Placentia City Council
AGENDA REPORT
TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DEPUTY CITY ADMINISTRATOR / PUBLIC SERVICES & INFRASTRUCTURE DATE: JUNE 7, 2022
SUBJECT: RESOLUTION FOR SETTING OF PUBLIC HEARING FOR FISCAL YEAR 2022- 23 SOLID WASTE COLLECTION RATES
FISCAL
IMPACT: EXPENSE: $ 15,000 MAILING EXPENSE
BUDGETED: $ 15,000 FY 2021-22 OPERATING BUDGET
REFUSE ADMINISTRATION FUND (374386-6225)
SUMMARY:
In 2010, the City entered into a Franchise Agreement ("Agreement") with Republic Waste Services of Southern California, LLC ("Republic") for solid waste collection services. Per the existing Agreement, solid waste rates are to be reviewed annually to determine if any adjustments are warranted based on changes in the Consumer Price Index (CPI). Staff and representatives from Republic meet each year to discuss potential adjustments to solid waste rates paid by residents and business owners. The last residential and commercial rate adjustment took place on July 1, 2021. Republic is proposing an adjustment to residential and commercial rates effective July 1, 2022, along with the implementation of a new collection fee in response to a newly created State unfunded mandate related to recycling of green waste.
Based on the recommendation from the City Attorney's Office, the City uses a public hearing and protest procedure consistent with Proposition 218 set forth in Article XIII D of the California Constitution. Proposition 218 was approved by voters in 1996 to establish legal requirements for imposing or increasing property -related taxes, assessments, fees, and charges. Fees for refuse collection service provided to single family residential properties in Placentia are paid via the property tax roll and each property owner is not invoiced separately for refuse collection service.
The recommended actions will authorize Staff to initiate the Proposition 218 notification process and set a public hearing for July 19, 2022 to consider the rate adjustment to the City's solid waste services.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Adopt Resolution No. R-2022-37, a Resolution of the City Council of the City of Placentia, California, declaring its intention to adopt increased solid waste collection charges, setting
1.d.
June 7, 2022
City Council Agenda
June 7, 2022
a public hearing for July 19, 2022 and directing Staff to provide notice pursuant to Proposition 218; and
2. Adopt Resolution No. R-2022-38, a Resolution of the City Council of the City of Placentia, California, adopting procedures for establishing and increasing property related fees and charges under Proposition 218.
DISCUSSION:
On July 20, 2010, the City entered into an Agreement with Republic for solid waste and recycling services. Per Section 24.3 of the Agreement, Republic is entitled to request a general annual rate adjustment to account for inflation. The agreed upon methodology for making this adjustment is determined by the CPI for the Los Angeles County Area as stated in Section 24.3 of the Agreement. Republic can adjust the rates in July of each year based on the change in CPI for all Urban Consumers for the 12 -month period ending January 31st of each year. Staff and representatives from Republic confer each year to discuss potential adjustments to solid waste rates paid by residents and business owners. The last residential and commercial rate adjustment took place on July 1, 2021. Republic is proposing an adjustment to residential and commercial rates effective July 1, 2022.
Proposition 218
In addition, to the provisions established in the Franchise Agreement, the City's ability to adjust rates is governed by Proposition 218. In 1996, California voters approved Proposition 218 which requires a specific process for cities to impose or increase certain types of fees. The provisions of Proposition 218 set forth in Article XIII D of the California Constitution provide that certain types of "Property Related Fees" are subject to a "majority protest" process.
The provisions of Proposition 218 set criteria for property -related fees for refuse, water, and sewer services. The fees must be set so that:
• The revenues generated by the fee do not exceed the cost of service. • No property owner's fee exceeds his/her proportionate share of the costs. • The City does not impose a property -related fee for a service that is not available to the property owner.
