WM
1970 E 213th St
Long Beach, CA 90810
March 22, 2024
Erick Lee, Director of Public Works
City of Manhattan Beach
1400 Highland Avenue
Manhattan Beach, CA 90266
Re: 2024/2025 Rate Adjustment Request
Dear Mr. Lee,
Pursuant to Sections 5.3 and 5.4 of the Franchise Agreement between USA Waste of California, Inc. dba Waste Management (WM) and the City of Manhattan Beach, we respectfully request an adjustment of service rates effective July 1, 2024.
Summary of Adjustments Requested:
• Calculated adjustment due to changes in CPI: 7.3%
• Requested extraordinary adjustment to residential rates: 2.51% • Requested extraordinary adjustment to commercial rates: 5.4%
Extraordinary Rate Adjustment Request to Offset Increased Labor Costs As summarized above, WM is requesting an extraordinary adjustment to service rates in accordance with Agreement Section 5.5 to offset significant increases in labor costs.
Since the COVID-19 pandemic, the waste and recycling industry has continued to suffer from an acute shortage of qualified employees – particularly commercial driver’s license (CDL) drivers. To ensure we can recruit and retain quality talent, WM has made considerable wage and benefit enhancements in support of the unionized drivers servicing Manhattan Beach. These are covered under a Collective Bargaining Agreement (CBA).
The most recent CBA covering Manhattan Beach’s drivers includes an average wage increase of 21.58%; an increase in company contributions to the union pension fund of 100%; and a 9.62% increase in the company's contribution towards each employee's monthly health and welfare premium, which is controlled by the union-sponsored health fund and is not within WM’s ability to control costs. These unprecedented percentage increases greatly exceed the annual cost changes calculated by the annual rate adjustment formula.
Considering these significant, unavoidable, and uncontrollable increases to the cost of providing service in Manhattan Beach, an extraordinary rate adjustment would be an appropriate remedy. As such, we are respectfully requesting an additional adjustment of
2.51% to residential rates and 5.4% to commercial rates. Approving this request will alleviate the financial strain placed on the franchise and allow WM to retain the trained, courteous drivers your residents and businesses know and trust. If approved by the City, WM will submit an updated rate sheet with the above-mentioned adjustments.
Clarification of Services and Rates for Manhattan Beach’s Commercial and Industrial Customers
Chargeable Commercial Organic Waste Collection
From the introduction of commercial organic waste collection under Assembly Bill (AB) 1826 to the current regulations today under Senate Bill (SB) 1383, the number of customers required to subscribe to such services has increased from 10 to 653, an increase well over 6,000%. This increase in customer demand for service, coupled with the increased cost of collection, and the rising costs of processing has led to commercial organic services no longer being viable to offer without charge. To sustain this service, we propose commercial organic waste collection be added as a chargeable service at a rate of $42.00 per month per 64-gallon organics cart serviced one time per week. This proposed rate reflects the cost of providing this value-added service and is in keeping with the current rates for similar service in surrounding jurisdictions.
Jurisdiction Service Level Organics Rate
City of Los Angeles
(Playa Del Rey & San
Pedro)
64-gallon cart serviced
1x/week $111.03
Lomita 64-gallon cart serviced
1x/week $102.79
Redondo Beach 35-gallon cart serviced
1x/week $46.26
Manhattan Beach
(Proposed)
64-gallon cart serviced
1x/week $42.00
Palos Verdes Estates 64-gallon cart serviced
1x/week $40.83
Marina Del Rey 64-gallon cart serviced
1x/week $38.76
Manhattan Beach
(Current)
64-gallon cart serviced
1x/week $0
Commercial Roll-out Service
With its high density and narrow alleyways, certain Manhattan Beach’s commercial customers require additional time and labor to safely and properly service. Known in the
industry as “roll-out” service, this refers to the physical relocation of waste and recycling containers between enclosures and the point of service. In some cases, this distance can reach up to 40 feet in length, which means that many of our routes require a driver and helper to provide service. Adoption of rates applied only to those customers that require specialized service, maintains the lowest possible rate and maximum value to those customers that do not require specialized services. To properly account for this labor- intensive, value-added service, we respectfully request the addition of the proposed roll- out rates as follows:
Roll-out
Distances
Charge Per Container x
Collection Frequency
0 to 5 ft. $0
6 ft. to 25 ft. $10
26 ft. to 40 ft. $20
WM is proud to be a sustainability partner with Manhattan Beach and is dedicated to assisting the City in compliance with state mandates and maximizing diversion. We thank you for taking the time to review our request.
Respectfully,
Erick Quintero
Sr. Account Executive, Public Sector