POINT ARENA CITY COUNCIL
AGENDA ITEM SUMMARY
AGENDA ITEM: IX C
MEETING DATE: 03/26/2024
TITLE
Solid Waste Collection Franchise Agreement with Redwood Waste Solutions dba Solid Waste of Willits
RECOMMENDED ACTION
Approve a new Franchise Agreement with Solid Waste of Willits for solid waste collection services.
ANALYSIS
Currently, Point Arena has a Franchise Agreement with Recology to provide solid waste collection. Recology bought Pacific Waste Disposal and assumed its Point Arena Franchise Agreement in 2017. Recology’s home operating area is in Sonoma and Marin counties, and serving Point Arena has become financially infeasible.
In 2019, the City Council approved Recology’s request to subcontract with Solid Waste of Willits (SWOW) which already provides waste collection services in County areas both north and south of Point Arena. Recology’s Franchise Agreement expires December 11, 2025.
In January 2023, Recology requested the City terminate its Franchise Agreement because Recology/SWOW were operating at a significant financial loss under the existing contract.
Section 5 of the current Franchise Agreement states that “the rates approved by CITY for the services called for by this Agreement shall provide a reasonable return to COMPANY.” At that time, Council’s directed staff to issue an RFP to locate a new provider for waste collection services. The City did not receive any proposals.
In November 2023, Recology informed the City it would implement a 118% rate increase beginning in 2024 (Attachment 1). Recology offered an alternate path that the City consider contracting directly with Solid Waste of Willets (SWOW) since they already provide the service through its subcontract with Recology. The chart below compares a few of the City’s current rates to SWOW rates and Recology proposed rates if they continue the City’s Franchise Agreement.
If the City Council approves a new Franchise Agreement with SWOW, their proposed rate schedule is consistent with the rates they charge in County unincorporated areas surrounding Point Arena. However, they are higher than the current Point Arena fees.
Attachment B shows SWOW’s current County rates for all services.
Given that the City did not receive any responses to the waste collection RFP and Recology is proposing a 118% increase to their current fees, staff recommends the City Council approve a new Franchise Agreement with Solid Waste of Willets (Attachment 3).
RESIDENTIAL RATES
Current
Recology Rate
Current
SWOW Rate
Proposed Recology
Rates
20 Gallon $32.13 $49.61 $70.31
32 Gallon $36.82 $60.28 $80.57
64 Gallon $61.38 $83.90 $134.31
96 Gallon $85.90 $101.03 $187.96
COMMERCIAL RATES
1 Yard $174.41 $407.42 $528.37
1.5 Yard $181.08 $441.32 $792.55
2 Yard $241.47 $561.90 $1,056.68
FISCAL IMPACT
The financial impact extends to both residents and businesses in the City of Point Arena due to the proposed increase in rates. Elevated fees within the City correlate with a corresponding increase in franchise fees received by the City’s general fund. The contract proposes a $12,000 annual franchise fee, double the current $6,000 fee paid by Recology.
ATTACHMENTS
Attachment 1: November 22, 2023 Recology Letter
Attachment 2: SWOW Waste Collection Fees
Attachment 3: Franchise Agreement
CITY MANAGER SIGNATURE
_________________________________
Peggy Ducey, Interim City Manager
November 22, 2023
Mr. Paul Anderson
City Manager
451 School Street
Point Arena, CA 95468
Dear Mr. Anderson,
Thank you for letting us know that the City of Point Arena (City) will be continuing with the current franchise agreement with Recology due to receiving no responses to the request for proposal and rejecting the direct-negotiated offer from Solid Waste of Willits. Consistent with our letter dated December 15, 2022, Recology will be implementing a 118.8% rate increase to overcome the ongoing losses and provide an industry standard profit of 12%, as is consistent with Section 5 of the franchise agreement. The new rates will be effective January 1, 2024.
Following this letter is a detailed statement of Recology costs of operations and calculation of the required rate increase. Below is a rate comparison.
Please contact me or Nikki Burke at 707-586-8233 or [email protected] if you have any questions.
