San Luis Obispo City Council
March 18, 2025

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In the case of a Change in Scope, a Change in Law or an Extraordinary Cost Increase, the Franchisee shall provide the City with projected operational, cost and revenue data reflecting the entire financial effect of such Change. The City reserves the right to require that the Franchisee supply any additional operational, cost and revenue data, or any other information it may reasonably need, to ascertain the appropriate financial impact of the Change and any necessary adjustment to Maximum Service resulting from such Change.

Extraordinary adjustments to Maximum Service Rates for a qualifying Change in Scope or Change in Law, for a Change in Fees, or for an Extraordinary Cost Increase shall take effect as of the beginning of the next year and will include all impacts of the extraordinary adjustment from the Effective Date of the impact; provided, however, that, in the case of any Change in Fees charged by the City, the extraordinary adjustment shall take effect as of the Effective Date of such Change in Fees. The underlying service, cost, revenue or Fee changes supporting any rate adjustment under this Section 5 will be added to the appropriate category under Sections 2 and 3 above for purposes of future cost projections.

San Luis Garbage Company
Financial Statements
December 31, 2023 and 2022

C O N T E N T S
Page(s)
Independent Auditors’ Report 1 - 2
Financial Statements
Statements of revenues and expenses - regulatory basis 3 Notes to financial statements 4 - 11
Independent Auditors’ Report on Supplementary Information 12 Schedules of allowable costs - regulatory basis 13 - 14

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2023 2022
Revenues
Hauling revenue 15,290,913 $ 14,229,919 $
Other income 19,642 15,773 Total revenue 15,310,555 14,245,692 Allowable Costs Direct labor 3,240,444 3,190,511 Corporate overhead - allowable threshold 253,513 232,794 Office salaries 441,918 419,239 Other general and administrative costs 4,601,981 4,281,662 Interest, related party 173,867 191,690 Total allowable costs 8,711,723 8,315,896 Allowable Pass-Through Costs Tipping fees, related party 2,987,529 2,199,882
Non-related party tipping fees 953,253 700,637 Franchise fees and taxes 1,932,189 1,824,783 Related party rent 168,486 160,615 Transportation - compactors, related parties - 550 Total pass-through costs 6,041,457 4,886,467 Total allowable and pass-through costs 14,753,180 13,202,363 Rate setting income 1,043,329 557,375 Non-Allowable Costs 8,492 6,349 Net income $ 1,036,980 548,883 $ See Notes to Financial Statements.

San Luis Garbage Company
Statements of Revenues and Expenses - Regulatory Basis
Years Ended December 31, 2023 and 2022

San Luis Garbage Company
Notes to Financial Statements
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Note 1. Summary of Significant Accounting Policies
Nature of business:

San Luis Garbage Company (the Company) became a wholly-owned subsidiary of Waste Connections US, Inc. as of April 1, 2002. The Company operates a garbage collection service for residential, commercial, and governmental entities within the city and vicinity of San Luis Obispo, California. The Company services collection routes by use of Companyowned equipment and employees of the Company. The Company extends credit in the form of accounts receivable to customers in its service area.

Prescribed accounting practices:

The County of San Luis Obispo and the City of San Luis Obispo require the Company to utilize the accounting principles prescribed by the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo (the Manual) in its financial statement reporting for rate setting purposes.

The primary purpose of the accounting principles prescribed by the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo is to determine integrated solid waste management rates which are fair to residents and which provide adequate revenue to the hauler. The basis of presentation prescribed by the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo differs from U.S. generally accepted accounting principles (U.S. GAAP) in that the following expenses are non-allowable costs:
charitable donations and political contributions, entertainment expenses, income tax expenses, and profit sharing payments not related to an Internal Revenue Service approved pension program. The Manual also specifies a limitation on corporate overhead, which is defined as salaries of corporate officers that can be treated as allowable costs. Bonus costs and allocated facility and administrative support costs are included as allowable costs and are not part of the corporate overhead pool subject to limitation. Although not specifically listed as non-allowable costs in the Manual, management has also historically classified the following costs as non-allowable: loss (or gain) on disposal of assets, penalties, and certain employee relocation costs.

In addition, according to the accounting principles prescribed by the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management, the operations of the individual garbage districts are considered separate entities for rate setting purposes. Given this, the financial statements for each company have not been consolidated with the other subsidiaries of Waste Connections US, Inc.

San Luis Garbage Company
Notes to Financial Statements
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Reclassifications:

Certain amounts in the 2022 financial statements have been reclassified for comparative purposes to conform with presentation in the 2023 financial statements.

Allocation of costs:

Management of the Company believes that because costs are shared between districts, allocating costs between the companies receiving the benefits is the most effective way to track and record the costs at the standalone district (Company) level. These costs are mainly allocated based on truck hours or customer count (container counts, CNG trucks and yard waste tons are also used as allocators), depending on the nature of the cost. In general, costs that are administrative are allocated on customer count, and costs that are direct are allocated on truck hours, consistent with the direct labor (direct) and office salaries (administrative) allocations.

Interest:

Interest expense is allocated using an estimated internal interest rate (3.09% for 2023 and

3.89% for 2022) and applying that interest rate to the average net book value of fixed assets, and then allocating to the stand-alone district level based on the pro-rata depreciation allocation percentages. The Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo includes interest expense as an allowable cost.

Income tax:

Entity level income tax is assessed at the corporate parent entity level. As a wholly owned subsidiary, the standalone district (the Company) does not pay or incur income tax. As such, there is no provision for current or deferred income taxes for the Company, and no allocation is made on the standalone financial statements for income tax. Income tax expense is a non-allowable cost under the principles prescribed by the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo.

Franchise fees and taxes:

U.S. generally accepted accounting principles would require that tax and franchise fees that are assessed by governmental authorities that are directly imposed on a revenue-producing transaction between a seller and a customer be presented on a net basis (excluded from revenues). However, in accordance with the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo, franchise fees and taxes have been shown gross on the statements of revenues and expenses – regulatory basis and are included in revenues and shown as an allowable cost.

Use of estimates:

The preparation of financial statements in conformity with practices prescribed or permitted by the Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo, which is a comprehensive basis of

San Luis Garbage Company
Notes to Financial Statements
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accounting other than U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue recognition:

Revenues are recognized when services are transferred to customers in an amount that reflects consideration that is expected to be received.

Nature of revenue:

The Company’s solid waste collection business involves the collection of waste from residential, commercial and industrial customers for transport directly to the landfill, transfer stations or recycling centers. Solid waste collection services include both recurring and temporary customer relationships. The services are performed under service agreements or franchise agreements with governmental entities. Residential and commercial collection services are provided on a subscription basis with individual households or businesses. The fees received for collection services are based primarily on the market, collection frequency, level of service, route density, type and volume or weight of the waste collected, type of equipment and containers furnished, the distance to the disposal or processing facility, the cost of disposal or processing, and prices charged by competitors for similar services.

Disaggregation of revenue:

The following table presents the Company’s revenue disaggregated by contract type:
2023 2022
Hauling revenues - residential customers 5,645,681 $ 4,972,579 $ Hauling revenues - commercial customers 9,645,232 9,257,340 Total 15,290,913 $ 14,229,919 $ The factors that impact the timing and amount of revenue recognized for each type of revenue may vary based on the nature of the service performed. Generally, the Company recognizes revenue at the time it performs a service. Certain customers are billed in advance (bi-monthly billing) and, accordingly, recognition of the related revenues is deferred until the services are provided.

San Luis Garbage Company
Notes to Financial Statements
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Contract balances:

The timing of revenue recognition, billings and cash collections results in billed accounts receivable (contract assets), and customer deposits and deferred revenue (contract liabilities) on the Company’s balance sheet (not presented).

Performance obligations:

Service performance obligations of a long-term nature, such as solid waste collection service contracts, are satisfied over time, and revenue is recognized based on the value provided to the customer during the period. The amount billed to the customer is based on variable elements such as the number of residential homes or businesses for which collection services are provided, the volume of waste collected, transported and disposed, and the nature of the waste accepted. The Company does not disclose the value of unsatisfied performance obligations for these contracts as its right to consideration corresponds directly to the value provided to the customer for services completed to date and all future variable consideration is allocated to wholly unsatisfied performance obligations.

Costs to obtain a contract:

The incremental direct costs of obtaining a contract, which consist of sales incentives, would be recognized on the Company’s balance sheet (not presented) as a deferred sales incentive to be amortized to expense over the life of the customer relationship. There were no contract acquisition costs recorded at the stand-alone district level.

Accounts receivable and allowance for credit losses:

Accounts receivable is stated at the amount management expects to collect from outstanding balances. At each balance sheet date, the Company recognizes an expected allowance for credit losses. In addition, also at each reporting date, this estimate is updated to reflect any changes in credit risk since the receivable was initially recorded. This estimate is calculated on a pooled basis where similar risk characteristics exist. The allowance estimate is derived from a review of the Company’s historical losses based on the aging of receivables. This estimate is adjusted for management’s assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed relevant by the Company. Management believes that the composition of trade receivables at year-end is consistent with historical conditions as credit terms and practices and the customer base has not changed significantly and has not identified any current conditions or supportable forecasts that would have a material impact on the expected credit losses.

The Company writes off receivables when there is information that indicates the debtor is facing significant financial difficulty and there is no possibility of recovery. If any recoveries are made from any accounts previously written off, they will be recognized in income or an offset to credit loss expense in the year of recovery, in accordance with the entity’s accounting policy election. Changes in the valuation allowance have not been material to the financial statements.

San Luis Garbage Company
Notes to Financial Statements
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Property and equipment, and depreciation:

Repairs, maintenance and small equipment purchases are charged to expense when incurred. Expenditures, which significantly increase asset values or extend useful lives, are capitalized and recorded at cost. Depreciation expense is calculated on the straight-line method over the following useful lives:

Years
Buildings and improvements 25
Vehicles 7
Containers 7
Equipment 7
Office equipment 5
Depreciation is allocated to each stand-alone district based on a combination of customer count, container count, and truck hours allocation factors. Depreciation expense for the years ended December 31, 2023 and 2022 was $1,341,004 and $1,078,188, respectively.

Public relations and promotions (advertising) costs:

The Company expenses public relations and promotions costs as incurred.

Insurance:

Waste Connections US, Inc., the sole shareholder and parent of the Company has high deductible coverage for automobile liability, general liability, employer’s liability, environmental liability, as well as for certain employee group health claims, property and workers’ compensation. Waste Connection’s insurance accruals are based on claims filed and estimates of claims incurred but not reported and are developed by corporate management with assistance from its third-party actuary and its third-party claims administrator. The insurance accruals are influenced by past claims experience factors, which have a limited history, and by published industry development factors. Insurance expense and allocated insurance expense for the Company are recorded in other general and administrative costs on the statements of revenues and expenses – regulatory basis.

Economic dependency:

The Company provides disposal services to residential and commercial customers under the terms of franchise agreements with the City of San Luis Obispo (City) and the County of San Luis Obispo (County). Collection rates are determined annually based on historical expenses, future budgeted expenses, and a reasonable rate of return. The garbage and recycling franchise agreements with the City extend through 2025, and the green waste organics agreement extends through 2038. The franchise agreement with the County extends to 2039.

San Luis Garbage Company
Notes to Financial Statements
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In consideration for the grant of the exclusive franchise to provide services to the respective municipalities, the Company has agreed to pay a franchise fee based upon a percentage of annual gross solid waste revenues provided to each grantee, as follows:

City of San Luis Obispo 10%
County of San Luis Obispo
(unincorporated) 10%
The Company is required to submit audited financial statements to the City of San Luis Obispo within four months of their year-end and to the County of San Luis Obispo within six months of their year-end. The contracts allow for an extension of time if mutually agreed upon by both parties.

Related party rent:

The Company accounts for intercompany leases as related party rent expense and has not adopted the new lease guidance because the intercompany leases eliminate on a consolidated level for Waste Connections US, Inc. Note 2. Related Party Transactions The Company has entered into various related party transactions. The nature of related party transactions and amounts not specifically identified elsewhere in the financial statements are as follows:

Overhead:

San Luis Garbage Company is a wholly-owned subsidiary of Waste Connections US, Inc.

Waste Connections US, Inc. provides management and administrative services San Luis Garbage Company. These costs are included as corporate overhead - allowable threshold in the accompanying statements of revenues and expenses - regulatory basis.

Tipping fees:

Waste Connections US, Inc. is also the sole shareholder in Cold Canyon Land Fill, Inc., which operates the sanitary landfill that the Company utilizes for the disposal of garbage collected, and the Materials Recovery Facility (MRF) for the disposal of recyclable material. These costs are included in tipping fees, related party in the accompanying statement of revenues and expenses – regulatory basis.

