HF&H Consultants
590 Ygnacio Valley Rd. Suite 105
Walnut Creek, CA 94596
Phone: (925) 977-6950
Web: hfh-consultants.com
October 20, 2025
Melissa Tigbao, PE
Public Works Director
City of Pacifica
170 Santa Maria Avenue
Pacifica, CA 94044
Sent via email: [email protected]
Subject: Review of Recology of the Coast’s 2026 Rate Application Dear Melissa Tigbao, PE,
It is our pleasure to present to the City of Pacifica (City) the results of the scheduled costbased rate adjustment (CBRA) resulting in new solid waste collection rates to be effective January 1, 2026. This report documents HF&H Consultants, LLC’s (HF&H) review of Recology of the Coast’s (Recology) Rate Year 17 (RY17) contractor’s compensation application (Application) requesting a 4.53% increase to customer rates. Our findings and recommendations are organized into the four sections:
I. Summary and Recommendations
II. Background
III. HF&H Analysis
IV. Rate Adjustment Factor
It should be noted that this report is based solely on our review of Recology’s Application prepared in accordance with the methodology prescribed in the Franchise Agreement Between City of Pacifica and Recology of the Coast for Recyclable Materials, Organic Materials, and Solid Waste Collection Services, including all subsequent amendments (Agreement), which commenced on February 9, 2010.
I. Summary and Recommendations
Based on our review of the Application performed in accordance with procedures in Section
11.03.A.2 and Attachment K of the Agreement, HF&H determined that a total increase of
2.94% to Recology’s total compensation is necessary to compensate Recology for its allowable expenses. Since the recommended rate increase is less than the 9.00% cap on annual rate adjustments, there will be no roll-over to future rate years. Attachment A to this report summarizes the recommended 2026 rates, which reflect a 2.94% increase to the 2025 rates and will become effective January 1, 2026. We believe this 2.94% increase is reasonable based on:
Our independent analysis conducted in accordance with the procedures in the Agreement
ATTACHMENT 1
Melissa Tigbao, PE
October 20, 2025
Projected costs for 2026, which are based on the change in various Bay Area consumer price indices. that have been applied to Recology’s allowable costs in accordance with the Agreement.
This increase, which is 1.59% lower than the requested 4.53% increase, is based on several adjustments to Recology’s rate calculation as described in Section III. HF&H Analysis and reflected in Table 3. The adjustments were discussed with Recology’s management to promote transparency and comprehension. The major components of the 2.94% recommended rate increase are as follows:
1.68% increase due to increases in labor & labor-related costs (the most significant increases were in salary and wages and workers compensation) 1.09% decrease due to lower fuel costs (decrease in actual cost) 2.38% decrease due to fuel reconciliation (one time reconciliation of overpayment of fuel for prior years due to actual costs being lower than Recology was compensated for)
1.25% increase due to higher lease costs (new purchases shown on the lease schedule not included in prior CBRA)
2.88% increase due to higher other costs (a correction of actual cost) 0.41% decrease due to gross receipt surplus (higher projected revenue) Table 1 summarizes the impact of each component that affects the recommended rate adjustment factor.
Melissa Tigbao, PE
October 20, 2025
Table 1: Rate Adjustment Factor Components
Note: Numbers may not sum exactly due to rounding
% Change
Cost of Operations:
Labor & Labor Related Costs 1.68%
Vehicle-Related Costs 0.84%
Fuel Costs -1.09%
Fuel Cost Reconciliation (FY23 & FY24) -2.38%
Organics Processing -0.14%
Lease Costs 1.25%
Other Costs 2.88%
Total Cost of Operations 3.05%
Profit 0.34%
Pass-Through Costs:
Recyclable Materials Processing -0.08%
Solid Waste Disposal -0.16%
C&D Processing - Ox Mtn -0.04%
C&D Processing - Blue Line 0.09%
Total Pass-Through Costs -0.19%
City Fees 0.15%
Total Recology Compensation 3.35%
Project Revenue Surplus -0.41%
Rate Adjustment Factor 2.94%
Melissa Tigbao, PE
October 20, 2025
II. Background
The City and Recology entered into an eight-year agreement for recyclable materials, organic materials, and solid waste collection services effective February 9, 2010. In 2016, the City and Recology agreed to an extension of the existing agreement through December 31, 2022.
