City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Fernando Ulloa, Interim City Manager
BY: Mike Willett, Public Works Director
MEETING DATE: September 3, 2024
ITEM NO: 9.1
SUBJECT: Adopt Resolution No. 2024-54 Setting a Public Hearing for Proposed Rate Increase Associated with Solid Waste Collection Services and State of California Recycling Mandates & Authorize the Prop 218 Notice Proceedings.
RECOMMENDATION
Motion to Adopt Resolution No. 2024-54 Setting a Public Hearing for proposed rate increase associated with Solid Waste Collection Services and State of California Recycling Mandates and Authorize the Prop 218 Notice Proceedings.
BACKGROUND
Solid Waste Collection Services
The City of Patterson (“City”) currently provides solid waste collection and disposal services for its approximately 405 commercial accounts and approximately 6,695 residential accounts through Bertolotti Disposal, Inc. a California corporation (“Bertolotti”). These services include commercial bin collection, curbside collection of recyclables and yard waste/organics and bulky items collection. Bertolotti has been providing solid waste services to residents and businesses in the City for nearly 20 years. Every five years the City completes a fund analysis/financial plan and rate study for its Enterprise Funds to ensure that the funds are financially self-sufficient for operating, capital and debt requirements. Taking part in the review and potential rate increases is an analysis of Bertolotti’s contract, the ability to negotiate CPI increases, and the impact to services and the solid waste recycling program due to ongoing, unfunded State mandates, such as SB 1383.
Proposition 218 Compliance
In order to increase rates for solid waste services, the City will comply with Article XIIID, section 6 of the California Constitution (“Section 6”), enacted by Proposition 218 in 1996.
Among other things, Proposition 218 requires that fees for solid waste services do not exceed the proportional cost of service attributable to the property charged. Proposition 218 also requires that revenues acquired from solid waste services do not exceed the amount needed to provide the service. Further, revenues shall not be used for any other purpose other than for providing the service.
ANALYSIS
An analysis of the proposed solid waste rates finds that the increase can be attributed to at least two factors. The first is compliance with California’s evolving State mandates and the second is inflationary pressures. The State of California’s stringent recycling requirements and zero emissions goals have increased operational costs, while inflation has further driven up expenses related to labor, equipment, materials, and disposal costs. To ensure that our City continues to meet its obligation with regulatory compliance and provide reliable and effective waste services, a rate increase would be required. The following section of this report provides a summary of the unfunded State mandates and descriptions of the significant portions of the regulations contributing to the proposed increase on residents and businesses.
State of California Unfunded Mandates
California Senate Bill 1383 (SB 1383), adopted in 2016, is an unfunded State mandate and comprehensive law aimed at reducing short-lived climate pollutants, particularly methane, by targeting organic waste disposal. The bill set a statewide goal to reduce organic waste disposal by 50% by 2020 and by 75% by 2025, compared to 2014 levels. Additionally, SB 1383 mandates that by 2025, at least 20% of edible food currently disposed of must be recovered for human consumption, and that by 2027, 1,864 tons of compost be purchased and disposed by the City of Patterson.
Impact of State Mandates on the Hauler
In order to achieve compliance with SB 1383 mandates, waste material collected for the City requires increased processing by Bertolotti to capture and divert from the landfill the highest amount of organic and recyclable materials from both residential and commercial waste streams.
Hand sorting through commercial recycling bins and residential recycling totes is required to control contamination and is labor intensive and requires additional staff for Bertolotti.
Additionally, many of the commodities such as cardboard, plastics and metals were once a revenue source for the hauler. Now the disposal of these commodities is a cost for the hauler due to market demand, infrastructure limitations and the rejection of such materials by China in 2018. In order to maintain compliance with unfunded State mandates, the City received a request from Bertolotti to increase the existing rates in order to cover the cost of providing solid waste services over the next five years.
Impact of State Mandates on the City
Under SB 1383, the City is responsible for conducting outreach and education to residents and businesses about the requirements, monitoring compliance, and enforcing the regulations through fines and penalties starting January 1, 2024. Additionally, the City must submit annual reports to the California Department of Resources Recycling and Recovery (CalRecycle) detailing compliance efforts and progress toward meeting the statewide organic waste reduction goals.
The phased implementation of SB 1383 underscores its significance in California's broader strategy to combat climate change by significantly reducing methane emissions from landfills.
Organic waste primarily includes landscape and green waste, food scraps, non-hazardous wood waste, and food soiled paper products.
The City is responsible for program oversight and management tasks required by State law. The labor and materials required to implement and manage unfunded State-mandated SB 1383 program is substantial. The tasks include the following:
1. Compost Procurement: SB 1383 required cities and counties to buy products made from recovered organic waste and meet annual procurement targets starting January 1, 2022. Each jurisdiction’s procurement target is calculated by multiplying its population, as reported by the California Department of Finance, by the per capita procurement target (0.08 tons of organic waste per California resident per year). The City is required to procure a quantity of recovered organic waste products that meet or exceed the following percentage of its recovered organic waste product procurement target per year: January 1, 2023, meet or exceed 30 percent. January 1, 2024, meet or exceed 65 percent. January 1, 2025, meet or exceed 100 percent of its recovered organic waste product procurement target in the amount of 1,864 tons.
2. Route Reviews, Waste Audits and Contamination Minimalization: A Solid Waste Division staff member conducts inspections/route reviews within the City on a quarterly basis (depending on Staff availability and extenuating circumstances) for a one-week period based on existing residential and commercial account lists. During these route reviews, Staff goes out to the neighborhoods 2-4 hours prior to collection service and checks for contaminants, such as organics in the mixed solid waste (MSW) container or MSW in the Organics. Also, for commercial accounts, Staff audits the businesses level of service, and that it meets SB 1383 requirements.