Transportation:

The Company also pays other related companies for transportation costs of garbage to the landfill. The transportation costs – compactors, related parties are included in the accompanying statement of revenues and expenses – regulatory basis.

Allocated insurance:

The Company incurs expenses for insurance costs that are allocated from a related party company that is a subsidiary of Waste Connections US, Inc. The amount of the insurance

San Luis Garbage Company
Notes to Financial Statements
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cost allocated totaled $1,106,795 and $1,143,042 for the years ended December 31, 2023 and 2022, respectively, which is included in other general and administrative costs.

Allocated facilities and regional support costs:

The Company incurs expenses for regional facilities and administrative support costs that are allocated from the regional division of Waste Connections US, Inc. The amount of the facilities and administrative support costs allocated totaled $29,386 and $35,736 for the years ended December 31, 2023 and 2022, respectively, which is included in other general and administrative costs.

Allocated labor:

The related companies pay for labor and services on behalf of each other. These costs are allocated between the companies receiving the benefits. The allocated labor costs are recorded to direct labor or office salaries. Direct labor costs are allocated to the companies based on truck hours. Office salaries are allocated to the companies based on customer count.

Allocated bonuses:

Bonus costs to the local level employees allocated from corporate are included in direct labor and office salaries.

Allocated interest:

Interest expense is allocated to the stand-alone district level based on the policy as described in Note 1, and is shown as interest, related party.

Allocated other costs:

The Company incurs other costs that are shared between the related companies. These costs are allocated between the companies receiving the benefits. These costs are mainly allocated based on truck hours or customer count (container counts, CNG trucks and yard waste tons are also used as allocators), depending on the nature of the cost. In general, costs that are administrative are allocated on customer count, and costs that are direct are allocated on truck hours, consistent with the direct labor (direct) and office salaries (administrative) allocations.

Note 3. Employee Benefit Plan
The Company’s employees can participate in the 401(k) profit sharing plan (the Plan) offered by Waste Connections US, Inc. Waste Connections US, Inc. made matching contributions to a trust, for the benefit of qualified employees, subject to certain limitations imposed by the Internal Revenue Service for the years ended December 31, 2023 and 2022.

The Company matches 100% of employee contributions up to 5% of compensation and the match vests immediately. Substantially all employees are eligible who are 21 years of age and have at least one year of service. For the years ended December 31, 2023 and 2022, the

San Luis Garbage Company
Notes to Financial Statements
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Company’s contribution amounted to $106,324 and $100,497, respectively. The total amount of the retirement costs are recorded in the financial statements as part of direct labor and office salaries.

Note 4. Related Party Lease
The Company has a lease for office and yard space with a related party, Corral de Piedra Land Company. The lease is renewed annually. The base rent is allocated to the stand-alone districts. The monthly base rent for the Company’s yard and office space for the years ended December 31, 2023 and 2022 was $14,040 and $13,385, respectively. The base rent is subject to an annual increase based on the Consumer Price Index (CPI) and is also subject to allocation adjustments. Related party rent expense for the years ended December 31, 2023 and 2022 was $168,486 and $160,615, respectively. Non-related party rent expense for the years ended December 31, 2023 and 2022 $3,182 and $2,533, respectively.

Note 5. Commitments and Contingencies
The Company has certain workers’ compensation and auto liability claims outstanding at the end of the year. The ultimate responsibility of these claims is held by Waste Connections US, Inc, the sole shareholder and parent of the Company. The known liability and expense is allocated from the corporate consolidated level to the stand-alone Company.

However, the liability and expense for any incurred but not reported (IBNR) estimated amounts have not been recorded to the financial statements of the stand-alone Company.

The solid waste industry in which the Company operates is subject to a certain level of environmental risk. Although the Company does not accept hazardous waste materials from its commercial and residential customers for placement in the landfill, and is not aware of any occurrences of receiving hazardous waste materials, occurrences are reasonably possible. Such environmental liabilities could have a material effect on the financial position of the Company.

Note 6. Significant Concentration of Risk
The Company operates exclusively in the solid waste industry in San Luis Obispo County, and therefore, its revenues and receivables are subject to geographical concentrations.

Due to the nature of the Company’s services, its accounts receivable balance is comprised of amounts due from many customers. This diversity reduces the risk of any one customer significantly impacting the Company’s realization of its receivables.

Note 7. Subsequent Events
The date to which events occurring after December 31, 2023 have been evaluated for possible adjustment to the financial statements or disclosure is June 21, 2024, which is the date on which the financial statements were available to be issued.

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2023 2022
Direct Labor
Labor 3,009,592 $ 2,968,930 $
Payroll taxes 230,852 221,581 Total direct labor 3,240,444 $ 3,190,511 $ Office Salaries
Office salaries 414,001 $ 394,696 $
Payroll taxes 27,917 24,543 Total office salaries 441,918 $ 419,239 $ San Luis Garbage Company
Schedules of Allowable Costs - Regulatory Basis
Years Ended December 31, 2023 and 2022

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2023 2022
Other General and Administrative Costs
Bad debt (7,813) $ 26,696 $
Bond 17,888 7,613 Depreciation 1,341,004 1,078,188 Drive cam fees 28,590 28,945 Dues and subscriptions 13,042 9,137 Facilities & regional support - allocated from related parties 29,386 35,736 Gas and oil 923,489 782,675 Insurance - allocated from related parties 1,106,795 1,143,042 Laundry and uniforms 22,691 26,012 Legal and accounting 55,856 37,086 Miscellaneous and other 3,277 2,772 Office 201,002 179,347 Operating supplies 49,622 57,688 Other taxes 38,775 40,822 Outside services 52,242 68,120
Permits and licenses 93,253 80,529
Postage 6,125 15,501
Public relations and promotions 10,484 2,249 Relocation 7,496 255 Rent 3,182 2,533 Telephone 19,518 20,612 Tires 155,898 163,183 Travel 12,973 20,326 Truck repairs 400,504 432,111 Utilities 16,702 20,484 Total other general and administrative costs 4,601,981 $ 4,281,662 $ San Luis Garbage Company
Schedules of Allowable Costs - Regulatory Basis - Continued Years Ended December 31, 2023 and 2022

Notice of Public Hearing Regarding
Proposed Solid Waste Rate Adjustment
Residential, Multi-Family, and Commercial Property Owners and Tenants - Customers:

This notice is intended to inform you that the City of San Luis Obispo (the “City”) will hold a public hearing regarding rate adjustments (the “Proposed Rate Adjustment”) proposed by San Luis Garbage Company (the “Garbage Company”) for properties and customers receiving solid waste, recycling, and organics services within the City. The Proposed Rate Adjustment will be considered by the San Luis Obispo City Council at the date, time, and location specified below. Consistent with the requirements of Proposition 218, this notice also provides you with the following information:
● The Amount of the Proposed Rate Adjustment;
● The Effective Date of the Rate Adjustment;
● The Date, Time, and Place of the Public Hearing;
● The Majority Protest Procedures;
● The Reason for the Proposed Rate Adjustment; and
● The Basis for the Proposed Rate Adjustment.

NOTICE OF PUBLIC HEARING
The Public Hearing for the Proposed Rate Adjustment within the City limits will be held on:

Date: March 18, 2025 Time: 5:30 p.m.

Place: San Luis Obispo City Hall, 990 Palm Street, San Luis Obispo, CA At the Public Hearing, the City Council will consider all public comment in support of and in opposition to the Proposed Rate Adjustment and whether or not a Majority Protest exists pursuant to the California Constitution (as described below).

If approved, the Proposed 2025 Rate Adjustment would become effective on March 19, 2025, and annual adjustments would be effective each January 1 of 2026, 2027, 2028 and 2029.

Reason For and Basis of the Proposed Rate Adjustments
The Proposed Rate Adjustment for 2025 is based on the Garbage Company’s documented cost of providing solid waste services and is a 7.98% increase above current solid waste rates. This cost-based adjustment is necessary for the Garbage Company to continue to provide safe, environmentally sound and reliable solid waste removal, transportation and disposal services to the residents and businesses of the City. The adjustments are requested due to:
• Increases in organics processing costs – Third-party costs for the organic waste post-collection processing facility operated by Kanadevia Inova Anaerobic Digestion Facility, formerly Hitachi Zosen INOVA, have doubled since 2022. The change in cost is the result of changes in facility capital and operating costs.

• Increases in landfill disposal costs – Related party costs charged to the customer for landfill waste disposal at Cold Canyon Landfill have remained the same since 2016. The 2025 rate adjustment reflects a market adjustment to these costs, from a per ton tipping fee of $41 per ton (in place since 2016) to a per ton tipping fee of $70. The Garbage Company provided market comparison demonstrating the applicability of the $70 per ton market tipping fee. • Collection costs including labor, vehicles, operating expenses and overhead – These costs are increasing by 4.22% in 2025.
• Adjustments necessary for moving to a new methodology for annual rate adjustments that provides for increased rate stability, predictability, fairness, transparency, ease of administration, and costeffectiveness. These include updated depreciation lifespans for solid waste collection vehicles, change to the limitation on corporate overhead costs for legal, tax, payroll, human resources, engineering, compliance, IT, training and recruiting programs, and updated profit allowance (to 9% of projected collection service costs in 2025, approximately 5% of overall costs) in-keeping with industry standards.
• Adjustments for new service enhancements, including the ability for residential customers to exchange a collection cart once annually at no additional cost, a few no cost bulky/large item collections, and a Customer Assistance Program providing a 20% low-income discount to residential customers using 20, 32, or 64-gallon cart service (using existing City practices to determine eligibility).

Beginning March 19, 2025, commercial customers enrolled in recycling bin service collection once and twice a week will begin paying for the service at 25% of the correlating trash bin service level rate.

The Proposed Rate Adjustments for 2025 applicable to residential solid waste customers are shown in the table below.

Garbage
Container Size 2024 Change in Monthly Rate 2025
20-gallon $14.74 $1.18 $15.92
32-gallon $23.53 $1.88 $25.41
64-gallon $47.05 $3.75 $50.80
96-gallon $70.60 $5.63 $76.23
In addition, commencing each January 1 of 2026, 2027, 2028 and 2029 solid waste rates will be adjusted based on the following:
• Annual change in the Bureau of Labor Statistics’ Consumer Price Index (CPI) for Garbage and Trash Collection in the U.S all city average, with a minimum 2% adjustment and a maximum 5% adjustment.

Amounts below the minimum or above the maximum will carry forward to the following year. • Calculation of a 10% profit allowance on projected collection service costs (increased from 9% in 2025, and approximately 5.5% of overall costs) to the Garbage Company starting in 2026 (estimated at an additional 0.67% to 0.69% adjustment in 2026).

• Addition of a revenue balancing mechanism starting in 2027, wherein actual revenues from solid waste rates over or under projections carry forward as additions to, or offsets against, the annual CPI adjustment.
• The rate adjustment for January 1, 2026, is not expected to exceed 8% and rate adjustments for January 1, 2027, 2028 and 2029 are not expected to exceed 7%.

The Proposed Rate Adjustments have been independently reviewed for consistency with the City of San Luis Obispo Rate Setting Process and Methodology Manual for Integrated Solid Waste Management dated June 1994 and in accordance with the provisions of the City’s Franchise Agreement with the Garbage Company, as amended, governing solid waste service within the boundaries of the City. The Proposed Rate Adjustments contemplate implementation of a new methodology for annual rate adjustments which is described in the New Solid Waste Rate Adjustment Methodology and 2025 Rates report authored by independent reviewer, R3 Consulting Group, Inc. The consultant’s report and the complete set of proposed 2025 solid waste rates is available at the City Clerk’s office located at 990 Palm Street, San Luis Obispo, California. The complete set of proposed 2025 rates is also available online at sanluisgarbage.com.

How Do I Protest the Proposed Rate Adjustments?
Pursuant to Section 6 of Article XIII D of the California Constitution, the following persons may submit a written protest against the Proposed Rate Adjustments to the City Clerk before the close of the Public Hearing referenced above.
 An owner(s) of property (parcel(s)) receiving solid waste, recycling, and organics services within the City limits. If the person(s) signing the protest, as an owner, is not shown on the last equalized assessment roll as the owner of the parcel(s) then the protest must contain or be accompanied by written evidence that such person signing the protest is the owner of the parcel(s) receiving services; or
 A tenant(s) whose name appears on the Garbage Company’s records as the customer of record for the corresponding parcel receiving solid waste, recycling, and organicsservices within the City limits (tenantcustomer).

