Written materials relating to an item on this agenda that are distributed to the legislative bodies within 72 hours before the item is to be considered at its regularly scheduled meeting will be made available for public inspection at the City Clerk’s Office, 300 West Third Street 4th Floor during customary business hours. Agenda reports are also on the City of Oxnard web site at www.oxnard.org.
In compliance with the Americans with Disabilities Act, if you require special assistance to participate in a meeting, please contact the City Clerk’s Office at 385-7803. Notice at least 72 hours prior to the meeting will enable the City to reasonably arrange for your accessibility to the meeting.
Agenda Item Time Estimates include: (Minutes for Presentation + Council Discussion + Public Comment)
AGENDA
OXNARD CITY COUNCIL
PUBLIC WORKS AND TRANSPORTATION COMMITTEE
Council Chambers, 305 West Third Street
November 14, 2023
Regular Meeting - 8:30 to 10:00 PM
Zoom details to call-in for public comment during a meeting:
1. Dial Phone Number: (888) 475-4499
2. Enter Meeting ID: 829 9302 1053
3. Passcode: 306572
If you wish to speak during public comments or a particular item on the agenda, please sign-on by following the zoom call-in steps listed above. Once the presiding officer calls for public speakers, press *9 to raise your hand to inform the City Clerk you would like to speak during the public speaking section for that particular item on the agenda, while in the zoom waiting room. Press *6 when asked to unmute. Listen to the instructions provided virtually on the phone while on hold in the zoom waiting room. Please note that there is a slight time delay when viewing the meeting via television.
IN ACCORDANCE WITH ASSEMBLY BILL 2449, MEMBERS OF THE LEGISLATIVE BODY MAY MEET IN- PERSON OR REMOTELY. TO PARTICIPATE REMOTELY VISIT WWW.OXNARD.ORG.
To find out how you may provide public comment, please refer to the instructions below or at www.https://www.oxnard.org/city-meetings/.
The public may view the meeting from home on Spectrum channel 10, Frontier channel 35, or YouTube at Youtube.com/oxnardnews.
Video recordings of the meeting are typically available online following the meeting at the City’s website at www.oxnard.org/city- meetings.
*Please see the link for the Measure M pre-recorded presentation video for each item listed on this agenda.
YOU MAY PARTICIPATE IN THE MEETING IN THE FOLLOWING WAYS:
1. ATTEND THE MEETING AT THE LOCATION LISTED ABOVE: Submit a speaker card to the City Clerk.
2. EMAIL COMMENTS OR SIGN UP TO SPEAK REMOTELY BEFORE THE MEETING
a. Submit a request to speak remotely by no later than 3 p.m. on the day of the meeting by using the form available at www.oxnard.org/citymeetings.
b. Submit an email to [email protected] no later than 3 p.m. on the day of the meeting (indicate the agenda item number in the subject line). All email correspondence will be forwarded to the legislative body prior to the start of the meeting and made part of the legislative record.
c. Contact the City Clerk’s Office at (805) 385-7803 to submit your request.
3. PROVIDING PUBLIC COMMENTS REMOTELY DURING THE MEETING
1 OXNARD CITY COUNCIL: PUBLIC WORKS AND TRANSPORTATION COMMITTEE November 14, 2023 - Page 2
a. To provide public comment during the meeting dial (888) 475-4499 and enter the Meeting ID and Passcode listed above as the Zoom details for this meeting. When the presiding officer announces the particular item on the agenda you want to speak on, press *9 to raise your hand while in the zoom waiting room. Once called on, press *6 to unmute your phone.
b. Public comments on agenda items will be taken following the announcement of the item. After the item is announced, members of the public may register or otherwise be recognized for the purpose of providing public comment.
Please review the Zoom instructions on the registration page to help ensure there are no technical difficulties during your comments and help you understand public comment procedures using Zoom. Detailed participation instructions can be found at www.oxnard.org/city-meetings.
In the event of a disruption which prevents a legislative body of the City of Oxnard from broadcasting a meeting using a call-in option or internet- based service option, or in the event of a disruption within the City’s control which prevents members of the public from offering public comment using the call-in option or internet-based service option, the legislative body shall take no further action on items appearing on a meeting agenda until public access to the meeting via the call-in option or internet-based service option is restored. However, if any of the broadcast options are disrupted, but any of the other broadcast options is still available to the public, the legislative body may take further action on items appearing on a meeting agenda without waiting for the disrupted broadcast option(s) to be restored.
A. ROLL CALL, POSTING OF AGENDA, FLAG SALUTE
Consideration of Teleconference Participation pursuant to Assembly Bill 2449.
B. PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
A person may address the legislative body only on matters not appearing on the agenda and within the subject matter jurisdiction of the legislative body. Speaker requests shall be submitted as set forth on the first page of this agenda. Speakers are limited to three minutes. After 30 minutes, if all speakers have not had the opportunity to speak, the remaining speakers will be given an opportunity to speak prior to adjournment of the meeting. The legislative body cannot enter into a detailed discussion or take action on any items presented during public comments at this time. Such items may only be referred to the City Manager/Executive Director/Secretary for administrative action or scheduled on a subsequent agenda for discussion. Persons wishing to speak on public hearing items should do so at the time of the hearing.
C. CONSENT AGENDA
1. City Clerk Department
SUBJECT: Approval of Minutes.
RECOMMENDATION: That the Public Works & Transportation Committee approve the minutes of the October 24, 2023, regular meeting as presented.
Contact: Dee Lai, (805) 385-8200
D. REPORTS
1. Public Works Department
SUBJECT: Solid Waste (Refuse) Rates Discussion. (50 minutes)
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council provide comments and feedback on the goals, variable input, preliminary scenarios, and the process and timeline for solid waste rates.
Please click the following link to view the required Measure M pre-recorded presentation video:
https://youtu.be/SmhLIgJXqAM
Live presentation to be provided by consultant.
Contact: Michael Wolfe, (805) 385-8055
2 OXNARD CITY COUNCIL: PUBLIC WORKS AND TRANSPORTATION COMMITTEE November 14, 2023 - Page 3
E. ITEMS FOR FUTURE AGENDAS
F. ADJOURNMENT
3 PUBLIC WORKS AND TRANSPORTATION COMMITTEE
AGENDA REPORT
CONSENT AGENDA
AGENDA ITEM NO. C.1
DATE: November 14, 2023
TO: Public Works and Transportation Committee
FROM: Dee Lai, Assistant City Clerk, (805) 385-8200, [email protected]
SUBJECT: Approval of Minutes.
RECOMMENDATION
That the Public Works & Transportation Committee approve the minutes of the October 24, 2023, regular meeting as presented.
BACKGROUND
Approval of Minutes.
STRATEGIC PRIORITIES
This agenda item is a routine operational item.
FINANCIAL IMPACT
There is no financial impact.
Prepared by: Dee Lai, Assistant City Clerk
ATTACHMENTS
1. 10 24 2023 PW Minutes
4 MINUTES
OXNARD CITY COUNCIL
PUBLIC WORKS AND TRANSPORTATION COMMITTEE
Council Chambers, 305 West Third Street
Regular Meeting
October 24, 2023
A. ROLL CALL, POSTING OF AGENDA, FLAG SALUTE
At 8:30 p.m., Chair Perello called to order the regular meeting of the Oxnard City Council Public Works and Transportation Committee in the City Hall Council Chambers at 305 W. Third Street, Oxnard, California. Dee Lai, Assistant City Clerk called the roll and announced the posting of the agenda. Chair Perello, Member Valenzuela Zavala and Member Zaragoza, were present in person.
Consideration of Teleconference Participation pursuant to Assembly Bill 2449.
B. PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
No public comments were received.
C. CONSENT AGENDA
1. City Clerk Department
SUBJECT: Approval of Minutes.
RECOMMENDATION: That the Public Works & Transportation Committee approve the minutes of the October 10, 2023, regular meeting as presented.
No public comments were received.
It was moved by Member Zaragoza, seconded by Chair Perello, to approve the Information/Consent item as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
D. REPORTS
1. City Attorney Department
SUBJECT: Ordinance of the City Council Prohibiting Single-Use Plastic Foodware (10 minutes).
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council introduce and adopt an Ordinance entitled: " Ordinance of the City of Oxnard, California Amending Article XXIV of Chapter 7 of the Oxnard City Code Prohibiting the Use and Distribution of Single-Use Plastic Foodware."
