STAFF REPORT
Meeting Date:
June 23, 2026
NON APPEAL
26 SUBJECT: PROPOSITION 218 PUBLIC HEARING TO CONSIDER PROPOSED MAXIMUM
SOLID WASTE AND RECYCLING COLLECTION SERVICE RATES AND
APPROVAL OF FOURTH AMENDMENT TO FRANCHISE AGREEMENT NO. 23- 132 WITH CR&R INCORPORATED
RECOMMENDATION: It is recommended that the City Council:
1. Conduct a Proposition 218 public hearing regarding the proposed maximum solid waste and recycling collection service rates and receive the City Clerk’s final tabulation of written protests;
2. Determine whether a majority protest exists under Article XIIID, Section 6 of the California Constitution;
3. If a majority protest does not exist, adopt the Resolution titled, “A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF LAGUNA BEACH, CALIFORNIA, SETTING MAXIMUM SOLID
WASTE SERVICE RATES, APPROVING THE FOURTH AMENDMENT TO AGREEMENT NO. 23-132 WITH CR&R INCORPORATED, AND REPEALING RESOLUTIONS INCONSISTENT HEREWITH”;
4. Approve the Fourth Amendment to Agreement No. 23-132 with CR&R Incorporated and authorize the City Manager to execute the amendment in substantially the form attached, subject to minor revisions approved by the City Attorney; and
5. Find the proposed action exempt under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines sections 15061 (B)(3) and 15308 or, alternatively, determine that the proposed action is not a “project” under CEQA pursuant to CEQA Guidelines section 15378.
SUMMARY OF THE MATTER
On July 11, 2023, the City Council awarded Franchise Agreement No. 23-132 to CR&R Incorporated (CR&R) for the collection, transportation, processing, diversion, and disposal of municipal solid waste. The eight-year agreement became effective on July 1, 2024, and includes the option for two one-year extensions based on performance standards.
Since the implementation of Franchise Agreement No. 23-132, City staff and CR&R continuously monitor and evaluate the various solid waste services in the City to ensure effective, reliable, and cost-appropriate services are being provided to the public. To that end, on January 28, 2025, the City Council approved the Third Amendment to the agreement, which modified service and billing provisions for multi-family properties with eight or fewer units. Following implementation, staff and CR&R continued to evaluate actual service levels, unit counts, cart allocations, and customer feedback for smaller multi-family properties between 2-8 units. During this process, City staff began formulating ideas and different possible solutions compared to the straight “per-unit” billing structure. That is, billing was based on the flat number of units – not the number of carts – for multi-family residential properties. Staff began to identify potential flaws with this approach. Particularly in light of smaller, two or three unit properties with minimal cans in PROPOSITION 218 PUBLIC HEARING TO CONSIDER PROPOSED MAXIMUM SOLID
WASTE AND RECYCLING COLLECTION SERVICE RATES AND APPROVAL OF FOURTH AMENDMENT TO FRANCHISE AGREEMENT NO. 23-132 WITH CR&R INCORPORATED June 23, 2026
comparison to a large single-family home with extra units in the form of ADUs or JADUs which were just billed at the SFR rate plus the cost of any additional carts requested.1 On April 28, 2026, the City Council received a report on the City’s solid waste service rates and potential issues with the current status of these services – including a possible cart-based pricing structure for eligible multi-family residential properties with two to eight units. The City Council directed staff to prepare and distribute the required Proposition 218 notices and set a public hearing for June 23, 2026 at 5:00 p.m. for certain solid waste rate adjustments that better reflect the costs of providing various solid waste services.
Notices describing the proposed rate adjustments and protest procedure were mailed on Friday, May 8, 2026 to approximately 11,262 affected property owners and customers, at least 45 days before the public hearing (Attachment 1).
