SUPPLEMENTAL REPORTS AND COMMUNICATION - AFTERNOON — Napa City Council, April 15, 2025 (part 1 of 3)

SUPPLEMENTAL REPORTS & COMMUNICATIONS
Office of the City Clerk

City Council of the City of Napa Regular Meeting
April 15th, 2025

FOR THE CITY COUNCIL OF THE CITY OF NAPA

SUBMITTED PRIOR TO THE CITY COUNCIL MEETING

4. PUBLIC COMMENT
• Document received from John Bristol on April 8, 2025.

6.A. ADMINISTRATIVE REPORTS

6.A. Downtown Napa Property and Business Improvement District Renewal • Presentation from Staff.

6.B. Solid Waste and Recycling Collection Rates
• Presentation from Staff.
• Email received from Jim McNamara on April 13, 2025.
• Memo #1 and supplementals from staff received on April 15, 2025. • Memo #2 and supplementals from staff received on April 15, 2025.

Downtown Napa PBID Renewal:
2026-2032
April 15, 2025

6.A.

PBID Quick
Facts
• The Downtown Napa Property and
Bus
iness Improvement District
(DNPBID) is a property assessment
district
• Established in 2005
• Renewed every 5 years: 2010, 2015,
2020, and now
in 2025 for a
7-year term
• DNPBID funds have been used for:
– Ongoing:
• Holiday lightening and décor
• Ambassador program
• Street and Garage Cleaning
• Hanging Flower Baskets
– Special Projects:
• Pedestrian and vehicular wayfinding
• Oxbow Gateway Sign
• Downtown two-way street infrastructure
project

PBID 2025
Renewal Snapshot
Renewal Schedule:
• January 1-A pril 14, 2025: Renewal petition
drive
• April 1, 2025: City Council, Housing
Aut
hority, and Parking Authority to
authorize City Manager the power to grant
property owner approval for City-owned
parcels
• TODAY: City Council adopts Resolution
of
Intention to renew the DNPBID, sets
public hearing for ballot tabulation
• June 17, 2025: City Council holds public
hea
ring/protest hearing on DNPBID
renewal; if no majority protest, adopts
Resolution of Renewal for seven-year
period

PBID 2025 Renewal Snapshot:

Ballots Returned by April 10, 2025
Status Count % of Total Assessed
Properties
% Based on Parcel Size of
Assessed Properties
Ballots Returned 122 44.68% 60.126%
Ballots Outstanding 151 55.31% 39.875%
Yes Petitions 120 43.95% 59.262%
No Petitions 2 0.73% 0.864%
50+1% needed to support the
Resolution of Intention to renew the DNPBID;
target has been surpassed.

Today’s Recommended Action
(1) Adopt a Resolution
of Intention to renew the
DNPBID
(2) Set public hearing
for ballot tabulation for
June 17, 2025.

Solid Waste and Recycling Collection Rates
2025-2029
Rate Study and Proposed Rate Notice
April 15, 2025

6.B.

Solid Waste & Recycling Collection
Rates – 2025-2029

1. Quick Overview of Solid Waste & Recycling
Enterprise F
und (SWR Fund)

2. Financial Position of SWR Fund

3. Primary Drivers for Rate Adjustments
- NRWS Contract & Impact of SB 1383 Compliance
- Major Capital & System Improvements
- Dramatically Increased Fuel & Electricity Costs

4. Proposed Solid Waste Rate Adjustments

5. Next Steps – Direction from Council
Collection Services Provided
• 5 major “Lines
of Service” for
Collection:

1. Residential

2. Commercial

3. Roll-off Box

4. Multi-Family

5. NVUSD

4 5-Year Collection Rate Revenue by Line of Service
$4,179,478 $4,550,155 $4,977,371 $5,148,235 $5,232,366
$7,127,490 $7,759,221
$8,881,369 $9,310,131 $9,499,374
$1,915,570
$2,482,959
$2,865,882 $3,251,538 $3,551,714
$9,813,898
$10,928,790
$11,809,030
$12,213,579 $12,380,077
$334,640
$345,646
$350,925
$371,917 $386,909
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
19/20 20/21 21/22 22/23 23/24
Collection Rate Revenue by Service Line – FY19/20 – FY23/24 Roll Off Commercial Multi-Family Residential NVUSD
$23,371,076
$26,066,771
$28,884,577
$30,295,400 $31,050,440
Programmatic Status
• Weekly Residential Curbside Service – Trash (Landfill), Recycling & Compost Service (including Food Scraps/Soiled Paper since 2015) • 4 streams of Commercial Service – Trash (Landfill), Recycling, Greenwaste (Yard Trimmings) & Food Scraps Composting (since 2015) • Roll-Off Debris Box – Trash and Multiple Recyclable/Compostable Materials (includes Clean Wood, Concrete, Dry Wall, Carpet, Metals, Cardboard, Mixed Recyclables, Dirt, Pomace & Yard Trimmings) • City Diversion Rate - 65% overall landfill diversion (recycling and composting) for 2024 (70% by State formula). City and State goal is 75% level (or more).

Materials Diversion Facility (MDF)
Built: 1993; Expanded 1997; City Purchased 2004

Compost Operations
Greenwaste Truck Organics Pre-
Processing Line
Covered Compost (CASP) System

Recycling Operations
Processing Area
Processing Area
Materials Storage
Tonnage Processed at MDF in 2024
• Recycling = 49,400 tons
• Composting = 93,800 tons
• Construction & Demolition = 18,500 tons
• Wood = 10,000 tons
• Other Materials (e-waste, tires, bulky items) = 600 tons • Facility Residue (disposal) = 13,900 tons
• 94% overall facility diversion (recovery) rate
– (Note: 2% improvement vs. 2023)
• Total Inbound Tons = 172,300 (vs.103,500 in 2006; 66% increase!)

2. FINANCIAL POSITION OF

SWR FUND
Section Introduction or Summary
Section Introduction or Summary

SWR Fund Overview – FY25/26 Expenditures
11 Payments to Contractor
(NRWS), $35,122,000 ,
67%
Disposal (Landfill) Tip Fees,
$4,165,000 , 8%
Payments for Materials (including
High-value CRV Materials),
$2,400,000 , 4%
Transfer to Non-Recurring Costs
(Grant and One-Time Projects),
$500,000 , 1%
Other Expenses (including City admin
support, liability insurance, banking
fees, etc.), $3,516,538 , 7%
Salaries and Wages (including
benefits), $1,711,647 , 3%
Transfer to Street Resurfacing ,
$1,317,000 , 2%
Debt Service for $12.5M in Capital
Improvements to MDF, $873,700 ,
2%
Transfer to CIP Reserves,
$3,000,000 , 6%
FY 2025/26 Budgeted Expenditures (Total = $52,605,885)
SWR Fund Overview—FY25/26 Revenue
12 Collection Service
Charges
$31,001,000
59%
MDF Gate Fees
$5,300,000
10%
Materials Sales
$10,600,000
20%
Misc (including fees,
interest, etc.)
$475,900
1%
Budget Shortfall $5,228,985
10%
FY 2025/26 Proposed Budgeted Revenues (Total = $43,376,900) Why are Rate Increases Needed?
13 $40,000,000
$45,000,000
$50,000,000
$55,000,000
$60,000,000
$65,000,000
FY24 Actuals FY25 Projections FY26 Budget FY27 Budget FY28 Budget FY29 Budget FY30 Budget Revenues vs Expenditures Trend (No Rate Adjustments)
Revenue Expenditures
• Last increase was January 2022
• For proposed FY2025/26 budget, expenditures will
exceed revenues ($5.2M in FY 25/26; $12M in FY29/30)
• With no rate increase, current reserves would be
exhausted by end of FY2026/27

3. PRIMARY DRIVERS OF

PROPOSED RATE ADJUSTMENTS
Section Introduction or Summary
Section Introduction or Summary

3 Primary Drivers for Rates

1. NRWS Contract & Impact of SB 1383
Compliance

2. M
ajor Capital & System Improvements

3. Dramatically Increased Fuel &
Electricity
Costs
State-of-the-art (& award winning!)
Covered Aerated Static Pile (CASP)
composting system (operational January 2020)

2022 NRWS Contract Amendment
Approved in October of 2022, this NRWS Contract Amendment addressed and accomplished the following:
(1) Operating & emission testing costs for $10M Covered Aerated Static Pile (CASP)
composting system at MDF
(2) Ongoing operating & maintenance costs for $2.5M stormwater management s
ystem at MDF
(3) Fixed annual labor cost increases at 3.5% per year to CY2031 (4) Fixed non-labor annual increases at 2.5% per year to CY2031 * Non-labor annual increases have a 50/50 shared “safety valve” provision when Bay Area CPI exceeds 5% in a given year as occurred in 2023 (5) Set up an every-other-year “Reconciliation Review” process when residential, commercial and/or roll-off service growth exceed certain thresholds (currently a combined payment to NRWS of $972K/year).

Added together, the amendment increased the base
contract payment to NRWS by approximately
$1.87M/year ($900K/year + $972K variable payment
based on growth in service).

SB 1383 NRWS Contract Amendment
SB 1383 NRWS Contract Amendment
Adopted April 18, 2023
Implementation Dates
SUMMARY OF SB 1383
2022
• Regulations take effect
• State enforcement on jurisdictions begins
2024
• Regulations require jurisdictions to take
enforcement
2025
• 75% reduction in organics disposal
• 20% increase in edible food recovery
1) Universal Compostable Organics:
2) Ordinance/Enforcement Adoption:
3) Edible Food Recovery Program:
4) SB 1383 Procurement Requirements:
5) Education, Training & Outreach:
6) Secure Capacity for Composting,
Recycling & Edible Food Recovery:
7) Monitor Compliance & Enforcement:
8) Have Accurate Compliance Records:

Dec 2021 Overall SB 1383 Compliance Score:
* Note five checkmarks indicates full SB 1383 compliance December 2021 SB 1383 Status
Current vs. Full Compliance Summary

21 SB 1383 – Current Compliance Status
Current Overall SB 1383
Compliance Score:
• 99% of commercial accounts
subscribed to organics
collection service
• 31 out of 47 multi-family
(apartment) complexes with
no organics collection service
now subscribed (11
remaining by end of CY2025)
• Need Biomass Gasification
or Anaerobic Digestion to
fulfill SB 1383 procurement
requirement for use of
organic derived renewable
energy and/or fuel.

HIGHLIGHTS OF
SB 1383 CONTRACT AMENDMENT:

New Collection Truck & Driver:
- New commercial compost collection vehicle ($523k
less $113k SB 1383 grant = $410k)
- New Thursday through Monday route
- 1600 new wheeled cart for organics
(200 lockable)
- Quarterly cleaning of organics equipment
* Note: Proposed 2025/26 budget includes increased
cleaning schedule for commercial food carts from quarterly to monthly cleaning by NRWS.

HIGHLIGHTS OF
SB 1383 CONTRACT AMENDMENT:

New NRWS Staff:
- Two NRWS Recycling Outreach Specialists
- 1.5 new NRWS CSRs (0.5 NCRWS/County)
- Two NRWS Compost Equipment Operators
- New staff to educate, support, monitor, conduct route reviews/audits & report on SB 1383 progress;
operate new organics processing equipment

HIGHLIGHTS OF
SB 1383 CONTRACT AMENDMENT:

New Processing Equipment :
- $1.45M optical sorter (85% City/15% NRWS)
- SB 1383-required quarterly facility audits
- $2.6M in new organics processing equipment
($1.5M grant-funded)
- In FY24/25, projected to add $216k new material
sales revenue; avoid $460k in disposal costs &
reduce transportation costs by $154k ($830k total)

Slow-Speed Shredder
($920k – Grant Funded)

Density Separator
($392k Grant Funded)

SB 1383 NRWS Contract Amendment
Total Impact = Approximately $2.8M per year
• Reset NRWS Contract Base : current collection rates at just over $31M per year, $2.8M translates into 9% of added cost per year. Contract terms are through 2031.
- 3.5% per year in labor cost escalations
- 2.5% per year in non- labor costs
- phase- in if Bay Area CPI is above 5% to ensure stability • Unfunded State Mandate: SB 1383 is state law and generally an unfunded mandate. Napa is ahead of many jurisdictions and understanding costs of full compliance with SB 1383. • Key Local Climate Action Step: SB 1383 a key local
program for Countywide Climate Action goals since
methane is 30-50 times GHG impact vs. CO2.

2. Capital Improvements at MDF
• In 2016, the City issued $12.5M in Solid Waste
Revenue Bonds
for the following:
- $10.0M – “Covered” Composting system to comply with State regulations to process food scraps and air district
regulations for emissions
- $2.5M – Stormwater system improvement to comply with
Statewide “Compost Order” from Regional Board
- $2.0M – Covered processing and storage area for recyclables to comply with stormwater discharge permits

• Increased annual expenses by approximately
$900/year f
or debt service
• Requires a minimum 1.25x coverage ratio which
must be c
onsidered for rate-setting
CIPS COMPLETED IN FY2023/24 & FY2024/25 AT MDF
Materials Diversion Facility
Exterior Concrete Pads ($2.25M over 6 years)
New Scale
($80K)

ADDITIONAL SWR CIP PROJECTS
COMPLETED IN FY2023/24 & FY2024/25
New MDF Recycled Water Line Connection ($125K)
Materials Recovery Facility (MRF) Building (at MDF)
Exterior Painting ($75K)
Industrial Stormwater Mitigation Improvement (Phase 1)
($675K)
PLANNED SWR CIPS FOR FY26 AND FY27
City Corp Yard SWR Equipment Storage Bay
($150K )
Raising Height of MDF Compost Retention
Pond ($500K)
Industrial MDF Stormwater Mitigation
Improvement Ph 2 ($750K)
12 KV Electrical System Installation at MDF
($2.8M)
HIGHLIGHTED SWR CIPS FOR FY27/28-FY29/30
Materials Diversion Facility Improvements ($1.5M)
Biomass (Wood Waste) Gasification CEQA Study ($200K)
Potential $28+M Project at City Materials Diversion Facility CASP (Covered Aerated Static Pile)
Compost System 2.0 ($13M)
CASP 1.0
(2.0 Similar)

34 3. Dramatically Increased Fuel & Electricity Costs
History CY2019-CY2024
Year Fuel Energy Total
Cost
Change
vs.

Previous
Year
CY2019 $846K $377K $1.22M
CY2020 $742K $447K $1.19M -$0.03M
(-2.5%)
CY2021 $787K $530K $1.32M +0.13M
(+11%)
CY2022 $996K $622K $1.62M +0.3M
(+23%)
CY2023 $1.48M $689K $2.17M +0.55M
(+34%)
CY2024 $1.58M $878K $2.46M +0.29M
(+13%)
CY2019
vs.

CY2024
+0.73M +$0.41M +1.24M
Projections FY2025/26-FY2029/30
• Fuel increased at 5.35%/year
• Electr
icity increased at
11%/year (per CPUC projection)
FY2025/26: Fuel = $1.66M
Energy = $0.97M
Total = $2.63M
FY2026/27: Fuel = $1.75M
Energy = $1.08M
Total = $2.83M
FY2027/28: Fuel = $1.84M
Energy = $1.20M
Total = $3.04M
FY2028/29: Fuel = $1.94M
Energy = $1.33M
Total = $2.63M
FY2029/30: Fuel = $2.04M
Energy = $1.48M
Total = $3.52M
More than doubled over the 5-year period

4. PROPOSED SOLID WASTE

RATE ADJUSTMENTS
Section Introduction or Summary
Section Introduction or Summary

Number of Households with Different
Cart Sizes – CY2019 to CY2024
36 4,978 5,009 4,956 4,940 4,875 4,719
11,446 11,354 11,336 11,360 11,282 11,177
5,305 5,380 5,552 5,654 5,842 5,970
615 696 749 783 845 902
-
5,000
10,000
15,000
20,000
25,000
CY2019 CY2020 CY2021 CY2022 CY2023 CY2024
Number of Households with Different Cart Sizes - 2019 - 2024 Number of Households - 20 gallon Number of Households - 35 gallon Number of Households - 65 gallon Number of Households - 95 gallon

22.439 22,593 22,737 22,844 22,76822,344
Monthly Proposed Residential Rates 2025 to 2029 (does not show 95-gal) Proposed Rate Adjustments
37 Level of
Service
Current
(since
2022) July 2025 Change Jan 2026 Change Jan 2027 Change Jan 2028 Change Jan 2029 Change Total
Change
Avg
Monthly
Change
per Rate
Year
20-gallon $30.54 $34.20 $3.66 $37.63 $3.43 $40.64 $3.01 $43.89 $3.25 $46.52 $2.63 $15.98 $3.20 35-gallon $38.29 $42.88 $4.59 $47.17 $4.29 $50.95 $3.78 $55.02 $4.07 $58.32 $3.30 $20.03 $4.01 65-gallon $58.71 $65.76 $7.05 $72.33 $6.58 $78.12 $5.79 $84.37 $6.25 $89.43 $5.06 $30.73 $6.15 Monthly Cost for Commercial/Multi-Family Service
(2 cubic yard bin picked up weekly)
Current
(Since 2022) July 2025 January 2026 January 2027 January 2028 January 2029 Cumulative
Increase
$ 597.10 $ 668.75 $ 735.63 $ 794.48 $ 858.04 $ 909.52 $ 312.42 Proposed Rate Adjustment by Percentage for All Rates including Commercial/Multi-Family and Roll-Off (with exception of Roll-Off MSW) • Jul 1, 2025—12%
• Jan 1, 2026—
10%
• Jan 1, 2027—8%
• Jan 1, 2028—8%
• Jan 1, 2029—6%
Enhanced SWR Low/Fixed Income
Assistance Program
• Eligible if qualified for PG&E “CARE” Program
• Program in place since since 2019 at $10/month for up to 1,250 households
• Recommended Increase to $15/month for up to 1,500
households (1,222 households currently participating in SWR’s RateShare program)
• Revenue source is material sales (not rate revenue)

Napa’s Rates Will Remain Below
Regional Average
39 65 Gallon Monthly Residential Service Cost Comparison Chart based on current jurisdiction rates, many subject to annual adjustment prior to January 2026. Most common 35-gallon residential rates not utilized in above chart because several jurisdictions do not have multiple service size options smaller than 65-gallon and thus are not comparable residential rate structures.

Material Sales Revenue Volatility
40 $50
$100
$150
$200
$250
$300
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
10-year Average Material Sales Price Per Ton for Residential Recyclables $121
$268
Maximum volatility of 121% from low of $121/ton to high of $268/ton Materials sales revenue projection = $10.6M/year; 60% drop = $6.4M loss  Rate Stabilization Fund Needed
Replenishment of Solid Waste
Reserves & CIP Investments
41 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $7,786,979
$9,526,938 $9,483,677 $9,784,818 $10,139,012 $10,522,194 $11,005,030 $537,952
$537,952 $537,952
$3,337,952
$7,637,952
$3,637,952 $1,837,952
$65,250
$393,043
$1,547,268
$3,759,154 $6,821,681
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Current End of FY25 End of FY26 End of FY27 End of FY28 End of FY29 End of FY30 Projected Solid Waste Fund Reserve Balances with Proposed Rate Adjustments Liability Operating CIP Rate Stabilization
$537,952
$537,952
$65,250
$537,952
$65,250
$537,952
$3,337,952
$3,337,952
$7,637,952
$7,637,952
$3,637,952
$3,637,952
$1,837,952
$1,837,952
$393,043
$393,043
$393,043
$1,547,268
$1,547,268
$3,759,154
$3,759,154
$6,821,681
$6,821,681

5-year “phase-in” for Commercial Compostable Organics
SB 1383 Mandatory Commercial Organics Rate Study
• Current commercial organics collections rates have a 75% of MSW (landfil
l) charge for commercial food scrap collection and “no charge” for commercial yard trimmings service.
• SB 1383 requires all commercial generators (including multi-family served as commercial accounts) to subscribe and be provided access to collection of compostable organics.
• Attachment 2 to staff report is a detailed study for phased-in consol idation
of current commercial compostable organics service.
1 65-gallon
3X week service
– charge per
month
Current July 2025 Jan 2026 Jan 2027 Jan 2028 Jan 2029
Commercial MSW
(Landfill)
$288.03 $323.23 $355.55 $383.99 $414.71 $439.59
Commercial Food
Scraps
$216.45 $183.16 $151.22 $119.00 $88.40 $54.82
Food Scraps
savings vs. MSW
25%
savings
43%
savings
57%
savings
69%
savings
79%
savings
87%
savings
Commercial Yard
Trimmings
No
Charge
$9.36 $20.03 $30.37 $42.28 $51.16

5. NEXT STEPS – DIRECTION FROM

COUNCIL
Section Introduction or Summary
Section Introduction or Summary

Next Steps – Proposition 218 Notice
• Attachment 3 to
Staff Report
• Proposition 218
Notice includes
:

1. Proposed Rates

2. Reasons/Data
behind Proposed
Rate Adjustments

3. Information on
Public Hearing
(June 17th)

4. Protest Form &
Instructions
Proposition 218 Notice

Next Steps – Proposition 218 Notice
• Modeled on 2019
SWR Rate Notice
& in fulfillment of
promise to 2020
Napa Grand Jury.
• Incorporates 2019
Napa Taxpayers
requested
revision to
wording adjacent
to check box on
protest form.

Council Direction – Issuance of
Proposition 218 Notice
• Authorize City staff to provide written notice by mail of the proposed
update to solid waste and recycling
collection rates in compliance with all requirements
of state law, and
• Schedule a public hearing to consider adoption of
updated solid
waste and recycling collection rates
at City Hall, 955 School Street on June 17, 2025, at
6:30 pm.

Community Services Bldg: 1600 First Street, Napa CA 94559  Mailing Address: P.O. Box 660, Napa CA 94559  (707) 257-9530  www.cityofnapa.org

MEMO

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: JOY ELDREDGE, UTILITIES DIRECTOR
PREPARED: KEVIN MILLER, MATERIALS DIVERSION ADMINISTRATOR DATE: APRIL 15, 2025
SUBJECT: UPDATED SUPPLEMENTAL FILES FOR SWR COLLECTION RATES

Following the publication of the April 15, 202 5, City Council agenda, City staff has prepared updated supplemental files for Solid Waste and Recycling (SWR) Collection Rates, identified as Administrative Item 6B.

The updated supplemental files are as follows:

1. The staff report table for proposed residential rates had a rounding error w here a few of the proposed rates were off by a penny and did not match the proposed 5-year rate tables.

2. The second attachment to the staff report was an independent study that now has fully incorporated edits/revision after outside legal review.

3. The third attachment to the staff report was revised for the rounding error in the chart (as was noted above for the staff report) as well as various text and graphics updated to mirror what would be printed and mailed to the public for proposed SWR collection rate in fulfillment of Proposition 218 notice requirements (and pending Council authorization for the notice).

1 21694801.3
To: Honorable Mayor and Members of City Council

From: Joy Eldredge, Utilities Director

Prepared By: Kevin Miller, Materials Diversion Administrator

TITLE:
..Title
Solid Waste and Recycling Collection Rates

..LABEL
RECOMMENDED ACTION:
..Rec omm endation

Authorize City Staff to Provide Written Notice by Mail of the Proposed Update to Solid Waste and Recycling Collection Rates in Compliance with all Requirements of State Law, and Schedule a Public Hearing to Consider Adoption of Updated Solid Waste and Recycling Collection Rates on June 17, 2025, at 6:30 pm.

..Body
DISCUSSION:

BACKGROUND

The City’s Solid Waste and Recycling Enterprise Fund (SWR Fund) operates an enterprise with an annual budget of approximately $52.6 million (based on City’s Fiscal Year (FY)2025/26 proposed budget) to provide solid waste/recycling collection, operate the City’s Materials Diversion Facility (MDF), and manage state-mandated diversion requirements and programs (SWR Enterprise). Most services are provided through a contract with Napa Recycling and Waste Services, LLC (NRWS). Collection rates have historically been set annually based on contractual obligations, increased operating expenses, capital improvement needs, and revenue projections. The current collection rates were approved by the Napa City Council on July 23, 2019, became effective January 1, 2022, and have not been adjusted in the intervening three-and-half year period.

Solid waste and recycling collection is an essential service provided by the City.

Col
lection rates are established to recover the cost of providing the service to the customer. The City’s Solid Waste & Recycling )Division within the Utilities Department manages the expenditures and revenues of the SWR Enterprise to ensure that a high level of service is delivered at the most reasonable cost to customers. Costs typically increase each year based on inflation, contractual obligations, compliance with state laws and regulations as well as and maintenance and operational requirements of the MDF. While revenues from collection rates are fairly stable each year, revenue from the sale of recyclable materials (16-21% of total SWR Fund revenue) is highly variable and is partially based on the volatile global commodity markets.

PRO

POSED RATE ADJUSTMENTS

Staff has carefully analyzed proj ected revenues and expenses, programmatic impacts, state regulatory requirements, debt service requirements and contractual obligations to establish a base adjustment to collection service rates necessary to cover the needs of the SWR Enterprise, including prudent replenishment of reserves in the SWR Fund that were drawn down and then partially replenished over the last five-year period. The detailed “Solid Waste & Recycling Collection Service Rate Study for 2025-2029” (“Rate 2 21694801.3
Study”) underlying this base rate recommendation and all proposed rates are contained in Attachment 1 to this report. The proposed monthly rates for residential services are presented in table below:

PROPOSED MONTHLY RESIDENTIAL RATES FOR THE NEXT FIVE RATE YEARS

Monthly residential rates include weekly collection of solid waste (trash) and recyclable materials as well as compostable greenwaste, soiled paper, and food scraps.

Cart
Size
Current
Rate
Adopted
1/1/2022
Proposed
Rate
Effective
7/1/2025
Proposed
Rate
Effective
1/1/2026
Proposed
Rate
Effective
1/1/2027
Proposed
Rate
Effective
1/1/2028
Proposed
Rate
Effective
1/1/2029
Total
Cumulative
Change
Average
Monthly
Change
per Year
20-
gal $30.54 $34.20 $37.62 $40.63 $43.88 $46.51 $15.97
$3.19
35-
gal $38.29 $42.88 $47.17 $50.94 $55.02 $58.32 $20.03
$4.01
65-
gal $58.71 $65.76 $72.34 $78.13 $84.38 $89.44 $30.73
$6.15
95-
gal $90.30 $101.14 $111.25 $120.15 $129.76 $137.55 $47.25 $9.45

Staff has prepared a draft written notice of public hearing to adopt proposed rates and is prepared to mail it to all property owners and rate payers by April 30, 2025, in order to meet the 45-day public review period required by Proposition 218. If approved for mailing, staff will return to City Council on June 17, 2025, for a public hearing to consider adoption of proposed rates. The proposed notice is shown in Attachment 3 to this report.

PRIMARY DRIVERS OF PROPOSED RATES

As noted above, solid waste and recycling collection service rates were last increased in January 2022. Since that last rate adjustment, many significant changes have occurred and solid waste and recycling collection service rates (“Solid Waste Rates”) need to be adjusted to address the changes that directly impact the City’s ability to provide solid waste and recycling collection services to its customers. While there are many variables, the three primary drivers for the proposed Solid Waste Rate adjustments are as follows:

1. NRWS Contract and Impact of SB 1383 Compliance: The 2022 Contract Amendment with NRWS was approved by the Napa City Council in October 2022. Among other items, the 2022 Contract Amendment addressed operating and maintenance costs of the Covered Aerated Static Pile (CASP) and improved stormwater management system at the City’s MDF. Both major facility improvements were necessary to be compliant with solid waste, stormwater and air permits applicable to the MDF, particularly in order to receive, process and compost food scraps and soiled paper in addition to more traditional greenwaste.

The 2022 Contract Amendment also increased compensation to NRWS for economic growth and defined parameters to measure that growth through an every-other-year “reconciliation review” process. Finally, the 2022 Contract Amendment fixed the annual contractual inflators for labor at 3.5% per year and 3 21694801.3
non-labor capital and operating payment at 2.5%. In order to avoid large fluctuations for both parties for non-labor costs, the Amendment also included a risk sharing procedure whereby the City and NRWS share non-labor costs increases 50%/50% when the index, the Consumer Price Index-All Urban Consumers – All Items less food and energy, San Francisco-Oakland-San Jose- CA (Series ID CUURA422SAOL1E), exceeds 5% in a given year (the “safety- valve”). This term applies to the current City-NRWS agreement which ends in Contract Year (CY)2031. The “safety valve” provision for non-labor costs was exercised in contract year (and calendar year) 2023 as the inflation rate was greater than 5% (6.0% that particular year). The capital and operating impacts of the 2022 Contract Amendment “reset” the baseline capital and operating by approximately $900,000 per year (escalated at the 3.5% labor and 2.5% non- labor indices since CY2022). The “reconciliation review” growth provision payment to NRWS is currently $205,516/year for residential growth, $698,404/year for commercial growth and the most recent annual roll-off debris box service growth was a payment of $68,466 to NRWS for CY2024 actuals.

Senate Bill (SB) 1383, California’s Short-Lived Climate Pollutant Reduction Strategy (Mandatory Organics Recovery), was signed into law in 2016 and the state-issued regulations to implement the statute became effective January 1, 2022 (SB 1383). SB 1383, focused on organics, is imposed on jurisdictions and solid waste generators (i.e., residential, commercial and institutional generators and collectors of solid waste/recyclable/compostable materials) that requires participation in recycling and organics recovery programs, including edible food recovery. The City submitted a Notification of Intention to Comply with SB 1383 to the state (CalRecycle) in February of 2022 and subsequent programmatic and contractual adjustments and additions were made to adhere to SB 1383 and the implementation plan approved by CalRecycle.

The SB 1383 Contract Amendment with NRWS was approved by the City Council in April 2023. This contract amendment continued the City’s effort to achieve (or exceed) a 75% level of diversion from landfill disposal pursuant to both adopted City policy and state goals. Key cost drivers included: (1) addition of one commercial compost collection vehicle and driver; (2) new and/or upgraded collection equipment for expanded collection of compostable organic materials;
(3) addition of two NRWS compost equipment operators, two NRWS recycling outreach specialists and 1 ½ NRWS customer service representatives (half of one NRWS customer service representative was paid by south Napa County unincorporated rate payers);
(4) new and/or upgraded sorting and processing equipment for recyclables at the City-owned MDF and
(5) $2.6 million of new organics processing equipment at the MDF ($1.5 million of which was paid through a competitive grant secured from CalRecycle by the City).

The total annual impact was projected at approximately $2.8 million per year. At current collection service rates, every $310,000 in additional costs is approximately 1% of collection service rate revenue. Thus the 4 21694801.3
annual increase in costs for SB 1383 compliance has “reset” the base NRWS contract by approximately 9%. The impact of the SB 1383 Contract Amendment is described in more detail in section 3.1 of the Rate Study (Attachment 1).

2. Major Capital and System Improvements: In September 2016, the City issued $12.5 million in solid waste revenue bonds (“SWRB”) for several major capital and system improvements at the MDF. Approximately $8 million of the SWRB proceeds have been invested in a CASP system to process compostable organic materials at the MDF. The CASP system is necessary to process a wide range of compostable materials including food scraps, grape pomace, soiled paper and manure (along with traditional yard trimmings) to be in compliance with permit conditions imposed on the MDF. Three major permits govern the MDF operation: solid waste facility, air district emissions, and stormwater management. Beyond the CASP system, approximately $2 million of the SWRB proceeds was dedicated towards a greatly improved stormwater management and treatment system at the MDF to meet the General Compost Order from the San Francisco Bay Area Regional Water Quality Control Board. The remainder of the SWRB proceeds funded necessary roof extensions, additional concrete pad, and loading dock improvements for storage and processing of recyclable materials at the MDF. The annual debt service for the SWRB is slightly under $900,000 per year.

