Agenda Item: 6
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR
CITY MANAGER APPROVAL:
DATE: May 24, 2022
SUBJECT: FRANCHISED WASTE HAULERS ANNUAL RATE ADJUSTMENT DEPARTMENT: Neighborhood Services
PRESENTER: Darin Seegmiller
RECOMMENDED ACTION
City Council:
1. Adopt a resolution approving the Eleventh Amendment to the Amended and Restated Agreement between the City of Santa Clarita and USA Waste of California, Inc., for residential solid waste management services, allowing the following adjustments: A) single- family residential standard service rates by 5.00 percent based on Section 6.5.1 Annual Rate Cap, as outlined in the Residential Franchise Agreement, and B) multi-family residential rates and special services by 3.18 percent, based on both the formula outlined in the Residential Franchise Agreement, subject to City Attorney approval.
2. Adopt a resolution approving the Tenth Amendment to the Amended and Restated Agreement between the City of Santa Clarita and Burrtec Waste Industries, Inc., for commercial solid waste management services, allowing the following adjustments: A) solid waste and organic rates by 3.38 percent, based on the formula outlined in the Commercial Franchise Agreement, subject to City Attorney approval.
BACKGROUND
In November 2003, the City Council selected USA Waste of California, Inc. (Waste Management), as the exclusive hauler for residential solid waste management services and Burrtec Waste Industries, Inc. (Burrtec), as the exclusive hauler for commercial solid waste management services.
Pursuant to their respective franchise agreements, the haulers may request rate adjustments each year. The Annual Rate Adjustment is calculated by using a formula that is based on price indices, including labor, fuel, equipment, and disposal.
Both of the agreements include an Annual Rate Cap that limits the total adjustment to 5.00 percent per year. Furthermore, the agreements contain a Santa Clarita Valley Rate Cap, which states that the City of Santa Clarita (City) single-family residential rates shall remain below the rates of franchised collection services provided by the County of Los Angeles (County) in unincorporated Santa Clarita Valley. Any unrealized increases as a result of these caps may be carried forward until they are fully applied.
Burrtec and Waste Management have submitted requests for annual rate adjustments in rate year 2022-23.
Waste Management Single-Family Residential Rates 2022-23
In past years, increases to the single-family rates have been restricted by the Santa Clarita Valley Rate Cap and the Annual Rate Cap. These rate caps have resulted in an unrealized rate deficit of
14.47 percent. Calculation of the 2022-23 Annual Rate using the methodology in the Franchise Agreement would increase the rate by 3.18 percent.
On March 24, 2022, Waste Management requested a rate increase of 3.19 percent plus 1.81 percent of the unrealized carryover deficit, to equal the 5.00 percent maximum rate adjustment.
The .01 percent difference between the recommended rate adjustment and Waste Management's request is due to a rounding difference, which has since been agreed upon by both City and Waste Management staff. Staff recommends the City Council approve a 5.00 percent increase to the City’s single-family residential rate for the 2022-23 rate year, consistent with the Annual Rate Cap, Section 6.5.1 of the Agreement. This increase would include a 1.82 percent adjustment from the cumulative carryover adjustment for residential services that have not been realized since 2015. If approved, the monthly single-family service rate would increase from $25.06 per month to $26.31 per month, which is still below the Los Angeles County unincorporated single- family rate of $28.20 per month.
Waste Management - Single-Family Residence Waste Services
Standard Rate Methodology 2022-23 3.18%
Cumulative Carryover Adjustment for Residential Cart Service from 2015-21 1.82% Total Proposed Adjustment for Residential Cart Service: 5.00%
Waste Management Multi-Family Residential Rates 2022-23
Waste Management also requested an annual rate adjustment for multi-family and special services. Using the prescribed methodology, the rate adjustment has been calculated to be 3.18 percent. Staff recommends the City Council approve a 3.18 percent adjustment to the multi- family residential rates and special services.
Burrtec Commercial Rates 2022-23
On March 31, 2022, Burrtec requested a 3.38 percent rate increase for commercial services, which is consistent with the annual rate adjustment methodology identified in the Franchise
Agreement. The methodology is based on national price indices such as labor, fuel, equipment, and disposal. Staff recommends the City Council approve a 3.38 percent rate increase for commercial services, which would bring the cost of servicing a three-yard bin, one time per week, from $131.41 to $135.85 per month.
Burrtec Residential Rates 2022-23
The California Public Resources Code governs the continuation of solid waste services after an annexation and grants the preexisting service provider with the option to continue servicing the given area. On December 10, 2019, the City Council approved and entered into a Continuation Rights Agreement with Burrtec to provide waste services to three newly annexed areas: Plum Canyon, Skyline Ranch, and North Sand Canyon.
The terms of this agreement authorize the administrative approval of rate adjustments on an annual basis, as prescribed by the County’s methodology, based on national price indices such as labor, fuel, and disposal. Per the agreement, Burrtec must provide all customers a minimum of 30-days' written notice of the implementation of changes in any service fees.
At this time, City staff does not have the rate adjustment data from the County to determine the rate for year 2022-23.
The final adjusted rates will not be implemented until the new County rates take effect. Once the rate adjustment for the County has been finalized, a memo will be provided to the City Council, detailing the single-family standard service rates for the annexed areas.
ALTERNATIVE ACTION
Other action as determined by the City Council.
FISCAL IMPACT
None by this action
ATTACHMENTS
Waste Management Resolution - Eleventh Amendment
Burrtec Resolution - Tenth Amendment
Waste Management Methodology (available in the City Clerk's Reading File) Waste Management Request (available in the City Clerk's Reading File) Burrtec Methodology (available in the City Clerk's Reading File) Burrtec Request (available in the City Clerk's Reading File)