FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
AGENDA ITEM #5
MEETING DATE December 4, 2024
PREPARED FOR Mayor and Town Council
PREPARED BY Heather Abrams, Town Manager
SUBJECT Conduct a Public Hearing and Adopt a Resolution Approving Maximum Rates Collected by Marin Sanitary Service for Solid Waste Services to be Effective January 1, 2025
RECOMMENDATION
1) Conduct public hearing to;
2) Adopt a resolution approving maximum rates collected by Marin Sanitary Service for Solid Waste Services to be effective January 1, 2025 in the Town of Fairfax
BACKGROUND
Fairfax Town Code Section 8.08.110 (as adopted during the course of Council’s December 1, 2021 meeting), provides that the Town Council may, with or without inviting bids therefor, “…enter into a contract with any responsible individual, firm or corporation for the collection, removal and delivery for Disposal, Recycling or processing of Solid Waste collected and accumulated within the Town, under the terms and conditions as may be prescribed by the Town Council; and the right to make the collection shall be exclusive to the contractor, who shall be designated as the Franchisee/Authorized Collector under the provisions of this chapter.”
The Town of Fairfax entered into such a franchise agreement with Marin Sanitary Service and an amendment was approved by the Town Council during its special meeting of January 20, 2020 that extended the agreement for 10 years and simplified and streamlined the annual rate setting methodology to approve stable and predictable rates, and a firm basis for rate control in future years (the “Agreement”).
All of the jurisdictions in Marin that have similar agreements with MSS work together to share information and reduce costs: the City of San Rafael, City of Larkspur, the Towns of Ross, San Anselmo, and Fairfax, the Las Gallinas Valley Sanitary District, and the County of Marin. This Marin franchisors’ group meets throughout the year to collaborate on oversight of MSS’s operations and works together to conduct a single annual rate review analysis rather than each jurisdiction having to conduct and pay for a separate review.
DISCUSSION
In accordance with the Agreement, Marin Sanitary Service submitted an application for rate review, requesting an increase in service charges to be effective January 1, 2025 (Attachment A). The City of San Rafael retained R3 Consulting Group, Inc. (“R3”) as an independent consultant on behalf of the Franchisors’ group and the Town, and R3 reviewed the rate application in accordance with the rate-setting methodology set forth in the Agreement. The review yielded a calculated rate adjustment of 3.53%, with 2 resultant 2025 rates shown in Attachment B. The consultant’s report is provided as Attachment C to this Staff Report.
In accordance with the requirements of the Agreement, as well as state law, the Town of Fairfax posted a notice of the December 4, 2024 public hearing in the three designated places in Town, as well as on the Town website, advising that this public hearing to consider the requested increase would be held on December 4, 2024 and that any person interested, including all persons owning property within the Town, was invited to appear and be heard on the matters set forth in the public hearing notice.
FISCAL IMPACT
Rates are paid directly by MSS’s customers in Fairfax.
ATTACHMENTS
A. MSS 2025 Combined Service Area Rate Application Letter B. MSS 2025 Rate Sheet
C. Consultant’s Independent Review of Marin Sanitary Service’s 2025 Rate Application D. Proposed Resolution
1050 Andersen Drive, San Rafael, CA 94901
p: (415) 456-2601 f: (415) 456-7595
www.marinsanitaryservice.com
August 30, 2024
Sent via e-mail
Mr. John Stefanski Mr. Curtis Paxton
Assistant City Manager General Manager
City of San Rafael Las Gallinas Valley Sanitary District Ms. Kimberly Scheibly Ms. Heather Abrams
Zero Waste Marin Executive Director Town Manager
County of Marin Town of Fairfax
Mr. Daniel Schwarz Mr. Dave Donery
City Manager Town Manager
City of Larkspur Town of San Anselmo
Ms. Christa Johnson Mr. Garth Schultz
Town Manager Principal
Town of Ross R3 Consulting Group
Subject: 2025 Combined Service Area Rate Application
Dear Ms. Scheibly, Abrams, Johnson, and Messrs. Stefanski, Paxton, Schwarz, Donery, and Schultz Attached is Marin Sanitary Service’s (MSS) rate calculation for rates to be effective January 1, 2025, in our combined service area. The 2025 Rate Application has been prepared in accordance with Exhibit B, Collector’s Rate Revenue Requirement and Rate Adjustment methodology. This methodology was ratified by the Marin Franchisors’ Group (MFG) during the 2019 Rate Application process. The same methodology was adopted by the Town of Fairfax and the Town of San Anselmo in 2019, during the 2020 Rate Application process.