Unfortunately, several major capital improvement projects (CIPs) have either been deferred or are now required because of combination of SB 1383 processing and increasingly stringent regulations and necessary permits (air, stormwater and solid waste facility permits). In consultation with NRWS as the contracted facility operator, the proposed rates support $18.7 million in MDF CIPs over the next five years. In FYs 2025/26 and FY2026/27, the proposed rates would fund the following CIPs at the MDF: (1) $2.8 million for installation of a 12 KV electrical system (as required by PG&E and deferred from 2020 because of the COVID-19 pandemic); (2) $750,000 for a second phase for treatment and storage of MDF industrial stormwater; (3) $500,000 for raising the height of the “compost contact” retention pond since no discharge is allowed for compost contact water, and (4) $150,000 for a permanent equipment storage bay at the City’s corporation yard. In FYs 2027/28 through FY2029/30, the major MDF CIPs that need to be funded are: (1) $13 million for next phase of CASP composting system (largely in response to air permit requirements to maximize on-site composting and avoid expense off-hauling of excess organic material to other composting facilities); (2) $500,000 for MDF concrete pad partial replacement (first year of a 3-year $500,000/year plan starting in FY2029/30 and continuing through FY2031/32); (3) $400,000 for replacement/rehabilitation of the 20 year-old MDF scalehouse in 2026 which has been deferred previously; and (4) $300,000 for partial replacement of perimeter MDF fencing (which has already been deferred several times). The original perimeter fencing will be 35 years old by CY2029 and cannot withstand additional deferral.

The City considered bond-funding for some of the above MDF CIPs, but the bond interest rates at nearly 6% interest are not favorable compared to the SWRB rate of 3.14%. The MDF CIP plan is described in more detail in section 3.2 of the attached Rate Study (Attachment 1).

5 21694801.3

3. Dramatically Increased Fuel and Electricity Costs: A rapid and significant increase in the cost of fuel for NRWS collection vehicles and electricity for operation of the MDF has been experienced since the time of previous rate setting and is expected to continue to increase in the next five years. Full reimbursement of actual NRWS fuel and MDF electricity costs (once documented and verified) is built into the City-NRWS Agreement. In CY2019 (time of previous multi-year SWR rate setting), the combined cost of fuel and electricity was $1.22 million. By CY2024, the combined fuel and electricity cost had risen to $2.46 million, a 101.6% increase. Projections for fuel cost are 5.35% increase per year for the next five years and an 11% per year increase for electricity for the next five years. If these projected increases materialize as projected, the cost of fuel and electricity will be $3.53 million in CY2029 (a 43.5% increase compared to CY2024 actual fuel and electricity costs) creating an additional $1.07 million obligation for the SWR Fund. As noted above, at current collection service rates, every $310,000 in additional costs is approximately 1% of collection service rate revenue. Thus a $1.07 million increase constitutes a 3.45% increase by itself over current collection service rates. The impact of dramatically increased fuel and electricity costs is described in more detail in section 3.3 of the Rate Study (Attachment 1).

ADJUSTMENT TO RESIDENTIAL LOW/FIXED INCOME ASSISTANCE PROGRAM

City water rates began a low-income assistance program called “RateShare” in 2012.

As part of the 2019 rate setting process, a low/fixed income financial assistance program was adopted. In short, the low-income assistance program for SWR Enterprise utilizes the qualification criteria based on the established Pacific Gas & Electric (PG&E) California Alternate Rates for Energy (CARE) program. The low/fixed- income assistance program for City/NRWS residential is available for eligible CARE households within the City on a first-come, first-serve basis. The current Council- approved SWR Enterprise low/fixed income assistance program is a flat $10 per month ($120 per year) assistance to qualified participating residential households. The current rate structure allowed up to 1,250 solid waste customers to participate in the low- income assistance program (as of March 2025, there were 1,222 customers utilizing the program). Given the number of eligible residential customers already utilizing the program and the higher costs of nearly all basic necessities today, City staff is recommending that the program be increased to $15 per month ($180 per year) and the maximum number of eligible households be increased from 1,250 households to 1,500 households. Materials sales revenue is proposed to be used as the source of revenue for this new low-income assistance program at a level of $270,000 per year (1,500 households X $180 per year for qualifying residential customers).

SB1383-COMPLIANT COMMERCIAL ORGANICS RATE STRUCTURE

In the course of developing commercial food scrap collection rates in 2014/2015, the City commissioned an independent study to establish those rates when the full program became available to all City (NRWS) commercial customers in April of 2015. That study recommended that the commercial food scrap collection rates be 75% of the Municipal Solid Waste (MSW) landfill service collection rates based on service cost at the time and the desire for there to be sufficient savings to encourage voluntary participation in the program. With the passage of SB 1383, all commercial generators of compostable organic materials (i.e., yard trimmings, food scraps and soiled paper) are now required 6 21694801.3
to subscribe and participate in the City’s organics collection program(s). As with commercial recycling, commercial customers have historically been offered service of yard trimmings at no additional charge (much like residential customers have a “bundled” rate that includes recycling and compost collection services). However, since SB 1383 made the collection of the full spectrum of compostable organic waste mandatory, it was recognized that the “no charge” commercial yard trimmings service needs to be consolidated and merged with the current commercial food scraps collection service rates (currently 75% of commercial MSW collection rates). This also applies to multi-family (apartment) complexes that are serviced like commercial properties. The results of the updated independent study are detailed in Attachment 2 to this staff report.

After extensive independent analysis, the recommended 5-year rates for commercial organics (Attachment 2) is anticipated to achieve the optimal cost-recovery rates for SB 1383’s new mandatory collection requirements for commercial and multifamily customers. The recommended rates are anticipated to sufficiently cover the collection and processing costs of the commercial and multifamily food scraps and yard trimming services, while also incentivizing compliance with SB 1383’s mandatory requirements.

The rates also incorporate increased costs to NRWS for operation impacts and equipment capitalization necessary to expand its food scraps and yard trimmings collection routes and processing at the MRF. It is anticipated that by the fifth year, commercial and multifamily customers will be able to co-collect their food scraps and yard trimmings into the same container, thereby reducing route collection costs at that time. Accordingly, staff recommends the new food scraps collection rates be reduced over time to 45% (or less) of MSW collection rate structure.

STAFF RECOMMENDATION

Staff recommends the issuance of a public notice that includes the proposed Solid Waste Rates as shown in Attachment 1 and Attachment 3 to cover the base contractual and programmatic obligations of the SWR Fund. While the proposed Solid Waste Rates would require use of the SWR Fund reserves in the initial years, they will also replenish reserves in later years to meet SWR Fund reserve targets for operating expenses, debt liabilities and emergencies. The proposed rates would also provide adequate funding to cover major CIPs over the next five years. Finally, the proposed Solid Waste Rates would replenish and restore the rate stabilization/undesignated fund reserve as the City approaches the end of the current agreement with NRWS (which ends in CY2031.) In looking ahead, a new fleet of collection vehicles and new and replacement MDF processing equipment must be purchased and installed as the current vehicles and equipment are nearing the end of their useful life.

Council is not setting collection rates at this time with this recommended action. Council is only authorizing the mailing of a Public Notice to Consider Adoption of Updated Solid Waste and Recycling Collection Rates on June 17, 2025 (please see Attachment 3 for draft notice). If the proposed rates are adopted, rates would be effective July 1, 2025, and each January 1, in years 2026 through 2029.

FINANCIAL IMPACTS:

There is no direct impact associated with the authorization to issue a Notification to property owners. However, future associated actions will have significant impacts on 7 21694801.3
the ability to cover operating costs associated with the Solid Waste Recycling program and the ability to make capital investments in the MDF. For example, the proposed budget (with no rate adjustment assumed) shows a $5.2M deficit in FY2025/26.

Proposed rates are necessary to address this deficit position and establish a rate stabilization fund to withstand volatility in the material sales market.

A more detailed discussion on reserves and impact of proposed rate adjustments on projected reserve balances is contained in sections 4.3 and 5.3 of rate study (Attachment 1).

CEQA:

The Utilities Director has determined that the Recommended Action described in this Agenda Report is not subject to CEQA, pursuant to CEQA Guidelines Section 15378 and 15273 and Public Resources Code Section 21080(b)(8) because (1) the increase in charges are for the purpose of meeting operational and maintenance expenses of solid waste services; and (2) the charges constitute the creation of a funding mechanism/other government fiscal activity that does not involve any commitment to any specific project that may result in a potentially significant physical impacts on the environment. .

DOCUMENTS ATTACHED:

ATCH 1 – Solid Waste & Recycling Collection Service Rate Study for 2025-2029

ATCH 2 – Development of SB 1383 5-Year Commercial Organics Rate Structure

ATCH 3 – Draft Proposition 218 Notice

NOTIFICATION:

Greg Kelley, General Manager, Napa Recycling & Waste Services (courtesy copy) Mike Murray, CFO, Napa Recycling & Waste Services (courtesy copy) Steve Lederer, Napa County Public Works Director (courtesy copy) Peter Ex, Napa County Local Enforcement Agency (courtesy copy)

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Development of a Phased 5-Year
Organics Rate Structure, Service
Migration Predictions, and Revenue
Impacts of a Fully Implemented SB 1383
Organics Program

Submitted on April 4, 2025, by EcoNomics, Inc.

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Table of Contents
1 Project Background and Objectives ..................................................................................................... 8

1.1 General Overview of Senate Bill 1383 ....................................................................................... 8

1.2 City’s SB 1383 Implementation Progress ................................................................................. 8

1.3 SB 619 Notice of Intent to Comply .............................................................................................. 9

1.4 2023-2024 Commercial Co-collected Compostable Rate Study ...................................... 9

1.5 2025 Rate Study Objectives ........................................................................................................ 10 2 Findings ........................................................................................................................................................ 12

2.1 Summary of Key Findings ............................................................................................................ 12

2.2 5-year Phased-in Rate for Commercial and Multifamily Yard Trimmings Service 13

2.2.1 5-year Phased-in Rate for Commercial Yard Trimmings Service ....................... 13

2.2.2 5-year Phased-in Rate for Multifamily Yard Trimmings Service ........................ 14

2.3 5-year Phased-in Rate for Commercial Food Scrap Service ........................................... 15

2.4 5-year Phased-in Rate for Multifamily Food Scrap Service ............................................ 15

2.4.1 5-year Phased-in Rate for Packaged Organics Collection Service ...................... 16

2.5 Revenue Impacts of Proposed Rates ....................................................................................... 17

2.5.1 Overview of Revenue Impact 1: Increase in Rate Revenue from Current Yard Trimmings Customers Who Currently do not Pay for this Service ....................................... 19

2.5.3 Overview of Revenue Impact 3: Increase in Rate Revenue from Currently Non-compliant Commercial Generators that Implement Food Scrap Recycling Programs in 2025 ..................................................................................................................................... 19

2.6 Cost Impacts of Proposed Rates ................................................................................................ 20

2.6.1 Overview of Cost Impact 1: Increase in Costs due to Need for Additional Staff For Multi-family Properties .................................................................................................................. 21

2.6.2 Overview of Cost Impact 2: Increase in Cost due to Capital Expenses Associated with Bins and Liners ......................................................................................................... 22

2.6.3 Overview of Cost Impact 3: Change in Collection Cost Payments to NRWS due to Reduction in Lift Costs ...................................................................................................................... 22

2.6.4 Overview of Cost Impact 4: Increase in Cost due to Capital Expenses Associated with New Collection Vehicle .......................................................................................... 22

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2.6.5 Overview of Cost Impact 5. Increase in Cost due to Increased Frequency of Cart Washing .............................................................................................................................................. 23

2.6.6 Overview of Cost Impact 6: Decrease in Cost from Avoided Disposal .............. 23

2.6.7 Overview of Cost Impact 7: Increase in Costs due to Need for Additional Staff to Drive Vehicle ......................................................................................................................................... 23

2.6.8 Overview of Cost Impact 8: Increase in Costs for Operating Additional Vehicle 23 2.7 Combined cost and revenue impacts of recommended rates ........................................ 23

2.7.1 Analysis of Recommended Program Rates and Net Impact on the City’s Solid Waste Enterprise Fund........................................................................................................................... 26

2.8 Rate Impacts on Individual Customers .................................................................................. 26

2.8.1 Rate impact on current customers: Commercial and Multi-family Yard Trimmings Recycling Customers ........................................................................................................ 27

2.8.2 Rate impact on current customers: Commercial and Multi-family Food Scrap Recycling Customers ............................................................................................................................... 27

2.8.3 Rate impact on future customers: Non-compliant commercial and multi- family generators that will need to implement food scrap recycling service, yard trimmings service, or both .................................................................................................................... 28

2.8.4 Rate impact on migrating customers for both Food Scraps and Yard Trimmings ................................................................................................................................................... 28

2.8.5 Rate impacts on individual customers as a result of the costs outlined in Table 7 29

2.8.6 Cost Impact 1: Labor Costs ........................................................................................................ 34

2.8.7 Cost Impact 2: Bins and Liners ................................................................................................. 34

2.8.8 Cost Impact 3: Collection Cost .................................................................................................. 34

2.8.9 Cost Impact 4: Purchase of a New Vehicle ........................................................................... 34

2.8.10 Cost Impact 5: Increased Washing of Food Scraps Carts ............................................. 34

2.8.11 Cost Impact 7: Cost of Vehicle Driver .................................................................................. 34

2.8.12 Cost Impact 8: Vehicle Operating Expenses ..................................................................... 35

2.9 Recommendation to Closely Track Migration and MSW Right-sizing to Ensure Fund Stability .................................................................................................................................................. 35

2.9.1 Migration. ................................................................................................................................. 35

2.9.2 MSW Right Sizing. .................................................................................................................. 35

2.9.3 Recommended Methodology to True Up Actual Migration Each Rate Year ... 36 3 Methodology ............................................................................................................................................... 37

3.1 Methodology to Identify Revenue Impacts ........................................................................... 37

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3.1.1 Revenue Impact 1: Increase in Rate Revenue from Current Commercial and Multi-family Yard Trimmings Customers Who do not Pay for this Service ....................... 37

3.1.2 Revenue Impact 2: Decrease in Rate Revenue from Current Commercial Food Scrap Recycling Customers Who Currently Pay 75% of the Equivalent MSW Rate for this Service .................................................................................................................................................. 38

3.1.3 Revenue Impact 3: Increase in Rate Revenue from Currently Non-compliant Commercial Generators that Implement Food Scrap Recycling Programs in 2025. ...... 39

3.1.5 Overall Food Scraps and Yard Trimmings Revenue Impacts ............................... 40

3.2. Methodology to Identify Cost Impacts .......................................................................................... 41

3.2.1 Cost Impact 1: Increase in Costs due to Need for Additional Staff For Multifamily Properties ........................................................................................................................... 41

3.2.2 Cost Impact 2: Increase in Cost due to Capital Expenses Associated with Bins and Liners .................................................................................................................................................... 42

3.2.3 Cost Impact 3: Decrease in Collection Cost Payments to NRWS due to Reduction in Lift Costs ............................................................................................................................ 43

3.2.4 Cost Impact 4: Increase in Cost due to Capital Expenses Associated with New Collection Vehicle ..................................................................................................................................... 47

3.2.5 Cost Impact 5. Increase in Cost due to Increased Frequency of Cart Washing 47 3.2.6 Cost Impact 6: Decrease in Cost from Avoided Disposal ........................................ 47

3.2.7 Cost Impact 7: Increase in Costs due to Need for Additional Staff to Drive Vehicle 50

3.2.8 Cost Impact 8: Increase in Costs for Operating Additional Vehicle ................... 50

3.3 Methodology to Model Downsizing for Yard Trimmings Customers ......................... 50

3.4 Methodology to Model Customer Migration ........................................................................ 50

3.4.1 Most Likely Scenario ............................................................................................................ 52

3.4.2 Scenario 1: Customers with Greater than 1 Cubic Yard Food Scraps and Yard Trimmings Service ................................................................................................................................... 52

3.4.3 Scenario 2: Customers with Greater than 2 Cubic Yards Food Scraps and yard trimmings Service .................................................................................................................................... 53

3.5 Dynamic Migration Pacing .......................................................................................................... 54

3.5.1 Logistic Growth Model ........................................................................................................ 54

3.6 Exploring patterns for migrating customers ........................................................................ 58

3.7 Methodology to Model Phased-in Rates ................................................................................. 60

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3.7.1 Structure of the 5-year phase-in period ....................................................................... 60

3.7.2 Final Rate Calculation .......................................................................................................... 60 4 Conclusion and Recommendations ................................................................................................... 63

4.1 Summary of Key Findings ............................................................................................................ 63

4.2 Implications for City Budgeting ................................................................................................. 63

5. Appendices ....................................................................................................................................................... 65

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List of Tables
Table 1: Commercial Yard Trimmings Phased-In Rates and MSW Rate Comparison ............................... 14 Table 2: Multifamily Yard Trimmings Phased-In Rates and MSW Rate Comparison ................................ 14 Table 3: Commercial Food Scraps Phased-In Rates and MSW Rate Comparison ....................................... 15 Table 4: Multifamily Food Scraps Phased-In Rates and MSW Rate Comparison ........................................ 16 Table 5: Commercial Packaged Organics Phased-In Rates and MSW Rate Comparison ......................... 17 Table 6: Multifamily Packaged Organics Phased-In Rates and MSW Rate Comparison .......................... 17 Table 7: Predicted Yearly Revenue Impact of Most Likely Migration Scenario ........................................... 17 Table 8: Predicted Yearly Cost Impact of Most Likely Migration Scenario .................................................... 21 Table 9: Predicted Yearly Impact of Most Likely Migration Scenario .............................................................. 25 Table 10: Expected Costs vs. Phased-in Revenue 2025-2028 ............................................................................. 26 Table 11: Percentage Breakdown of Cost Components ......................................................................................... 31 Table 12: Phased-In Rates For Scenario 1 ................................................................................................................... 39 Table 13: Scenario 1: Total Monthly Revenue by Waste Type ........................................................................... 40 Table 14: Migration Summary by Year Scenario 1 .................................................................................................. 42 Table 15: Collection Cost Overview By Year .............................................................................................................. 43 Table 16: Lifts Summary by Type ................................................................................................................................... 44 Table 17: Predicted Lifts Summary by Type .............................................................................................................. 45 Table 18: Scenario 1 Lifts Summary by Type ............................................................................................................ 46 Table 19: Scenario 2 Lifts Summary by Type ............................................................................................................ 47 Table 20: Mean Weight per Cubic Yard by Cart Size ............................................................................................... 48 Table 21: Mean Weight per Cubic Yard by Waste Type......................................................................................... 48

List of Figures
Figure 1. Cost in USD of each of the 7 components in Commercial Food Scraps Rates ............................ 32 Figure 2. Cost in USD of each of the 7 components in Multifamily Food Scraps Rates ............................. 32 Figure 3. Cost in USD of each of the 7 components in Commercial Yard Trimmings Rates ................... 33 Figure 4. Cost in USD of each of the 7 components in Multifamily Yard Trimmings Rates .................... 33 Figure 5. Expected Phased in Yearly Revenue by Waste Type ........................................................................... 41 Figure 6. Distribution of cart weights standardized for fullness and volume. ............................................. 49 Figure 7. Number of Containers by Service Type for All Accounts ................................................................... 51 Figure 8. Number of Containers by Service Type for Scenario 1 Accounts ................................................... 53 Figure 9. Number of Containers by Service Type for Scenario 2 Accounts ................................................... 54 Figure 10. Scenario 1- Number of Migrating Accounts and Relevant Lifts for Those Accounts over Time ............................................................................................................................................................................................ 55 Figure 11. Scenario 1- Number of Migrating Accounts and their Processing and Collection Costs .... 56 Figure 12. Scenario 2- Number of Migrating Accounts and Relevant Lifts for Those Accounts over Time ............................................................................................................................................................................................ 57 Figure 13. Scenario 2- Number of Migrating Accounts and Processing and Collection Costs for Those Accounts over Time .............................................................................................................................................................. 57 Figure 14. Difference in Non Migrated vs. Migrated Rate and Total Cubic Yards in Scenario 1 Accounts .................................................................................................................................................................................... 58 Figure 15. Difference in Non Migrated vs. Migrated Rate and Total Cubic Yards in Scenario 2 Accounts .................................................................................................................................................................................... 59

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List of Appendices
Appendix 1 - 2023/2024 report
Appendix 2 - Commercial Rate Tables – Yard Trimmings and Food Scraps Appendix 3 - MF Rate Tables – Yard Trimmings and Food Scraps Appendix 4 - Packaged Organics Rate Tables – Commercial and Multifamily Appendix 5 - Current and Predicted Services – Current Food Scraps and Onboarding Accounts Appendix 6 – Potential Migrators – Current and Migration Service Information Appendix 7 - Constants

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1. Project Background and Objectives

1.1 General Overview of Senate Bill 1383
In 2016, the California state legislature passed Senate Bill 1383 (SB 1383): California’s Short- Lived Climate Pollutants Reduction Law. This legislation is intended to reduce greenhouse gas emissions in California through diversion of organic waste materials from landfills.

Definitions of organics were finalized by CalRecycle in November 2020 and included: yard trimmings, food scraps, food-soiled paper and fibers. SB 1383 requires all commercial businesses, multi-family and single-family residences to separate their waste into 3 streams:
municipal solid waste (MSW), organics, and recyclables on or before January 2022.

Jurisdictions that do not comply with these organic waste diversion requirements may face fines of up to $10,000 per day. SB 1383 also requires all jurisdictions to adopt a local ordinance that mandates businesses, multi-family properties, and residents to implement a 3-container collection program or face administrative penalties. The City incorporated these mandatory recycling requirements into Section 5.61 of its municipal code in January 2022.

1.2 City’s SB 1383 Implementation Progress
The City recently amended its contract agreement with Napa Recycling and Waste Services (NRWS) to incorporate the programmatic and reporting requirements of SB 1383. Following a 5-year pilot commercial collection program, in 2015 the City of Napa began offering source- separated food scrap collection to businesses at a cost of 75% the cost of equivalent MSW service. This rate for food scraps, when compared to equivalent MSW service, offers businesses a rate incentive to comply with the organic-waste diversion mandates. The food scrap rate incentivization level was the result of extensive analysis conducted by Economics, Inc. in 2014 and presented to the City Council in March 2015. The rate incentive was developed to ensure the program was financially sustainable and that the food scrap rate generated sufficient revenue to cover the collection and processing costs of the program. As of Jan 1, 2025, there are approximately 292 commercial accounts that subscribe to commercial food scrap collection service. The City’s contract hauler, NRWS has provided businesses and multi-family properties yard trimming recycling programs at no charge since the current collection contract has been effective. To become fully compliant with SB 1383, a total of 60 commercial and multi-family accounts need to implement food scraps; an additional 88 multi-family accounts that currently have yard waste service will need to also implement a food scrap recycling program. Multi-family customers that subscribe to commercial collection service (i.e. have a centralized collection area for MSW, recycling, and/or organics as opposed to individual carts for each housing unit) must also have organics recycling service per SB 1383. Of the 123 multi-family properties in the City with commercial collection service, 109 have organics recycling service (88.6%), which includes food scraps and/or yard trimmings. SB 1383 requires all commercial and multi-family properties to have 3-container collection service, therefore the City needs to implement additional organics recycling programs at both commercial and multi-family properties to attain full compliance with SB 1383.

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1.3 SB 619 Notice of Intent to Comply
In February of 2022 the City of Napa submitted a Notification of Intent to Comply (NOIC) to CalRecycle. The NOIC process, which was authorized by Senate Bill 619, allows jurisdictions to seek delays in enforcement of elements of SB 1383. Via the SB 619 NOIC process, the City requested, and was granted, conditional relief from CalRecycle enforcement surrounding the requirement that all multi-family properties have organics recycling collection service (including food scraps, fiber materials, and yard trimmings) by January 1, 2022. As part of the NOIC process, CalRecycle, in close coordination with the City, developed a Corrective Action Plan (CAP) that provided a pathway for the City to attain full multi-family organics recycling compliance by 2026. The CAP provided the City additional time for multi-family and commercial generators to successfully participate in the expanded and enhanced collection programs that comply with SB 1383. Implementing organics recycling at multi- family properties presents a unique set of challenges, including limitations on space in existing trash enclosures needed to house additional containers to collect food scraps and yard trimmings, high turnover among residents, multiple languages being spoken by residents, frequent trash overages during move-in and move-out periods due to the disposal of unwanted bulky items by outgoing tenants, and property managers that are wary of adjusting service levels to incorporate organics recycling service. In recognition of these challenges, the execution of the CAP focused on providing extensive technical assistance to the waste generators to capture and recover the maximum amount of organic materials targeted by SB 1383 while also minimizing contamination.

1.4 2023-2024 Commercial Co-collected Compostable Rate Study In 2023, the City of Napa commissioned a rate study to identify the optimal rate to charge for co-collected commercial compostables collection service (including yard trimmings and food scraps). The City retained EcoNomics, Inc. to review the current SB 1383 compliance status of all commercial accounts, determine the costs and operational effects of full compliance, develop pacing scenarios as any businesses moved towards the necessary food scraps and yard trimmings collection scenarios to comply with SB 1383 over time, and provide a cost impact analysis to develop a rate for commercial co-collected compostables collection (food scraps and yard trimmings). As compliance with SB 1383 is attained and all businesses and multi-family properties implement the requisite compostable programs, EcoNomics projected adjustments to the volume of total materials collected, as well as needed operational and capital cost changes needed to accommodate an expanded commercial compostable route, to create a preliminary cost recovery rate. EcoNomics also modeled scenarios to develop a rate for highly contaminated commercial and multi-family food scraps collection by processing these materials through the City’s depackaging equipment. This report was submitted to the City on January 26, 2024 and is titled:

Projecting Collection Cost Impacts for Full SB 1383 Implementation: A Rate Study to Develop Revenue and Cost Impacts of a Clean Compostables and Packaged Organics Route. The complete report is included as Appendix 1. The results of the study were reviewed by City staff and it was determined that the recommended cost-recovery rate for commercial yard trimmings be ‘phased-in’ over a five-year period to reduce financial impacts on current customers that have been receiving yard trimmings service at no charge since the contract

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became effective. The rate study found that a cost-recovery rate could be offered to commercial food scrap customers at a lower cost than the current rate of 75% of equivalent MSW service. To ensure stability in rate revenue receipts from current commercial food scrap customers, the City directed EcoNomics to study the rate impacts of the cost recovery rate for food scraps over a 5-year period. The City also requested that EcoNomics determine the operational, capital, and rate impacts of container migration for customers with large numbers of yard trimmings and food scrap carts who may benefit from the use of a single 1 or 2-yard bin to collect these materials, provided it is operationally feasible to do so. The 2025 study builds off of the findings of the 2024 report, including the projected revenue and cost impacts of projected full SB 1383 compliance levels, and includes recommendations from the original 2024 rate study.

In summary, the following key factors influenced the development of the new rate model and were included in the 2025 study:
• Updating the calculation of collection cost payments to identify the cost per lift value and distribute this value across all generators for cost recovery • The exclusion of the packaged organics route until the program is refined at a later date.
• Modeling the migration of service levels from multiple carts to fewer bins because of increased costs per services as the rate becomes implemented over a 5-year period. • Direct field research analysis of cart weights used to improve the accuracy of specific density values.
• Maintaining separate routes for yard trimmings and food scraps until year 5.

Incorporating the above elements into the 2025 rate study required extensive additional analysis of the commercial customer base to develop service projections and model cart-to- bin migration scenarios. This analysis was coupled with field data collection to refine key assumptions, including density, and to refine service projections based on actual customer volume allocations.

1.5 2025 Rate Study Objectives
The objective of 2025 rate study is to identify the optimal, cost-recovery rate to charge for commercial and multi-family food scraps and yard trimmings collection service and to determine the impact of charging these rates on the City’s overall solid waste fund. The commercial rates were developed in alignment with the following criteria:
• Develop a financially sustainable rate that generates sufficient rate revenue to cover the collection and processing costs of the commercial and multifamily food scraps and yard trimmings programs
• Continue to provide a rate incentive (i.e. the rate for compostable collection is less than equivalent MSW collection rate) to businesses and multi-family properties that

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incentivizes them to incorporate new compostable collection service that is required to comply with SB 1383 without increasing overall trash bills • Provide a cost-recovery rate for existing yard trimmings customers (that have historically received this service at no charge) whose yard trimmings collection costs will increase when it is provided at a charge
• Provide a cost-recovery rate for existing commercial food scrap customers (that have received this service at 75% the charge of equivalent MSW service since 2015 before SB 1383 regulations became effective) whose food scrap collection costs may decrease when it is provided at the optimally incentivized level • Provide a clear nexus between the cost of providing the service and the rate charged to the customers
Per the City’s direction, EcoNomics has developed a revised commercial compostable rate model that aligns with the above criteria that includes a five-year period for implementation.

During this five-year period, commercial yard trimmings and food scraps will be provided at different rates until the rates converge at the end of the five-year period. At this point, customers will be able to co-collect their food scraps and yard trimmings into the same container, if desired. The rate was developed to ensure cost recovery by the City (i.e. the cost of providing the service to the customers is equivalent to the rate) and is designed to provide adequate compensation to NRWS for the operational impacts and equipment capitalization required to expand the food scraps and yard trimmings routes to attain full SB 1383 compliance, while providing the most economical container sizes and collection services for commercial food scraps and yard trimmings customers. The 5-year timeline of the rate structure developed in this report allows for a rate which is:
a) matched against the needed capital expenditures to acquire all the bins needed to “right-size” the collection of compostables;
b) matched to expenditures for the acquisition of bin liners that will be paired with the replacement of carts with bins;
c) matches the timing of rate increases to the actual 5-year deployment schedule of the identified bins and carts and;
d) structured to optimize scenarios on the overall impact on rate revenues due to charging for Yard Trimmings and the reduction of Food Scrap rate revenue.

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2 Findings

2.1 Summary of Key Findings
EcoNomics, Inc. has completed the analysis for the City of Napa’s phased 5-year commercial compostable rate structure. This report presents the detailed findings, which are aligned with the objectives of balancing capital expenditures, operational costs, and compliance with SB 1383 requirements while providing a cost-recovery rate. In addition, recommendations for balancing the City’s Materials Diversion fund can be found in the conclusion and recommendations section. The analyses validate the assumptions, quantify impacts on rates and revenues, and propose actionable recommendations for phased implementation.

