CITY OF HAWAIIAN GARDENS
CITY COUNCIL MEETING
STAFF REPORT
Agenda Item #A1
DATE: August 26, 2026
TO: Honorable Mayor and Members of the City Council
FROM: Ernesto Marquez, City Manager
BY: Neema Ghanbari, MS, PE, Public Works Director
RECOMMENDATION:
RECOMMENDATION TO (1) OPEN AND CONDUCT A MAJORITY PROTEST HEARING
FOR A PROPOSED RATE INCREASE FOR WASTE SERVICES TO COMMENCE ON OCTOBER 1, 2026, IN COMPLIANCE WITH PROPOSITION 218; AND (2) ADOPT RESOLUTION NO. 026-2026 AUTHORIZING THE RATE INCREASE FOR WASTE
SERVICES AFTER CONCLUDING THE CITY DID NOT RECEIVE A MAJORITY PROTEST
SUMMARY
The City contracts for solid waste services through the use of an exclusive Franchise Agreement. All properties within the City are required to subscribe to the solid waste services set forth in the Franchise Agreement. Under the Franchise Agreement, the Franchisee (USA Waste of California Inc., Waste Management or “WM”) is responsible for all aspects of solid waste services within the City. As part of the Franchise Agreement, rates, which are negotiated between the City and WM, are established and WM charges customers (i.e. residential, multi-family, commercial, and industrial) the agreed upon rates to provide the solid waste services. Solid waste rates are determined based upon on the type of service provided, the size and type of container, and the frequency of collection. Under California law and the Franchise Agreement, if WM wishes to increase the rates beyond what is currently permissible in the Franchise Agreement, the proposed rate increase is subject to the requirements of Proposition 218.
Proposition 218 – Legal Background
Proposition 218 (sometimes referred to herein as “Prop 218”), the Right to Vote on Taxes Act, was approved by California voters in November 1996. In part, Prop 218 requires a majority protest proceeding before imposing or increasing any property-related fees.
Specifically, Prop 218 requires the City to hold a public hearing and mail a notice of the public hearing to the owner of record and any tenant who is directly liable for the payment of the proposed fees. The City must mail the notice at least forty-five (45) days prior to the date of the public hearing regarding the proposed fees. Property owners and affected Agenda Item #A1
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tenants may protest the proposed fees by submitting their comments in writing to the City.
If the City receives protests from more than half of the affected parcels, the City may not approve the proposed fees. The City is conducting this majority protest proceeding in an abundance of caution and without conceding the applicability of Prop. 218 to privately provided solid waste service.
Rate Increase – Factual Background
On November 19, 2019, the City reassigned the exclusive solid waste collection franchise to Waste Resources, Inc. (“WRI”) from the previous service provider, and has served as the City’s exclusive waste hauler, until just recently.
On October 22, 2025, the Hawaiian Gardens City Council adopted Resolution No. 031-2025, consenting to a second reassignment of the exclusive solid waste collection franchise, this time to Waste Management (“WM”), which took effect on May 1, 2026.
WM now serves as the Exclusive Solid Waste Collection Services provider for Hawaiian Gardens.
Pursuant to Resolution No. 031-2025, WM assumed all rights, liabilities, title and interest in the Exclusive Solid Waste Services Franchise Agreement (“Agreement”), dated July 1, 2018, and all Amendments thereto, and agreed to perform all obligations and liabilities due thereunder.
Under the Agreement, WM is responsible for all aspects of solid waste services in Hawaiian Gardens, including the collection and handling of solid waste and green waste, food scrap waste, and recyclables (collectively, “Solid Waste Services”).
All properties within the City are required to subscribe to the Solid Waste Services provided by WM, for which Solid Waste Service Fees are imposed on customers who receive said services from WM; and customers are billed directly for the services.
WM accepted the existing rates for Solid Waste Services (“Solid Waste Service Rates”) currently in place but is entitled to request an annual rate adjustment to be applied on the anniversary date of the Agreement (i.e., July 1st), during the Term thereof. All rate adjustment requests are subject to City approval prior to application, provided that such approval complies with the requirements of Proposition 218 and the Proposition 218 Omnibus Implementation Act.
Subject to these parameters, the City has determined that it is necessary to increase the Solid Waste Service Rates that WM may impose on its solid waste customers.