Overview
Exhibit B specifies that the 2025 Rate Application is to be prepared utilizing the Indexed Rate Revenue Requirement methodology. This means that a majority of MSS’s operating costs are adjusted by the change in the Consumer Price Index for Water and Sewer and Trash Collection, US city average, (referred to as the WST index). Other operating costs such as Garbage Landfilling, Organics Processing, Recyclable Materials Processing, Zero Waste Marin Fees, and Other Agency Fees are adjusted based upon projections or other methods to arrive at 2025 expenses. These adjusted expenses, plus Franchise Fees and Collector Profit, are totaled for the 2025 Rate Revenue Requirement.
ATTACHMENT A
~ .,
SANITARY SERVICE t ' CONSERVATION - OUR EARTH, OUR MISSION, OUR JOB Marin Sanitary Service
Combined Service Area 2025 Rate Application
Cover Letter
The 2025 Rate Revenue Requirement is calculated individually for each jurisdiction to account for varying Franchises Fees and Other Agency Fees. The 2025 Rate Revenue Requirement is then divided by the 2024 Rate Revenue Requirement to arrive at the 2025 Rate Adjustment Factor for each jurisdiction.
The rate-setting process in an Indexed Rate Year is relatively straightforward and there are a limited number of supporting schedules. These schedules and related files will be provided to R3 Consulting Group, Inc. for their review. While the process this year was streamlined, there are three significant issues that led us to request additional rate increase amounts. These are discussed below.
SB1383-Short-Lived Climate Pollutants Reduction Act- Organics waste reduction in the landfill AB 1826 was passed in October 2014 and set requirements for all businesses and multi-family complexes that meet certain criteria to arrange for organics recycling. SB 1383 was passed in September 2016 and expands upon the requirements of AB 1826. Taken together, these two mandates represent the most significant change to the laws affecting our industry since AB 939 was passed in 1989.
We have implemented the changes due to SB 1383 as directed in our franchise agreement amendments. This includes the purchase of new processing equipment that has allowed us to expand our Food2Energy program. We have also expanded our organics routes including the creation of a new route in 2021. In 2022 we hired an additional outreach specialist to help with SB 1383 compliance for the residents, multi-family properties, and businesses in our service area.
This year, we do not anticipate any significant increases in cost to fulfill our obligations with SB 1383.
However, it remains that the changes are incremental and will occur over the next several years, during which time our pool of operating costs subject to the WST indexing may not compensate for our cost increases related to these changes (in law).
Annual Rate Revenue Reconciliation-2023
As noted in our June 2024 update meeting, our actual annual billings compared to the 2023 rate revenue requirement had a shortfall of $446 thousand. This is a decrease from last year as we continue to see a recovery from the economic effects of the pandemic on the communities we serve.
Property Insurance
As noted in the past few years’ Rate Applications, our long-time property insurance carrier, Affiliated FM, non-renewed their entire book of Waste Hauling business throughout the country. This was due to some very large claims they had at waste facilities in other parts of the country. In addition, the wildfires in California over the last few years have put added pressure on the property insurance marketplace.
Marin Sanitary Service
Combined Service Area 2025 Rate Application
Cover Letter
The end result is that the annual premium for our combined facilities increased from about $80,000 to almost $940,000. The extraordinary request we have included relates specifically to the increased tipping fee at MRRA, the company that processes the recyclables collected within our franchise agreements. We have explored the option of self-insurance and found that it is not available for property insurance.
Conclusion
We look forward to working closely with the R3 Consulting Group personnel during the review process and will supply them with all necessary financial documentation. Once the review is completed, we look forward to meeting with you to discuss the rate review report.
As always, we remain at your disposal.
