CITY OF SAN MATEO
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 22 Section Name: PUBLIC HEARING Account Number: 21-4678 File ID: 25-10565 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Public Works Department
MEETING DATE: March 16, 2026
SUBJECT:
2026 Solid Waste Collection Rates — Rate Increase
RECOMMENDATION:
Adopt a Resolution to establish maximum rates for solid waste, recycling, and organics collection for rate year 2026.
BACKGROUND:
The City’s Solid Waste Program (Program) includes waste diversion, compost/recycling education and outreach, special collection events, construction and demolition recycling plan processing, litter reduction programs, illegal dumping abatement, and hazardous waste management, and ensures compliance with all County, regional, State, and Federal regulations. Solid waste, recycling, and organics collection, processing, and disposal services are available to all residents and commercial businesses in the City of San Mateo.
Each year, Council authorizes the solid waste rates to cover the costs of the collection services provided by Recology San Mateo County (Recology); the processing and disposal services provided by South Bayside Industries, Inc. (SBI); the City’s portion of the costs of membership in the joint powers authority, South Bayside Waste Management Authority (RethinkWaste); and the agency fees, which include the City’s solid waste and street sweeping programs, trash capture device maintenance, landfill fee, and franchise fees. The City retains HF&H Consultants (HF&H) to assist in developing a rate structure to fund the cost of solid waste services.
In 2021, the City adopted a long-term plan for incremental adjustment to the residential solid waste rates to bring them into alignment over time with their true cost of service. This is an ongoing effort.
For rate year 2026, the City faces increased costs for collection, processing, and disposal services.
The exclusive franchise agreement between the City and Recology San Mateo County allows for inflationary increases to Recology’s collection expenses: fuel costs, labor costs, vehicle maintenance costs, and other costs. Recology’s annual compensation increases are reviewed and approved by the Board of Directors of RethinkWaste, of which a City Council member sits as a director. The agreement was renewed in 2019 and will expire in 2035. Recology’s collection costs in 2026 increased four percent compared to 2025. After review, the RethinkWaste Board of Directors found the proper inflation factors were used to determine Recology’s allowable compensation for 2026 and the increases were approved.
The processing and disposal services fees set by RethinkWaste are increasing seven percent in 2026. The cost increase is a result of a five-percent increase to the tipping fee rates set by RethinkWaste and increased amounts of material from San Mateo being processed at the Shoreway Facility.
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For 2026, in addition to collection, processing, and disposal costs and City program fees, solid waste rates include funding $150,000 annually to be set aside in the Solid Waste Fund dedicated to the future purchase of replacement street sweepers.
The 2026 cost increase is also a result of the decision of the City Council last year to defer $331,333 in increased costs from 2025 to 2026, as allowed under the franchise agreement. That decision lowered rates in 2025 but must be accounted for this year.
Maintaining current rates to meet the 2026 projected expenses described above would lead to an anticipated deficit of $1,170,910. Therefore, staff recommends the City Council to authorize raising residential rates by a range of $4.16-$6.50 per month. These increases will result in a projected deficit of $14,137 in 2026. In addition, residential customers subscribing to 96-gallon solid waste carts will meet their cost of service.
Table A summarizes the current 2025 and proposed 2026 residential rates. These rates include collection, processing, and disposal of garbage, recycling, and organics.
Table A – Proposed 2026 Residential Solid Waste Rate Changes Size of
Collection Cart
2025 Current
Monthly Rate
2026 Proposed
Monthly Rate
Monthly
Difference
20-gallon $36.09 $42.09 $6.00
32-gallon $45.93 $52.18 $6.25
64-gallon $72.43 $78.93 $6.50
96-gallon $103.08 $107.24 $4.16
Staff Recommendation:
Based on the above, staff recommends Council authorize the rate increases in Table A to meet the need for commercial and residential rates to meet their cost of service, to judiciously preserve the Solid Waste Fund reserves to blunt the impact of future rate increases as well as the City’s anticipated share of future capital improvements at the Shoreway Environmental Center forecast by RethinkWaste, and to be better prepared for upcoming, anticipated increases from Recology, South Bayside Industries, and RethinkWaste.