Chelsey Ballot, Deputy City Attorney, Brian Yanez, Assistant Public Works Director, and Michael Wolfe, Public Works Director, were available to answer the committee’s questions. No public comments were received. Discussion ensued among the committee and staff.
It was moved by Member Zaragoza, seconded by Member Valenzuela Zavala, to approve the recommended action as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
2. Public Works Department
SUBJECT: Purchase Order with Rush Truck Centers for a Vacuum Truck for the Wastewater Division. (10 minutes)
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council approve and authorize the City Manager to execute a Purchase Order with Rush Truck Centers in the amount of $471,762.84 for the purchase of a vacuum truck for the Wastewater 5 OXNARD CITY COUNCIL: PUBLIC WORKS AND TRANSPORTATION COMMITTEE October 24, 2023 - Page 2
Division.
Jan Hauser, Wastewater Division Manager, and Michael Wolfe, Public Works Director, were available to answer the committee’s questions. No public comments were received. Discussion ensued among the committee and staff.
It was moved by Member Valenzuela Zavala, seconded by Chair Perello, to approve the recommended action as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
3. Public Works Department
SUBJECT: Agreement 32400240 with Mariposa Landscapes, Inc. for Landscape Maintenance Services for 37 Landscape Maintenance Districts and 1 Maintenance Assessment District within the City of Oxnard. (15 minutes)
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council approve and authorize the Mayor to execute the Agreement for up to five years with Mariposa Landscapes Inc for landscape maintenance services within the City’s 37 Landscape Maintenance Districts and 1 Maintenance Assessment District in the amount not to exceed $9,000,000 that includes all possible extensions for the maximum 5 year term ending December 31, 2028.
Eric Storrie, Special Districts Manager, and Michael Wolfe, Public Works Director, were available to answer the committee’s questions. Public comment was received from Ray Blattel. Discussion ensued among the committee and staff.
It was moved by Member Zaragoza, seconded by Member Valenzuela Zavala, to approve the recommended action as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
4. Public Works Department
SUBJECT: Agreement 32400238 with Mariposa Landscapes Inc. for Landscape Maintenance Services within Community Facilities District No. 2. (15 minutes)
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council approve and authorize the Mayor to execute an Agreement with Mariposa Landscapes Inc. for landscape maintenance services within Community Facilities District No. 2 in the amount not to exceed $1,564,500.00 for the maximum five-year term of the Agreement, with an initial term of twelve months, ending December 31, 2024, after which the Agreement may be extended for four additional one-year terms with a fully extended final term ending on December 31, 2028.
Eric Storrie, Special Districts Manager, and Michael Wolfe, Public Works Director, were available to answer the committee’s questions. No public comments were received. Discussion ensued among the committee and staff.
It was moved by Member Zaragoza, seconded by Member Valenzuela Zavala, to approve the recommended action as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
5. Public Works Department
SUBJECT: Agreement 32400239 with SGD Enterprises dba Four Seasons Landscaping for Landscape Maintenance Services within Community Facilities District No. 5. (15 minutes)
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council approve and authorize the Mayor to execute the Agreement with SGD Enterprises dba Four Seasons Landscaping for landscape maintenance services within Community Facilities District 6 OXNARD CITY COUNCIL: PUBLIC WORKS AND TRANSPORTATION COMMITTEE October 24, 2023 - Page 3
No. 5 in the amount not to exceed $6,545,000.00 for the maximum five year and two month term of the Agreement, with the initial agreement term of fourteen months, ending December 31, 2024, after which the Agreement may be extended for four additional one-year terms with a fully extended final term ending on December 31, 2028.
Eric Storrie, Special Districts Manager, and Michael Wolfe, Public Works Director, were available to answer the committee’s questions. No public comments were received. Discussion ensued among the committee and staff.
It was moved by Member Valenzuela Zavala, seconded by Member Zaragoza, to approve the recommended action as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
6. Public Works Department
SUBJECT: Agreement 32400232 with Garcia’s Landscaping Maintenance Inc. for Landscape Maintenance Services for the Riverpark Ballfields within Community Facilities District No. 5. (15 minutes)
RECOMMENDATION: That the Public Works and Transportation Committee recommend that the City Council approve and authorize the Mayor to execute an Agreement with Garcia’s Landscaping Maintenance, Inc. for landscape maintenance services for the Riverpark Ballfields within Community Facilities District No. 5 in the amount not to exceed $1,725,000, for the entire five-year and two month term of the Agreement ending December 31, 2028.
Eric Storrie, Special Districts Manager, Steve Howlett, Assistant Public Works Director, and Michael Wolfe, Public Works Director, were available to answer the committee’s questions. No public comments were received. Discussion ensued among the committee and staff.
It was moved by Member Zaragoza, seconded by Member Valenzuela Zavala, to approve the recommended action as presented. VOTE: Valenzuela Zavala, Zaragoza, and Perello voted in favor; the motion passed 3-0.
E. ITEMS FOR FUTURE AGENDAS
No requests were made.
F. ADJOURNMENT
There being no further business on the agenda, and without objection, Chair Perello adjourned the meeting at 9:30 p.m.
___________________________ __________________________________ DEE LAI BERT E. PERELLO Assistant City Clerk Chair
7 PUBLIC WORKS AND TRANSPORTATION COMMITTEE
AGENDA REPORT
REPORTS
AGENDA ITEM NO. D.1
DATE: November 14, 2023
TO: Public Works and Transportation Committee
FROM: Michael Wolfe, Public Works Director, (805) 385-8055, [email protected]
SUBJECT: Solid Waste (Refuse) Rates Discussion. (50 minutes)
RECOMMENDATION
That the Public Works and Transportation Committee recommend that the City Council provide comments and feedback on the goals, variable input, preliminary scenarios, and the process and timeline for solid waste rates.
Please click the following link to view the required Measure M pre-recorded presentation video:
https://youtu.be/SmhLIgJXqAM
Live presentation to be provided by consultant.
BACKGROUND
Executive Summary
The City’s Public Works Department Environmental Resources Division (ER) is an enterprise fund operation that provides Municipal Solid Waste (MSW) services to Oxnard residents and businesses, which includes collection, sorting, processing, and disposal for 34,154 residential properties and 16,378 commercial customers (includes apartment buildings) six days a week. Services include collection, sorting, transportation, and transferring material to the landfill to foster a clean, safe, and sustainable Oxnard. To provide our services while meeting all Local, State, and Federal requirements, ER:
• Recycles approximately 12,918 tons of material and 14,177 tons of organics (green waste & food waste);
• Handles approximately 294,938 tons (589,876,000 lbs) of MSW annually; • Has a workforce of 179 essential workers fulfilling 529,443 hours per year; and • Has invested approximately $60 million in capital equipment, facilities, and land including the Del Norte Regional Recycling and Transfer Station and approximately 138 vehicles (109 heavy-duty trucks & 29 small vehicles)
The last time the City Council approved a cost of service analysis for ER was in May 2012, with a rate increase effective January 2013. Since January 2013 (when accounting for the removal of the Infrastructure Use Fee (IUF) in 2021) the residential rate (96-gallons) has gone from $30.15 to $30.78 per month and the most popular commercial rate (4-yard/once per week) has gone from $224.81 to $230.86 per month. This represents a 2.1% residential increase and a 2.7% commercial increase over 10 years. However, over that same decade, the 8 consumer price index has increased by 33.9%. Separate from rates, service fees (e.g. per ton for disposal of refuse, greenwaste, construction and demolition, and self-haul disposal rates at Del Norte) increased in FYs 2012/13, 2016/17, 2018/19 for pass-through costs and decreased in FY 21/22 for the removal of the IUF.
Clearly, during the 2010’s, City Hall’s discombobulation on the heels of the District Attorney investigations into the prior decade’s activities, shocking financial audit findings, and frequent executive staff turnover had, at minimum, distracted City Hall from following best management practices, including the reviewing of rates every five years. In addition to that, the State has imposed many unfunded mandates on the solid waste industry, such as mandatory recycling and mandatory organics recycling waste programs, that require significant capital investment and operational costs not fully contemplated in previous rate studies.
Based upon the draft Fiscal Year 2023/24 cost-of-service study the ER division expenditures are anticipated to materially outpace revenues resulting in a negative ending cash balance no later than Fiscal Year 2024/25. The combination of minimal rate increases, unfunded State mandates, elevated inflation, and the need for significant capital investment to replace and rehabilitate assets is expected to result in a growing structural deficit.