Patty Garbarino
President
Cc: Jason Raleigh, Marin Sanitary Service
Justin Wilcock, Marin Sanitary Service
Dale McDonald, Las Gallinas Valley Sanitary District
Cory Bytof, City of San Rafael
Berenice Davidson, County of Marin
Casey Poldino, County of Marin
TOWN OF FAIRFAX
EXHIBIT C - SCHEDULE OF RATES
RESIDENTIAL REFUSE COLLECTION RATES
Rate increase: 3.53%
Effective date: 01/01/2025
Weekly Service Rates (Billed Quarterly)
Monthly Rate Quarterly Rate Monthly Rate Quarterly Rate 20 gallon cart $43.05 $129.15 $50.25 $150.75
32 gallon cart $51.60 $154.80 $60.29 $180.87
64 gallon cart $103.24 $309.72 $120.59 $361.77
96 gallon cart $154.84 $464.52 $180.88 $542.64
Low income - 20 gal** cart $34.44 $103.32 $40.20 $120.60 Low income - 32 gal** cart $41.28 $123.84 $48.23 $144.69 Low income - 64 gal** cart $82.59 $247.77 $96.47 $289.41 Low income - 96 gal** cart $123.87 $371.61 $144.70 $434.10 Additional Organics Cart Rental $2.73 $8.19 $2.73 $8.19 (35 or 64 gallon cart)
Additional Split Cart Rental $2.73 $8.19 $2.73 $8.19
(64 or 96 gallon cart)
Additional Monthly Charges Monthly Fee Quarterly Fee
(per cart, each way)
Distance 5' - 50' $7.70 $23.10
Distance Over 50' $15.32 $45.96
*Residential Customers may request one additional Organic Waste Cart, for a total of two, as part of the service **Must meet PG&E CARE program eligibility requirements. 20% discount on regular rates.
Additional Service Fees per Occurrence Fee
Return Fees - Off day $25.00
Return Fees - Same day $10.00
Resume Service/Late Fee $35.00
Contamination (cart) any size cart $30.00
Overload/Overweight (cart) $25.00
Extra bag garbage $15.00
Steam Clean (cart) $15.00
Special Collection $35.00
Special Handling (Bulky items) $30.00
Bulky item fees per item Fees Vary
Cart Strap Set-up Admin Fee $25.00
20 Gal Cart Replacement Fee $55.00
32 Gal Cart Replacement Fee $60.00
64 Gal Cart Replacement Fee $65.00
96 Gal Cart Replacement Fee $75.00
64 Gal Split Cart Replacement Fee $90.00
96 Gal Split Cart Replacement Fee $100.00 ONE TIME SERVICE FEES REOCCURING CHARGES Residential Service (Bundled service includes 1 landfill (garbage) cart, 1 organic waste cart*, & 1 Recycling split cart )
Flat rate Hill Rate
NOTE: We may not be able to accommodate any collection requests NOT at the curb due to a variety of factors including safety, accessibility, and efficiency. Requests to be assessed and approved by Route Manager.
ATTACHMENT B
TOWN OF FAIRFAX
EXHIBIT C - SCHEDULE OF RATES
COMMERCIAL REFUSE MONTHLY COLLECTION RATES
Rate increase: 3.53%
Effective date: 01/01/2025
Garbage 1 2 3 4 5 6
20 gallon cart* $51.73 $103.46 $155.19 $206.92 $258.65 $310.38 $11.94 32 gallon cart $60.88 $121.76 $182.64 $243.52 $304.40 $365.28 $14.05 64 gallon cart $121.76 $243.52 $365.28 $487.04 $608.80 $730.56 $28.10 96 gallon cart $182.64 $365.28 $547.92 $730.56 $913.20 $1,095.84 $42.15 1 yard bin $303.46 $511.24 $718.76 $926.69 $1,134.39 $1,342.09 $70.03 2 yard bin $507.35 $898.97 $1,290.46 $1,681.99 $2,073.79 $2,465.27 $117.08 3 yard bin $711.42 $1,286.90 $1,862.21 $2,437.71 $3,012.85 $3,483.93 $164.17 4 yard bin $1,015.11 $1,873.51 $2,652.42 $3,431.32 $4,210.18 $4,989.07 $234.26 5 yard bin $1,145.99 $2,093.05 $3,000.59 $3,908.08 $4,815.66 $5,723.15 $264.46 6 yard bin $1,276.85 $2,312.57 $3,348.73 $4,384.88 $5,421.12 $6,457.27 $294.66 10 yard roll-off $2,128.08 $3,854.29 $5,581.20 $7,308.13 $9,035.19 $10,762.12 $491.10 18 yard roll-off $3,830.55 $6,937.71 $10,046.19 $13,154.63 $16,263.35 $19,371.82 $883.97 20 yard roll-off $4,256.14 $7,708.56 $11,162.43 $14,616.26 $18,070.40 $21,524.24 $982.19 25 yard roll-off $5,320.18 $9,635.71 $13,953.03 $18,270.32 $22,587.99 $26,905.30 $1,227.73 Organics (F2E or Compost) 1 2 3 4 5 6
Additional One
Time Empty/On
Call