In consideration of the five-year extension, Recology agreed to change the frequency of recycling service for single family customers from bi-weekly to weekly commencing January 2017 at no additional cost to the City or the ratepayers. In 2022, the City and Recology agreed to an additional extension for ten more years, moving the termination date to December 31, 2032, with the potential for an additional five-year extension, contingent upon mutual written agreement by December 31, 2031.
In accordance with Section 11.02 of the Agreement, Recology’s compensation was set for 2023 based on the maximum allowable rates agreed to by the City and Recology. In accordance with Section 11.02.D of the Agreement, subsequent rate adjustments shall be adjusted annually commencing January 1, 2024, and continuing through the remaining term of the Agreement, including any extension periods. The Agreement requires the adjustment to be determined using one of two methodologies: (1) an index-based adjustment; or (2) a CBRA. Each adjustment methodology is briefly described below.
Index-based methodology adjustments are intended to adjust the revenue requirement by increasing or decreasing specific line-item costs by related indices to adjust Recology’s compensation to be more reflective of the actual changes in costs to provide services, without completing a full review or audit of Recology financials on an annual basis.
The CBRA methodology involves a review of Recology’s actual cost of operations and operational statistics (e.g., staffing levels, routes, route hours, customers and their service levels) to determine the actual allowable total annual cost of operations for the most-recently completed rate year to forecast Recology’s allowable costs. The intent of performing a CBRA is to examine the actual costs to serve the City’s ratepayers, instead of relying on Recology’s original proposed costs, and take into consideration the cost impacts related to changes in inflation, deflation, number of customers, and the service levels of each customer.
RY17 was determined using the CBRA methodology. Table 2 summarizes the rate-setting methodology prescribed through the duration of the Agreement.
Table 2: Rate-Setting Methodology Schedule
Rate Year
Commencement
Date
Adjustment
Methodology Submittal Date
15 January 1, 2024 Index-Based September 1, 2023
16 January 1, 2025 Index-Based September 1, 2024
17 January 1, 2026 Cost-Based June 1, 2025
18 January 1, 2027 Index-Based September 1, 2026
19 January 1, 2028 Index-Based September 1, 2027
20 January 1, 2029 Cost-Based June 1, 2028
21 January 1, 2030 Index-Based September 1, 2029
22 January 1, 2031 Index-Based September 1, 2030
23 January 1, 2032 Cost-Based June 1, 2031
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October 20, 2025
III.HF&H Analysis
Recology’s compensation calculations for RY17 were submitted on June 17, 2025. Recology calculated an RY17 compensation requirement of $12,803,651 and total RY17 revenue at current rates to be $12,249,330. To address the projected $554,321 gross receipt shortfall, Recology requested a 4.53% increase to current rates. HF&H’s review of and adjustments to Recology’s Application determined a 2.94% increase to current rates was necessary to compensate Recology for its allowable expenses. HF&H reviewed these changes with Recology’s management and the City.
Table 3 summarizes HF&H’s proposed adjustments to Recology’s projected RY17 gross receipts and compensation. Following Table 3 is a detailed description of our review of each expense line item and the basis for each adjustment.
