City Council
Report
City Council Meeting: June 13, 2023
Agenda Item: 12.B
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Resource Recovery & Recycling
Subject: Public Hearing and Adoption of Solid Waste Rate Resolution Recommended Action
Staff recommends that the City Council:
1. Hold a public hearing.
2. Receive public comment pursuant to Proposition 218 requirements.
3. Consider all protests against the proposed solid waste rate increases that have been submitted in accordance with Proposition 218.
4. Adopt findings of Statutory Exemption pursuant to Public Resources Code 20180(b)(8) and Categorical Exemption pursuant to Section 15273 of the California Environmental Quality Act (CEQA) Guidelines.
5. Adopt the attached resolution establishing a five-year schedule of solid waste rates effective August 1, 2023, for FY 2023-24 and July 1 every year thereafter through July 1, 2027, for FY 2027-28.
Summary
The City’s Resource Recovery and Recycling Division (RRR) provides year-round sanitation services to over 93,000 Santa Monica residents plus additional daytime workers and visitors. These services, such as solid waste collection, recycling, organics recycling, alley cleanup, street sweeping, household hazardous waste collection, and zero waste education, are primarily funded through solid waste utility rates. The last solid waste rate increase was approved by the City Council nine years ago in 2014.
In 2020, the City consciously paused a proposed solid waste rate increase at the beginning of the COVID-19 global pandemic to avoid imposing additional financial hardships on ratepayers. After a three-year rate freeze, RRR now relies on spending 2 of 11
down reserves in its enterprise fund in order to sustain a $37 million sanitation operation with 93.9 full-time-equivalent (FTE) essential workers who collected over 176 million pounds of organics, recyclables, and landfill trash in Fiscal Year 2022-2023 while trying to keep pace with escalating costs due to inflation, increasing community needs, and State regulatory compliance. Without a rate increase, RRR would deplete its reserves in 2024. In order to preserve the City’s ability to provide residents and businesses with reliable and cost effective municipal solid waste management services while ensuring the RRR Fund remains financially self-sustaining, the proposed rate adjustments are critical and necessary.
The 2023-2028 Five-Year Solid Waste Rate Study (Attachment A) recommends an 11 percent increase per year from Fiscal Year 2023-24 through Fiscal Year 2027-28.
Furthermore, a rate restructuring in the first year is recommended for multi-family and commercial customers to eliminate the livable unit charges and water meter charges and fold in street sweeping services into one bundled solid waste and recycling rate in order to simplify and modernize the rate structure to meet solid waste industry standards.
These recommendations were presented and supported by the City Council during the study session held on February 28, 2023. Even with the proposed increases, Santa Monica’s solid waste rates are still among the lowest in Los Angeles County.
This report discusses the proposed solid waste rates and new or improved community programs funded by the new rates, including the creation of a new income-qualified Solid Waste Rate Assistance Program, a new Community Cleanup Program, and the enhancement of the existing Bulky Item Illegal Dumping Response Program.
Pursuant to Proposition 218 legal requirements, staff recommends that the City Council conduct a public hearing at the Council Meeting on June 13, 2023, receive community comments, and approve the proposed solid waste rates for 2023-2028.