32 gallon $23.77 $47.54 $71.31 $95.08 $118.85 $142.62 $5.49 64 gallon $47.51 $95.02 $142.53 $190.04 $237.55 $285.06 $10.96 1 yard $166.00 $332.00 $498.00 $664.00 $830.00 $996.00 $38.31 2 yard $332.00 $664.00 $996.00 $1,328.00 $1,660.00 $1,992.00 $76.62 3 yard $497.98 $995.96 $1,493.94 $1,991.92 $2,489.90 $2,987.88 $114.92 10 yard roll-off $1,489.64 $2,979.28 $4,468.92 $5,958.56 $7,448.20 $8,937.84 $343.76 18 yard roll-off $2,681.35 $5,362.70 $8,044.05 $10,725.40 $13,406.75 $16,088.10 $618.77 20 yard roll-off $2,979.30 $5,958.60 $8,937.90 $11,917.20 $14,896.50 $17,875.80 $687.53 25 yard roll-off $3,724.12 $11,172.36 $11,172.36 $14,896.48 $18,620.60 $22,344.72 $859.41 Garbage Compactors (Per empty)
Roll-off Compactor Tipping fee per ton $202.42 Roll-off Compactor Hauling charge $258.62 Stationary FL (Per Compacted Yard) $130.88 Roll-off Compactor Special handling Rates Vary Service Fee Details
Lock $25.00 Monthly fee
Box rental Fees Vary Minimum Bimonthly fee
Minimum Load ML Fees Vary
Distance < 50ft $7.70 Monthly fee per cart, each way
Distance > 50ft $15.32 Monthly fee per cart, each way
On Call rate only available with approval from Route Manager Commercial Service Fees Fee
Return Fee - BIN $75.00
Return Fee - CART -same day $10.00
Return Fee - CART -off day $25.00
Late Fee/Resume Service Fee $35.00
Contamination (BIN) $50.00
Contamination (CART) $30.00
Overload/Compaction (BIN) $60.00
Overload/Compaction (CART) $25.00
Additional Empty/Bag Garbage $15.00
Additional Empty BIN Fees vary
Extra Bag Yard Waste $15.00
Steam Clean (1-6 yard BIN) $95.00
Steam Clean (CART) $15.00
Steam Clean (COMPACTOR/ROLL-OFF) $225.00
Lock Set-up Admin Fee $25.00
Lock Single Use Fee $5.00
Lock Purchase Fee $20.00
Lock Bar Bin Set-up Fee $75.00
Overweight Charge Per Ton* $205.00
20 Gal Cart Replacement Fee $55.00
32 Gal Cart Replacement Fee $60.00
64 Gal Cart Replacement Fee $65.00
96 Gal Cart Replacement Fee $75.00
64 Gal Split Cart Replacement Fee $90.00
96 Gal Split Cart Replacement Fee $100.00
Bin Repair/Replacement Fee** Fees vary
*Boxes exceeding 300lbs/yard
**Fees vary by size up to $1,200, not to exceed current replacement value.
NOTE: All container types and sizes may not be available at all locations depending on a variety of factors including safety, accessibility, and efficiency. Requests to be assessed and approved by Route Manager. ONE TIME SERVICE FEES REOCCURING CHARGES Collections per Week
Monthly fee
Additional One
Time Empty/On
Call
Other Charges
* Customers must have a sufficient level of service for the volume of material generated. Requests for 20gal carts require assessment and approval of a Route Manager.
TOWN OF FAIRFAX
EXHIBIT C - SCHEDULE OF RATES
MULTI-FAMILY DWELLING REFUSE MONTHLY COLLECTION RATES
Rate increase: 3.53%
Effective date: 01/01/2025
Garbage 1 2 3 4 5 6
20 gallon cart* $43.86 $87.72 $131.58 $175.44 $219.30 $263.16 $10.12 32 gallon cart $51.60 $103.20 $154.80 $206.40 $258.00 $309.60 $11.91 64 gallon cart $103.24 $206.48 $309.72 $412.96 $516.20 $619.44 $23.82 96 gallon cart $154.84 $309.68 $464.52 $619.36 $774.20 $929.04 $35.73 1 yard bin $303.46 $511.24 $718.76 $926.69 $1,134.39 $1,342.09 $70.03 2 yard bin $507.35 $898.97 $1,290.46 $1,681.99 $2,073.79 $2,465.27 $117.08 3 yard bin $711.42 $1,286.90 $1,862.21 $2,437.71 $3,012.85 $3,483.93 $164.17 4 yard bin $1,015.11 $1,873.51 $2,652.42 $3,431.32 $4,210.18 $4,989.07 $234.26 5 yard bin $1,145.99 $2,093.05 $3,000.59 $3,908.08 $4,815.66 $5,723.15 $264.46 6 yard bin $1,276.85 $2,312.57 $3,348.73 $4,384.88 $5,421.12 $6,457.27 $294.66 10 yard roll-off $2,128.08 $3,854.29 $5,581.20 $7,308.13 $9,035.19 $10,762.12 $491.10 18 yard roll-off $3,830.55 $6,937.71 $10,046.19 $13,154.63 $16,263.35 $19,371.82 $883.97 20 yard roll-off $4,256.14 $7,708.56 $11,162.43 $14,616.26 $18,070.40 $21,524.24 $982.19 25 yard roll-off $5,320.18 $9,635.71 $13,953.03 $18,270.32 $22,587.99 $26,905.30 $1,227.73 Organics 1 2 3 4 5 6
Additional One
Time Empty/On
Call
Additional Organics Cart Rental $2.73 $5.46 $8.19 $10.92 $13.65 $16.38 NA (35 gallon cart) after 4 TOTAL carts per cart per
month
Additional Organics Cart Rental (64 gallon $2.73 $5.46 $8.19 $10.92 $13.65 $16.38 NA (64 gallon cart) after 4 TOTAL carts per cart per
month.