Key findings of the study include:
• 5-year commercial rates for commercial and multifamily yard trimmings and commercial and multifamily food scraps: Recommended rate tables for commercial and multifamily food scraps and commercial yard trimmings for rate years 1 (effective July 1, 2025) through 5 (effective January 1, 2029). The rates for the commercial food scraps and yard trimmings service were developed to ensure full cost recovery for the City and factor in projected cart-to-bin migration costs for properties where such a migration was operationally feasible and where an economic rate incentive exists to switch from many carts to a single bin. Projected rates also include full SB 1383 compliance by 2026. Changes in collection cost payments to NRWS, rate revenue, capital costs, operational costs and processing costs for the most likely migration scenario are included in the cost-recovery rate. • Net cost and revenue impacts to City’s solid waste fund: A summary table showing the total net financial impact on the City’s solid waste fund that includes projected changes in rate revenue based on full SB 1383 compliance and projected cart-to-bin migration, changes in processing costs based on an expanded compostable collection route, reductions in disposal costs based on landfill diversion from expanded commercial compostables, increases in capital costs for the deployment of lined bins for food scraps, changes in collection costs paid to NRWS based on adjustments to services, and increased labor costs for expanded routes. • An optimized cart-to-bin migration plan. The study includes a listing of customers that currently have high volumes of cart service that may benefit financially from implementing bin service. The City and NRWS can target these accounts to assist in implementing bin service and, where operationally feasible, may be able to reduce collection costs to the City and disposal costs to the generator. • Capital cost projections for container and vehicle acquisition and deployment .

The study includes a schedule of when capital acquisition of bins is likely to occur based on projected migration from carts to bins. The City can use this to plan for capital expenditures and include in future budgets. It also includes the addition of a side loader vehicle, its driver, and associated operational costs.

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• Right Sizing of Yard Trimmings Service The offering of yard trimmings collection service at no charge likely led to the acquisition of more cubic yards of yard trimmings service than likely is needed by the customers. This study estimates a reduction of yard trimmings service at 10% of their total cubic yardage each year to reflect: 1) customers ‘right-sizing’ their service to match actual yard trimmings generation volume; and 2) a portion of customers arranging with their landscaping contractor to haul-away yard trimmings instead of making use of onsite disposal through NRWS. • Packaged food scrap rates The report includes cost-recovery rates for packaged organics collection service for generators who have high levels of cross-contaminants (i.e. non-compostable materials such as plastic) in their food scrap streams.

2.2 5-year Rates for Commercial and Multifamily Yard Trimmings Service Effective July 1, 2025, yard trimmings will no longer be offered at no charge to commercial and multifamily customers. To develop a cost-recovery rate for yard trimmings, EcoNomics examined:
• The level of current diversion of yard trimmings from participating yard trimmings customers;
• Adjustments to collection and processing costs as a result of customers migrating from large volumes of yard trimmings carts to bins;
• Reductions in service levels as a result of being charged for the service • The proposed cost recovery yard trimmings rate will be phased in over a 5-year period to minimize the potential for ‘rate shock’ to existing yard trimmings customers who have been receiving this service at no charge for over 20 years.

2.2.1 5-year Rates for Commercial Yard Trimmings Service EcoNomics is recommending the rates shown in Table 1 below be charged to customers on the City’s commercial yard trimmings route beginning July 1, 2025. The rates effective for January 1, 2026 and each January 1 thereafter until 2029 are also included. The rates shown in Table 1 are for five years. More information on the costs that are included in these rates can be found in Sections 2.5.1 and 3.8.1.

As shown in Table 1, the recommended rates for this service provide a rate incentive, i.e. reduction, ranging from 12 - 45% of equivalent MSW service. There is no current service for 1 cubic yard MSW, so this value was created by taking the MSW rate for a 2 cubic yard container and dividing by two in the following rate comparisons. The entire recommended commercial compostable rate schedule, which includes collection frequencies of 1-7 days per week for up to 10 containers, is included in Appendix 2.

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Table 1: Commercial Yard Trimmings Rates and MSW Rate Comparison Size 2025 2026 2027 2028 2029 MSW Rate (2029) Comparison (%) 35-gal $2.25 $4.84 $12.19 $17.11 $21.71 $48.01 45.21%
64-gal $3.13 $6.68 $15.07 $21.13 $26.94 $96.22 28.00%
90-gal $4.01 $8.52 $17.96 $25.14 $32.18 $144.09 22.34%
1 CY $7.10 $14.97 $20.63 $28.66 $35.68 $298.55 11.95%
2 CY $12.98 $27.24 $39.86 $55.39 $70.60 $597.10 11.82%
3 CY $18.86 $39.52 $59.08 $82.15 $105.52 $875.54 12.05% 4 CY $24.74 $51.79 $78.30 $108.91 $140.45 $1,136.75 12.36% 6 CY $36.50 $76.35 $116.75 $162.43 $210.29 $1,691.89 12.43% Comparison is shown as a percentage of 2029 rates relative to 2029 MSW rate.

2.2.2 5-year Rates for Multifamily Yard Trimmings Service Due to the additional labor needed for navigating the operational complexities at multifamily properties, including staging containers at the curb for collection in properties where there is inadequate access for heavy-duty collection vehicle, EcoNomics is recommending a separate set of rates for multifamily properties to distribute these sector-specific costs. The rates for multifamily properties in Table 2 below should be charged to customers on the City’s multifamily yard trimmings route beginning July 1, 2025. The rates effective for January 1, 2026 and each January 1 thereafter until 2029 are also included in the table below.

The rates shown in Table 2 are phased in over the course of five years and based on the actual costs for multifamily yard trimmings collection service.

As shown in Table 2, the recommended rates for this service provide a rate incentive, i.e. reduction, ranging from 13 - 76% of equivalent MSW service. The entire recommended multifamily yard trimmings rate schedule, which includes collection frequencies of 1-7 days per week for up to 10 containers, is included in Appendix 3.

Table 2: Multifamily Yard Trimmings Rates and MSW Rate Comparison Size 2025 2026 2027 2028 2029 MSW Rate (2029) Comparison (%) 35-gal $4.83 $10.19 $20.49 $28.57 $36.53 $48.01 76.08%
64-gal $5.71 $12.03 $23.38 $32.58 $41.77 $96.22 43.41%
90-gal $6.60 $13.87 $26.26 $36.60 $47.00 $144.09 32.62% 1 CY $9.68 $20.31 $28.93 $40.09 $50.50 $298.55 16.92%
2 CY $15.56 $32.59 $48.16 $66.85 $85.42 $597.10 14.31%
3 CY $21.44 $44.87 $67.38 $93.61 $120.35 $875.54 13.75% 4 CY $27.32 $57.14 $86.61 $120.37 $155.27 $1,136.75 13.66% 6 CY $39.08 $81.69 $125.05 $173.89 $225.11 $1,691.89 13.31% Comparison is shown as a percentage of 2029 rates relative to 2029 MSW rate.

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2.3 5-year Rates for Commercial Food Scrap Service
Currently, commercial food scrap recycling rates are offered at 75% the cost of equivalent MSW service. Effective July 1, 2025, food scrap rates will be reduced to a cost-recovery rate over a 5-year phase-in period. To develop a cost-recovery rate for commercial food scraps service, EcoNomics examined:
• The level of current diversion of food scraps from participating food scrap customers; • The projected quantity of food scraps from currently non-compliant commercial and multi-family customers that will need food scrap service to become compliant with SB 1383;
• The projected reduction in MSW cart and bin revenue associated with expanded food scrap recycling collection programs;
• Adjustments to collection and processing costs due to customers migrating from large volumes of food scraps carts to bins;
EcoNomics is recommending the rates shown in Table 3 below be charged to customers on the City’s commercial food scrap route beginning July 1, 2025. The rates effective for January 1, 2026 and each January 1 thereafter until 2029 are also included in the table below. The rates shown in Table 3 are based on the actual costs for commercial food scrap collection service and will decrease from current pricing levels over the five year period.

As shown in Table 3, the recommended rates for this service provide a rate incentive, i.e. reduction, ranging from 11- 32% of equivalent MSW service. The entire recommended commercial compostable rate schedule, which includes collection frequencies of 1-7 days per week for up to 10 containers, is included in Appendix 2.

Table 3: Commercial Food Scraps Rates and MSW Rate Comparison Size 2025 2026 2027 2028 2029 MSW Rate (2029) Comparison (%) 35-gal $31.69 $27.76 $28.64 $27.14 $25.36 $73.13 32.27% 64-gal $61.50 $51.30 $45.99 $38.39 $30.60 $146.56 19.68% 90-gal $91.10 $74.68 $63.23 $49.58 $35.84 $219.48 15.53% 1 CY $189.99 $157.24 $122.73 $91.02 $58.86 $454.76 13.30% 2 CY $375.65 $305.23 $233.68 $165.60 $97.78 $909.52 10.93% Comparison is shown as a percentage of 2029 rates relative to 2029 MSW rate.

2.4 5-year Rate for Multifamily Food Scrap Service
EcoNomics is recommending the rates shown in Table 4 below be charged to customers on the City’s commercial food scrap route beginning July 1, 2025. The rates effective for January 1, 2026 and each January 1 thereafter until 2029 are also included in the table below. The rates shown in Table 4 are based on the actual costs for multi-family food scrap collection service. These rates will ‘ramp down’ from current pricing levels over the five year period.

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As shown in Table 4, the recommended rates for this service provide a rate incentive, i.e. reduction, ranging from 12- 55% of equivalent MSW service. The entire recommended commercial compostable rate schedule, which includes collection frequencies of 1-7 days per week for up to 10 containers, is included in Appendix 3.

Table 4: Multifamily Food Scraps Rates and MSW Rate Comparison Size 2025 2026 2027 2028 2029 MSW Rate (2029) Comparison (%) 35-gal $34.26 $33.11 $36.94 $38.60 $40.19 $73.13 54.95% 64-gal $64.08 $56.65 $54.29 $49.84 $45.42 $146.56 30.99% 90-gal $93.69 $80.03 $71.53 $61.04 $50.66 $219.48 23.08% 1 CY $192.56 $162.59 $131.03 $102.47 $73.68 $454.76 16.20% 2 CY $378.23 $310.58 $241.98 $177.05 $112.60 $909.52 12.38% Comparison is shown as a percentage of 2029 rates relative to 2029 MSW rate.

2.4.1 5-year Rates for Packaged Organics Collection Service In addition to the commercial and multi-family food scrap rates noted above, the study also examined the cost factors for a ‘packaged organics’ rate which could be used for convenience stores, multi-family properties, and other businesses that generate an organics stream that contains extensive contamination from packaged food items, including rigid plastics, food soiled paper, film plastics, expanded polystyrene, and other non-compostable materials that would need to be removed prior to composting. The rate for the packaged organics rates are slightly higher than the food scraps rates due to additional processing requirements of the packaged organics stream to remove contaminants. Tables 5 and 6 below show the rates for commercial and multifamily packaged organics service for one container and one pickup. A complete list of the rates can be found in Appendix 4. Expected revenue and cost values were not modeled for the packaged organics rate because of the unknown variables and unpredictable nature of forecasting packaged organic amounts.

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Table 5: Commercial Packaged Organics Rates and MSW Rate Comparison Size 2025 2026 2027 2028 2029 MSW Rate (2029) Comparison (%) 35-gal $32.02 $28.44 $29.74 $28.65 $27.34 $73.13 37.38% 64-gal $62.11 $52.57 $48.02 $41.20 $34.27 $146.56 23.38% 90-gal $92.00 $76.55 $66.19 $53.69 $41.20 $219.48 18.77% 1 CY $191.88 $161.19 $128.91 $99.67 $70.13 $454.76 15.42% 2 CY $379.44 $313.12 $246.07 $182.89 $120.33 $909.52 13.23% Comparison is shown as a percentage of 2029 rates relative to 2029 MSW rate.

Table 6: Multifamily Packaged Organics Rates and MSW Rate Comparison Size 2025 2026 2027 2028 2029 MSW Rate (2029) Comparison (%) 35-gal $34.60 $33.79 $38.04 $40.11 $42.16 $73.13 57.65% 64-gal $64.69 $57.92 $56.32 $52.65 $49.09 $146.56 33.49% 90-gal $94.58 $81.89 $74.49 $65.14 $56.02 $219.48 25.52% 1 CY $194.46 $166.54 $137.22 $111.13 $84.95 $454.76 18.68% 2 CY $382.02 $318.49 $254.37 $194.35 $135.15 $909.52 14.86% Comparison is shown as a percentage of 2029 rates relative to 2029 MSW rate.

2.5 Revenue Impacts of Proposed Rates
The recommended rates for commercial and multifamily yard trimmings and food scraps, shown in Tables 1-4 above, will have the revenue impacts on the City’s rate revenue stream as shown in Table 7 below. An overview of each of the four revenue impact areas is included in this section. Note the impacts in year one are for a period of six months, as the rate changes will be effective between July 1 – December 31, 2025, while years 2-4 represent annual quantities. Negative values represent a reduction in revenue from current numbers while positive values represent an increase in revenue.

Detailed analyses supporting the revenue impacts is included in subsequent sections of this report and are referenced in Table 7 below. The revenue impact summary table assumes all customers with more than one cubic yard of cart service migrate to bin service if: 1) there is a lower cost of doing so; and 2) if it is operationally feasible to receive bin service at their property. Operational feasibility for bin service of a sample of potential migration sites was assessed with assistance from NRWS’ Operations Manager in addition to site visits by EcoNomics staff. Using these criteria, EcoNomics projected 54 yard trimmings customers and 100 food scrap customers to migrate from carts to bins.

The overall net revenue impact in year 5 is a reduction in revenue of $659,197.73, mostly driven by the reduction in food scrap revenue received by the City as food scrap rates decrease from the current rate (75% of equivalent MSW costs) Table 7: Predicted Yearly Revenue Impact of Most Likely Migration Scenario

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Scenario 1 Migration, Full SB 1383 compliance
Description of Revenue Impact
Year 1
Revenue
Impact
Year 2
Revenue
Impact
Year 3
Revenue
Impact
Year 4
Revenue
Impact
Year 5
Revenue
Impact
Report
Section
Describing
Detailed
Analysis
Revenue Impact 1: Increase in Rate
Revenue from Current Commercial
and Multi-family Yard Trimmings
Customers Who Currently do not
Pay for this Service
$38,248 $153,172 $211,625 $307,365 $371,321 2.5.1, 3.1.1 Revenue Impact 2: Decrease in
Rate Revenue from Current
Commercial Food Scrap Recycling
Customers Who Currently Pay 75%
of the Equivalent MSW Rate for
this Service
-$154,883 -$466,224 -$607,988 -$761,623 -$947,647 2.5.2, 3.1.2 Revenue Impact 3: Increase in Rate
Revenue from Currently Non-
compliant Commercial Generators
that Implement Food Scrap
Recycling Programs between 2025
and 2029
$86,818 $141,769 $111,810 $81,899 $51,232 2.5.3, 3.1.3
Revenue Impact 4: Decrease in
MSW rate revenue from
commercial and multi-family
generators who ‘right size’ their
MSW service levels as a result of
incorporating commercial
compostable service
-$51,198 -$112,636 -$121,647 -$128,946 -$134,103 2.5.4, 3.1.4 Net Revenue Impact by Rate
Year -$81,014 -$283,918 -$406,200 -$501,305 -$659,198 3.1.5

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2.5.1 Overview of Revenue Impact 1: Increase in Rate Revenue from Current Yard Trimmings Customers Who Currently do not Pay for this Service Currently, the City does not charge customers for yard trimmings collection service (i.e. this service is offered at no charge). As of October 1, 2024, there were 459 commercial yard trimmings customers and 90 multifamily customers receiving this service at no charge.

EcoNomics recommends that a cost-recovery model, covering the next 5 years, be implemented effective July 1, 2025. Using the commercial and multi-family yard trimming rates displayed in Tables 1 & 2, current yard trimmings customers will generate additional revenue of $371,320.90 in year 5 or $30,943.41 in monthly rate revenue. Additional analysis supporting this revenue projection is included in Sections 2.8.1 and 3.1.1.

2.5.2 Overview of Revenue Impact 2: Decrease in Rate Revenue from Current Commercial Food Scrap Recycling Customers Who Currently Pay 75% of the Equivalent MSW Rate for this Service
As of January 2025, there were 292 commercial customers that participated in the City’s food scrap recycling program. This program is currently offered at 75% of equivalent MSW service to provide an incentive for participating in the program. This rate reduction from the 75% MSW-equivalent rate for commercial and multi-family food scraps to the cost-recovery rates shown in Tables 3 & 4 will result in a reduction in rate revenue of approximately $947,646.97 per year or $78,970.58 per month by year 5. The decrease in revenue each year is modeled in Tables 7 and 9 at the current (2025) food scrap rate. Additional analysis supporting this revenue projection is included in Sections 2.8.2 and 3.1.2.

2.5.3 Overview of Revenue Impact 3: Increase in Rate Revenue from Currently Non- compliant Commercial Generators that Implement Food Scrap Recycling Programs in 2025 There are 60 commercial and multi-family accounts that are non-compliant with SB 1383 and will need to implement a food scrap recycling program to comply. These non-compliant accounts were aggregated into a prioritized listing of accounts that need ‘onboarding’ onto the City’s food scrap collection program and are referred to as ‘onboarding’ accounts throughout the study. To determine the revenue impacts on the City if these ‘onboarding’ accounts implement state-mandated organics recycling services, EcoNomics developed service projections for each of these accounts that incorporated food scrap recycling services. EcoNomics used its industry knowledge and experience implementing thousands of commercial and multi-family organics recycling programs to develop the organics service projections needed for the onboarding accounts to become compliant with SB 1383. Based on this analysis, when all non-compliant accounts are in compliance and have needed organics recycling services, using the food scrap recycling rates shown in Tables 3 & 4, these customers will generate $51,231.74 per year or $4,269.31 in rate revenue per month in rate year 5. Additional analysis supporting this revenue projection is included in Sections 2.8.3 and 3.1.3.

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2.5.4 Overview of Revenue Impact 4: Decrease in MSW rate revenue from commercial customers who ‘right size’ their MSW service levels as a result of incorporating commercial compostable service
EcoNomics developed service projections to incorporate state-mandated organics services for all currently non-compliant ‘onboarding’ accounts. Wherever possible, these service projections assumed onboarding accounts would ‘right-size’ their MSW collection service (i.e. reduce MSW service levels by the equivalent volume of organic waste that was diverted) to reduce disposal costs. The current MSW revenue being generated from all the accounts targeted for SB 1383 organics implementation is $617,149.44 yearly. The total expected revenue reduction from MSW after these targeted accounts incorporate food scrap collection service and implement ‘right-sizing’ adjustments to their MSW service will be $134,103.40 per year or $11,175.28 per month by rate year 5. The right-sizing of MSW service to account for volume of organics diverted through the compostable program represents a reduction in revenue to the City. Additional analysis supporting this revenue projection is included in Section 3.1.4.

2.6 Cost Impacts of Proposed Rates
In addition to impacts on the City’s rate revenue stream outlined above, the expansion of the commercial and multifamily food scrap and yard trimmings route to the additional customers, additional frequency of food scrap cart washing, as well as potential migration from carts to bins for some customers, will also have impacts on costs. These costs are outlined in Table 8 below. Note the cost impacts for year 1 include only six months of costs, while years 2-5 show yearly costs. Negative values in the table represent a reduction in costs while positive values represent an increase in costs.

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Table 8: Predicted Yearly Cost Impact of Most Likely Migration Scenario Scenario 1 Migration, Full SB 1383 compliance
Description of cost Impact Year 1 Cost
Impact
Year 2 Cost
Impact
Year 3 Cost
Impact
Year 4 Cost
Impact
Year 5 Cost
Impact
Report Section
Describing
Detailed Analysis
Cost Impact 1: Increase in
Costs due to Need for
Additional Staff For
Multifamily Properties
$44,485 $79,731 $49,812 $62,554 $58,696 2.6.1, 2.8.6, 3.2.1 Cost Impact 2: Increase in
Cost due to Capital Expenses
Associated with Bins and
Liners
$3,962 $11,522 $5,633 $27,796 $69,739 2.6.2, 2.8.7, 3.2.2 Cost Impact 3: Change in
Collection Cost Payments to
NRWS due to Reduction in Lift
Costs
$55,927 $98,406 -$216,589 -$245,640 -$451,364 2.6.3, 2.8.8, 3.2.3 Cost Impact 4: Increase in
Cost due to Capital Expenses
Associated with New
Collection Vehicle
$0 $0 $163,274 $163,274 $163,274 2.6.4, 2.8.9, 3.2.4
Cost Impact 5. Increase in Cost
due to Increased Frequency of
Cart Washing
$22,858 $21,520 $20,602 $17,695 $9,853 2.6.5, 2.8.10,

3.2.5 Cost Impact 6: Decrease in
Cost from Avoided Disposal -$3,044 -$3,061 -$3,073 -$3,078 -$3,075 2.6.6, 3.2.6 Cost Impact 7: Increase in
Costs due to Need for
Additional Staff to Drive
Vehicle
$0 $0 $185,000 $191,475 $198,177 2.6.7, 2.8.11,

3.2.7 Cost Impact 8: Increase in
Costs for Operating Additional
Vehicle
$0 $0 $35,000 $36,225 $37,493 2.6.8, 2.8.12,

3.2.8 Net Cost Impact per Rate Year $124,189 $208,117 $239,659 $250,300 $82,793

2.6.1 Overview of Cost Impact 1: Increase in Costs due to Need for Additional Staff For Multi-family Properties
The additional food scraps and yard trimmings collection service at multifamily properties will require additional labor support. The expected increase in service will require an additional labor cost of $10,333.33 per month starting in 2025. However, the costs represented in Table 8 are based on the estimated labor time needed for the helper to assist with the predicted number of multi-family containers in service during any given rate year.

As customers migrate and the yard trimmings service is right sized, the total number of lifts for food scraps and yard trimmings changes over time. Additional information on this cost can be found in Section 3.2.1.

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2.6.2 Overview of Cost Impact 2: Increase in Cost due to Capital Expenses Associated with Bins and Liners
Capital acquisition costs to the City were calculated each year for the bins and liners needed for food scraps service customers who were predicted to migrate from cart service to bin service in that year. In the current contract, bins for yard trimmings are included and any yard trimmings customers who migrate from carts to bin incurred no additional capital charge for this equipment. The total capital cost for bins and liners the City can be expected to pay over the five years of migration for 100 food scraps customers is $118,651.35.

Additional information can be found in Section 3.2.2.

2.6.3 Overview of Cost Impact 3: Change in Collection Cost Payments to NRWS due to Reduction in Lift Costs
The City currently pays NRWS $454.69 per lift over baseline per year for commercial collection service. The number of lifts is expected to increase as a result of non-compliant generators adding food scrap services, decrease as a result of MSW right sizing caused by the diversion of these materials, decrease as a result of yard trimmings right sizing once there is a charge for the service, and further decrease as a result of any migration of current food scraps and yard trimmings customers. More details on lift calculations and the costs per lift can be found in Section 3.2.3.

As noted in the Section 2.5.3 of this report, a portion of the current SB 1383 non-compliant accounts may be able to reduce their MSW service after they implement a food scrap recycling program reducing the total MSW lifts by 52 as a result of right sizing MSW. The number of additional lifts as a result of increased food scraps service is 177 for a net increase in lifts of 125. This leads to an overall increase in the collection payment in 2025, but as more customers migrate in years 2-5, the number of total lifts over baseline is reduced each year.

By the time all predicted customers migrate in 2029, the reduction in lifts over baseline from the current values will be 882 lifts for a cost savings of $451,363.50 per year or $37,613.62 per month in year 5. Additional information can be found in Section 3.2.3.

2.6.4 Overview of Cost Impact 4: Increase in Cost due to Capital Expenses Associated with New Collection Vehicle
Due to the increase in compostable collection needed to comply with SB 1383, the City anticipates the purchase of an additional side loader to service the carts on the compostable route. The purchase of this vehicle will occur in 2027. The price of the vehicle plus a 3% capital acquisition rate will be funded through a loan with a term of 60 months with a 5% interest rate. Only payments for the first 3 years of this loan (2027-2029) are shown here as the last two years of payment are beyond the scope of this rate study. The total cost of this vehicle is estimated at $721,000.00 in 2027. The yearly costs represented in Table 8 represent the sum of the monthly loan payments of $13,606.16. Additional information can be found in Section 3.2.4.

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2.6.5 Overview of Cost Impact 5. Increase in Cost due to Increased Frequency of Cart Washing
Currently, a third-party vendor provides cart washing services quarterly for food scrap containers at a cost of $12.50 per cart. After the implementation of this program, it was decided to increase cart washing to once per month which will lead to an increase in costs for years 1-4. However, the reduction in food scraps carts caused by migration reduces the total number of food scraps carts by a significant amount in year 5 leading to a reduction in washing cost after migration is complete. The cost for cart washing is applied to each food scraps cart. After full SB 1383 implementation and migration the estimated number of food scraps carts in 2029 is 521. After increasing the frequency of food scraps cart washing, along with the reduction in carts as a result of migration, the difference in cost in 2029 is an increase of $9,853.39 per year. Additional information can be found in Section 3.2.5.

2.6.6 Overview of Cost Impact 6: Decrease in Cost from Avoided Disposal With the expansion of the commercial food scrap recycling route to all 60 currently SB 1383 non-compliant onboarding accounts, 974.48 additional tons of materials per year that are currently being disposed of as MSW will be diverted from the landfill and instead composted at the City’s MDF facility. The cost per ton of disposal in 2025 is $78, while the cost per ton of composting is $40.52, a cost-saving of $37.48 for every ton of additional materials diverted through either the commercial compostables or packaged organics routes. Right sizing of MSW reduces the monthly tons of materials by 81.21 tons per month. Assuming full SB 1383 compliance, the City will reduce landfill disposal costs by $36,523.37 per year or $3,043.61 per month in year 5. Additional analysis supporting this cost reduction projection is included in Section 3.2.6.

2.6.7 Overview of Cost Impact 7: Increase in Costs due to Need for Additional Staff to Drive Vehicle
The cost of labor to drive the additional vehicle that will service food scraps and yard trimmings carts is estimated at $185,000 per year in 2027. The cost is applied a labor inflation cost of 3.5% each year for a total cost in year 5 of $198,176.62 or $16,514.72 per month. Additional information on this cost can be found in Section 3.2.7.

2.6.8 Overview of Cost Impact 8: Increase in Costs for Operating Additional Vehicle The operating costs of the new vehicle to service food scraps and yard trimmings carts excludes labor but includes insurance, office expenses, vehicle repair and maintenance. The expected cost in 2027 to operate the new vehicle is $35,000 per year. An inflation rate of

3.5% is applied each year for a total cost in year 5 of $37,492.88 or $3,124.406 per month.

Additional information on this cost can be found in Section 3.2.8.

2.7 Combined cost and revenue impacts of recommended rates Table 9 below combines the aggregate rate revenue impacts from Table 7 in Section 2.5 and the cost impacts identified in Table 8 in Section 2.6 to show the overall expected impact of the service and rate changes on the City’s fund.

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All of the cost impacts directly apply to customer rates except for the avoided disposal costs of material that is currently being processed as MSW and will be diverted to food scraps or yard trimmings containers. The revenue impacts of the new yard trimmings revenue, the new predicted food scraps revenue from full SB 1383 compliance and the existing food scraps services cover all costs for food scraps and yard trimmings collection and processing, in addition to the interest charged in the future for any upfront capital costs. The change in revenue as a result of MSW right sizing is not directly related to the customer rates, nor is the difference between current food scrap revenue and the food scrap revenue calculated in the recommended rates.

The negative net fund impact values are driven by the reduction in food scrap revenue received by the City as food scrap rates are phased in from the current rate (75% of equivalent MSW costs) to the actual costs of the service (which is less than current, incentivized rate). As the MSW rate increases each year and the food scrap rate gets closer to a cost-recovery amount each year (which is lower than 75% the cost of MSW), the rate revenue reduction compared to the revenue amount that would have come in under a business-as-usual scenario gets more pronounced. Since this reduction in revenue impact cannot be considered a ‘direct cost’ of providing the service, it is not included in the cost recovery rates.

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Table 9: Predicted Yearly Impact of Most Likely Migration Scenario Scenario 1 Migration, full SB 1383 compliance
Description of Impact Year 1
Impact
Year 2
Impact
Year 3
Impact
Year 4
Impact
Year 5
Impact
Revenue Impact 1: Increase in Rate Revenue from Current Commercial and Multi-family Yard Trimmings Customers
Who Currently do not Pay for this Service
$38,248 $153,172 $211,625 $307,365 $371,321
Revenue Impact 2: Decrease in Rate Revenue from Current Commercial Food Scrap Recycling Customers Who Currently Pay 75% of the Equivalent MSW Rate for this Service
-$154,883 -$466,224 -$607,988 -$761,623 -$947,647
Revenue Impact 3: Increase in Rate Revenue from Currently Non-compliant Commercial Generators that Implement
Food Scrap Recycling Programs between 2025 and 2029
$86,818 $141,769 $111,810 $81,899 $51,232
Revenue Impact 4: Decrease in MSW rate revenue from
commercial and multi-family generators who ‘right size’ their MSW service levels as a result of incorporating
commercial compostable service
-$51,198 -$112,636 -$121,647 -$128,946 -$134,103
Cost Impact 1: Increase in Costs due to Need for Additional Staff For Multifamily Properties -$44,485 -$79,731 -$49,812 -$62,554 -$58,696 Cost Impact 2: Increase in Cost due to Capital Expenses Associated with Bins and Liners -$3,962 -$11,522 -$5,633 -$27,796 -$69,739 Cost Impact 3: Change in Collection Cost Payments to NRWS due to Reduction in Lift Costs -$55,927 -$98,406 $216,589 $245,640 $451,364 Cost Impact 4: Increase in Cost due to Capital Expenses Associated with New Collection Vehicle $0 $0 -$163,274 -$163,274 -$163,274 Cost Impact 5: Increase in Cost due to Increased Frequency of Cart Washing -$22,858 -$21,520 -$20,602 -$17,695 -$9,853 Cost Impact 6: Decrease in Cost from Avoided Disposal $3,044 $3,061 $3,073 $3,078 $3,075 Cost Impact 7: Increase in Costs due to Need for Additional Staff to Drive Vehicle $0 $0 -$185,000 -$191,475 -$198,177 Cost Impact 8: Increase in Costs for Operating Additional Vehicle $0 $0 -$35,000 -$36,225 -$37,493
Net Impact on Fund per Rate Year -$205,203 -$492,035 -$645,859 -$751,606 -$741,990 Estimated annual rate revenue by rate year $32.9M $36.2M $39M $42.2M $44.7M Percent of total rate revenue represented by net
impact on fund of recommended organics rates 0.62% 1.36% 1.65% 1.78% 1.66% Budgeted Rate Stabilization Reserves $227,191 $1,120,970 $2,154,277 $3,346,673 $4,287,353 Remaining Rate Stabilization Fund Balance if Used to
Offset Negative Fund Impact
$21,988 $628,935 $1,508,418 $2,595,067 $3,545,363

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2.7.1 Analysis of Recommended Program Rates and Net Impact on the City’s Solid Waste Enterprise Fund
As shown in Table 9, the total aggregate monthly revenue and cost impacts of the fully implemented commercial compostables and packaged organics route is a net fund impact of $741,990 per year by Rate Year 5 when the fully phased in rates are charged. This represents approximately 1.66% of the City’s total projected annual rate revenue of $44.7M.

EcoNomics recommends the use of rate stabilization reserves to offset the potential negative impact on the fund resulting from noncompliant accounts and a period of time necessary for customers to “right-size” their MSW service. The projected remaining rate stabilization fund balance after the cost of charging the recommended rates is included for each year in Table

9. The rate stabilization fund is projected to have a balance of $3.6M by the end of year 5.

These recommendations are outlined in Section 4.