Reliable and efficient solid waste service is a key component for the maintenance of solid waste services for the public health, safety, and welfare of the community. As mentioned, absent a rate adjustment, the draft cost-of- service study projects negative cash balances by FY 2024/25. Staff has provided some preliminary rate increase scenarios for discussion and consideration. Each of the scenarios assumes changes in key assumptions such as the level and timing of rate revenue adjustments, amount of capital spending, and proposed debt issuances.
Based on the direction of City staff, several sensitivity analyses were performed such as examining the effects of no rate adjustment or no capital spending, among other sensitivities.
DISCUSSION
Cost of Service Study
As an industry best management practice, rates should cover the cost of providing services, establish an appropriate level of reserves, and a cost of service study (Study/Studies) should be performed every 3-5 years.
This Study is critical to understanding the effectiveness and efficiencies of the operation and verifying existing rates are adequate, and providing a long-term path for the financing viability and sustainability for solid waste operations. The last ER Study was completed in 2012 and implemented in 2013. With respect to the solid waste industry in California, many things have changed over the past decade since this last review was completed.
Operations must keep up with rising costs for goods and services, unfunded State mandates, and be able to implement critical capital outlay and projects that are mandated or necessary for the health and safety of our customers.
Performed regularly, Studies provide transparency into what the City can expect in the years ahead and ensure we have the financial resources to maintain our infrastructure, manage vehicles and equipment capacity for growth, implement new technologies, address existing and new state and federal regulations, and implement our capital improvement program (CIP). All of this is to provide reliable and safe service to our customers. The Study is the tool used to develop rates so that rates meet the cost of service plus the appropriate level of reserves.
Raftelis, placed under contract in December of 2022, is assisting the City with the calculations of the cost of service draft study and recommending changes to the current rates and fees structure.
Goals for the Cost of Service Study
When finalized, the cost of service study will determine the overall revenue adjustments and the total amount of revenue required from rates and fees to meet the cost of service over time. The revenue covers operating and 9 maintenance (O&M), debt service, and capital expenses as well as reserve funding. Revenue adjustments represent the average rate increase for the City; rate changes for individual customers will depend on the cost of service analysis. Once complete, the Study will include rates and fees that promote and sustain a financially viable utility. As such, to provide guidance, staff in conjunction with Raftelis have relied upon identifying several goals in the development of preliminary rate options. These goals are important to consider when identifying rate-influencing items with variable options, such as a reserve fund balance target or Capital Improvement Program (CIP) projects. In general, the goals are to provide a safe, reliable, and sustainable solid waste service. Specific goals include:
1. Cover Operations and Maintenance Costs (O&M) - (G1)
2. Cover Capital Investments - (G2)
3. Legally Compliant - (G3)
4. Promote Financial Viability - (G4)
5. Community Values - (G5)
6. Provide Fairness and Equity - (G6)
Input and Considerations
The foundation of the Study and the primary objective of the solid waste rates are to reasonably recover the cost of providing service, the cost of infrastructure investment, implement known State unfunded mandates and comply with covenants of internal and external fiscal targets (referred to as the "Revenue Sufficiency" evaluation).
Ensuring adequate cash reserves and appropriate cash flows generally results in a sustainable long-term financial plan that can mitigate the financial and operating risk from unanticipated or sudden events to financial operations (e.g., changes in market conditions affecting operations and recovered materials revenues, reduced growth or tonnage, unanticipated or extraordinary expenses, unfunded mandates, etc.). The identified revenue requirements to be funded from rates are then allocated based on the type and level of service.
To assess the sustainability of the City’s charges for service, Raftelis developed a draft financial model capable of forecasting solid waste operations over a ten-year Rate Study Period but with the recommended rate revenue adjustment period comprising the Fiscal Years 2024-25 through 2028-29. By forecasting operations over this period of time we can capture funding requirements that may not be annually occurring, test sensitivity to potential changes in operations or costs, and examine projections of cash reserves and net revenue margins to evaluate compliance with formal and informal fiscal policies. Performing a thorough evaluation of the City’s funding requirements allows us to provide sound rate recommendations to help ensure the City has sufficient resources to fund operations and achieve its objectives. The following provides a brief overview of the key activities performed for the draft Study:
1. An evaluation of the service area requirements for the City was performed. This included a review of recent historical customers served and corresponding waste generation such that: i) a representative forecast of the Division’s needs from a financial standpoint could be prepared, and ii) a projection of rate revenues consistent with the projected service area needs could be developed.
2. Raftelis, with the support of City staff, analyzed a projection of the Net Revenue Requirements from rates and fees, which equates to the expenditure requirements funded from rates and fees. An illustration of the components that make up the Net Revenue Requirements is summarized below:
+ Cost of Operation and Maintenance
+ Debt Service (Vehicle Leases)
+ Indirect Cost Allocation and Administration Payments 10 + Capital Funding Requirements
+ Deposits to Reserves for Policy Compliance and Future Expenditures – Other Operating Revenue
– Interest Income / Transfers from Operating Reserves = Net Revenue Requirements (Funded from Rates and Fees)
3. The annual cost of providing solid waste service to City customers was determined by identifying the gross revenue requirements, netting out all other applicable revenues resulting in a net revenue requirement to be funded from the respective fees. The applicable equivalent unit billing determinants, as presented within the cost of service analysis of the draft report, will be used to determine the unit cost of service to be presented in the final report. It should be noted that the information reported herein is accurate to the best of our knowledge and is assumed to be reasonable for the purposes of estimating the cost of service with rate recommendations pursuant to the Proposition 218 Omnibus Implementation Act at Gov. Code 53750. In addition to recommending rates and fees, the intent of providing this information is to help support a general understanding of the City’s financial needs to support ER’s programs, operations, and services.
4. Based on the identified funding requirements and the draft cost of service associated with providing service over the Rate Study Period, provide preliminary rate recommendations to ensure adequate funding for the City’s needs and meet the City’s rate goals and objectives.
The following items are key components of developing the draft rate study and have a direct influence on the actual rates. Staff has recommendations for each item, as noted. Because these factors influence any proposed rate change, staff is seeking feedback from the Public Works and Transportation Committee/City Council on each item separately. The summary of these factors with recommendations is listed below:
Factor Staff
Recommendation
Justification Goal(s)
1. Rate Study
Period
5-year period Industry standard;
long-range planning;
fairness of rates;
ensures planned
operations and
mitigates deferred
maintenance
G6
2. Pass-Through
Charge (to the
extent allowed
by State Code)
Include a pass-
through for fees as
allowed by
California
Government Code
53736 (c)
Avoids over or
underestimating
factors outside the
City’s control (e.g.
disposal fees from
third-party vendors)
G4,
G5, G6
3. Capital
Improvement
Program (CIP)
and Capital
Outlay
Implement over an
extended period to
smooth rates;
leases extended to
7 years, CIP over
20 years
Allows for CIP
projects at a pace
within existing
resources; ensures an
operable and safe
facility; safe and
G2, G4
11 reliable equipment
and vehicles
4. Reserve Fund
Balance Target
Endeavor to
maintain 25% (per
Resolution 15595)
Consistent with City
Council Resolution;
provides a funding
source for
emergencies and bond
covenants (if/when
required) and strong
credit ratings
G1, G4,
G5
5. Debt Coverage
Ratio (when
applicable)
Ensure funding of
annual debt
service and capital
lease payments
Ensures the City is
not in default of
debt/lease repayment
obligations
G4, G5
The draft cost of service study has evaluated and considered all revenues from both rates and fees, among other revenues. For purposes of this report and as referenced in the draft cost of service study, rate revenues are defined as the monthly property based charges for solid waste collection and disposal service that must follow the Proposition 218 noticing requirements and process. Fees are defined as charges for solid waste services and while they do not require a Proposition 218 noticing procedure, they must be cost based and in compliance with Proposition 26.