1 yard $166.00 $332.00 $498.00 $664.00 $830.00 $996.00 $38.31 2 yard $332.00 $664.00 $996.00 $1,328.00 $1,660.00 $1,992.00 $76.62 3 yard $497.98 $995.96 $1,493.94 $1,991.92 $2,489.90 $2,987.88 $114.92 Garbage Compactors (Per empty)
Roll-off Compactor Tipping fee per ton $202.42 Roll-off Compactor Hauling charge $258.62 Stationary FL (Per Compacted Yard) $130.88 Roll-off Compactor Special handling Rates Vary Service Fee Details
Lock $25.00 Monthly fee
Box rental Fees Vary Minimum Bimonthly fee
Minimum Load ML Fees Vary
Distance < 50ft $7.70 Monthly fee per cart, each way
Distance > 50ft $15.32 Monthly fee per cart, each way
On Call rate only available with approval from Route Manager MFD One Time Service Fees Fee
Return Fee - BIN $75.00
Return Fee - CART -same day $10.00
Return Fee - CART -off day $25.00
Late Fee/Resume Service Fee $35.00
Contamination (BIN) Per Yard $50.00
Contamination (CART) $30.00
Overload/Compaction (BIN) $60.00
Overload/Compaction (CART) $25.00
Additional Empty/Bag Garbage $15.00
Extra Bag Yard Waste $10.00
Additional Empty Garbage Fees vary
Steam Clean (BIN) $95.00
Steam Clean (CART) $15.00
Steam Clean (COMPACTOR/ROLL-OFF) $225.00
Lock Set-up Admin Fee $25.00
Lock Single Use Fee $5.00
Lock Purchase Fee $20.00
Lock Bar Bin Set-up Fee $75.00
Overweight Charge Per Ton* $205.00
20 Gal Cart Replacement Fee $55.00
32 Gal Cart Replacement Fee $60.00
64 Gal Cart Replacement Fee $65.00
96 Gal Cart Replacement Fee $75.00
64 Gal Split Cart Replacement Fee $90.00
96 Gal Split Cart Replacement Fee $100.00
Bin Repair/Replacement Fee** Fees vary
*Boxes exceeding 300lbs/yard
**Fees vary by size up to $1,200, not to exceed current replacement value.
NOTE: All container types and sizes may not be available depending on a variety of factors including safety, accessibility, and efficiency. Requests to be assessed and approved by Route Manager.
NOTE: Minimum service level is 32 gallons per unit or equivalent volume. Decrease to 20 gallon per unit is subject to company review and approval.
NOTE: Up to four (4) Organics carts provided at no additional charge. Additional carts may be rented for a nominal monthly fee. REOCCURING CHARGES Collections per Week Additional One
Time Empty/On
Call
Other Charges ONE TIME SERVICE FEES
Monthly fee
FINAL REPORT
Town of Fairfax
Submitted electronically on October 22, 2020
submitted electronically: October 30, 2024
Review of Marin Sanitary Service’s
2025 Rate Application
ATTACHMENT C
n ::2.-.. CONSULTING GROUP, INC.
K.---1 RESOURCES. RESPECT· RESPONSIBILITY
450 14th Street, Suite 350, Oakland, CA 94612 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com October 30, 2024
Heather Abrams
Town Manager
Town of Fairfax
142 Bolinas Road
Fairfax, CA 94930
submitted via email: [email protected]
SUBJECT: Final Report – Review of Marin Sanitary Service’s 2025 Rate Application Dear Ms. Abrams,
R3 Consulting Group, Inc. (R3) is pleased to submit this report detailing the results of our review of Marin Sanitary Service’s (MSS’s) 2025 rate application for the Town of Fairfax.