Background
In support of a clean, safe, and sustainable Santa Monica, the 2023-2028 Five-Year Solid Waste Rate Study proposes new rates that will enable the City to meet increasing 3 of 11
community needs including regulatory compliance with the new statewide mandatory organics recycling law Senate Bill 1383 (SB 1383), increase alley cleaning frequencies, enhance bulky item and illegal dumping pickup services, support volunteer-organized community cleanup activities, sweep the City’s increasing inventory of protected bicycle lanes, and continue its sustainability efforts to achieve the City Council’s goal of zero waste by 2030, which is defined as lowering the per capita landfill disposal rate to 1.1 pounds per person per day (PPD) by 2030 from the current rate of 3.5 PPD. 4 of 11
Discussion
Clean and Safe
At the study session on February 28, 2023, staff presented two rate adjustment options and one alternative outcome in detail (Attachment B) for the City Council’s discussion:
Table 1. Solid Waste Rate Option Summary
Option Additional
Staffing
Level
Proposed
Annual
Increase
Anticipated Outcome
One – Enhanced Clean and Safe
Services (RECOMMENDED)
15.12 FTE 11% Enhanced bulky item illegal dumping collection Proactive weekly alley cleanup
Quarterly community cleanup program
Two – Right-Size Basic Services 8.12 FTE 10.2% Right-size existing basic services No enhanced bulky item illegal dumping collection
No quarterly community cleanup program
Alternative (NOT RECOMMENDED) 0 FTE 9% Staffing shortages persist Missed or delayed collections continue
City’s cleanliness degrades
City Council supported rate adjustment Option One, titled Enhanced Clean and Safe Services, which supports a cleaner, safer, and more sustainable City by providing the tangible community benefits summarized in Table 2.
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Table 2. Services Included in the Enhanced Clean & Safe Services Proposed Solid Waste Rates Service Category Service
Frequency
Benefits to the Community
On-Site Organics Recycling for All Weekly All residential and business locations will be provided with on-site organics collection and
recycling services of green waste, food waste, and
food-soiled papers at no additional charge
Reliable Curbside Collection Services Weekly On-time weekly collection of landfill trash (black container), recyclables (blue container), and
organics (green containers)
Enhanced Bulky Item and Illegal Dumping
Collection Program
Weekly Proactive and frequent removal of illegally dumped and abandoned items from alleys and sidewalks to
minimize undesirable behaviors and improve the
City’s overall cleanliness
Year-Round Recycling Events Monthly All residents have access to free recycling events that rotate monthly, including compost and kitchen
pail giveaways, paper shredding and recycling,
collection and recycling of hard-to-recycle items
such as electronic waste, mattresses, box springs,
and carpets
New Community Cleanup Program Quarterly A new, volunteer-driven program that empowers residents and businesses to play a part in cleaning
up their neighborhood with City-supported supplies
and resources
Enhanced Sweeping Program Year-Round
As Needed
Routine sweeping of all City streets, alleys, and
protected bike paths; increased removal of fallen
palm fronds from public right-of-way
Enhanced Zero Waste Education and Outreach Year-Round
As Needed
Increased capacity and frequency to provide waste
reduction and recycling education to residents and
businesses through all means, including social
media, mailers, in-person appointments,
inspections, and on-site technical assistance
On-Demand Household Hazardous Waste
(HHW) Collection
Year-Round
As Needed
All residents can request a HHW collection from
their doorstep at no additional charge
The proposed rates shown in Table 3 are for two months of service (the City bills bimonthly, or six times a year) for some of the most frequently chosen landfill trash service levels by customer type. Recycling and organics recycling services are bundled in the rates at no additional charge. RRR offers a wide variety of service levels, ranging from one 65-gallon trash cart with once-a-week collection to multiple 4-cubic-yard trash bins with seven-day-a-week collection. A complete set of proposed solid waste rates for all service levels from 2023-2028 is attached (Attachment C) and posted online at www.santamonica.gov/solid-waste-rates.
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Table 3. Proposed Rates of Typical Solid Waste Services Customer Type Current Proposed
8.1.2023
Proposed
7.1.2024
Proposed
7.1.2025
Proposed
7.1.2026
Proposed
7.1.2027
Single-Family
One 65-gallon 1x per week collection $83.55 $92.74 $102.94 $114.26 $126.83 $140.78 One 95-gallon 1x per week collection $107.79 $119.65 $132.81 $147.42 $163.64 $181.64 Multi-Family
Four-unit apartment with two 95-gallon
1x per week collection
$198.56 $239.30 $265.62 $294.84 $327.28 $363.28
Ten-unit apartment with one 300-
gallon 2x per week collection
$445.16 $550.00 $610.50 $677.66 $752.20 $834.94
Commercial
One 2-cubic-yard 1x/week
collection with 0.75-inch water meter
$262.67 $309.38 $344.01 $382.45 $425.11 $472.46
One 3-cubic-yard 3x/week
collection with 3-inch water meter
$1,060.22 $1,411.11 $1,566.96 $1,739.94 $1,931.91 $2,144.97 For single-family customers, the proposed rate increase is 11% annually for all five years. For multi-family and commercial ratepayers, the Year One increase on August 1, 2023, is greater than the subsequent years. A rate restructuring is required for these customers in the first year to eliminate the livable unit charges and water meter charges and fold in street sweeping services into one bundled rate to ensure the City’s rate structure is consistent among all customer types and align with solid waste industry standards. Year Two through Year Five increases are identical to single-family customers at 11%.