2.7.1.1 Difference in Expected Costs vs. Phased in Rates for years 1-4 The recommended cost recovery rates cover the predicted direct costs for each compostable service. Because these rates are phased in over time in attempt to limit the impact of these rate changes on the customer, there is a difference in years 1-4 in the rate revenue received vs. the actual cost of providing the service. The expected costs of providing the service vs. actual revenue received by the programs for each rate year is examined in Table 10 below. This table shows the difference in revenue received vs. the costs associated with yard trimmings and food scraps service each year. Because current food scraps rates are designed to cover the costs of providing the program and also anticipate for higher level of compliance in future years, the projection leads to a net surplus in revenue for years 1-4 that will ensure the City is able to maintain sufficient reserves to address unforeseen variances in service levels.

Table 10: Expected Costs vs. Revenue 2025-2028
Description Year 1 Year 2 Year 3 Year 4
Expected Costs $363,379.80 $789,677.27 $753,974.29 $797,459.20 Revenue $583,709.57 $1,055,768.50 $942,497.70 $854,690.95 Net Impact $220,329.77 $266,091.22 $188,523.40 $57,231.75

2.8 Rate Impacts on Individual Customers
The following section examines the projected impact of the proposed rates on food scrap recycling and yard trimmings customers, both those who currently have service as well as the onboarding customers referred to in Section 2.5.3. The average rate across all customers within Scenario 1 decreased by $43.42. The range of rate differences between these customers went from a cost savings of $2470.6 for a food scraps customer who migrated to bins, to a cost increase of a yard trimmings customer who currently receives the service at no charge to a rate of $621.07 per month.

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2.8.1 Rate impact on current customers: Commercial and Multi-family Yard Trimmings Recycling Customers
Currently, yard trimmings collection service is offered at no charge to 549 customers. All current participants in the City’s yard trimmings recycling program would see an increase in the costs they are paying for this service. Currently, these customers are paying $0 per month. When the commercial yard trimmings rate becomes effective on July 1, 2025, the average cost for yard trimming collection service will be increased to $11.49 per month and will gradually increase to $55.16 per month by January 1, 2029, as shown in Table 7.

Customers can mitigate this rate impact by:
• Right-sizing of MSW: All of the current commercial yard trimmings customers that generate 1) food scraps and 2) only had yard trimmings collection service, will be required to place food scraps into a food scraps recycling container. By placing their food scraps into a newly established food scrap recycling program, the customers will divert all their food scraps from their existing MSW container. Depending on the volume of food scraps a customer can divert from their MSW containers they may be able to reduce the size and/or the service frequency of the MSW container, and reduce disposal costs.
• Cart to Bin Migration: Approximately 231 customers have more than one cubic yard of aggregate cart collection service for food scraps or yard trimmings. Based on the recommended rates for both yard trimmings and food scraps included in Appendix 2, some of these customers will see a financial incentive to consolidate their many carts into a single bin with a higher volume capacity (i.e. a cubic 2-yard bin has the volumetric equivalent to six 65-gallon carts). Based on migration projections, there are 154 customers with more than 1-cubic yard of cart service that will realize a rate reduction, provided that it is operationally feasible to provide bin service to the property.
• Right-sizing yard trimmings container: Yard trimmings service has been offered at no charge and customers had little incentive to modulate service based on actual yard trimmings generation levels, seasonal or otherwise. When this service is offered at a charge, customers will have an incentive to reduce service to match actual yard trimmings generation levels. The effects of right sizing are examined in Section 3.3 below.

2.8.2 Rate impact on current customers: Commercial and Multi-family Food Scrap Recycling Customers
The recommended cost-recovery commercial food scrap rate, that will be phased-in over 5- years, would be charged to 292 source-separated food scrap customers, who are currently paying 75% of the cost of equivalent MSW service. Currently customers are paying anywhere between $36.01 - $4,690.14 per month with an average rate of $316.58 per month. All current participants in the City’s food scrap recycling program would see a reduction in the costs they are paying for this service. With the implementation of the recommended commercial food scrap rates shown in Tables 3 & 4, these customers will be paying between

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$24.18 and $736.57 per month with an average rate of $74.27 per month by rate year 5. This represents a cost between 17 - 67% less for food scrap recycling service with a mean reduction in cost of 36%. As the food scrap rates decrease over the 5 year period, the reduction in revenue from the current rates increases over time as seen in Table 7. Appendix 5 shows current and predicted services for food scrap customers and includes the current food waste revenue for all accounts.

2.8.3 Rate impact on future customers: Non-compliant commercial and multi-family generators that will need to implement food scrap recycling service, yard trimmings service, or both
There are approximately 60 commercial customers that need to implement an organics recycling program. EcoNomics modeled the optimal commercial food scrap and/or yard trimmings service levels for all non-compliant accounts in the City. For these service projections, EcoNomics assumed a fully-compliant program would be implemented, which would include 3-containers (MSW, recycling, and compostables) in every enclosure to ensure convenient access to residents and businesses using the containers. An additional 220 cubic yards of weekly food scraps service was predicted for food scrap producing customers who do not currently have service. Once these customers add these food scraps services, the City can expect to see an increase in yearly revenue of $51,231.74 or an increase of $4,269.31 per month, for the additional cart and bin services. This represents an increase in revenue for the City that gets smaller each year as a result of the reduction in food scrap rate towards a cost recovery rate by Year 5. On average, the customers that are currently non-compliant for food scrap recycling are paying $886.71 per month for MSW collection service. With the incorporation of commercial food scrap and/or yard trimmings service in a manner that is compliant with SB 1383, in July of 2025 these customers will be paying an average of $755.35 for MSW service and $241.16 for food scraps service, an increase of approximately $109.8 per month (12.38%). The projected loss in MSW revenue for the City increases each year detailed in Table 5, due to the yearly increases in the MSW rate. MSW revenue is projected to increase by 12% in year 1, and by 10%, 8%, 8% and 6% in years 2-5 respectively.

2.8.4 Rate impact on migrating customers for both Food Scraps and Yard Trimmings The following section reviews the potential cost savings Scenario 1 and Scenario 2 migrating customers as ‘rational actors’, where migration occurs only when the customer experiences cost savings. The 2029 revenue for Scenarios 1 & 2 was compared to the 2029 revenues where no migration takes place. All values are taken from the recommended rates for each scenario. The increase in costs for cart services caused by the increased frequency of food scrap cart washing, the additional side loader vehicle, its driver and operational costs, as well as the reduction in lift payments combined to reduce rates for all rational actors who switch to bin service.

2.8.4.1 Scenario 1 Migrators
The average rate across all migrating customers with more than 1 cubic yard of food scraps or yard trimmings service (Scenario 1) decreased by $58.27. The range of rate differences

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between these customers went from a cost savings of $258.70 to $17.01 per month. All customers saw a reduction in rates as a result of migration.

Food Scraps
When broken down by food scraps and yard trimmings customers, the mean change in the rate after migration was a decrease of $56.17 per month. There were 100 customers who experienced a cost savings ranging from $215.95 to $17.01.

Yard Trimmings
The mean change in the monthly rate when customers with yard trimmings service migrated to bins was a decrease of $57.50. There were 51 customers who experienced a cost savings ranging from $165.16 to $22.40 per month.

2.8.4.2 Scenario 2 Migrators
Customers with more than 2 cubic yards of food scraps or yard trimmings service in Scenario 2 decreased their monthly rate by $85.77 on average. The range of rate differences between these customers went from a cost savings of $257.54 to $48.23 per month. All customers saw a reduction in rate as a result of migration.

Food Scraps
When broken down by food scraps and yard trimmings customers, the mean change in the rate when the customers with food scraps carts migrated was a decrease of $85.52 per month. There were 38 customers who experienced a cost savings ranging from $213.63 to $48.23 per month.

Yard Trimmings
The mean change in the monthly rate when customers with yard trimmings service migrated to bins was a decrease of $78.49. There were 21 customers who experienced a cost savings ranging from $165.16 to $49.49 per month.

2.8.5 Rate impacts on individual customers as a result of the costs outlined in Table 7 The recommended rates directly reflects the cost of service. Applying these rates and expected service configurations to customers in 2029, the table and figures below show the approximate distribution of each of the identified costs and their contribution to the rate.

Each of the available container sizes and their associated costs (rate) in year 2029 are shown for commercial (C) and multifamily (MF) rates for one container and one pickup. In Table 11, each of the collection costs are displayed for the available services. The values are the percentages of the total rate, with larger percentages colored in dark blue and lightening through the smaller percentages. The table indicates the majority of both commercial and multifamily rates are more greatly impacted by the processing cost, or the total cubic yards of material collected. In the case of the multifamily carts, it is the labor or the driver cost that makes up the majority of the rate. The high percentage of labor remained constant when pickups and the number of containers increased as well.

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Table 11: Percentage Breakdown of Cost Components
Waste
Type
Rate Container
Size
Processing
Cost
Collection
Cost
Capital
Cost
Labor
Cost
Vehicle
Cost
Driver
Cost
Operating
Cost
Washing
Cost
FW C 0.175 24 3 NA NA 23 30 6 14
FW C 0.325 37 2 NA NA 19 25 5 12
FW C 0.475 46 2 NA NA 16 21 4 10
FW C 2.000 71 1 28 NA NA NA NA NA
FW MF 0.175 15 2 NA 37 15 19 4 9
FW MF 0.325 25 2 NA 33 13 17 3 8

MSW C NA NA NA NA NA NA NA NA NA

MSW MF NA NA NA NA NA NA NA NA NA
YW C 0.175 28 3 NA NA 27 35 7 NA
YW C 0.325 28 3 NA NA 27 35 7 NA
YW C 0.475 42 3 NA NA 22 28 5 NA
YW C 2.000 98 2 NA NA NA NA NA NA
YW C 3.000 99 1 NA NA NA NA NA NA
YW C 4.000 99 1 NA NA NA NA NA NA
YW C 6.000 99 1 NA NA NA NA NA NA
YW MF 0.175 17 2 NA 41 16 21 4 NA
YW MF 0.475 27 2 NA 35 14 18 3 NA
YW MF 4.000 87 1 NA 12 NA NA NA NA

The impact on each of the individual service types are seen more clearly through the bar charts below and further explained in each of the cost sections. In each of the figures, values are shown in monthly costs.

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Commercial Food Scraps
Commercial food scraps carts incur a variety of costs from the additional side loader vehicle and cart washing. Commercial bin rates are driven primarily by the processing cost of the larger collection volume and the purchase of the new bin over time.

Figure 1. Cost of each of the 7 components in Commercial Food Scraps Rates Multifamily Food Scraps
There are currently no multifamily customers with food scraps bin service. Food scraps carts incur a variety of costs from the additional side loader vehicle and cart washing, as well as an additional charge for labor to assist with collection.

Figure 2. Cost of each of the 7 components in Multifamily Food Scraps Rates

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Commercial Yard Trimmings
Commercial yard trimmings bins are most entirely made up of processing cost, as these containers don’t need additional equipment or labor. The cart rates are primarily driven by 3 somewhat evenly distributed costs: processing costs and the additional vehicle and its driver.

Figure 3. Cost of each of the 7 components in Commercial Yard Trimmings Rates Multifamily Yard Trimmings
Multifamily customers with yard trimmings bin service have a rate driven by processing costs and the labor needed to assist in collection. Similar to the commercial yard trimmings carts, food scraps rates are most greatly affected by the labor to assist in collection followed by the cost of the additional side loader vehicle.

Figure 4. Cost of each of the 7 components in Multifamily Yard Trimmings Rates

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2.8.6 Cost Impact 1: Labor Costs
Labor costs are applied to multifamily rates and refer to the additional help needed for collection at these properties. In the rates, it was applied as a monthly cost per lift to each multifamily customer, for both yard trimmings and food scraps. Currently, the total number of multifamily lifts is 678. The estimated time for assistance for each lift was three minutes with an approximate labor cost of $12.92 per lift. When applied to 2029 service configurations, the average cost per customer for labor is $40.59 per month. The labor costs range between $14.82 for a customer with 1 container to $237.15 for a customer with 4 containers.

2.8.7 Cost Impact 2: Bins and Liners
Any food scraps customers migrating from many carts to fewer bins will pay for the cost of new capital equipment. Customers can expect to pay between $23.18 and $81.53 per month with a mean of $25.08 per customer to cover costs of the new bins and liners in the estimated migration services. Liners are needed for food scrap bins only to prevent rusting of the metal containers. This cost will apply for five years, or the expected lifespan of the equipment.

2.8.8 Cost Impact 3: Collection Cost
The collection cost is calculated based on the number of lifts over baseline and distributed across all customers as a cost per lift. In the most likely scenario and the recommended rates presented within this study, the cost per lift charge is $0.76 per month in 2029. This number is dependent on the total lifts over baseline and yearly cost per lift reconciliation payment made to NRWS.

2.8.9 Cost Impact 4: Purchase of a New Vehicle
The monthly loan payment at a 5% interest rate used to purchase the new vehicle will be passed on to any customer with cart service in the form of a vehicle cost to make up a portion of both commercial and multifamily food scraps and yard trimmings cart rates. The purchase of the new side loader vehicle will increase the monthly cost by an average of $7.17 per customer. The monthly cost will range between $5.83 for customers with 1 cart to $58.27 for a customer with 10 carts.

2.8.10 Cost Impact 5: Increased Washing of Food Scraps Carts The increase from quarterly to monthly washing for food scraps carts will be passed onto the customer at a monthly rate of $3.66 per cart. The average cost for cart washing per customer is $5.37, the highest cost is set at $36.58 for customers with 10 food waste carts.

2.8.11 Cost Impact 7: Cost of Vehicle Driver
Similar to the cost of the vehicle to service food scraps and yard trimmings carts in Cost Impact 4, the cost for the vehicle driver will also be distributed across the total number of food scraps and yard trimmings carts. The cost of hiring an additional driver for the new vehicle will increase the customers cost by an average of $9.32 per month. The customer

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with the lowest cost impact will pay $7.58 for 1 container, and the customer with the highest cost impact will pay $75.76 for 10 containers.

2.8.12 Cost Impact 8: Vehicle Operating Expenses
Operating costs for the new vehicle are applied across all carts on service. The average operating cost paid by each customer is $1.76. The customer with the lowest operating cost will pay $1.43 for having 1 container. The customer with the highest operating cost will pay $14.33 for servicing 10 containers.

2.9 Recommendation to Closely Track Migration and MSW Right-sizing to Ensure Fund Stability

2.9.1 Migration.

As shown in the revenue impact analysis, our projections show that the migration of customers with large volumes of yard trimmings or food scrap recycling cart service to bin service will reduce collection cost payments from the City to NRWS through more efficient collection of higher-volumes of materials. Collection cost reduction as a result of bin to cart migration will result in a net change to the City’s collection costs ranging from an increase of $55,926.87 caused primarily by the addition of food scraps services needed to achieve full SB 1383 compliance; to a reduction of $451,363.5 per year caused by the gradual migration from carts to bins as well as the reduction in service levels for yard trimmings customers predicted to decline by 10% per year.

Cart to bin migrations not only result in reductions in collection costs paid to NRWS, but also have the potential to reduce rates paid by customers through providing more efficient collection service when operationally feasible. However, many customers may not be aware of the option to migrate from carts to bins and will need technical assistance from NRWS and City staff to successfully consolidate their cart service into bin service without disruptions such as overages or underserving of containers. To this end, Appendix 6 includes a listing of accounts that would benefit from cart to bin migration. We recommend that these accounts be notified of the potential rate reductions associated with consolidating bins by the City to ensure the collection cost reductions projected in this study are actualized.

2.9.2 MSW Right Sizing.

To preserve the nexus between the commercial food scrap and yard trimmings rate being charged to customers reflecting the actual cost of providing the service, the revenue reductions the City will realize from MSW right-sizing was intentionally not included in the commercial and multifamily yard trimmings and food scraps rates shown in in Tables 1-4.

Based on our modeling, the revenue reductions resulting from MSW right-sizing of on- boarding accounts are unlikely to structurally impact the City’s operating revenues and represent less than 0.5% of total rate revenue by year 5. However, we recommend that the City closely track the MSW service levels for all currently non-compliant ‘onboarding’ accounts as these accounts become compliant and right-size their service levels. Estimates of MSW revenue as of October 2024 was $766,406.40; while the calculated MSW revenue per

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year based on the January 2025 listing was $617,149.44. This change in revenue may indicate more aggressive right-sizing, change in business operations or reflect closed businesses and should be explored further as this is a significant source of the City’s revenue.

We have included the ‘baseline’ MSW cubic yardage and rate revenues for all onboarding accounts in Appendix 5 - Current and Predicted Services – Current Food Scraps and Onboarding Accounts . As the on-boarding accounts implement the required organics collection service, on a semi-annual basis, we recommend that the City track any reductions in MSW revenue as a result of customer-right sizing to determine the impact of these activities on total aggregate MSW revenue. If the MSW revenue reduction impacts are significant (i.e. exceed 0.5% of total MSW revenue) and are resulting in the City’s inability to cover certain costs, the City should consider using rate stabilization reserves, or other similar mechanisms, to maintain the balance of the City’s budgeted funds.

2.9.3 Recommended Methodology to True Up Actual Migration Each Rate Year As further explained in Section 3.8, the suggested rates are calculated as a result of the service configuration (size of the container, how many containers, frequency of pickups) and the distribution of various costs dependent on the total number of commercial lifts, and the total number of food scraps and yard trimmings containers (both carts and bins). The rates recommended here are conservative, and estimate the values of the dependent costs each year. These estimates can be amended to update the model with actual values of commercial and multifamily service levels each year. EcoNomics recommends the application of these actual values to examine potential rate adjustments and estimate total expected revenue. For use in the 5-year study, we have modeled the maximum probable impacts on the City’s funds using moderate to aggressive migration and right-sizing scenarios. In the likely case that migration and right-sizing is not as prevalent as modeled in future years, the City may opt to adjust the food scraps and yard trimmings rates to reflect actual cost recovery.

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3 Methodology
The methodology section provides the detailed analyses that support the findings in Section

2. 3.1 Methodology to Identify Revenue Impacts
Due to the difference in labor costs applied to multifamily properties, EcoNomics developed two different rates depending on commercial or multifamily service.

3.1.1 Revenue Impact 1: Increase in Rate Revenue from Current Commercial and Multi-family Yard Trimmings Customers Who do not Pay for this Service Currently, the City does not charge for yard trimmings service. Over the next five years, the City aims to offer a singular commercial compostables rate for collection of both food scraps, yard trimmings and the combined collection of the two.

The current existing rates, and the modeled 2025 rates for Yard Trimmings (YT) are:

Current rate for 95-gal YT 1x/wk. (most common service):
$0
Expected rate for commercial service in 2025 based on cost projections for the most likely migration scenario: $20.07
Proposed rate for commercial service in 2025 based on cost projections: $4.01 Expected rate for multifamily service in 2025 based on cost projections for the most likely migration scenario: $32.98
Proposed rate for multifamily service in 2025 based on cost projections: $6.60

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3.1.2 Revenue Impact 2: Decrease in Rate Revenue from Current Commercial Food Scrap Recycling Customers Who Currently Pay 75% of the Equivalent MSW Rate for this Service Currently, Food Scraps recycling is offered at 75% of the cost of equivalent MSW service. The rates are phased in according to the equation for annual rate changes. Currently there is no 1 cubic yard bin, so a rate for this container was calculated by taking the rate for the 2 cubic yard bin and dividing by 2. The current existing rates and the modeled 2025 rates for Food Scraps (FS) are:

Current rate for 65-gal FS (most common service for FS):
$72.17
Expected rate for commercial service in 2025 based on cost projections for current services: $18.84
Proposed rate for commercial service in 2025 based on cost projections: $61.5 Expected rate for multifamily service in 2025 based on cost projections for current services: $31.76
Proposed rate for multifamily service in 2025 based on cost projections: $64.08 To moderate City rate revenue impacts as the commercial food scrap rate “ramps down” to the commercial compostables cost recovery rate and the YT rate “ramps up”, the information below models how the new rate structure can be phased in over a 5-year period.

The table below shows the rates for both the 65-gallon food scrap container and the 95- gallon yard trimmings container as they are phased in over time for each recommended 5- year rate schedule. The rate of food scraps ramps down from the current rate to the cost recovery rate while the rate of yard trimmings ramps up from no charge to the cost recovery rate. The difference between the rates is driven by actual costs of providing the service that are dependent on the total number of lifts on service for all commercial and multifamily customers, the total number of containers (carts and bins) on service for multifamily properties, the total number of carts on service for both commercial and multifamily customers, the number of food scraps carts a customer has, and the total number of food scrap bins that are serviced and require extra capital costs. These variables are driven by migration assumptions, compliance projections, and yard trimmings service reductions.

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Table 12: Proposed Rates For Scenario 1
Rates for FW (0.325 CY) and YW (0.475 CY) with 1 Container, 1 Pickup Year Service Type Commercial Rates Multifamily Rates
2025 FW - 0.325 CY (65-gal) $61.50 $64.08
2026 FW - 0.325 CY (65-gal) $51.30 $56.64
2027 FW - 0.325 CY (65-gal) $45.99 $54.29
2028 FW - 0.325 CY (65-gal) $38.40 $49.85
2029 FW - 0.325 CY (65-gal $30.60 $45.42
2025 YW - 0.475 CY (90-gal) $4.01 $6.60
2026 YW - 0.475 CY (90-gal) $8.52 $13.87
2027 YW - 0.475 CY (90-gal) $17.96 $26.26
2028 YW - 0.475 CY (90-gal) $25.15 $36.61
2029 YW - 0.475 CY (90-gal) $32.18 $47.00

3.1.3 Revenue Impact 3: Increase in Rate Revenue from Currently Non-compliant Commercial Generators that Implement Food Scrap Recycling Programs in 2025.

Commercial Food Generators
Each of the onboarding accounts determined to need food waste was analyzed for: current collection volume of MSW, type of commercial property, and existing food waste collection services of similar accounts. Using industry expertise and knowledge, EcoNomics made predictions for the weekly volume of food waste collection services needed for each business or multi-family property to become compliant. Each food generator was investigated for the type of food waste produced and assigned a category depending on the specific type of food served. The following food types are offered as examples: “Heavy” consisted of restaurants with Mexican, Chinese, Thai, Italian, and Mediterranean foods due to their higher water/sauce content and the fact that many of these restaurants include a ‘scratch’ kitchen.

The “Light” category consisted of ice cream shops, catering and specialty food shops, a theater and church. The “Pizza” category were all restaurants whose primary fare was pizza.

The “Fast Food” category included McDonald’s, Jack in the Box and KFC. These categories were then used to assign a fixed volume of food scrap generation and adjusted for business size.

Multi Family Food Waste Predictions
After discussions with the City, the predicted food waste data set was updated to apply the general rule of assigning 8 gallons of food scraps volume per unit per week in all multifamily properties. These generation predictions informed the total volume of service needed to attain SB 1383 compliance.

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3.1.4 Revenue Impact 4: Decrease in MSW rate revenue from commercial customers who ‘right size’ their MSW service levels as a result of incorporating commercial compostable service
As shown in the revenue impact analysis, our projections show that the right-sizing of MSW service will result in a reduction to the City’s rate revenue in the amount of $8,533.022 per month when all SB 1383 programs are fully implemented. These projections roughly assume a 2:1 right-sizing scenario, where if 1 cubic yard of new organics service is added, the customer reduces its MSW service by roughly 0.5 cubic yard.

3.1.5 Overall Food Scraps and Yard Trimmings Revenue Impacts The most likely migration scenario assumes that any customer with a weekly service of 1 cubic yard or more of food scraps or 1 cubic yard or more of yard trimmings will migrate to using fewer bins instead of multiple carts. In 2029 when the full phased in rates are charged, and all customers have migrated, this scenario produces an expected monthly revenue of $58,496.37. This is an annual reduction in rate revenue of $648,750.20 from the current food scraps revenue.

The table and plot below show the changes in revenue over time for both food scraps and yard trimmings. The yard trimmings revenue steadily rises as the phased in rates are applied each year from the current rate of $0. The food scraps revenue slowly decreases caused by the phasing in of the lower recommended cost-recovery rate.

Table 13: Scenario 1: Total Monthly Revenue by Waste Type Waste Type Year 0 2025 2026 2027 2028 2029
Food Scraps $102,254.24 $90,910.19 $75,216.34 $60,906.05 $45,610.50 $27,552.97 Yard Trimmings $0.00 $6,374.74 $12,764.36 $17,635.43 $25,613.75 $30,943.41 Total $102,254.24 $97,284.93 $87,980.71 $78,541.47 $71,224.25 $58,496.37

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Figure 5. Expected Yearly Revenue by Waste Type

3.2. Methodology to Identify Cost Impacts

3.2.1 Cost Impact 1: Increase in Costs due to Need for Additional Staff For Multifamily Properties
The additional food scraps and yard trimmings collection service will require additional support in the collection of these materials in multifamily properties. The expected increase in compostables service will require an additional labor cost of $124,000.00 per year. This led to the development of a special rate for multifamily customers in order to fairly distribute the labor cost to the customers that will receive the service. Assuming a 40-hour work week, EcoNomics used the yearly salary to calculate the cost per minute of the additional staff’s time and determined each container lift would require approximately three minutes to remove the container from its enclosure, stage the container for the driver, and return the container to the enclosure. This value was multiplied by 4.3 and applied to the multifamily compostable rate as a monthly cost per lift of $12.92 in 2025. Each year, the cost of labor was applied an inflation rate of 3.5% and multiplied by the number of food scraps and yard trimmings lifts at multifamily properties. As of January 2025 the number of food scraps and

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yard trimmings lifts each week was 678. The cost per lift for the laborer varies each year as customer service levels change with the expected reduction in yard trimmings service.

3.2.2 Cost Impact 2: Increase in Cost due to Capital Expenses Associated with Bins and Liners EcoNomics developed capital expenditure scenarios based on bin migration schedules and procurement costs. Plastic bin liners are required for food scrap collection in 1- and 2-yard bins to ensure metal bins do not rust from exposure to food scrap liquids, which are very corrosive. The bin and liner cost in 2025 is $997.04 per 1 cubic yard bin and $1,169.05 per 2 cubic yard bin. Any bins bought after 2025 were applied annual cost increments of 5.35% tied to inflation. Costs for the bins and liners were calculated based on the cost to the City during the predicted year of migration. In order to get the monthly cost charged to the customer, the cost of the bins and liners were applied an interest rate of 5% over a loan term of 60 months to distribute the cost to the customer across the lifetime of the equipment.

The total capital cost for bins and liners the City can be expected to pay over the five years of migration for 100 customers is $118,651.35. Over the course of 60 months from the time of migration, these generators will pay between $23.18 and $81.53 per month to cover these costs through the capital cost portion of their rate.

The table below shows the number of food scraps customers expected to migrate each year in Scenario 1, along with the number of bins needed to be purchased and the total cost per year according to pricing and inflation. The Total Capital Cost value was calculated at the cost expected to be paid by the City each year based on dynamic migration rates. Each customer was only assigned one bin in the migration service predictions so the number of new bins and migrated generators are the same. The pricing for each bin by year was calculated based on the actual bin size predicted for migration.

Table 14: Migration Summary by Year Scenario 1
Total Generators, Bin Quantity, and Capital Cost per Migration Year Migration Year Total Customers Total Bin Qty Total Capital Cost ($) 2025 4 4 $3,962.07
2026 11 11 $11,521.75
2027 5 5 $5,633.05
2028 24 24 $27,795.64
2029 56 56 $69,738.85
Total 100 100 $118,651.35

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3.2.3 Cost Impact 3: Decrease in Collection Cost Payments to NRWS due to Reduction in Lift Costs
In order to determine the percentage each generator pays of the reconciliation lift payments made to NRWS, first the total number of lifts per container type was identified. When calculated, using the January 2025 commercial listing, the values were slightly different from those used in the attachment R report. The total lifts in attachment R were 10,829. A proportion of lifts for each container type was calculated using the values from the commercial listing. The number of baseline lifts are calculated by summing the number of lifts included in the current amendment (7,793), the number of lifts calculated to add additional Sunday service (150) and the number of lifts included for the SB 1383 collection (1,350). In 2027, an additional 600 lifts were added to the baseline value to accommodate for increased compostable collection.

For years 2025 –2029, Table 15 below shows the total estimated lifts for all services, the number of lifts over baseline, and the resulting monthly cost per lift that would need to be charged to each customer to recover NRWS collection payments. As more customers migrate from carts to bins in the moste likely migration scenario, the number of lifts are reduced as collection becomes more efficient.

Table 15: Collection Cost Overview By Year
Year Total Lifts Total Lifts over Baseline Monthly Cost per Lift 2025 11,077 1,784 $6.10
2026 11,158 1,865 $6.72
2027 10,505 612 $2.34
2028 10,474 581 $2.37
2029 10,072 179 $0.76
Current Service
In Table 16 below, the “Total Lifts on Service” are calculated by summing the lifts (QTY*P.U.).

The “Proportion of Total Lifts” represents the proportion of lifts for each container category. “Lifts over Baseline” is the total number of lifts over baseline multiplied by the proportion value, to determine how many lifts over baseline are attributed to each container type. The Lifts Over Baseline total is taken from the Attachment R report. The “Current Yearly Collection Cost” is calculated by multiplying the number of lifts over baseline for each category by the yearly cost per lift reconciliation value. The value used in this case was the one applicable to 2025. The “Cost per Lift” is calculated by dividing the collection cost by the total number of lifts taken from the Attachment R report.

Using the identified number of lifts over baseline the City is responsible for reconciling (1,536), identified in the attachment R report, the proportion was then applied to this value to get the number of lifts over baseline per container type. To calculate the total cost to the City, the yearly cost per lift value ($454.69 in 2025) was multiplied by the number of lifts over baseline. The total cost to the city for current collection services is $698,403.84 per year. This cost was then divided by the total lifts for each container type to get a yearly cost

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per lift value of $64.49. The cost per lift value could then be applied to the number of lifts for each service by generator.

Table 16: Lifts Summary by Type
Breakdown of total weekly lifts, yearly costs, and proportions Container
Type
Total Lifts on
Service
Proportion of
Total Lifts
Lifts Over
Baseline
Current Yearly
Collection Cost
Yearly Cost per Lift
(Current)
Recycling
cart 3,342 28.37% 436 $198,104.37 $64.49
MSW cart 1,995 16.93% 260 $118,257.99 $64.49
Food Scrap
cart 1,672 14.19% 218 $99,111.46 $64.49
Recycling bin 1,446 12.27% 189 $85,714.82 $64.49
Yard
Trimmings
cart
1,352 11.48% 176 $80,142.76 $64.49
MSW bin 952 8.08% 124 $56,431.88 $64.49
Cart clean 945 8.02% 123 $56,016.94 $64.49
Yard
trimmings
bin
72 0.61% 9 $4,267.96 $64.49
Food scrap
bin 6 0.05% 1 $355.66 $64.49
Total 11,782 — 1,536 $698,404 —
Predicted Lifts
In order to calculate the new per lift cost depending on the addition or reduction in commercial lifts, the net number of new lifts added as a result of additional food scraps service and reduction in MSW caused by right sizing were calculated. The number of food scraps service lifts increased by 177, while the number of MSW service lifts were reduced by

52. The predicted net changes in lifts was 125 lifts. These values were then used to update the totals in the lifts by container type to calculate a new proportion of the number of lifts per container type above baseline. This methodology updates the numbers in all categories of container types and then multiplies the yearly additional lift cost to the new numbers.

With the predicted lifts added, the new number of lifts over baseline is 1,661.00. The total cost to the city for predicted collection services is $755,240.09. This cost was then divided by the total lifts for each container type to get a cost per lift value of $68.95.

