FINAL REPORT
City of San Clemente
submitted electronically on November 7, 2024
Solid Waste Franchise Fee
Cost of Service Study
Attachment 3
1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com October 7, 2024
Mr. Eric Vail
City Attorney – City of San Clemente
Burke, Williams, & Sorenson, LLP
submitted via email: [email protected]
SUBJECT: Solid Waste Franchise Fee Study – R3 Report
Dear Mr. Vail,
R3 Consulting Group, Inc. (R3) is pleased to submit the attached report of Solid Waste Franchise Fee Study (Study) to the City of San Clemente (City). This report presents our analytical methodology, results and findings, and recommendations regarding the solid waste Franchise Fee paid by the City’s contracted solid waste collection service provider, CR&R Incorporated (Contractor), per the Agreement for Solid Waste Handling Services (Agreement) between the City and the Contractor.
The purpose of this Study was to comprehensively analyze and calculate the following:
City’s Costs: The annual costs to the City for performing its management, administration, regulatory compliance and enforcement, solid waste collection and clean-up, and other obligations associated with the Contractor’s Agreement and the sanitation system.
Property Use Charges: The annual use charge to the Contractor for its special and lasting access to use government property in the public right-of-way for placement of solid waste containers and collection of the solid waste contents.
Pavement Impacts: The annualized costs for pavement repair, maintenance, and rehabilitation resulting from the unique impacts to City street pavement caused by the Contractor’s solid waste collection vehicles during the course of providing sanitation service.
We then compared the calculated values to the annual Franchise Fee paid by the Contractor to the City per the Agreement. We found that the City’s current and projected Franchise Fee revenues are less than the sum of the City’s Costs and government Property Use Charges calculated in this Study. Based on these results, we conclude that the City’s Franchise Fee is not more than necessary to cover the City’s costs in managing and administering the Agreement and the sanitation system plus the value of the Contractor’s use of the public right-of-way. We also calculated values for Pavement Impacts in this Study and note that the City is not currently compensated for Pavement Impacts.
We appreciate the opportunity to be of service to the City. If you have any questions regarding this report or need additional information, please contact me.
Sincerely,
Garth Schultz | Principal
R3 Consulting Group, Inc.
510.292.0853 | [email protected]
TABLE OF CONTENTS
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report toc - i
1. Executive Summary
page 1
2. Methodology & Calculations
page 4
3. Findings & Conclusions
page 17
4. Recommendations
page 18
1. EXECUTIVE SUMMARY
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 1 of 18 Background
The City’s Agreement with the Contractor is for the collection, processing, and disposal of solid waste from Contractor’s solid waste service subscribers in the City. The Agreement provides the Contractor with the exclusive right to provide critical aspects of the City’s sanitation system, including solid waste collection and the other services and programs included in the Agreement. The Agreement specifies that the Contractor will charge solid waste service subscribers, with the Contractor billing and collecting revenues from subscribers and the City authorizing the maximum rates that the Contractor may charge pursuant to the rate adjustment methodology included in the Agreement.
Per the Agreement, the Contractor pays the City a Franchise Fee. Franchise Fees paid to the City cover the costs incurred by the City in managing, administering, enforcing, and supplementing the services provided in the Agreement, as well as the charge for the use of the public right-of-way for the special and lasting access to use it for set-out and collection of solid waste containers.
Purpose
The purpose of this Study is to identify the amounts that may be reasonably recovered through the Franchise Fee paid by the Contractor to the City are exempt from consideration as taxes. In terms of the applicable legal framework, this analysis seeks to quantify whether amounts that may be reasonably recovered through the Franchise Fees paid by the Contractors to the City fall within an exemption to the definition of a tax per Article XIII C, Section 1(e) of the California Constitution (“Proposition 26”).
There are four primary exceptions to the Proposition 26 definition of tax that are relevant:
Exception 1: “A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.” Exception 2: “A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.” Exception 3: “A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.” Exception 4: “A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property.” The Franchise Fee is a fee with two components. The first component includes the City’s proportionate costs (City’s Costs). The second component includes the proportionate charges for the Contractor’s use of the public right-of-way (Property Use Charges).
Methodology and Findings
To complete this Study, R3 reviewed and analyzed information provided by the City and the Contractor pertaining to the City’s Costs, Property Use Charges, and Pavement Impacts. Using that information, we then calculated the proportionate amounts necessary to cover the City’s costs, including staffing and other costs; use of government property in the public right-of-way; and pavement repair, maintenance, and rehabilitation costs caused by the Contractor’s solid waste collection vehicles during the course of providing sanitation service. All calculated amounts in this Study are in current Fiscal Year (FY) 2023-24 dollars.
City’s Costs
The annual costs for management, administration, regulatory compliance and enforcement, solid waste collection and clean-up, and other obligations associated with the Contractor’s Agreement and the Executive Summary
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 2 of 18 sanitation system includes: staffing salary and benefits, contracted services, and overhead for distributed costs including but not limited to property, utilities, insurance, human resources, payroll administration, accounts payable and receivable, and other finance functions.
Staffing costs are calculated based on estimated time allocations (based on historical experience and the assessment of current City employees) and maintenance contractor costs are calculated based on estimated share allocations associated with the sanitation system, with distributed overhead applied to both.
