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 Approving the New Tiered Disposal Rate Structure for Permitted Roff -Off Haulers and Solid Waste Haulers for the Santa Maria Regional Landfill, Commencing January 1, 2024
Description:
The City Council will consider updating the tiered disposal rate structure for permitted roll- off haulers and solid waste haulers to the Santa Maria Regional Landfill.
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 Resolution authorizing a new tiered disposal rate structure for permitted roll -off and solid waste haulers for the Santa Maria Regional Landfill, commencing January 1, 2024.
BACKGROUND:
The Utilities Department provides integrated waste management services on behalf of the City of Santa Maria (“City”). This includes municipal solid was te, 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 fut ure Integrated Waste Management Facility at Los Flores.
The City does not provide roll-off bin collection services within City limits. Instead, the City authorizes permitted roll-off haulers, formerly referred to as franchise haulers, to provide roll-off collection services. There are currently seven permitted haulers conducting roll-off collection services within the City.
To secure new waste streams to both facilitate the closure of the SMRL and to maximize operational efficiencies, in 2017 the City Council adopted Resolution No. 2017 -40 to develop a four-tier disposal rate structure for municipal solid waste delivered to the SMRL by permitted haulers. The purpose of the rate structure was to incentivize the permitted 2 haulers to transport their waste to the SMRL for a lower disposal rate as tonnage increased. This rate structure attracted new waste volumes to the SMRL.
On November 3, 2020, in line with increases to the SMRL disposal fees in early 2020, the City Council adopted Resolution No. 2020-108 to revise the tiered disposal rate structure for municipal solid waste delivered to SMRL by permitted haulers. This adjustment was needed for the City to con tinue to attract new waste as well as generate additional revenue for the Solid Waste Disposal Fund.
In Fiscal Year 2022-23, approximately 34,000 tons of solid waste were delivered to SMRL by permitted haulers under the tiered disposal rate program. This accounted for approximately 22 percent of the total tons disposed at SMRL and generated approximately $1.6 Million in revenue for the Solid Waste Disposal Fund.
Following a comprehensive recent update, the Solid Waste Disposal Fund financial model has dem onstrated that costs exceed revenues due to escalating expenses related to operations, maintenance, equipment replacement, and environmental monitoring and reporting, as well as planned capital expenditures related to the construction of a landfill liner e xtension project to expand disposal capacity at the SMRL in June 2024, the construction of the initial phases of the future Integrated Waste Management Facility at Los Flores during fiscal year 2026-27, and final closure activities of the SMRL beginning in fiscal year 2031-32.
DISCUSSION:
In order for the City to continue to provide a cost -effective alternative for waste disposal by permitted haulers and generate additional revenue for the Solid Waste Disposal Fund, the proposed tiered rate structure continues to provide a disposal fee discount, or credit, ranging from $5 to $20 per ton from the current posted general refuse gate rate at SMRL.
This methodology allows for a more efficient process to maintain an appropriate tiered disposal rate structure.
Under the proposed tiered rate structure, permitted haulers and other solid waste haulers delivering new tons to the SMRL will be eligible for the discounted rates based on the total monthly tonnage, as shown in the table below:
Tier Monthly Tonnage
Current General
Refuse Gate
Rate/Ton
Proposed
Discounted
Rate/Ton
1 1 – 599.99 $77.00 $0
2 600 – 999.99 $68.00 $5.00
3 1,000 – 1,499.99 $58.00 $10.00
4 >1,500 $56.00 $20.00
As the general refuse gate adjusts in the future, the proposed discounted rate per ton ($5 to $20) will still apply for each tier.
3 Current permitted haulers will be eligible for the discounted rates after adoption by the City Council. In addition, permitted haulers or other solid waste haulers bringing new waste streams to the SMRL may elect to form a joint venture or legal par tnership with other haulers to maximize their tonnage and qualify for lower rates. Eligibility for participation under the tiered disposal rate program will continue to be as determined by the Director of Utilities, as authorized by the City Manager.
The proposed tiered rate structure is not property -related like rates for water service, sewer service, and refuse collection; therefore, approval of such rates is not subject to Article XIII D, Section 6 of the California Constitution, commonly referred to as “Prop 218.”
Alternative(s)
1. The City Council may elect not to approve the proposed tiered rate structure. This will lead to inadequate revenues for the Solid Waste Disposal Fund. In order to meet projected expenses, other sources of revenue will need to be identified, such as the General Fund. This alternative is not recommended, as the fees to provide the service should cover costs without subsidy from the General Fund or other sources.
2. The City Council may adopt an alternative discount or apply a cred it different than those recommended by Staff. Further discount or credit is not recommended as the SMRL could experience a significant loss of revenue resulting from customers utilizing other disposal sites; this will negatively affect the solvency of the enterprise fund.
Fiscal Considerations
Based on the current estimated quantities of roll -off waste, the adjusted tiered disposal rate structure will generate approximately $450,000 per year in additional revenue. This revenue is necessary to help support the long-term viability of the Solid Waste Disposal Fund. Staff will continue to evaluate the solvency of the enterprise fund and may return to City Council for consideration of further adjustments to this tiered disposal rate structure in the future.
Impact to the City
The proposed tiered disposal rate structure will increase the revenues for the enterprise fund to provide funding for necessary expenses. A self-sufficient Solid Waste Disposal Fund does not need to be subsidized from other sources, such as the General Fund.
Impact to the Community
The proposed tiered disposal rate structure for the SMRL will continue to provide permitted haulers and other solid waste haulers with a local, cost-effective option for the safe disposal of waste.
Attachments:
1. Proposed Resolution