A valid written protest must contain a statement that you protest the Proposed Rate Adjustments, the address or Assessor’s Parcel Number (APN) of the parcel or parcels which receive solid waste, recycling, and organics services, and a signature by either the owner or the tenant-customer of the parcel or parcels. One written protest per parcel shall be counted in calculating a majority protest to the Proposed Rate Adjustments subject to the requirements of Section 6 of Article XIII D of the California Constitution. Written protests will not be accepted by e-mail or by facsimile. Verbal protests will not be counted in determining the existence of a majority protest. To be counted, a protest must be received in writing by the City Clerk before the close of the Public Hearing referenced above.

Written protests regarding the solid waste rate Adjustment may be mailed to:

City of San Luis Obispo
Attn: City Clerk
990 Palm Street
San Luis Obispo, CA 93401-3249

Written protests may also be personally delivered to the City Clerk at San Luis Obispo City Hall located at 990 Palm Street, San Luis Obispo, California, 93401.

If valid written protests are presented by a majority of owners and/or tenants-customers of parcels receiving solid waste, recycling, and organics services within the City limits, then the City will not adjust the rates for the services.

Questions can also be directed to San Luis Garbage by calling (805) 543-0875.

An informational session has been coordinated to allow the opportunity for the public to learn and ask questions about the proposed rate adjustment on a date prior to the public hearing.

Informational Session
Date: February 26, 2025
Time: Doors open at 5:00 p.m., brief presentation at 5:30 p.m.

Location: Ludwick Community Center
864 Santa Rosa Street
San Luis Obispo, CA 93401
SAN LUIS GARBAGE COMPANY, INC.

RATE ADJUSTMENT EFFECTIVE MARCH 19, 2025

CITY OF SAN LUIS OBISPO

SINGLE-FAMILY AND MULTI-FAMILY RESIDENTIAL CART
Residential customers must use containers provided by San Luis Garbage. The bundled residential cart rate includes weekly pickup of one trash cart (black or gray lid), one organics cart (green lid), and one recycling cart (blue lid), at no extra cost.

RESIDENTIAL CART SERVICE
Pickup
Per
Week
Monthly Rate
Effective
01/01/2024

PROPOSED

7.98%
RATE

ADJUSTMENT

MONTHLY
RATE

EFFECTIVE
3/19/2025
19 Gallon Cart Set 1 $14.74 1.18 15.92
32 Gallon Cart Set 1 $23.53 1.88 25.41
PARA UNA VERSIÓN EN ESPAÑOL DE ESTE “AVISO DE AUDENCIA PÚBLICA SOBRE LOS AUMENTOR PROPUESTOS DE LA TASA DE RESIDUOS SÓLIDOS”, UTILICE EL SIGUIENTE ENLACE AL SITIO WEB:
www.sanluisgarbage.com/news
Si tiene preguntas o consultas adicionales, no dude en comunicarse con la compañía de basura al (805) 543-0875 y uno de nuestros representantes de servicio al cliente podrá ayudarlo.

64 Gallon Cart Set 1 $47.05 3.75 50.80
96 Gallon Cart Set 1 $70.60 5.63 76.23
32 Gallon Additional Trash Cart 1 $21.45 1.71 23.16
64 Gallon Additional Trash Cart 1 $42.93 3.43 46.36
96 Gallon Additional Trash Cart 1 $64.36 5.14 69.50
32/64/96 Additional Recycle Cart 1 $4.93 0.39 5.32
32/96 Additional Organics Cart 1 $9.16 0.73 9.89
DESIGNED MANUAL SERVICE (determined by city staff)
19 Gallon Cart Set 1 $23.93 1.91 25.84
32 Gallon Cart Set 1 $38.29 3.06 41.35
64 Gallon Cart Set 1 $76.63 6.12 82.75
96 Gallon Cart Set 1 $114.89 9.17 124.06
LATE MAKEUP COLLECTIONS WITH TRASH TRUCK (Phone call required) TRIP CHARGE, plus additional charge below for any
extra carts or equivalent volume (gallons). $23.74 1.89 25.63 - Additional charge per 32 gallon cart. $11.77 0.94 12.71 EXTRA COLLECTIONS WITH PICKUP OR FLATBED TRUCK (Phone call required) TRIP CHARGE, plus applicable amount below: $35.59 2.84 38.43 - Contamination Fee (Equivalent to a trash cart dump) $0.00 12.71 12.71 - Per trash cart or equivalent volume (over 6 cans) $11.77 0.94 12.71 - Per recycle cart or equivalent volume (over 6 cans) $5.88 0.47 6.35 - Per bulky/large item or white goods/large appliance
(after no cost collections are used - see notes section for details) $44.48 3.55 48.03
- Per piece of small size furniture/appliance (after no cost collections are used - see notes section for details) $26.30 2.10 28.40 - Per mattress with boxspring. $26.30 2.10 28.40
RESIDENTIAL - OTHER CHARGES:

TAX LIEN CERT. MAIL FEE $5.36 0.43 5.79
SPECIAL TRIP FEE $71.20 5.68 76.88
LOOSE CARDBOARD $12.63 1.01 13.64
RESTART FEE-RESIDENTIAL $35.59 2.84 38.43
VACANT RATE $12.10 0.97 13.07
SERVICE AWAY FROM THE CURB $16.04 1.28 17.32
CART REPLACMENT (One provided annually at no
cost) $34.07 2.72 36.79
USED OIL COLLECTION - no charge (Call for details and pick up information).

MULTI-FAMILY RESIDENTIAL BIN (5 UNITS OR MORE)

MULTI-FAMILY TRASH BIN SERVICE
(Cubic Yards)
Pickup
Per
Week
Monthly Rate
Effective
01/01/2024

PROPOSED

7.98%
RATE

ADJUSTMENT

MONTHLY
RATE

EFFECTIVE
3/19/2025
1 Yard Trash Bin 1 $170.30 13.59 183.89
1 Yard Trash Bin 2 $248.03 19.79 267.82
1 Yard Trash Bin 3 $325.64 25.99 351.63
1 Yard Trash Bin 4 $403.32 32.18 435.50
1 Yard Trash Bin 5 $481.05 38.39 519.44
1 Yard Trash Bin 6 $558.64 44.58 603.22
1 Yard Trash Bin 7 $502.44 40.09 542.53

1.5 Yard Trash Bin 1 $197.18 15.73 212.91

1.5 Yard Trash Bin 2 $304.72 24.32 329.04

1.5 Yard Trash Bin 3 $412.30 32.90 445.20

1.5 Yard Trash Bin 4 $519.81 41.48 561.29

1.5 Yard Trash Bin 5 $627.36 50.06 677.42

1.5 Yard Trash Bin 6 $734.88 58.64 793.52

1.5 Yard Trash Bin 7 $842.41 67.22 909.63
2 Yard Trash Bin 1 $224.06 17.88 241.94
2 Yard Trash Bin 2 $358.50 28.61 387.11
2 Yard Trash Bin 3 $492.92 39.34 532.26
2 Yard Trash Bin 4 $627.35 50.06 677.41
2 Yard Trash Bin 5 $761.78 60.79 822.57
2 Yard Trash Bin 6 $896.21 71.52 967.73
2 Yard Trash Bin 7 $1,030.60 82.24 1,112.84
3 Yard Trash Bin 1 $277.79 22.17 299.96
3 Yard Trash Bin 2 $466.06 37.19 503.25
3 Yard Trash Bin 3 $654.26 52.21 706.47
3 Yard Trash Bin 4 $842.50 67.23 909.73
3 Yard Trash Bin 5 $1,030.65 82.25 1,112.90
3 Yard Trash Bin 6 $1,218.91 97.27 1,316.18
3 Yard Trash Bin 7 $1,407.13 112.29 1,519.42
4 Yard Trash Bin 1 $331.61 26.46 358.07
4 Yard Trash Bin 2 $576.56 46.01 622.57

4 Yard Trash Bin 3 $821.60 65.56 887.16
4 Yard Trash Bin 4 $1,066.61 85.12 1,151.73
4 Yard Trash Bin 5 $1,311.55 104.66 1,416.21
4 Yard Trash Bin 6 $1,556.59 124.22 1,680.81
4 Yard Trash Bin 7 $1,801.65 143.77 1,945.42
6 Yard Trash Bin 1 $439.12 35.04 474.16
6 Yard Trash Bin 2 $794.65 63.41 858.06
6 Yard Trash Bin 3 $1,150.20 91.79 1,241.99
6 Yard Trash Bin 4 $1,505.73 120.16 1,625.89
6 Yard Trash Bin 5 $1,861.29 148.53 2,009.82
6 Yard Trash Bin 6 $2,286.55 182.47 2,469.02
6 Yard Trash Bin 7 $2,596.25 207.18 2,803.43
8 Yard Trash Bin 1 $534.94 42.69 577.63
8 Yard Trash Bin 2 $992.34 79.19 1,071.53
8 Yard Trash Bin 3 $1,450.54 115.75 1,566.29
8 Yard Trash Bin 4 $1,909.22 152.36 2,061.58
8 Yard Trash Bin 5 $2,368.06 188.97 2,557.03
8 Yard Trash Bin 6 $2,915.92 232.69 3,148.61
8 Yard Trash Bin 7 $4,871.03 388.71 5,259.74

MULTI-FAMILY RECYCLING BIN

SERVICE
(Cubic Yards)
Pickup
Per
Week
Monthly Rate
Effective
01/01/2024

PROPOSED

7.98%
RATE

ADJUSTMENT

MONTHLY RATE

EFFECTIVE
03/19/2025
1 Yard Recycle Bin 1 $0.00 45.97 45.97
1 Yard Recycle Bin 2 $0.00 66.96 66.96
1 Yard Recycle Bin 3 $81.41 6.50 87.91
1 Yard Recycle Bin 4 $100.83 8.05 108.88
1 Yard Recycle Bin 5 $120.26 9.60 129.86
1 Yard Recycle Bin 6 $139.66 11.14 150.80
1 Yard Recycle Bin 7 $125.61 10.02 135.63

1.5 Yard Recycle Bin 1 $0.00 53.23 53.23

1.5 Yard Recycle Bin 2 $0.00 82.26 82.26

1.5 Yard Recycle Bin 3 $103.08 8.23 111.31

1.5 Yard Recycle Bin 4 $129.95 10.37 140.32

1.5 Yard Recycle Bin 5 $156.84 12.52 169.36

1.5 Yard Recycle Bin 6 $183.72 14.66 198.38

1.5 Yard Recycle Bin 7 $210.60 16.81 227.41
2 Yard Recycle Bin 1 $0.00 60.49 60.49
2 Yard Recycle Bin 2 $0.00 96.78 96.78
2 Yard Recycle Bin 3 $123.23 9.83 133.06
2 Yard Recycle Bin 4 $156.84 12.52 169.36
2 Yard Recycle Bin 5 $190.45 15.20 205.65
2 Yard Recycle Bin 6 $224.05 17.88 241.93
2 Yard Recycle Bin 7 $257.65 20.56 278.21
3 Yard Recycle Bin 1 $0.00 74.99 74.99
3 Yard Recycle Bin 2 $0.00 125.81 125.81
3 Yard Recycle Bin 3 $163.57 13.05 176.62
3 Yard Recycle Bin 4 $210.63 16.81 227.44
3 Yard Recycle Bin 5 $257.66 20.56 278.22
3 Yard Recycle Bin 6 $304.73 24.32 329.05
3 Yard Recycle Bin 7 $351.78 28.07 379.85
4 Yard Recycle Bin 1 $0.00 89.52 89.52
4 Yard Recycle Bin 2 $0.00 155.64 155.64
4 Yard Recycle Bin 3 $205.40 16.39 221.79
4 Yard Recycle Bin 4 $266.65 21.28 287.93
4 Yard Recycle Bin 5 $327.89 26.17 354.06
4 Yard Recycle Bin 6 $389.15 31.05 420.20
4 Yard Recycle Bin 7 $450.41 35.94 486.35
6 Yard Recycle Bin 1 $0.00 118.54 118.54
6 Yard Recycle Bin 2 $0.00 214.52 214.52
6 Yard Recycle Bin 3 $287.55 22.95 310.50
6 Yard Recycle Bin 4 $376.43 30.04 406.47
6 Yard Recycle Bin 5 $465.32 37.13 502.45
6 Yard Recycle Bin 6 $571.64 45.62 617.26
6 Yard Recycle Bin 7 $649.06 51.79 700.85
8 Yard Recycle Bin 1 $0.00 144.41 144.41
8 Yard Recycle Bin 2 $0.00 267.88 267.88
8 Yard Recycle Bin 3 $362.64 28.94 391.58
8 Yard Recycle Bin 4 $477.31 38.09 515.40
8 Yard Recycle Bin 5 $592.02 47.24 639.26
8 Yard Recycle Bin 6 $728.98 58.17 787.15
8 Yard Recycle Bin 7 $1,217.76 97.18 1,314.94

ADDITIONAL INFORMATION - RESIDENTIAL CUSTOMERS

1. For Temporary Bins or Rolloff Box services, please call the office for current rates.

2. Polystyrene (Styrofoam, Plastic #6) and soft plastics (plastic bags/films) are not accepted in the mixed recycling program and must be disposed as trash. Mixed recycle in plastic bags will be tagged for contamination.

