Agenda Item: 5
CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS
CITY MANAGER APPROVAL:
DATE: May 27, 2025
SUBJECT: SOLID WASTE FRANCHISE EXTRAORDINARY RATE
ADJUSTMENT
DEPARTMENT: Neighborhood Services
PRESENTER: Darin Seegmiller
RECOMMENDED ACTION
City Council:
1. Adopt a resolution approving the Second Amendment to the Franchise Agreement between the City of Santa Clarita and Burrtec Waste Industries, Inc., for the Provision of Garbage, Recyclable Materials, and Organic Waste Collection Services dated November 12, 2024, and certain revised solid waste rates for services beginning July 1, 2025.
2. Authorize the City’s consent, at the request of Burrtec Waste Industries, Inc., for early termination of their continuation rights for waste collection services in the Tesoro Del Valle annexation area.
3. Authorize the City Manager or designee to execute all contracts and associated documents, subject to City Attorney approval.
BACKGROUND
Burrtec Waste Industries, Inc. (Burrtec), provides solid waste collection services to the City of Santa Clarita (City) in accordance with the Amended and Restated Agreement for Provision of Garbage, Recyclable Materials, and Organic Waste Collection Services (Agreement), effective November 12, 2024. The initial term of the Agreement expires on June 30, 2033. Burrtec is requesting amendments to the current agreement related to extraordinary rate adjustments, the establishment of fees for extra carts, and the termination of services in Tesoro Del Valle (Tesoro).
EXTRAORDINARY RATE ADJUSTMENT
On January 15, 2025, the City received a request from Burrtec for an extraordinary rate adjustment (Request). This Request was made under Section 6.07 of the Agreement, which allows for such adjustments under specific circumstances. Burrtec initiated the Request following the closure of Chiquita Canyon Landfill (Chiquita), which stopped accepting waste on January 1, 2025. Although the closure had been anticipated, the cessation of operations occurred without prior notice. As a result, Burrtec was required to immediately find a new location to dispose of the City’s garbage. After exploring different options and locations, Burrtec signed a three-year agreement with Waste Management (WM) to accept the City’s garbage at Sun Valley Recycling Park (Sun Valley), a transfer station located at 9227 Tujunga Avenue. The change in disposal location was approved by the City Council on January 14, 2025.
Burrtec’s Request includes increases to the residential and commercial rates to account for increased disposal and operational costs as a result of the change in disposal site.
Upon receipt of Burrtec’s Request, the City hired R3 Consulting Group (R3) to review the request and supporting documentation provided by Burrtec. R3 Consulting Group reviewed the information provided to the City and evaluated it based on the current market conditions of waste disposal in the area.
Waste Disposal Costs
The primary driver behind Burrtec’s Request is the significant increase in disposal costs caused by the re-routing of the City’s waste from Chiquita Canyon Landfill to Sun Valley Recycling Park.
Chiquita, formerly the second-largest active landfill in Los Angeles County, served as the City’s designated disposal facility for waste. In anticipation of its closure, and in response to ongoing operational disruptions, Burrtec began exploring alternative disposal options in 2024. This included test routing to various facilities in the region, primarily to evaluate logistics, traffic, impacts and wait times.
As part of this process, four facilities were evaluated, including Sun Valley, Antelope Valley Recycling & Disposal Facility, Sun Valley Paper Stock, and Sunshine Canyon Landfill. These efforts placed economic strain on Burrtec’s collection system and introduced disposal costs significantly higher than those at Chiquita.
Ultimately, Burrtec identified Sun Valley as the most viable long-term solution. With the City’s approval, and to secure the necessary capacity, Burrtec entered into a three-year agreement with WM for the disposal of the City’s municipal solid waste. Should the issues at Chiquita be resolved and the facility reopen for operation, Burrtec may resume using the site, subject to prior notification and coordination with the City.
When delivering waste to Chiquita, Burrtec was required to pay $37.50 per ton for disposal. The disposal cost at each of the viable alternative sites was over $90 per ton. The new fees reflect a 162 percent increase compared to the previous fees at Chiquita. The City’s consultant, R3, was
able to verify that Burrtec’s representation of the increase in fees is consistent with current regional market conditions.
Operational Adjustments
Burrtec’s Request also included increases to the residential and commercial rates to account for operational adjustments due to the change in the disposal site.