This review was conducted pursuant to R3’s engagement with the seven agencies (Agencies) served by MSS, including the City of San Rafael, City of Larkspur, County of Marin, Las Gallinas Valley Sanitary District, Town of Ross, Town of Fairfax, and the Town of San Anselmo.
This report summarizes results from our review of MSS’s 2025 indexed rate application per the streamlined rate setting methodology established in 2019. The methodology is described in the amended Exhibit B to the Franchise Agreement that the Town holds with MSS. * * * * *
We appreciate the opportunity to be of service to the Town. Should you have any questions regarding this report or need any additional information, please do not hesitate to reach out directly.
Sincerely,
Jim Howison | Sr. Managing Consultant
R3 Consulting Group, Inc.
925.768.7244 | [email protected]
r) :::2.... CONSULTING GROUP, INC.
I<-...~ RESOURCES· RESPECT· RESPONSIBILITY
1. FINDINGS
Town of Fairfax | Review of MSS’s 2025 Rate Application Page 1 of 4 Executive Summary
On August 30, 2024, MSS submitted its application for an increase to its solid waste rates, to be effective January 1, 2025. This is an indexed year rate adjustment, which primarily projects compensation due to MSS based on the applicable Water-Sewer-Trash CPI Index (WST). Based on our review of the rate application, R3 concurs with MSS’s calculated 2025 rate revenue requirement for the Town of $2,705,120, which is $92,205 higher than the 2024 rate revenue requirement of $2,612,914. The corresponding adjustment to the Town’s solid waste rates for 2025 is 3.53%, based on January 1, 2025 effective date.
Table 1: 2025 Rate Adjustment Summary
2024 2025 Dollar
Change
Percentage
Change
Adjustment
to Rates
Collector Operations 1,553,304 1,624,574 71,270 4.59% 2.73% Garbage Landfilling and
Organics Processing 390,400 419,168 28,767 7.37% 1.10%
State Compliance
Database Subscription (357) 0 357 -100.00% 0.01%
SB 1383 Compliance 19,510 19,360 (151) -0.77% -0.01%
Profit Calculation 206,046 216,569 10,523 5.11% 0.40%
Recyclable Materials
Processing 78,239 72,329 (5,910) -7.55% -0.23%
Interest 24,721 25,855 1,134 4.59% 0.04%
Zero Waste Marin Fees 42,054 30,696 (11,358) -27.01% -0.43% Franchise Fees 266,721 277,477 10,756 4.03% 0.41%
Other Agency Fees 77,500 77,500 0 0.00% 0.00%
Annual Rate Revenue
Reconciliation (54,294) (69,654) (15,360) 28.29% -0.59% Recycling Property
Insurance 9,070 11,246 2,176 23.99% 0.08%
Total Annual Rate
Revenue Requirement $2,612,914 $2,705,120 $92,205 3.53% 3.53% Town of Fairfax | Review of MSS’s 2025 Rate Application Page 2 of 4 2025 Rate Adjustment Details
Collector Operations
Collector Operations compensates MSS for labor, benefits, general and administrative, depreciation and lease, maintenance, fuel and oil. Per Exhibit B, compensation for Collector Operations is adjusted using the CPI index for Water and Sewer and Trash Collection. R3 used publicly available Bureau of Labor Statistics data to verify the calculated increase of 4.59% to Collector Operations. Per Exhibit B, the rate adjustment is subject to a 2.5% minimum and a 5% maximum rate cap for MSS’s collection operations.
The result is $1,624,574 in Collector Operations for the Town in 2025, which is an increase of $71,270 compared to 2024.
Garbage and Organics Tipping Fees
Garbage Landfilling and Organics Processing tipping fee projections are calculated using actual tonnages collected from January 1 through June 30, 2024, which are then annualized to project total 2024 tonnages. Those tonnages are then multiplied by the projected 2025 tipping fees calculated in accordance with Exhibit B. This is based on the actual per ton tipping fees for each waste stream category, or if unavailable, projected tipping fees are calculated using the current year per ton tipping fees escalated by the change in WST— subject to a minimum increase of 2.5% and a maximum increase of
5.0%.