Existing Rates and History (include a benchmark CPI theoretical scenario)
The City Council approved a cost of service analysis last in May 2012, resulting in rate increases effective January 2013. The authorized increases and decreases noted in the table below cumulatively represent a 2.1% increase in residential rates and a 2.7% increase in the most popular commercial rate since the last Study was approved and implemented in January 2013. However, over that same decade, the consumer price index has increased by 33.9%. The following tables provide the rate history for a residential customer (96-gallon cart):
Date Oct
2012
Jan 2013 Mar 2013 Jan
2014
Jan
2015
Jan
2016
Jan 2017
Residential Rate (96-
gallon)
$29.86 $30.15 $31.03 $31.03 $31.03 $31.03 $31.34
Total Change 0.0% 1.0% 2.9% 0.0% 0.0% 0.0% 1.0%
Notes Rate
Increase
Pass-
Through
Pass-
Through
Date (cont.) Jan 2018 Jan
2019
Jan
2020
Jan 2021 Jan 2022 Jan
2023
12 Residential Rate (96-
gallon)
$31.88 $31.88 $31.88 $30.78 $30.78 $30.78
Total Change 1.7% 0.0% 0.0% -3.5% 0.0% 0.0%
Note Pass-
Through
IUF Reduced
The below graph shows the history of residential rates since 2012. The graph also includes a benchmark scenario, if rates were theoretically increased annually by the CPI (Los Angeles-Long Beach-Anaheim, California) at a minimum.
Note: Residential rates increased in FY 12-13, FY 16-17, FY 18-19 and decreased in FY 21-22, reflecting the IUF reduction.
Efficiency Efforts
The ER staff is entrusted with managing enterprise funds based on an annual budget approved by the City Council. The City is committed to investing in meeting local, state, and federal regulations, ensuring safe and reliable solid waste collection services, and providing excellent customer service to residents and businesses.
ER has made significant investments totaling approximately $60 million to the Material Recycling Facility (MRF) at Del Norte Regional Recycling and Transfer Station and has acquired Compressed Natural Gas (CNG) automated collection refuse vehicles, replacing older vehicles to enhance efficiency and reduce costs.
ER staff actively informs residents and businesses about recycling programs and new organic recycling laws through various channels such as social media, billing inserts, radio broadcasts, and special events. Outreach and education staff are available to assist residents and businesses by providing information on recycling and mandated programs.
13 Despite efficient efforts to be cost-effective, the City needs rates that meet the actual cost to provide service.
Oxnard Refuse customers pay less per person served for refuse service when compared to other nearby cities.
The current average rate per person for trash service is compared with other agencies in the table below:
Challenges
There are many challenges ER faces with new and old unfunded Local, State, and Federal mandates. These include factors that are outside the control of the City (e.g. unfunded mandates and rising costs of labor, fuel, and disposal cost) and factors due to the post-pandemic (e.g. supply chain restrictions and increased cost to supplies and equipment). Another challenge is the aging vehicles, equipment, and infrastructure that need constant maintenance and repairs.
State Unfunded Mandates -
Several recycling and composting laws that took effect that had major financial and operational impacts on the solid waste collection system:
1. AB 341 Mandatory Commercial Recycling (MCR) – Adopted into California Law in 2012 and requires businesses that generate four or more cubic yards of commercial waste per week and multi-family complexes with five or more units to self-haul or subscribe to recycling services.
2. AB 1826 Mandatory Commercial Organics (MORe) – Effective January 1, 2016, and phases in the number of businesses and multi-family dwellings that are required to subscribe to commercial organic collection service.
3. AB 827 – Effective July 1, 2020, and expands upon requirements of MCR and MORe to include mandatory recycling and organics carts for businesses at the “front of house” (i.e. portion of the business open to the public) to collect waste generated by customers from products they purchase and consume on the premises.
14 4. SB 1383 Short-Lived Climate Pollutants (Organics Recycling) – Effective January 1, 2022, and requires jurisdictions to provide organic waste collection services to all residents and businesses so that they may divert all organic waste to a compost program.
Inflation -
Of significant importance is that the cost to operate a full-service solid waste operation is not immune to inflation. As noted above, the industry has observed significant increases to the cost of solid waste collection, operations, and disposal. The U.S. Bureau of Labor Statistics measures garbage bill increases nationally through a subcomponent to CPI in the Garbage and Trash Index (G&T). The Garbage and Trash Index has increased by 20% since 2020. Raftelis calculated a weighted Producer Price Index (PPI) of the cost inputs to garbage collection service and estimated cost increases may be closer to 40% since 2020 due to labor, capital cost, and fuel cost increases.
The City’s previous solid waste cost of service analysis was last completed in 2012. Costs for goods and services have increased since that year and continue to do so while the refuse utility rates have only slightly changed (2.1% increase in residential rates and a 2.7% increase in the most popular commercial rate). In addition, recent State unfunded mandates have increased the costs of operations to avoid penalties and/or non- compliance actions by the State. This has led to a structural deficit and impacts ER’s financial stability. Without a rate increase, the draft rate model shows a negative cash balance in FY 2024/25.
15 Note: FY 22-23 Cash Balance base is unaudited and FY 23-24 and beyond are estimates and subject to change.
Aging Infrastructure and Equipment -
As noted above, the ER handles over 589 million pounds of municipal solid waste each year. This takes a significant amount of equipment and infrastructure. ER has 138 vehicles, including 109 large heavy-duty trucks.
Additionally, the MRF houses sorters and other associated equipment related to recycling. The sorting equipment, which is key to the 6-day-a-week operations, is 27 years old and requires constant maintenance to keep up with the recycling, greenwaste, food waste, and residual trash, produced by residential, commercial, and industrial customers. Furthermore, the MRF building is 27 years old and houses ER’s administrative staff, conveyors, walking floors, and sorting equipment. The MRF needs significant improvements including a new roof. Here are some examples of operating and capital costs to address this aging equipment and infrastructure:
• Average annual maintenance cost for trash truck (front-end loader) is $19,642 • Current price of a new trash truck (side-loader) is $339,053 (Purchase of zero-emission vehicles is expected to cost up to 200% more than the current price of a new CNG refuse vehicle) • Estimated roof replacement costs: $7.5 Million
• Annual maintenance and repairs costs for sorting equipment (we have 31 sorting belt lines made up of conveyors, walking floors and one bailer) which can cost between $250K to $1.5M per repair • Estimated cost for a like-for-like replacement of the MRF is $36 Million (this estimate can fluctuate with the price of steel, metal, inflationary factors, and the consumer price index)
Revenues and Expenditures
The revenue streams for ER have managed to remain relatively stable over time due to several key factors. One of the primary reasons is the consistent collection of solid waste services from both residential households and businesses within the city. Waste generation rates have remained relatively constant, ensuring a consistent flow of revenue for the city's solid waste programs (see table below). On average, revenues have averaged about $47 million per fiscal year. Most recently, revenue has been impacted by the decline in sales of recycled material due to the COVID-19 pandemic, market fluctuation, and new/increased regulations on the cleanliness of the material. All of the other revenues, including the two largest, residential and commercial collections, have remained consistent. This would be consistent with a relatively stable number of customers for residential and commercial accounts.
The largest contributing expenditures to the solid waste program primarily include costs related to waste collection, transportation, and disposal. These expenditures encompass various essential activities and services involved in managing the city's solid waste effectively. Here's a breakdown of key operating expenses:
1. Waste Collection Personnel: A significant portion of the budget is allocated to employing waste collection personnel, including drivers and crew members responsible for collecting waste from residential areas, commercial establishments, and public spaces.
2. Fleet and Equipment Maintenance: Maintaining a fleet of waste collection vehicles, including garbage trucks and recycling vehicles, is crucial for day-to-day operations.
3. Fuel: Refuse heavy-duty and fleet vehicles operate on CNG, diesel, and unleaded fuel.
4. Waste Transportation: The transportation of collected waste to appropriate disposal facilities, recycling centers, or composting sites. This includes fuel costs, vehicle maintenance, and fees associated with using disposal facilities.
16 5. Disposal Fees: Paying fees to landfill and waste disposal facilities for the final disposal of non-recyclable waste. Landfill fees are often calculated based on the weight or volume of waste disposed of.
6. Recycling Programs: Funding recycling initiatives, including curbside recycling collection, recycling education campaigns, and the operation of recycling centers, is another significant expenditure. This includes costs related to sorting, processing, and transporting recyclable materials to recycling facilities.
7. Organics Recycling: With the implementation of organic waste recycling programs, costs associated with collecting and processing organic waste, such as food scraps and yard trimmings, contribute to the expenditures.