Table 3: HF&H Adjusted RY17 Rate Application Summary
Cost of Operations:
1 CBA Labor Costs $4,185,458 ($115,985) $4,069,473
2 Non-CBA Labor Costs 672,554 0 672,554
3 Worker's Compensation 312,807 0 312,807
4 Payroll Taxes 267,635 (6,650) 260,984
5 Vehicle-Related Costs 545,902 0 545,902
6 Fuel Costs 524,600 (33,634) 490,966
7 Fuel Cost Reconciliation (FY23 & FY24) (292,073) 0 (292,073) 8 Organics Processing 618,322 0 618,322
9 Lease Costs 904,940 0 904,940
10 Other Costs 1,826,995 (2,730) 1,824,264
11 Total Cost of Operations $9,567,139 ($159,000) $9,408,139 12 Profit $1,063,015 ($17,667) $1,045,349
Pass-Through Costs:
13 Recyclable Materials Processing $145,524 ($8,148) $137,377 14 Solid Waste Disposal 972,087 (6,647) 965,440
15 C&D Processing - Ox Mtn 54,430 (2,387) 52,042
16 C&D Processing - Blue Line 11,564 0 11,564
17 Total Pass-Through Costs $1,183,605 ($17,181) $1,166,423 18 City Fees $989,892 $0 $989,892
19 Total Calculated Costs $12,803,651 ($193,848) $12,609,802 20 Projected Revenue at Current Rates $12,249,330 $0 $12,249,330 21 Surplus/(Shortfall) ($554,321) $193,848 ($360,473)
22 Rate Adjustment Factor 4.53% -1.59% 2.94%
Recology's
Requested
RY17
HF&H
Adjustments
HF&H
Adjusted RY17
HF&H Consultants
590 Ygnacio Valley Rd. Suite 105
Walnut Creek, CA 94596
Phone: (925) 977-6950
Web: hfh-consultants.com
RECOLOGY’S COMPENSATION FOR RATE YEAR SEVENTEEN
HF&H Scope of Work
The City engaged HF&H to perform a review of the Application in accordance with Section
11.03(B) of the Agreement. HF&H staff performed this review based upon procedures agreed upon by the City and HF&H, as documented in our proposal dated August 14, 2025, and upon the Agreement between the City and Recology. These procedures included the following tasks. Any adjustments to Recology’s Application based on conducting the following tasks are explained in detail in the “Findings” section.
Task 1: Preliminary Application Review
As part of Task 1, Preliminary Application Review, HF&H completed the following tasks:
1a. Reviewed Recology’s Application for completeness and compliance with the procedures contained in Article 11 and Attachment K of the Agreement. 1b. Reviewed Recology’s Application for mathematical accuracy and logical consistency to determine that the Application was mathematically correct, that the rows and columns of numbers add down and across as intended, and that the stated assumptions were in fact used in the RY17 compensation calculation. Determined that the Application was internally consistent and that any summary schedules agreed to the supporting schedules and worksheets.
1c. Determined what information still needed to be acquired and sent a request for additional information to Recology.
Task 2: Expense Review
As part of Task 2, Expense Review, HF&H completed the following tasks:
2a. Verified that Total Cost of Operations agreed to Recology’s audited financial statements and investigated any significant differences. We reviewed Recology’s audited financial statements, including the notes and supplemental information for background information.
2b. Recalculated the allocation factors (routes, single family customers, tonnage, and drop box hauls) based on data received from Recology and compared them to those used by Recology in the Application.
2c. Reviewed Recology’s general ledger for non-allowable costs including verifying the nonallowable costs had been properly excluded in the Application. We reviewed the general ledger for specific accounts such as legal fees.
2d. Verified the allocation of costs in the Application was in accordance with the methodology in the Agreement.
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October 20, 2025
2e. Reviewed projected organic material processing costs including tonnage assumptions and rate per the Agreement. We verified the Application properly used the actual tons processed for the 12 months ending April 30, 2025 to project processing costs for the forthcoming rate year (in accordance with Attachment K of the Agreement). We compared the actual tons processed to supporting documentation provided by Recology. 2f. Verified the profit calculation is in accordance with Section 4.4 of Attachment K. 2g. Reviewed projected recyclable material processing costs including tonnage assumptions and rate per the Agreement. We verified the Application properly used the actual tons processed for the 12-months ending April 30, 2025 to project processing costs for the forthcoming rate year (in accordance with the Agreement). We compared the actual tons processed to supporting documentation provided by Recology. 2h. Reviewed projected disposal costs including tonnage assumptions and rate per the Agreement. We verified the Application properly used the actual tons processed for the 12-months ending April 30, 2025 to project disposal costs for the forthcoming rate year (in accordance with the Agreement). We compared the actual tons processed to supporting documentation provided by Recology.
2i. Verified the proper calculation of City fees payable by Recology has been included in the Application.