With the proposed increases, Santa Monica’s solid waste rates for single-family customers are slightly higher than some cities, but it is important to note the City also provides more services to its residents at no additional charge, such as year-round recycling events and on-demand door-to-door household hazardous waste collection.
On the other hand, the City’s multi-family and commercial rates are among the lowest in Los Angeles County because some cities contract out the collection services for those customer types to private haulers, while Santa Monica remains one of only three cities in the County (including Culver City and Claremont) that provide municipal solid waste management services to all customers. This demonstrates the benefits of a municipallyrun solid waste management operation. 7 of 11
The new rates would be effective on August 1, 2023, and annually thereafter on the first day of the fiscal year from July 1, 2024, through July 1, 2027. The additional revenues generated from the rate increases are anticipated to keep the RRR Fund in a positive fund balance, but the continued use of RRR reserve funds through FY 2025-26 are anticipated to be required to keep the annual increase to 11% and not at a higher rate.
Barring any unforeseen circumstances, over time, RRR Fund reserves are projected to be restored to an industry best practice standard of a minimum 90-days of operating expenditures.
Sustainability
Besides cost effectiveness, having full, local control of a municipal operation means RRR maintains the flexibility in its service offerings and the ability to set priorities that are important to the community, such as doubling down on bulky item illegal dumping cleanup efforts while recovering recyclable items (e.g. cardboards dumped on the ground) and diverting them from landfills, committing to sustainable waste management strategies, including continued implementation of mandatory organics recycling of all residents and businesses, and striving towards the City Council’s sustainability goal of achieving zero waste by 2030, which is locally defined as reducing the landfill disposal rate to 1.1 pounds per person per day (PPD). Currently, the City generates 3.5 PPD, and much progress is needed in zero waste strategy implementation.
New: Solid Waste Rate Assistance Program
Council supported staff’s recommendation of allocating General Fund resources to create an income-qualified Solid Waste Rate Assistance Program to minimize the financial impacts on eligible ratepayers.
Staff recommends mirroring the eligibility criteria of the City’s existing water and wastewater (sewer) utility rates low-income assistance program. Currently, incomequalified customers who are enrolled in Southern California Edison and Southern 8 of 11
California Gas Company’s California Alternate Rates for Energy (CARE)1 program can submit proof of CARE program enrollment to the City and apply for discounted water and wastewater rates, which reduces the Tier 1 rate by $1 per hundred cubic feet. The actual discount varies depending on water usage. Instead of creating a stand-alone application process for the solid waste rate discount, staff proposes easing the burden on customers and simplifying the administrative process by automatically enrolling all CARE customers who qualify for the water and wastewater rate discounts in a 10% discount on the solid waste rate. Currently, the City has 444 CARE customers.
Staff believes a 10% discount would provide a significant relief to CARE customers to help offset the proposed 11% increase. Staff analysis indicates 64% of the CARE customers are single-family residents and smaller multi-family building owners. New discount applications are accepted and approved year-round, and the discount would be reflected on the following billing cycle’s utility statement. Proposition 218 prohibits one ratepayer class from subsidizing the utility rates of another ratepayer class, which dictates such discounts must be funded outside of the RRR enterprise fund.
Accordingly, General Fund resource have been identified to support this program.
