STRATEGIC GOAL(S) MET:
1. Ensure Financial Stability
FINANCIAL INFORMATION
PRIOR ACTION/REVIEW
The Prop 218 consultant recently gave a broad overview the Prop 218 process and timeline at the March 16, 2022, City Council Meeting and the consultant recently provided some rate options at the March 22,2022, Finance Committee meeting. The Finance Committee did provide direction on the type of rate increase
BACKGROUND INFORMATION
The Prop 218 process can be outlined as follows:
• Step 1: Council considers report on current and proposed service fees through a workshop(s) held at a regular City Council meeting.
• Step 2: Council sets a public hearing date (45-day notice) • Step 3: Staff posts public hearing notice and mails copies to all service locations. • Step 4: At the public hearing, service recipients turn in votes opposing rate increase (votes can also be mailed or dropped off).
• Step 5: Staff counts votes after public hearing closes. • Step 6: If the opposition vote is more than 50% plus one of the total numbers of service locations, the adjustments fail. Otherwise, the adjustments pass (only one vote per service location).
Proposed timeline
• April – finalize rate analysis and draft report
• May – Present final recommendations to City Council
• June – Conduct ratepayer outreach; print and mail Proposition 218 notices to ratepayers • July – Part of 45-day Prop 218 waiting period; continue ratepayer outreach • August – Conduct Proposition 218 hearing
• September – Implement new rates absent a majority protest MVD Contract
City Staff has received a proposed agreement and rates from Mid Valley Disposal (MVD). City staff has met with MVD staff to review and discuss the MVD proposed agreement and rates. The new proposed agreement and rates encompass the new requirements and increase in costs due to SB 1383. City Staff will bring the MVD proposed agreement to a future City Council meeting.
Previous Deficit
The Solid Waste fund is and has been operating in a deficit. City Staff has discussed this issue with our auditors regarding the Prop 218 process that previous deficit would not need to be considered for the rate study as it has and is currently covered by the General Fund. This method is not sustainable as the Solid Waste fund should be supported by the rates.
ATTACHED INFORMATION
1. Prop 218 Proposed Rates Presentation
FISCAL IMPACT:
1. Is There A Fiscal Impact? Yes
2. Is it Currently Budgeted? No
3. If Budgeted, Which Line? 319 Enterprise Fund
Solid Waste Rate Study
Progress Update
City Council Workshop
April 20, 2022
Alison Lechowicz
Project Manager
CITY OF KINGSBURG
Background
Solid Waste Rates
Rates have not increased since 2009
Contract with Mid Valley Disposal began in 2014
Mid Valley Disposal increases rates charged to City annually Solid Waste Fund is an Enterprise Fund -> should be self-supported by rates Rate study will cover a 5-year period and determine solid waste and street sweeping rates
First rate change September 1, 2022
July 1 of 2023, 2024, 2025, 2026
2 Proposition 218
Governs how property-related charges are adopted (also applies to water and sewer rates)
Rates must be based on the reasonable cost of service and proportionally recover costs based on how customers take service
Procedural requirements:
Conduct a rate study
Mail a notice to property owners
Hold a public hearing a minimum of 45 days after notice is mailed Rates cannot be adopted if more than 50% of ratepayers submit written protests 3 Current Residential Monthly Rates
4 RESIDENTIAL REFUSE
Single Family Residential
One 96 Gallon Barrel $25.10
Two 96 Gallon Barrels $34.25
1 Yard Bin $52.35
Additional Green Waste Container $11.60
Senior Citizen Residential
64 Gallon Container $24.10
Mobile Homes $18.20
Multi-Family
Base Rate $25.10
Granny Flat $44.85
Locking Devices $25.00
RESIDENTIAL RECYCLING
96 Gallon Container $2.50
Multi Family 96 Gallon Container
(each) $5.00
3 Yard Bin (each) $46.00
5 Current Commercial Monthly Rates
6 Commercial Refuse Pickups per Week
Container Size 1 2 3 4 5 6
96 Gallon $19.55 $34.50 $51.75 N/A N/A N/A
1 Yard Bin $57.35 $95.00 $120.00 $172.35 $189.65 $248.50 2 Yard Bin $76.30 $103.45 $162.55 $221.30 $280.55 $339.55 3 Yard Bin $118.45 $148.90 $228.85 $311.10 $378.80 $472.30 4 Yard Bin $143.75 $194.20 $262.65 $355.00 $479.60 $647.85 6 Yard Bin $155.40 $311.20 $458.28 $605.35 $756.80 $908.20 6 Yard Compactor $310.80 $622.40 $916.55 $1,210.70 $1,515.95 $1,816.45 Current Commercial Monthly Rates
7 Commercial Recycling Pickups per Week