8. Compliance and Regulatory Costs: Meeting state and federal regulations related to waste management, including reporting requirements and environmental compliance, requires funding. Expenditures associated with ensuring adherence to these regulations are essential components of the solid waste program's budget.
9. Personnel Training and Safety: Providing training for waste management personnel and ensuring their safety through proper equipment and protocols. Safety measures are crucial to protect both the workers and the community as MRF processors, sorters, and workers are listed as the seventh most dangerous jobs in America.
10. Community Outreach and Education: Engaging in educational initiatives and outreach programs to inform residents and businesses about recycling practices, waste reduction, and proper disposal methods.
This helps promote community participation and compliance with waste management guidelines.
ER’s expenditures have seen an increase over the past several years (see table below). In summary, the largest contributing expenditures to the solid waste program encompass waste collection personnel, fleet maintenance, waste transportation, disposal fees, recycling programs, organics recycling, compliance costs, personnel training, safety measures, and community outreach efforts. These expenditures are vital for ensuring efficient and environmentally responsible management of the city's solid waste.
17 Note: FYs 20-21 through 23-24 include revenue for payment to ER for the Infrastructure Use Fee which will end in FY 23-24. *1Forbes Advisor:https://www.forbes.com/advisor/legal/workers-comp/most-dangerous-jobs-america/
Rate Change Scenarios (Preliminary Calculations)
To provide revenue that will sustain critical operations and maintenance, debt service, and fund capital expenditures, an increase in rates is recommended. Raftelis began work on the cost of service draft rate study to develop a financial plan for the City’s solid waste utility that includes a ten-year rate model. Based upon the preliminary analysis, a rate adjustment is required to ensure full cost recovery of projected annual operating expenses, capital costs, and other factors including unfunded Local, State, and Federal mandates.
Updating the rates to keep up with the rising costs of providing safe and reliable services is a key component of maintaining the financial viability of the ER funds, including maintaining healthy fund balances/reserves for emergencies and applicable bond covenants (if/when required) and strong credit ratings.
To develop the financial plan, Raftelis estimated and projected annual expenses and revenues, modeled reserve balances, and added planned capital expenditures. The City is anticipating financing a portion of capital improvements through capital leases and debt. It is important to note that the draft cost of service study preliminarily calculates a $.0 million net revenue loss for Fiscal Year 2023/24. Additionally, the draft cost of service study projects that the structural deficit will continue in future years without an increase in rates.
Because of the projected deficit, staff has worked closely with Raftelis to develop a viable preliminary draft financial plan for the City’s solid waste fund. Due to the existing structural deficit in the ER Fund and the need for rate increases, the draft Study contemplates scenarios. The following scenarios are estimates and are not to be seen as fixed. These are being presented to show the sensitivity of the draft rate model to certain inputs and to initiate the conversation with the Committee Members/Councilmembers to provide comments and feedback.
Based on a collaborative effort among City staff and Raftelis several preliminary sensitivity runs and scenarios were identified and evaluated for comparison and discussion as follows:
o Model Sensitivity 1: No rate adjustment
18 o Assumes all identified funding requirements including operating, capital, and proposed capital lease and debt payments. Key assumptions include:
▪ Fiscal Year 2023/24 Served as Forecast Baseline as Adjusted for Actual Operating Results and known cost increases / operating expense growth estimated at 4.5% per year
▪ Assumes some additional collection routes to maintain regulatory compliance with SB1383 and service demands
▪ Assumes IUF repayments from the City to ER ends in FY 2023/24Assumes Resumption of IUF payments in FY 2024/25 to the City
▪ $43.7 million Reinvestment to MRF including new equipment and roof FY 2025/26-FY 2027/28
▪ Replacement of vehicles at end of life in FY 2024/25
▪ Compliance with CARB Zero Emissions Vehicle Requirements ▪ Primarily relies on use of capital leases and debt to fully fund capital expenditures o Recognizes no rate adjustments to assess the adequacy of existing fees to cover the cost of service
o Model Sensitivity 2: Rate Adjustments and No Capital Expenditures o Assumes all identified funding requirements except excludes capital spending o Helps identify the necessary rate increases which are driven by the structural deficit among revenues and operating expenses.
o Scenario 1: Rate Adjustments and Reduced Capital Expenditures o Assumes all identified funding requirements except reduces capital expenditures including minimal spending for the MRF rehabilitation and only funding 50% of projected new vehicle fleet requirements.
o Includes an allowance for rebuilding vehicles to extend the service life and minimize capital expenditures.
o Represents a moderate capital spending scenario, but doesn’t fully address capital reinvestment needs of the system
o Scenario 2: Phased Rate Adjustments and Reduced Capital Expenditures o Builds off of Scenario 1, but assumes a $5 million interfund loan to assist ER in phasing the identified rate increases over three (3) years.
o Represents a moderate capital spending scenario with phased increases.
o Scenario 3: Rate Adjustments and Full Capital Expenditures o Assumes all identified funding requirements as assumed in Model Sensitivity 1, including the full capital funding requirements.
o Represents necessary rate adjustments to fund a fiscally sustainable operation and maintain regulatory compliance.
o Scenario 4: Phased Rate Adjustments and Full Capital Expenditures 19 o Builds off of Scenario 3, but assumes a $5 million interfund loan to assist ER in phasing the identified rate increases over three (3) years.
o Represents necessary rate adjustments to fund a fiscally sustainable operation and maintain regulatory compliance with phased increases.
Baseline Model Assumptions
Assumes all identified funding requirements including operating, capital, and proposed capital lease and debt payments. Key assumptions include:
o Fiscal Year 2023/24 Served as Forecast Baseline as Adjusted for Actual Operating Results and known cost increases / operating expense growth estimated at 4.5% per year o Assumes some additional collection routes to maintain regulatory compliance with SB1383 and service demands
o Assumes IUF repayments from the City to ER ends in FY 2023/24 o Assumes Resumption of IUF payments in FY 2024/25 to the City o $43.7 million Reinvestment to MRF including new equipment and roof FY 2025/26-FY 2027/28 o Replacement of vehicles at end of life in FY 2024/25
o Compliance with CARB Zero Emissions Vehicle Requirements o Primarily relies on use of capital leases and debt to fully fund capital expenditures. o Recognizes no rate adjustments to assess the adequacy of existing fees to cover the cost of service
Model Sensitivity 1: No rate adjustment
The following charts present a forecast of the cashflow requirements relative to a projection of existing revenues. As can be seen, the solid green line presents the projected revenues under existing rates. A decline in revenues is observed in FY 2024/25 due to the final repayment of IUF reimbursement from the City.
Conversely, IUF payments to the City are assumed to begin in the Fiscal Year 2024/25. Operating expenses represented as the blue stacked bars are projected to increase by approximately 4.5% per year on average.
Capital expenditures funded directly from revenues are reflected as the blue stacked bar for FY 2023/24. Debt service requirements are represented as the purple stacked bar and reflect the addition of both existing capital lease payments and proposed capital lease and debt service payments associated with the funding of $77.9 million in capital spending as shown below.
20 Assuming no rate adjustments ER system cash balances are estimated to fall negative by the Fiscal Year 2024/25 as shown below.
Model Sensitivity 2: Rate Adjustments and No Capital Expenditures
Assumes all identified funding requirements pursuant to Model Sensitivity 1 except it excludes capital spending to help identify the necessary rate increases to address the structural deficit among revenues and operating expenses. The following charts present a forecast of the cashflow requirements relative to a projection of existing revenues. As can be seen in this scenario in contrast with Model Sensitivity 1, the forecast does not reflect any increase in debt service payments.
21 To fully fund the revenue requirements of the scenario the following rate adjustments were recognized:
Assuming implementation of the identified rate adjustments the City is expected to maintain compliance with the minimum reserve target equivalent to 25% of operating expenditures.
Scenario 1: Rate Adjustments and Reduced Capital Expenditures
Assumes all identified funding requirements pursuant to Model Sensitivity 1 except reduces capital expenditures including minimal spending for the MRF rehabilitation and only funding 50% of projected new vehicle fleet requirements. Includes an allowance for rebuilding vehicles to extend the service life and minimize capital expenditures. Represents a moderate capital spending scenario, but doesn’t fully address capital 22 reinvestment needs of the system. As can be seen in this scenario in contrast with Model Sensitivity 1, the forecast assumes less debt service associated with more moderate capital spending assumptions.