Task 3: Total Projected Revenue and Rate Adjustment Factor Calculation As part of Task 3, Total Projected Revenue and Rate Adjustment Factor Calculation, HF&H completed the following tasks:
3a. Verified Recology’s projected revenue at current rates by calculating projected revenue through multiplying current rates with current subscription and reviewed supporting documentation for mathematical accuracy in accordance with Section 4 of Attachment K. The projected revenue at current rates is then used to determine the necessary rate adjustment factor to cover the difference between total calculated costs and projected revenue.
3b. Recalculated the rate adjustment factor in accordance with Section 4.6 of Attachment K to the Agreement.
Findings
Recology’s calculated contractor’s compensation for RY17 was $12,803,651. In accordance with the City’s request, HF&H reviewed Recology’s calculations. We revised the compensation calculations to conform to procedures specified by the Agreement as described below. The final recommended RY17 contractor’s compensation is $12,609,802, a $193,848 decrease.
The following describes HF&H’s analysis and recommendations of the cost components of Recology’s Application:
Melissa Tigbao, PE
October 20, 2025
1. Total Cost of Operations: HF&H recommends a net decrease of $159,000 (Table 3, Row 11) to Total Annual Cost of Operations due to the following:
a. Collective Bargaining Agreement Labor Costs: In accordance with Attachment K, Section 4.3.1 of the Agreement, Collective Bargaining Agreement (CBA) labor costs (i.e., wages, health and welfare, and pension costs) for RY17 shall be determined by adjusting allowable CBA labor costs from the most-recently completed fiscal year, determined in accordance with Section 4.2 by the procedures described in the then-current CBA, for the two year period from the most-recently completed fiscal year to the coming Rate Year (RY17). In addition, Attachment K, Section 4.3.1 states that RY17 wages and pension costs shall be capped at a 6.0% increase. Health and welfare costs are not capped.
In the Application, Recology adjusted the allowable CBA labor costs by applying the most recent weighted average increase in wages, health and welfare, and pension twice. This methodology does not align with the CBA increase methodology which is different each year nor does it align with the agreed-upon methodology during the last the CBRA methodology in 2022. In addition, Recology’s application did not cap the increase in wages and pension costs at
6.0%.
HF&H reprojected the RY17 CBA labor costs using the actual historical CBA increases and the projected CBA increases beginning November 2025 to increase the allowable CBA labor costs in accordance with the CBA’s methodology. This process included weighting the CBA increases based on timing of the annual increases (The CBA timeline is from November to October while the Rate Year is January to December).
The reprojected wages and pension costs exceeded the 6% cap by $106,710. The reprojected health and welfare costs were $9,275 lower than Recology’s projections. As such, we recommend decreasing CBA labor costs by $115,985 (Table 3, Row 1)
b. Non-CBA Labor Costs: Per Attachment K, Section 4.3.2, labor costs for personnel who are not governed by a CBA shall be projected based on the allowable non-CBA labor costs from the previous fiscal year multiplied by one plus the annual percentage change in the CPI-W (Urban Wage Earners CPI published by the Bureau of Labor Statistics) and multiplying the result by the change in the CPI-W again. In the Application, Recology projected non-CBA labor costs using the correct methodology. Therefore, no adjustment is recommended (Table 3, Row 2).
c. Workers Compensation: Per Attachment K, Section 4.3.3, workers compensation costs shall be projected based on the allowable workers compensation costs from the previous fiscal year multiplied by one plus the annual percentage change in the CPI-U (All Urban Consumers CPI published by the Bureau of Labor Statistics) and multiplying the result by the change in the CPI-U again. In the Application, Recology projected workers compensation costs using Melissa Tigbao, PE
October 20, 2025
the correct methodology. Therefore, no adjustment is recommended (Table 3, Row 3).
d. Payroll Taxes: Recology’s Application properly calculated the payroll expenses related to the CBA and Non-CBA labor costs included in their Application; however, based on the recommended reduction in allowable RY17 CBA labor costs described in 1.a above, the payroll taxes included in the Application are overstated.