The calculation results are $76,141 in annual staffing costs and $95,442 in annual maintenance contractor costs for annual total City Costs of $171,583.
Property Use Charges
The annual charge to the Contractor for use of government property in the public right-of-way is calculated as a function of estimates for the number of solid waste accounts setting out solid waste collection containers in the right-of-way, the set-out area used, the amount of time it is used, and the market value for the per square foot use of the public right-of-way.
The calculation result for the use of the public right-of-way is an annual total Property Use Charge of $574,330.
Pavement Impacts
The annualized costs for pavement repair, maintenance, and rehabilitation is calculated based on the proportionate impact to pavement from solid waste collection vehicles compared to other sources of impacts. This calculation accounts for annual repair costs, five-year projections for capital improvement costs, and five-year projections for growth in deferred maintenance. The calculation also accounts for the high loading and slow speed impacts on pavement associated with solid waste collection vehicles.
The calculation result for the Pavement Impacts caused by Contractor’s solid waste collection vehicles during the course of providing sanitation service is an annualized total repair, maintenance, and rehabilitation cost of $338,807.
Conclusions
Franchise Fee
The FY 2022-23 Franchise Fee paid by the Contractor to the City was $530,795 and the projection for FY 2023-24 is $557,334. The sum of FY 2023-24 annual City’s Costs and amounts for Property Use Charges calculated in this Study is $745,913, which is $188,578 (34%) higher than the projected FY 2023-24 Franchise Fee payments.
The amount of the Franchise Fee is therefore not more than necessary to cover the City’s costs incurred in managing and administering the Agreement and the sanitation system plus the value of the Contractor’s use of the public right-of-way.
Though this Study calculates Pavement Impacts caused by Contractor’s solid waste collection vehicles during the course of providing sanitation service, the City is not compensated for such impacts.
Reasonableness of Estimates and Assumptions
In performing calculations, it was necessary to estimate certain values for which reasonable ranges exist.
Where assumptions were necessary for completing calculations, our objective was to apply assumptions on the lower end of the reasonable range. Had we used other higher assumptions, the results of this Study would have been higher calculated Franchise Fee amounts. Therefore, we conclude that the calculated fee amounts are not higher than necessary to cover the City’s reasonable costs plus the reasonable value of the Contractor’s use of the public right-of-way.
Executive Summary
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 3 of 18 Limitations
This Study relies on information provided by the City and the Contractor, which we have reviewed and analyzed for reasonableness and accuracy but did not independently audit or verify.
As stated above, it was necessary to estimate certain values for which reasonable ranges are known to exist. Though changes to estimates and other underlying assumptions may materially change the calculations, we have elected to apply estimates on the low end of reasonable ranges, thus minimizing the potential that changes in calculations would result in different ultimate findings. We have reviewed estimates and assumptions with City staff and legal counsel and have mutual concurrence on applicability and reasonableness of all such values in this Study.
Finally, the methodology employed by this Study calculates the reasonable values for the Franchise Fee within the context of current laws, regulations, and court rulings. Changes in the legal framework may require revisions to the methodology and findings contained in this Study.
2. METHODOLOGY & CALCULATIONS
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 4 of 18 City’s Costs
Methodology
R3 reviewed and analyzed information provided by the City pertaining to the General Fund costs incurred for management, administration, regulatory compliance and enforcement, solid waste collection and clean-up, and other obligations associated with the Contractor’s Agreement and the sanitation system.
These costs include and may not be limited to:
Staffing costs, including salaries and benefits.
Contracted maintenance services.
Overhead for distributed costs such as property, utilities, insurance, human resources, payroll administration, accounts payable and receivable, and other finance functions.
Using the total annual salary, benefits, and other cost information provided by the City, we estimated the proportion of costs associated with management and administration of the agreement and the sanitation system. We then calculated the proportionate totals and categorized them by the functions listed in the sections below.
Variables, Estimates and Assumptions
Staffing Costs
Variables associated with salaries and benefits include the allocation of time that positions are dedicated to management and administration of the Agreement and the sanitation system (including time supervising others with primary responsibility for these duties), the amount by which funding of salaries and benefits is paid by the General Fund, and the applicable amount of General Fund overhead.
The estimated time allocation by position category used in this Study (and based on historical experience) is shown in Table 1, below and on the following page, along with the explanation for the allocation values.
Table 1: Allocations of Staffing Time by Position
Positions Time
Allocation Explanation
City Manager, Deputy City Clerk, Code
Compliance Officers (2), Sr. Code Compliance
Officer, Public Works Director, Maintenance
Operations Supervisor, Maintenance Manager.
5%
Estimated allocation based on
estimated minimum overall time
spent in management and
administration of the Agreement and
the sanitation utility.
Associate Civil Engineer, Assistant Engineer, Sr.
Civil Engineer, Maintenance Worker I,
Maintenance Worker II, and Maintenance Lead
worker.
21%
Calculated value based on the
percentage of time spent on
pavement rehabilitation, repair and
improvement projects applicable to
Contractor’s operations in the City.
R3 verified with City staff that the salaries and benefits included in this Study are paid by the General Fund – any non-General Fund portions of positions included in Table 1 have been excluded from the calculations. A General Fund overhead rate of 10% (the low end estimate provided by R3 based on historical experience for the for distributed costs such as property, utilities, insurance, human resources, payroll administration, accounts payable and receivable, and other finance functions) is also applied to the total allocated costs.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 5 of 18 It should be noted that the City’s Environmental Services Coordinator position, which has direct responsibility for management and administration of the Agreement is not included in the staffing costs calculated via this Study because that position is already funded via dedicated funding and is not funded by the Franchise Fee.
