Fremont City Council Meeting: 12/12/23 07:00 PM
3300 Capitol Avenue Div/Dept: Environmental Services
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5058) DOC ID: 5058
Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 1
SOLID WASTE COLLECTION RATES, TRANSFER STATION SERVICE FEES, AND LANDFILL DISPOSAL FEES FOR 2024 AND 2025 - Adopt Resolutions Setting the Integrated Waste Management Collection Rates, Transfer Station Service Fees, and Landfill Disposal Fees for January 2024 through December 2025 Contact Persons:
Name: Kathleen Cote-Guarnieri Suzanne Wolf
Title: Environmental Services Manager Community Services Director Div/Dept: Environmental Services Community Services
Phone: 510-494-4583 510-494-4329
E-Mail: [email protected] [email protected]
Executive Summary: The City has four solid waste agreements, including waste collection, transfer station services, recycling processing and landfill disposal, which are all elements of providing solid waste services to Fremont residents and businesses. Fees for these various solid waste services are calculated biennially in accordance with each contract's terms. While the specific adjustment formula varies by contract, each solid waste agreement includes some of the following elements: a Consumer Price Index (CPI) adjustment, a fuel adjustment based upon the OPIS (Oil Price Information Service) fuel index, recovery of increases in regulatory fees, current disposal costs, and changes in recyclable commodity prices. The various solid waste fees are all components of the solid waste collection rates set once every two years by the Council and charged to ratepayers.
This report recommends solid waste collection rates for 2024 and 2025, which incorporate the required service fees along with anticipated material collection and recycling processing expenses needed to comply with current State and County recycling regulations.
The recommended monthly rate for the average residential customer for 2024 and 2025 would be $51.02 per month, an increase of $5.00 per month or a 10.86% increase from the current rates. Commercial rates vary by service, but the average commercial customer would experience an increase of 7.7% to 9.8% for refuse and recycling service, depending upon the type of service, for this next two-year period. The overall recommended adjustment has been affected by high inflation and rising fuel costs. Additionally, the residential rate has been impacted by increased curbside material processing costs. Even with these adjustments, Fremont’s solid waste collection rates compare favorably to the countywide average (see enclosure A).
BACKGROUND: Items impacting 2024-2025 rate setting are described below.
Recycling Processing Charge: In June 2022, the City Council approved an amendment to the City’s curbside processing agreement with BLT Enterprises that was designed to align the compensation paid with the anticipated processing costs. The curbside processing fee was refined to include the following three components: 1) per ton incoming material processing fee, 2) mixed paper processing fee, and 3) per ton residue landfill payment. These components have specified biennial adjustments, which have been incorporated into the 2024-2025 rate setting calculations as described in the discussion section of this staff Council Staff Report (ID # 5058) Meeting of December 12, 2023 Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 2
report. The curbside processing fee is funded by the recycling processing change incorporated into the residential solid waste collection rates.
Prevailing Wage Adjustment: Republic Services is required to pay prevailing wages to its collection drivers who are represented by International Brotherhood of Teamsters Local 70 (Teamsters Local 70). Waste Management employs the largest number of drivers any single driver wage classification in Alameda County; therefore, the Collective Bargaining Agreement between Waste Management and Teamsters Local 70 establishes the prevailing wages applicable to all solid waste providers operating in Alameda County. The prevailing wage increase that went into effect in July 2022 (7.2%), and was subsequently increased in July 2023 (5.3%), was higher than the CPI rate. Republic Services submitted a request for extraordinary rate review to address the discrepancy. Staff is recommending incorporating a prevailing wage component into the 2024-2025 rate setting calculations to ensure collection rates are sufficient to cover the cost of providing service and to address this issue moving forward. Staff will be returning to the City Council in early 2024 with a recommendation on the retroactive component of Republic Service’s extraordinary rate review claim.
DISCUSSION/ANALYSIS: The solid waste agreements specify the formula to be used for calculating the biennial compensation adjustment for each solid waste service provider.
While the specific adjustment formula varies by individual contract, each agreement includes some of the following elements applicable to that service fee: 1) a fixed component that is not adjusted, 2) a variable component subject to a Consumer Price Index (CPI) adjustment, 3) a variable component subject to the health insurance index, 4) a fuel component subject to an OPIS (Oil Price Information Service) fuel index, 5) recovery of increases in regulatory fees, and 6) a pass-through of disposal costs. Additionally, the transfer station and recycling processing contracts include a mixed paper commodity price index adjustment.
The chart below summarizes the various solid waste contracts, the components within each fee, and the contractually required adjustments for 2024-2025. Also detailed are the recommended adjustments for each component.
