Collection Compensation Element - Officers Compensation Frozen 840,000 840,000 Commercial Recycling Compensation Element 421,795 $451,194 Commercial Recycling Compensation Element Reduction Amount Frozen (421,795) (421,795) Disposal Compensation Element Standard Formula 1,353,693 1,338,234 Container Compensation Element 321,578 330,711
Recycling Material Diversion Compensation Element
Recyclable Material Processing Cost (7/1/21- 6/30/22) 1,216,902 Recyclable Material Processing Cost (7/1/22-6/30/23) Calc 1,196,893 Organics Compensation Element All ORG Calc 1,101,963 653,628 Commercial Food Waste Compensation Element Calc - 336,200 Vehicle & Admininistration Asset Replacement Element 1,611,549 1,611,549 Total Costs before Franchise Fees 19,983,107 21,228,854

6. Fee Compensation Element Current Needed
Franchise Fee 16.35% 16.35%
Admin Fee 7.00% 7.00%
Total 23.35% 23.35% 6,087,483 6,466,976
7 Total Calculated Compensation 26,070,590 27,695,830
Add Cost of Mid Year Dump Rate Changes
Less Former City Organic Subsidy
Rounding -
Required Compensation from Rates $ 26,070,590 $ 27,695,830 Forecasted Revenue using Current Rates and Dec. 2022 Census (see page 18) 26,873,349 Required Rate Increase $ 822,481
Average Rate Increase Percentage 3.06%
AVI Rate Model
HFH True Up Step 1
City Fees
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Methodology of Rate Adjustment
The following sections summarizes HF&H’s process in calculating the rate adjustment factor. We adjusted the financials to address the true up necessary from the compensation review. HF&H follows the methodology set forth by the Agreement to forecast FY24-2025 rate adjustment. HF&H recommends a

0.92% in rate adjustment following methodology of AVI’s FY2024 rate application:

Refuse Rate Index Adjustment (RRI)
Article 5.05.1.1 of the Agreement contains a detailed methodology for incorporating index and labor changes in the annual rate adjustment to find the value of the RRI factor. The calculation begins with the percent change in Labor according to the Teamster Union Local 70 Contract, vehicle maintenance index, and consumer index. We found the operating cost categories using the audited financials. The cost of the total expenses is used to find the weight of each cost category in relation to total cost. The weighted percentage of the costs are multiplied by the by the percentage change in the calculated indexes to get an RRI factor. The RRI factor used in AVI’s submitted application is 4.06%.

Commercial Recycling Compensation
Article 5.05.7.4 of the Agreement states the commercial recycling compensation element shall be the initial commercial recycling compensation element stated in Article 5.05.7.3 minus the commercial recycling compensation reduction amount of $421,795. Article 5.05.7.3 states the annual commercial recycling compensation element adjustment shall be calculated by multiplying the commercial recycling compensation element times (one plus the sum of the RRI factor and the ATG (annual tonnage growth) factor). The forecasted commercial recycling compensation element is $47,717 ($496,512 - $421,795).

Adjusting Rates to Reflect Changes in Landfill / Disposal Cost Article 5.05.3 states annual disposal compensation element adjustment shall be calculated by multiplying the disposal compensation element times (one plus the AT (annual tonnage) factor and multiplying the result, (the disposal compensation element adjusted for growth), times (one plus the ATF (annual tip fee) factor) as show in Exhibit 2. The growth of tonnage has decreased resulting in an annual tonnage factor of -6.98% and the annual tipping fee factor is 1.82% based on the growth of approved tip fee. The forecasted disposal compensation element is $1,267,481.

Container Compensation Element
Article 5.0535 states the container compensation element represents the amortized cost of carts and bins over the lifetime of the Agreement and shall not be adjusted except to account for customer growth through the use of the AG (annual growth) factor. The AG factor for year end 2023 is 1.31%.

Prior year container compensation of $330,771 is multiplied by the AG factor to get FY2024 cost. The forecasted container compensation element cost is $335,043.

Recycling Material Diversion Compensation Element
Article 5.05.8 of the Agreement states recycling materials division compensation element is calculated annually by multiplying (a) the actual tonnage of recyclable materials delivered by contractor in prior 1014
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calendar year (January 1 – December 31) by the anticipated per-ton tip fee to be charge by such MRF during the subsequent Agreement year. The forecasted recycling materials division compensation element cost is $1,157,932.

Organic Waste Diversion Compensation Element
The organic waste is made up of two categories, commercial food waste and all other organic waste.

Both categories will be calculated in the same manor. Article 5.05.9 of the Agreement states organic waste materials division compensation element is calculated annually by multiplying (a) the actual tonnage of organic waste materials delivered by contractor in prior calendar year by the anticipated perton tip fee to be charge by the organic waste processing facility during the subsequent Agreement year.

The forecasted commercial food waste cost is $426,423 and all other organic waste $675,540.

Vehicle and Administration Element
Article 5.18 of the Agreement states beginning July 1, 2020 the baseline Vehicle and Administration Asset Element shall be set at $1,595,575. That amount was increased to $1,611,549 to account for additional costs associated with SB 1383. The baseline amount shall not be subject to the annual rate adjustment. The forecasted vehicle and administration element cost is fixed at $1,611,549.

Fee Compensation Element
Article 5.05.6 states fee compensation shall always be equal to the sum of the collection element, disposal compensation element, and container compensation (base compensation) divided by [1 minus the sum of the then current fee percentages] minus the base compensation. The fee compensation is made up of the franchise fee and administrative fee.