3. Trash, Recycle, and organics carts should be placed next to one another for collection.

4. BULKY/LARGE ITEM COLLECTION:
- Single-Family customers may schedule one (1) large/bulky item collection throughout the year at no additional charge and schedule one (1) large/bulky item pickup during each Clean Up Week at no additional charge. Additional pickups scheduled during Clean Up Week will be charged at a discounted rate. - Multi-Family customers may schedule up to four (4) large/bulky item collections throughout the year at no additional charge and schedule up to four (4) large/bulky item pickups during each Clean Up Week at no additional charge.

Additional pickups scheduled during Clean Up Week will be charged at a discounted rate. *Clean Up Week is held two times per year in the spring and fall.

5. Low-income residential customers may be eligible for a 20% discount off of the garbage rate. To check eligibility, visit slocity.org/recycle or call the City of San Luis Obispo at (805) 781-7215.

6. Late Fees are imposed for residential customers over 30 days delinquent. The fee is 1.5% per month of the outstanding charge, with a minimum fee of $5.00. No prior notice is required, as this late fee policy is stated at the bottom of every bill.

7. Any additional recycling services are charged at a 75% discount of the garbage rate for the equivalent container size and frequency.

8. The fee schedule above only includes the Garbage Company rates and does not include IWMA fees, which are separately noted on the billings.

9. It is encouraged to bag your trash in the garbage container, but do not bag your recyclables or organic materials in their respective carts. Keep items loose.

COMMERCIAL
Commercial customers must use trash carts from San Luis Garbage. The bundled commercial cart rate includes weekly pickup of one trash cart (black or gray lid), one organics cart (green lid), and one recycling cart (blue lid), including the same level of service at no additional charge. Additional recycling or organic cart pickups are available at a 75% discount off the trash cart rate for the specified service level.

COMMERCIAL CART SERVICE Pickups Per
Week
Monthly Rates
Effective
01/01/2024

PROPOSED

7.98%
RATE

ADJUSTMENT

MONTHLY
RATE

EFFECTIVE
3/19/2025
One 32 Gallon Trash Cart 1 $41.85 3.34 45.19
One 32 Gallon Trash Cart 2 $65.68 5.24 70.92
One 32 Gallon Trash Cart 3 $89.65 7.15 96.80
One 32 Gallon Trash Cart 4 $113.50 9.06 122.56

One 32 Gallon Trash Cart 5 $137.37 10.96 148.33
One 32 Gallon Trash Cart 6 $161.29 12.87 174.16
One 32 Gallon Trash Cart 7 $185.12 14.77 199.89
Two 32 Gallon Trash Carts 1 $53.78 4.29 58.07
Two 32 Gallon Trash Carts 2 $83.69 6.68 90.37
Two 32 Gallon Trash Carts 3 $113.54 9.06 122.60
Two 32 Gallon Trash Carts 4 $143.40 11.44 154.84
Two 32 Gallon Trash Carts 5 $173.34 13.83 187.17
Two 32 Gallon Trash Carts 6 $203.19 16.21 219.40
Two 32 Gallon Trash Carts 7 $233.05 18.60 251.65
Three 32 Gallon Trash Carts 1 $65.72 5.24 70.96
Three 32 Gallon Trash Carts 2 $101.66 8.11 109.77
Three 32 Gallon Trash Carts 3 $137.46 10.97 148.43
Three 32 Gallon Trash Carts 4 $173.41 13.84 187.25
Three 32 Gallon Trash Carts 5 $209.20 16.69 225.89
Three 32 Gallon Trash Carts 6 $245.06 19.56 264.62
Three 32 Gallon Trash Carts 7 $280.96 22.42 303.38
Four 32 Gallon Trash Carts 1 $77.70 6.20 83.90
Four 32 Gallon Trash Carts 2 $119.55 9.54 129.09
Four 32 Gallon Trash Carts 3 $161.34 12.87 174.21
Four 32 Gallon Trash Carts 4 $203.20 16.22 219.42
Four 32 Gallon Trash Carts 5 $245.03 19.55 264.58
Four 32 Gallon Trash Carts 6 $286.90 22.89 309.79
Four 32 Gallon Trash Carts 7 $328.66 26.23 354.89
Five 32 Gallon Trash Carts 1 $89.68 7.16 96.84
Five 32 Gallon Trash Carts 2 $137.44 10.97 148.41
Five 32 Gallon Trash Carts 3 $185.25 14.78 200.03
Five 32 Gallon Trash Carts 4 $233.03 18.60 251.63
Five 32 Gallon Trash Carts 5 $280.90 22.42 303.32
Five 32 Gallon Trash Carts 6 $328.63 26.22 354.85
Five 32 Gallon Trash Carts 7 $376.42 30.04 406.46
Six 32 Gallon Trash Carts 1 $101.66 8.11 109.77
Six 32 Gallon Trash Carts 2 $155.37 12.40 167.77
Six 32 Gallon Trash Carts 3 $209.11 16.69 225.80
Six 32 Gallon Trash Carts 4 $262.92 20.98 283.90
Six 32 Gallon Trash Carts 5 $316.63 25.27 341.90

Six 32 Gallon Trash Carts 6 $370.42 29.56 399.98
Six 32 Gallon Trash Carts 7 $424.17 33.85 458.02
One 64 Gallon Trash Cart 1 $53.78 4.29 58.07
One 64 Gallon Trash Cart 2 $83.69 6.68 90.37
One 64 Gallon Trash Cart 3 $113.54 9.06 122.60
One 64 Gallon Trash Cart 4 $143.40 11.44 154.84
One 64 Gallon Trash Cart 5 $173.34 13.83 187.17
One 64 Gallon Trash Cart 6 $203.19 16.21 219.40
One 64 Gallon Trash Cart 7 $233.05 18.60 251.65
One 96 Gallon Trash Cart 1 $74.59 5.95 80.54
One 96 Gallon Trash Cart 2 $119.42 9.53 128.95
One 96 Gallon Trash Cart 3 $164.24 13.11 177.35
One 96 Gallon Trash Cart 4 $209.03 16.68 225.71
One 96 Gallon Trash Cart 5 $253.92 20.26 274.18
One 96 Gallon Trash Cart 6 $298.67 23.83 322.50
One 96 Gallon Trash Cart 7 $343.52 27.41 370.93
Two 96 Gallon Trash Carts 1 $122.25 9.76 132.01
Two 96 Gallon Trash Carts 2 $187.91 15.00 202.91
Two 96 Gallon Trash Carts 3 $253.65 20.24 273.89
Two 96 Gallon Trash Carts 4 $319.33 25.48 344.81
Two 96 Gallon Trash Carts 5 $385.08 30.73 415.81
Two 96 Gallon Trash Carts 6 $450.73 35.97 486.70
Two 96 Gallon Trash Carts 7 $516.56 41.22 557.78
Three 96 Gallon Trash Carts 1 $169.91 13.56 183.47
Three 96 Gallon Trash Carts 2 $256.52 20.47 276.99
Three 96 Gallon Trash Carts 3 $343.17 27.38 370.55
Three 96 Gallon Trash Carts 4 $429.79 34.30 464.09
Three 96 Gallon Trash Carts 5 $516.45 41.21 557.66
Three 96 Gallon Trash Carts 6 $603.03 48.12 651.15
Three 96 Gallon Trash Carts 7 $689.68 55.04 744.72
Four 96 Gallon Trash Carts 1 $217.55 17.36 234.91
Four 96 Gallon Trash Carts 2 $325.10 25.94 351.04
Four 96 Gallon Trash Carts 3 $433.63 34.60 468.23
Four 96 Gallon Trash Carts 4 $540.18 43.11 583.29
Four 96 Gallon Trash Carts 5 $647.76 51.69 699.45
Four 96 Gallon Trash Carts 6 $755.24 60.27 815.51

Four 96 Gallon Trash Carts 7 $862.87 68.86 931.73
Five 96 Gallon Trash Carts 1 $265.21 21.16 286.37
Five 96 Gallon Trash Carts 2 $393.76 31.42 425.18
Five 96 Gallon Trash Carts 3 $522.15 41.67 563.82
Five 96 Gallon Trash Carts 4 $650.62 51.92 702.54
Five 96 Gallon Trash Carts 5 $779.06 62.17 841.23
Five 96 Gallon Trash Carts 6 $907.53 72.42 979.95
Five 96 Gallon Trash Carts 7 $1,073.98 85.70 1,159.68
Six 96 Gallon Trash Carts 1 $312.90 24.97 337.87
Six 96 Gallon Trash Carts 2 $462.28 36.89 499.17
Six 96 Gallon Trash Carts 3 $611.67 48.81 660.48
Seven 96 Gallon Trash Carts 1 $360.54 28.77 389.31
Eight 96 Gallon Trash Carts 1 $408.22 32.58 440.80
Eight 96 Gallon Trash Carts 7 $1,555.51 124.13 1,679.64 LATE MAKEUP COLLECTIONS WITH GARBAGE TRUCK (Phone call required) TRIP CHARGE, plus additional charge below for any
extra carts or equivalent volume (gallons). $23.95 1.91 $25.86 - Additional charge per 32 gallon cart. $12.83 1.02 $13.85

COMMERCIAL TRASH BIN SERVICE
(Cubic Yards)
Pickups Per
Week
Monthly Rates
Effective
01/01/2024

PROPOSED

7.98%
RATE

ADJUSTMENT

MONTHLY
RATE

EFFECTIVE
3/19/2025
1 Yard Trash Bin 1 $149.37 11.92 161.29
1 Yard Trash Bin 2 $209.11 16.69 225.80
1 Yard Trash Bin 3 $268.89 21.46 290.35
1 Yard Trash Bin 4 $328.63 26.22 354.85
1 Yard Trash Bin 5 $388.36 30.99 419.35
1 Yard Trash Bin 6 $448.14 35.76 483.90
1 Yard Trash Bin 7 $507.90 40.53 548.43

1.5 Yard Trash Bin 1 $167.31 13.35 180.66

1.5 Yard Trash Bin 2 $244.95 19.55 264.50

1.5 Yard Trash Bin 3 $322.61 25.74 348.35

1.5 Yard Trash Bin 4 $400.31 31.94 432.25

1.5 Yard Trash Bin 5 $477.96 38.14 516.10

1.5 Yard Trash Bin 6 $555.67 44.34 600.01

1.5 Yard Trash Bin 7 $633.35 50.54 683.89
2 Yard Trash Bin 1 $185.21 14.78 199.99
2 Yard Trash Bin 2 $277.83 22.17 300.00
2 Yard Trash Bin 3 $370.51 29.57 400.08
2 Yard Trash Bin 4 $463.09 36.95 500.04
2 Yard Trash Bin 5 $555.72 44.35 600.07
2 Yard Trash Bin 6 $648.34 51.74 700.08
2 Yard Trash Bin 7 $740.94 59.13 800.07
3 Yard Trash Bin 1 $221.08 17.64 238.72
3 Yard Trash Bin 2 $349.50 27.89 377.39
3 Yard Trash Bin 3 $477.96 38.14 516.10
3 Yard Trash Bin 4 $606.45 48.39 654.84
3 Yard Trash Bin 5 $734.88 58.64 793.52
3 Yard Trash Bin 6 $863.37 68.90 932.27
3 Yard Trash Bin 7 $991.87 79.15 1,071.02
4 Yard Trash Bin 1 $256.87 20.50 277.37
4 Yard Trash Bin 2 $424.21 33.85 458.06
4 Yard Trash Bin 3 $591.47 47.20 638.67
4 Yard Trash Bin 4 $758.81 60.55 819.36
4 Yard Trash Bin 5 $926.08 73.90 999.98
4 Yard Trash Bin 6 $1,093.37 87.25 1,180.62
4 Yard Trash Bin 7 $1,260.72 100.61 1,361.33
6 Yard Trash Bin 1 $328.57 26.22 354.79
6 Yard Trash Bin 2 $564.60 45.06 609.66
6 Yard Trash Bin 3 $800.67 63.89 864.56
6 Yard Trash Bin 4 $1,036.72 82.73 1,119.45
6 Yard Trash Bin 5 $1,272.76 101.57 1,374.33
6 Yard Trash Bin 6 $1,508.79 120.40 1,629.19
6 Yard Trash Bin 7 $1,744.87 139.24 1,884.11
8 Yard Trash Bin 1 $400.27 31.94 432.21
8 Yard Trash Bin 2 $704.97 56.26 761.23
8 Yard Trash Bin 3 $1,009.74 80.58 1,090.32
8 Yard Trash Bin 4 $1,314.53 104.90 1,419.43
8 Yard Trash Bin 5 $1,619.29 129.22 1,748.51
8 Yard Trash Bin 6 $1,923.98 153.53 2,077.51