Council Staff Report (ID # 5058) Meeting of December 12, 2023 Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 3
Summary of Solid Waste Fee/Rate Components
Contract Service
Provider
Component 2024-2025-Two Year
Adjustment
Altamont Landfill
Disposal
Waste
Management
• Fixed
• Variable
• Regulatory Fees
• No change
• 80% CPI- 7.90% increase
• $1.20 per ton increase
Transfer Station
Services
BLT
Enterprises
• Fixed
• Variable – CPI
• Variable – Health insurance
• Variable – ILWU wages
• Fuel
• Regulatory Fees
• Landfill Disposal
• No change
• CPI- 9.88% increase
• CPI- 9.88% increase
• CPI- 9.88% increase
• OPIS Fuel Index – 72.88%
increase
• Fuel tax – 35.42% increase
• Pass-through of approved
landfill disposal rates
Yard Waste
Transfer
BLT
Enterprises
• Variable - CPI
• Variable – Health Insurance
• Variable – ILWU wages
• CPI- 9.88% increase
• CPI- 9.88% increase
• CPI- 9.88% increase
Curbside
Processing
BLT
Enterprises
• Inbound Processing Fee -
CPI
• Residue Landfill Payment –
blended index
• Mixed Paper Processing
Fee- commodity price index
• CPI- 9.88% increase
• Blended landfill disposal
approved increase/CPI index –
5.8% increase
• $11.81/ton increase based on
average commodity price
decline
Council Staff Report (ID # 5058) Meeting of December 12, 2023 Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 4
Solid Waste
Collection
Republic
Services
• Fixed
• Variable
• Fuel
• Disposal (TS/Landfill)
• Franchise/IWM Fee
• No change
• Blended CPI/Health/Wage
Index – 11.17% increase
• Blended OPIS Fuel
index/taxes- 60.73% increase
• Pass through of TS Rate plus
$15.30/ton material diversion,
processing, and disposition
• No change
Fixed Costs: This element of the rate pays for start-up costs and capital equipment and is not adjusted during the contract term.
Variable – Health Insurance Index: The transfer station and solid waste collection contracts provide for an adjustment to the health insurance component of the rate using the US City Average Health Insurance Index, as a regional index is not published. The adjustment minimum is the CPI if higher than the Health Insurance Index. For 2024-2025, the CPI of
9.88% was used for the health insurance components of the rate.
Variable – Consumer Price Index: The CPI adjustment is applicable to the variable component of each fee as identified in each solid waste agreement and is calculated on the change in the All Urban Consumers Index (CPI-U), San Francisco-Oakland-Hayward for the previous 24 months. The CPI went from 309.497 in June 2021 to 340.056 in June 2023, a
9.88% increase. The CPI adjustment is also applied to the various liquidated damage penalties provided for in the contracts. The recommended variable adjustment formula for the solid waste collection agreement is a blended index consisting of 45% CPI, 12% US City Average Health Insurance Index (if higher than the CPI), and 43% prevailing wage adjustment, which was 12.9%. The blended variable adjustment was calculated at 11.17%.
ILWU Wage Adjustment: The transfer station and recycling processing contracts included an adjustment for facility worker wages consistent with the 2014-2019 wage schedules agreed to by BLT Enterprises and ILWU (International Longshore and Warehouse Union) and incorporated into the transfer station contract (Exhibit 16). That wage schedule expired on December 31, 2019; therefore, the wage adjustment has reverted to the CPI index adjustment and was adjusted by 9.88%.
Fuel Adjustment: The transfer station and solid waste collection contracts provide for an adjustment to the fuel component of the rate based upon the OPIS fuel index which ha s fluctuated up and down over the years. Fuel costs have increased substantially since the last rate setting and the OPIS fuel index increased 72.88%. The fuel adjustment for the collection contract is slightly different than the one in the transfer station contract. Fuel taxes are included in the fuel adjustment component for the collection contract, while fuel taxes are reflected as a regulatory fee in the transfer station contract.
Council Staff Report (ID # 5058) Meeting of December 12, 2023 Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 5
Transfer and Disposal Costs: Staff is recommending a total disposal rate of $107.13 per ton.
This includes various costs associated with processing and ultimate disposition of all solid waste material delivered to the transfer station. Specifically, it includes the base transfer station rate of $91.83 per ton (which includes landfill disposal of $37.30 per ton) and materials processing/waste disposal costs of $15.30 per ton. Material processing and waste disposal includes items such as, sorting dry waste to divert from the landfill, surcharges due to excess contamination of recycling material, compliance with State diversion regulations (SB1383), removal of homeless encampment and illegal dumped debris, and the City’s contribution to the commercial organics program.
Curbside Processing Fee: The curbside processing fee is intended to fund the processing of residential recycling material for diversion from the landfill in compliance with current State and County recycling regulations. The fee includes the following three components: 1) per ton incoming material processing fee, 2) mixed paper processing fee, and 3) per ton residue landfill payment. The recommended rates include the following adjustments:
• Inbound processing fee component – 9.88% CPI adjustment • Landfill residue component – blended index incuding landfill disposal using the approved landfill disposal adjustment (65%) and transportation using the CPI (35%) for of a blended index calculated at 5.8%.
• Mixed paper processing component – this component is adjusted to reflect the average increase or decline in commodity prices per ton. The recommended adjustment to mixed paper processing component is an increase of $11.08 per ton based upon the same decrease in mixed paper commodity pricing per ton.
Franchise Fee: The franchise fee is paid into the City's General Fund and is used to compensate the public for the value of using the public right-of-way to conduct business. A franchise fee of 10% of residential rates, and 12% of commercial rates was incorporated in the original 1994 Allied Waste/BFI solid waste collection agreement and has been retained in the current agreement. There are no changes to the franchise fee percentage reflected in the recommended 2024-25 solid waste collection rates.