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Table 17: Predicted Lifts Summary by Type
Breakdown of total lifts, cost, and proportions
Container
Type
Total Lifts on
Service
Proportion of
Total Lifts
Predicted Lifts
Over Baseline
Predicted Yearly
Collection Cost
Cost per Lift
(Predicted)
Recycling cart 3,342 28.07% 466 $211,977.19 $68.95
MSW cart 1,943 16.32% 271 $123,241.08 $68.95
Food Scrap
cart 1,849 15.53% 258 $117,278.82 $68.95
Recycling bin 1,446 12.14% 202 $91,717.24 $68.95
Yard
Trimmings cart 1,352 11.35% 189 $85,754.98 $68.95
MSW bin 952 8.00% 133 $60,383.69 $68.95
Cart clean 945 7.94% 132 $59,939.69 $68.95
Yard
trimmings bin 72 0.60% 10 $4,566.83 $68.95
Food scrap bin 6 0.05% 1 $380.57 $68.95
Total 11,907 — 1,661 $755,240 —
Scenario Lifts
Scenario lifts were calculated in a similar manner as the predicted lifts, except the changes in lifts were applied to the “Total Predicted Lifts”, since migration will take place after the predicted accounts are likely onboarded. The values used in the tables below represent raw values before validation and the rational actor tests and are intended to demonstrate the methodology used. The actual cost per lift applied in the rate tables for the most likely migration scenario can be seen in Table 15 above.

Scenario 1: Accounts with a combined volume on service of greater than 1 cubic yard migrate to bin service
The lifts for Food scraps service and yard trimmings service decreased by a net of 562 lifts when the cart service was migrated to bin service in this scenario. These values were used to update the “Total Lifts on Service” by container type to calculate a new “Proportion of Total Lifts”. This was then applied to the number of “Lifts Over Baseline” to get the total lifts over baseline for each container type. With the reduction in lifts for migrated accounts, the new number of lifts over baseline is 179. The total cost to the city in 2029 for predicted collection services is $91,603.25 This cost was then divided by the total lifts for each container type to get an annual “Cost per Lift Value” of $9.09.

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Table 18: Scenario 1 Lifts Summary by Type
Breakdown of total lifts, cost, and proportions
Container Type Total Lifts on
Service
Proportion of
Total Lifts
Lifts Over
Baseline
Scenario 1 Yearly
Collection Cost
Cost per Lift
(Scenario 1)
Recycling cart 3,342 30.05% 293 $133,099.38 $43.14
MSW cart 1,943 17.47% 170 $77,382.43 $43.14
Food Scrap cart 1,268 11.40% 111 $50,499.70 $43.14
Recycling bin 1,446 13.00% 127 $57,588.78 $43.14
Yard Trimmings
cart 1,146 10.31% 100 $45,640.90 $43.14
MSW bin 952 8.56% 83 $37,914.60 $43.14
Cart clean 945 8.50% 83 $37,635.82 $43.14
Yard trimmings
bin 72 0.65% 6 $2,867.49 $43.14
Food scrap bin 6 0.05% 1 $238.96 $43.14
Total 11,120 — 974 $442,868 —
Scenario 2: Accounts with a combined volume on service of greater than 2 cubic yards migrate to bin service
The lifts for Food scraps service and yard trimmings service decreased by a net of 346 lifts when the cart service was migrated to bin service in this scenario. These values were used to update the total lifts by container type to calculate a new proportion of the number of lifts per container type above baseline. With the reduction in lifts for migrated accounts lifts, the new number of lifts over baseline is 580. The total cost to the city for predicted collection services is $ 541,081.1. This cost was then divided by the total lifts for each container type to get a cost per lift value $51.62.

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Table 19: Scenario 2 Lifts Summary by Type
Breakdown of total lifts, cost, and proportions
Container Type Total Lifts on
Service
Proportion of
Total Lifts
Lifts Over
Baseline
Scenario 2 Yearly
Collection Cost
Cost per Lift
(Scenario 2)
Recycling cart 3,342 29.28% 348 $158,427.64 $51.62
MSW cart 1,943 17.02% 203 $92,107.99 $51.62
Food Scrap cart 1,487 13.03% 155 $70,491.29 $51.62
Recycling bin 1,446 12.67% 151 $68,547.68 $51.62
Yard Trimmings
cart 1,221 10.70% 127 $57,881.55 $51.62
MSW bin 952 8.34% 99 $45,129.60 $51.62
Cart clean 945 8.28% 99 $44,797.76 $51.62
Yard trimmings
bin 72 0.63% 8 $3,413.16 $51.62
Food scrap bin 6 0.05% 1 $284.43 $51.62
Total 11,414 — 1,190 541,081 —
The collection cost relies on the number of weekly lifts and is most affected by the service configurations. A reduction in lifts reduces the amount paid to NRWS and significantly lowers collection costs.

3.2.4 Cost Impact 4: Increase in Cost due to Capital Expenses Associated with New Collection Vehicle
A new collection vehicle is planned to be purchased in 2027. This vehicle will service carts on the commercial and multifamily routes. It has an estimated initial cost of $721,000.00 and will be financed at a 5% interest rate over a loan period of five years. This cost will be distributed across the total number of food scraps and yard trimmings carts on service. This report explores the yearly costs through 2029.

3.2.5 Cost Impact 5. Increase in Cost due to Increased Frequency of Cart Washing After review of the food scrap collection program it was decided to take the current quarterly schedule of cart washing for a cost of $12.50 per cart and increase the frequency of cart washing to one time per month. This increased the cost per cart to $38.25. This yearly washing cost was then divided by 12 to get a monthly cost and applied to the customer’s monthly rate. The inflation rate per year for this cost was set at 3.5%.

3.2.6 Cost Impact 6: Decrease in Cost from Avoided Disposal Density values for each waste stream are critical in estimating the processing cost component of the overall total cost for services.

Since the City is moving towards a universal compostables route and subsequent rate that combines food scraps and yard trimmings, a new density value was calculated in order to better estimate processing costs for both materials using the proportion of each type (food scraps or yard trimmings) in the current service listing and the density values obtained from

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field collection. The new density value calculated was 282.96 lbs per cubic yard. Details of this process are described below.

Commercial service locations in Napa with high quantities of food scraps and yard trimmings were identified through the NRWS commercial service listing. These locations were visited with a platform digital scale and the carts were inspected for bin fullness, contents and weight. Empty carts were also weighed to correct for the weight of the cart when calculating approximate weight per cubic yard. After the mean weight of the empty carts were subtracted for each cart respective of their size, the weights were then corrected for bin fullness. The fullness of the carts were recorded as a percentage of fullness, and this percentage was divided by the weight of the contents of the cart to get a standardized weight of the material if the cart were full. To arrive at an approximate weight per cubic yard of material the standardized weight of the cart was then divided by the size in cubic yards of the cart. Empty carts were removed from the data set and summary statistics calculated to get the mean weight per cubic yard and standard deviation for each waste type (food scraps and yard trimmings).

Results
The table below shows the number of observations by cart size, the mean weight in pounds, and the standard deviation for the carts weighed while empty. These mean weights were removed from all raw weight measurements.

Table 20: Mean Weight per Cubic Yard by Cart Size
Empty Carts
Size Count Mean Weight (lbs.) Std Dev (lbs.)
35-gal 3 22.87 0.06
64-gal 11 23.17 9.15
90-gal 7 29.78 6.94
After the remaining weight was corrected for fullness and standardized to weight per cubic yard, the means and standard deviation were calculated for each waste type and can be seen in the table below.

Table 21: Mean Weight per Cubic Yard by Waste Type
Includes standard deviation
Waste Type Count Mean Weight (lbs./CY) Std Dev (lbs./CY) FW 74 496.31 316.44
MSW 39 102.42 94.23
YW 38 152.40 127.31
YW/FW 1 86.45 NA
The figure below shows the variability in food scrap, MSW and yard trimmings weights that have been standardized by container size and bin fullness. The food waste measurements were highly variable.

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Figure 6. Distribution of cart weights standardized for fullness and volume.

Processing Costs Update
After internal discussion, the density values were updated to the values from the field data observations and used in the analysis of converting cubic yards on service to weight of materials collected. This weight was then used to calculate processing costs. In the cost analysis, if the densities used in the calculations are heavier than actual material being collected, as is likely the case when containers are collected without being full, the processing cost predicted will likely be much higher than the costs the City will actually incur.

The processing cost is calculated by multiplying the total cubic yards per month collected (weekly cubic yards * 4.3) by the cost per cubic yard for food scraps and yard trimmings processing as calculated from the 2023 report. This value takes into account the residuals that must be disposed of at the landfill and the price of processing the materials at the City’s compost facility. The packaged organics rates were calculated using the packaged organics processing cost that was higher as a result of the higher percentage (30% vs. 10%) of residuals.

The factors that contribute the most to this value are the densities of the waste streams that apply a predicted weight per cubic yard of service in order to apply the price per ton processing charge and the amount of total weekly service.

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3.2.7 Cost Impact 7: Increase in Costs due to Need for Additional Staff to Drive Vehicle The new vehicle to service food scraps and yard trimmings carts requires a driver. The salary for this driver is applied an inflation rate of 3.5% each year. The cost is then distributed across the total number of carts on service. In the rate calculation the customer is charged this rate for each cart they have. The new truck is planned to be purchased in 2027 so this cost will apply starting in year 3.

3.2.8 Cost Impact 8: Increase in Costs for Operating Additional Vehicle Operation costs for the new vehicle that services carts are distributed in the same manner as the costs for the driver and the new truck. Operating costs are increased each year based on the capital inflation rate of 5.35%.

3.3 Methodology to Model Downsizing for Yard Trimmings Customers Because the current yard trimmings customers receive this service at no charge, EcoNomics modeled the reduction of yard trimmings services as a result of the right sizing that will likely occur as the yard trimmings rates are phased in over the next five years. In order to model this, the current total cubic yardage of yard trimmings service was reduced each year by 10%, and then the most likely service configuration applied to the new estimated total. All revenue and cost projections, along with the total lifts and total containers are updated each year to reflect this downsizing, as well as the effects of the customer migration explained below.

3.4 Methodology to Model Customer Migration
As part of the rate impact study, EcoNomics projected how many customers (commercial users) will migrate from multiple yard trimmings and/or food scraps carts to fewer bins, and calculated the total associated costs for collection, processing, labor and capital costs (new vehicle, needed bins and liners) dependent on the dynamic migration pacing detailed later in this section.

For the purpose of the migration analysis, it is assumed that no multifamily properties or Napa Valley Unified School District (NVUSD) accounts will migrate from carts to bins.

Multifamily accounts will need to be reviewed separately so the quantity of carts maintains appropriate access for all residents.

To identify customers that may migrate from carts to bins, the total weekly cubic yards collected for each customer was analyzed by examining each type of container and multiplying the quantity of this container by the size in cubic yards and the frequency of pickups. These values were then summed across each of the two compostable types, yard trimmings and food scraps, to get a total weekly volume for each customer. This was important as many customers had a variety of size containers and services for the same waste type. These customers were then separated into three categories; Scenario 1 (1 or more cubic yard per week of food scrap or yard trimmings cart service), Scenario 2 (2 or more cubic yard per week of food scrap or yard trimmings cart service), and customers not likely to migrate. In order to calculate the net cost and rate impact of projected migration

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from carts to bins, EcoNomics calculated the individual costs and revenue impacts and applied the phased rates for each of the 5-years. EcoNomics analyzed this data based on separate migration of food scrap and yard trimmings customers since the newly implemented phased rates will need to remain separate until the cost for each service reaches an equilibrium after year five. Currently there is no charge for yard trimmings collection service, while food scraps service has a charge that is 75% of equivalent MSW service. When assigning the combination bin size, quantity and pickups to migrating customers to reach as close as possible to the total weekly cubic yards of either food scraps or yard trimming, the algorithm used to predcit service migration allowed for the proposed bin service configuration to be up to .33 cubic yards less than the customer’s current total weekly cubic yards on service.

In the January 2025 service listing, there were 713 commercial accounts with food scraps and/or yard trimmings service. The figure below shows the current distribution of carts and bins across all customers. After combining the total weekly cubic yards each service, it was estimated between 153 (or 17.98%) and 69 (or 8.11%) customers will likely migrate.

Multiple migration scenarios were examined by EcoNomics to determine the range of potential revenue and cost impacts based on various levels of migration. Details including capital cost expenditures for each scenario are described in the sections below. Using these scenarios, EcoNomics developed a ‘most likely scenario’ that was used to develop the recommended rate and to calculate aggregate rate revenue and cost impacts for use in this study.

Figure 7. Number of Containers by Service Type for All Accounts

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3.4.1 Most Likely Scenario
After operational review from NRWS as to the feasibility of swapping carts to bins in the identified locations, any customers who could not fit bins were removed from the data set.

After calculating and applying the suggested rates for each scenario, the rates for each customer were compared before and after migration. It was assumed that only customers whose rate decreased due to migration would migrate. There were 3 customers that did not see cost savings after migration and all future service migration predictions expect these customers to remain with their current services. In this report the most likely scenario used to develop the suggested rates was Scenario 1, where the greatest number of customers were predicted to migrate therefore having the greatest impact on the resulting cost and revenue.

3.4.2 Scenario 1: Customers with Greater than 1 Cubic Yard Food Scraps and Yard Trimmings Service
Scenario 1 customers are those with greater than one cubic yard (1CY) per week of either food scraps or yard trimmings service. If a customer had more than 1CY of service for both services, these were expected to migrate to a bin for each waste type. There was 1 food scrap customer and 41 yard trimmings customers that already had only bin service. If the customer had current food scrap and/or yard trimming service in bins only, they were removed from the data set. If they had a combination of carts and bins they remained in the data set to be evaluated for migration. There remained 100 food scrap customers and 57 yard trimmings customers with cart service or cart and bin service that were reviewed for bin migration.

Within these customers there was a total of 277 yard trimmings containers, with 272 carts and 5 bins in their current service configurations. As for food scraps customers, there was a total of 350 containers, with 350 carts and 0 bins in their current service configurations.

When reviewing the impacts of migration, the largest factor determining the change in cost for services will be the number of lifts. The number of lifts per week were calculated by multiplying the quantity of each container type and size by the number of pickups each week.

The total number of current weekly lifts for both the food scrap and yard trimmings customers with more than 1 CY of service was 1,062.

The figure below shows the current distribution of carts and bins for food scrap accounts with more than one cubic yard of weekly service and yard trimmings accounts with more than one cubic yard of weekly service.

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Figure 8. Number of Containers by Service Type for Scenario 1 Accounts

3.4.3 Scenario 2: Customers with Greater than 2 Cubic Yards Food Scraps and yard trimmings Service
Scenario 2 customers are those with greater than two cubic yard per week of either food scraps or yard trimmings service. If a customer had more than 2CY of service for both services, these were assigned a bin for each waste type. There were 1 food scraps customers that already had all their service collected in bins and 34 yard trimmings customers. If the customer had current food scrap and/or yard trimming service in bins only, they were removed from the data set. If they had a combination of carts and bins they remained in the data set to be evaluated for migration. There remained 41 food scraps customers and 28 yard trimmings customers with cart service or cart and bin service.

Within these customers there was a total of 173 yard trimmings containers, with 168 carts and 5 bins in their current service configurations. As for food scraps customers, there was a total of 209 containers, with 209 carts and 0 bins in their current service configurations. The number of lifts per week were calculated by multiplying the quantity of each container type and size by the number of pickups each week. The total number of weekly lifts for all food scraps and yard trimmings customers was 680.

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The figure below shows the current distribution of carts and bins for food scrap accounts with more than two cubic yards of weekly service and yard trimmings accounts with more than two cubic yards of weekly service.

Figure 9. Number of Containers by Service Type for Scenario 2 Accounts

3.5 Dynamic Migration Pacing

3.5.1 Logistic Growth Model
Migration pacing was calculated using a logistic growth model. This model uses the total number of customers expected to migrate, the rate of migration, and the year when the migration rate peaks, or the inflection point.

For each scenario, the fraction of customers expected to migrate each month over the 5-year period was calculated to see the effects of migration in terms of costs. Migration reduces revenue and lifts while slightly increasing cubic yards on service. Cumulative costs were aggregated based on the migration status of the customers each month to create a time series of total costs.

Yard Trimmings Customer Pacing
Customers with current yard trimmings service receive this service at no charge, presenting a strong motivation to review and cut costs early. In this model, we assumed the majority of customers with yard trimmings service (80%) will migrate within the first two years. In the

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21719811.1 55
model, potential migrating customers whose rates will decline are randomly assigned migration months to calculate real time expected annual revenues and costs.

Food Scraps Customer Pacing
As the recommended food scraps rate is phased in, customer rates will be declining and likely to delay migration. The pacing model for food scraps thus shows an inverse relationship to pacing for yard trimmings migrators. In this model, it was assumed the majority of food scrap customers will migrate near the end of the five year phased in rate period, if this results in a monthly cost savings. See section Section 2.8.4 for detailed information on the effects to customer rates.

Scenario 1
Figure 10 shows the monthly number of food scrap and yard trimmings migrators based on the logistic growth model described above. The yard trimmings migrators (green line) migrate quickly in years 1-3 as the rates are phased in and then decrease the rate of migration in years 4 and 5. Inversely, food scrap migrators (orange line) migrate slowly in years 1-3 and then increase the rate of migration in years 4 and 5. The blue shows the total predicted lifts and how they change over time with migration.

Figure 10. Scenario 1- Number of Migrating Accounts and Relevant Lifts for Those Accounts over Time

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The figure below shows the cumulative costs associated with food scrap migrators and yard trimmings migrators each month. The dashed lines represent the current costs (processing and collection costs), while the solid lines represent the cost as a result of migration. For comparison, costs are presented in 2029 values throughout the time period of five years and are only presented for the number of accounts who migrated each month. The values are cumulative across all migrated customers. Initially, costs between accounts that have migrated and those who have not migrated are similar. The costs of customers who migrate to bins for yard trimming and food scraps service remains slightly lower as all customers begin to migrate.

Figure 11. Scenario 1- Number of Migrating Accounts and their Processing and Collection Costs
Scenario 2
The figure below shows the number of food scrap migrators and yard trimmings migrators each month based on the logistic growth model. The food scrap migrators (orange line) migrate slowly in years 1-3 and then increase the rate of migration in years 4 and 5. The yard trimmings migrators (green line) migrate quickly in years 1-3 as the rates are phased in and then decrease the rate of migration in years 4 and 5.

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Figure 12. Scenario 2- Number of Migrating Accounts and Relevant Lifts for Those Accounts over Time
The figure below shows the cumulative costs associated with food scrap migrators and yard trimmings migrators each month. The dashed lines represent the current costs while the solid lines represent the cost following migration.

Figure 13. Scenario 2- Number of Migrating Accounts and Processing and Collection Costs for Those Accounts over Time

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3.6 Exploring patterns for migrating customers
Scenario 1
In order to explore the relationship between migrators who experienced a cost decrease after migrating, a plot was created to compare weekly cubic yards of service and rate savings.

As shown in the figure below, rate decreases directly related to the total volume of cubic yards on service. The more cubic yards on service a customer had, the larger their cost savings.

Figure 14. Difference in Non-Migrated vs. Migrated Rate and Total Cubic Yards in Scenario 1 Accounts

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Scenario 2
This plot was created to view the relationship between weekly cubic yards and rate savings.

Figure 15. Difference in Non-Migrated vs. Migrated Rate and Total Cubic Yards in Scenario 2 Accounts

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3.7 Methodology to Model Phased-in Rates

3.7.1 Structure of the 5-year phase-in period
In order to phase in the suggested rate changes, the annual rate change for each individual customer was calculated for current food scraps and yard trimmings customers. The formula for calculating the annual rate change is shown below:

Annual rate change = (Expected rate - Current rate) / # of years (in this case 5) A function was created that computes phased-in rates for food waste and yard waste services, with rates increasing over time until Year 5 when the full cost is charged. In order to arrive at the correct expected cost, which translates to the expected rate, we calculated each of the components separately according to service specifications, year, any amortization that may occur on up front costs, and the respective inflation rates for each type of cost. These expected rates were then used as a base rate, where the customer was charged a proportion of the change in rate between what they are currently paying and the expected rate for each year. The proportion was determined by the number of years the rate was being phased in, so for a 5 year phase in, the customer is charged 20% of the expected rate the first year, 40% of the expected rate for year two, 60% of the expected rate for year three and 80% of the expected rate for year four.

3.7.2 Final Rate Calculation
For each service type (FW/YW) and container size (CY):

Rate = Processing Cost + Collection Cost + Capital Cost + Labor Cost + Vehicle Cost + Driver Cost + Operating Cost + Washing Cost
Rates were calculated based on dynamic modeling using the current commercial service listing, the accounts predicted to add food scraps service by 2026, and the dynamic migration pacing expected and the resulting service configurations each year.

1. Processing Cost
Formula: Processing Cost = Monthly Compostable Processing Cost × Container Size (CY) × Pickups per Week × Number of Containers
Using the updated density values from field data observations, the monthly processing cost per cubic yard of compostables collected is $29.40 for food scraps and yard trimmings combined. The processing cost for accounts on the packaged organics rate will incurr a cost of $38.88 per cubic yard.

Notes: Processing cost values were updated at the yearly price per ton. Directly scales based on total cubic yards collected at monthly values.

2. Collection Cost (Dynamic Calculation)
Formula:

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Collection Cost = Monthly Collection Cost per Lift x Pickups per Week × Number of Containers
Lifts Over Baseline = Number of total commercial lifts in that year - baseline lifts Collection Cost per Lift = Lifts Over Baseline x Cost per Lift / total lifts The total number of lifts for all generators in each scenario was calculated based on adding or subtracting the change in lifts from what is currently in the calculations (10,829) and subtracting the baseline number of lifts (9,293).

Notes: Updated every two years at the cost per lift from Attachment U. Directly scales based on total lifts over baseline.

3. Capital Cost (Only for FW Bins ≥ 1 CY)
Formula:

Capital Cost = Bin Cost (CY) + Liner Cost (CY) capitalized at 5% interest paid over 5 years This cost only applies to food scraps bins if container size ≥ 1 CY. The bin and bin liner costs are multiplied by a 3% capital cost charge, this cost is recuperated over the next five years with a monthly charge paid by the generator over five years. The cost for a 1 cubic yard bin with liner is $997.04. The cost for a 2 cubic yard bin with liner is $1,169.05.

Notes: Bin and Liner costs are calculated according to the year of migration and apply a capital cost interest rate to the current (2025) price quote. Directly scales based on the number of food scraps bins added per customer. City will need to ensure monthly payments extend into the next rate schedules for customers who migrate after year 1 and will only have paid a portion of the 5 year term.

4. Labor Cost (Dynamic Calculation, MF properties only) Formula:

Labor Cost per Lift = Labor Cost per Minute x 3 Number of Weekly Pickups x Number of Containers
Using the yearly salary and assuming a 40 hour work week, the labor cost per minute was calculated. It was assumed each lift assistance took three minutes. This cost was then multiplied by the number of containers times the number of weekly pickups or the weekly lifts, and then multiplied by 4.3 for a monthly cost for all lifts.

Notes: Labor costs increase at an inflation rate each year. The customer is charged a flat rate per lift.

5. Vehicle Cost (Dynamic Calculation)
Formula:

Vehicle Cost = (Monthly payment for the loan of the vehicle / Total Containers) x Number of Containers

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Notes: Only applies for rates starting in 2027 when the vehicle is set to be purchased. Vehicle Cost was initially charged a 3% capitalization rate before applying the formula to calculate the total loan amount. The term payment is 5% interest over 60 months. The cost is distributed across the total number of carts updated dynamically due to migration. The customer is charged a flat rate per container.

6. Vehicle Driver Cost (Dynamic Calculation)
Formula:

Driver Cost = (Monthly Driver cost / Total Containers) x Number of Containers Notes: Driver costs increase at an inflation rate each year. Total carts are updated each year dependent on migration and resulting service configurations. The customer is charged a flat rate per container.

7. Operating Cost of the New Vehicle (Dynamic Calculation) Formula:

Operating Cost = (Monthly Operating cost / Total Containers) x Number of Containers Notes: Operating costs increase at an inflation rate each year. Total carts are updated each year dependent on migration and resulting service configurations. The customer is charged a flat rate per container.

8. Washing Cost of Food Waste Carts (Dynamic Calculation) Formula:

Washing Cost = Washing Cost x Number of Containers / 12 Notes: Washing costs increase at an inflation rate each year. Charge only applies to food scraps carts. The customer is charged a flat rate per container.

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4. Conclusion and Recommendations

4.1 Summary of Key Findings
Commercial and multifamily food scrap and yard trimmings service configurations will likely change as the current rate structure is phased out and the new rate structure is phased in.

The most probable changes include generators reducing their service for yard trimmings as they begin to evaluate their service needs and ‘migrate’ from having multiple carts to bins where operationally feasible. In arriving at a cost recovery rate, the rates are primarily driven by the processing cost of collecting each material and directly relate the total cubic yards on service. Cart customers will incur additional costs as a result of the new equipment and staff to service these containers since these additional operating costs are included in the cart rate structure. The rates for multi-family carts include additional labor costs needed to access the containers in space constrained areas where direct access by the vehicle is limited. With these additional costs on multi-family carts driving the rates higher, we expect a broader degree of right-sizing and migration to bins, were operationally feasible.

4.2 Implications for City Budgeting
The current rate for food scraps, which is offered at 75% the equivalent rate of existing MSW service, is much higher than actual costs of service and therefore contributes disproportionately to the City’s fund above the actual cost of providing the service. As the new rate structure is phased in, the projected ‘loss’ in revenue from the current food scrap rates offered at 75% of MSW rates are partially made up by the reduction in processing costs of materials currently being sent to the landfill that are actually compostables, the addition of rates for yard trimming service, and the reduction in collection costs as service levels adjust to more accurately reflect customer needs. The final rates recommended in this report are meant to cover all costs associated directly with the collection and processing of the materials. Of these various cost components, all of them, except for the collection cost, were created conservatively and function to cover the expected costs if our predictions about migration, service level adjustments, SB 1383 compliance, and MSW right sizing are correct.

If our predictions are not correct, and instead there is less migration, fewer service level adjustments, and less MSW right sizing, the rates will lead to increased revenue to the fund in comparison to their actual cost of providing service (i.e. the rates will more than cover the cost of providing service). In the case of the collection payments, or lifts over baseline that require compensation to NRWS, if our predictions are incorrect and the number of lifts do not decrease as expected, the City may be required to use rate stabilization reserves in order to cover the difference in the cost and the cost per lift charge being applied to the rates. The maximum expected amount of additional funds required if there are zero reductions in commercial or multifamily lifts is approximately $400,000 annually by year 5. It is also recommended the rate stabilization reserves be used to cover the difference in actual costs of providing the organics collection service and the rates received by the City in years 1-4 as the full cost-recovery rates are phased in.

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Because the algorithm to develop each year’s rates is based on actual and predicted values for the number of containers (carts and bins) and the number of total lifts, it is recommended that as these values change each year based on actual generator behavior, the actual migration and right-sizing levels replace the predicted values to develop a rate that covers actual expected costs. This will help cover costs resultant from changes in service levels based on actual levels of migration and right sizing, both for MSW and yard trimmings. We recommend this retroactive ‘truing-up’ of the costs of actual migration levels vs predicted migration levels occurs annually. In addition to migration levels, the reduction in MSW revenue caused by right sizing should be monitored, as well as the changes in yard trimmings service that may be caused by updating service levels to align with actual needs and the transition to yard trimmings being self-hauled by landscapers.

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5. Appendices

Appendix 1:2023/2024 Rate Report - Click on this link to view the word document in Dropbox

Appendix 2: Commercial Rate Tables – Yard Trimmings and Food Scraps – Click on this link to view the excel file in Dropbox

Appendix 3: MF Rate Tables – Yard Trimmings and Food Scraps - Click on this link to view the excel file in Dropbox

Appendix 4: Packaged Organics Rate Tables – Commercial and Multifamily - Click on this link to view the excel file in Dropbox

Appendix 5: Current and Predicted Services – Current Food Scraps and Onboarding Accounts - Click on this link to view the excel file in Dropbox

Appendix 6: Potential Migrators – Current and Migration Service Information - Click on this link to view the excel file in Dropbox

Appendix 7: Constants used throughout analysis - Click on this link to view the excel file in Dropbox

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ATTACHMENT 2

PROPOSED RATE INCREASE TO

SOLID WASTE AND RECYCLING CHARGES
PUBLIC HEARING - JUNE 17, 2025 AT 6:30 P.M,
CITY HALL, 955 SCHOOL STREET, NAPA, CA 94559
Residents can be proud of Napa’s solid waste program that diverts approximately 65% of collected materials from landfill.

Clean Compressed Natural Gas (CNG) vehicles collect materials that are processed at our robust recycling, food scrap and composting facility. What has changed? State Senate Bill 1383 requires recovery of organic materials. Initiatives have been implemented with Napa Recycling and Waste Services (NRWS) to ensure compliance.

Rates have not increased since 2022 and changes are proposed to meet the costs of the City’s successful materials diversion program. If approved, residential customers can expect to see the following in their future monthly solid waste bills from NRWS:

Please take a look at the complete contents of this notice.

An explanation of proposed rates, what rates are used for and an overview of services received has been highlighted. Full details on proposed rates, the public hearing on the rates, and the opportunity to protest are also included.

Chart based on current jurisdiction rates, many subject to annual adjustment prior to January 2026. Most common 35-gallon residential rates not utilized in above chart because several jurisdictions do not have multiple service size options smaller than 65-gallon like Napa and thus are not comparable rate structures.

Low/Fixed Income Assistance
A discount of $15.00 per month for low-income residential customers will be proposed. If you qualify for PG&E’s CARE Program, you may qualify for this discount.

Napa’s Rates Will Remain Below Regional Average
Solid Waste & Recycling Proposed Rates to Meet Regulations 65-Gallon Monthly Residential Service Cost Comparison
**
**

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ATTACHMENT 3
The cost to provide effective solid waste/recycling services and divert 65% from landfill is about $52.6M per year. As shown in the chart below, a large portion of the cost is our contract with Napa Recycling & Waste Services to employ 87 employees, operate and maintain 30 refuse/recycling trucks and state of the art recycling, sorting, and composting equipment to collect and process all material. The revenue to support these services is also shown below. Increasing expenses to meet State legislative and environmental requirements, significantly higher fuel and energy costs, and major capital improvements necessary for the recycling and composting facility has left a $5.2M gap that will be addressed by the proposed rates.

How are solid waste and recycling rates used?
• Over 24,000 residential and
commercial accounts serviced
• Approximately 85,000 tons of
material collected annually
• All completed with a 100% full
fleet of Clean Compressed
Natural Gas (CNG) collection
trucks
• Over 170,000 tons processed
at our regional recycling and
compost facility (with an overall
recovery rate of 94%)
• 20 sorters along with automated
sorting equipment work daily to
process recyclables
• Yard trimmings, food scraps and
other compostable organics are
composted at Napa’s award-
winning compost facility
Processing
Collection
• 65% in 2024 for the City of Napa
compared to 27% in 1997
• Over 25 different types of materials
separated and returned to market
Landfill Diversion
Community
• Customer service
• Waste prevention assistance
• Development review with SB
1383-compliant enclosure
standards adopted and enforced
by the City
Fiscal Year 2026 Proposed
Budget Expenditures
Fiscal Year 2026 Proposed
Budget Revenues
Total: $47,376,900 Total: $52,605,885

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ATTACHMENT 3
What’s Included in Your Service?
Landfill
20/35/65/95 Gal
Recycling
2 - 95 Gallon Carts
Compost
2 - 95 Gallon Carts
FREE PICKUP:
• Electronic Waste
• Household and Large Appliances
• Oversized Metal Items
• Cooking Oil
• Household Batteries
• Bagged Clothing and Shoes
• Household Fluorescent Bulbs and Tubes
*Must schedule an appointment.