8 Yard Trash Bin 7 $3,273.69 261.24 3,534.93
Sunday Trash Service* $104.59 8.35 112.94

COMMERCIAL RECYCLING BIN

SERVICE
(Cubic Yards)
Pickups Per
Week
Monthly Rates
Effective
01/01/2024

PROPOSED

7.98%
RATE

ADJUSTMENT

MONTHLY
RATE

EFFECTIVE
3/19/2025
1 Yard Recycle Bin 1 $0.00 40.32 40.32
1 Yard Recycle Bin 2 $0.00 56.45 56.45
1 Yard Recycle Bin 3 $67.23 5.36 72.59
1 Yard Recycle Bin 4 $82.44 6.58 89.02
1 Yard Recycle Bin 5 $97.06 7.75 104.81
1 Yard Recycle Bin 6 $112.07 8.94 121.01
1 Yard Recycle Bin 7 $126.95 10.13 137.08

1.5 Yard Recycle Bin 1 $0.00 45.17 45.17

1.5 Yard Recycle Bin 2 $0.00 66.13 66.13

1.5 Yard Recycle Bin 3 $80.66 6.44 87.10

1.5 Yard Recycle Bin 4 $100.05 7.98 108.03

1.5 Yard Recycle Bin 5 $119.47 9.53 129.00

1.5 Yard Recycle Bin 6 $138.89 11.08 149.97

1.5 Yard Recycle Bin 7 $158.34 12.64 170.98
2 Yard Recycle Bin 1 $0.00 50.00 50.00
2 Yard Recycle Bin 2 $0.00 75.00 75.00
2 Yard Recycle Bin 3 $92.62 7.39 100.01
2 Yard Recycle Bin 4 $115.77 9.24 125.01
2 Yard Recycle Bin 5 $138.90 11.08 149.98
2 Yard Recycle Bin 6 $162.11 12.94 175.05
2 Yard Recycle Bin 7 $185.24 14.78 200.02
3 Yard Recycle Bin 1 $0.00 59.68 59.68
3 Yard Recycle Bin 2 $0.00 94.35 94.35
3 Yard Recycle Bin 3 $119.47 9.53 129.00
3 Yard Recycle Bin 4 $151.66 12.10 163.76
3 Yard Recycle Bin 5 $183.73 14.66 198.39
3 Yard Recycle Bin 6 $215.86 17.23 233.09
3 Yard Recycle Bin 7 $315.16 25.15 340.31
4 Yard Recycle Bin 1 $0.00 69.34 69.34

4 Yard Recycle Bin 2 $0.00 114.52 114.52
4 Yard Recycle Bin 3 $147.92 11.80 159.72
4 Yard Recycle Bin 4 $189.70 15.14 204.84
4 Yard Recycle Bin 5 $231.55 18.48 250.03
4 Yard Recycle Bin 6 $273.40 21.82 295.22
4 Yard Recycle Bin 7 $315.16 25.15 340.31
6 Yard Recycle Bin 1 $0.00 88.70 88.70
6 Yard Recycle Bin 2 $0.00 152.42 152.42
6 Yard Recycle Bin 3 $200.20 15.98 216.18
6 Yard Recycle Bin 4 $259.20 20.68 279.88
6 Yard Recycle Bin 5 $318.23 25.39 343.62
6 Yard Recycle Bin 6 $377.18 30.10 407.28
6 Yard Recycle Bin 7 $436.22 34.81 471.03
8 Yard Recycle Bin 1 $0.00 108.05 108.05
8 Yard Recycle Bin 2 $0.00 190.31 190.31
8 Yard Recycle Bin 3 $239.72 19.13 258.85
8 Yard Recycle Bin 4 $312.07 24.90 336.97
8 Yard Recycle Bin 5 $384.42 30.68 415.10
8 Yard Recycle Bin 6 $467.36 37.30 504.66
8 Yard Recycle Bin 7 $541.33 43.20 584.53
The rates shown include the monthly container rental fee and are the same for bins and garwoods, when volume is identical. (Garwoods are types of containers)

UNSCHEDULED EXTRA COLLECTIONS FOR COMMERCIAL AND MULTI-FAMILY CUSTOMERS 1 CUBIC YARD Per Lift $68.75 5.49 74.24

1.5 CUBIC YARD Per Lift $76.24 6.08 82.32
2 CUBIC YARDS Per Lift $89.66 7.15 96.81
3 CUBIC YARDS Per Lift $110.53 8.82 119.35
4 CUBIC YARDS Per Lift $131.44 10.49 141.93
Rates for all commercial customers for unscheduled extra collections of recycling or organics can be provided at a 75% discount from the trash service rates for the specified level of service required.

COMMERCIAL - OTHER CHARGES:

LOOSE CARDBOARD Per Yard $12.72 1.02 13.74
LOOSE YARDAGE (SOLID WASTE) Per Yard $50.78 4.05 54.83
RENTAL Per Month $59.81 4.77 64.58
TEMPORARY RENTAL CHARGE Per Day $2.00 0.16 2.16
TAX LIEN CERT. MAIL FEE Per Mailing $5.40 0.43 5.83
LOCK CHARGE-FRONT Per Month $112.18 8.95 121.13
LOCK CHARGE-REAR Per Month $96.74 7.72 104.46

STAND BY TIME Per Minute $1.67 0.13 1.80
CART OR BIN REPLACMENT Per Unit $34.07 2.72 36.79
COMPACTORS Per Ton $73.80 5.89 79.69
EXTRA COLLECTIONS WITH PICKUP OR FLATBED TRUCK (Phone call required) TRIP CHARGE, plus applicable amount below: $35.90 2.86 38.76 - Contamination fee per trash cart or equivalent
volume (per cubic yard above) $0.00 13.85 13.85
- Per trash cart or equivalent volume (over 6 cans) $12.83 1.02 13.85 - Per recycle cart or equivalent volume (over 6 cans) $5.94 0.47 6.41 - Per bulky/large item or white goods/large appliance $26.38 2.11 28.49 - Per piece of small size furniture/appliance $26.38 2.11 28.49 - Per mattress with boxspring. $26.38 2.11 28.49
Commercial Maintenance Fee - per trip $35.90 2.86 38.76

ADDITIONAL INFORMATION - COMMERCIAL CUSTOMERS

1. Polystyrene (Styrofoam, Plastic #6) is no longer collected for recycling and should be thrown away as trash.

2. Organics is recycled in a special green waste wheeler and is picked up once a week at no additional charge.

3. All commercial customers are eligible for one standard recycling cart and one organics cart at no additional charge. Commercial customers can choose from a 32, a 64, or a 96 gallon blue cart for commingled recycling.

4. Recycling and organics containers should be placed near/next to the garbage container for collection.

5. White office paper can be commingled with the other recyclables in the blue container.

6. Shredded paper can be placed in a knotted, clear bag and put in the recycling container (no other plastic bags are permitted).

7. Customers requesting Temporary Bins or Rolloff boxes service can call the office for current rates.

8. The fee schedule above only includes the Garbage Company rates and does not include IWMA fees, which are separately noted on the billings.

9. It is encouraged to bag your trash in the garbage container, but do not bag your recyclables or organic materials in their respective containers. Keep items loose.

10. Late Fees are imposed for commercial customers over 30 days delinquent. The fee is 1.5% per month of the outstanding charge, with a minimum fee of $5.00. No prior notice is required, as this late fee policy is stated at the bottom of every bill.

REPORT
City of San Luis Obispo and Participating Agencies
Submitted electronically on October 22, 2020
Submitted electronically: November 1, 2024
New Solid Waste Rate Adjustment
Methodology and 2025 Rates

1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com November 1, 2024
Ms. Meg Buckingham
Solid Waste and Recycling Coordinator
Public Utilities
879 Morro, San Luis Obispo, CA 93401
submitted via email: [email protected]
SUBJECT: New Solid Waste Rate Adjustment Methodology and 2025 Rates Dear Ms. Buckingham and Participating Agencies,
R3 Consulting Group, Inc. (R3) was engaged by the City of San Luis Obispo (City) to provide solid waste consulting services via two engagements supporting the City’s negotiations of a new solid waste services agreement with Waste Connections, the solid waste hauler. R3 was originally engaged by the City to work in collaboration with Los Osos Community Services District and Waste Connections to update the methodology for annual adjustments to the solid waste rates charged by Waste Connections. The key objectives for updating the rate adjustment methodology were to enhance rate stability, predictability, fairness, transparency, ease of administration, and costeffectiveness.

As that engagement proceeded, eight other agencies in San Luis Obispo County (the City of Arroyo Grande, the City of Grover Beach, the City of Pismo Beach, Avila Beach Community Services District, Cambria Community Services District, Cayucos Sanitary District, Nipomo Community Services District, and Oceano Community Services District – altogether “Participating Agencies” or “Agencies”) were included as stakeholder participants in the development of new rate adjustment methodology. With the inclusion of these additional Agencies, objectives for the engagement were updated to include regional scale applicability of the new rate adjustment methodology. R3 was then engaged by the City to review Waste Connections’ rate adjustment requests for the 2025 rate year on behalf of all ten Agencies with the objective of determining 2025 solid waste rates that would an appropriate starting point for a new rate adjustment methodology starting in 2026.

The City of San Luis Obispo served as the lead contracting agency for both engagements, providing primary oversight and direction of R3’s work. Input and feedback were also sought from the other nine Agencies, and the results reflect their stakeholder input. Ultimately, the outcomes of both engagements are the conclusion of good faith contract negotiations between the City and Waste Connections. In summary, the City and Waste Connections have tentatively agreed to updated terms and conditions for annual rate adjustment which fulfill key objectives while also securing enhanced services that will protect low income households, prevent illegal dumping, and clean solid waste collection containers. The new rate adjustment methodology and enhanced services also resulted in updated adjustments to solid waste rates for 2025.

The City intends to recommend a new agreement with Waste Connections to the City Council that will include the new rate adjustment methodology and enhanced services along with the 2025 adjustments to solid waste rates. In keeping with the objective for the results to be applicable on a regional scale, Waste Connections is willing to offer the new rate adjustment methodology and

1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com select enhanced services to the other nine Agencies at the updated 2025 adjustments to solid waste rates.

R3 would like to recognize that this has been a significant undertaking, and we’d like to thank the City of San Luis Obispo, Waste Connections, Los Osos Community Services District, and Participating Agencies for your involvement in providing feedback during this process. In closing, R3 recommends City and stakeholder consideration of the revised 2025 rates and the new rate adjustment methodology as a means of achieving shared rate fairness, stability, and predictability objectives. Here’s what Waste Connections has shared regarding the outcomes:
“San Luis Garbage (SLG) had the opportunity to negotiate with the City of San Luis Obispo on the re-write of the 1994 rate-making manual. The goal of this endeavor was to simplify and streamline the rate-making process for all parties and provide an improved model going forward for potential refuse collection rate changes. The process included a considerable amount of discussion and analysis and although arduous at times, SLG feels the negotiations were performed in good faith, were collaborative in nature and carried out with mutual respect. In addition to updating the rate-making methodology, both parties took the opportunity to establish some new service enhancements that will discourage illegal dumping, provide cart cleaning exchanges, and offer rate relief for low-income customers. SLG believes the outcome of the negotiation has provided a much-improved rate-review process for the City of San Luis Obispo and other cities currently under the old rate-making methodology which will ultimately allow for an easier path to fair and reasonable rates for all customers.” * * * * * * *
We appreciate the opportunity to be of service to the City and would like to thank the City and the Participating Agencies for their involvement and feedback. We would also like to recognize Waste Connections staff for being communicative and responsive to requests for information during the process.