Article 4.04.1 states the franchise fee percentage shall 16.35% with respect to revenue received for services performed by contractor after June 30, 2021 and during the remaining term of this Agreement unless adjusted by the City. Article 4.04.2 states the administrative fee percentage shall be 7.00% with respect to revenue received for services performed by contractor after June 30, 2021 and during the remaining term of this Agreement unless adjusted by the City. The forecasted fee compensation element is $6,720,645.

Rates Projected to Meet Total Compensation
The following table summarizes the difference in AVI’s FY22-2023 audited financial total compensation of $26,070,590 to provide franchised services and AVI’s proposed cost for FY24-2025. Based on our review of the compensation and methodology of the application described in this report, we have determined that a recommended 0.92% overall rate increase is consistent with the rate-setting methodology described in the Agreement.
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Figure 4: 2 Year Forecast of Collection Service Compensation FY 22-2023
FY 24-2025
(Proposed Costs)
Absolute
Change
Percent
Change
Collection Compensation Element $13,537,422 $15,699,874 $2,162,452 16% Collection Comp. Element - Officer Compensation $840,000 $840,000 $0 0% Commercial Recycling Compensation Element $421,795 $469,512 $47,717 11% Com. Recycling Comp. Element Reduction Amount ($421,795) ($421,795) $0 0% Disposal Compensation Element $1,353,693 $1,267,481 ($86,212) -6% Container Compensation Element $321,578 $335,043 $13,465 4% Recycling Materials Diversion Compensation Element $1,216,902 $1,157,932 ($58,970) -5% Organic Waste Diversion Compensation Element $1,101,963 $1,101,963 $0 0% Vehicle and Administration Asset Element $1,611,549 $1,611,549 $0 0% Fee Compensation Element $6,087,483 $6,720,645 $633,162 10% Total Costs $26,070,590 $28,782,204 $2,711,614 10%
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Figure 5: RRI Methodology
For Rate Change Effective 7/1/2023 7/1/2024
Approved Budget for FY 6/30/24 FY 6/30/25
Current Needed
Calculated
Contractor
Contractor Compensation Contractor Compensation
Compensation Ref. Page 2
Collection Compensation Element Excluding Officer Compensation $ 14,892,240 $ 15,699,874 Collection Compensation Element - Officers Compensation Frozen 840,000 840,000 Commercial Recycling Compensation Element 451,194 $469,512 Commercial Recycling Compensation Element Reduction Amount Frozen (421,795) (421,795) Disposal Compensation Element Standard Formula 1,338,234 1,267,481 Container Compensation Element 330,711 335,043
Recycling Material Diversion Compensation Element
Recyclable Material Processing Cost (7/1/22- 6/30/23) 1,196,893 Recyclable Material Processing Cost (7/1/23-6/30/24) Calc 1,157,932 Organics Compensation Element Calc 653,628 675,540
Commercial Food Waste Compensation Element Calc 336,200 426,423 Vehicle & Admininistration Asset Replacement Element 1,611,549 1,611,549 Total Costs before Franchise Fees 21,228,854 22,061,559

6. Fee Compensation Element Current Needed
Franchise Fee 16.35% 16.35%
Admin Fee 7.00% 7.00%
Total 23.35% 23.35% 6,466,976 6,720,645
7 Total Calculated Compensation 27,695,830 28,782,204
Add Cost of Mid Year Dump Rate Changes
Less Former City Organic Subsidy
Rounding -
Required Compensation from Rates $ 27,695,830 $ 28,782,204 Forecasted Revenue using Current Rates and Dec. 2023 Census (see page 18) 28,520,902 Required Rate Increase $ 261,302
Average Rate Increase Percentage 0.92%
AVI Rate Model
HFH True Up Step 2
City Fees
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Recommendation
After review of AVI’s financial statements, tonnage reports, route operation statistics, contractor compensation and other supporting documentation, we recommend the City adopt a 0.92% rate increase applied it all rates in accordance with Article 5 of the Agreement. 1018
HF&H Consultants, LLC
590 Ygnacio Vally Road, Suite 105
Walnut Creek, CA 94596
1019

STAFF REPORT

CITY COUNCIL

Agenda Item 6.1
DATE: June 25, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Adoption of Rates for Garbage Collection, Disposal, and Recycling Services Provided by Amador Valley Industries and Establishing the 2024-25 Annual Assessment
Prepared by: Jay Baksa, Finance Director
EXECUTIVE SUMMARY:

The City Council will consider adopting two separate resolutions establishing the garbage rates effective July 1, 2024 and establishing the Fiscal Year 2024-25 refuse-related property tax assessment.

STAFF RECOMMENDATION:

Conduct a public hearing, deliberate, and adopt the Resolution Approving and Establishing the Collection of Minimum Residential Garbage and Recycling Service Fees for Fiscal Year 2024-2025; and adopt the Resolution Amending the Schedule of Service Rates for Integrated Solid Waste Services.

FINANCIAL IMPACT:

The annual rate adjustment for the Fiscal Year 2024-25 will result in a 0.92% increase for all rates.

The residential garbage and recycling service fees, which are collected on the Property Tax bill as an annual assessment, will increase by $0.39 per month on the required residential 32-gallon can to a total of $42.92 per month. The proposed commercial rate increases vary based on the service level selected. The proposed rate of $208.26 represents the average service level for a one-yard bin collected once per week.

Attachment 5
1020

DESCRIPTION:

Background
In January 2005, the City executed an Agreement with Amador Valley Industries, LLC (AVI) for service that began July 1, 2005 and continued to June 30, 2020. On June 16, 2020, the City Council approved an Amended and Restated Agreement with AVI to extend the term to 2035, address capital equipment replacement needs, and incorporate local and state requirements. In addition, a new rate model approach was agreed to that addresses annual rate adjustments, component cost separation, and regular financial reviews. The financial reviews are to be done by a third-party administrator every three years to confirm reasonableness and to ensure that an industry standard level of operating margin is being maintained by AVI.