The following chart presents the total capital funding requirements assumed in this scenario. The majority of spending is assumed in the Fiscal Year 25/26 associated with funding for the replacement of the MRF facility roof and partial equipment replacement. It is expected that the City will require further capital reinvestment to the MRF facility beyond the forecast period.
To fully fund the revenue requirements of the scenario the following rate adjustments were recognized:
Assuming implementation of the identified rate adjustments the City is expected to maintain compliance with the minimum reserve target equivalent to 25% of operating expenditures. 23 Scenario 2: Phased Rate Adjustments and Reduced Capital Expenditures
Builds off of Scenario 1, but assumes a $5 million interfund loan to assist ER in phasing the identified rate increases over three (3) years. Represents a moderate capital spending scenario with phased increases. As can be seen in this scenario in contrast with Scenario 3, the forecast assumes a more moderate phase-in of the proposed system revenues.
The following rate adjustments were recognized:
Assuming implementation of the identified rate adjustments the City is expected to maintain compliance with the minimum reserve target equivalent to 25% of operating expenditures, however, cash reserves are expected 24 to be substantially depleted by the Fiscal Year 25/26 resulting in an increased financial risk to other City funds.
Scenario 3: Rate Adjustments and Full Capital Expenditures
Assumes all identified funding requirements as assumed in Model Sensitivity 1, including the full capital funding requirements. Represents necessary rate adjustments to fund a fiscally sustainable operation and maintain regulatory compliance. The following chart presents a forecast of the funding requirements consistent with Model Sensitivity 1, however also assumes additional revenue adjustments. The debt assumptions observed to fully fund the CIP assume: i) $46.5 million in 20-year loans at 5% interest for the facility capital improvements; and ii) approximately $28 million in capital leases with a 7-year repayment at 3% interest. Total debt and capital lease payments are expected to increase from approximately $2 million a year to $10 million a year at its highest level by the Fiscal Year 27/28.
The following presents the proposed rate adjustments to fully fund the requirements of this scenario.
25 Assuming implementation of the identified rate adjustments the City is expected to maintain compliance with the minimum reserve target equivalent to 25% of operating expenditures, however, cash reserves are expected to be substantially depleted by the Fiscal Year 2025/26 resulting in an increased financial risk to other City funds.
Scenario 4: Phased Rate Adjustments and Full Capital Expenditures
Builds off of Scenario 3, but assumes a $5 million interfund loan to assist ER in phasing the identified rate increases over three (3) years. Represents necessary rate adjustments to fund a fiscally sustainable operation and maintain regulatory compliance with phased increases. As can be seen in this scenario in contrast with Scenario 5, the forecast assumes a more moderate phase-in of the proposed system revenues.
The following rate adjustments were recognized:
26 Assuming implementation of the identified rate adjustments the City is expected to maintain compliance with the minimum reserve target equivalent to 25% of operating expenditures, however, cash reserves are expected to be substantially depleted by the Fiscal Year 2025/26 resulting in an increased financial risk to the City’s general fund.
Scenario Comparisons and Key Observations:
Scenario Residential Bill Impact Comparison
As can be seen below, Scenario 1 and 3 represent the largest single rate revenue adjustments ranging from approximately $14 to $15 per month. Based on comparison Model Sensitivity 2 we can infer that 86% of the rate increase is to address the operating expenses / structural deficiency of the system. Of Scenarios 1 and 3, only Scenario 3 fully funds the total identified needs of the system.
Additionally, we performed a sensitivity with Scenarios 2 and 4, which phased in the rate increases over a three (3) year period. Scenario 2 represents the moderate capital funding at $7.55/mo while Scenario 4 represents the full capital funding requirements at $8.70/mo.
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29
Model Sensitivity 1 $- $- $- $- $-
Model Sensitivity 2 $13.24 $1.54 $1.37 $1.41 $1.45
Scenario 1 $14.16 $3.15 $1.68 $1.49 $1.54
Scenario 2 $7.55 $7.55 $7.55 $1.60 $-
27 Scenario 3 $15.39 $3.69 $2.74 $2.63 $1.66
Scenario 4 $8.70 $8.70 $8.70 $1.71 $0.00
Financial Assistance Programs
The City of Oxnard’s Utility Rate Assistance Program “Project Assist” is available for solid waste, water, and wastewater utility customers who qualify. This program was initially approved by City Council in May 2017 and has since been renewed annually. Project Assist grants financial relief equal to a monthly $25.00 maximum credit per utility bill charged to customers who meet the eligibility requirements. For FY 2023-24, staff requested to direct $241,500 from late penalty revenues to the Project Assist Program. The $241,500 allocation estimates that approximately 805 eligible utility customers could participate in the program for a full fiscal year.
Outreach Information
Requirements for Prop 218 and Timeline:
Proposition 218 has very strict rules that govern the revenue of the solid waste utility. Specifically:
1. An agency cannot collect revenue beyond what is necessary to provide the service.
2. Revenues derived from the charge shall not be used for any other purpose other than that for which the charge was imposed.
3. The amount of the fee may not be used for any other purpose other than that for which the change was imposed.
4. The amount of the fee may not exceed the proportional cost of service for the parcel.
5. No charge may be imposed for a service unless that service is actually used or immediately available to the owner of the property.
28 6. A written notice of the proposed charge shall be mailed to the record owner of each parcel at least 45 days prior to the public hearing when the agency considers all written protests against the charge.
Estimated Timeline for Proposition
Early January
2024
Mail Proposition 218 Notices (English & Spanish) containing the Proposed Solid Waste Rate increase to Property Owners and Ratepayers
March 4,
2023
Public Hearing for Proposed Rate
In addition to the required notification listed above, the City has created a multi-faceted outreach campaign to raise awareness of the Refuse Cost of Service draft Study, which includes two Community Meetings scheduled for Wednesday, November 15, 2023, at 6:30 p.m. at the South Oxnard Center and Wednesday, December 13, 2023, at 6:30 p.m. at the Oxnard City Council Chambers - streamed virtually via the City’s YouTube Channel.
Additionally, staff anticipates distributing a bilingual press release before the Community Meetings; running English and Spanish social media ads on Facebook and Instagram to inform residents and stakeholders; and publishing a bilingual print ad in VIDA newspaper. Paid outreach will be supplemented by including Refuse Cost of Service Study Community Meeting flyers in the neighborhood weekly packets and regularly posting on Nextdoor, Twitter, Facebook, and Instagram.
The City’s consultant, Raftelis, created an informational Rates 101 video in English and Spanish, which will be shared by staff at Community Meetings, on the City website, and via the City’s social media channels.
Additionally, staff has created an ER Division video in English and Spanish, which details the operations and services provided by the division, and the economic challenges the division faces. The videos will be shared in a series of small clips on a YouTube playlist and social media channels for the community to access.
STRATEGIC PRIORITIES
This agenda item supports the Infrastructure and Natural Resources strategy. The purpose of the Infrastructure and Natural Resources strategy is to preserve and improve our roads, utilities, parks, trees, water supply and natural resources through effective planning, prioritization, and an equitable and efficient use of available funding.
FINANCIAL IMPACT
The solicitation of City Council input and feedback has no fiscal impact. Absent a rate adjustment, the draft cost of service study projects negative cash balances by FY 2024/25.
Prepared by: Brian Yanez, Assistant Public Works Director
ATTACHMENTS
1. City's Presentation
2. Raftelis' Presentation
29 BRIAN YANEZ
ASSISTANT PUBLIC WORKS DIRECTOR
30 Oxnard’s Environmental Resources
2 31
How Much Waste Is It?
3 32
Summary of Operations
4 33
Summary of Operations
5 34
6 Environmental Resources Capital Investments
35 Efficient Efforts
7 What we’re doing to keep costs down
36 Sample Item Cost Increase
8 37
Sample Product Cost Increase
9 38
Consumer Price Index
10 39
State Unfunded Mandates
11 40
Rate Setting - Goals
12 41
Input & Considerations
13 42
Refuse Rate History
14 43
Solid Waste Inflation
15 44
Single Family Rate
16 with CPI, IUF, & Pass Throughs
45 ER Cash Balance Estimate
17 46
City Utility Comparison
18 47
Expenditures vs Revenue
19 48
PROPOSED RATE OVERVIEW
20 • Assuming no rate adjustments, ER system cash balances are estimated to fall negative by the Fiscal Year 2024/25 as shown above
49 PROPOSED RATE OVERVIEW
21 50
PROPOSED RATE OVERVIEW
22 51
PROPOSED RATE OVERVIEW
23 52
PROPOSED RATE OVERVIEW
24 53
PROPOSED RATE OVERVIEW
25 54
PROPOSED RATE OVERVIEW
26 55
PROPOSED RATE OVERVIEW
27 56
Utility Bill Assistance
28 57
Proposition 218 Preliminary Timeline
29 58
QUESTIONS?