Free Pickup of Used
Motor Oil and Filters
Free Annual Bulky
Item Drop Off Coupon
Free Annual Tire
Disposal Coupon
Visit naparecycling.com or call (707) 255-5200 for:
scheduling pick-up, requesting additional services, commercial needs, billing and service related questions, as well as a full version of the Reduce, Reuse & Recycle Guide for Napa County.

Twice a Year Collection
of Unlimited Compostables
in Compostable Bags
Free
Year-Round
Curbside Collection

ALL OF THIS
starting at $8 per week

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ATTACHMENT 3
Why is a Rate Increase Needed?
Beginning in the 2024 fiscal year, expenditures began to exceed revenues. The three primary drivers of this change are outlined below.
• The costs to fuel NRWS
collection vehicles and power the
City’s recycling and composting
facility have more than doubled
since 2019 ($1.2M in CY2019 to
$2.5M in CY2024)
• Over the 5-year rate period, fuel
costs are projected to increase by
over 5% per year while the cost of
electricity is projected to increase
by 11% per year resulting in a
projected cost of $3.5M by CY2029
Proposed Rates include the
cost of necessary capital
improvement at the City’s
Materials Diversion Facility
(MDF).

These include:
• Enhanced Composting
system ($13M) to comply with
State regulations to process
food scraps and air district
regulations for emissions
• Installation of a 12 KV
electrical system ($2.8M) as
required by PG&E for current
and future facility power
demands
• Improved Stormwater
Management system ($1.3M)
to comply with Composting
Order from Regional Board
• Deferred maintenance for
facility concrete, scalehouse,
storage and fencing ($1.6M)
In 2023, the City executed
an amendment to the
contract with Napa
Recycling and Waste
Services (NRWS) to comply
with SB 1383 (Mandatory
Organic Recovery).

Key costs:
• $2.6M in new organics
processing equipment ($1.5M
paid by CalRecycle grant)
• $523K NRWS commercial
compost collection vehicle
($113K paid by CalRecycle
grant)
• 1,600 new composting carts
focused on commercial and
multi-family accounts
• New NRWS driver, two
new compost equipment
operators, two NRWS
Recycling Outreach
Specialists, and 1 ½
NRWS Customer Service
Representatives (1/2 of
position paid by Napa County)
• Quarterly Facility and
annual Field Audits (as
required by SB 1383)
SB 1383 Requirements Dramatically Increased Fuel
and Electricity Costs Capital Improvements
Cost Increase =
$2.8M/year
Average Cost Increase =
$3.7M/year
Projected Expense =
$3.5M by CY2029
Visit cityofnapa.org/SolidWasteRates for:
cost of service analysis, rate tables, waste prevention information and more!

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ATTACHMENT 3
Recyclable Material Sales produce a dual benefit to generate revenue that reduces rates and avoids cost and impacts of landfill disposal. It’s great news the quantity of recyclable material has grown considerably, but the sale price per ton is very volatile. As shown in the chart below, over the last 10 years (CY2014 to CY2024), the market value of residential curbside recyclables has varied by 121% (from a low of $121/ton to a high of $268/ton).

Reduce Exposure to Market Volatility & Invest in Recycling Technology Investments. The City and NRWS have jointly invested in optical sorters, sorting robots, and other advanced technology at Napa’s recycling facility that have already significantly increased recovery of mixed paper and other high value recyclables (e.g., aluminum cans, #1 PET plastic bottles/trays, etc.). The net effect of increased processing efficiency results in estimated materials sales revenue increase of $3-4M annually into the future. This revenue helps offset other cost escalations that would otherwise have to be paid by rate payers.

Average Material Sales Price Per Ton for Residential Recyclables Rate Stabilization Fund. The City projects $10.6M
in revenue for material sales in FY2026. If the global market for recyclables decreased by just 30%, the
result would be a $3.2M loss in revenue. Proposed
rates establish a rate stabilization fund over the five- year period to be prepared to withstand market volatility in the future.

Good News for Napa.

SB 1013 added wine bottles
and hard liquor containers
to the California Redemption
Value (CRV) system (aka
“Bottle Bill”). This will
significantly increase the value
of glass containers and help
insulate their value against
wild market price swings.

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ATTACHMENT 3

CITY OF NAPA

NOTICE OF PUBLIC HEARING ON PROPOSED CHANGES TO RATES FOR COLLECTION OF SOLID WASTE

The Napa City Council will hold a public hearing at City Hall, 955 Scho ol Street, on Tuesday, June 17, 2025, at 6:30 pm, to consider proposed changes to the rates charged for collection of solid waste and recyclable materials from residential, multi-family, and commercial customers for the next five years. All rates are proposed to be increased 12.00% effective July 1, 2025; 10.00% effective January 1, 2026; 8.00% effective January 1, 2027; 8.00% effective January 1, 2028; and 6.00% effective January 1, 2029. These rate increases are based on (a) calculations for Operating and Capital Cost Payments to Napa Recycling & Waste Services as described in the Contract for the Collection and Transportation of Municipal Solid Waste, Recyclable Materials, and Compostables and the Operation of the Napa Materials Diversion Facility; (b) necessary capital improvements and maintenance of Napa Materials Diversion Facility, (c) increases in fees at the transfer station used by the City, ( d) costs to repair street damage caused by heavy refuse and recycling vehicles; and (e) revenues and expenditures in the City’s Solid Wast e & Materials Diversion Enterprise Fund.

The specific proposed maximum residential rates to be charged for each of the five upcoming years are shown in the tables below. The specific commercial, multi-family, and roll off rates proposed to become effective July 1, 2025, are shown in the tables below and on subsequent pages of this notice. Rate tables showing the specific maximum commercial, multi-family and roll off rates proposed to become effective January 1, 2026; January 1, 2027; January 1, 2028; and January 1, 202 9 may be viewed on the City’s web site at www.cityofnapa.org/SolidWasteRates .

If you would like to receive a copy of the staff report to the City Council that explains the rationale for the proposed rate increases in detail, please contact the Office of the City Clerk at P.O. Box 660, Napa, CA, 94559 -0660. Or you may download the staff report directly via the internet at www.cityofnapa.org/SolidWasteRates. The staff report is also available for review at the City Clerk’s office at City Hall. Written comments on the proposed changes to collection rates may be submitted to the City Clerk at: P.O. Box 660, Napa, CA 94559-0660. Written protests may also be submitted in person at the hearing.

SUMMARY OF ALL PROPOSED INCREASES TO MONTHLY RATES

PROPOSED RESIDENTIAL RATES FOR THE NEXT FIVE YEARS

Rates include weekly collection of recyclable materials as well as compostable yard trimmings, food-soiled paper, and food scraps
Cart Size Existing
Rate
Proposed Rate
Effective July 1,
2025
Proposed Rate
Effective January 1,
2026
Proposed Rate
Effective January 1,
2027
Proposed Rate
Effective January 1,
2028
Proposed Rate
Effective January 1,
2029
20-gallon $30.54 $34.20 $37.62 $40.63 $43.88 $46.51
35-gallon $38.29 $42.88 $47.17 $50.94 $55.02 $58.32
65-gallon $58.71 $65.76 $72.34 $78.13 $84.38 $89.44
95-gallon $90.30 $101.14 $111.25 $120.15 $129.76 $137.55

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ATTACHMENT 3

PROPOSED COMMERCIAL AND MULTI-FAMILY RATES EFFECTIVE JULY 1, 2025

NOTE REGARDING COMMERCIAL RATES: All the commercial rates with the proposed increase of 12.00% effective on July 1, 2025 are shown below in detail. Each of these rates will be increased on January 1, 2026 by an additional 10.00%; on January 1, 2027 by an additional 8.00%; on January 1, 2028 by an additional

8.00%; and January 1, 2029 by an additional 6.00% and may be viewed on the City’s web site at www.cityofnapa.org/SolidWasteRates.

Company Provided Bins
Existing Rate with Proposed 12.00% Increase

Bin Size 1x/wk 2x/wk 3x/wk 4x/wk 5x/wk 6x/wk 1x/wk 2x/wk 3x/wk 4x/wk 5x/wk 6x/wk 7x/wk One 1.5 yd $464.46 $972.79 $1,448.74 $1,942.13 $2,475.40 $3,088.53 $520.20 $1,089.52 $1,622.59 $2,175.19 $2,772.45 $3,459.15 $4,145.86 Two 1.5 yd. $989.78 $2,101.23 $3,129.29 $4,194.95 $5,346.88 $6,671.18 $1,108.55 $2,353.38 $3,504.80 $4,698.34 $5,988.51 $7,471.72 $8,954.94 Three 1.5 yd $1,470.93 $3,122.62 $4,650.46 $6,234.17 $7,946.03 $9,914.15 $1,647.44 $3,497.33 $5,208.52 $6,982.27 $8,899.55 $11,103.85 $13,308.14 Four 1.5 yd $1,979.58 $4,202.43 $6,258.52 $8,389.90 $10,693.69 $13,342.37 $2,217.13 $4,706.72 $7,009.54 $9,396.69 $11,976.93 $14,943.45 $17,909.98 One 2 yd. $597.10 $1,271.70 $1,905.81 $2,563.15 $3,273.45 $4,089.70 $668.75 $1,424.30 $2,134.51 $2,870.73 $3,666.26 $4,580.46 $5,494.66 Two 2 yd. $1,271.86 $2,746.88 $4,116.51 $5,536.37 $7,070.68 $8,833.74 $1,424.48 $3,076.51 $4,610.49 $6,200.73 $7,919.16 $9,893.79 $11,868.42 Three 2 yd. $1,837.15 $3,967.65 $5,946.10 $7,997.02 $10,213.14 $12,759.85 $2,057.61 $4,443.77 $6,659.63 $8,956.66 $11,438.72 $14,291.03 $17,143.35 Four 2 yd. $2,473.05 $5,341.11 $8,004.38 $10,765.18 $13,748.48 $17,176.73 $2,769.82 $5,982.04 $8,964.91 $12,057.00 $15,398.30 $19,237.94 $23,077.58 One 3 yd. $875.54 $1,898.75 $2,849.71 $3,835.56 $4,900.76 $6,124.68 $980.60 $2,126.60 $3,191.68 $4,295.83 $5,488.85 $6,859.64 $8,230.43 Two 3 yd. $1,803.64 $3,911.39 $5,870.45 $7,901.25 $10,095.57 $12,616.93 $2,020.08 $4,380.76 $6,574.90 $8,849.40 $11,307.04 $14,130.96 $16,954.88 Three 3 yd. $2,731.73 $5,924.05 $8,891.15 $11,966.98 $15,290.39 $19,109.12 $3,059.54 $6,634.94 $9,958.09 $13,403.02 $17,125.24 $21,402.21 $25,679.19 One 4 yd. $1,136.75 $2,496.54 $3,763.87 $5,077.63 $6,496.88 $8,127.09 $1,273.16 $2,796.12 $4,215.53 $5,686.95 $7,276.51 $9,102.34 $10,928.18 Two 4 yd. $2,341.66 $5,142.91 $7,753.59 $10,459.93 $13,383.55 $16,741.84 $2,622.66 $5,760.06 $8,684.02 $11,715.12 $14,989.58 $18,750.86 $22,512.15 Three 4 yd. $3,546.59 $7,789.23 $11,743.27 $15,842.20 $20,270.23 $25,356.53 $3,972.18 $8,723.94 $13,152.46 $17,743.26 $22,702.66 $28,399.31 $34,095.97 One 6 yd. $1,691.89 $3,729.74 $5,630.39 $7,600.75 $9,729.20 $12,173.80 $1,894.92 $4,177.31 $6,306.04 $8,512.84 $10,896.70 $13,634.66 $16,372.61 Two 6 yd. $3,485.32 $7,683.24 $11,598.64 $15,657.53 $20,042.14 $25,078.02 $3,903.56 $8,605.23 $12,990.48 $17,536.43 $22,447.20 $28,087.38 $33,727.57

Customer Owned Bins
Existing Rate with Proposed 12.00% Increase

Bin Size 1x/wk 2x/wk 3x/wk 4x/wk 5x/wk 6x/wk 1x/wk 2x/wk 3x/wk 4x/wk 5x/wk 6x/wk 7x/wk One 1.5 yd $397.98 $896.73 $1,371.22 $1,863.11 $2,394.17 $3,003.63 $445.74 $1,004.34 $1,535.77 $2,086.68 $2,681.47 $3,364.07 $4,145.86 Two 1.5 yd. $918.00 $2,019.05 $3,045.54 $4,109.61 $5,259.12 $6,579.44 $1,028.16 $2,261.34 $3,411.00 $4,602.76 $5,890.21 $7,368.97 $8,954.94 Three 1.5yd $1,399.80 $3,041.27 $4,567.49 $6,149.61 $7,859.07 $9,823.26 $1,567.78 $3,406.22 $5,115.59 $6,887.56 $8,802.16 $11,002.05 $13,308.14 Four 1.5 yd $1,907.80 $4,120.30 $6,174.82 $8,304.58 $10,605.98 $13,250.61 $2,136.74 $4,614.74 $6,915.80 $9,301.13 $11,878.70 $14,840.68 $17,909.98 One 2 yd. $530.67 $1,195.64 $1,828.27 $2,484.13 $3,192.23 $4,004.79 $594.35 $1,339.12 $2,047.66 $2,782.23 $3,575.30 $4,485.36 $5,494.66 Two 2 yd. $1,200.09 $2,664.72 $4,032.80 $5,451.03 $6,982.97 $8,742.14 $1,344.10 $2,984.49 $4,516.74 $6,105.15 $7,820.93 $9,791.20 $11,868.42 Three 2 yd. $1,768.01 $3,888.60 $5,865.48 $7,914.82 $10,128.64 $12,671.54 $1,980.17 $4,355.23 $6,569.34 $8,864.60 $11,344.08 $14,192.12 $17,143.35 Four 2 yd. $2,403.29 $5,261.25 $7,922.98 $10,682.18 $13,663.18 $17,087.55 $2,691.68 $5,892.60 $8,873.74 $11,964.04 $15,302.76 $19,138.06 $23,077.58 One 3 yd. $783.55 $1,793.44 $2,742.40 $3,726.19 $4,788.32 $6,007.17 $877.58 $2,008.65 $3,071.49 $4,173.33 $5,362.92 $6,728.03 $8,230.43 Two 3 yd. $1,708.86 $3,802.97 $5,870.45 $7,788.60 $9,979.76 $12,495.82 $1,913.92 $4,259.33 $6,574.90 $8,723.23 $11,177.33 $13,995.32 $16,954.88 Three 3 yd. $2,636.04 $5,814.56 $8,779.56 $11,853.21 $15,173.45 $18,986.88 $2,952.36 $6,512.31 $9,833.11 $13,275.60 $16,994.26 $21,265.31 $25,679.19 One 4 yd. $1,044.74 $2,391.26 $3,656.52 $4,968.25 $6,384.41 $8,009.55 $1,170.11 $2,678.21 $4,095.30 $5,564.44 $7,150.54 $8,970.70 $10,928.18 Two 4 yd. $2,246.89 $5,034.45 $7,643.02 $10,347.24 $13,267.71 $16,620.76 $2,516.52 $5,638.58 $8,560.18 $11,588.91 $14,859.84 $18,615.25 $22,512.15 Three 4 yd. $3,450.89 $7,679.72 $11,631.66 $15,728.43 $20,153.26 $25,234.31 $3,865.00 $8,601.29 $13,027.46 $17,615.84 $22,571.65 $28,262.43 $34,095.97 One 6 yd. $1,567.08 $3,586.88 $5,484.79 $7,452.38 $9,576.60 $12,014.31 $1,755.13 $4,017.31 $6,142.96 $8,346.67 $10,725.79 $13,456.03 $16,372.61 Two 6 yd. $3,356.74 $7,536.11 $11,448.66 $15,504.70 $19,885.00 $24,913.76 $3,759.55 $8,440.44 $12,822.50 $17,365.26 $22,271.20 $27,903.41 $33,727.57

PROPOSED COMMERCIAL MSW CART RATES EFFECTIVE JULY 1, 2025 1x/week 2x/week 3x/week 4x/week 5x/week 6x/week 7x/week Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Proposed 35-gallon $48.01 $53.77 $96.01 $107.53 $144.01 $161.29 $192.03 $215.07 $240.04 $268.84 $288.03 $322.59 $376.34 65-gallon $96.22 $107.77 $192.39 $215.48 $288.60 $323.23 $384.84 $431.02 $481.04 $538.76 $577.27 $646.54 $754.32 95-gallon $144.09 $161.38 $288.17 $322.75 $432.26 $484.13 $576.36 $645.52 $720.43 $806.88 $864.54 $968.28 $1,129.69

COMERCIAL AND MULTI-FAMILY COMPACTORS (Less Than 6 Yards) ▪ Existing Compacted Rate Per Yard =
$130.35
▪ To calculate rate per month = ((cost per yard x
size bin x # of pick-ups per week x 52
weeks)/12 months)
▪ Proposed Compacted Rate Per Yard = $145.99

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ATTACHMENT 3

ROLL OFFS (Uncompacted)

As a result of the 2025 SWR rate study it was determined that MSW rates for roll -off debris boxes and certain temporary MSW service would be frozen at current rates. The rates for recycling roll-off boxes will be increased by 12.00% effective on July 1, 2025 and are shown below in detail. The recycling roll-off rates will be increased on January 1, 2026 by an additional 10.00%; on January 1, 2027 by an additional 8.00%; on January 1, 2028 by an additional 8.00%; and January 1, 2029 by an additional 6.00% and may be viewed on the City’s web site at www.cityofnapa.org/SolidWasteRates.

▪ Existing Uncompacted Rate Per Yard = $46.42 ▪ Proposed Uncompacted Rate per Yard = $46.42

Size of Roll Off
(yards)
Current Rate Per
Service
Proposed Rate Per
Service (no change)
10 $ 464.20 $ 464.20
15 $ 696.30 $ 696.30
20 $ 928.40 $ 928.40
25 $ 1,160.50 $ 1,160.50
30 $ 1,392.60 $ 1,392.60
40 $ 1,856.80 $ 1,856.80
To calculate rate per month: ((rate per yard x size of bin x number of pickups per week x 52 weeks)/12 months) To calculate rate per service: Size of Bin x Uncompacted Rate Per Yard

ROLL OFFS (Compacted)

▪ Existing Compacted Rate Per Yard = $130.35 ▪ Proposed Compacted Rate Per Yard = $145.99

Size of
Compactor
(yards)
Current Rate Per
Month (1x week
service)
Proposed Rate Per
Month (1x week
service)
Current Rate
Per Service
Proposed
Rate Per
Service
6 $3,389.10 $3,795.74 $782.10 $875.94
10 $5,648.50 $6,326.23 $1,303.50 $1,459.90
15 $8,472.75 $9,489.35 $1,955.25 $2,189.85
20 $11,297.00 $12,652.47 $2,607.00 $2,919.80
25 $14,121.25 $15,815.58 $3,258.75 $3,649.75
30 $16,945.50 $18,978.70 $3,910.50 $4,379.70
To calculate rate per month: ((rate per yard x size of bin x number of pickups per week x 52 weeks)/12 months) To calculate rate per service: Size of Bin x Compacted Rate Per Yard

Temporary Bin Sizes and Rates – MSW (no change)
Residential & Commercial Carpet Roll-off Service (Recycling)

Temporary Bin Sizes Current Rate Proposed Rate
Current Rate Proposed Rate

1.5 yard $240.60 $240.60
Roll Off Box
Size Rate Per Service Rate Per Service

2.0 yard $240.60 $240.60 20 Cubic Yards $301.62 $337.81

3.0 yard $287.02 $287.02 30 Cubic Yards $403.45 $451.86

4.0 yard $333.42 $333.42 40 Cubic Yards $505.26 $565.89

6.0 yard $426.27 $426.27
Cost Per Yard $46.43 $46.43

ROLL OFFS (Recycled Materials)

Current Rate Proposed Rate
10 YARDS Per Service Per Service
Asphalt $205.79 $230.48
Concrete $244.98 $274.38
Dirt $293.99 $329.27
20 YARDS
Wood $195.99 $219.51
Yard trimmings $333.20 $373.18

Current Rate Proposed Rate
30 YARDS Per Service Per Service
Metal $0.00 $0.00
Wood $244.98 $274.38
Yard trimmings $431.19 $482.93
OTHER
Manure $195.99 $219.51
Pomace $195.99 $219.51
Sheetrock $195.99 $219.51

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ATTACHMENT 3

Commercial and Multi-family Food Scrap Recycling, Yard Trimming Recycling, and Packaged Organics Rates Commercial food scrap collection is currently offered at 75% of the equivalent MSW service and yard trimmings collection service is offered at no charge. As a result of the 2025 SWR study, the City will be implementing a 5-year phased in rate for yard trimmings collection service in which the rate will go from its current ‘no charge’ status to a cost -recovery model. Food scrap collection rates will also be phased down from the current 75% of MSW rate to a lower cost recovery rate over a five-year period. The City has introduced new cost- recovery rates specifically for multi-family food scraps, multi-family yard trimmings, and commercial and multi-family packaged organics.

Packaged organics service, which is reserved for food scrap generators with high levels of non-compostable contamination in the stream, is not currently offered, but may be activated by the City over the five -year rate adjustment period . Rate tables showing the specific maximum commercial and multi-family food scraps, yard trimmings, and packaged organics rates proposed to become effective July 1, 2025; January 1, 2026; January 1, 2027; January 1, 2028; and January 1, 2029 may be viewed on the City’s web site at www.cityofnapa.org/SolidWasteRates. The proposed phase-in cost-recovery rate for these services over a 5-year period is shown in the tables. The food scrap compactor rate will not be adjusted from the current rate.

Commercial Food Scrap Rates
1x/week 2x/week 3x/week 4x/week 5x/week 6x/week 7x/week Size Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Proposed 35-gallon $36.01 $31.68 $72.01 $62.72 $108.01 $93.76 $144.02 $124.81 $180.03 $155.85 $216.02 $186.88 $217.91 65-gallon $72.17 $61.49 $144.29 $122.31 $216.45 $183.16 $288.63 $244.02 $360.78 $304.86 $432.95 $365.72 $426.58 95-gallon $108.07 $91.09 $216.13 $181.54 $324.20 $272.00 $432.27 $362.46 $540.32 $452.90 $648.41 $543.37 $633.84 1 Cubic
Yard NA $189.98 NA $399.45 NA $596.77 NA $801.06 NA $1,021.24 NA $1,273.20 $1,525.17 2 Cubic
Yard $447.83 $375.64 $953.78 $793.37 $1,429.36 $1,186.80 $1,922.36 $1,594.17 $2,455.09 $2,033.32 $3,067.28 $2,536.04 $3,038.76 Multifamily Food Scrap Rates
1x/week 2x/week 3x/week 4x/week 5x/week 6x/week 7x/week Size Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Current Proposed Proposed 35-gallon $36.01 $34.26 $72.01 $67.89 $108.01 $101.51 $144.02 $135.14 $180.03 $168.77 $241.94 $202.38 $236.00 65-gallon $72.17 $64.07 $144.29 $127.48 $216.45 $190.91 $288.63 $254.35 $360.78 $317.78 $484.91 $381.22 $444.66 95-gallon $108.07 $93.68 $216.13 $186.71 $324.20 $279.75 $432.27 $372.79 $540.32 $465.82 $726.21 $558.87 $651.92 1 Cubic Yard NA $192.56 NA $404.62 NA $604.52 NA $811.39 NA $1,034.16 NA $1,288.70 $1,543.25 2 Cubic Yard $447.83 $378.22 $953.78 $798.53 $1,429.36 $1,194.55 $1,922.36 $1,604.51 $2,455.09 $2,046.24 NA $2,551.54 $3,056.84

Commercial Packaged Organics Rates (no current rate for this service) SIZE 1X/WEEK 2X/WEEK 3X/WEEK 4X/WEEK 5X/WEEK 6X/WEEK 7X/WEEK 35-gallon $32.01 $63.38 $94.75 $126.14 $157.51 $188.88 $220.24 65-gallon $62.11 $123.54 $185.01 $246.49 $307.94 $369.42 $430.89 95-gallon $91.99 $183.35 $274.70 $366.07 $457.41 $548.78 $640.15 1 Cubic Yard $191.88 $403.25 $602.47 $808.65 $1,030.73 $1,284.59 $1,538.45 2 Cubic Yard $379.44 $800.96 $1,198.19 $1,609.36 $2,052.30 $2,558.82 $3,065.33

Multifamily Packaged Organics Rates (no current rate for this service) SIZE 1X/WEEK 2X/WEEK 3X/WEEK 4X/WEEK 5X/WEEK 6X/WEEK 7X/WEEK 35-gallon $34.60 $68.55 $102.50 $136.47 $170.43 $204.38 $238.32 65-gallon $64.69 $128.71 $192.76 $256.82 $320.86 $384.92 $448.98 95-gallon $94.58 $188.51 $282.45 $376.40 $470.33 $564.28 $658.23 1 Cubic Yard $194.46 $408.41 $610.22 $818.99 $1,043.65 $1,300.09 $1,556.54 2 Cubic Yard $382.02 $806.13 $1,205.94 $1,619.69 $2,065.22 $2,574.32 $3,083.41

Commercial Yard Trimmings Rates (currently offered at no charge) SIZE 1X/WEEK 2X/WEEK 3X/WEEK 4X/WEEK 5X/WEEK 6X/WEEK 7X/WEEK 35-gallon $2.24 $4.48 $6.71 $8.95 $11.19 $13.43 $15.67
65-gallon $3.12 $6.24 $9.36 $12.48 $15.60 $18.72 $21.84 95-gallon $4.00 $8.00 $12.01 $16.01 $20.01 $24.01 $28.01 1 Cubic Yard $7.09 $14.18 $21.26 $28.35 $35.44 $42.53 $49.62 2 Cubic Yard $12.97 $25.94 $38.90 $51.87 $64.84 $77.81 $90.77 3 Cubic Yard $18.85 $37.69 $56.54 $75.39 $94.23 $113.08 $131.93 4 Cubic Yard $24.73 $49.45 $74.18 $98.91 $123.63 $148.36 $173.08 6 Cubic Yard $36.48 $72.97 $109.45 $145.94 $182.42 $218.91 $255.39

Multifamily Yard Trimmings Rates (currently offered at no charge) SIZE 1X/WEEK 2X/WEEK 3X/WEEK 4X/WEEK 5X/WEEK 6X/WEEK 7X/WEEK 35-gallon $4.82 $9.64 $14.46 $19.28 $24.11 $28.93 $33.75 65-gallon $5.70 $11.41 $17.11 $22.81 $28.52 $34.22 $39.92 95-gallon $6.59 $13.17 $19.76 $26.34 $32.93 $39.51 $46.10 1 Cubic Yard $9.67 $19.34 $29.01 $38.69 $48.36 $58.03 $67.70 2 Cubic Yard $15.55 $31.10 $46.65 $62.20 $77.75 $93.31 $108.86 3 Cubic Yard $21.43 $42.86 $64.29 $85.72 $107.15 $128.58 $150.01 4 Cubic Yard $27.31 $54.62 $81.93 $109.24 $136.55 $163.86 $191.17 6 Cubic Yard $39.07 $78.14 $117.20 $156.27 $195.34 $234.41 $273.48

Special Events Food Scrap Collection – rate per container per service Food Scrap Compactors (no increase in rate) Current Proposed Cost Per Yard
(Compacted) Current: $97.76 Proposed: $97.76
35-gallon Food Scrap Cart $11.47 $12.85 Per Month 1x/week Per Service 65-gallon Food Scrap Cart $17.19 $19.25 Compactors (yds) Current Proposed Current Proposed 95-gallon Food Scrap Cart $22.91 $25.66 6 $2,541.76 $2,541.76 $586.56 $586.56

1.5 Cubic Yard Food Scrap Bin $123.89 $138.76 10 $4,236.27 $4,236.27 $977.60 $977.60 2 Cubic Yard Food Scrap Bin $140.53 $157.39 15 $6,354.40 $6,354.40 $1,466.40 $1,466.40 3 Cubic Yard Food Scrap Bin $173.85 $194.71 20 $8,472.53 $8,472.53 $1,955.20 $1,955.20 4 Cubic Yard Food Scrap Bin $207.16 $232.02 25 $10,590.67 $10,590.67 $2,444.00 $2,444.00 6 Cubic Yard Food Scrap Bin $274.82 $307.80 30 $12,708.80 $12,708.80 $2,932.80 $2,932.80 Calculate rate = ((cost per yd x size bin x # of pick ups per week x 52 weeks)/12 months

Page 9 of 12 ends

ATTACHMENT 3

Split 20-cubic Yard Roll-off Boxes – 2 Material Types per Box

Materials (Two Per Split Box)
Current Proposed
Rate Per
Service
Rate Per
Service
MSW & Wood $562.16 $629.62
MSW & Yardwaste $630.78 $706.47
MSW & Sheetrock $562.16 $629.62
MSW & Metal $464.17 $519.87
MSW & Cardboard $464.17 $519.87
MSW & Mixed Recyclable Materials $464.17 $519.87
Wood & Yardwaste $264.60 $296.35
Wood & Sheetrock $195.99 $219.51
Wood & Metal $98.00 $109.76
Wood & Cardboard $98.00 $109.76
Wood & Mixed Recyclable Materials $98.00 $109.76

Materials (Two Per Split Box) Cont.

Current Proposed
Rate Per
Service
Rate Per
Service
Yard trimmings and sheetrock $264.60 $296.35
Yard trimmings & Metal $166.61 $186.60
Yard trimmings & Cardboard $166.61 $186.60
Yard trimmings and Mixed Recyclable Materials $166.61 $186.60 Sheetrock & Metal $98.00 $109.76
Sheetrock & Cardboard $98.00 $109.76
Sheetrock & Mixed Recyclable Materials $98.00 $109.76
Metal & Cardboard Free Free
Metal & Mixed Recyclable Materials Free Free
Cardboard & Mixed Recyclable Materials Free Free

MISCELLANEOUS CHARGES
The proposed increases of 12.00% effective July 1, 2025, is shown in the miscellaneous rates below. Each of these rates will be increased on January 1, 2026, by an additional 10.00%; on January 1, 2027, by an additional 8.00%; on January 1, 2028, by an additional 8.00%; and January 1, 2029, by an additional 6.00%.