Financial Review
As part of the Fiscal Year 2024-25 rate adjustment, the City engaged HF&H Consultants, LLC, to perform the financial review. The review included components summarized in Table 1.

Table 1. Financial Review Results
Area Summary Findings
Financial Statement Reviewed audit and verified amounts with supporting documentation. No Discrepancies
City Fees Verified correct amount was remitted to
City. No Discrepancies
Tonnage Reports
Verified amounts of annual/quarterly
tonnage reports with supporting
documentation.

No Discrepancies
Route Operation Statistics
Reviewed route information for
reasonableness by comparing City to other
similar jurisdictions.

No Discrepancies
Revenue Review
Reviewed revenue by utilizing customer
subscription data and service rates to verify
AVI’s audited financials.

No Discrepancies
Billing Review
Reviewed 45 invoices through different
customer classes to test for systemic billing
errors.

No Discrepancies
Contractor Compensation
Calculation Reviewed prior two years rate calculations. No Discrepancies Compensation Review
The rate approach included in the Agreement was the periodic review of AVI’s financial statements to verify AVI’s compensation is consistent with an operating ratio not greater than 90%, which is the industry standard. To accomplish this, HF&H reviewed AVI’s audited financials for Fiscal Year 2022-23 to determine the revenue requirement needed to meet the 90% operating margin. During the review it was found that actual revenue collected during FY 2022-23 was $292,182 higher than was necessary to maintain the 90% operating margin (Table 2). 1021

Table 2. Audited Revenue Requirement for FY 2022-23
FY 2022-23 (Actual) FY 2022-23 (Audited) Difference (+/-) Total Revenue
Required $26,362,772 $26,070,590 ($292,182)
True-Up Calculation
To account for this difference, HF&H conducted two calculations. First, the Fiscal Year 2022-23 revenue requirement identified in the audit of $26,070,590 was used as the updated baseline and the Fiscal Year 2023-24 revenue requirement was recalculated. This was then used to calculate the annual adjustment for the upcoming Fiscal Year 2024-25 rates, resulting in the recommended revenue of $28,782,204, as shown in Table 3. A detailed description of these calculations is provided in the report by HF&H included as Attachment 4.

Table 3. Updated Revenue Requirements
FY 2022-23 (Audited) FY 2023-24 (Audited) FY 2024-25
Total Revenue Required $26,070,590 $27,695,830 $28,782,204 Annual Rate Adjustment Calculation
The Agreement contains a provision that rates must be reasonably forecasted to provide AVI with an appropriate level of compensation based on a formula detailed in the Agreement. The forecasting methodology compares customer counts between the two most recent calendar years to calculate revenue generation based on the level of services provided multiplied by the appropriate rates. Rates are adjusted as appropriate across all service sectors to meet the calculated revenue requirement as set forth by the rate model.

City Staff have worked closely with HF&H throughout the financial review and agree with all information presented including the updated revenue requirement and the Fiscal Year 2024-25 rate adjustment. As required in the Agreement, the City has provided AVI with information showing the rate calculations and assumptions. Section 5.13.1 states “…the final decision of the rate structure rests solely with the City.” The proposed rate structure for Fiscal Year 2024-25 is estimated to meet the compensation requirement of $28,782,204. This compensation is possible as a result of a proposed 0.92% average increase to all categories.

Detailed Comparison of Current and Proposed Rates
Attachment 5 compares the proposed rates to the current rates for service levels that represent a majority of the subscribers in the City. The proposed rates would be effective July 1, 2024. 1022

Competitiveness of Dublin Rates with Neighboring Agencies Historically, Staff has included a comparison of the Dublin rates compared to rates charged for similar services in surrounding communities. This comparison has focused solely on the garbage rates, as historically, recycling and organic waste were seen as smaller complimentary services.

This is no longer true with the implementation of SB 1383, as well as other regional and statewide laws. Looking specifically at garbage rates no longer offers a clear “apples to apples” comparison.

For example, Livermore now charges recycling at 80% of the garbage rate, Castro Valley a rate of 67% the garbage rate, and San Ramon at 50%, where Dublin charges 25%. The same pattern is now occurring with Organic Waste, in which Dublin charges 50% of the garbage rate and Castro Valley charges 124% of the garbage rate, but as regulations change and options for disposal become more limited these services have become more expensive and cities are adjusting for that reality.

Overall, Dublin remains competitive, and the services offered are at least comparable to, and are often better than, the surveyed cities especially when factoring the type of service (garbage, recycling, organics, etc.), that is being provided. The current three-city comparison is provided as Attachment 6 and, like last year, Staff has included Castro Valley Sanitation District in place of Pleasanton, to include three service areas that offer similar services. The Pleasanton costs and cost structure have become an outlier in the Tri-Valley and when incorporating their costs into an “area average”, made it appear that Dublin was significantly higher. In reality, Dublin is competitive with the other two cities examined (Livermore and San Ramon). Pleasanton’s costs have been included for reference but are not included in the three-city average calculation.

Minimum Residential Garbage Service
All properties in the City are required to subscribe to a weekly minimum garbage service (Dublin Municipal Code Section 5.32). This minimum service includes weekly curbside collection of a 32- gallon garbage container, up to two organic waste carts including food scraps (96 gallons each), up to two recycling carts (96 gallons each), recycling collection of used oil and filters, an annual household hazardous waste drop-off event, and three on-call bulky waste pick-ups per year.