Analysis
Direct Management and Administration
This category includes City staffing costs for direct management and administration of the Agreement and the sanitation system. Direct annual staffing costs calculated by this Study are $24,281.
Indirect Management and Administration
This category includes City staffing costs for indirect management and administration, including supervision of those responsible for direct management and administration of the Agreement and the sanitation system and associated responsibilities. Indirect annual staffing costs calculated by this Study are $29,835.
Code Enforcement
This category includes City staffing costs for enforcing the solid waste provisions of the City’s Municipal Code, which includes illegal solid waste accumulations, illegal dumping, littering, improper waste collection setouts, nuisances, and the associated investigations, warnings, notices of violation, and administration of penalties. Annual code enforcement staffing costs calculated by this Study are $22,025.
Street Sweeping
The Contractor provides street sweeping services to the City, with those services being funded by a separate funding mechanism per the Agreement. Street sweeping services are not funded by the Franchise Fee and therefore the costs for street sweeping services are not included in this Study.
Catch Basin Waste Removal
Catch basin waste removal services are funded by the City’s Storm Drain Operating Fund. Catch basin waste removal services are not funded by the Franchise Fee and therefore the costs for those services are not included in this Study.
Illegal Dumping Clean-up
Illegal dumping waste removal and clean-up services are funded by other City funding sources. Illegal dumping clean-up services are not funded by the Franchise Fee and therefore the costs for those services are not included in this Study.
Waste Removal from Public Locations
The City hires maintenance contractors for a variety of maintenance services (including waste and litter removal) which are performed in City parks, trails, beaches and pier. The City tracks total annual costs for parks maintenance services performed by such contractors. For the purposes of this Study, we estimate that 25% of the total annual maintenance costs are for removal of waste and litter (an assumption which is based on our prior experience managing such contracts for local governments) except in cases where line-item costs for waste and litter removal are known (in which case the calculated proportion of annual costs is 26%). Based on this assumption, the City’s estimated annual costs for waste and litter removal from the City’s parks, trails, beaches and pier are $406,327 (and approximately 25% of total annual contracted maintenance costs).
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 6 of 18 Of that amount, this Study assumes that only 20% of the waste and litter removal costs are attributable to waste generators receiving solid waste services from the Contractor. This assumption is based on the likelihood that most waste and litter disposed in the City’s parks, trails, beaches and pier is not generated by Contractor’s customers. Applying this assumption results in an annual cost of waste and litter removal estimated by this Study of $89,392.
Waste Collection from City Events
The City’s maintenance contractors (mentioned above) also provide for maintenance and waste removal services at City events. The City tracks total annual costs for maintenance and waste removal services at City events. For the purposes of this Study, we estimate that only 25% of the total annual maintenance costs are for removal of waste and litter, which is the same assumption as referenced in the prior section.
Based on this assumption, the City’s estimated annual costs for waste and litter removal from the City’s events are $27,500.
Of that amount, this Study assumes that only 20% of the City event waste and litter removal costs are attributable to waste generators receiving solid waste services from the Contractor. This is the same assumption referenced in the section above. Applying this assumption results in an annual cost of City event waste and litter removal estimated by this Study of $6,050.
Annual Total of City’s Costs
Table 3, below, shows the total of the City’s Costs for management and administration of the Agreement and the sanitation system as calculated in this Study, by category.
Table 3: City’s Annual Costs by Category and in Total
Category Staffing Costs Maintenance
Contractor Costs Total
Direct Management and Administration $24,281 $ - $24,281 Indirect Management and Administration $29,835 $ - $29,835 Code Enforcement $22,025 $ - $22,025
Waste Removal from Public Locations $ - $89,392 $89,392 Waste Collection from City Events $ - $6,050 $6,050
Total Annual City’s Costs $76,141 $95,442 $171,583
Property Use Charges
Methodology
R3 reviewed and analyzed information provided by the City and the Contractor pertaining to Property Use Charges for Contractor’s use of the public right-of-way for collection of solid waste collection containers.
They then calculated the annual Property Use Charges based on:
The setout area used for collection of solid waste containers (in square feet).
The amount of time that the area is used.
The market value for use of the public right-of-way (in dollars per square foot).
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 7 of 18 The number of solid waste subscribers setting out collection containers in the public right-ofway.
Using these values, we calculated the market value for the Contractor’s use of government property in the City.
Variables, Estimates, and Assumptions
Setout Area
Standard residential solid waste collection setouts include three solid waste collection containers, usually carts with wheels and lids, with one each for garbage, recycling, and organics waste streams. The setout area needed for placement of these containers is inclusive of the width of each container (typically two feet) as well as minimum required space between the containers and other objects such as cars (minimum of one feet). The set-out area also takes up available parking space and is, thus, assumed to extend six feet out from the curb. Taken altogether, the area for residential setouts is calculated as three containers that are each two feet wide, plus one foot between each container and other objects, for a total area ten feet wide times six feet in depth. The result is 60 square feet of setout area per serviced singlefamily residential property.