Proposed Solid Waste Service Rates
The rate structure for Solid Waste Services includes four customer classes: Residential, Commercial, Multi-Family, and Industrial (Roll Off). Rates are determined based on the type of service provided, the size and type of container used for collection of waste, and the frequency of collection.
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Customers may request certain on-call services, such as bulky pick up (Commercial) as well as E-Waste and U-Waste collection. Such services are charged a fixed service fee, plus an additional fee per item disposed.
If adopted, the proposed rates set forth in Attachment A would be in effect from October 1, 2026, to June 30, 2027 (the “Base year”) and would remain in effect through June 30, 2031, subject to the annual rate adjustment provisions described herein.
During said five (5) year period, Solid Waste Service Rates charged in the City may not exceed those reflected in the rate tables contained in Attachment A, subject to the annual rate adjustment provisions described herein.
Annual Rate Adjustments
The Solid Waste Service Rates reflected in Attachment A may be adjusted annually on July 1st, based on two (2) cost factors: (1) Changes in the Consumer Price Index; and (2) Disposal Facility Tipping Fees, and would occur automatically during said five-year period.
However, any rate adjustment would remain subject to the 30-day advance notice requirement under Government Code Section 53756(d), as amended from time to time.
The application of said cost factors would apply to the Solid Waste Service Rates charged in all service sectors, including permanent and temporary clean up bins and roll off services, formulated as follows:
Rates may be adjusted for inflation based on the percentage change in the Consumer Price Index (“CPI”) for All Urban Consumers (CUUR0000SA0), All Items, not seasonally adjusted – U.S. City Average for the twelve (12) month period ending on the date of March 31st, immediately prior to the applicable rate adjustment.
The costs of disposal at solid waste landfills and/or other facilities generally located in Los Angeles County may be passed through to customers to account for any increase in the per ton tipping fees imposed on WM by the Los Angeles County Sanitation Districts and/or any other public agency for disposal and/or processing of solid waste.
For the Base Year of July 1, 2026 to June 30, 2027, WM has only requested a cost of living increase, based on the CPI; no increase is being sought at this time for increases in Disposal costs.
Proposed rate adjustments per CPI for FY 2026-27 are as follows:
Commercial: 3.26%
Multi-Family: 3.26%
Roll-Off: 3.26%
Residential: 3.26%
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Proposed residential service rates are as follows:
These proposed residential rates would bring the City in-line with its neighboring cities. A chart has been prepared which reflects this comparison:
A full examination of the proposed rate changes can be found in the City’s Notice of Public Hearing, attached hereto as Attachment A.
To proceed with the rate increase, the Council will need to conduct the public hearing to consider approval of a resolution containing the adjustment of solid waste service rates, and Agenda Item #A1
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future adjustments to rates for residential, multi-family, commercial, and industrial customers as set forth in the Notice, after determining that there has not been a majority protest.
On July 1, 2026, the City mailed notices to all affected property owners regarding the proposed rate changes and the scheduled public hearing. The City has set the public hearing for August 26, 2026, which is 57 days after the notices were mailed. The notices identified the proposed rates and provided instructions for submitting written protests regarding the proposed rate changes. As of the date of the agenda posting, the City has not received any written protests. Staff will confirm at the public hearing whether any additional written protests have been received.
The Franchise Agreement establishes the rate schedules for the amount that WM may charge for solid waste services. The Franchise Agreement requires that adjustments to the maximum rate schedule for collection of solid waste (which are not permitted within the Agreement) be considered for adoption in accordance with Proposition 218 (i.e., California Constitution, Art. XIII C & D). (See Franchise Agreement sections 7.3.1, 7.3.2, & 7.4.1).
Staff recommends that the City Council conduct a majority protest hearing regarding the proposed rate increase for waste services, to take effect October 1, 2026, in compliance with Proposition 218; and adopt Resolution No. 026-2026 authorizing the proposed rate increase for waste services.
FISCAL IMPACT:
Approval of the recommended actions would set the rates for solid waste services in compliance with Proposition 218. The City receives a franchise fee of 10% of WM’s gross revenues collected within the City representing costs incurred by the City in managing the franchise, use of tangible City property, and other recoverable costs.
SUGGESTED ACTION
Approve Recommendation.
ATTACHMENTS
A. Notice of Public Hearing Concerning Proposed Rate Increases to Solid Waste Service Fees
B. Resolution No. 026-2026