Residents desiring larger garbage carts are billed directly by AVI for the incremental rate difference. The City pays AVI for the service cost of the minimum residential service with monies collected from the property tax bill.

The City Council will need to establish the annual fee, which is collected with the property tax bill for residential properties, separately from the rates for other levels of service. The proposed fee for basic residential service for Fiscal Year 2024-25 is $515.04, which is collected in two installments on the property tax bill. This equates to $42.92 per month, which is $4.68 per year ($0.39 per month) more than the rate levied in Fiscal Year 2023-24, as shown below. 1023

Table 4. Historical Annual Fee for Minimum Garbage Service Collected with the Property Tax Bill
2022-23 2023-24
Proposed
2023-24
Annual
Change
Monthly
Change
$486.72 $510.36 $515.04 $4.68 $0.39
This base rate includes $0.45 per month to cover the cost associated with the collection being included on the property tax bill. These funds are not paid to AVI but are retained by the City to offset the administrative cost in preparing the tax roll. In addition, the cost of collection and delinquencies for the basic service is expected to be covered by prior year fund balance, penalties and prior year taxes collected by the County Tax Collector, and interest on funds held prior to payment to the Company.

STRATEGIC PLAN INITIATIVE:

None.

NOTICING REQUIREMENTS/PUBLIC OUTREACH:

A notice was placed in the East Bay Times on June 8, 2024 and June 15, 2024, notifying the community of the City Council’s consideration of the proposed rates, and the City Council Agenda was posted.

ATTACHMENTS:
1) Resolution Approving and Establishing the Collection of Minimum Residential Garbage and Recycling Service Fees for Fiscal Year 2024-25
2) Resolution Amending the Schedule of Service Rates for Integrated Solid Waste Services 3) Exhibit A to the Resolution – Proposed Adjustment to Garbage Company Rates 4) Memorandum – Review of AVI’s Compensation – Final Report – Dated June 6, 2024 5) Proposed vs. Current Rates
6) Local Area Rate Comparison
1024
Consent of Assignment of
Amador Valley Industries to
Livermore Sanitation, Inc (a
Waste Connections company)
August 20, 2024
1025
Outline
• Background
– Agreement with Amador Valley Industries (AVI)
– SB 1383 Amendment
– Performance and Compensation Reviews
• Sale of AVI and Assignment Review
• Next Steps
1026
Collection Service Agreement with AVI
• The City entered into a Collection Service Agreement with AVI beginning July 1, 2005 through June 30, 2012.
• Five amendments to the Agreement included changes to
obligations required, services provided, and extended the term to June 30, 2020.
• An Amended and Restated Agreement was approved June 16, 2020 that extended the term to June 30, 2035.
1027
SB 1383 Amendment
• Negotiations began in September 2021 for an Amendment to support the City’s compliance with Senate Bill 1383.
• The terms and costs of the SB 1383 Amendment were agreed to in principle.
– Annual rate adjustment and SB 1383 adjustment approved by City Council June 21, 2022.
1028
SB 1383 Amendment
• Collection Systems Updates
– SB 1383 related updates and expansion of programs to multi-family properties. • Processing
• Education
• Customer Service
• Recordkeeping and Reporting
• Procurement of Recovered Organic Waste Products
• Performance Standards
1029
Performance and Compensation Reviews
• In December 2022, Staff engaged HF&H Consultants, LLC (HF&H) to conduct performance and compensation reviews of AVI.
• Performance Review
– Identified shortfalls related to public education and outreach, diversion, reporting standards. – Shortfalls remedied by AVI or HF&H provided recommendations to prevent future noncompliance.
• Compensation Review
– Actual revenue collected during Fiscal Year 2022-23 was higher than necessary to maintain the 90% industry standard operating margin.
– True-up calculation was completed with the annual rate adjustment, resulting in a 0.92% rate adjustment for FY24-25.
1030
Sale of AVI and Assignment of Agreement
• On March 8, 2024, AVI notified the City of its intent to sell the company, inclusive of AVI’s stocks and other interests to Waste Connections, Inc.
• Staff engaged HF&H to perform a franchise assignment review in accordance with the Amended and Restated Agreement.
1031
Franchise Assignment Review
• The Assignment Review included reviews of AVI and Waste Connections and a review of the purchase agreement between AVI and Livermore Sanitation, Inc. (LSI - a Waste Connections Company).
• The following areas were evaluated:
– Compliance
– Assignment terms
– Financial condition
– Experience and qualifications
1032
Franchise Assignment Review
• Compliance Review
– AVI’s performance under the Amended and Restated Agreement and SB 1383 amendment.
– Addressed by the performance and compensation reviews of AVI. • Assignment Terms
– Proposed terms of purchase agreement between AVI and LSI. – LSI expected to make a reasonable return on investment. No undue risk anticipated. • Financial Condition
– Determination of financial health of AVI and Waste Connections. – Concerns about impacts to operational performance are addressed in the Assignment Review recommendations.
1033
Franchise Assignment Review
• Experience and Qualifications of Waste Connections
– Waste Connections provides service to approximately 50 municipalities in California, including acquisition of LSI in December 2022. – Most existing AVI employees will be retained, with the exception of leadership.