Therefore, we recommend reducing payroll taxes by $6,650 (Table 3, Row 4) to account for the lower reprojection of allowable labor costs. e. Vehicle-Related Costs: Per Attachment K, Section 4.3.5 of the Agreement states that projected vehicle-related costs for the coming rate year shall equal the allowable vehicle-related cost from the previous fiscal multiplied by one plus the annual percentage change in the MVI (Motor Vehicle Maintenance and Repair Index published by the Bureau of Labor Statistics) and multiplying the result by the change in the MVI again. In the Application, Recology projected vehicle-related costs using the correct methodology. Therefore, no adjustment is recommended (Table 3, Row 5).
f. Fuel Costs & Reconciliation: Per Attachment K, Section 3.3.7 of the Agreement states that projected fuel costs for the coming rate year shall equal the allowable fuel costs from the most-recently completed fiscal year multiplied by one plus the annual percentage change in the Producer Price Index – Fuel Pricing Index, published by the Bureau of Labor Statistics (PPI) and multiplying the result by the change in the PPI again, to project the costs for RY17. In addition, due to the volatility of fuel prices, Section 3.3.8 of Attachment K provides for a reconciliation of actual fuel costs to the projected fuel costs (which is the basis for Recology’s compensation) once actual fuel costs are known. Due to the volatility of fuel prices, this reconciliation assures Recology is neither over nor undercompensated for actual fuel prices during the term of the Agreement, and in turn assures ratepayers are not over or under charged.
Upon review, we found Recology’s Application correctly used the allowable fuel costs from the most-recently completed fiscal year (October 2023 through September 2024); however, they did not apply the annual change in the PPI in accordance with the Agreement. When discussed, Recology stated their rationale for the change was due to the 18% reduction in the PPI (which is applied twice, thus reducing fuel costs by more than 36%) is not reflective of current fuel prices and would result in undercompensating Recology in RY17. This would benefit ratepayers in the short term; however, once RY17 is completed and fuel costs are reconciled based on actuals, this would result in a significant impact to rates in future years to make Recology whole when the reconciliation is done.
To reduce ratepayer impact we recommend using the most recent 12 months of actual fuel costs adjusted by the change in CPI (Table 3, Row 7). Recology agreed with this approach of reprojecting RY17 fuel costs.
Melissa Tigbao, PE
October 20, 2025
Based on the revised fuel projection methodology, we recommend reducing Recology’s RY17 fuel costs by $33,634 (Table 3, Row 6).
Note: To assist with the City and Recology’s goal to mitigate the variability of fuel prices, HF&H also recommends conducting fuel reconciliations annually, instead of only during CBRA years.
g. Organics Processing (includes Transfer/Transport Costs): Per Attachment K, Section 4.3 of the Agreement states that organics processing costs shall equal (i) the base component of the organics transfer, transport, and processing fee for the current Rate Year, which totals to $96.87 for 2025, multiplied by one plus the annual percentage change in the CPI-U plus the sum of the then-current (or known future) regulatory fees, multiplied by (ii) the total tons of organic materials collected for the most-recently completed 12-month period ending April 30.
Recology currently takes residential organic material and commercial organic material to different facilities; the Application separated out the organic tonnage by customer class and applied the applicable per ton rate to each; therefore, no adjustments are recommended to organics processing costs (Table 3, Row 8). h. Lease Costs: Per Attachment K, Section 4.3.12 of the Agreement states that lease costs shall be fixed for all years during the Agreement, unless adjusted by deleting from the schedule vehicles and equipment no longer in use and adding to the schedule new and replacement vehicles and equipment approved by City in connection with City’s consideration of Recology’s Application during CBRA.
HF&H reviewed Recology’s lease schedule for January 1, 2026, and noted an increase in lease cost associated with additional vehicles, vehicles parts, building repairs, carts, bins, and boxes. HF&H reviewed the data and noted Recology properly deleted old vehicles and equipment no longer in use and added new vehicles and equipment necessary to provide services as directed in the Agreement. The additional costs are reasonable; therefore, no adjustment is recommended (Table 3, Row 9).
i. Other Costs: Per the Agreement, other costs (e.g., insurance, utilities, billing, safety meetings, corporate overhead) for the coming rate year shall equal allowable other costs from the most-recently completed fiscal year, determined in accordance with Section 4.2 of Attachment K multiplied by the annual percentage change in CPI-U and multiplied by the annual percentage change in CPI-U again.