Integrated Waste Management (IWM) Fee: In April 2003, Council established IWM residential fees of 16% (of the residential solid waste rate) and a commercial fee of 13.5% (of the commercial solid waste rate), which were incorporated into the solid waste rates effective January 2004. The purpose of this fee is to fund solid waste management activities performed by the City's Maintenance Division (e.g., litter removal, street sweeping, and debris removal from streets and public areas) and Environmental Service Division activities (e.g., waste diversion, program implementation, regulatory compliance, and solid waste contract administration). Staff recommends that the IWM fee remain at the current percentage to continue to provide services like street sweeping, recycling, right of way litter and debris removal, and encampment abatement.
Solid waste service fee comparison/recommendation: A comparison of the solid waste service fees is provided below. Service fees for the Altamont Landfill and t he Transfer Station were adjusted in 2023 to incorporate regulatory fee increases that occurred during the rate cycle.
Council Staff Report (ID # 5058) Meeting of December 12, 2023 Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 6
Contract
Service Provider
2023 Fee
2024-2025
Recommended
Fee
% Increase
Altamont Landfill
Disposal
Waste Management $36.10 $37.30 3.32%
Transfer Station BLT Enterprises $85.68 $91.83 7.18%
Recycling
Processing and
Yard Waste
BLT Enterprises
Yard Waste Transfer
Curbside Recyling
Incoming Processing
Landfill Residue
Mixed Paper Processing
$30.67
$78.00
$55.00
$67.00
$33.70
$85.70
$58.19
$78.81
9.88%
9.88%
5.80%
17.%
($11.81/ton)
Solid Waste
Collection
Republic Services See rate
schedule
below
See rate schedule
below
A comparison of the current and recommended 2024-2025 solid waste collection rates for the most common service categories is provided below. The total percentage increase varies by rate category depending upon the portion of the rate attributable to disposal related expense versus other adjustment indices.
Service Level 2022-2023 2024-2025 Two year %
Increase
Residential - 64 gallon
(per month) with RPC
$46.02 $51.02 10.86%
($5.00/month)
Multi-family (3 cu. yd.
2 x per week)
$513.87 $564.23 9.80%
Commercial (3 cu. yd.
1 x per week)
$258.79 $283.62 9.59%
Commercial - 20 cu. yd.
uncompacted roll-off
(per container serviced)
$537.52 $589.11 9.60%
Commercial - 40 cu. yd.
compactor
(per container serviced)
$2,353.08 $2,533.98 7.69%
Host Fees: At its June 26, 2007, meeting, the City Council established transfer station host fees for franchise waste delivered from Union City/Newark and for all self-haul waste. The host fees are subject to a CPI adjustment as part of the biennial rate setting process and would increase to $10.80 per ton and $12.70 per ton, respectively. The City Council also Council Staff Report (ID # 5058) Meeting of December 12, 2023 Updated: 12/8/2023 9:28 AM by Susan Gauthier Page 7
established a curbside offset fee, which applies to curbside material generated outside of the Tri-Cities and processed at the Fremont Transfer Station. That fee is also subject to a CPI adjustment and would increase from $2.86 per ton to $3.14 per ton.
FISCAL IMPACT: There are no recommended changes to the Franchise and Integrated Waste Management Fee percentages; however, the fees are calculated as a percent of total solid waste rates. Any increase in the solid waste rates result in an increase in the total amount of Franchise and Integrated Waste Management Fees generated; therefore, the recommended rates for 2024-2025 would result in approximately $600,000 per year of additional Franchise Fees (General Fund) and approximately $590,000 per year of additional Integrated Waste Management Fees being collected.
ENVIRONMENTAL REVIEW: The proposed action is exempt from and not subject to review under the California Environmental Quality Act (CEQA) because, without limitation, it is not a “project” as defined in CEQA Guidelines Section 15378(b)(2) and/or 15378(b)(5) and it has no possibility of a significant effect on the environment, as specified in CEQA Guidelines Section 15061(b)(3), each as a separate and independent basis for CEQA compliance.
ATTACHMENTS:
• Draft Resolution BLT Mixed Municipal Waste Service Fee • Draft Resolution Altamont Disposal Fees
• Draft Resolution Republic Solid Waste Recycling Organic Waste Rates • Draft Resolution BLT Curbside Recycling Yard Waste Transfer Fee • Rate Comparison
RECOMMENDATIONS:
1. Adopt a resolution setting disposal fees at the Altamont Landfill effective January 1, 2024, as shown in enclosure B of this report.
2. Adopt a resolution setting service fees at the Fremont Recycling and Transfer Station effective January 1, 2024, as shown in enclosure C of this report.
3. Adopt a resolution setting Curbside Recycling Processing payment and Yardwaste Transfer fees at the Fremont Recycling and Transfer Station effective January 1, 2024, as shown in enclosure D of this report.
4. Adopt a resolution setting Solid Waste Collection rates effective January 1, 2024, as shown in enclosure E of this report