LSI General Manager will serve as AVI’s General Manager. – Existing union collective bargaining agreements will be maintained. – Liquidated damages of approximately $783,000 were assessed for failure to perform. Recommendations to mitigate these issues are included in the Assignment Review.
1034
Next Steps
• Staff recommends conditioning the assignment on the
incorporation of the mitigation measures identified in the Assignment Review.
• If approved:
– City and HF&H will work with LSI to finalize a new Amended and Restated Collection Service Agreement that incorporates the mitigations.
– Staff and LSI will implement a transition plan.
1035

STAFF REPORT

CITY COUNCIL

Agenda Item 8.1
DATE: August 20, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Designation of Voting Delegates for the 2024 National League of Cities City Summit
Prepared by: Marsha Moore, MMC, City Clerk
EXECUTIVE SUMMARY:

The City Council will consider appointing a voting delegate, and up to two alternates, to attend and vote on the City’s behalf at the National League of Cities City Summit in November 2024.

STAFF RECOMMENDATION:

Discuss the item and appoint a voting delegate, and up to two alternates, to attend and vote, on the City’s behalf, at the National League of Cities City Summit in November 2024.

FINANCIAL IMPACT:

Sufficient funds have been allocated in the Fiscal Year 2024-25 Adopted Budget for attendance at the November 2024 Conference.

DESCRIPTION:

The National League of Cities (NLC) is an organization through which city officials work together on a national level to further their common interests and the interests of their citizens.

The NLC City Summit is scheduled to be held November 13-16, 2024, in Tampa, FL. During this conference, the annual business meeting is held, at which each member city is afforded the opportunity to shape the NLC’s federal advocacy agenda for the upcoming year by casting a vote on preferred policy recommendations. In accordance with the NLC By-Laws, Article IV, Section 2 Member Voting (Attachment 1), the City is allowed only one voting delegate, and two alternates for the November 2024 conference. For the City of Dublin to participate in this meeting, the City Council needs to appoint a voting delegate, and up to two alternates, to attend and vote on the City’s behalf at the Summit. Voting delegates can be registered for in-person or virtual participation.
1036

Once City Councilmembers have been appointed, notification of the voting delegate and alternate(s) will be forwarded to the NLC.

STRATEGIC PLAN INITIATIVE:

None.

NOTICING REQUIREMENTS/PUBLIC OUTREACH:

The City Council Agenda was posted.

ATTACHMENTS:
1) NLC By-Laws
1037





 









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1046

STAFF REPORT

CITY COUNCIL

Agenda Item 8.2
DATE: August 20, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Proposed Framework for Dublin Commons Development Agreement Prepared by: Hazel L. Wetherford, Deputy City Manager
EXECUTIVE SUMMARY:

The City Council will review the proposed framework for the Dublin Commons Development Agreement for the future development of the site.

STAFF RECOMMENDATION:

Review and provide direction on the proposed framework for the Dublin Commons Development Agreement.

FINANCIAL IMPACT:

There are no financial impacts associated with approving the proposed framework.

DESCRIPTION:

Background
Over the last several years, the City Council has made significant progress towards realizing the goal of delivering a downtown project to the community through the Downtown Dublin Preferred Vision. There have been at least 10 public meetings and subsequent actions during that period.

Following is a summary of those meeting dates and actions taken:

October 15, 2019 Resolution No. 107-19 which approved a Memorandum of Understanding (MOU) between the City and American Realty Advisors (ARA), the primary property owner of the Dublin Place shopping center.

November 5, 2019 Resolution No. 115-19 which approved the Downtown Dublin Preferred Vision (DPV) and its three main principles (siting of the town square, a new street grid network, and the downtown character).
1047

December 3, 2019 Resolution No. 126-19 which amended the General Plan and Downtown Dublin Specific Plan (DDSP) to allow an increase in the allowable commercial floor area ratio (FAR) in the Transit Oriented and Retail Districts, combined new residential dwelling unit allocation into one pool for all three districts, and amended the parking standards for the Village Parkway and Transit Oriented Districts.

July 21, 2020 Resolution No. 79-20 which amended the DDSP to create a new street grid in the Retail District, site a town square, combine the remaining allocation of new non-residential square footage from the Transit Oriented and Retail Districts into one pool, allow lodging in the Retail District, and update the design guidelines for the Core Area of the Retail District.

November 17, 2020 Resolution No. 121-20 which adopted the Downtown Dublin Streetscape Plan and amended the City of Dublin Streetscape Master Plan.

April 6, 2021 Resolution No. 26-21 which approved a First Amendment to the MOU with ARA, providing a 12-month term extension.

April 5, 2022 Resolution No. 30-22 which approved a Second Amendment to the MOU with ARA, providing a 14-month term extension.

November 6, 2023 Received a presentation from Staff, the City’s consultant Urban Field Studio, and ARA on the proposed implementation of the DPV. After the presentation, the City Council provided direction to Staff on additional DDSP Amendments required to support the DPV.

December 19, 2023 Resolution No. 134-23 amending the General Plan and DDSP to further implement the Downtown DPV. The amendments consisted of adding Research and Development as a new land use, increasing the residential allocation by 465 units, decreasing the non-residential allocation by 300,000 square feet, increasing the building height and floor area ratio in the Core Area of the Retail District, and changing setbacks.

July 16, 2024 Received a presentation from Staff on updates to the Downtown Dublin efforts, including the ongoing work on the development of the Dublin Commons project, which includes the town square, living options, commercial uses, and the proposed life science buildings.

Upon adoption of the DDSP amendments in December 2023, ARA and Hines (Applicant) submitted a Planning Application for the Dublin Commons project which is the redevelopment and rebranding of the Dublin Place shopping center consistent with the core tenants of the Preferred Vision. Dublin Commons is a mixed-use project of up to 275,000 square feet of retail (consisting of 155,000 square feet of new retail and 120,000 square feet of existing retail), 535,000 square feet 1048

of Research and Development (Life Science), up to 1,510 multifamily residential units (inclusive of the affordable housing site units) and a new Town Square.