The amount of area used for commercial setouts (in this Study, use of the term commercial also always includes multi-family) can vary widely, as there is no standard commercial subscription size profile – each commercial solid waste subscriber can select from a range of container sizes, with most of them being larger than the containers used in residential areas. Given this complexity, this Study assumes that the average commercial setout area is twice that of the residential setout area, for 120 square feet.
Commercial solid waste containers, especially the metal bin-type containers, range in size from one cubic yard to four cubic yards (which are approximately two to eight times the volume of the largest residential containers) and are thus typically much larger in footprint area than residential containers.
Additionally, commercial subscribers can and often do use a greater number of containers than residential customers. For these reasons we conclude that our assumption of 120 square feet for commercial setouts (twice the residential setout) is likely lower than the average setout area needed in commercial areas and is, therefore, conservative. If detailed information about the number and type of commercial containers were available, it is likely that information would support setout areas larger than the 120 square feet assumed in this Study.
Setout Time Usage
Standard residential solid waste collection is performed once weekly. Most residential containers are set out the evening prior to collection and are removed from the public right-of-way the following afternoon.
Thus, for the purposes of this Study, we assume that collection containers are in the public right-of-way for an average of 18 hours per day, one day per week, which amounts to approximately 10.71% of the time (18 hours divided by 24 per day divided by 7 days per week).
Commercial solid waste subscription setout times can vary widely – just as there is no standard commercial subscription size profile, likewise there is no standard collection frequency. Commercial solid waste subscribers can select collection frequency between once and six times per week, and with different frequencies for different waste streams. Given this complexity, this Study assumes that the average commercial collection frequently is twice weekly, for 21.42% of the time. As with the setout area, this estimate is likely lower than the average commercial collection frequency and is, therefore, conservative.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 8 of 18 Market Value for Use of Public Right-of-Way
To establish the market value for use of the public right-of-way, R3 conducted an online survey of recent purchases of bare land in the City and locally in Orange County. R3 sampled 27 recent sales of bare land which were sold at a median price of $131.01 per square foot. To that value, R3 added the per square foot value of the City’s street pavement, which is calculated as a function of the total replacement value of the City’s streets ($568,400,000) divided by the area of the streets in square feet (30,627,122) both of which are contained in the City’s 2023 PMP (see next section). The resultant value of the street improvements is $18.56 per square foot, which, when added to the median $131.01 market value of bare land, yields $149.57 per square foot.
This value is then divided by a rental realization rate of 14.49, which was established via online survey of 25 parking space rentals in and around the City, resulting in a total annual per square foot use charge for the public right-of-way of $10.32. This value is then divided by 2, for extra reasonableness, yielding a per square foot property use charge for the purpose of this Study of $5.16. R3 believes this value to be conservative – other methodologies that could have been applied would have resulted in a higher estimated market value for the use of the public right-of-way. For example, had this Study used “parklet rental fee” charges established in other California communities, with an approximate average annual per square foot value of $15.00 per square foot, the results from this Study would be higher than estimated herein.
Number of Subscriptions Setting Out Containers
The Contractor reports that there are 18,985 residential and 1,251 commercial solid waste service subscribers in the City. However, not all subscribers set out their containers in the public right-of-way for collection all the time. To account for non-setouts (either because subscribers don’t have waste materials to set out or because they receive on-premises service) we assume that only 90% of residential solid waste subscribers set out containers on a regular basis, for a resulting total of 17,062 average residential setouts. It is also understood that most commercial subscribers do not set out containers in the public right-of-way, and therefore we conservatively assume that only 5% of commercial subscribers set out containers on a regular basis, for a resulting total of 63 average commercial setouts. It should be noted that the 90% set-out estimate for residential customers may be low, and the 5% set-out rate for commercial customers is almost certainly low – were one to take field observations for these values, we believe that the actual rates of set-out would be higher than used for the purposes of this Study.
Analysis and Total Annual Property Use Charges
Calculating the total annual Property Use Charges using the variables, estimates, and assumptions from the prior section is a function of multiplication, as shown in Table 4, below.
Table 4: Calculation of Total Annual Property Use Charges Variable Category Residential Commercial
Grand Total Annual
Property Use Charge
Setout Area 60 SF 120 SF
Setout Time Usage 10.71% 21.42%
Annual Use Charge $5.16 per SF $5.16 per SF
Number of Setouts 17,062 63
Total Annual Property
Use Charges $565,971 $8,359 $574,330
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 9 of 18 Pavement Impacts
Methodology
R3 reviewed and analyzed information provided by the City pertaining to Pavement Impacts from the Contractor’s solid waste collection vehicles. We then calculated estimates of the proportionate share of the average annual pavement repair, maintenance, and rehabilitation costs associated with solid waste collection vehicles based on the proportionate impact to pavement from solid waste collection vehicle compared to other sources of impacts.
The calculation accounts for the City’s annual repair costs, five-year projections for capital improvement costs, and five-year projections for annualized growth in deferred maintenance. The calculation also accounts for the high loading and slow speed impacts on pavement associated with solid waste collection vehicles.
The calculation proportionately allocates the average annual pavement management costs to solid waste vehicles based on:
The equivalent single-axle load and proportionate impacts from speed for those vehicles compared to other vehicles.
The number of vehicle trips on City streets.