Sincerely,
Logan Harvey
Senior General Manager
Recology Sonoma Marin
707-347-6496/[email protected]
cc: Andy Fulton, Seth Hansen, Nikki Burke
SWOW
Rate Impact Recology Rates So. Coast
Residential Rates 10/1/2023 1/1/2024 Rates 1/1/24 Customers 20 Gal $ 32.13 $ 70.31 $ 49.61 12
32 Gal 36.82 80.57 60.28 66
64 Gal / Three 32 Gal 61.38 134.31 83.90 9
96 Gal / Two 32 Gal 85.90 187.96 101.03 4
Commercial Rates
2 yard $ 241.47 $ 528.37 $ 561.90 9
3 yard 362.20 792.55 838.68 3
4 yard 482.91 1,056.68 1,282.30 8
Recology Sonoma Marin
Point Arena Extraordinary Rate Adjustment (Per Section 5 of Contract) Rates Effective 1/1/2024
Recology Cost of Operations 2023
Financials
Collection Revenue $ 121,889
Franchise Fees (6,000)
Net Revenue $ 115,889
Costs of Operation:
Annual Subcontractor Costs $ 168,256
Customer Service & Ops Mgmt. 10,264
Billing & Admin Support 21,765
Capital Expenses (New Plastic Bins) 31,413
Interest Expense/(Income) 817
Total Costs $ 232,515
Net Income $ (116,626)
Rate Increase Calculation
Total Expenses $ 232,515
Profit on Expenses 31,707
Franchise Fees 6,000
Total Required Revenue $ 270,221
Rate Increase Required 121.7%
Less: Rate Increase Implemented 10/1/2023 2.9%
Rate Increase to be Applied 1/1/24 118.8%
Solid Wastes of Willits, Inc. • Attachment 2
Residential Customers
20 gallon cart $ 60.28
35 gallon cart $ 83.90
65 gallon cart $ 101.03
95 gallon cart $ 10.57
Driveway/Rollout Fee (Weekly Service Only) $ 47.24
$ 78.52
$ 83.30
35 gallon cart-once a month $ 32.85
65 gallon cart-once a month $ 38.54
allon cart-once a month $ 48.34
Contamination Processing Fee $ 29.05
Call back charge $ 17.43
Special Pickup - 35 gallon cart $ 32.85
Special Pickup - 65 gallon cart $ 38.54
Special Pickup - 95 gallon cart $ 48.34
Restart Fee $ 5.00
Commercial Customers
1 yard container
1/week $ 407.42
2/week $ 641.20
3/week $ 903.11
1.5 yard container
1/week $ 441.32
2/week $ 860.46
3/week $ 1,428.88
2 yard container
1/week $ 561.90
2/week $ 926.39
3/week $ 1,559.99
Every Other Week $ 404.36
1/month $ 266.23
3 yard container
1/week $ 838.68
2/week $ 1,204.53
3/week $ 2,330.65
Every Other Week $ 476.99
1/month $ 280.57
4 vard container
1/week $ 1,282.30
2/week $ 2,279.23
35 gallon cart-every other week 65 gallon cart-every other week 95 gallon cart-every other week
3/week $ 3,555.26
Every Other Week $ 536.95
1/month $ 291.56
6 yard container
1/week $ 1,668.69
2/week $ 2,964.78
3/week $ 4,637.30
Every Other Week $ 604.55
1/week $ 302.00
35 gallon cart - commercial
1/week-roll out $ 75.68
2/week $ 83.49
Every Other Week $ 109.58
1/month $ 57.93
$ 33.65
65 gallon cart - commercial
1/month $ 97.33
1/week-roll out $ 107.34
2/week $ 171.67
Every Other Week $ 84.14
1/month $ 57.66
95 gallon cart - commercial
1/month $ 106.71
1/week-roll out $ 114.29
2/week $ 187.47
Every Other Week $ 94.38
1/month $ 68.57
Container Locking Fee $ 9.29
Locks each $ 23.23
Container Delivery Fee $ 87.55
Restart Fee $ 18.59
Recycle Container Rental $ 29.05
Recycle Sled Service $ 360.02
Industrial Customers
4 yard Container $ 272.96
20 yard drop box $ 1,147.23
30 yard drop box $ 1,484.37
40 yard drop box $ 1,555.50
Delivery fee-4 yard Container $ 162.17
Delivery fee-Drop Box $ 261.91
Overload Charge per yard $ 31.74
1/week
FRANCHISE AGREEMENT
between
CITY OF POINT ARENA
and
SOLID WASTES OF WILLITS, INC