Sincerely,
Garth Schultz | Principal
R3 Consulting Group, Inc.
510.292.0853 | [email protected]

TABLE OF CONTENTS
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates TOC

1. Executive Summary
page 1

2. Background
page 4

3. New Solid Waste Rate Adjustment
Methodology and 2025 Rates
page 10
Attachments
1 Summary of Original 2025 Base Year Rate Adjustments
2 Revised 2025 Rate Adjustments
3 CPI-U for Garbage and Trash
4 Example Rate Calculations for 2026 through 2029

1. EXECUTIVE SUMMARY
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 1 of 19 New Rate Adjustment Methodology
The City of San Luis Obispo, in its capacity as the lead agency on the solid waste rate adjustment methodology update process, and in partnership with Los Osos Community Services District and Waste Connections, completed negotiations and arrived at tentative agreement with Waste Connections regarding the terms and conditions of a new methodology. The outcome was the result of extensive good faith negotiations between the City and Waste Connections, with due consideration to input provided by other public agency stakeholders.

Pending City Council approvals, the new methodology will replace the 1994 Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates (1994 Rate Manual) and will regulate annual rate adjustments for the City’s solid waste rates starting in 2026.

The new methodology fulfills key objectives established by the City and Waste Connections, including rate stability, predictability, fairness, transparency, ease of administration, and cost-effectiveness.

Additionally, in response to requests by other Agencies that contract with Waste Connections in San Luis Obispo County, the new methodology can be applied on a regional-scale and is available as recommended alternative to the 1994 Rate Adjustment Manual for those Agencies.

The key features of the new methodology include:

CPI Adjustments: Starting in 2026, rate adjustments will be based on the Garbage and Trash CPI, with a floor of 2% and a cap of 5%. Amounts under 2% or over 5% will carry forward. The CPI adjustment will apply to Waste Connections’ collection and post-collection cost centers.

Revenue Balancing Mechanism: Starting in 2027, adjustments to rates will account for shortfalls or surpluses in Waste Connections’ actual revenues compared to projected revenues from prior years. For example, if Waste Connections’ 2025 revenues exceed projections, the amount of surplus revenues will be credited to the rates in 2027 (and vice versa), achieving fairness in compensation and rates for the company and for ratepayers. Such adjustments would take place annually and will be independent of the CPI cap and floor noted above (there is no cap on these amounts).

Less Frequent Cost-Based Adjustments: Currently, solid waste rates are adjusted based on the 1994 Rate Adjustment Manual every three years on Waste Connections’ costs. Via the new methodology, cost-based adjustments would occur a maximum of every five years, and only if requested by Waste Connections or the City. The first opportunity for a cost-based adjustment will be for the 2030 rate year. If neither Waste Connections nor the City request a cost-based adjustment, then the CPI adjustment approach will be applied. Cost-based adjustments will be based on Waste Connections’ consolidated audited financial statements for the region.

Timeframes for cost-based adjustment application and review process will be ample, such that the City will have sufficient time for review and approval processes and such that the potential for delay in implementation is minimized. These timeframes will be delineated in the forthcoming amendment to the agreement with Waste Connections.

Updated Depreciation Lifespan for Trucks: The 1994 Rate Manual set a 7-year depreciation schedule for solid waste collection trucks. Modern solid waste collection trucks have a 10-year lifespan, and the depreciation schedule was adjusted accordingly.

Updated Profit Allowance: The 2025 rate adjustment will include a 9% profit allowance of projected collection costs and in 2026 and thereafter the profit allowance will be 10%. The updated profit allowance is in-keeping with industry standard ranges for solid waste services. For

Executive Summary
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 2 of 19 context, the 2025 profit allowance is approximately 5% of revenues and we estimate that the 2026 profit allowance will be approximately 5.5% of revenues. Profit will not be allowed on postcollection costs.

Removed Limitation on Corporate Overhead: The 1994 Rate Manual placed a limitation on corporate overhead costs. Today, corporate overhead costs fund legal, tax, payroll, human resources, engineering, compliance, IT, training and recruiting programs. The City and Waste Connections agreed to remove the prior limitation in order to fund these services. In the nearterm, compensation to Waste Connections for corporate overhead will be limited by the CPI adjustment noted above. Cost-based adjustments to corporate overhead are possible in 2030, and will be subject to review, justification, and potential limitation at that time.

Extraordinary Adjustments: The California Air Resources Board (CARB) Advanced Clean Fleets (ACF) regulation is requiring all solid waste collection trucks to have zero emissions by 2042. This includes a phased in plan to get the percentage of the fleet to be zero emission vehicle (ZEV) with 10% by 2030, 25% by 2033, 50% by 2036,75% by 2039 and 100% by 2042.

During CPI Adjustment years, Waste Connections may request extraordinary rate adjustments due to changes in law affecting collection operations, including for compliance with CARB’s ACF zero emission mandate (which may necessitate change to depreciation schedules). The City may, but is not obligated to, consider requests for extraordinary rate adjustments due to changes in law affecting post-collection operations. Requests for extraordinary change are subject to good faith negotiations between City and Waste Connections.

New Service Enhancements
During negotiations, the City and Waste Connections also took the opportunity to establish new service enhancements that will discourage illegal dumping, provide cart cleaning exchanges, and offer rate relief for low-income customers. The below service enhancements are available to the other Agencies that approve the new rate adjustment methodology in association with adjusted 2025 solid waste rates:

Customer Assistance Program: 20% low-income discount provided to residential customers using 32-gallon cart service, using existing jurisdictional practices on low-income relief for their offered utility type services with evidence of qualifying financial hardship.

Free Bulky Waste Collections: Collection of a bulky waste item twice annually from residential accounts at no separate cost, via clean-up week or voucher program depending on existing program.

Annual Cart Exchange: Once annual exchange of a residential solid waste, recycling, or organics cart per customer account.
2025 Rate Adjustments
As a result of the above, Waste Connections’ 2025 rate adjustment request was revised from a 9.29% increase to a 9.89% increase in solid waste rates, effective January 1, 2025 (and prior to other rate structure adjustments that the City and Waste Connections may enact). When the new rate methodology changes and service enhancements are equally applied to the other regional Agencies, the results are as shown in Table 1 on the following page. Additional details are included in Section 3 of this report.

Executive Summary
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 3 of 19 Table 1: 2025 Rate Adjustments
Agency Original Revised
City of San Luis Obispo 9.29% 9.89%
City of Arroyo Grande 3.97% 4.92%
Los Osos CSD 12.47% 13.18%
City of Pismo Beach 3.97% 4.82%
Cambria CSD 12.78% 12.59%
City of Grover Beach 3.97% 5.02%
Nipomo CSD 3.23% 5.04%
Oceano CSD 3.76% 4.98%
Cayucos SD 12.47% 14.32%
Avila Beach CSD 3.97% 4.60%

2. BACKGROUND
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 4 of 19 1994 Rate Manual
The 1994 Rate Manual is a 120-page document that provides step-by-step directives regarding annual adjustments to solid waste rates in the City. Though the 1994 Rate Manual specifically references the City of San Luis Obispo, other agencies in San Luis Obispo County (including the nine Agencies referenced in this report) also follow the 1994 Rate Manual for annual adjustments to solid waste rates.

The 1994 Rate Manual established a three-year cycle for adjustments to solid waste rates. The first year of each three-year cycle (called a “base year”) adjusted rates based on the documented costs of providing solid waste services. In the second and third years, solid waste rates were adjusted in accordance with external indicators, such as the Consumer Price Index (CPI).

While the 1994 Rate Manual was an appropriate approach to annually adjusting solid waste rates at the time, changing regulatory conditions and modern best practices in solid waste rate setting indicate that the prior approach has outlived its usefulness. In particular, cost-based adjustments on a fixed three-year cycle are no longer the industry norm. Most solid waste rate adjustment methodologies in California today either do not include regular cost-based adjustments or do so less frequently. When allowed, cost-based adjustments are typically the result of extraordinary changes in cost due to factors like changes in law or other uncontrollable factors (such as China’s National Sword Policy in 2017 and the COVID pandemic in 2020). Additionally, step-by-step instructions and timelines in the 1994 Rate Manual are outdated and do not contemplate current approaches to public noticing, public hearings, and review timelines for authorizing rate adjustments.

RFQ for New Rate Adjustment Methodology
Recognizing the limitations of the 1994 Rate Manual, the City and Los Osos Community Services District issued a request for quotes (RFQ) in early 2024 seeking a consultant to develop a new rate adjustment methodology. Pursuant to the RFQ process, R3 was awarded an agreement to provide support in developing a new rate adjustment methodology.

Rate Adjustment History
Rate adjustments experienced by the City and participating Agencies have varied significantly in the prior ten years from 2015 through 2014, as shown in Table 2, on the following page. As shown in the table, rate adjustments by agency have varied from 0% (most Agencies in 2015) to over 20% (most Agencies in 2022).

There are important reasons for these variances, primarily related to the unfunded State mandates of SB 1383 (Short-lived Climate Pollutants Act) which required all agencies in California to implement programs to recover and recycle organic waste to reduce methane emissions from landfills. While rate adjustments were necessary to fund the required SB 1383 programs, the combination of new costs with the three-year cost-based adjustment approach in the 1994 Rate Manual resulted in rate adjustment spikes in 2016, 2019, and 2022. Overall, across the Agencies, the average annual rate adjustment from 2015 through 2024 has been 6.76%.

One important objective of the new rate adjustment methodology is to minimize the recurrence of such spikes by reducing the frequency of cost-based rate adjustments. From R3’s experience implanting new rate methodologies with other clients, the result has been stable and predictable annual rate adjustments.

Background
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 5 of 19 Table 2: 2015 – 2024 Rate Adjustments by Agency
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0.00% 5.25% 1.00% 1.60% 13.70% 1.70% 0.70% 17.75% 9.10% 3.00%

0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%

2.00% 10.37% 1.00% 1.60% 25.74% 1.70% 0.70% 41.87% 7.70% 2.70%

0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%

1.92% 9.93% 1.00% 1.60% 25.32% 1.70% 0.70% 41.50% 9.10% 3.00%

0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%

0.00% 0.00% 1.00% 1.60% 15.08% 1.70% 0.70% 21.27% 9.10% 3.00%

0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 21.03% 9.10% 3.00%

2.00% 27.39% 1.00% 1.60% 26.43% 1.70% 0.70% 43.30% 9.10% 3.00%

0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00% Financial Statement History
There are three Waste Connections business units serving the ten participating Agencies (San Luis Garbage, Mission Country Disposal, and South County Sanitary Service). Each business unit prepares annual audited financial statements which are used as the basis for base year rate applications to the Agencies. R3 analyzed Waste Connections’ audited financial statements for the six years from 2018 through 2023 to evaluate profit achievement, with the results summarized in Table 3, below. Table 3 also includes estimated profit achievement in 2024 (still underway) and for 2025 (prior to 2025 rate adjustments).

Table 3: 2018 – 2023 Profit Achievement

Background
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 6 of 19 As shown in Table 3, in total across all three business units, Waste Connections operated without any net income between 2018 and 2021, with net positive profitability being achieved in 2022 and 2023. Profit achievement varied by business unit, with South County Sanitary Service consistently experiencing greater profit achievement and Mission Country Disposal consistently experiencing lesser or no profit achievement. This is one of the key reasons that rate adjustments for the Agencies served by Mission Country Disposal (Cambria Community Services District, Cayucos Sanitary District, and Los Osos Community Services District) were higher than the other Agencies in 2019 and 2022.

Table 3 also shows that projected profit achievement in 2024 will be lower than 2023, which is primarily the result of Waste Connections incurring increased landfill disposal costs (provided by a related party) and increased organics processing costs (provided by a non-affiliated third party processor). Projected profit achievement for 2025 – which, importantly, is prior to 2025 adjustments to solid waste rates – demonstrates no net profit for San Luis Garbage and Mission County Disposal and low net income for South County Sanitary Service. Overall, without adjustments to rates, Waste Connections service to the Agencies in 2025 will not yield net income.

It should be noted that Waste Connections allocates costs between business units based on allocation metrics that include vehicle operating hours, number of solid waste containers, and number of customer accounts. While such metrics are useful means of allocating costs, they do not necessarily represent the exact cost of providing service within a given business unit.

Rate Comparison
R3 compared current 2024 solid waste rates for the Agencies to rates in other jurisdictions in San Luis Obispo County, Santa Barbara County, and Monterey County. The results are shown in Table 4, below and on the following page, and are organized in ascending order by 32-gallon monthly rate (common residential subscription level).