Under Proposition 218, the City's refuse collection fees are considered "Property Related Fees" since the fees for Single -Family Residential customers are paid by property owners via the property tax roll. In other cities, refuse collection fees are either billed directly to each customer by the waste hauler or they are collected as part of the water utility bill. Proposition 218, and subsequent legislation AB 1260, define the process for establishing or adjusting property -based fees. The process requires a notice of the proposed fee be sent to all property owners in the City and 45 days after the notice is sent, a public hearing be conducted by the City Council. During the 45 -day period and until the close of the public hearing, a property owner may protest the fee by submitting a written protest. If more than 50% of the property owners of record in the City protest the fee, the City Council would be prohibited from enacting the fee change.
City Council Agenda
June 7, 2022
Staff recommends that the City Council adopt a resolution that sets a public hearing date of July 19, 2022 for the annual rate increase in conformance with Proposition 218 (Attachment 1) and a second resolution that establishes the procedures for establishing and increasing property -related fees and directing Staff to commence the 45 -day protest process consistent with Proposition 218 (Attachment 2). A notice including procedures for submitting a written protest will be mailed to all property owners shown on the last equalized property tax assessment roll of single-family households. The notice will include information about refuse collection services in the City, the reason for the proposed rate increase, as well as the current rates and proposed rates Owners will be informed that if they wish to protest the proposed new rates, they must submit their written protest to the City Clerk in advance or on the night of the public hearing prior to the close of the hearing.
Proposed Rates for FY 2022-23
The proposed refuse rates for Fiscal year ("FY") 2022-23 include increases due to the following circumstances:
1) Annual Rate Adjustment per CPI per Section 24.3 of the Agreement 2) Increase in the Orange County Landfill Tipping Fees per Section 24.5 of the Agreement Annual Rate Adiustment per CPI for January 2022
In accordance with the City's current waste hauling Franchise Agreement with Republic, the company is entitled to request a general annual rate adjustment to account for inflation. The agreed upon methodology for making this adjustment is determined by the CPI for Los Angeles County -Orange County Area as stated in Section 24.3 of the Agreement. Republic can adjust the rates in July of each year based on the change in CPI for all Urban Consumers for the 12 -month period ending January 31St of each year. The change in CPI for the most recent 12 -month period was 7.5% (percent). Section 24.2 of the Agreement limits the annual rate adjustment to 7% (percent). The proposed rates that will be included in the mailed notice will reflect a 7% increase in CPI.
Orange County Landfill Tipping Fees
Another component of the rate includes landfill "tipping fees", which are passed through directly to the customer. Beginning in 2010, the County of Orange (County) increased the landfill gate tipping fees from $22.00 per ton to $31.37 per ton. Per the Waste Disposal Agreement with the County of Orange, the county disposal fee is adjusted each July 1st according to the change in CPI— All Urban Consumers, All Cities for the 12 -month period ending October 31St of each year.
The change in CPI for the most recent 12 -month period was 6.24% (percent). In 2021, the landfill gate tipping fees were increased again to $36.09 per ton. For FY 2022-23, the County will increase the fee to $38.34, which represents a 1.17% (percent) increase from the FY 2021-22 fees. The proposed rates that will be included in the mailed notice will reflect the increase in the landfill "tipping fees".
Proposition 218 Process and Next Steps
As this refuse proposal is subject to the Proposition 218 process, below is a timeline of the steps necessary to complete the process:
City Council Agenda
June 7, 2022
Step Date
Adoption of Resolution to Set Public
Hearing and Direct Staff to Initiate the
Proposition 218 Process
Public Hearing
Effective Date of Rates (if adopted)
FISCAL IMPACT:
June 7, 2022
July 19, 2022
July 1, 2022
The cost for postage for mailing the public hearing notice for the proposed rate increase to residential trash services is estimated at $15,000. There are budgeted funds in the FY 2021-22 Refuse Administration Fund to cover these costs. There is no fiscal impact to the General Fund.
Prepared by:
r
sa Y. R6binson
Management Analyst
Reviewed . ...o i ed:
.wi
Luis Estevez
Reviewed and approved:
"'Termite
L..• p
Directo • Finance
Reviewed and approved:
1 Damien R. Arrula
Deputy City Administrator City Administrator
Attachments:
1. Resolution No. R-2022-37 — Setting Public Hearing
2. Resolution No. R-2022-38 — Ballot Procedures