As Staff has shared in previous presentations, the City has partnered with ARA to bring the City’s Preferred Vision to reality. The City approached ARA with the opportunity for a public-private partnership to deliver a project that neither the City nor the property owner could accomplish alone. Based on this partnership, ARA has made significant commitments exceeding $90 million as further detailed in Attachment 2.

Framework for Development Agreement and Community Benefit Agreement As part of the proposed project, the Applicant is requesting approval of a Development Agreement and Community Benefit Agreement (Agreement). The Agreement would provide security to the Applicants that the City will not change its zoning and other laws applicable to the project for a stated period. Additionally, it is a mechanism for the City to obtain commitments from the Applicants that the City might not otherwise be able to obtain. Below is the framework for the Agreement.
 Term
o An initial 25-year term with options to extend one-year increments for up to 10 additional years.
o Applicant would make a community benefit payment to the City of $250,000 per year unless, at the time of the extension request, the City Manager determines that significant process is being made on the project.
 Phasing
o The project will be phased over time and the initial phase will include the Town Square and the surrounding commercial development around the Town Square, both of which will be completed prior to or concurrently with the first residential development.
 Downtown Dublin Specific Plan Residential Development Pool o Applicant is requesting a reservation of the remaining 1,270 units from the Downtown Dublin Specific Plan Residential Development Pool. o In order to pull units from the Pool, community benefits must be considered. The Staff has included the following benefits:
 Project will generate significant new revenue for the City, anticipated to be $130 million over 30 years.
 Project is estimated to generate 1,400 jobs at build out.  Project will serve as a catalyst for future economic development around the Downtown area and is consistent with the goals and objective of the Downtown Preferred Vision.
 City has requested from the Applicant to designate Dublin as the point of sale for the general contractor and sub-contractors so any sales tax derived from such activities during construction can be allocated to the City. 1049

One item still under discussion is the ability to utilize future square feet within the Life Science/Office buildings for use as a lab and coworking center.  Affordable Housing
o Applicant would enter into an affordable housing agreement with the City, which would include an alternative method of compliance to dedicate Block H, just east of the Dublin Senior Center, to the City and/or designee. This 1.1-acre site was contemplated by the City Council as part of its Memorandum of Understanding with ARA in 2019 for a senior affordable housing project. The site can accommodate between 80-170 units and 80 of these units are included in the overall request for the project. It should be noted that there are additional obligations outlined in the Housing Element for this location that have been codified in the DDSP that would need to be addressed as part of any agreed upon affordable housing program for this site.
 Public Infrastructure and Improvements
The public infrastructure and improvements are a vital part of the overall project and the City’s involvement in participating in these costs is key to the overall feasibility. Following is a summary of the items and obligations being discussed:
o Applicant will receive fee credits and reimbursements for certain public improvements made on behalf of the City. These include:
 Town square dedication and improvements
 Construction of new public streets
 Modifications to existing intersections
 Bicycle and pedestrian improvements
 Other improvements identified in the Western Dublin Transportation Impact Fee program
o Staff is recommending an allocation of public art fees to the project area, as well as a future gateway sign.
o Public Parking Garage: The garage is extremely important to the overall project at a later phase once the second life science building is constructed. The Applicant and Staff propose the following:
 City acquisition of the 2-acre public parking garage site (Block E2).  Applicant to improve surface parking during the intervening period.  Improvement of the public parking garage site upon approval of the second life science building.

The number of parking stalls, 1,100, was vetted by the City’s parking consultant.

This number will provide adequate market-based parking for life science users as well as daytime and weekday use. The capacity will also be necessary to handle the 1050

more intense use during the evenings and weekends.

The parking garage site is estimated to cost $6 million, and the garage improvement is estimated to cost $75 million. Staff is recommending a financial commitment to support these public improvements through available grant funding, financing, and use of the General Fund Reserves. Staff will continue to allocate future annual surpluses and other lump-sum funding to the General Fund Downtown Public Improvements Reserve towards the project during the initial phase and during later phases (public parking garage) to help offset costs associated with these public infrastructure improvements.
 Marketing and Promotion
o The Agreement will also anticipate language to have the Applicant formalize a marketing and promotion effort to support the businesses surrounding the Town Square, as well as events within the Town Square.
 Maintenance
o The Agreement will also address ongoing maintenance of the private and public infrastructure in Dublin Commons with consideration of the Applicant agreeing to funding maintenance for public infrastructure. The Applicant may propose an alternate method, to be approved by the City Engineer.
 Small Business Support
o Staff and Applicant proposed to work together to provide small business support programs to help incentivize the attraction of high-quality restaurants and retailers.

Currently, the City has sewer capacity set aside for the Downtown area that could be provided to the project and to specific restaurant tenants at the City Council’s discretion. Additional support could come from the use of the Small Business Assistance Program that has been in use by the City to support improvements related to Title 24/ADA and/or trash enclosure requirements.  Commercial Retail Development
o To ensure high-quality restaurants and retailers, Staff and the Applicant agree that the Site Development Review will include:
 Minimum ground floor commercial height of 18’
 Minimum of 100,000 square feet of retail spaces surrounding the Town Square
 Provide several outdoor dining areas to support a vibrant dining experience  Funding Mechanisms
o Staff and the Applicant agree to work on possible funding mechanisms to support the project including, but not limited to:
 Use of the General Fund Reserve for public infrastructure and improvements  Lease revenue bond (finance the construction of the parking garage)  Available Grant Funding
1051

 Fee Deferrals
 Tax Sharing Options (Property/Sales)
 Statewide Communities Infrastructure Program
 Enhanced Infrastructure Financing Districts
 Community Facilities District
 City’s existing programs, including Sewer Capacity, Commercial Façade Grants and Small Business Assistance programs.