Table 4: Regional Comparison of Monthly Rates
Agency 20 Gallon 32 Gallon 64 Gallon 96 Gallon 2 Cubic
Yards
Oceano CSD N/A $20.37 $29.31 $57.39 $128.75
San Luis Obispo $14.74 $23.53 $47.06 $70.59 $185.21
Pismo Beach N/A $23.76 $47.56 $71.33 $166.02
Grover Beach N/A $24.23 $32.74 $41.23 $147.95
Arroyo Grande N/A $27.33 $35.52 $43.73 $167.65
Nipomo CSD N/A $27.57 $39.52 $51.81 $136.62
Avila Beach CSD N/A $28.31 $46.78 $65.24 $177.68
Santa Barbara County Zone 4 Lompoc N/A $31.41 $36.13 $40.70 $179.98 Cayucos SD N/A $32.60 $38.52 $44.48 $184.32
Santa Barbara County Zone 5 N/A $33.03 $37.84 $42.46 $192.87 City of Atascadero N/A $33.67 $52.80 $66.35 $172.24
San Miguel N/A $34.13 $53.80 $72.88 $124.12
Santa Barbara County Zone 4 Santa Ynez N/A $34.33 $42.62 $50.77 $254.11 City of Morro Bay $22.21 $35.54 $71.07 $106.63 $265.30
Solvang N/A $36.28 $45.20 $54.69 $256.55

Background
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 7 of 19 Agency 20 Gallon 32 Gallon 64 Gallon 96 Gallon 2 Cubic
Yards
Goleta N/A $37.39 $41.88 $48.35 $240.10
Templeton N/A $38.73 $54.63 $60.41 $149.58
Los Osos CSD $27.74 $39.45 $60.57 $64.96 $228.72
Buellton N/A $40.51 $48.40 $56.38 $281.13
Cambria CSD N/A $41.52 $83.03 $124.55 $201.94
King City $32.43 $42.83 $53.68 $63.52 $288.00
Santa Barbara County Zone 2 N/A $43.25 $54.66 $65.92 $259.61 City of Paso Robles $38.15 $43.32 $57.42 $63.59 $188.36 Santa Barbara County Zone 3 N/A $45.22 $51.52 $57.75 $215.72 MRWMD $38.28 $46.54 $72.92 $91.20 $277.20
City of Santa Barbara N/A $48.26 $59.82 $71.38 $277.66
WM Area (Formerly Mid-State) N/A $48.72 $71.31 $93.84 $214.46 Santa Barbara County Zone 1 N/A $56.60 $62.86 $69.25 $256.74 Santa Maria N/A N/A $38.74 $47.87 $166.72
Table 4 demonstrates that solid waste rates for the City and other Participating Agencies compare favorably to others in the region. Charts 1 through 4, below and on the following pages, show the information from Table 4 in graphical format.

Chart 1: Regional Comparison of Monthly 32-gallon Cart Rates Chart 1, which is organized in ascending order of 32-gallon monthly rate, demonstrates that the rates for 32-gallon monthly service (the most subscribed residential service level) for all Participating Agencies $0
$10
$20
$30
$40
$50
$60

Background
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 8 of 19 other than Cambria Community Services District, Cayucos Sanitary District, and Los Osos Community Services District are the lowest in the region. Chart 2 shows how 64-gallon monthly rates compare.

Chart 2: Regional Comparison of Monthly 64-gallon Cart Rates Chart 3: Regional Comparison of Monthly 96-gallon Cart Rates $0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$0
$20
$40
$60
$80
$100
$120
$140

Background
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 9 of 19 Charts 3 and 4 keep the same ordering as Charts 1 and 2 and show how large residential 96-gallon service and commercial two (2) cubic yard bin service compare with the region. Overall, while exceptions exist, rates for solid waste service for the City and the Participating Agencies are among the lowest in the region, including San Luis Obispo County, Santa Barbara County, and Monterey County.

Chart 4: Regional Comparison of Monthly 2 Cubic Yard Rates $0
$50
$100
$150
$200
$250
$300
$350

3. NEW RATE ADJUSTMENT METHODOLOGY
AND 2025 RATES
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 10 of 19 2025 Base Year Rate Adjustments
Waste Connections submitted base year rate applications to the Agencies for rates effective January 1, 2025.1 Those rate applications were prepared in accordance with the 1994 Rate Manual, with modification for an effectiveness date of January 1, 2025, instead of the October 1, 2024 date that otherwise would have been the effective date given strict adherence to the 1994 Rate Manual. In simple terms, the applications project future 2025 costs for providing solid waste services based on the actual costs of providing services as follows:

Actual results for the most recently completed year (2023), which are based on the audited financial statements.

Projected results for the current year (2024), which are to be based on year-to-date information available at the time the application is submitted.

Projected results for the next year (2025).

Adjustments to solid waste rates are then calculated based on the projected 2025 revenue requirement, which is the sum of:

Allowed costs.

Allowable operating profit.

Pass through costs.

In reviewing the 2025 base year rate applications for the Agencies, R3:

Checked calculations for mathematical accuracy and consistency.

Tied projected costs back to the 2023 audited financial statements.

Evaluated the root causes of extraordinary changes in cost for landfilling and organics processing.

Reviewed 2024 revenues year to date to determine accuracy of projected revenues at current rates for 2025.

Proposed adjustments to solid waste collection vehicle depreciation lifetimes.

A summary of Waste Connections’ original 2025 base year rate adjustments per the applications submitted to the Agencies is included as Attachment 1.

It should be noted that Waste Connections’ base year rate applications are made at the business unit level (San Luis Garbage, Mission Country Disposal, and South County Sanitary Service) with no allocation of projected costs to individual Agencies served by those business units. Rather, the base year rate adjustment applications use total costs and revenues for those business units to calculate rate adjustments for the individual Agencies. For the purposes of our analysis, and as documented in Attachment 1, R3 allocated projected expenses by agency in accordance with proportion of revenues – this allocation approach is what the base year rate application achieve in practice, and the result is an exact match to the rate adjustment calculations included in the base year rate applications for each agency.
1 Authorization of the January 1, 2025 rate adjustments are expected to occur after that date. Waste Connections will prorate adjustment amounts on customer bills to account for the timing difference.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 11 of 19 R3 thoroughly reviewed the figures included in the 2025 rate adjustment calculations, as well as supporting documentation requested of Waste Connections during the review process and found that Waste Connections’ rate applications were accurate and in accordance with the 1994 Rate Manual. The rate adjustments shown in Table 5 on the following page are the correct rate adjustments per the 1994 Rate Manual and are the default rate adjustments effective January 1, 2025, if the City and the Participating Agencies do not move forward with revisions to the 2025 rates in accordance with the new rate adjustment methodology.

Table 5: 2025 Rate Adjustments Per 1994 Rate Manual
Agency January 1, 2025, Default
Rate Adjustment
City of San Luis Obispo 9.29%
City of Arroyo Grande 3.97%
Los Osos CSD 12.47%
City of Pismo Beach 3.97%
Cambria CSD 12.78%
City of Grover Beach 3.97%
Nipomo CSD 3.23%
Oceano CSD 3.97%
Cayucos SD 12.47%
Avila Beach CSD 3.97%
Revisions for New Rate Adjustment Methodology
In negotiating the terms and conditions of a new rate adjustment methodology starting in 2026, the City and Waste Connections made the following revisions to the 2025 base year rate adjustments:

Updated Depreciation Lifespan for Trucks
The 1994 Rate Manual set a 7-year depreciation schedule for solid waste collection trucks. Modern solid waste collection trucks have a 10-year lifespan, and the depreciation schedule was adjusted by Waste Connections accordingly. Table 6, on the following page, shows the dollar magnitude of this change and the effect on the 2025 rate adjustment, with the effect being a reduction in the rate adjustment calculation ranging from 1.33% to 1.62%, depending on agency. Differences in effect by agency are the result of business unit allocations described earlier in this report.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 12 of 19 Table 6: Change in Depreciation Lifespan
Original
Depreciation
$1,338,367 $376,989 $295,515 $131,502 $398,063 $316,350 $236,919 $225,376 $114,616 $26,441 Revised
Depreciation
1,125,720 317,545 248,918 110,766 336,460 267,393 200,254 190,498 96,879 22,349 Change in
Calculations
(212,647) (59,444) (46,597) (20,735) (61,603) (48,957) (36,665) (34,878) (17,737) (4,092) Effect on
Rate
Adjustment
-1.47% -1.62% -1.62% -1.62% -1.33% -1.33% -1.33% -1.33% -1.33% -1.33% Removed Limitation on Corporate Overhead
The 1994 Rate Manual placed a limitation on corporate overhead costs. Today, corporate overhead costs fund legal, tax, payroll, human resources, engineering, compliance, IT, training and recruiting programs.

The City and Waste Connections agreed to remove the prior limitation in order to fund these services.

Table 7, below, shows the effect of removing the prior limitation on corporate overhead. Differences in effect by agency are the result of different original proportionate amounts of corporate overhead between Agencies. In the near-term, compensation to Waste Connections for corporate overhead will be limited by the CPI adjustment noted above. Cost-based adjustments to corporate overhead are possible in 2030, and will be subject to review, justification, and potential limitation at that time.

Table 7: Change in Corporate Overhead
Original
Corporate
Overhead
$246,296 $46,213 $36,226 $16,120 $93,625 $74,406 $55,724 $53,009 $26,958 $6,219 Revised
Corporate
Overhead
430,378 80,753 63,301 28,168 163,600 130,017 97,371 92,627 47,106 10,867 Change in
Calculations 184,082 34,540 27,075 12,048 69,975 55,611 41,648 39,619 20,148 4,648 Effect on Rate
Adjustment 1.28% 0.94% 0.94% 0.94% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51%

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 13 of 19 50% Cost Share for Regional Service Enhancements
Waste Connections is offering new service enhancement to the benefit of the City and the Agencies including:

Collection of a bulky waste item twice annually from residential accounts at no cost, via clean-up week or voucher program depending on existing program.

Once annual exchange of a residential solid waste, recycling, or organics cart per customer account.

Waste Connections has estimated the annual cost of offering these service regionally and is proposing recovery of 50% of the projected costs via the 2025 rate adjustment. The City and Waste Connections have tentatively agreed to this cost sharing as part of the new agreement and for inclusion in the 2025 rates. Waste Connections is proposing the low income discount customer assistance program without a change in rate adjustment.

Table 8, below, shows the effect of including the 50% cost sharing for these two service enhancements into the 2025 rate adjustment. Cost allocations are by percentage of accounts by agency, which is the reason for differences in the effect of rate adjustment by agency.

Table 8: 50% Cost Share for Service Enhancements
New Annual
Cart Exchange $26,376 $9,889 $7,223 $3,623 $11,445 $7,566 $8,179 $7,987 $3,681 $320 Bulky Clean-up
Enhancements 21,091 7,908 5,776 2,897 9,152 6,050 6,540 6,386 2,944 256 Change in
Calculations 47,467 17,797 12,999 6,520 20,597 13,616 14,719 14,373 6,625 576 Effect on Rate
Adjustment 0.33% 0.48% 0.45% 0.51% 0.45% 0.37% 0.54% 0.55% 0.50% 0.19% Corrections to AB 939 Fees
Agency fees, which include AB 939 Fees and Franchise Fees, are included as estimates in rate adjustment applications. Because the rate applications are at the company business unit level, and not at the individual agency level, AB 939 fees in the application are allocated to the Agencies in proportion to revenues. However, only the City of San Luis Obispo and Cayucos Sanitary District receive AB 939 Fees – therefore this was corrected in the revised 2025 rate adjustments as shown in Table 9, on the following page. Note that the values for the City of San Luis Obispo also include a correction to Franchise Fee revenues.2
2 Specifically, to remove the 1994 Rate Manual’s approach to “grossing up” the calculated rate adjustment to account for the Franchise Fee by including the projected Franchise Fee payment amounts in the rate adjustment calculation itself. This approach is also recommended for the other Agencies starting with the 2026 rate adjustment.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 14 of 19 Table 9: Corrections to AB 939 Fees
Original
Agency Fees $362,140 $5,226 $4,097 $1,823 $- $- $- $- $- $- Revised
Agency Fees 439,411 - - 12,754 - - - - - -
Change in
Calculations 77,2713
(5,226) (4,097) 10,931 - - - - - -
Effect on Rate
Adjustment
Updated Profit Allowance
The 1994 Rate Manual, along with the Agencies agreements with Waste Connections, limits allowable profit based on an “operating ratio” of 92% or 93% of allowable collection expenses (not including postcollection disposal, processing or recycling expenses nor agency fees) depending on the agency. A 93% operating ratio is the equivalent of a 7.53% profit margin, and a 92% operating ratio is the equivalent of an 8.7% profit margin.

A key negotiation point between the City and Waste Connections was a change to the profit allowance.

Ultimately, after much discussion and negotiation, the City and Waste Connections agreed that the 2025 rate adjustment will include a 9% profit allowance of projected allowable collection costs and in 2026 and thereafter the profit allowance will be 10%. The updated profit allowance is in-keeping with industry standards for solid waste services.