Per Attachment K, Section 4.2.2 in the Agreement, the following items are disallowed other costs for the most-recently completed fiscal year, including, but are not limited to: other costs associated with providing service to non-City customers; charitable or political donations in any amount; travel and entertainment expense in excess of $5,000 annually; citations and penalties; corporate overhead in excess of 5.7% the annual cost of operations; and bad debt expenses in excess of 3% of gross receipts. Upon review, we found Recology properly removed all non-allowable costs, with the exception of:
Melissa Tigbao, PE
October 20, 2025
i. “Other Costs” for Providing Service to Non-City Customers. Upon review we found Recology under allocated other costs to non-City customers, which resulted in an over allocation to the City. Recology provides service to City and non-City customers. Other costs are apportioned to the City based on their proportional share of households served.
Recology’s Application allocated 74.3% of other costs to the City. Based on our review, we found only 74.2% of households served by Recology are in the City.
ii. Excess Travel and Entertainment. Upon auditing invoices for costs included in the Application, we found that Recology mistakenly included $5,745 in travel and entertainment expenses, exceeding the $5,000 cap. iii. Citations and Penalties. Upon an audit of invoices for costs included in the Application, we found Recology mistakenly included $45 citation.
Based on the adjustments recommended above, HF&H recommends a net decrease of $2,730 to Other Costs (Table 3, Row 10).
2. Profit: We found that Recology calculated profit in accordance with procedures described in the Agreement. However, due to the proposed adjustments described herein, HF&H recommends a net increase of $17,667 (Table 3, Row 12) to Recology’s calculated profit.
3. Pass-Through Costs: HF&H recommends a net decrease of $17,181 (Table 3, Row 17) to Recology’s allowable Pass-through Costs, due to the following:
a. Recyclable Materials Processing Costs (includes Transfer/Transport): For RY17, the cost to process recyclable materials is calculated based on total tons of recyclable materials collected for the most recently completed 12-month period ending April 30. Per the Agreement, the calculated tonnage is multiplied by two fees as applicable: 1) the recyclable transfer cost per ton to cover costs related to receipt of materials in collection vehicles and loading such materials into long-haul transfer vehicles, (per Attachment K Section 4.6.2); and, 2) the recyclable transport fee per ton, for transportation of recyclable materials from the designated transfer facility to the designated processing facility (per Attachment K Section 4.6.3).
HF&H reviewed recycling tonnage for the 12-month period by requesting detailed supporting documentation (monthly reports, monthly weight tags, etc.) for four months to validate the recycling material collected was from the City and was accurately included in the Application. For two months, HF&H found a slight variance in the reported volume of recycling tonnage transferred when compared to the supporting documentation, which resulted in overstating of recycling tons in the Application. HF&H adjusted the total recyclable tons in the Application from 4,642.58 to 4,513.17 to agree to supporting documentation.
HF&H recalculated the recycling transfer, transport and processing fee and recommends a decrease of $8,148 (Table 3, Row 13) to the RY17 Recology costs to reflect this adjustment.
Melissa Tigbao, PE
October 20, 2025
b. Solid Waste Disposal: In accordance with Attachment K, disposal costs for RY17 should equal the agreed-upon per-ton disposal fee at the designated disposal facility (currently Ox Mountain Landfill) multiplied by the total tons of solid waste collected for the most recently completed 12-month period ending April 30. The total per-ton tipping fee to dispose of solid waste at Ox Mountain Landfill is currently $71.07. The disposal fee is made up of four components: 1) the base fee; 2) HHW/LEA fee; 3) a solid waste management and diversion fee; and 4) an AB 1220 fee. The base fee is adjusted by the change in the CPI-U.
HF&H reviewed solid waste tonnage for the 12-month period by requesting detailed supporting documentation (monthly reports, monthly weight tags, etc.) for four months to validate the solid waste tonnage disposed of was from the City and was accurately included in the Application. All four months’ supporting documentation agreed to the tonnage included in the Application. However, Recology did not use the current base tipping fee in the Application to project the RY17 base fee but instead used an estimated number that was higher than the actual base fee.