The proposed rate adjustments scheduled to become effective July 1, 2026 are driven by three components:
implementation of the Waste Infrastructure System Enhancement (WISE) disposal agreement, contractual inflationary adjustments tied to the Finished Goods and Natural Gas Producer Price Indices, and a proposed repricing of eligible multi-family properties with two to eight units from a per-unit billing structure to a cart-based billing structure. Staff recommends approving the rate adjustments and the Fourth Amendment to Agreement No. 23-132 to implement the revised rate structure.
DISCUSSION
Proposition 218 Public Hearing and Protest Process
Article XIIID, Section 6 of the California Constitution requires the City to provide notice and conduct a public hearing before imposing or increasing property-related fees for solid waste collection services. The mailed notice described the proposed rates, the basis for the proposed adjustments, the date, time and location of the public hearing, and the process to submit a written protest. The City may not impose the proposed rates if written protests are submitted by a majority of affected property owners or ratepayers.
For a protest to be counted, it must be in writing, identify the affected parcel or service address, include the original signature of the property owner of record authorized to submit the protest, and be received before the close of the public hearing. Only one protest per parcel may be counted. At the conclusion of the public hearing, the City Clerk will report the number of valid written protests. As of the preparation of this report, 10 written protests have been received (Attachment 2). If a majority protest does not exist, the City Council may adopt the attached Resolution setting maximum solid waste service rates and approving the Fourth Amendment (Attachment 3).
Under the current agreement between the City and CR&R, multi-family properties with dwelling units located in a building or complex of eight or fewer units may subscribe to the Residential Rates set forth in the agreement and are charged a per unit basis. Multi-family properties with bin service, multiple days per week collection, and/or nine or more units are subject to billing for services at the Commercial/Multi-family Maximum Rates.
1 These multi-family properties did receive additional services such as more frequent bulky-item pick up and other related soldiwaste services.
PROPOSITION 218 PUBLIC HEARING TO CONSIDER PROPOSED MAXIMUM SOLID
WASTE AND RECYCLING COLLECTION SERVICE RATES AND APPROVAL OF FOURTH AMENDMENT TO FRANCHISE AGREEMENT NO. 23-132 WITH CR&R INCORPORATED June 23, 2026
Rate Adjustment Components
The proposed Fiscal Year 2026-27 solid waste rate adjustments include three components. First, the WISE component reflects increased landfill disposal costs associated with the Waste Infrastructure System Enhancement agreement approved by the City Council in March 2026. Second, the annual contractual inflationary adjustment reflects changes in the Finished Goods and Natural Gas Producer Price Indices applicable to collection and processing services under the Franchise Agreement. Third, the multi-family repricing adjustment would transition eligible multi-family properties with two to eight units from per-unit billing to a cart-based pricing structure.
The WISE and Producer Price Index adjustments are contractual cost components. The multi-family repricing adjustment is a policy adjustment intended to better align customer billing with actual service levels at smaller multi-family properties while continuing to ensure that each property has access to landfill, recycling, and organics collection service consistent with Senate Bill 1383 requirements.
Multi-Family Cart-Based Pricing for Properties with Two to Eight Units Approximately 858 multi-family properties with two to eight units are currently billed on a per-unit basis for one residential 3-cart set for each dwelling unit, regardless of the actual number of carts onsite. These multi-family properties are afforded additional services such as more numerous bulky item pickup options, hazardous waste removal options, etc. For example, a two-unit property currently pays $54.42 per month, calculated as two units multiplied by $27.21 for a 3-cart set with a 95-gallon trash cart. A three-unit property pays $81.63 per month, calculated as three units multiplied by $27.21 for the same level of service.
Under the proposed cart-based structure, eligible multi-family properties with two to eight units would be billed for one base residential 3-cart set, with additional carts billed only as needed at the applicable residential extra-cart rates. Staff believes that this proposed structure more closely aligns rates with actual service levels, addresses concerns raised by property owners regarding the flat cost per unit, and preserves compliance with State-mandated recycling and organics service access requirements. Actual service levels may vary by site based on container capacity, site constraints, waste generation, contamination, and operational needs. Further, City staff and CR&R will remain vigilant if the new pricing is implemented to ensure properties do not purposefully under subscribe to solid waste services and cause issues during pick up.