For context, the 2025 profit allowance is approximately 5% of revenues and we estimate that the 2026 profit allowance will be approximately 5.5% of revenues. Table 10, on the following page, shows the effect of changing the profit allowance to 9% of collection costs for all Agencies for the 2025 rate adjustments. Differences in the effect on rate adjustment are due to differences in existing profit allowances by agency, as well as differences in the depreciation, corporate overhead and new service enhancements shown in earlier tables.
3 Includes adjustment to Franchise Fee to remove “grossing up” method from City’s 2025 rate adjustment calculations.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 15 of 19 Table 10: 9% Profit Allowance on Allowable Collection Costs Original Profit
Allowance $641,302 $188,392 $170,609 $65,715 $227,094 $180,477 $135,161 $111,295 $65,388 $15,085 Revised Profit
Allowance 768,515 224,623 175,993 78,382 237,649 188,618 141,665 134,797 68,490 15,714 Change in
Calculations 127,213 36,231 5,384 12,667 10,555 8,141 6,504 23,502 3,102 629 Effect on Rate
Adjustment
Total Revisions for New Rate Adjustment Methodology
Taken altogether, the revisions to the 2025 rate adjustment result in small increases to the original 2025 rate adjustment calculations. These are shown in Table 11, on the following page, and are also shown in Attachment 2.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 16 of 19 Table 11: Overall Revisions to 2025 Rate Adjustments
Original 2025
Revenue
Calculation
$15,640,734 $4,089,595 $3,228,699 $1,426,540 $4,786,646 $3,804,059 $2,848,911 $2,692,832 $1,378,241 $317,951 Change in
Depreciation (212,647) (59,444) (46,597) (20,735) (61,603) (48,957) (36,665) (34,878) (17,737) (4,092) Change in
Corporate
Overhead
184,082 34,540 27,075 12,048 69,975 55,611 41,648 39,619 20,148 4,648 Enhanced
Services 47,467 17,797 12,999 6,520 20,597 13,616 14,719 14,373 6,625 576 Updated Profit
Allowance 127,213 36,231 5,384 12,667 10,555 8,141 6,504 23,502 3,102 629 Corrections to
AB 939 Fees 77,271 (5,226) (4,097) 10,931 - - - - - -
Revised 2025
Revenue
Calculation
15,864,119 4,113,493 3,223,463 1,447,971 4,826,170 3,832,470 2,875,118 2,735,447 1,390,379 319,712 Revenues at
Current Rates 14,435,726 3,677,194 2,882,493 1,282,686 4,621,616 3,672,906 2,750,690 2,616,676 1,330,724 306,989 Shortfall (1,428,393) (436,299) (340,970) (165,285) (204,554) (159,564) (124,428) (118,771) (59,655) (12,724) Revised 2025
Rate
Adjustment4

9.89% 13.18% 12.59% 14.32% 4.92% 4.82% 5.02% 5.04% 4.98% 4.60% Proportionality in Cost of Service
R3 analyzed the 2025 rate adjustments for adequacy with respect to the cost-of-service requirements of Proposition 218. Because the base year rate adjustment methodology is based on the documented cost of provided solid waste services as expressed in Waste Connections’ audited financial statements, we find that the current and proposed solid waste service rates will generate revenues sufficient to cover the cost-of-providing service plus a reasonable profit allowance commensurate with normal expectations in the solid waste industry.

R3 also analyzed the proposed solid waste service rates for adequacy with respect to proportionate allocation of costs among solid waste service customers. R3 found that the current (and thus also 4 Rate adjustments shown include grossing up for franchise fees per 1994 Rate Manual methodology, except for San Luis Obispo.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 17 of 19 proposed) solid waste rate structure proportionately allocates costs to service types and container sizes based on the relative differences in cost associated with the types of services provided to customers.

For example, for customers subscribing to 60- or 90-gallon cart solid waste service, the per-gallon cost-ofservice for those subscribed to the larger container size (90-gallons) is proportionately less than those subscribed to the smaller container size (60-gallons). This is because solid waste service is comprised of both fixed and variable costs, with the fixed cost portion being for the cost of collection (labor, fuel, capital equipment, and other shared costs) as well as the costs related to post-collection disposal, processing, recycling and composting. Thus, the cost-of-service for the larger container size (90-gallons) has a lesser proportion of fixed costs to variable costs compared to the smaller (60-gallon) container size.

Factors Affecting 2025 Rate Adjustments
Overall, for the Agencies and the three Waste Connections business units, the 2025 rate adjustments reflect an 8.12% increase in revenues to meet increased costs and revised profit allowances. The largest contributors to the overall increase are:

Increases in organics processing costs – Third-party costs for the organic waste postcollection processing facility operated by the company formerly named Hitachi Zosen INOVA, and which are not within Waste Connections’ control, have doubled since 2022. The change in cost is the result of changes in facility capital and operating costs.

Increases in landfill disposal costs – Related party costs for landfill waste disposal at Cold Canyon have remained flat since 2016. The 2025 rate adjustment reflects a market adjustment to these costs, from a per ton tipping fee of $41 per ton (in place since 2016) to a per ton tipping fee of $70. Waste Connections provided market comparison demonstrating the applicability of the $70 per ton market tipping fee.

Other factors play minor roles in the 2025 rate adjustment:

Collection costs including labor, vehicles, operating expenses and overhead – These costs are increasing in proportion to the Consumer Price Index and are projected to increase by 3.20% in 2024 and 4.21% for 2025.

Agency fees – These costs are mostly proportionate to changes in rates and are projected to increase by 2.22% in 2024 and 3.30% in 2025.

Overall, collection services comprise the single largest component overall rate funded expenses, at 56% of total rate revenues. Post-collection services are the next largest component of rate funding, at 29% of total rate revenues. Agency fees comprise 10% of rate revenues and profit allowance comprises 5% of rate revenues. This is demonstrated in Chart 5, on the following page.

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 18 of 19 Chart 5: Summary Components of 2025 Rate Revenues
New Rate Adjustment Methodology
The City and Waste Connections negotiated a new methodology for adjusting rates starting in 2026, which are summarized below. R3 is preparing an exhibit to the City’s new agreement with Waste Connections that will further detail the terms and conditions of the new methodology in accordance with the following points, which have been tentatively agreed to by the parties. The exhibit will be finalized and ready for distribution to the Agencies on or around November 18, 2024. It is recommended that the Agencies bring forward the exhibit as an amendment to their agreements with Waste Connections when considering the 2025 rate adjustments, which is anticipated to occur in January 2025.

The features of the new methodology include:

CPI Adjustments: Starting in 2026, rate adjustments will be based on the Garbage and Trash CPI, with a floor of 2% and a cap of 5%. Amounts under 2% or over 5% will carry forward. The CPI adjustment will apply to Waste Connections’ collection and post-collection cost centers. The proposed CPI is the Consumer Price Index for all Urban Consumers for Garbage and Trash in the United States, all City average. Details and prior results for this CPI are included in Attachment 3.

This is the same CPI used by Waste Connections in preparing its 2025 base year application.

Updated Profit Allowance: As stated previously, the 2025 rate adjustment includes a 9% profit allowance of projected collection costs. The City and Waste Connections have tentatively agreed that, in 2026 and thereafter, the profit allowance will be 10% of collection costs.

Revenue Balancing Mechanism: Starting in 2027, adjustments to rates will account for shortfalls or surpluses in Waste Connections’ actual revenues compared to projected revenues from prior years. For example, if Waste Connections’ 2025 revenues exceed projections, the amount of surplus revenues will be credited to the rates in 2027 (and vice versa), achieving fairness in compensation and rates for the company and for ratepayers. Such adjustments would take place annually and will be independent of the CPI cap and floor noted above.

Less Frequent Cost-Based Adjustments: Currently, solid waste rates are adjusted based on the 1994 Rate Manual every three years on Waste Connections’ costs. Via the new methodology, Collection
Services
56%
PostCollection
Services
29%
Agency Fees
10%
Profit
Allowance
5%

New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo | New Solid Waste Rate Adjustment Methodology and 2025 Rates 19 of 19 cost-based adjustments would occur a maximum of every five years, and only if requested by Waste Connections or the City. The first opportunity for a cost-based adjustment will be for the 2030 rate year. If neither Waste Connections nor the City request a cost-based adjustment, then the CPI adjustment approach will be applied. Cost-based adjustments will be based on Waste Connections’ consolidated audited financial statements for the region. Timeframes for cost-based adjustment application and review process will be ample, such that the City will have sufficient time for review and approval processes and such that the potential for delay in implementation is minimized.

Extraordinary Adjustments: The California Air Resources Board (CARB) Advanced Clean Fleets (ACF) regulation is requiring all solid waste collection trucks to be zero emissions in 2042.

This includes a phased in plan to get the percentage of the fleet to be zero emission vehicle (ZEV) with 10% by 2030, 25% by 2033, 50% by 2036,75% by 2039 and100% by 2042. During CPI Adjustment years, Waste Connections may request extraordinary rate adjustments due to changes in law affecting collection operations, including for compliance with CARB’s ACF zero emission mandate (which may necessitate change to depreciation schedules). The City may, but is not obligated to, consider requests for extraordinary rate adjustments due to changes in law affective post-collection operations. Requests for extraordinary change are subject to good faith meet and confer negotiations between City and Waste Connections.

Example Calculations for 2026 through 2029
R3 has prepared example calculations of projected rate adjustments for 2026 through 2029 based on the tentatively agreed to terms and conditions outlined above (including adjustment to 10% profit allowance on collection services starting in 2026). Table 12, below, demonstrates this example for the City of San Luis Obispo, and Attachment 4 provides examples for all Agencies. Note that the example in Table 12 and Attachment 4 includes the following assumptions:

CPI at the 5% cap (note that CPI below the 5% cap will result in lower rate adjustments) Revenue reconciliation at 1% below annual rate revenue projections (note that amounts above rate revenue projections will offset rate adjustments, not add to them).

Discontinuance of the prior Franchise Fee grossing method on rate adjustment for all Agencies starting in 2026.

Table 12: Example Calculation of New Rate Methodology for the City of San Luis Obispo 2025 2026 2027 2028 2029
Collection Services $8,539,055 $8,966,008 $9,414,308 $9,885,024 $10,379,275 Profit Allowance 768,515 896,601 941,431 988,502 1,037,927 Post-Collection Services 4,602,096 4,832,201 5,073,811 5,327,501 5,593,876 Franchise Fee 1,586,412 1,675,695 1,777,106 1,866,072 1,959,572 AB 939 Fee 368,041 386,443 405,765 426,053 447,356
Revenue Reconciliation Example N/A N/A 158,641 167,569 177,711 Total Revenues 15,864,119 16,756,947 17,771,062 18,660,722 19,595,717 Indexed Rate Adjustment 5.63% 6.05% 5.01% 5.01%

Series Id: Series Title: Area:

Item: Base Period: Years: Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec HALF1 HALF2 2014 422.440 422.483 423.413 425.393 425.242 425.930 426.562 426.771 427.327 427.995 427.808 428.187 2015 427.734 429.248 429.235 429.807 431.234 430.813 431.229 432.967 433.843 434.829 436.428 436.996 2016 437.205 438.296 437.699 437.676 438.317 437.858 438.607 439.358 439.707 440.311 443.343 444.745 2017 446.266 447.699 446.987 447.129 447.272 448.046 448.328 448.717 449.008 452.196 453.820 453.596 2018 453.354 454.915 455.230 458.722 462.887 465.041 465.579 470.457 471.026 472.535 486.650 485.935 458.358 475.364 2019 475.687 477.474 478.569 479.449 480.865 480.984 482.138 483.987 484.346 486.133 486.485 486.708 478.838 484.966 2020 491.003 494.429 495.288 494.432 494.946 496.679 498.564 500.882 501.756 503.315 504.970 508.190 494.463 502.946 2021 512.722 517.270 518.505 518.579 516.440 517.202 521.185 524.408 529.934 530.114 529.053 532.538 516.786 527.872 2022 533.078 538.313 540.719 542.564 544.546 547.554 548.187 548.706 558.254 561.090 563.816 565.185 541.129 557.540 2023 570.412 575.697 576.773 580.124 587.431 589.812 596.167 597.347 596.997 597.569 601.631 602.164 580.042 598.646 2024 606.773 610.551 610.015 611.073 609.538 611.946 614.089 615.880 609.983 U.S. city average
Garbage and trash collection DECEMBER 1983=100
2014 to 2024 Consumer Price Index for All Urban Consumers (CPI-U) Original Data Value CUUR0000SEHG02 Not Seasonally Adjusted Garbage and trash collection in U.S. city average, all
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