Burrtec is proposing to revise its residential collection system to reduce wait times and mitigate traffic impacts. To ensure that each route has sufficient capacity to collect all the garbage set out for collection in one load, Burrtec is proposing to reduce the number of accounts assigned to each route by approximately 9 percent, requiring the creation of additional routes. To support this Request, Burrtec provided information, including individual vehicle load weight data, and driver and vehicle mechanic hours that was verified by R3.
Retroactive Cost Recovery
Burrtec’s Request includes a provision to recover the operational and disposal costs associated with disposal to Sun Valley that occurred prior to the requested July 1, 2025, rate adjustment.
Burrtec proposes to recover these costs over the remaining 96 months of the Agreement. Both the City and R3 have reviewed and verified the documentation provided by Burrtec for these expenses.
Proposed Rates
The total rate increases for standard residential service bundles, extra garbage carts, and select commercial services are provided below in Table 1. All proposed rates can be found in the Second Amendment attached.
Table 1: Proposed Rate Increases
Monthly Rate Current Rate Proposed Rate Rate Increase ($) Residential 32-Gallon Cart $25.48 $28.99 $3.51
Residential 64-Gallon Cart $27.05 $32.57 $5.52
Residential 96-Gallon Cart $29.87 $37.39 $7.52
Residential Extra Garbage Cart $6.32 $7.93 $1.61 Commercial 1.5 CY Bin (1x week) $120.63 $141.56 $20.93
Commercial 3 CY Bin (1x week) $184.94 $226.80 $41.86
If approved, residential customers will see rate increases between 14 to 25 percent, and commercial customers will see increases between 6 to 25 percent based on container size and frequency. With the proposed rate, the City’s rate for a standard 96-gallon bundle would remain lower than the Los Angeles County Unincorporated rate and lower than many of the benchmark cities surveyed (see Figure 1).
Figure 1
CHARGES FOR EXTRA RECYCLING AND ORGANIC WASTE CARTS
In addition to the extraordinary rate adjustment, Burrtec is also requesting to establish fees for additional residential carts. Burrtec does not currently charge residents for additional recycling and organic waste carts, of which there are currently 7,948 additional residential carts being utilized throughout the City.
Burrtec’s request states that unlimited, free additional organics and recycling carts have led to some customers using these carts for purposes beyond regular, household waste. Additionally, customers who do not use extra carts are essentially subsidizing those who do, because those who only have the standard number of carts are helping pay for the extra services used by others.
If this issue is not resolved, Burrtec anticipates that customers may use the extra carts to bypass rising waste disposal costs, leading to increased contamination and the associated costs being borne by customers not receiving the benefit.
In order to address these concerns, Burrtec is requesting to charge for additional residential recycling and/or organic waste carts after two free additional carts per household. The proposed rates are listed below and are lower than the current rate for an additional garbage container to
incentivize the use of recycling and organics carts.
If approved, most customers (80 percent) will not see any impact on their bill because they currently have two or fewer additional carts. However, customers with three or more additional carts will pay $6.00 ($4.80 for the senior/low-income rate) for each additional cart.
EARLY TERMINATION OF CONTINUATION RIGHTS FOR TESORO DEL VALLE
ANNEXED AREA
Finally, Burrtec has requested to terminate their continuation rights for waste collection services under the “AGREEMENT FOR THE CONTINUATION RIGHTS FOR RESIDENTIAL SOLID
WASTE COLLECTION FOR THE TESORO DEL VALLE ANNEXED AREA OF SANTA CLARITA” (Continuation Rights Agreement) as of June 30, 2025, carried over from their agreement with the County, before Tesoro was annexed into the City. Their continuation rights were set to expire on October 31, 2025. In the interest of keeping services and rates consistent for all City residents, Burrtec would like to conclude the continuation rights on June 30, 2025, and begin to service residents of the Tesoro area through the Agreement and approved rates of the City. If approved, the residents in Tesoro will see their rates for standard service increase from $32.51 per month to the recommended amount of $37.49 per month.
Residents of the Tesoro area will be notified by Burrtec of the Continuation Rights Agreement termination and the change in services and rates as a result. The City’s Agreement will provide the residents of the Tesoro neighborhood with additional services such as large item/electronic waste drop off at Burrtec’s facility, neighborhood cleanup bins, document shredding events, free home composting bins, and a prepayment discount for annual rates.
ALTERNATIVE ACTION
Other action as determined by the City Council.
FISCAL IMPACT
There is no fiscal impact by this action.
ATTACHMENTS
Resolution - Second Amendment
Burrtec Extraordinary Rate Request
Tesoro Annexed Area Cont. Rights Request
Franchise Agreement Redline Copy (available in the City Clerk's Reading File)