The proportion of vehicle trips that are made by trucks versus automobiles.1 Variables, Estimates, and Assumptions
The weight, loading, slow speed, and frequent stops that characterize solid waste collection vehicle operations impose unique and quantifiable impacts on the City’s street pavement. It is important to understand that, while calculation of vehicle impacts to pavement can be precise for individual vehicles, out of necessity we made certain assumptions about overall blended pavement impacts associated with several categories of vehicle types for the purposes of this Study. This is because we sought to calculate estimated impacts to all street pavement in the City, covering all vehicle uses, and precise traffic information at that scale is not currently available. Thus, we make informed assumptions regarding several variables necessary for this Study.
For each of these variables, there is a range of potentially reasonable values that may be used. We have selected values at the low end of the reasonable range to present findings that conservatively calculate estimated values of the pavement impacts associated with the Contractor’s solid waste collection vehicles during the course of providing sanitation service.
Assumptions used are described in the following subsections, which reference sources supporting the summary provided here. We must note that changes in assumptions may result in material changes in calculation results and findings.
Factors Impacting Pavement Conditions
Street pavement repair, maintenance, and rehabilitation needs and their resulting costs are affected by several factors, including vehicle usage and trench cuts and subsurface activities related to underground utilities.
1 Our analysis accounts for the distribution of vehicles among the 13 Federal Highway Administration vehicle classifications, which include passenger cars, SUVs/pick-ups, buses, and multiple truck and truck/trailer axle combinations.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 10 of 18 Environmental conditions such as light and water also contribute to pavement repair, maintenance, and rehabilitation needs in combination with the primary impacts from vehicles, trench cuts (for maintenance and repairs to underground utilities), and subsurface activities related to underground utilities. This Study only focuses on the impacts to street pavement from vehicles, and the proportion of those impacts that are attributable to the Contractor’s solid waste collection vehicles as they perform sanitation service.
City’s Costs for Pavement Repair, Maintenance and Rehabilitation The City regularly projects its costs for repair, maintenance, and rehabilitation of pavement resulting from degradation due to use. These projections, and the basis for them, are documented in Pavement Management Technical Assistance Program (PMP) reports which the City commissions with engineering consultants. Per the City’s May 2023 PMP report, the City’s projected average annual pavement maintenance and rehabilitation costs from 2023 through 2027 for its entire street network, are approximately $5.5 million. Of that, the City has budgeted $800,000 per year to be paid from the General Fund.
Axle Loading
Our methodology for calculating the proportionate amount of pavement maintenance, and rehabilitation impacts for the Contractor’s vehicles is grounded in the fact that all vehicles, including solid waste collection vehicles, degrade pavement during use. Measurement of that impact – also known as “vehicle loading” – can be estimated, quantified, and expressed as an Equivalent Single Axle Load (ESAL), which is a function of the vehicle’s weight and the distribution of that weight over the vehicle’s axles.
It is important to note that heavier vehicles (including solid waste vehicles) have more impacts on pavement and have a higher vehicle loading ESAL value. It is also important to note that ESAL values are associated with vehicle loading only, and not the speed of the vehicle; it is therefore assumed that relative ESAL values between vehicle types are based on vehicles travelling at the same rate of speed. For this analysis, R3 used the vehicle categories and average ESAL values shown in Table 5, below. Table 5 explains and cites supporting information for how the ESAL for each vehicle type was determined. It should be noted that solid waste collection vehicles are much heavier than most other typical vehicles on City roadways.
Table 5: ESAL Value Assumptions by Vehicle Type
Vehicle Type ESAL
Value Source
Automobiles (Passenger Cars) 0.0008
AASHTO (American Association of State Highway and
Transportation Officials) Design Guide with ESALs by
Vehicle Type
Average of All Other Trucks2 0.0171
Calculated Value Using AASHTO Design Guide with
ESALs by Vehicle Type, Federal Highway Administration
ESALs by Vehicle Type, Comparative Traffic Counts
Solid Waste Vehicle (Garbage) 1.0000
Calculated Values by Type Using Example Axle Weights
and AASHTO Axle Load Equivalency Factors Solid Waste Vehicle (Organics) 1.0000 Solid Waste Vehicle (Recycling) 0.7500
2 “All other trucks” means all vehicles with high loading and impact on street pavement other than solid waste vehicles, including pickup trucks, vans, box trucks, and a variety of other trucks with a lower average ESAL than solid waste collection vehicles.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 11 of 18 Given the assumed ESAL values in Table 5, a solid waste vehicle collecting garbage has 1,250 times the impact of an automobile. We are aware of other research concluding that the impacts of solid waste collection vehicles may be as high as 8,000-9,000 times the impact of passenger cars; thus, our assumed ESAL of “1” for garbage collection vehicles is on the low end of the reasonable range of ESALs for such vehicles.
Speed Impact
Impacts to flexible pavements (which are typical for residential streets) are also influenced by vehicle speeds, with impacts being exponentially higher when a load carrying vehicle is moving at a very slow speed.3 This is demonstrated in Chart 1, on the following page.
Chart 1: Exponential Relationship Between Speed and Pavement Impacts Unlike typical traffic on residential streets, which tends to travel at or near the posted speed limit (25 miles per hour [mph] in the City), solid waste vehicles slow and stop for collection in front of each household, averaging approximately 4 mph to 8 mph.4 At these low speeds, and as shown in Chart 1, vehicles have approximately 2.2 to 2.6 times the impact to the pavement than they would travelling only at the 25 mph speed limit.