Table 1: Estimated Cost Savings per Month for Multi-Family Properties (2-8 Units) with CartBased Pricing Property Type Approx.
Properties
Current Monthly Rate
(Unit-Based)
Adjusted Monthly
Rate (Cart-Based) Percent Reduction
2-Unit Property 551 $54.42 $28.40 -48%
3-Unit Property 165 $81.63 $35.63 -56%
4-Unit Property 71 $108.84 $50.10 -54%
PROPOSITION 218 PUBLIC HEARING TO CONSIDER PROPOSED MAXIMUM SOLID
WASTE AND RECYCLING COLLECTION SERVICE RATES AND APPROVAL OF FOURTH AMENDMENT TO FRANCHISE AGREEMENT NO. 23-132 WITH CR&R INCORPORATED June 23, 2026
5-Unit Property 34 $136.05 $69.58 -49%
6-Unit Property 17 $163.26 $68.30 -58%
7-Unit Property 12 $190.47 $56.99 -70%
8-Unit Property 8 $217.68 $68.30 -69%
* Current rate based on residential 3-cart set with 95-gallon trash cart.
Impact of Multi-Family Repricing (Adjustments)
The proposed rate configuration would reduce rates for the affected two-to-eight-unit multi-family customer class and would result in an estimated reduction in CR&R rate revenue of approximately $27,753 per month. Because CR&R's cost of providing service does not decrease by the same amount, remaining system costs must be recovered through the rate structure. The proposed repricing is estimated to increase the base residential rate by approximately 4.4% and the commercial sample rate by approximately 5.2% to maintain proportional cost recovery. These figures were the result of analysis and conversations with CR&R about the proper allocation and their costs based on the various soldi waste services they provide throughout the City.
If adopted, the Fourth Amendment would formally revise the Franchise Agreement to implement this cartbased pricing approach for eligible two-to-eight-unit multi-family properties while maintaining Commercial/Multi-Family Maximum Rates for properties with bin service, multiple collection days per week, or nine or more units.
Table 2: Impact of Multi-family Repricing Adjustment on Current Rates (per Month) Service Bundle Approx.
Customers
Current 2025
Monthly Rate
Monthly Rate
with MF
Reprice
Rate Change/
Customer/month % Change
35-Gallon Cart Set 1,182 $26.69 $27.86 $1.17 4.42%
65-Gallon Cart Set 2,938 $27.00 $28.18 $1.18 4.41%
95-Gallon Cart Set 4,130 $27.21 $28.40 $1.19 4.41%
Commercial Bin
3 Cubic Yard Bin, 1x/week
(Refuse)
52 $ 229.42 $241.70 $12.28 5.4%
Combined Fiscal Year 2026-27 Rate Impact
Table 3 combines the WISE, Producer Price Index, and multi-family repricing adjustments proposed to become effective July 1, 2026. The table shows representative residential cart service levels and a representative commercial 3-cubic-yard refuse bin serviced once per week.
