FOR THE COUNCIL MEETING OF DECEMBER 5, 2023
COUNCIL AGENDA REPORT
TO: City Council
FROM: Interim City Manager Alex Posada
BY: Director of Utilities Shad S. Springer
SUBJECT: Adoption of a Resolution Authorizing Disposal Fees for the Santa Maria Regional Landfill Effective January 1, 2024, and January 1, 2025
Description:
The City Council will consider setting disposal fees for the Santa Maria Regional Landfill effective January 1, 2024, and January 1, 2025.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3), no environmental review is required.
RECOMMENDATION:
Adopt a Resoluti on authorizing disposal fee s for the Santa Maria Regional Landfill effective January 1, 2024, and January 1, 2025.
BACKGROUND:
The Utilities Department provides integrated waste management services on behalf of the City of Santa Maria (“City”). This includes municipal solid waste, recyclables, and organic waste collection services for residential and commercial customers, operating the Santa Maria Regional Landfill (“SMRL”) at 2065 East Main Street, and planning for the design, permitting, construction, and operations of the future Inte grated Waste Management Facility (“IWMF”) at Los Flores.
In 2023, the Utilities Department contracted with HF&H consultants to analyze and update the existing financi al model for the Solid Waste Disposal Fund. The model determines operating performance (revenues vs. expenditures) as well as project ed impacts on the cash balance of the enterprise fund. The recent analysis evaluated the existing financial plan and foreca sts considering current economic and market conditions, regulatory mandates, historical performance, and projects . T he financial model was updated to identify sufficient revenues to fund projected operating and capital needs.
Revenues for the Solid Waste Disposal Fund are based on fees collected at the SMRL from all patrons, regardless of the origin of the waste (e.g., Guadalupe, Nipomo, Orcutt, Santa Maria). The last fee adjustment for the SMRL occurred on January 1, 2022. Based on the updated financial model for the Solid Waste Disposal Fund, current SMRL disposal 2 fees are inadequate to generate sufficient revenue for the Solid Waste Disposal Fund to support the forecasted operational and capital expenditures. Additional revenues are needed for expenses related to operations, maintenance, capital equipment replacement, environmental monitoring and reporting, and capital projects.
Increases in expenses related to operations include labor and benefits, household hazardous waste disposal costs and facility o perations, recycling park operations, equipment repairs, fuel, and growing regulatory requirements for landfill gas and groundwater systems. In addition, the Utilities Department anticipates significant capital expenditures related to the construction of a landfill liner extension project to expand disposal capacity at the SMRL in June 2024, the construction of the initial phases of the future IWMF at Los Flores during fiscal year 2026/27, and final closure activities of the SMRL beginning in fiscal year 2031/32.
DISCUSSION:
Staff recommends disposal fees for the SMRL (Attachment “A”) to become effective on January 1, 2024 , and on January 1, 2025, to provide the additional funding needed to continue sustaining the enterprise fund. The proposed fees are comparable to neighboring disposal facilities to minimize the risk of losing volume and revenue to other disposal sites.
If approved, the updated disposal fees will be publicly posted at the SMRL, including on signage at and near the Scale House, as well as posted to the City Utilities Department webpage.
Disposal fees are not property-related such as rates for water service, sewer service, and refuse collection. As a result, they are not subject to Article XIII D, Section 6 of the California Constitution, commonly referred to as “Prop 218”.
Alternatives
The City Council ma y elect not to approve the proposed disposal fees. This will lead to inadequate funding of the enterprise fund. To meet projected expenses, other sources of revenue will need to be identified, such as the general fund. Staff does not recommend this option, as the disposal fees should cover ongoing and fut ure costs without subsidy from other sources.
Fiscal Considerations
The proposed disposal fees are estimated to generate additional revenue in the amount of $3,000,000 over the next two fiscal years. This revenue is necessary to help support the long-term viability of the enterprise fund. Staff will continue to monitor and update the financial model and may return to the City Council for consideration of further fee adjustments in the future.
Impact to the City
The proposed disposal fees will help to generate additional revenue for operating and capital needs, while still being competitive with surrounding disposal facilities.
3 Impact to the Community
The fees for the SMRL will continue to provide the com munity with a local, cost-effective option for the safe disposal of waste.
Attachments
Attachment “A”: Proposed Fee Structure
Attachment “B”: Disposal Fee Comparison