In this Study we conservatively assume that solid waste vehicles in the City may be travelling at a faster 10 mph average speed, and we thus assume that the relative impact of speed is a factor of 2, not the higher
2.2 to 2.6 factors corresponding with slower speeds as noted above. We apply this speed factor of 2 as a multiplier to the ESAL loading for solid waste collection vehicles in our analysis of impacts to residential streets only; the factor is not applied to the ESAL loading for arterial and collector streets, as those streets are not typically comprised of flexible pavements, solid waste collection vehicles stop less frequently on those streets (and thus have a higher average speed).
3 Effect of truck speed on the response of flexible pavement systems to traffic loading; International Journal of Pavement Engineering, July 2020; Michael R. S. Mshali and Wynand JvdM. Steyn. 4 Real-world activity, fuel use, and emissions of heavy-duty compressed natural gas refuse trucks; Science of the Total Environment 761, 2021; Gurdas S. Sandhu, H. Christopher Frey, Shannon Bartelt-Hunt, Elizabeth Jones.
0.00 0.50
1.00 1.50
2.00 2.50
3.00 3.50
0 2 4 6 8 10 12 14 16 18 20 22 24 26
Relative Impact
Average Speed (MPH)
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 12 of 18 Vehicle Passes Per Day
By estimating the number and type of vehicles (i.e., solid waste collection vehicles, automobiles, and all other trucks) that travel on a street, and the average pavement impacts (measured in ESAL loading) associated with each vehicle type (described in the prior subsection), the total impacts that the pavement will experience can be estimated in a mathematical calculation. Our analysis makes informed assumptions about the number of vehicle passes (meaning trips down streets) by type for the two major types of streets identified by the City in its PMP. Those two types of streets are: high-traffic-volume streets (namely arterial and collector streets) and low-traffic-volume streets (residential streets). Specific data for the City relating to the number of vehicle passes per day and the proportion of those passes that are comprised of trucks was not available for this Study.
For the low-traffic residential streets, we used 2,132 vehicle passes per day, which is based on figures provided by the City from a 2024 traffic study. We also estimated that 5% of residential traffic trips were made by trucks. For arterial and collector streets, we used 13,426 passes per day, also based on figures provided by the City from the same 2024 traffic Study. For the percentage of those trips that are trucks, we used a calculated value based on comparative traffic counts from the City of Torrance in 2023 and which is the same dataset that we used to estimate the average ESAL for “All other trucks” in Table 5. That dataset calculates the average daily traffic counts for all vehicles on commercial streets in that city, with 87.7% of the average daily traffic count being comprised of passenger cars and motorcycles and the remaining
12.3% being comprised of trucks.
For the purposes of this Study, we have assumed an even higher percentage of arterial and collector street traffic being trucks, at 15% of the average daily traffic. As with the prior assumptions, this value is conservative in that it returns a low proportionate value for the impacts to streets from the Contractor’s solid waste vehicles. Table 6, below, is a summary of the assumptions used in this Study related to average daily vehicles passes and the percentage that are trucks assumptions used in this Study.
Table 6: Vehicle Passes Per Day by Street Type
Street Type Vehicle Passes Per Day Percentage of Vehicle Passes That Are Trucks
Residential 2,132 5%
Arterial and Collector 13,426 15%
Vehicle Passes By Vehicle Type
The variables described in the prior subsection provide the overall number of vehicle passes per day, and the percentage of those passes that are trucks. To isolate the vehicle loading impacts to pavement associated with solid waste collection vehicles, we need to determine the number of passes that those vehicles make per day. This is a relatively simple calculation based on the weekly schedule of collections for solid waste collection services.
For the low-traffic residential streets, solid waste collection operations are on a weekly schedule. Since weekly collections are on both sides of the street, each street is driven twice (once in each direction) by a minimum of one of each type of solid waste collection vehicle. For the purposes of this Study, we assume that each solid waste collection vehicle makes two passes per week, or 0.286 passes per day, on residential streets. This value does not account for the fact that some streets are driven on during nonroute days so that collection vehicles can access streets on a given route, meaning that the actual average passes per week in the City must be higher than stated above.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 13 of 18 Using the lower passes per week is conservative in that it returns a lower result for the street impacts from the Contractor’s solid waste vehicles. For the high-traffic arterial and collector streets, which are primarily commercial, the schedule for solid waste collection can vary. Solid waste collection services may be provided up to five or six times a week for larger waste generators and may be as low as weekly for smaller generators. Additionally, because solid waste generators in commercial areas are not all on the same collection schedules as residential accounts are, vehicles in commercial areas pass over the same streets multiple times to serve accounts with different collection schedules.
For the purposes of this Study, for arterial and collector streets, we assume that solid waste collection vehicles collecting garbage for landfill disposal pass over each street two times per day (once in each direction), while solid waste collection vehicles for organics and recycling pass over each street once per day (one half in each direction). Total passes for organics and recycling collection vehicles are less because it is generally the case that service levels for garbage are at least twice those of the corresponding organics or recycling service level. As with the number of passes on residential streets, this value does not account for the fact that some streets are driven on during non-route days so that collection vehicles can access streets on a given route, meaning that the actual average passes per week in the City must be higher than stated above. Using the lower passes per week is conservative in that it returns a lower result for the pavement impacts from the Contractor’s solid waste vehicles.