HF&H corrected the calculation of the RY17 solid waste per ton fee by using the current base fee to project the RY17 base fee and recommends a decrease of $6,647 (Table 3, Row 14) to reflect the revised disposal costs calculation. c. Construction & Demolition Processing (includes Transfer/Transport):
Based on Attachment K, C&D processing costs for RY17 should equal the agreedupon per-cubic yard and per-ton processing fees at the designated processing facilities, Ox Mountain Landfill and Blue Line Transfer Station, respectively, multiplied by the total volume (tons or cubic yards) of C&D material collected and transported to the respective facility, for the most recently completed 12-month period ending April 30.
HF&H reviewed the invoices from the Ox Mountain Landfill and noted the volume of material brought to the Ox Mountain Landfill was overstated in the Application.
In addition, the per-cubic yard tip fee was understated. The net impact of correcting Recology’s calculation results in a net decrease to the Ox Mountain C&D processing costs of $2,387 (Table 3, Row 15).
HF&H reviewed the invoices from the Blue Line Transfer Station and noted the volume of material and the respective per-ton tip fee were properly used in the Application; therefore, no adjustment is necessary (Table 3, Row 16).
4. City Fees: In accordance with Sections 10.02 and 10.03 and Attachment M of the Agreement, City fees (franchise fees, franchise administrative services fees, Frontierland Park remediation fee, AB 939 Fees, and vehicle impact fee) are adjusted annually by the percentage change in the CPI-U, with the exception that franchise fees are held constant at $200,000. Recology properly calculated the RY17 City fees; therefore, no adjustment is necessary (Table 3, Row 18).
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October 20, 2025
5. Total Calculated Costs: Total calculated costs shall be the sum of total annual cost of operations, profit, pass-through costs, and City fees, as calculated above (Table 3, Row 19).
Projected Revenue at Current Rates
Recology’s Application projected revenue at current rates to be $12,249,330 by using the actual revenue for the 12 months ending April 30, 2025 ($11,853,975), adjusted to reflect the most recent rate adjustment effective January 2025 (a 5.09% increase). Our review of the reasonableness of Recology’s projected revenues involved: 1) requesting the most recent subscription and billing data; 2) building up annual revenue by multiplying current rates by subscription; and 3) testing billing of specific customer accounts. Based on the procedures performed, we propose no change to Recology’s projected revenue at current rates used to calculate the RY17 rate adjustment factor (Table 3, Row 20).
IV. Rate Adjustment Factor
Attachment K, Section 4.8 of the Agreement states that the rate adjustment factor shall equal the total calculated costs for the coming rate year (RY17) divided by projected revenue at current rates.
After the application of the adjustments described in this report, HF&H calculated a rate adjustment factor of 2.94%.
* * * * *
We would like to express our appreciation to Recology’s management and staff for their assistance. In addition, we express our appreciation to you for your assistance and guidance during the course of the review. Should you have any questions, please contact me directly at (925) 977-6957 or [email protected].
Very truly yours,
HF&H CONSULTANTS, LLC
Rick Simonson
Senior Vice President
cc: Roland Yip, City of Pacifica
Louis Sun, City of Pacifica
Carl Mennie, Recology
Rich Lanser, Recology
Aparna Dhatrak, Recology
HF&H Client Files
2026
2025 Adjustment 2026
Rates Factor Rates
Single-Family Residential Service
One time additional 32 gallon bag $11.32 2.94% $11.65
Each additional gallon over 32 per pick up $1.98 2.94% $2.04 Mini can 20 gallons or less (20 gallon can) $32.46 2.94% $33.41 32 gallon Cart $50.11 2.94% $51.58
48 gallon Cart $74.50 2.94% $76.69
64 gallon Cart $98.95 2.94% $101.86
96 gallon Cart (acknowledged by City) $147.78 2.94% $152.12 Extra Recycling Cart $4.61 2.94% $4.75
Extra Organic Materials Cart $4.61 2.94% $4.75
Residential service rates are for solid waste container sizes and include costs for recyclables and organics materials collection service.