To summarize, Staff is recommending receiving feedback and direction from the City Council so that Staff can proceed with the preparation of the Agreement. Should the City Council authorize Staff to move forward, a Development Agreement and Community Benefit Agreement will be formalized and will be brought to the Planning Commission for review and recommendation to the City Council.

STRATEGIC PLAN INITIATIVE:

Strategy 1: Economic Development, Small Business Support, and Downtown Dublin Objective B: Work with ARA and Hines on the development of the Dublin Commons project, including associated public improvements, relocation of tenants, development agreement and appropriate incentives to effectuate physical changes to the area, as well as support for small businesses.

NOTICING REQUIREMENTS/PUBLIC OUTREACH:

The City Council Agenda was posted, and a copy of the Staff Report was shared with the Applicant.

ATTACHMENTS:
1) Site Plan
2) July 16, 2024 City Council Staff Report
1052

DUBLIN COMMONS

SITE PLAN

RESTAURANT/ CAFE

RESIDENTIAL
LOBBY
OFFICE

FITNESS

PARKING
RETAIL
Attachment 1
D3

FIRST STREET

SECOND STREET

THIRD STREET

WOODLAND AVENUE

GOLDEN GATE DRIVE

COMMONS DRIVE

PLAZA DRIVE

SECOND STREET

DUBLIN BOULEVARD
N
1053

STAFF REPORT

CITY COUNCIL

Agenda Item 7.1
DATE: July 16, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Linda Smith, City Manager
SUBJECT: Downtown Dublin Update
Prepared by: Hazel L. Wetherford, Deputy City Manager
EXECUTIVE SUMMARY:

The City Council will receive a presentation on updates to the Downtown Dublin efforts, including the ongoing work on the development of the Dublin Commons project, which includes the town square, living options, commercial uses, and the proposed life sciences buildings.

STAFF RECOMMENDATION:

Receive the presentation.

FINANCIAL IMPACT:

There are no financial impacts associated with receiving the presentation.

DESCRIPTION:

Background
Over the last five years, the City has made significant progress towards realizing the Downtown Dublin Preferred Vision, including taking the following actions:
 October 15, 2019 - the City Council adopted Resolution No. 107-19 which approved a Memorandum of Understanding (MOU) between the City and American Realty Advisors (ARA), the primary property owner of the Dublin Place shopping center.  November 5, 2019 - the City Council approved the Downtown Dublin Preferred Vision (DPV) and its three main principles (siting of the town square, a new street grid network, and the downtown character).
 December 3, 2019 - the City Council adopted Resolution No. 126-19 which amended the General Plan and Downtown Dublin Specific Plan (DDSP) to allow an increase in the Attachment 2
1054

allowable commercial floor area ratio (FAR) in the Transit Oriented and Retail Districts, combined new residential dwelling unit allocation into one pool for all three districts, and amended the parking standards for the Village Parkway and Transit Oriented Districts.  July 21, 2020 - the City Council adopted Resolution No. 79-20 which amended the DDSP to create a new street grid in the Retail District, site a town square, combine the remaining allocation of new non-residential square footage from the Transit Oriented and Retail Districts into one pool, allow lodging in the Retail District, and update the design guidelines for the Core Area of the Retail District.
 November 17, 2020 - the City Council adopted Resolution No. 121-20 which adopted the Downtown Dublin Streetscape Plan and amended the City of Dublin Streetscape Master Plan.
 April 6, 2021 - the City Council adopted Resolution No. 26-21 which approved a First Amendment to the MOU with ARA, providing a 12-month term extension.  February 5, 2022 - the City Council received an update on Downtown Dublin as part of the Strategic Planning retreat.
 April 5, 2022 - the City Council adopted Resolution No. 30-22 which approved a Second Amendment to the MOU with ARA, providing a 14-month term extension.  November 6, 2023 - the City Council received a presentation from Staff, the City’s consultant Urban Field Studio, and ARA on the proposed implementation of the DPV. After the presentation, the City Council provided direction to Staff on the DDSP Amendments required to support the DPV.
 December 19, 2023 - the City Council adopted Resolution No. 134-23 amending the General Plan and DDSP to further implement the Downtown DPV. The amendments consisted of adding Research and Development as a new land use, increasing the residential allocation by 465 units, decreasing the non-residential allocation by 300,000 square feet, increasing the building height and floor area ratio in the Core Area of the Retail District, and changing setbacks.

Upon adoption of the DDSP amendments, ARA and Hines submitted a Planning Application for a Site Development Review Permit, including a Vesting Tentative Tract Map and a Development Agreement for the Downtown DPV. As part of this process, the existing Dublin Place shopping center is being rebranded as Dublin Commons.

ARA and Hines have also submitted a Planning Application for a Site Development Review Permit for the northerly corner of the shopping center, located at the intersection of Amador Valley Boulevard and Amador Plaza Road. This application includes the demolition of two existing commercial buildings and the construction of a new multi-tenant commercial building.

Redevelopment of the northern corner will facilitate the relocation of current tenants into new 1055

spaces, enabling the demolition of the southern portion of the shopping center and paving the way for the Dublin Commons Project.