3. Outreach and Education: The residential sector receives education through mailers such as the Recycling Guide, door hangers and cart tags if it’s found that their containers have contaminants in them, letters/notices if they’re in violation, and from handouts at community events. The commercial sector receives education in the business license application/renewal packet (SB1383 Compliance Forms), through forms/letters received in the mail, from in-person site visits/inspections by Staff, containers tags, and from notices in the mail or given to them in-person (if they’ve been found to be in violation of container contamination, or for not being in compliance with mandatory recycling and mandatory organics recycling). Tier 1 and Tier 2 Edible Food Generators that have been identified, and the local Food Recovery Organization also receives information on Edible Food Recovery requirements during site visits/inspections. The City monitors and collects data from education programs and assembles for reporting purposes to the State.
4. Edible Food Recovery Program: The State of California Edible Food Recovery Program is part of the larger SB 1383 legislation, which is designed to reduce organic waste and specifically divert edible food from landfills to feed those in need. SB 1383 establishes a statewide target to reduce the disposal of organic waste by 75% by 2025 and recover at least 20% of edible food that would otherwise be disposed of. The City of Patterson has implemented an Edible Food Recovery Program and ensures that local businesses such as supermarkets, grocery stores, large venues and restaurants are complying with the law. The City is responsible for monitoring, educating, and enforcing these requirements.
5. Construction and Demolition Waste Management Plan: The Solid Waste Division works with the Building Division on the Construction and Demolition, Solid Waste Management Plan demonstrating that it complies with SB 1383 requirements. Staff conduct regular inspections of construction sites to ensure proper waste segregation and disposal practices are followed. Construction and demolition projects are required to submit waste diversion reports. These reports are reviewed for accuracy and completeness.
6. Enforcement: The City of Patterson adopted its Chapter 6.15 Mandatory Organic Waste Disposal Reduction Ordinance No. 858 on December 7, 2021. The ordinance outlines requirements and authorization for City with the following sections: Requirements for single-family generators, Requirements for commercial businesses, Waivers for generators, Requirements for commercial edible food generators, Requirements for food recovery organizations and services, and regional agencies, Requirements for haulers and facility operators, Self-hauler requirements, Compliance with CALGreen recycling requirements, Model water efficient landscaping ordinance requirements, Procurement requirements for jurisdiction departments, direct service providers, and vendors, Inspections and investigations by the City, and Enforcement.
7. Program Oversight: Public Works Administration and the Solid Waste Division is responsible for the development, implementation, and operation of the SB1383 program.
The Solid Waste Division confers with the State of California, CalRecycle, regarding its program. Annual meetings take place and review the City program, its effectiveness, and alignment with the law is under constant scrutiny by the State of California.
The rate study has determined that higher rates are needed to sustain the fund to pay for the ongoing expenses for services and compliance with unfunded State mandates. The proposed increases are represented in two different scenarios. The scenarios differ in that Scenario 1 increases the rate to commercial with immediate recovery of cost of service, while Scenario 2 have a phased-in approach, applying equal increases over a five-year-period, so that the increase is incremental. The scenarios for proposed residential rates are identical. The rates with costs for service and revenues are provided in “Attachment B: Bartle Wells Solid Waste Rate Study Report”.
As part of adopting new rates, the Council is asked to consider approving the continuation of the Senior Low-Income Discount Program utilizing the T.I.D. CARES Program guidelines as a qualifying factor for this program. Currently, there are about 56+/- customers receiving the $10 Discount. Staff are recommending that the Council approve the continuation of the Senior LowIncome Discount Program in the amount of $10, include no increases in the first two adjustments and limit the final increases to just half of the proposed full annual increases. The discount would be subsidized by the Garbage Fund late fees that totaled approximately $145,000 in FY 2024/25.
Proposed Seniors/Low Income Discount Table
Recommended Rates Current 1/1/2025 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 5-year Budgeted Discount
Residential Customers $41.83 $43.98 $47.28 $50.83 $54.64 $58.74 $62.26 Low Income/
Senior Customers $31.83 $31.83 $31.83 $33.18 $34.53 $35.88 $37.23 Monthly Discount Per
Customer $10.00 $12.15 $15.45 $17.65 $20.11 $22.86 $25.03 Annual Budgeted
Discount (56 customers) $560.00 $680.40 $865.20 $988.40 $1,126.16 $1,280.16 $1,401.68 $6,342.00 Proposition 218 Process and Next Steps
As this rate increase proposal is subject to the Proposition 218 process, below is a proposed timeline of the steps necessary to complete the process, subject to change as necessary to meet mailing and Proposition 218 requirements:
Step Date
Adoption of Resolution to set Public Hearing, and
Ballot Procedures, and direct City staff to initiate
the Proposition 218 process
September 3, 2024
Staff finalizes the Public Notice for printing and
mailing
September 4, 2024
Notice of Public Hearing and Ballots - 45-day
minimum notice
Mailed to residents in September utility bill.
Published in Patterson Irrigator on: • August 29,
2024 • September 5, 2024 • September 12, 2024
Public Hearing November 19, 2024
Effective Date of Rates January 1, 2025
FISCAL IMPACT
All costs associated with this item have been budgeted and approved by the City Council. The costs include funding for the rate study and assistance with the Proposition 218 process. All costs were budgeted in the Garbage Fund (600-790). The proposed annual garbage rate increases for the next five years (2025-2029) would sustain financial strength in the garbage fund revenues.