59 City of Oxnard
Environmental Resources Rate Study
City Council Presentation
November 14th, 2023
Photo courtesy of Downtown Oxnard
60 2
Agenda
• Why are we discussing rate increases?
• Key Issues Facing Environmental Resources
• Key Steps Conducting a Rate Study
• Methodology
• Rates and Fee Design Overview
• Key Assumptions
• Preliminary Rate Scenarios
61 Why would the City do a solid waste rate study?
• The City’s Environmental Resources Division (Enterprise Fund) is not like other government services (Police, Fire, Libraries, Parks) that are funded by tax dollars from the General Fund
• The environmental resources enterprise (City’s Environmental Resources Division) is funded by customer rate revenue
› It’s a non-profit business
• Rates must keep up with costs to operate the City’s solid waste collection and disposal
• The last time City approved a cost-of-service study was in 2012 • Additional Key State Regulations: SB1383 Required addition of New Routes with No Change in Staffing resulting in Significant Increase in Overtime • By law (Proposition 218), rates must be based on the cost to provide solid waste service 3 62
Key Issues Facing Environmental Resources
4 Inflation
Since 2020, inflation
and expenditure
growth has outpaced
revenue growth for
the solid waste
system
Capital
Reinvestment
City has approximately
$60 million invested in
capital assets and
infrastructure much of
which is nearing end of
life. Additionally capital
costs has seen significant
increases in recent years.
Unfunded Mandates
AB 341 Mandatory Commercial
Recycling
AB 1826 Mandatory Commercial
Organics
AB 827 Mandatory Commercial
Organics & Recycling for
Business Customers
SB 1383 Short-Lived Climate
Pollutants (Organics Recycling)
63 Key Steps in Conducting a Rate Study
Measure M &
Rate Adoption
– 218
Procedures
Rate AdoptionRate DesignCost-of-
Service
Financial
Planning =
Revenue
Requirements
5 Compare
revenue with
operating costs,
capital costs,
and reserve
requirements
Identify
differences in
costs to serve
each of the
customer
classes
Consider level
and structure of
rate design for
each class of
service
Documentation,
report, review
by legal counsel
Notice to City
customers
Public Hearing
64 Methodology
Objective: Develop Financial Plan that Funds
Revenue Requirements and Achieves City’s
Financial Targets
› To develop the forecast the following was
modeled:
– Projected Annual Expenses and Revenues
– Modeled Reserve Balances
– Capital Improvement Plan
6 Gross Revenues Revenue
Requirements
REVENUE SUFFICIENCY
$ Surplus $ (Deficiency)
$ Balanced
65 Rates and Fees Design Overview
• Rates are defined as property based
charged which must follow state law in
design of the fees including Prop. 26
and Prop. 218
• Fees do not require following Prop.
218 but are required to follow Prop. 26
7 • Rates and Fees must follow all applicable laws and regulations including:
› Prop. 218
– An agency cannot collect revenue beyond what is necessary to provide the service.
Revenues derived by the charge shall not be used for any other purpose other than that for which the charge was imposed.
– A written notice of the proposed charge shall be mailed to the record owner of each parcel at least 45 days prior to the public hearing when the agency considers all written protests against the charge.
› Prop 26
– A fee need not bear a special benefit to the property so long as the fee bears a reasonable relationship to the burden the fee payor imposes on society 66 Residential Rates
8 67
Commercial
Rates
9 68
Industrial
Rates
10 69
Fees
Gate Fees: Del Norte $/Ton
Refuse $55.59
Green Waste $62.81
Construction & Demolition $66.92
11 Miscellaneous $/Ton
Security & Contamination $0.12
Walking Floor Transfer Trailer $385.34
Special Collection Services $35.00
Delivery Fee for Mechanical
Loading Containers $15.00
70 Factors Considered in the Rate Study
12 Inflationary assumptions
Growth and demand
O&M budget
Capital improvement plan
Existing debt and financing of future capital
Reserve targets
71 Key Assumptions: Baseline
13 Statistics
› Single Family Residential Accounts ~ 33,900
› Multi-Family and Non-Residential Accounts ~ 8,300
› Does not assume growth per California Department of Finance projections – DOF projects (0.37%) decline in population for Ventura County from 2024 - 2029 Revenue
› Residential and Commercial Monthly Rates
› Industrial Roll-Off Rates per Pick-up
› Gate Fees
› Other Revenues
Operating Expenses
› Adjustments made to FY 2024 budget based on known conditions › Assumes Infrastructure Use Fee Repayments start in FY 2025 72 Key Assumptions: Baseline
14 Capital
› Assumes replacement of MRF beginning in FY 2026
› Vehicles to be purchased starting FY 2025
– Assumes compliance with CARB regulations for electrification of vehicles starting FY 2025 Debt
› Long Term Debt assumed for Facilities
– Term: 20 years
– Interest Rate: 5%
› Capital Leases assumed for Vehicles
– Term: 7 years
– Interest Rate: 3%
73 Key Assumptions: Operating Expenses
15 › Based on 3 years historical trial balances,
financial reports, and operating agreements
› FY 2024 budget served as a baseline and was
adjusted for known conditions
– Budget Composition
• 45% Personnel
• 23% Disposal
• 12% Other Contracted & Prof Services
• 8% - Maintenance & Fuel
• 7% - Supplies & Other Expenses
Operating Expense Composition
74 Key Assumptions: Operating Expenses
16 • Operating Expenses
projected to grow 4.5%
annually
75 Key Assumptions: Inflation
17 Major changes effecting cost of service in recent
times:
› Industry has observed significant increases to cost of solid waste collection and disposal
› Rates have essentially remained unchanged for 10
years or since FY13
– FY13 Residential (96 gal) Rate - $30.15/mo
– Current Residential (96 gal) Rate - $30.78/mo
– Most recent audited financial statements reported
a $4 million net revenue loss in FY22
Consumer Price Index (red line): measure of change in price of representative basket of consumer goods by U.S. BLS
Garbage & Trash Index (green line): measure of solid waste bill increases nationally reported by U.S. BLS.
Weighted Index (blue line): measure of inflation to the primary cost inputs for solid waste service based on PPI and other indices accounting for labor 50%, capital 35%, and fuel at 15%. 76 Capital Improvement Projects (CIP)
18 • The CIP assumes long term debt (20 years) for facilities and capital leases (7- years) for vehicles and totals $77.9 million for the Forecast Period Funding Sources 2024 2025 2026 2027 2028 2029
Solid Waste Operating Fund $2,944,815 $200,000 $0 $0 $0 $0 Environmental Resources Sec & Contamination $0 $0 $300,000 $0 $0 $0 Existing Debt Proceeds $0 $0 $0 $0 $0 $0
Proposed Debt $0 $0 $9,717,075 $20,250,000 $16,500,000 $0 Proposed Capital Lease $192,356 $13,646,037 $13,821,417 $34,137 $12,850 $231,320 Total Funding $3,137,172 $13,846,037 $23,838,492 $20,284,137 $16,512,850 $231,320 Project Type 2024 2025 2026 2027 2028 2029
Facility $2,944,815 $200,000 $9,717,075 $20,250,000 $16,500,000 $0 Equipment $192,356 $1,561,993 $598,523 $34,137 $12,850 $0 Vehicle $0 $12,084,044 $13,522,895 $0 $0 $231,320
Total Projects $3,137,172 $13,846,037 $23,838,492 $20,284,137 $16,512,850 $231,320 77 What would reserve balances look like
without rate increases? (Assume full CIP execution)
19 Operating Reserve = City endeavors to maintain 25% of the operating budget in utility funds (90 days)
78 20
Preliminary Rate
Scenarios
79 Important note about rate structure
• The Cost-of-Service analysis is underway and Raftelis is working closely with the City to provide the final rate design
• The following rate projections are not final and are subject to change as it projects the rate adjustments across the board
• The City will maintain its affordability program which offers a $25 discount to those who qualify 21 80
Rate Scenarios
• Model Sensitivity 1: No Rate Increase + Full Capital
• Model Sensitivity 2: Rate Increase + No Capital Expenditures • Scenario 1: Rate Increase + Reduced Capital
• Scenario 2: Phased Rate Increase + Reduced Capital + Interfund Loan • Scenario 3: Rate Increase + Full Capital
• Scenario 4: Phased Rate Adjustment + Full Capital + Interfund Loan 22 81
Baseline Model Assumptions
23 • Assumes all identified funding requirements including operating, capital, and proposed capital lease and debt payments.