The number of passes per day for the remaining vehicle types – automobiles and other trucks – are simply calculated as a function of the total number of daily passes, the total number of those that are trucks (based on the percentages discussed in the prior section), and the number of passes for solid waste collection vehicles. For example, for the City’s residential streets, given 2,132 passes per day and 5% (~106.617) of those being trucks, there are ~2,025.717 automobile passes per day (2,132 x 95%).
With three types of solid waste collection vehicles each passing 0.286 times per day (as described above), the total passes per day are 0.857 (3 x 0.286). The number of passes for all other trucks is 105.76 (106.617 minus 0.857). Table 7, below, provides a summary of vehicle passes per day by street type.
Table 7: Vehicle Passes Per Day by Vehicle Type and Street Type Vehicle Type Residential Streets Arterial and Collector Streets Automobiles (Passenger Cars) 2,025.717 11,411.755
Average of All Other Trucks 105.760 2,010.982
Solid Waste Vehicle (Garbage) 0.286 1.429
Solid Waste Vehicle (Organics) 0.286 0.714
Solid Waste Vehicle (Recycling) 0.286 0.714
Total 2,132 13,426
Percentage of Streets by Type
A final variable that needs to be addressed in the percentage of streets by type. This information is included in the City’s PMP, including the relative area by street type, as shown in Table 8, on the following page.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 14 of 18 Table 8: Percentage of Streets by Type
Street Type Area (Square Feet) Percentage of Area
Residential 20,941,289 68.4%
Arterial and Collector 9,296,485 30.4%
Alleys 389,348 1.3%
Total 30,627,122 100%
Analysis
Percentage Impact for Solid Waste & Street Sweeping Vehicles by Street Type With the variables for ESAL by vehicle type, the multiplication factor for the relative impacts of speed for solid waste collection vehicles on residential streets, and the number of passes by vehicle type established, we then calculate the relative percentage impact associated with each vehicle type. This is calculated as a function of ESAL multiplied by speed factor (residential streets only) multiplied by the number of weekly passes, multiplied by ESAL, with the product being the total vehicle loading pavement impact by vehicle type per week.
Totaling the weekly total vehicle loading by vehicle types yields the total estimated loading experienced by each street type (residential vs. arterial and collector). From there, we calculate the percentage contribution to total vehicle loading for solid waste collection vehicles, which is the total weekly ESAL loading associated with solid waste collection vehicles divided by the total ESAL loading for the street.
Table 9, below, and Table 10, on the following page, show these calculations and the results.
Table 9: Calculation of Solid Waste Pavement Impacts – Residential Streets
A B C D E F
Vehicle Type
Average
ESAL /
Vehicle
(Per Table
5)
Relative
Impact
from
Speed
Passes /
Day /
Vehicle
Type
(Per Table
7)
Passes /
Week /
Vehicle
Type
(C x 7)
Total
Weekly
ESAL
Loading
(A x B x D)
Percent of
Total
ESAL
Loading
(E / 35)
Automobiles 0.0008 1x 2,025.717 14,180 11.34 32.41%
All Other Trucks 0.0171 1x 105.760 740 12.66 36.17%
Garbage Vehicles 1.0000 2x 0.286 2 4.00 11.43%
Organic Material Vehicles 1.0000 2x 0.286 2 4.00 11.43% Recycling Vehicles 0.7500 2x 0.286 2 3.00 8.57%
Total 2,132 14,926 35.00 100%
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 15 of 18 As shown in Table 9, for the City’s residential streets we calculated the percentage impacts for solid waste vehicles to be 31.43% of total impacts to residential street pavement (11.46% times 2 plus 8.57%).
Table 10: Calculation of Solid Waste Vehicle Impacts – Arterial and Collector Streets
A B C E F
Vehicle Type
Average
ESAL /
Vehicle
(Per Table 5)
Passes /
Day /
Vehicle Type
(Per Table 7)
Passes /
Week /
Vehicle Type
(B x 7)
Total Weekly
ESAL
Loading
(A x C)
Percent of
Total ESAL
Loading
(E / 323.37)
Automobiles 0.0008 11,411.755 79,882 63.91 19.76%
All Other Trucks 0.0171 2,010.982 14,077 240.71 74.44%
Garbage Vehicles 1.0000 1.429 10 10.00 3.09%
Organic Material Vehicles 1.0000 0.714 5 5.00 1.55%
Recycling Vehicles 0.7500 0.714 5 3.75 1.16%
Total 13,426 93,979 323.37 100%
For the City’s arterial and collector streets, Table 10 calculates the percentage impact from solid waste vehicles to be 5.8% of the total impacts (3.09% plus 1.55% plus 1.16%).
Average Annual Pavement Expenses
Per the PMP report, the City is projected to spend $5.5 million per year on pavement repair, maintenance, and rehabilitation. Of that, only $800,000 is planned for payment from the General Fund. Additionally, the City spends approximately $814,227annually for staffing related to PMP pavement projects and also on spot repair work not included in the PMP. Therefore, the total annual estimated City costs for pavement repair are $1,614,227.