PROPOSITION 218 PUBLIC HEARING TO CONSIDER PROPOSED MAXIMUM SOLID
WASTE AND RECYCLING COLLECTION SERVICE RATES AND APPROVAL OF FOURTH AMENDMENT TO FRANCHISE AGREEMENT NO. 23-132 WITH CR&R INCORPORATED June 23, 2026
Table 3: Residential and Commercial Rate Impact per Month with All Three Adjustments Service Level 2025 Base
Rate per
Month
WISE
Impact
PPI
Impact
MF
Reprice
Adjustment
Final
2026
Rate per
Month
Total
Change
2025→2026
(per Month)
35-Gallon Cart
Set $26.69 $2.27 $1.33 $1.17 $31.47 $4.77
65-Gallon Cart
Set $27.00 $2.34 $1.34 $1.18 $31.86 $4.86
95-Gallon Cart
Set $27.21 $2.38 $1.35 $1.19 $32.12 $4.92
Commercial
3 Cubic Yard Bin,
1×/Week (Refuse)
$ 229.42 $16.62 $12.90 $12.28 $271.22 $41.80
Comparative Rate Analysis
The Orange County rate comparison included with the April 28, 2026 agenda materials indicated that Laguna Beach's current residential solid waste rate for the 95-gallon 3-cart bundle ranks near the midpoint among Orange County jurisdictions, at 16th highest out of 35. Assuming other Orange County jurisdictions also experience disposal fee and inflationary increases, Laguna Beach is projected to rank 11th highest for the representative residential rate if the WISE, Producer Price Index, and proposed multi-family repricing adjustments are implemented.
The City's representative commercial rate for one 3-cubic-yard refuse bin serviced once per week is comparatively higher and is projected to remain 5th highest countywide. This reflects the practical realities of providing service in Laguna Beach, including steep terrain, narrow alleys, constrained access, and heavy seasonal traffic, all of which create a more challenging and costly operating environment.
Fourth Amendment to Franchise Agreement No. 23-132
The proposed Fourth Amendment would update the Franchise Agreement to implement the revised multifamily cart-based billing structure and the Fiscal Year 2026-27 maximum rate schedule (Attachment 4).
The amendment is structured to revise definitions related to residential and multi-family service, amend the billing provisions for eligible multi-family complexes, and replace or supplement Attachment D to the Franchise Agreement with the updated maximum rate schedule effective July 1, 2026.
Under the proposed amendment, eligible multi-family properties with eight or fewer units that receive cart service would be billed based on the actual subscribed residential cart service level rather than automatically being billed per dwelling unit. Properties with bin service, multiple collection days per week, or nine or PROPOSITION 218 PUBLIC HEARING TO CONSIDER PROPOSED MAXIMUM SOLID
WASTE AND RECYCLING COLLECTION SERVICE RATES AND APPROVAL OF FOURTH AMENDMENT TO FRANCHISE AGREEMENT NO. 23-132 WITH CR&R INCORPORATED June 23, 2026
more units would remain subject to Commercial/Multi-Family Maximum Rates. The City Manager would retain the ability to resolve service classification disputes and require service adjustments necessary for capacity, access, operational, or regulatory compliance.
FINANCIAL ANALYSIS
No General Fund appropriation is requested as part of this action. Solid waste collection, processing, diversion, and disposal services are supported through customer rates established under the Franchise Agreement. The WISE-related disposal fee increase and annual Producer Price Index adjustments are contractual pass-through cost components. If the multi-family repricing adjustment is adopted, it will decrease charges to the affected two-to-eight-unit multi-family customer class while redistributing remaining system costs through corresponding residential and commercial base-rate adjustments needed to maintain proportional recovery of reasonable service costs.
ENVIRONMENTAL ANALYSIS
The proposed action is exempt under the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines section 15061(b)(3), in that the proposed rate adjustments and related administrative actions are not anticipated to result in a direct or reasonably foreseeable indirect physical change in the environment. In addition, the proposed action is not a “project” for purposes of CEQA pursuant to CEQA Guidelines section 15378, because it has no potential to result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS
1. Proposition 218 Public Hearing Notice (Pgs. 7-10)
2. Protest Votes (Pgs. 11-21)
3. Resolution Setting Maximum Solid Waste Service Rates and Approving the Fourth Amendment (Pgs. 22-56)
4. Draft Fourth Amendment to Agreement No. 23-132 with CR&R Incorporated (Pgs. 57-87) Submitted By: Mark McAvoy Approved: .David A Kiff
Mark McAvoy, Director of Public
Works & Utilities
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Ashley Moran, Sr. PW Analyst/Solid Waste
Coordinator
Patrick Donegan, Assistant City Attorney