As Staff has shared in previous presentations, the City has partnered with ARA to bring the City’s Downtown DPV to fruition. The City approached ARA with the opportunity for a public-private partnership to deliver a project that neither the City nor the property owner could accomplish alone. Based on this partnership, ARA has made significant commitments exceeding $90 million, which include:
 Acquiring 7300 Amador Plaza Road parcel
 Acquiring 7050 Amador Plaza Road parcel
 Buying out the Hobby Lobby lease
 Halting redevelopment of 7505 Dublin Boulevard (the former Coco’s site)  Ceasing the leasing of retail spaces
 Paying off the property loan
 Negotiating a relocation agreement with PetSmart
 Hiring a Development Manager (Hines)
 Hiring an Architecture, Design, and Planning Firm (Gensler)  Securing contracts for the Burlington parcels
Update
In support of the Downtown DPV, Staff has been working on the deal terms for the Development Agreement and the City’s commitment to financially supporting the public improvements required for the Dublin Commons Project. These improvements include but are not limited to the following:
 Town square park
 Construction of public streets
 Modifications of intersections
 Improvements identified in the Western Dublin Transportation Impact Fee program  Bicycle and pedestrian improvements
 Public parking garage (see below)
 Public art and gateway signage
In addition to these public improvements, the City will also support utility relocation, business relocation, sales tax sharing, property tax sharing, and commercial façade improvements. These initiatives align with Strategy 1B of the City Council’s Strategic Plan and will directly contribute to physical changes in the area. Staff will present the Development Agreement deal terms, including the items outlined, at a future City Council meeting.

Of note among the deal terms being negotiated is the public parking garage, the cornerstone of the City’s investment in the infrastructure of this new Downtown area. Based on the City’s evaluation of the overall parking need, the garage will need to include approximately 1,100 parking stalls.

These stalls will provide the needed market-based parking for the future life science buildings and capacity for daytime use, but also for more intense use during the evenings and weekends. It should be noted that the future parking garage will not be necessary until the life science buildings 1056

are constructed.

The parking garage is currently estimated to cost more than $75 million, and Staff is exploring ways for the City to fund its construction. The General Fund Downtown Public Improvements Reserve has a current balance of $25.8 million, and Staff plans to recommend the continued allocation of annual surpluses and other lump-sum funding to this reserve over the next several years to either fully fund the garage or be positioned for a manageable debt issuance for a portion of the cost. It is important to highlight that Downtown Dublin, when completed, is expected to bring in more than $4 million in new revenue to the City, which is an important factor in considering the City’s ability to sustain long-term debt service payments for the garage. Staff is working with its consultants on a variety of financing options and will bring this issue back to the City Council at a future meeting.

STRATEGIC PLAN INITIATIVE:

Strategy 1: Economic Development, Small Business Support, and Downtown Dublin Objective B: Work with ARA and Hines on the development of the Dublin Commons project, including associated public improvements, relocation of tenants, development agreement and appropriate incentives to effectuate physical changes to the area, as well as support for small businesses.

NOTICING REQUIREMENTS/PUBLIC OUTREACH:

The City Council Agenda was posted.

ATTACHMENTS:

None.
1057
Proposed Framework for
Dublin Commons
Development Agreement
August 20, 2024
1058
Background
• 10-15-2019 MOU with American Realty Advisors
• 11-5-2019 Downtown Preferred Vision Approved
• 12-3-2019 DDSP Amendments
• 7-21-2020 DDSP Amendments
1059
Background, 2
• 11-17-2020 Downtown Dublin Streetscape Plan
Adoption
• 4-6-2021 First Amendment to MOU
• 4-5-2022 Second Amendment to MOU
• 11-6-2023 Downtown Dublin Update
1060
Background, 3
• 12-19-2023 DDSP Amendments
• 7-16-2024 Presentation from Staff
1061
Framework
• Development Agreement and Community Benefit
Agreement
• Term
– 25 years
– Options to extend in one-year increments for up to
10 additional years
1062
Framework, 2
• Phasing
– Project will be phased over time
– Initial phase will include Town Square and surrounding commercial development
• Residential Development Pool
– Request to reserve 1,270 units
1063
Framework, 3
• Community Benefits
– $130M anticipated new revenue over 30 years
– 1,400 estimated new jobs at build out
– Catalyst for the Downtown area
– Consistent with the goals and objective of the Downtown Preferred Vision
– Designate Dublin as the point of sale
– Designate square feet for lab and coworking space (under discussion)
1064
Framework, 4
• Affordable Housing
– Affordable Housing Agreement
– Dedication of a 1.1-acre site
– 80-170 units for senior affordable housing
– Housing Element sites would need to be addressed as
part of any agreed upon affordable housing program
for the site
1065
Framework, 5
• Public Infrastructure and Improvements
– Fee credits and reimbursements for certain public
improvements made on behalf of the City
– Allocation of public art fees to the project including a future gateway sign
1066
Framework, 6
– Public Parking Garage
 City to acquire 2-acre site (estimated cost: $6M)
 Applicant to improve site to provide surface parking
 Public parking garage would be improved upon approval of second Life Science building (estimated cost: $75M)
– City to provide financial commitment
• Marketing and Promotion
– Formalize a marketing and promotion effort to support businesses surrounding the Town Square, as well as events 1067
Framework, 7
• Maintenance
– Ongoing maintenance of the private and public infrastructure • Small Business Support
– Small business support programs to help with attracting high-quality restaurants and retailers
• Commercial Retail Development
– Minimum ground floor commercial height of 18’
– Minimum of 100,000 SF of retail spaces surrounding Town Square – Provide several outdoor dining areas
1068
Framework, 8
• Funding Mechanisms
– Use of General Fund Reserve
– Lease revenue bond
– Available grant funding
– Fee deferrals
– Tax sharing options (property/sales)
– Statewide Communities Infrastructure Program
– Enhanced Infrastructure Financing District
– City’s existing programs
1069
Recommendation
• Receive feedback and direction from the City
Council so that Staff can proceed with the
preparation of the Development Agreement and
Community Benefit Agreement
• Questions
1070