Container Size 1 2 3
64 Gallon $4.00 N/A N/A
96 Gallon $5.75 N/A N/A
1 Yard Bin $34.50 $69.00 $103.50
2 Yard Bin $43.70 $100.50 $131.10
3 Yard Bin $52.90 $121.70 $158.70
4 Yard Bin $67.85 $135.70 $203.55
6 Yard Bin $97.75 $195.50 $293.25
Organics Pickups per Week
Container Size 1 2 3
96 Gallon $4.60 $9.20 $13.80
Why Rate Increases Are Needed
Fund the cost of providing service
Keep up with Mid Valley Disposal Rates (adjusted each year based on CPI) Operating & Maintenance costs – City staffing and admin Additional street sweeping costs – new areas served; change in disposal of refuse Reverse operating deficit
Meet Fund Reserve targets
Operating Reserve Target = 15% of annual operating costs Comply with new legislation (SB 1383)
The City must provide organics collection services to all residents and businesses January 1, 2025: Statewide 75% reduction in organic waste and recovery of 20% of edible food waste for food donation
New procurement costs – compost and biofuels
8 Solid Waste Net Revenues
9 FY 17/18
ACTUAL
FY 18/19
ACTUAL
FY 19/20
ACTUAL
FY 20/21
PROJECTED
FY 21/22
PROPOSED
Total Revenues $ 1,909,680 $ 1,858,470 $ 1,921,866 $ 1,916,000 $ 1,919,000 Total Expenses $ 1,924,290 $ 1,986,773 $ 1,967,169 $ 1,933,631 $ 1,972,115 Net Revenues $ (14,610) $ (128,810) $ (45,810) $ (17,631) $ (53,115) Mid Valley Rate Comparison
10 Category Mid Valley Rate
(SB1383 +8%)
Rate City Bills to
Customers
Loss
Single Family Residential $29.65 $27.60 ($2.05)
Category - Commercial Mid Valley Rate
(SB1383 +8%)
Rate City Bills to
Customers
Loss
96 Gallon Barrels 1X week $25.78 $19.55 ($6.23)
2 Yard Bins 1X week $100.62 $76.30 ($24.32)
2 Yard Bins 2X week $150.98 $103.45 ($47.53)
3 Yard Bins 1X week $147.79 $118.45 ($29.34)
3 Yard Bins 2X week $192.69 $148.90 ($43.79)
3 Yard Bins 3X week $301.81 $228.85 ($72.96)
Recycling One 96 Gallon Barrel 1X $9.40 $5.75 ($3.65)
Organics One 96 Gallon Barrel 1X $8.64 $4.60 ($4.04)
Solid Waste Rate Option 1 – “Break Even”
September 1, 2022 increase to cover City admin and service provider costs Align rates with Mid Valley service categories
Increases for all customers
Larger increases for commercial customers
Smaller increases for residential customers
New services for organics recycling
Year 1: Mid Valley cost +20% adder for City expenses
Inflationary cost passthroughs in Years 2 to 5
Estimated at 5.5% for illustrative purposes
City has authority to increase rates up to inflationary % Covers costs w/slight net positive revenues
11 SW Rate Option 2 and Option 3
Option 2: “Build Reserve”
Year 1: Mid Valley cost +23% adder for City expenses
Inflationary cost passthroughs in Years 2 to 5
Covers costs and accumulates a 15% O&M reserve ($500,000) by Year 5 (FY2026) Option 3: “Repayment and Reserve”
Year 1: Mid Valley cost +37% adder for City expenses
Inflationary cost passthroughs in Years 2 to 5
Repays prior interfund loan of about $400,000 by Year 4 (FY2025) Accumulates a reserve of 15% of operating costs by Year 5 (FY2026) 12 13
Ending Fund Balance
14 Residential Rates
Commercial Rate Increases – Sept 1
15 Category - Commercial Current Opt 1 Opt 2 Opt 3
96 Gal 1X week $19.55 $30.94 $31.64 $35.38
2 Yd Bins 1X week $76.30 $120.75 $123.52 $138.11
2 Yd Bins 2X week $103.45 $181.18 $185.33 $207.23
3 Yd Bins 1X week $118.45 $177.34 $181.41 $202.84
3 Yd Bins 2X week $148.90 $231.23 $236.53 $264.47
3 Yd Bins 3X week $228.85 $362.17 $370.47 $414.23
Recycling 96 Gal 1X $5.75 $11.28 $11.53 $12.90
Organics 96 Gal 1X $4.60 $10.37 $10.61 $11.86
Street Sweeping
Current monthly rates: $2.10 per home or $0.20 per linear foot of street frontage
Current expenses (FY2023)
$196,000 for Central Valley Sweeping
$33,600 for refuse disposal
$48,300 in City admin and overhead
Total expenses of $277,900
Current revenues of $143,000
Proposed increases:
16 Current Sep 1, '22 Jul 1, '23 Jul 1, '24 Jul 1, '25 Jul 1, '26 Opt 1 $2.10 $4.07 $4.30 $4.53 $4.78 $5.05
Opt 2 $2.10 $4.17 $4.40 $4.64 $4.89 $5.16
Opt 3 $2.10 $4.66 $4.92 $5.19 $5.47 $5.77
Rate Study Schedule
March 16 – Presented rate study background
March 22 – Presented to Finance Committee
April 20 – Present initial rate recommendations to City Council May – Present final report to City Council
June – Mail Prop 218 notice of rate hearing to customers Late June/July – 45-day Prop 218 waiting period; conduct ratepayer outreach August 3 – Proposition 218 hearing
September – Implement new rates absent a majority protest 17 Questions?
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