Commmercial Solid Waste Bin Collection Service
Commercial container rentals
1 cubic yard $84.91 2.94% $87.41
2 cubic yards $99.03 2.94% $101.94
Commercial container pick up for Solid Waste
1 cubic yard $77.85 2.94% $80.14
2 cubic yards $113.22 2.94% $116.55
Compacted commercial container pick up for Solid Waste
1 cubic yard $114.60 2.94% $117.97
2 cubic yards $197.03 2.94% $202.82
Commercial container pick up for Organics
1 cubic yard $127.35 2.94% $131.09
2 cubic yards $218.89 2.94% $225.33
Commmercial Can/Cart Solid Waste Pick Up
Each additional gallon over 32 $2.88 2.94% $2.96
32 gallon Cart $56.59 2.94% $58.25
48 gallon Cart $84.85 2.94% $87.34
64 gallon Cart $107.15 2.94% $110.30
96 gallon Cart $169.72 2.94% $174.71
Commmercial Can/Cart Organics Pick Up
32 gallon Cart $50.93 2.94% $52.43
48 gallon Cart $76.38 2.94% $78.63
64 gallon Cart $101.84 2.94% $104.83
96 gallon Cart $152.77 2.94% $157.26
ATTACHMENT A - 2026 RATES
2026
2025 Adjustment 2026
Rates Factor Rates
Debris Box Solid Waste Debris Collection
14 yard container (7 days) $718.75 2.94% $739.88
Each additional day $59.03 2.94% $60.77
20 yard container (7 days) $926.00 2.94% $953.22
Each additional day $82.88 2.94% $85.32
Debris Box Construction and Demolition Debris Collection 9 yard container (7 days) - clean fill only $848.19
Each additional day $70.21
15 yard container (7 days) - Max. Weight 2 tons $783.00 Each additional day $70.21
Excess weight charge (per ton) $200.21
20 yard container (7 days) - Max. Weight 3 tons $983.21 Each additional day $70.21
Excess weight charge (per ton) $200.21
30 yard container (7 days) - Max. Weight 5 tons $1,383.63 Each additional day $70.21
Excess weight charge (per ton) $200.21
40 yard container (7 days) - Max. Weight 7 tons $1,784.05 Each additional day $70.21
Excess weight charge (per ton) $200.21
Miscellaneous Single-Family Services
Service from side or rear of house $8.25 2.94% $8.49
Return pick up charge $14.27 2.94% $14.69
Special call for large items
charge by
volume
charge by
volume
Extra charge for collection private driveways:
1 to 30 feet no charge no charge
Over 30 feet (for every 10 feet or part thereof) $8.25 2.94% $8.49 Life line rates (available only for 20 gallon Cart Customers) $30.48 2.94% $31.38 Single Family return trip charge (i.e. provision $23.10 2.94% $23.78 of collection service after the regularly
scheduled collection day) per event
Miscellaneous Commercial and Multi-Family Services
Recycling services provided to commercial and no charge no charge multi-family customers
Distance charge for MFD and commercial
accounts for container size of 3 cubic yards or less:
Within fifty (50) feet of access by Contractor's collection no charge no charge vehicle
51 feet or more from access by Contractor's no charge no charge collection vehicle
2026
2025 Adjustment 2026
Rates Factor Rates
Distance charge for MFD and commercial
accounts for container size larger than 3 cubic yards
or less:
0 to fifty (50) feet of access by Contractor's collection no charge no charge vehicle
51 feet or more from access by Contractor's no charge no charge collection vehicle
Extra pick up charge for MFD and commercial
charge by
volume
charge by
volume
customers (charge per collection event)
Lock purchase fee (one time charge; replacement at $26.19 2.94% $26.96 no additional charge)
Key service (unlock and relock bin). Monthly charge $14.63 2.94% $15.06 based on once per week service
Container steam cleaning (or clean container exchange) $130.92 2.94% $134.77 Bin or debris box
Fee to collect contaminated Targeted Recyclable $32.91 2.94% $33.88 Materials or Organic Materials (per container)