R3 reviewed MSS’s projected 2024 tons and the 2025 per ton tipping fees for residential garbage, residential green waste/organics, commercial garbage, commercial mixed waste for processing, commercial food scraps, and MSS-served Agencies’ waste delivered to MSS. Per Exhibit B, R3 confirmed that MSS materially correctly projected tons by category using annualized actual tons for the first six months of the current rate year and, as actual tipping fees are unavailable, applied the 4.59% WST adjustment to project 2025 per ton tip fees. The result is $419,168 in Garbage and Organics Tipping fees for the Town in 2025, which is an increase $28,767 compared to 2024.
Database Subscription for Compliance with State Law
The rate setting methodology allows for the recovery of additional revenues associated with costs for changes in law and/or new State mandates. For increased operating expenses due to State Laws, including AB 1826 and SB 1383, MSS has included in its rate application a line item for a compliance database. Zero Waste Marin has assumed responsibility for the tracking and reporting of materials. In, 2024, MSS discontinued its subscription to Recyclist and received a refund of $357. For 2025,there is no remaining portion of the agency’s credit.
Compliance with SB 1383
MSS is requesting continued revenue in association with SB 1383 with the goal of increasing compliance with the State of California’s organics state mandate(s). The company will continue to provide compliance monitoring and inspection services, contamination monitoring, outreach and education, and reporting functions on behalf of the Town. The total 2025 revenue recovery for these new SB 1383 compliance measures for MSS is $19,360, for a decrease of $151 or 0.77% from 2024.
Profit Calculation
R3 reviewed the calculation of MSS’s profit, which is a function of total allowable operating expenses ($2,063,101 for the Town) divided by the contractually set operating ratio of 90.5% and subtracting the same sum, rounded to the nearest dollar. MSS’s actual profit achievement will vary depending on the company’s real revenues and expenses; as such, profit is not guaranteed. The result is $216,569 in Calculated Profit for the Town in 2025, which is an increase of $10,523 compared to 2024. The increase is due to increases in allowable operating expenses, which were described in the previous sections of this report.
Town of Fairfax | Review of MSS’s 2025 Rate Application Page 3 of 4 Recyclable Materials Processing
A net recyclable materials processing cost is calculated each year to share the risks and rewards of changing recycling markets between rate payers and MSS. Per Exhibit B, the Recyclable Materials Processing cost is escalated by the annual change in the WST and that amount is then divided by the number of all tons of recyclable materials processed at Marin Recycling Center from July 1 of the prior rate year through June 30 of the current rate year.
The recyclable materials revenue amount is calculated based on 90% of the total revenue received by the Marin Recycling Center for recyclable materials, which is then divided by the number recyclable material tons processed at Marin Recycling Center. The calculation does not include income or tons from recyclable materials processed for third parties or agencies that were not customers of MSS or the Marin Recycling Center as of December 31, 2018. For Rate Year 2025, the resulting Net Recyclable Materials Processing Cost Per Ton is $73.58, a decrease of $5.29 from the 2024 value of $78.87. The result is $72,329 in Recyclable Materials Processing costs for the Town in 2025, which is an decrease of $5,910.
Interest
Interest is based on MSS’s actual interest from its loan amortization schedules for actual and projected capital expenditures for services under the Agreement as of the last base year review in 2019. This is increased in the same manner as Collector Operations, as described above, via WST annually.
The result is $25,855 in interest for the Town in 2025, which is an increase of $1,134 compared to 2024.
Zero Waste Marin Fees
Zero Waste Marin Fees are set as a pass-through as government fees and, per Exhibit B to the agreements, changes in such fees result in appropriate adjustments to rates to compensate MSS for increases or decreases in such fees. Zero Waste Marin fees included in the annual indexed rate applications for the MSS service area are set to be equal to the current Zero Waste Marin Fee assessments for the current fiscal year, with 100% of the MSS hauler fees passed through to the MSS Agencies, and with none of the MSS Transfer Station fees passed through to the MSS Agencies. The result is $30,696 in Zero Waste Marin Fees for the Town in 2025, which is a decrease of $11,358 compared to 2024. The decrease is due to grant funding obtained by Zero Waste Marin.
Franchise Fees
Franchise Fees are calculated by multiplying the applicable franchise fee percentage by each agency served by MSS by the revenues projected for each that Rate Year. The Town’s Franchise Fee is 10% of gross revenues. The result is $277,477 in Franchise Fees for the Town in 2025. Franchise Fees fund the costs of compliance with State laws, management and administration of the Town’s Agreement with MSS, and compensate the Town for the value of the property rights conveyed to MSS via the Agreement.
Other Agency Fees
Other Agency Fees are calculated and applied to each of the Agencies based on the specific fees set by those Agencies. MSS pays the Town a $77,500 Vehicle Impact Fee to cover the cost of road impacts from MSS’s solid waste collection vehicles.