Current Rate Proposed Rate
Residential
Additional Carts ($/Cart/Month)
1 MSW To be provided at monthly rate
multiplied by number of carts Recycle (after 4-35gal or 2-95gal) 2 20-gallon $5.17 $5.79
3 35-gallon $5.17 $5.79
4 65-gallon $5.17 $5.79
5 95-gallon $5.17 $5.79
Yard trimmings (after 4-35 gal or 2-95
gal)
6 20-gallon $5.17 $5.79
7 35-gallon $5.17 $5.79
8 65-gallon $5.17 $5.79
9 95-gallon $5.17 $5.79
10 Bulky Items ($/service up to 4
items) $56.84 $63.66
11 Each item over 4 items ($/Item) -
excluding e-waste, cardboard $22.93 $25.68
12 Cardboard and single stream
recyclables Free Free
13 E-Waste (CRTs/LCDs), Metal
Items and Cooking Oil Free Free
Extra Empty ($/bin/Service)
14 On day of service (Monday-
Friday) up to 9 bags (30 gal.)/barrels
$9.61/each
barrel
$10.76/each
barrel
15 On day of service (Monday-
Friday) 10 or more bags/barrels $46.43/yard $52/yard
16 Not on day of service (Monday-
Friday) up to 9 bags/barrels
$9.61/barrel +
$76.73 trip
charge
$10.76/barrel +
$85.94 trip
charge
17 Not on day of service (Monday-
Friday) 10 or more bags/barrels
$46.43/yard +
$76.73 trip
charge
$52/yard +
$85.94 trip
charge
18 Not on day of service (Saturday,
Sunday) up to 9 bags/barrels
$9.61/barrel +
$221.75 trip
charge
$10.76/barrel +
$248.36 trip
charge
19 Not on day of service (Saturday,
Sunday) 10 or more bags/barrels
$46.43/yard +
$221.75 trip
charge
$52/yard +
$248.36 trip
charge
Backyard Service (includes MSW,
Recycle, YW) ($/Month)

20 5-600 feet $34.65 $38.81
21 601 feet or more $42.87 $48.01
22 With doctors note Free Free
Commercial & Multi-family
1 Bulky Items ($/service up to 4
items) $113.66 $127.30
2 Cardboard and single stream
recyclables Free Free
3 Each item over 4 items ($/Item) -
excluding e-waste, occ $22.93 $25.68
4 E-Waste (CRTs/LCDs), Metal
Items and Cooking Oil Free Free
5 Pallets $113.66 $127.30
Extra Empty ($/Bin/Empty)
Commercial
6 35-gallon $22.93 $25.68
7 65-gallon $34.39 $38.52
8 95-gallon $45.82 $51.32
Commercial and Multi-Family
9 1.5-yard $247.76 $277.49
10 2-yard $281.07 $314.80
11 3-yard $347.69 $389.41
12 4-yard $414.30 $464.02
13 6-yard $549.66 $615.62

Miscellaneous
14 Bin Cleaning/Bin Exchange
($/Bin/Service) $310.18 $347.40
15 Heavy Waste $137.55 $154.06
16 Hourly labor charge (for 2
persons) for on-site transfer of solid
waste/materials from smaller exterior
collection containers to larger exterior
collection container(s)
$162.83 $182.37
17 Locking Bin or Key Fee $11.47 $12.85
Recycling Services ($/Service)
18 Single Stream Recyclables (less
than 10 yard) Free Free
Current Rate Proposed Rate
19 Source Separated Recyclables (less
than 10 yard) Free Free
20 Yard trimmings (less than 10 yard) Free Free
Saturday, Sunday, Holiday Service
($/day(s)/month)

21 35-gallon $172.24 $192.91
22 65-gallon $172.24 $192.91
23 95-gallon $172.24 $192.91
Trip Charges ($/Trip)
24 up to 35-gallon $76.75 $85.96
25 35-gallon – 6-yards $147.83 $165.57
Roll Off/Compactor/Temporary Bins
1 Overweight Surcharge (10 yards and
more)
Trip charge
($246.35) plus cost
to bring in
equipment capable
of removing such
materials plus
$97.53 per ton
Trip charge
($275.91) plus cost
to bring in
equipment capable
of removing such
materials plus
$109.23 per ton
2 Sealed watertight roll off boxes (for
wet materials such as pomace).

Additional charge/service for special
sealed box and added labor
$51.80 $58.02
Miscellaneous
3 Demurrage for non-removal after 3
days ($/Bin/Day) $30.60 $34.27
4 Trip Charge - Move/Relocate Box
($/Box/Service) $246.35 $275.91
5 Rental Fee ($/day) $30.60 $34.27
Temporary Bins ($/5 days)
6 2-yard $240.59 $269.46
7 3-yard $287.02 $321.46
8 4-yard $333.42 $373.43
Other Fees
1 City Directed Spill Clean Up $411.57 $460.96
Contaminated Recycling Fees
Residential recyclables, yard
trimmings

2 35-gallon $22.93 $25.68
3 65-gallon $34.39 $38.52
4 95-gallon $45.82 $51.32
Commercial (bins) recyclables, yard
trimmings

5 1.5-yard $247.76 $277.49
6 2-yard $281.07 $314.80
7 3-yard $347.69 $389.41
8 4-yard $414.30 $464.02
9 6-yard $549.66 $615.62
Fines for SB 1383 Non-compliance
10 1st violation within a 12-month period $100
11 2nd violation within a 12-month period $200
12 3rd violation or more within a 12-month
period $500
Deposit
13 Commercial cart $60.00 $80.00
14 Resident $30.00 $40.00
15 Residential Cart Redelivery Charge $25.00 $25.00
Roll Off/Compactors/Commercial
bin

16 MSW 50% of service 50% of service
17 Recycle 50% of service 50% of service

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ATTACHMENT 3
15374283.3

CITY OF NAPA

SOLID WASTE RATES PROTEST FORM

You do not need to complete this form if you do not oppose the proposed rate increase.

If you wish to protest the proposed rate increase, you may use this sample form.

□ Check the box if you agree with the following statement:

I protest the proposed rate increase for the collection of solid waste (trash), recycling, and compostables. I certify that I am the property owner and/or responsible for paying the solid waste rates for this property.

Comments or Reason for Protest (optional):

Street Address

Signature Printed Name

Mail to:

Napa City Clerk
P.O. Box 660
Napa, CA 94559-0660
Attn: Proposition 218 Protest
*Please mail this protest form
back in a stamped envelope.*

- OR -
Deliver in person to:

Napa City Clerk
955 School Street
Napa, CA 94559-0660
Attn: Proposition 218 Protest

In order to be counted, all written protests must be received by the City, whether sent by mail or delivered in person, by the close of the public hearing June 17, 2025 at 6:30 pm.

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ATTACHMENT 3

PROPOSED RATE INCREASE TO

SOLID WASTE AND RECYCLING CHARGES
PUBLIC HEARING - JUNE 17, 2025 AT 6:30 P.M,
CITY HALL, 955 SCHOOL STREET, NAPA, CA 94559
PO Box 660
Napa, CA 94559
Presorted
Standard
US Postage
PAID
Napa, CA
Permit __
If you own more than one
parcel, you may receive
multiple notices. We apologize
for the inconvenience.

DO NOT DISCARD.

IMPORTANT

SOLID WASTE/

RECYCLING RATE

INFORMATION
ENCLOSED.

Printed on 100% Post-Consumer Recycled Paper

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ATTACHMENT 3

Community Services Bldg: 1600 First Street, Napa CA 94559  Mailing Address: P.O. Box 660, Napa CA 94559  (707) 257-9530  www.cityofnapa.org

MEMO

Following the publication of the April 15, 2025, City Council agenda, City staff has prepared updated supplemental files for Solid Waste and Recycling (SWR) Collection Rates, identified as Administrative Item 6B.

The updated supplemental file is for the first attachment to the staff report for the “Solid Waste & Recycling Collection Service Rate Study for 2025-2029.” The SWR rate study is a very large and technical report (now 291 pages) and City staff and City consultants updated input data from consultants and crosschecks various study calculations, tables, charts and cross references.

This study along with the Powerpoint presentation to Council, staff report, rate notice (if approved) and FAQs (still to be developed) wi ll be accessible to the public online (as well as Spanish version of the proposed rate notice) when notices are mailed out.

1 City of Napa
Utilities Department
April 2025

SOLID WASTE & RECYCLING

COLLECTION SERVICE RATE STUDY
FOR 2025-2029

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ATTACHMENT 1

2 Solid Waste and Recycling Collection Service
Rate Study for 2025-2029

TABLE OF CONTENTS

Chapter 1 – Executive Summary ……………………………………………… p. 5

Chapter 2 – Status of Solid Waste and Materials Diversion Operations and Programs since Time of Last Rate Setting Process …... p. 10

Section 2.1 Overview of Services Provided …………….……….…. p. 10

Section 2.2 Current Status of City AB 939 and Diversion Efforts. .. p. 10

Section 2.3 New Programs, Staffing, and Other Operational Changes Cost changes made from 2014-2024 .…… p. 11

Chapter 3 – Primary Drivers for Rate Adjustments …………………………. p. 15

Section 3.1 2018, 2022 & SB 1383 NRWS Contract Amendments p. 15

Section 3.2 MDF Capital Improvements Expenses and Debt
Service Costs pp. 15-16 ………………………………. p. 17

Section 3.3. Increased Fuel and Electricity Costs ………………… p. 23

Section 3.4 New Programs and Cost Changes Planned
or Proposed for 2025-2029 ………………….……...... p. 24

Chapter 4 – Financial Position of SWR Fund ……………….……………... p. 26

Section 4.1 Projected Revenues under Existing Rates ……......…. p. 26

Section 4.2 Projected Expenditures ……...................................…. p. 33

Section 4.3 Status of Reserves for Solid Waste and
Recycling Enterprise Fund ……………..…..…............ p. 37

Chapter 5 – Revenue Requirements and Proposed Solid Waste Rate Adjustments …………………………………………………...… p. 41

Section 5.1 Rate Methodology …………………………….……….. p. 41

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ATTACHMENT 1

3 Section 5.2 Revenue Requirements ………………………………… p. 41

Section 5.3 SWR Fund Position with Proposed
Rate Adjustment ………………………..…………..…… p. 43

Section 5.4 Impact of Proposed Rates on Specific Lines
of Service ………………………………….………...….. p. 45

Section 5.5 Adjustment of Commercial Municipal Solid
Waste (MSW) Cart Rates ……………..………..……... p. 47

Section 5.6 Addition of “Packaged Organics” to Full Scale Commercial Food Scrap Diversion Program ...……... p. 49

Section 5.7 Proposition 218 Notice and Next Steps ……….……... p. 49

APPENDIX A: RECYCLING PROGRAM ACHIEVEMENTS AND
GRANTS ………………………………………………… p. 50

APPENDIX B: STAFF REPORT AND RESOLUTION R2018-043
ADOPTING 2018 CONTRACT AMENDMENT
WITH NRWS (APRIL 17, 2018 NAPA CITY
COUNCIL MEETING) ………………………………… p. 53

APPENDIX C: NAPA RECYCLING AND WASTE SERVICES

COST OF SERVICE STUDY (FOR
2018 CONTRACT AMENDMENT TO
CITY-NRWS AGREEMENT) ………………………… p. 69

APPENDIX D: PROJECTED SWR FUND

REVENUES, EXPENDITURES AND RESERVE
BALANCES FOR CITY FY2024/25-FY2029/30

WITH PROPOSED SOLID WASTE COLLECTION
RATE ADJUSTMENTS ……………………………… p. 70

APPENDIX E: MAY 8, 2018 CALRECYCLE LETTER TO

CALIFORNIA JURISDICTIONS REGARDING
CHINA’S “NATIONAL SWORD” POLICY …………. p. 76

APPENDIX F: SUMMARY OF RECYCLING PROGRAM
CHANGES AS OF AUGUST 17, 2018 FROM

NATIONAL WASTE & RECYCLING ASSOCIATION
(REPRINTED WITH PERMISSION) ……………..… p. 81

APPENDIX G: EXECUTIVE SUMMARY OF 2016 SOLID
WASTE REVENUE BONDS (GREEN BONDS) ..… p. 93

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ATTACHMENT 1

4 APPENDIX H: ABBREVIATED STUDY OBSERVATIONS ON
PACKAGED ORGANICS PROGRAM ……………… p. 94

APPENDIX I: UPDATED 2019 STUDY OF NAPA RECYCLING

AND REFUSE COLLECTION VEHICLE WEIGHT
IMPACT ON CITY STREETS ……………………… p. 96

APPENDIX J: ESTIMATE OF ANNUAL STREET MAINTENANCE

COST FROM CITY OF NAPA PUBLIC WORKS
DEPARTMENT ………………………………………. p. 97

APPENDIX K: FULL SOLID WASTE AND RECYCLING

COLLECTION SERVICE RATES UNDER

PROPOSED RATE ADJUSTMENTS
FOR 2025-2029 ……………………………………… p. 100

APPENDIX L: STAFF REPORT FOR SB 1383 ORDINANCE
ADOPTION (O2022-001) …………………………… p. 165

APPENDIX M: STAFF REPORT FOR SB 619 NOTIFICATION OF
INTENT TO COMPLY WITH SB 1383 SHORT-

LIVED CLIMATE POLLUTANTS & ORGANIC

WASTE REDUCTION REQUIREMENTS
(O2022-008) …………………………….…………… p. 190

APPENDIX N: STAFF REPORT FOR 2022 NRWS CONTRACT
AMENDMENT …………….………………………… p. 205
APPENDIX O: STAFF REPORT FOR SB 1383 NRWS
CONTRACT AMENDMENT ….…………………… p. 211

APPENDIX P: SB 1383 COMMERCIAL ORGANICS

COLLECTION RATE AND MIGRATION STUDY
WITH 5-YEAR PHASE-IN OF RESULTS ………… p. 224

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ATTACHMENT 1

5 CHAPTER 1: EXECUTIVE SUMMARY

City of Napa’s Solid Waste & Recycling Collection Service Rates (“Solid Waste Rates”) were last adjusted in January of 20 22 (with the approving Napa City Council action occurring on July 23, 2019).

Since that last rate adjustment, many signif icant changes have occurred and the proposed rate adjustments to the Solid Waste Rates will address those changes in the Solid Waste and Recycling Enterprise Fund (“SWR Fund” or “Fund”). The purpose of the “rate study” is to evaluate the current and projected overall financial position of the SWR Fund and, if necessary, provide recommended (or “proposed”) adjustments to the City’s Solid Waste Rates for 2025 through 2029.

As an enterprise fund, the SWR Fund is independent of the City’s general fund and is supported by non- tax revenue, primarily from solid waste rate revenue charged for the collection and processing (including disposal) of municipal solid waste (MSW), recyclable materials and compostables. Within the Fund, there are five major “lines of service” which include (1) residential, (2) co mmercial, (3) roll -off debris/recycling box, (4) multi-family and (5) service to the Napa Valley Unified School District (NVUSD).

Because solid waste collection rates are tied to property (with property owners within City limits generally required to subscribe to solid waste removal services), solid waste rates (like City water rates) are subject to the provision of California’s Proposition 218 (or “Prop 218”). Prop 218 has provisions for a notice process to property owners and/or solid waste/recycling service customers, a 45 -day public review period once the notice of potential increased rates is mailed, and a public hearing process to protest the potential rates following the public review period. In general, the rates charged to a rate - paying customer must be based on the cost of service to provide those services.

Beyond solid waste rate revenue, the SWR Fund also has two other major “non-rate” sources of revenue – revenue from the sale of processed recyclable materials and revenue from “Gate Fees” charged to users of the City’s Materials Diversion Facility (“MDF” or sometimes known as “Napa Recycling and Composting Facility” ). The City of Napa currently contract s with a private company named Napa Recycling & Waste Services, LLC (or “NRWS”) to provide for the collection and processing of solid waste, recyclable and compostable materials as well as operation of the City-owned Materials Diversion Facility (“MDF”). The City currently stands at a 69% level of recycling and composting (commonly known as “diversion rate” referring to the diversion of materials away from landfill disposal). Both the State of California and the City of Napa itself have set goals of meeting or exceeding a diversion rate of 75% or better. Relevant legislation and City programs toward that goal are discussed in this rate study (primarily chapter 2 and Appendices A, L, M, N, and O to this rate study).

The major projected expenditures for the SWR Fund include compensation to NRWS for contracted services, landfill disposal of MSW, mitigation of impacts of heavy refuse and recycling collection vehicles on City streets, capital improvements, costs associated with materials delivered to and processed at the City’s MDF, and salaries and benefits of City staff serving the SWR Fund. Projected revenues and expenses for the Fund are discussed in detail in Chapters 3 and 4 (as well as Appendices B through O to this rate study).

While there are many changes to such a large Fund, the most significant three changes that impact the fund (“primary drivers”) since the time of the last City of Napa solid waste rate setting are as follows:

1. NRWS Contract and Impact of SB 1383 Compliance: The 2022 Contract Amendment with NRWS was approved by the Napa City Council in October 2022 (see Appendix N for full staff

Page 5 of 291 ends

ATTACHMENT 1

6 report to Council). Among other items, the 2022 Contract Amendment addressed operating and maintenance costs of the Covered Aerated Static Pile (CASP) and improved stormwater management system at the City’s MDF. Both major facility improvements were necessary to be compliant with solid waste, stormwater and air permits applicable to the MDF, particularly in order to receive, process and compost food scraps and soiled paper in addition to more traditional greenwaste. The 2022 Contract Amendment also increased compensation to NRWS for economic growth and defined parameters to measure that growth through an every-other- year “reconciliation review” process. Finally, the 2022 Contract Amendment fixed the annual contractual inflators for labor at 3.5% per year and non-labor capital and operating payment at

2.5%. In order to avoid large fluctuations for both parties for non-labor costs, the Amendment also included a risk sharing procedure whereby the City and NRWS share non-labor costs increases 50%/50% when the index, the Consumer Price Index-All Urban Consumers – All Items less food and energy, San Francisco-Oakland-San Jose-CA (Series ID CUURA422SAOL1E), exceeds 5% in a given year (the “safety-valve”). This term applies to the current City-NRWS agreement which ends in Contract Year (CY) 2031. The “safety valve” provision for non-labor costs was exercised in contract year (and calendar year) 2023 as the inflation rate was greater than 5% (6.0% that particular year). The capital and operating impacts of the 2022 Contract Amendment “reset” the baseline capital and operating by approximately $900,000 per year (escalated at the 3.5% labor and 2.5% non-labor indices since CY2022). The “reconciliation review” growth provision payment to NRWS is currently $205,516/year for residential growth, $698,404/year for commercial growth and the most recent annual roll-off debris box service growth was a payment of $68,466 to NRWS for CY2024 actuals.

The SB 1383 Contract Amendment with NRWS was approved by the City Council in April 2023 (see Appendix M for full staff report to Council). This contract amendment continued the City’s effort to achieve (or exceed) a 75% level of diversion from landfill disposal pursuant to both adopted City policy and state goals. Key cost drivers included:

(1) addition of one commercial compost collection vehicle and driver; (2) new and/or upgraded collection equipment for expanded collection of compostable organic materials;
(3) addition of two NRWS compost equipment operators, two NRWS recycling outreach specialists and 1 ½ NRWS customer service representatives (half of one NRWS customer service representative was paid by south Napa County unincorporated rate payers); (4) new and/or upgraded sorting and processing equipment for recyclables at the City-owned MDF and

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ATTACHMENT 1

7 (5) $2.6 million of new organics processing equipment at the MDF ($1.5 million of which was paid through a competitive grant secured from CalRecycle by the City).

The total annual impact was projected at approximately $2.8 million per year. At current SWR collection service rates, every $310,000 in additional costs is approximately 1% of collection service rate revenue. Thus the annual increase in costs for SB 1383 compliance has “reset” the base NRWS contract by approximately 9% (all other factors being unchanged). The impact of the 2022 and SB 1383 Contract Amendments are described in more detail in section 3.1 and Appendices L, M, N, O and P of this rate study.

2. Dramatically Increased Fuel and Electricity Costs: A rapid and significant increase in the cost of fuel for NRWS collection vehicles and electricity for operation of the MDF has been experienced since the time of previous rate setting and is expected to continue to increase in the next five-years. Full reimbursement of actual NRWS fuel and MDF electricity costs (once documented and verified) is built into the City-NRWS Agreement. In CY2019 (time of previous multi-year SWR rate setting), the combined cost of fuel and electricity was $1.22 million. By CY2024, the combined fuel and electricity cost had risen to $2.46 million, a 101.6% increase.

Projections for fuel cost are a 5.35% increase per year for the next five-years and an 11% per year increase for electricity for the next five-years. If these projected increases materialize as projected, the cost of fuel and electricity will be $3.53 million in CY2029 (a 43.5% increase compared to CY2024 actual fuel and electricity costs) creating an additional $1.07 million obligation for the SWR Fund. As noted above, at current collection service rates, every $310,000 in additional costs is approximately 1% of collection service rate revenue. Thus a $1.07 million increase constitutes a 3.45% increase by itself over current collection service rates. The impact of dramatically increased fuel and electricity costs is described in more detail in section 3.3 of this rate study

3. Major Capital and System Improvements: In September 2016, the City issued $12.5 million in solid waste revenue bonds (“SWRB”) for several major capital and system improvements at the MDF. Approximately $8 million of the SWRB proceeds have been invested in a CASP system to process compostable organic materials at the MDF. The CASP system is necessary to process a wide range of compostable materials including food scraps, grape pomace, soiled paper and manure (along with traditional yard trimmings) to be in compliance with permit conditions imposed on the MDF. Three major permits govern the MDF operation: solid waste facility, air district emissions, and stormwater management. Beyond the CASP system, approximately $2 million of the SWRB proceeds was dedicated towards a greatly improved stormwater management and treatment system at the MDF to meet the General Compost Order from the San Francisco Bay Area Regional Water Quality Control Board. The remainder of the SWRB proceeds funded necessary roof extensions, additional concrete pad, and loading dock improvements for storage and processing of recyclable materials at the MDF. The annual debt service for the SWRB is slightly under $900,000 per year.

Page 7 of 291 ends

ATTACHMENT 1

8 pandemic); (2) $750,000 for a second phase for treatment and storage of MDF industrial stormwater; (3) $500,000 for raising the height of the “compost contact” retention pond since no discharge is allowed for compost contact water, and (4) $150,000 for a permanent equipment storage bay at the City’s corporation yard. In FYs 2027/28 through FY2029/30, the major MDF CIPs that need to be funded are: (1) $13 million for next phase of CASP composting system (largely in response to air permit requirements to maximize on-site composting and avoid expense off-hauling of excess organic material to other composting facilities); (2) $500,000 for MDF concrete pad partial replacement (first year of a 3-year $500,000/year plan starting in FY2029/30 and continuing through FY2031/32); (3) $400,000 for replacement/rehabilitation of the 20 year-old MDF scalehouse in 2026 which has been deferred previously; and (4) $300,000 for partial replacement of perimeter MDF fencing (which has already been deferred several times). The original perimeter fencing will be 35 years old by CY2029 and cannot withstand additional deferral.

Beyond the three major changes described above, this r ate study examines the Fund’s projected revenue with existing rates against projected expenses for 2025-2029. When the City issued the SWRB in 2016, the bond indenture placed a minimum 1.25 debt coverage ratio for the F und which the City would not meet without some level of increases in solid waste rates. Please see chart below that presents the projected net operating position of SWR Fund with no rate adjustments for City FY2025/26 through FY2029/30.

Projected 5-year Operating Position of SWR Fund with No Rate Adjustments

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ATTACHMENT 1

9 In addition to the minimum debt service coverage ratio required by the 2016 SWRB, the impact of continuing with existing solid waste rates on the Fund’s reserves was also analyzed. In summary, the difference between continuing with existing solid waste rates and the proposed rate adjustments was dramatic. With no rate adjustments, the SWR Fund is projected to go from total reserves of $8,674,931 at the end of City FY20 23/24 with reserves completely exhausted by the end of City FY20 26/27 and projected to be negative $ 7,988,482 by the end of City FY202 7/28 (and this, in turn, would require significant financial support from the City’s general fund which is generally not practiced for an Enterprise fund such as the SWR Fund). Please refer to Table 2 in section 5.2.1 of this rate study for more complete data.

In contrast to the dire scenario described above under existing solid waste rates, adoption of the proposed rate adjustments provides a prudent replenishment of total SWR Fund reserves.

Projected 5-year Impacts of Proposed Solid Waste and Recycling Rates

The refunding of reserves under the proposed rate adjustments satisfies the 20% operating reserve target specified in the SWR Fund fiscal policy ($10,522,194 by the end of FY2028/29) and a rate stabilization fund reserve balance of $3,759,154 by the end of FY208/29 . A $3.76 million rate stabilization reserve balance would cover a single year 36% decline in materials sales revenue , which is always a possibility with volatile global markets for recyclables. Also included in these total projected reserves is a build -up of the Capital Improvement Project (CIP) reserves to cover the $18.7M in MDF CIPs over the 5 years and leave a projected CIP reserve balance of $1,837,952 by the end of FY2029/30. This will almost certainly be needed as the MDF continues to age (the facility will be 3 5 years old by the end of 2029). Failure to build adequate capital reserves in the Fund would necessitate some combination of future borrowing, depletion of existing reserves or higher rate increases for future City rate payers.

FY25
Projection
s
FY26
Budget
FY27
Budget
FY28
Budget
FY29
Budget
FY30
Budget
Revenue $48,439,000 $52,833,076 $56,298,361 $60,177,538 $63,365,443 $64,803,401 Rate Stabilization and Operating
Reserves $1,757,000 $227,191 $1,120,970 $2,154,277 $3,346,673 $4,287,353 CIP Expenditures $1,500,000 $3,000,000 $4,000,000 $5,000,000 $5,000,000 $3,000,000 Operating Expenditures $45,182,000 $49,605,885 $51,177,391 $53,023,261 $55,018,770 $57,516,048 $-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000

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ATTACHMENT 1

10 CHAPTER 2: STATUS OF SOLID WASTE AND RECYCLING
OPERATIONS AND PROGRAMS FROM 2014
to 2024

Section 2.1 OVERVIEW OF SERVICES PROVIDED

The Solid Waste and Materials Diversion Enterprise Fund (“SWR Fund” or the “Fund” in this report) pays for solid waste and recycling collection services provided primarily by Napa Recycling and Waste Services, LLC (“NRWS”) in the City of Napa. Services and program provided by a combination of NRWS and City staff include operation of the City of Napa’s Materials Diversion Facility ( “MDF”) where the recyclables are sorted and marketed, operation of the c ompost facility at the Napa MDF and provision of all of the City’s recycling programs including planning and implementing recycling programs at businesses in Napa, the commercial food scrap composting program, the Electronic Waste drop off day, the Recycle More Program, carpet recycling and other programs. The main sources of revenue to the Fund are (1) solid waste and recycling collection service revenues (“solid waste rates”) from residents and businesses, (2) revenue from the sale of recyclable materials, compost, and gravel from the MDF and (3) gate fees collected at the MDF from customers delivering yard trimmings , source separated concrete, wood, and other recyclable materials. Revenues also come from larger users for whom the Napa MDF processes c urbside recyclable materials, yard trimmings and food scraps including the County of Napa and private companies such as Sonoma Garbage Service. Only the first source of revenue to the SWR Fund listed above (solid waste rate revenue) includes property-related fees subject to California’s Proposition 218. However, all three major sources of revenue are utilized to cover overall expenditures in the Fund.

Section 2.2 CURRENT STATUS OF CITY AB 939 & SB 1383 DIVERSION EFFORTS

Despite very difficult global markets for recyclables, Napa has continued to achieve and maintain a very high level of recycling and composting. Measured by the older (and more conservative) “diversion - based” calculation method (diverted tons over total generation), it is estimated that the City of Napa achieved a 65% level of landfill diversion in calendar year (“CY”) 2024. This represents a 2% overall improvement from CY20 20 at 63% landfill diversion rate and steady progress toward the City goal of 75% diversion (as set by the “Disposal Reduction Policy” passed by the Napa City Council in July of 2012).

Effective January 1, 2009, state law requires use of the per capita disposal and goal measurement system to determine compliance with AB 939. The per capita disposal and goal measurement system measures tons disposed by the City and it also evaluates diversion program implementation efforts and results. Using this measurement system, the City of Napa’s disposal target rate is 7.3 lbs. of solid waste per person per day. The City of Napa’s 2016 calculated disposal rate as reported in th e annual report was 3 .8 lbs. per person per day. City staff calculates that the equivalent diversion rate would be approximately 74% for CY2016 (Please note that CY2017 and CY2018 data was not used as wildfire debris disposal skewed the state’s landfill disposal reports and the City submitted a disposal modification request using historical averages that was accepted by the State of California). Using the per capita measurement system, jurisdictions are discouraged from comparing their own rates with those of neighboring jurisdictions due to the specificity of the per capita disposal targets. Details on recycling

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ATTACHMENT 1

11 programs achievements and recycling grants as of CY2018 can be found in Appendix A to this rate study.

Section 2.3 NEW PROGRAMS, STAFFING AND OTHER OPERATIONAL CHANGES MADE FROM 2014-2024

2.3.1 Upgraded Position – Waste Prevention Specialist & Second City Waste Prevention Specialist Added:

The City created the new position of Waste Prevention Representative in FY 2013/14, and modified it to a slightly higher “Waste Prevention Specialist” classification i n FY2016/17. The Waste Preve ntion Specialist assist businesses, residents, schools and City facilities to increase diversion of recyclable waste and organics s uch as food scraps. The Waste Prevention Specialist has been very involved in the roll out of the full -scale Commercial Food Scrap Diversion Program to restaurants and other food scrap generators in the City. This was previousl y required by AB 1826, which has increasing requirement for compostable organics generating businesses, schools and multi-family complexes with virtually all such generators covered by January 1, 2020. With the passage and impact of SB 1383, all generators of compostable organics were required to subscribe to organics collection service as of January 2022. A second City Waste Prevention Specialist was added as of December 2023 and has also be en working with multi -family complexes and commercial businesses to increase diversion of recyclable materials and redu ce contamination in the recyclables being collected. Salary and benefit costs for positions are contained in row 12 of Appendix D to this rate study.

2.3.2 New & Upgraded Scalehouse Supervisor Position:

The City created the position of “Senior Scalehouse Attendant” in FY2017/18. The MDF is operated 361 days per year (closed only on New Year’s Day, Easter Sunday, Thanksgiving Day and Christmas Day). With the creation of Senior Scalehouse Attendant, a team of three full time Scalehouse Attendants operate the MDF’s scales for 95% of the time with some limited back -up coverage from NRWS personnel. The Senior Scalehouse Attendant position also allowed the City to take on pri mary responsibility for Gatehouse Fee accounting and customer support (with billing duties supported via NRWS). Following a classification study, the City employee filling the Senior Scalehouse Attendant position was upgraded to a Scalehouse Supervisor position in FY2023/24. Salary and benefit costs for position are contained in row 12 of Appendix D to this rate study.

2.3.3 Expanded Recycle More Program:

In April 2013 the City commenced the Recycle More Program to collect electronic waste, metal appliances, oversized metal items, and used cooking oil from residences by appointment. In November 2013 the program was expanded to include collection of clothing, other textiles (such as linens, bedding, and towels), shoes, belts, purses, handbags, backpacks, hard cover books, compact discs (“CD’s”), digital versatile discs (“DVD’s”), tapes, toys and other similar re -useable items. In January 2016, the program was again expanded to collect and recycle household batteries (when combined with at least one other Recycle More item). In July of 2023, the Recycle More program was expanded to also include collection of household fluorescent bulbs and tubes. For calendar year 2024, the program collected 393 tons of electronic waste, metals, batteries, textiles and re-use items and 304 gallons of used cooking oil.

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12 This represented a 330% increase in collected tonnage from 2013 totals (119 tons). Costs for this program are contained in row 66 of Appendix D to this rate study.