Reduction for Pavement Subsurface Impacts
The City’s projected expenditures for pavement maintenance repair are assumed to include impacts to pavement caused by vehicles, trench cutting, and subsurface activities, as well as the environmental impacts associated with those same sources of primary impacts. We roughly estimate the impacts of trench cutting and subsurface activities on the City’s streets to be 10% of all pavement repair, maintenance, and rehabilitation costs. This leaves 90% of the average annual pavement management costs and average annualized deferred maintenance needs associated with vehicle impacts.
This is demonstrated in Table 11, on the following page.
Methodology & Calculations
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 16 of 18 Table 11: Average Annual Pavement Impacts from Vehicles Category Amount of Impacts
from All Sources
Reduction for
Subsurface Activities
Amount of Impacts
from Vehicles
Average Annual
Pavement Expenses $1,614,227 -10% $1,452,804
Table 12, below, shows the breakdown of the average annual pavement impacts from all vehicles by street type, using the total from Table 11.
Table 12: Total Pavement Impacts from Vehicles by Street Type Variable Residential Arterial, Collector and
Alley Total
Percentage of Streets
by Type (From Table 8) 68.4% 31.6% 100%
Total $993,355 $459,450 $1,452,804
Total Annual Pavement Impacts
Calculating the total annual Pavement Impacts using the variables, estimates, and assumptions from the prior section is a function of multiplication, as shown in Table 13, below.
Table 13: Calculation of Total Pavement Impacts from Contractor’s Vehicles Variables Residential Arterial and Collector
Grand Total
Annual Pavement Impacts
from Vehicles (From
Table 12)
$993,355 $459,450
Percentage Impacts from
Contractor’s Vehicles
(From Tables 9 and 10)
31.43% 5.80%
Total $312,167 $26,640 $338,807
3. FINDINGS & CONCLUSIONS
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 17 of 18 Franchise Fee
The FY 2022-23 Franchise Fee paid to the City was $530,795 and the projection for FY 2023-24 is $557,334.
R3 calculated estimates of the City’s Costs and Property Use Charges based on actual and estimated cost information provided by the City, and with conservative assumptions for estimated values.
The sum of FY 2023-24 annual City’s Costs ($171,583) and Property Use Charges ($574,330) amounts calculated in this Study is $745,913.
Where assumptions were necessary to complete the analysis in this Study, attempts were made to apply conservative assumptions given a range of possible inputs.
The calculated amounts bear a reasonable relationship to the Contractor’s burdens on the City resulting from the management and administration of the Agreement and the sanitation system, and the reasonable value of the Contractor’s use of the public right-of-way. The City’s Costs have been reviewed and confirmed by City staff as being representative of the actual time and costs incurred for these activities. Amounts of Property Use Charges are proportionately allocated to the Contractor with due recognition of the realities of the Contractor’s operations.
The amounts calculated in this Study are $188,578 (34%) higher than the projected FY 2023- 24 Franchise Fee payments. It is highly unlikely, given the justification provided herein, that FY 2023-24 Franchise Fee payments exceeded the amounts calculated in this Study.
The projected FY 2023-24 Franchise Fee is less than would be justified by the calculations in this Study.
It is reasonable to assume that the City’s Costs and Property Use Charges will not decrease in FY 2024-25. Likewise, it is also reasonable to assume based on historical trends that Franchise Fee revenues will only increase slightly in FY 2024-25. It is highly unlikely given prior trends that the FY 2024-25 Franchise Fee payments will exceed the amounts calculated in this Study.
The Franchise Fee therefore is not more than necessary to cover the City’s costs incurred in managing and administering the Agreement and the sanitation system plus the value of the Contractor’s use of the public right-of-way.
4. RECOMMENDATIONS
City of San Clemente | Solid Waste Franchise Fee Study – R3 Report 18 of 18 Restate Franchise Fee
The current franchise fee payments from the Contractor to the City are calculated as a percentage of gross revenues collected from billings in the City. While these payments do not exceed the City Costs and Property Use Charges values calculated in this Study, the City would be better served by restating the Franchise Fee to be a dollar value instead of a percentage of gross revenues.
We recommend that the City consider amending the Agreement with the Contractor to set the Franchise Fee at a dollar value not to exceed the sum of the City Costs and Property Use Charges values calculated by this Study.
Sources and Uses Accounting
Currently, the City’s Costs and Property Use Charges are not tied to Franchise Fee revenues in the City’s accounting system. The City could implement project code accounting and/or enterprise fund accounting for the Franchise Fee to better track source revenues and their uses. In either case, allocated and/or direct staffing and other costs could be tied to source revenues, while the Property Use Charges could be transferred out for general use.
R3 recommends the City consider implementing sources and uses accounting practices for Franchise Fee revenues, City’s Costs, and Property Use Charges.
Periodic Recalculation
Over time, the City’s Costs associated with the Agreement and the sanitation system, the value of Property Use Charges for use of the public right-of-way, and the annualized costs associated with Pavement Impacts from the Contractor’s solid waste collection vehicles may change in ways that vary from the annual change in the CPI. Additionally, changes in City policies, programs, procedures, organization, geopolitical boundaries, laws, regulations, court rulings, and/or other factors may also trigger a need for recalculating fees.
R3 recommends the City consider updating this Study periodically (e.g., every five years) or more frequently if needed to recalculate fees in response to other factors.