• Key assumptions include:
› Fiscal Year 2023/24 Served as Forecast Baseline as Adjusted for Actual Operating Results and known cost increases / operating expense growth est. at 4.5% per year › Some additional collection routes to maintain regulatory compliance with SB1383 and service demands
› IUF repayments from the City to ER ends in FY23/24
› Resumption of IUF payments in FY24/25 to the City
› $43.7M Reinvestment to MRF including new equipment and roof FY25/26-FY27/28 › Replacement of vehicles at end of life in FY24/25
› Compliance with CARB Zero Emissions Vehicle Requirements › Primarily relies on use of capital leases and debt to fully fund capital expenditures. • Recognizes no rate adjustments to assess the adequacy of existing fees to cover the cost of service
82 Model Sensitivity 1: No Rate Increase +
Full Capital
24 • Assuming no rate adjustments ER cash balances are estimated to fall negative in Fiscal Year 2025
83 Model Sensitivity 2: Rate Adjustments &
No Capital
25 • Assumes all identified funding requirements except excludes capital spending
• Helps identify the necessary rate increases which are driven by the structural deficit among revenues and operating expenses.
Current 2025 2026 2027 2028 2029
Rate Adjustments - All Customers 43.00% 3.50% 3.00% 3.00% 3.00% 96 Gallon Residential $30.78 $44.02 $45.56 $46.93 $48.34 $49.79 Monthly Increase $13.24 $1.54 $1.37 $1.41 $1.45
64 Gallon Residential $24.70 $35.32 $36.56 $37.66 $38.79 $39.95 Monthly Increase $10.62 $1.24 $1.10 $1.13 $1.16
4 Cubic Yard - 1 x week Commercial $230.86 $330.13 $341.68 $351.93 $362.49 $373.36 Monthly Increase $99.27 $11.55 $10.25 $10.56 $10.87
84 Model Sensitivity 2: Rate Adjustments &
No Capital
26 • Assuming no capital with the previously identified rate adjustments the City is expected to meet compliance with reserve targets by FY28/29 85 Scenario 1: Rate Adjustments & Reduced
Capital
27 • Assumes all identified funding requirements except reduces capital expenditures including minimal spending for the MRF rehabilitation and only funding 50% of projected new vehicle fleet requirements.
• Includes an allowance for rebuilding vehicles to extend the service life and minimize capital expenditures.
• Represents a moderate capital spending scenario but doesn’t fully address capital reinvestment needs of the system.
Current 2025 2026 2027 2028 2029
Rate Adjustments - All Customers 46.00% 7.00% 3.50% 3.00% 3.00% 96 Gallon Residential $30.78 $44.94 $48.09 $49.77 $51.26 $52.80 Monthly Increase $14.16 $3.15 $1.68 $1.49 $1.54
64 Gallon Residential $24.70 $36.06 $38.58 $39.93 $41.13 $42.36 Monthly Increase $11.36 $2.52 $1.35 $1.20 $1.23
4 Cubic Yard - 1 x week Commercial $230.86 $337.06 $360.65 $373.27 $384.47 $396.00 Monthly Increase $106.20 $23.59 $12.62 $11.20 $11.53
86 Scenario 1: Rate Adjustments & Reduced
Capital
28 87
Scenario 2: Phased Rate Adjustments and
Reduced Capital Expenditures
29 • Builds off of the Baseline Model but assumes a $5m interfund loan to assist ER in phasing the identified rate increases over three (3) years. • Represents a moderate capital spending scenario with phased increases.
Current 2025 2026 2027 2028 2029
Rate Adjustments - All Customers 24.53% 19.70% 16.46% 3.00% 0.00% 96 Gallon Residential $30.78 $38.33 $45.88 $53.43 $55.03 $55.03 Monthly Increase $7.55 $7.55 $7.55 $1.60 $0.00
64 Gallon Residential $24.70 $30.76 $36.82 $42.88 $44.17 $44.17 Monthly Increase $6.06 $6.06 $6.06 $1.29 $0.00
4 Cubic Yard - 1 x week Commercial $230.86 $287.49 $344.12 $400.75 $412.77 $412.77 Monthly Increase $56.63 $56.63 $56.63 $12.02 $0.00
88 Scenario 2: Phased Rate Adjustments and
Reduced Capital Expenditures
30 89
Scenario 3: Rate Adjustments and Full
Capital Expenditures
31 • Assumes all identified funding requirements as assumed in Baseline Model, including the full capital funding requirements. • Represents necessary rate adjustments to fund a fiscally sustainable operation and maintain regulatory compliance.
Current 2025 2026 2027 2028 2029
Rate Adjustments - All Customers 50.00% 8.00% 5.50% 5.00% 3.00% 96 Gallon Residential $30.78 $46.17 $49.86 $52.60 $55.23 $56.89 Monthly Increase $15.39 $3.69 $2.74 $2.63 $1.66
64 Gallon Residential $24.70 $37.05 $40.01 $42.21 $44.32 $45.65 Monthly Increase $12.35 $2.96 $2.20 $2.11 $1.33
4 Cubic Yard - 1 x week Commercial $230.86 $346.29 $373.99 $394.56 $414.29 $426.72 Monthly Increase $115.43 $27.70 $20.57 $19.73 $12.43
90 Scenario 3: Rate Adjustments and Full
Capital Expenditures
32 91
Scenario 4: Phased Rate Adjustments and
Full Capital Expenditures
33 • Assumes all identified funding requirements as assumed in the Baseline Model including the full capital funding requirements.
› Assumes a $5m interfund loan to assist ER in phasing the identified rate increases over three (3) years. • Represents necessary rate adjustments to fund a fiscally sustainable operation and maintain regulatory compliance.
Current 2025 2026 2027 2028 2029
Rate Adjustments - All Customers 28.27% 22.04% 18.06% 3.00% 0.00% 96 Gallon Residential $30.78 $39.48 $48.18 $56.88 $58.59 $58.59 Monthly Increase $8.70 $8.70 $8.70 $1.71 $0.00
64 Gallon Residential $24.70 $31.68 $38.66 $45.64 $47.01 $47.01 Monthly Increase $6.98 $6.98 $6.98 $1.37 $0.00
4 Cubic Yard - 1 x week Commercial $230.86 $296.11 $361.36 $426.61 $439.41 $439.41 Monthly Increase $65.25 $65.25 $65.25 $12.80 $0.00
92 Scenario 4: Phased Rate Adjustments and
Full Capital Expenditures
34 93
Scenario Summary and Comparison
• Scenario 1 and 3 demonstrate the
sensitivity among a partial and fully
funded capital needs
› FY24/25 Bill Impacts Est. to
Range from $14-$15 a month
• Scenarios 2 and 4 present a phase
in approach of Scenarios 1 and 3
respectively
› FY24/25 – FY26/27 increases
range from $7.55 / month to $8.70
/ month
35 94
Scenario Summary and Comparison
36 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29
Model Sensitivity 1: No Rate Increase +
Full Capital 0.0% 0.0% 0.0% 0.0% 0.0%
Model Sensitivity 2: Rate Increase + No
Capital Expenditures 43.0% 3.5% 3.0% 3.0% 3.0%
Scenario 1: Rate Increase + Reduced
Capital 46.0% 7.0% 3.5% 3.0% 3.0%
Scenario 2: Phased Rate Increase +
Reduced Capital + Interfund Loan 24.5% 19.7% 16.5% 3.0% 0.0% Scenario 3: Rate Increase + Full Capital 50.0% 8.0% 5.5% 5.0% 3.0% Scenario 4:
Phased Rate Increase +
Full Capital + Interfund Loan 28.3% 22.0% 18.1% 3.0% 0.0% 95 37
Thank you!
96 38
End of
Presentation
97