Balancing Account:
In accordance with the City’s franchise agreement, Recology maintains a balancing account which tracks the cumulative surplus or deficit between what Recology is owed and what is collected from solid waste rates. The City is charged interest if the cumulative balancing account is a negative balance at the end of any given year. Past City Council direction is to avoid interest charges by keeping the balancing account as low as possible.
In March 2024, the City Council authorized the use of $1.0 million in fund reserves to be remitted to Recology to reduce the balancing account deficit before the year’s end. The payment was made in August 2024 which avoided accruing additional interest on the deficit. In March 2025, the City Council authorized the use of $0.4 million to be remitted to Recology to reduce the balancing account deficit. The payment was made in August 2025 which avoided accruing additional interest on the deficit.
The City’s current long-term plan is to bring residential rates into alignment with their cost of service by the end of the current franchise agreement in 2035. By judiciously using Solid Waste Fund reserves over time to blunt the effect on residential rate payers, this goal is attainable. These funds are derived from rate stabilization fees collected from 2019- 2021 and from City program savings over time.
Council direction has been for all solid waste and street sweeping program savings to be used for rate stabilization. In March 2025, staff reported to Council that $4.4 million was available for stabilization.
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Since then, the City has allocated approximately $630,000 to purchase a new electric street sweeper, the purchase for which was approved by City Council on November 18, 2024, and is considering purchase of a bike lane electric street sweeper which would be of a similar cost. These purchases would reduce the reserve balance to $3.2 million for future rate stabilization. However, with the recommended increases to residential rates, no remittance to Recology is recommended for 2026. City staff will continue to recommend strategic use of Solid Waste Fund reserves to help offset added costs for service and/or partially offset future rate increases as the cost-of-service implementation plan is implemented.
It is important to note that in addition to potential annual contractual inflationary increases, Recology, SBI, and RethinkWaste must meet state regulations such as the move to zero emission vehicles. RethinkWaste is considering necessary capital improvement projects and bond measures, all of which will likely require the City to raise rates in the next few years.
Rate Setting Procedures:
Proposition 218 is a citizen-led initiative constitutional amendment enacted in 1996 and is alternatively known as the “Right to Vote on Taxes Act.” While the courts have not ruled that Proposition 218 applies to solid waste collection rates from a franchise hauler, in an abundance of caution, the City has historically followed the “majority protest” proceedings set forth in Proposition 218.
Accordingly, with the City Council’s approval, a public notification of the proposed maximum increase in solid waste rates was mailed to property owners on January 16, 2026 (Attachment 2). The notification instructed property owners on how to submit a valid written protest. Valid written protests are accepted through the time of this public hearing.
At the end of the public hearing, the City Clerk will tally and report the qualifying written protests and the City Council will certify whether the written protests in opposition to the increase meet or do not meet the majority protest threshold. In accordance with Article XIIID, Section 6, of the California Constitution, a "majority protest" exists if written protests against the proposed fee or charge are presented by a majority of owners of the identified parcels. If a majority protest is not received, the City Council may then authorize the increased rates. If a majority protest is received, the City cannot increase the rates and the rates will remain unchanged.
Assuming a majority protest does not exist, staff recommends Council adopt the Proposed Resolution (Attachment 1) establishing the above-referenced solid waste rates.
BUDGET IMPACT:
If the proposed rate adjustments are authorized, the Solid Waste Fund’s revenues will increase toward alignment with the costs of service.
ENVIRONMENTAL DETERMINATION:
This action by the City in setting the maximum rates to be charged by Recology San Mateo County relates to funding an on- going solid waste collection service and is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
NOTICE PROVIDED
Notice of the proposed maximum increase in solid waste rates and the March 16, 2026, notice of public hearing were mailed to all property owners and Recology customers on January 16, 2026. This meets the 45-day notification requirement.
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ATTACHMENTS
Att 1 – Proposed Resolution
Att 2 – Notice of Public Hearing
Att 3 – Public Comment
STAFF CONTACT
Jack Johnson, Waste Management Supervisor
[email protected]
6505227346