Annual Rate Revenue Reconciliation
The Rate Revenue Reconciliation item is to reconcile the projected rate revenue from the 2023 rate adjustment to the actual revenue collected through rates charged during the 2023 rate year. MSS experienced a shortfall of $69,654 in 2023 billed revenues in the Town compared to the 2023 revenue requirement. That amount is therefore included in the 2025 rate application.
Town of Fairfax | Review of MSS’s 2025 Rate Application Page 4 of 4 Recycling Property Insurance
Property insurance for recycling processing facilities has gone up across the country due to due to fire risks from lithium batteries. MSS has had no such claims but has received rate increases based on its risk profile. MSS has previously and separately briefed the Agencies on this item, and R3 is aware of the market circumstances surrounding it. R3 finds that this extraordinary item is supported and reasonable.
The result is $11,246 in Recycling Property Insurance for the Town in 2025, which is an increase of $2,176 compared to 2024.
Survey of Comparable Rates
Figure 1 illustrates R3's survey of solid waste rates as of October 2024 for agencies located throughout Marin County. These survey results are presented as an indication of the reasonableness of the resulting rates for 2025. For comparison purposes, agencies serviced by Marin Sanitary Services (MSS) are designated in green and represent the proposed pricing for 32-gallon cart, including the current rate increase. Other, non-MSS service agencies are designated in blue and are current pricing, though price increases are expected for 2025 as well. The average cost for the 30–35-gallon cart for non-MSS service agencies is represented by the grey line is $57.18. The 32-gallon cart is projected to cost $51.60 per month for the flat regions of the Town. The 2025 Hill Rate for the 32-gallon cart is projected to be $60.29 per month. The Town’s commercial rates for a 3-cubic yard bin serviced one time per week will be $711.42 compared to $687.16 the previous year.
Figure 1: Comparison of MSS’s 2025 Rates to Other Marin County Agencies $57.18 $51.60
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
ATTACHMENT D
RESOLUTION 24-__
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF FAIRFAX
APPROVING MAXIMUM RATES TO BE COLLECTED BY MARIN SANITARY SERVICE FOR SOLID WASTE SERVICES EFFECTIVE JANUARY 1, 2025, IN THE TOWN OF FAIRFAX WHEREAS, Fairfax Town Code Section 8.08.110 (effective January 1, 2022) provides that the Town may enter into an exclusive contract with any responsible individual, firm or corporation for the collection, removal and delivery for disposal, recycling or processing of solid waste collected and accumulated within the Town, under the terms and conditions as may be prescribed by the Town Council; and
WHEREAS, the Town of Fairfax has entered into such an agreement with Marin Sanitary Service for the provision of solid waste and recycling services (the “Franchise Agreement”); and WHEREAS, in accordance with the Franchise Agreement, Marin Sanitary Service may submit an application to the Town for an increase in garbage and recycling service rates; and WHEREAS, Marin Sanitary Service has submitted an application for rate review, requesting an increase in service charges to be effective January 1, 2025; and WHEREAS, the Town conducted an independent review of the rate application in accordance with the rate-setting methodology set forth in the Franchise Agreement; and WHEREAS, the new rate schedule proposed by Marin Sanitary Service is attached hereto and incorporated herein as Exhibit A; and
WHEREAS, in accordance with the requirements of the Franchise Agreement, as well as state law, the Town of Fairfax posted a notice of the November 22, 2024 public hearing in the three designated places in Town as well as on the Town website; and WHEREAS, the Town Council of the Town of Fairfax held a public hearing on December 4, 2024, to consider the requested increase, at which time any person interested, including all persons owning property within the Town, was invited to appear and be heard on the matters set forth in the public hearing notice; and
WHEREAS, Fairfax Town Code Section 8.08.030 (effective January 1, 2022) provides that solid waste collection service charges will be set forth in a resolution of the Town Council, NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Fairfax as follows:
SECTION 1. The recitals set forth above are adopted as findings of the Town Council.
SECTION 2. The Town Council has reviewed the rate schedule requested by Marin Sanitary Service, as set forth in Exhibit A hereto, and finds that the proposed rates and charges are not discriminatory or excessive and will be in compliance with applicable laws.
SECTION 3. The Town Council hereby adopts the rate schedule set forth in Exhibit A, with such new rates effective as of the 1st day of January 2025.
The foregoing Resolution was duly passed and adopted at a special meeting of the Town Council of the Town of Fairfax held in said Town on the 4th day of December 2024 by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
Attest:
______________________________
Christine Foster, Deputy Town Clerk