2.3.4 Mandatory Commercial Recycling and Introduction of Full Scale Commercial Food Scrap Diversion Program:

In 2011, a new change to AB 939 was signed into law (AB 341) that established a statewide goal of diverting 75% of the solid waste stream from landfill by 2020. The law required CalRecycle to prepare a statewide plan for meeting the 75% diversion goal. The draft plan relied heavily on diverting food scraps from landfill throughout the state. The City authorized NRWS to begin a pilot commercial food scrap diversion program in August 2011.

AB 341 also required all businesses and multi -family complexes of 5 units or more, generating over 4 cubic yards of solid waste per week, to participate in a recycling program. This requ irement became effective July 1, 2012. Due to Napa’s comprehensive commercial and multi -family recycling program already in place, staff identified only 9 generators that did not have a recycling program when AB 341 became effective. Recycling programs were offered to these generators. In addit ion, the City was already providing (via NRWS) the data collection on the results of the commercial recycling program plus the education program required by the new law.

By CY2016, the City and NRWS had narrowed down to only 3 non-compliant generators and by CY2018 there was only one non -compliant generator; enforcement action was taken and now the City have all qualifying commercial generators (2 cubic yards of more of solid waste service per week) participating in recycling.

In September 2014, another change to AB 939 was signed into law (AB 1826) requiring all businesses generating 8 cubic yards or more of food waste (referred to as “organic waste” in the statute) per week, to participate in a food scrap diversion program beginning April 1, 2016. Businesses generating 4 cubic yards of organic waste per week had to begin participating in a food scrap diversion program by January 1, 2017. Businesses producing 4 or more cubic yards of commercial solid waste per week were required to implement an organics diversion program by January 1, 2019. Businesses generating 2 or more cubic yards of commercial solid waste may be subject to the same requirement, at the discretion of CalRecycle, beginning in 2020.

AB 1826 also required the City to begin offering a full -scale commercial food scrap recycling program on or before January 1, 2016. Given this requirement, Council approved the existing pilot commercial food scrap program be scaled up to include all Napa food scrap generating busin esses and that the program began on April 1, 2015. A rate study was conducted in late 2014 and result in the City establishing a commercial food scrap collection rate that was/is 75% of the Municipal Solid Waste (MSW) charge. This discounted rate reflected the true costs collection and processing of commercial food scraps (and soiled paper) with collection costs being roughly equivalent to MSW collection, but the cost of processing the collected compostable materials at the City’s MDF being roughly half the cost of MSW landfill disposal via the Devlin Road Transfer Station (which the City is contractually bound to deliver MSW per membership agreement with the Napa -Vallejo Waste Management Authority). This rate provides revenue to pay for the program and also encouraged the restaurants/food generators to separate the food scraps in order to save money on their collection service.

Food scrap programs take time and attention to implement. Care had to be taken to train each restaurant to (a) segregate the food scraps from other trash, and (b) make sure there are no plastics or glass in the food scraps. This latter requirement is crucial, because the food scraps will be composted and made

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13 into soil amendment. The soil amendment (compost) cannot be sold if there are pieces of glass or plastic in the finished product. The fo od scrap diversion program has also taken into account the flow of food through a restaurant’s kitchen, from raw food preparation, through cooking and clearing of leftover food scraps from customers. The program must fit into the chef’s operations and provide a convenient method to segregate the food scraps from trash throughout the food preparation process, while taking up the least amount of space in kitchens that are usually already very full of equipment, personnel and supplies. Training of all restaurant management and staff is key to a successful program. And finally, the training and monitoring of the program must be continued periodically as staff and management turnover are frequent in the restaurant business. This attention training, combined investment is an organic pre-processing system at the City MDF have resulted in a very low residue/contamination rate of less than 2% in CY2018.

Due to the time required to implement the food scrap diversion program at each restaurant , staff anticipated a slow but steady increase in the commercial food scrap composting program and that has come to fruition. B y the end of calendar year 2 016 there were approximately 76 restaurants/food generators (building on the original 50 pilot program participants) participating in the commercial food scrap diversion program diverting over 1,500 tons of food scraps that year. By the end of calendar year 2018 there were approximately 151 restaurants/schools/food generators participating in the commercial food scrap diversion program diverting over 2,400 tons of food scraps for the year. By the end of 2020, staff anticipate that the program will be implemented at 250 Napa restaurants, schools, grocery stores and other food waste generators as required by AB 1826 and the program is projected to divert over 3,000 tons of food scraps per year. Costs for this program are contained in row 58 of Appendix D to this rate study.

2.3.5 Full Scale Residential Food Scrap Diversion Program:

During 2013, the City authorized NRWS to conduct a pilot residential co-collection program to add food scraps to the yard trimmings collection program. The pilot commenced in June 2013 and was conducted on two residential yard trimmings collection routes serving approximately 1,500 homes in the Browns Valley area of Napa. The co -collected organics (food scraps and yard trimmings ) were composted at the Napa MDF. The pilot program provided some data on the quantity of food scraps that reside nts would place in the yard trimmings container in the event the program was implemented on a city -wide basis. As noted in Section 4 below, the City completed the pilot and expanded it into a full -scale residential food scrap diversion program beginning in April 2015.

The program provided education and “kitchen scrap” pail to each residence for storage of foo d scraps.

Each resident was asked to empty the pail periodical ly into their existing yard trimmings cart (which became a “compost” cart with food scraps and soiled paper mixed in with the yard trimmings). The expanded range of residential organics collected by the existing organics collection truck and delivered to the Napa MDF for composting.

Since the introduction of the full-scale residential food scrap program, the results have been measurable and significant. On a ton -for-ton basis, the residential MSW disposal route has been reduced by 10 - 13% on average. This translates to approximately 1,800 -2,300 tons of reduced landfil l disposal each year (which in turn constitutes an annual net savings of $ 74,000 to $94,000 of avoided disposal/lower processing costs) each year. It also translates into somewhere between a 1 to 1 ½ percent improvement towards the City’s 75% landfill diversion goal. Annual costs for this program are contained in row 25 of Appendix D to this rate study.

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14 2.3.6 Impacts of SB 1383 Implementation

As noted in the Executive Summary of this report, SB 1383 became effective January 2022. Through a combination of City Waste Prevention Specialists working with added NRWS recycling outreach and customer service staff, there has been a marked improvement in the recovery of recyclable and compostable materials, particularly for commercial accounts. In fact, as compared to the month before SB 1383 took effect (December 2021) and the end of CY2024 (December 2024), the number of accounts on the commercial food scrap composting route has increased by 70% (from 198 accounts to 337 accounts). During the same approximate time periods, the amount of compostable materia l collected on the commercial food scrap composting route increased by 55% (from 2,444 tons in CY2021 to 3,807 tons in CY2024). For core SB 1383 compliance, the City continues implement the Notification of Intention to Comply (NOIC), particularly participation of all multi-family accounts (served as commercial accounts by NRWS).

Please see Appendix L and Appendix M for details on SB 1383 ordinance adoption and City of Napa NOIC.

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15 CHAPTER 3: PRIMARY DRIVERS FOR

RATE ADJUSTMENTS

Section 3.1 2018, 2022 & SB 1383 CONTRACT AMENDMENT WITH NRWS

On April 17, 2018, the Napa City Council considered and approved the 2018 Contract Amendment with NRWS. This amendment to City Agreement No. 8687 extended the City’s agreement with NRWS for a 14-year period (through end of CY2031). Beyond extending the term of the agreement with NRWS, the 2018 contract amendment accomplished the following:

(1) Provided for new generation of NRWS heavy refuse and recycling fleet, with 20 new compressed natural gas (CNG) and 8 refurbished CNG vehicles by the end of CY2020. (2) New and replaced-as-needed collection equipment will be provided to City customers by NRWS. This included residential carts as well as commercial carts, bins and roll-off drop boxes as needed during the 14-year contract extension term. (3) NRWS guaranteed a new flow of 30,000 tons of compostable organic materials to the City’s MDF for at least the first 10 years of the contract extension. (4) A new full-service customer payment office within the City limits (598 Lincoln Avenue) and additional storage for the benefit of the City (at 600 Tower Road) were secured from NRWS. (5) New processing equipment at the City MDF is secured by the 2018 Contract Amendment including millions of dollars of upgrades to the recycling sorting facility and composting operations.
(6) Reset the “base” contractual operating costs with fixed 3.5% (labor) and 2.5% (non-labor) cost of living increases for first five-years of the contract extension (CY2018 through CY2022). “Base” (i.e., pre-known capital and operating) contractual costs established by the 2018 Contract Amendment are shown in Figure 1 below. Base costs do not include unit- based compensation to NRWS such as over-baseline processing payment or share of material sales revenue.
(7) Preserves and enhances financial incentives for continuously improved landfill diversion and a performance-based compensation for NRWS.

The net financial impacts of the 2018 Contract Amendment were estimated at $2,060,000 annually by the end of CY2019. The complete staff report as well as the adopting resolution (R2018-043) are contained in Appendix B to this rate study. As indicated in the April 2018 staff report, a rate increase of 10.5% is necessary to accommodate increased improvements and expenses associated with the 2018 Contract Amendment.

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16 Figure 1: Chart Showing Changes in Base (Fixed) Capital and Operating Payments from City FY2017/18 through FY2021/22 per 2018 Contract Amendment $11,462,323
$13,373,643
$14,152,306
$14,713,320
$15,047,545
$8,000,000
$9,000,000
$10,000,000
$11,000,000
$12,000,000
$13,000,000
$14,000,000
$15,000,000
$16,000,000
FY17/18 FY18/19 FY19/20 FY20/21 FY21/22
Base Contract Payments to NRWS*

* Note: “Base” Contract Payments refers to pre-set capital and operating payments and does not include unit-based compensation to NRWS such as over-baseline processing payment or materials sales share (30% standard materials sales or 95% share of MDF direct sales).

An independent study to review the cost associated with the 2018 Contract Amendment was commissioned by the City and conducted by the solid waste consulting firm of Hilton, Farnkopf and Hilton (HF&H). The full findings of this study are presented in Appendix C to this report. In brief, the study concluded that the 2018 Contract Amendment was: (1) mathematically accurate for proposed cost forms, (2) NRWS proposed costs are “favorable compared to HF&H benchmarks for historical and comparison data,” (3) the use of fixed escalators (3.5% for labor and 2.5% for other costs) for the first 5 years of the 14-year extension appear to be reasonable, (4) costs for new and/or expanded program including Biomass/BioEnergy plant(s), commercial food scrap collection, Recycle More program, facility stormwater treatment and operation and maintenance of Covered Aerated Static Pile (CASP) composting system all appear reasonable and (5) capital costs, depreciation schedules, interest and projections for capital assets appear reasonable and in line with expected costs based on HF&H industry benchmark data.

For details regarding the full impact of the 2 022 and SB 1383 NRWS Contract Amendments, please Appendices M, N, O and P of this rate study.

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17 Section 3.2 MDF CAPITAL IMPROVEMENTS EXPENSES AND DEBT SERVICE COSTS

3.2 MDF Capital Improvements:

As new light industrial uses have moved into properties near the Napa MDF, the City determined there was a need to improve odor control at the composting facility and in the ponds that treat the water used in the compost process. Mitigating these issues were nec essary in order to responsibl y receive and process food scraps/food waste at the City’s MDF as well as comply with more stringent solid waste, air and stormwater permit regulations. During 2012 -2014 the City completed environmental mitigation improvements in and around the wood and compost ing processing area of the MDF including construction of two large particulate enclosures for the grinder and the screener plus enhanced bird control. The cost was $610,000 with the City and NRWS each paying half the cost.

Concurrent with the installation of these improvements, the California Air Resources Board was studying potential new regulations for discharges to air from composting facilities. Several alternate methods for capturing and treating discharges to the air o f volatile organic compounds and particulate are currently available including placing finished compost “caps” on outdoor compost piles, using fabric covers on the piles, and a method called “covered composting” wherein the compost piles are placed in a fully enclosed building. During FY 2011/12 the City retained CH2MHill to assess the options available to the City for the composting of yard trimmings, food scraps, pomace, manure, wood and other materials that would meet both the anticipated new stormwater regulations and the anticipated future changes to the Bay Area Air Quality Management District (BAAQMD) regulations for composting facilities. The final report was issued in August 2012. Based upon the results of the CH2MHill study, City staff determined that specific stormwater improvements and construction of a covered compost system would enable the City to comply with both the new stormwater regulations and the anticipated changes to the BAAQMD regulations for the foreseeable future.

The Napa Renewable Resources Project (NRRP) was initiated to cover five elements of planned and/or potential improvements. The two “need to have” improvements were (1) a shift from open -air turned window system to a “covered” compost system and (2) upgrad es to the Napa MDF’s stormwater management system, particularly for any water that came in contact with active compost during the first 3-4 weeks of composting process.

In 2015 and 2016, a $2.5 million organics receiving building was constructed at the MDF as well as a $2.9 million “organics pre -processing system” to receive, screen, sort, grind and generally remove contamination from compostable organics received at the Napa MDF. In 2017, NRWS received a CalRecycle grant for a n organics “de -packaging” machine that would allow the facility to separate expired or off-spec food from plastics or paper packaging for composting. The organics de -packager was installed in late 2018 at the Napa MDF and became operational at the beginning of 2019.

The City successfully issued $12.5 million in Solid Waste Revenue Bonds (“SWRB”) in 2016. The timing of the SWRB was fortunate for the solid waste payer as the City’s 2016 SWRB were issued with an overall average interest rate of 3.15% (with an annual average debt service cost of $868,646) with the total annual debt service costs (including principal, interest and fiscal agent fees) are shown in rows 19- 21 of Appendix D. Please see Appendix G to this rate study for Executive Summary of the 2016 SWRB rates, requirements, and debt service schedule.

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18 Design-Build (DB) Request for Proposals (RFPs) for these bond -funded facility improvements were issued in April and May 2017. A $2.1 million DB contract for construction of the southeast corner concrete and roof extensions was finalized with Ledcor Constru ction in September 2017 and work completed in May of 2018. In February 2018, Council approved a resolution to authorize a not-to-exceed $10.4 million DB construction contract for covered compost operations and stormwater improvements with Overaa Construction (Overaa). The work was completed in early 2020.

The CASP compost system has provided a dedicated compost mixing area where food scraps, pomace, manure and other materials that can produce odor, will be received, pre-processed, and then composted in concrete bunkers operated in an enclosed facility. The facility will use forced air to aerate the compost in the concrete bunkers, which will promote the composting process. The previous composting system, consisting of outdoor windrows (referred to as “turned windrows” because the aeration is accomplished through manual turning of the windrows by loaders) was discontinued as air permit condition once the CASP system became operational in January of 2020.

As a result of adding debt service to construct improvements to meet regulatory and operational requirements, cost to the Fund increased by nearly $900,000 per year.

3.2.1 Planned MDF Capital Improvements – FY2025/26 to FY2029/30

FY2025/26 =

$1.6M 12KV Electrical System Installation at MDF (Phase 1)

• Description: Installation of a 12 KV transformer and electrical system required by PG&E. • Justification: For both current and future power (electricity) needs, the MDF has reached its maximum capacity to be supplied power from the existing historical and “temporary” transformer installed for CASP 1.0 composting system. PG&E is requiring this upgrade to MDF’s electrical system for both current (Material Recovery facility, organic pre-processing system and CASP

$750K MDF Stormwater Mitigation Improvements (Phase 2)

• Description: MDF Stormwater Improvements (Phase 2) consists of design and construction of improvements to the compost contact water storage capacity and improvements to the industrial stormwater discharge of water quality.
• Justification: The previous rainy winters have shown a need for additional onsite storage for compost contact water to reduce the offsite hauling costs once the storage fills. Improvements to the industrial stormwater system are needed to meet Regional Water Quality Control Board (RWQCB) discharge limits and to reduce the costs for offsite hauling of industrial stormwater due to onsite discharge limits.
• Expected Useful Life: 20 years

$500K MDF Raising Height of Compost Retention Pond
• Description: The compost contact retention pond would be raised up to 3.4 feet to allow for an additional 863,366 gallons of storage capacity.

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19 • Justification: The previous rainy winters have shown a need for additional onsite storage for compost contact water to reduce the offsite hauling costs once the storage fills. As no discharge of compost contact water is allowed to be released from the facility under the General Compost Order applicable to the MDF, the City has had to bear significant costs ($125K- $250K/year) for offsite hauling compost contact stormwater to avoid any illicit discharges from the facility.
• Expected Useful Life: 25 years

$150K Permanent SWR Equipment Storage Bay at City Corporation Yard

• Description: Installation of a permanent storage bay structure for SWR equipment at City’s corporation yard.
• Justification: Currently, the SWR division utilizes three metal storage containers located at the City’s corporation yard for SWR related equipment (e.g., interior recycling/compost/landfill containers for businesses and schools; compost bins for home composting workshops; recycling/compost/landfill receptacles for special events; stickers/signage; etc.). This is plan is in keeping with City’s overall desire to move away from temporary storage units to more permanent structure to protect City-purchased/City-owned equipment • Expected Useful Life: 15 years
__________________________________________________________________________ $3M total planned Capital outlay (CIP Expenditure Account #51160520-70510)

FY2026/27 =

$1.2M 12KV Electrical System Installation at MDF (Phase 2)

• Description: Installation of a 12 KV transformer and electrical system required by PG&E. • Justification: For both current and future power (electricity) needs, the MDF has reached its maximum capacity to be supplied power from the historical and “temporary” transformer installed for CASP 1.0 composting system. PG&E is requiring this upgrade to MDF’s electrical system for both current (Material Recovery facility, organic pre-processing system and CASP

1.0 composting system) and future projects (e.g., CASP 2.0 upgraded composting system, potential BioMass Gasification and/or Anaerobic Digestion to Renewable Natural Gas systems). • Expected Useful Life: 25 years (when completed).
__________________________________________________________________________ $1.2M total planned Capital outlay (CIP Expenditure Account #51160520-70510)

FY2027/28 =

$400K MDF Scalehouse Replacement

• Description: The current MDF scalehouse building was constructed in 2006 and it is anticipated the building will need to have a major rehabilitation/replacement. • Justification: Structures located at the MDF are subject to difficult conditions with blowing soil and compost. Previous MDF CIPs anticipated replacement of just the metal roof, but it is more likely that the whole scalehouse structure will need to be replaced by the year 2028. • Expected Useful Life: 20 years

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20 $300K MDF Parking Lots

• Description: Anticipated pad replacement need for MDF employee parking lots. • Justification: MDF employee parking lots were constructed in 1994 and have a conservative useful life of 25 years.
• Expected Useful Life: 25 years
__________________________________________________________________________ $700K total planned Capital outlay (CIP Expenditure Account #51160520-70510)

FY2028/29 =

$9M CASP (Covered Aerated Static Pile) System 2.0 (Phase 1)

• Description: This major composting infrastructure improvement would expand and extend the useful life of the first CASP (Covered Aerated Static Pile) active compost system at the MDF. The first CASP 1.0 system (build in 2018/2019 and fully operational in 2020) was constructed on the northeast corner of the MDF property and utilized positive aeration of mixed compostable organic material (i.e., food scraps, manure, grape pomace, soiled paper and yard trimmings) for first 22 days of active composting. The proposed CASP 2.0 system would be installed on the northwest portion of MDF property (when current compost curing and concrete/asphalt processing currently occur) utilizing a negative aeration system to become the primary aeration system for first 22 days of active composting process. After installation of CASP 2.0, CASP 1.0 on northeast portion of the MDF property would then be repurposed for curing of compost product and reduce the current curing time (with no aeration) from 40 days to the 25 days (for a total estimated composting duration reduced from current 63-days to 47 days).
• Justification: As more food scraps and other volatile organic compound emitting organics have been introduced to Napa’s collection and processing system (for added landfill diversion and as required by SB 1383 state law), the original CASP 1.0 composting system became necessary to comply with increasingly stringent regulations for air emissions, stormwater management and in compliance with solid waste facility permitting governing the MDF. Particularly for air permit/air emission requirements, CASP 2.0 is needed to provide negative aeration treatment (i.e., air being “sucked” through active compost materials vs. positive aeration system employed by CASP 1.0). The first 22 days is of composting raw organic material has the highest potential for air emissions and thus require a higher level of treatment and control that a negative aeration system provides. The combined ability of CASP 2.0 as the primary treatment for first 22 days and CASP 1.0 as the secondary treatment for following 22 days, will shorten the total processing time by 25% (from 63 days to 47 days) which is vital for Napa’s MDF as space is a premium while state regulations (and the City’s own climate change and policy goals) strive to capture more and more organic materials for composting onsite at the City’s MDF. • Expected Useful Life: 20 years (upon completion)
__________________________________________________________________________ $9M total planned Capital outlay (CIP Expenditure Account #51160520-70510)

FY2029/30 =

$4M CASP (Covered Aerated Static Pile) System 2.0 (Phase 2)

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21 • Description: This major composting infrastructure improvement would expand and extend the useful life of the first CASP (Covered Aerated Static Pile) active compost system at the MDF. The first CASP 1.0 system (built in 2018/2019 and fully operational in 2020) was constructed on the northeast corner of the MDF property and utilized positive aeration of mixed compostable organic material (i.e., food scraps, manure, grape pomace, soiled paper and yard trimmings) for first 22 days of active composting. The proposed CASP 2.0 system would be installed on the northwest portion of MDF property (when current compost curing and concrete/asphalt processing currently occur) utilizing a negative aeration system to become the primary aeration system for first 22 days of active composting process. After installation of CASP 2.0, CASP 1.0 on northeast portion of the MDF property would then be repurposed for curing of compost product and reduce the current curing time (with no aeration) from 40 days to the 25 days (for a total estimated composting duration reduced from current 63-days to 47 days).
• Justification: As more food scraps and other volatile organic compound emitting organics have been introduced to Napa’s collection and processing system (for added landfill diversion and as required by SB 1383 state law), the original CASP 1.0 composting system became necessary to comply with increasingly stringent regulations for air emissions, stormwater management and in compliance with solid waste facility permitting governing the MDF. Particularly for air permit/air emission requirements, CASP 2.0 is needed to provide negative aeration treatment (i.e., air being “sucked” through active compost materials vs. positive aeration system employed by CASP 1.0). The first 22 days is of composting raw organic material has the highest potential for air emissions and thus require a higher level of treatment and control that a negative aeration system provides. The combined ability of CASP 2.0 as the primary treatment for first 22 days and CASP 1.0 as the secondary treatment for following 22 days, will shorten the total processing time by 25% (from 63 days to 47 days) which is vital for Napa’s MDF as space is a premium while state regulations (and the City’s own climate change and policy goals) strive to capture more and more organic materials for composting onsite at the City’s MDF. • Expected Useful Life: 20 years (upon completion)

$500K MDF Concrete Pad Partial Replacement (new 3-year MDF CIP)

• Description: Partial replacement of concrete pads at MDF, as concrete was originally installed in 1994 and has an estimated useful life of 25-30 years.
• Justification: Reflect estimated cost of 20% of exterior pads every five years. • Expected Useful Life: 25 years

$300K MDF Perimeter Fencing Partial Replacement

• Description: Replacement of MDF perimeter fencing.
• Justification: Most of current fencing was installed in 1994 and has a conservative estimated life of 20 years.
• Expected Useful Life: 20 years
____________________________________________________________________________ $4.8M total planned Capital outlay (CIP Expenditure Account #51160520-70510)

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22 The Contributions to the CIP Reserve (SWR CIP Revenue Account #51160520-81510) from Operating Fund (SWR Expenditure Account #51060501-82511), would be the following:

FY2025/26 = $3M
FY2026/27 = $4M
FY2027/28 = $5M
FY2028/29 = $5M
FY2029/30 = $3M

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23 Section 3.3 DRAMATICALLY INCREASED FUEL AND ENERGY COSTS

A rapid and significant increase in the cost of fuel for NRWS collection vehicles and electricity for operation of the MDF has been experienced since the time of previous rate setting and is expected to continue to increase in the next five years. Full reimbursement of actual NRWS fuel and MDF electricity costs (once documented and verified) is built into the City-NRWS Agreement. In CY2019 (time of previous multi-year SWR rate setting), the combined cost of fuel and electricity was $1.22 million. By CY2024, the combined fuel and electricity cost had risen to $2.46 million, a 101.6% increase. Projections for fuel cost are a 5.35% increase per year for the next five years and an 11% per year increase for electricity for the next five years. If these projected increases materialize as projected, the cost of fuel and electricity will be $3.53 million in CY2029 (a 43.5% increase compared to CY2024 actual fuel and electricity costs) creating an additional $1.07 million obligation for the SWR Fund. As noted above, at current collection service rates, every $310,000 in additional costs is approximately 1% of collection service rate revenue. Thus a $1.07 million increase constitutes a

3.45% increase by itself over current collection service rates.

The History of CY2019 through CY2024 fuel and electricity expenses are shown below:

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24 5-year projections of FY2025/26 through FY2029/30 are summarized below:

• Fuel increase at 5.35% per year.
• Electricity increased at 11% per year

Section 3.4 NEW PROGRAMS AND COST CHANGES PLANNED OR PROPOSED FOR 2025, 2026, 2027, 2028, AND 2029

3.4.1 New Emissions Testing Requirements from Air District for CASP Composting System at City MDF:

As described previously in this rate study, a new Covered Aerated Static Pile (CASP) composting system is being installed at the City’s MDF. A permit application for operation of the new CASP system is still pending with the Bay Area Air Quality Management District (BAAQMD) at the time of this report. While not yet finalized the draft permit conditions require an extensive air emissions samp ling and testing

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25 protocol for the first year (four quarters) of operation to fully demonstrate the effectiveness of the CASP composting system to control and limit air emissions from the new composting system. Inbound tonnage received and composted onsite at the MDF will be restricted to approximately 63,000 tons during the first year of this testing protocol (as opposed to the approximately 44,000 tons allowed to be composted onsite with the current open air, turned window composting system). After the first year of exte nsive testing, annual testing and more limited monthly reporting are anticipated to be required by the BAAQMD. At the time of this report, it is estimated the first year of extensive, one-time initial emissions testing will cost approximately $800K beginning in October of 2019 and continuing through the end of September of 2020. Beginning in October of 2020, it is estimated the recurring/ongoing emissions testing for BAAQMD will cost an estimated $250K per year. Expenditure projections for this new emissions testing is also addressed row 83 of Appendix D , with the $800,000 initial testing placed in nonrecurring budget and $250,000 per year in estimated ongoing emission testing costs included in recurring expenditures thereafter.

3.4.2 Modification to Residential Low-Income Assistance Program:

The City’s solid waste/recycling rates have always considered the residential 20 -gallon size as the “lifeline” option (and this might be true for seniors on a fixed income for example), however we recognize the need to address larger low-income households that would presumably generate la rger amounts of non-recyclable, non-compostable Municipal Solid Waste (MSW). The low-income assistance program for solid waste uses qualification criteria based on the established Pacific Gas & Electric (PG&E) California Alternate Rates for Energy (CARE) program.

In accordance with Proposition 218 (Prop 218), a water or solid waste customer is to pay only for the cost of service provided to that customer. Thus, to maintain Prop 218 compliance an assistance program can only be funded by a non -rate based source, to prohibit one rate paying customer from subsidizing another customer. M aterials sales revenue is proposed to be used for the low-income assistance program at a level of $270,000 per year (row 6 of Appendix D). The low-income assistance program for solid waste would use eligible CARE households within the City on a first come, first serve basis. Staff recommends a flat $ 15 per month ($ 180 per year) level of assistance to particip ating residential households. This would allow up to 1, 500 solid waste customers to participate in the low -income assistance program.

3.4.3 Contribution to Risk Management Fund for Hidden Glen Landfill Liability:

The City owns the property on which the former “Coombsville Dump” (aka Hidden Glen Landfill) is located. That landfill property is the subject of a closure plan, that was approved in 2001 by the then California Integrated Waste Management Board (now California Department of Resources, Recycling and Recovery or “CalRecycle”). The closure plan includes provisions for landscape improvements over the cap on the property as a part of the closure, which will be the site of future City park, along with ongoing maintenance of the property, all of which are designed to ensure the physical integrity of the cap over the former landfill.

Since the approval of the closure plan in 2001 to date, the City has incurred costs related to the closure of the Landfill in accordance with the closure plan, which has included the defense and settlement of a lawsuit alleging that the City breached its obligations under the closure plan.

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ATTACHMENT 1

26 To date, the City has incurred costs related to the settlement of the lawsuit in the amount of approximately $5 million and those costs have been paid from general fund revenue sources (the Risk Management Fund). Since the City’s purpose of acquiring the site of the former landfill served a dual purpose of closing a former landfill (which is a legitimate cost of the Solid Waste Enterprise to be equitably allocated to ratepayers who use the services of the Enterprise), as well as providing a public benefit for a future public park (which is a legitimate expense of the City’s general fund to be equitably allocated to taxpayers), the City has equally allocated the costs of closing the landfill to the Solid Waste Enterprise and the Risk Management Fund. Therefore, there is a balance of $2.5 million (50% of $5 million) to be paid by the Solid Waste Enterprise Fund to cover the proportionate costs of obligations under the closure plan.

In addition to the costs that have been previously incurred, there are pending claims filed by owner of residential property immediately adjacent to the former landfill property, alleging that debris from the former landfill has spilled into the adjacent properties and the City is responsible for costs to remediate the debris. The City is currently in the process of evaluating those claims.

The Risk Management Fund has already paid for litigation costs and will be used to pay for soil remediation costs, if necessary. The SWR Fund will make annual contributions to the Risk Fund to cover the SWR Fund’s proportionate responsibility for closure of the landfill. The level of funding is 400,000 per year, to be transferred from the SWR Fund to the Risk Management Fund (shown in row 30 of Appendix D). The source of revenue for this transfer will be material sales.

In addition to the above costs, the City has included a projected annual maintenance charge of $5,000 in the upcoming City FY2025/26 budget (row 43 of Appendix D). This projected maintenance cost is escalated by inflation each year to be utilized for maintenance costs at the site of the former Landfill (including local enforcement agency monitoring fees and minimum property maintenance cost, as well as costs that are anticipated to be incurred after the Hidden Glen passive park is constructed).

Chapter 4: Financial Position of SWR Fund

Section 4.1 PROJECTED REVENUES UNDER EXISTING RATES

Appendix D to this rate study shows all of the projected revenues and expenditures for the Fund for Rate Year (RY) 2025, RY2026, RY2027, RY2028 and RY2029. The following descriptions of the projections refer to details contained in Appendix C. The key revenue and expense line items (not already described above) are described in more detail below. The row numbers from Appendix C are included for reference to the actual spreadsheet containing all of the proje cted SWR Fund revenues and expenses. Some rows were not used in the spreadsheet and only the significant revenues and expenses are described below, so there is not a discussion for every row. Several of the projected figures include cost escalation per t he City’s Long Term Financial Forecast (LTFF ). This forecast is prepared by the Finance Department and includes the inflation rates to be used by City departments for each cost category included in the City’s General Fund budget ( 4.1%). In the case of other costs (such as several of the NRWS operating costs) staff has utilized the pre-set 2022 Contract Amendment escalators (3.5% for labor and 2.5% for non-labor costs) per Contract/Calendar (CY) or different projected inflation rates that are more applicable to certain NRWS contractual costs (such as over-baseline throughput processing costs). All projected revenues and expenses for each rate year are shown in terms of City Fiscal Year (July through June) for consistency with City budget practices.

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Napa City CouncilApril 15, 2025

Napa City Council
April 15, 2025