Enhanced: Bulky Item Illegal Dumping (BIID) Response Team Collection and removal of abandoned items, bulky items, and illegal dumping from the public right-of-way is one of the most frequently requested services in the City’s 311 system. Residents perceive the cleanliness of their neighborhood by not only how timely the City collects the materials inside the trash, recycling, and organics containers, but also items discarded outside the containers and on the ground, in the alleys, and by the curb. RRR recognizes bulky item and illegal dumping collection is a community priority but has not had the staffing to provide proactive daily cleanups of the City’s 200-plus miles of streets and alleys after losing a significant number of contract and as-needed workers during the COVID-19 budget cuts and restructuring in 2020. 1 California Alternate Rates for Energy (CARE) program qualification is based on one of two criteria: 1) a household member’s participation in a public assistance program, such as, but not limited to, Women, Infants, and Children (WIC), CalFresh/SNAP (Food Stamps), Supplemental Security Income (SSI), Medicaid, or Medi-Cal; or 2) the total combined gross annual household income does not exceed $36,620 for households with a 1-2 people, $46,060 for a 3-person household, and $55,500 for a 4-person household.
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If the proposed new rates are approved, RRR would be able to hire more permanent, full-time sanitation workers to fully restore and expand the Bulky Item Illegal Dumping (BIID) team. The BIID team would proactively inspect “hot spots,” especially in highly visible/high-traffic locations, because those areas have the greatest impact on our residents and visitors’ perception of the City. The BIID team would also monitor the streets and alleys of a different section of the City every day, removing items from the ground and separating out recyclable items such as clean and dry mattresses and cardboard and diverting them from the landfill. Simultaneously, RRR would launch a community awareness campaign to promote reuse and anti-dumping. Given the necessary time required to hire and train new City workers and establish a public education campaign, it is anticipated the community should experience a noticeable improvement in 311 response time for bulky item/illegal dumping collection and cleaner streets and alleys by the first quarter of the 2024 calendar year.
New: Community Cleanup Program
The new rates would also provide the resources needed to create and support a new, volunteer-driven Community Cleanup Program. Community members want to make a difference in the neighborhood they live in and be part of the solution, and this program would empower them to do that. Under the Community Cleanup Program, volunteers from residents, businesses, schools, or community-based organizations can apply for a neighborhood cleanup day on a specified date. RRR would provide volunteers with gloves, bags, and trash pickers. At the end of the cleanup event, RRR sanitation workers and collection trucks would remove the trash bags and any oversized items.
The BIID team mentioned in the previous section would support the Community Cleanup Program, so the program is anticipated to launch in early 2024 at a quarterly frequency after the BIID team is fully staffed and trained.
Public Outreach and Support from the Sustainability Commission Since the February 2023 study session, RRR staff have presented to and/or shared the rate study information with all seven neighborhood groups in the City; met twice with the major business stakeholders including the Chamber of Commerce, Santa Monica Travel 10 of 11
& Tourism, Santa Monica Pier Corporation, and Business Improvement Districts (BID) leaders; advertised in SaMoNews and the Buy Local Newsletter; published a notice of the public hearing in the Santa Monica Daily Press; mailed a full-color educational Proposition 218 public notice to all residents and solid waste account holders; created a website with all the pertinent rate study information and frequently asked questions at www.santamonica.gov/solid-waste-rates; and created an email address for inquiries at [email protected]. Additionally, staff presented twice to the Commission on Sustainability, Environmental Justice, and the Environment. At its April 17, 2023, public meeting, the Commission passed a motion to support RRR’s proposed rate increases and the zero-waste programming funded by these rates (Attachment D).
Pursuant to Proposition 218 legal requirements, the City Council must hold a public hearing at the conclusion of a 45-day notice period on June 13, 2023, to receive public comments. Moreover, the City Clerk will tally the Proposition 218 protests received at the public hearing. Absent a majority protest of one vote per property (50% plus one), the Council can approve the proposed rate increases.
Environmental Review
The establishment of the new solid waste rates is exempt from CEQA pursuant to Section 21080(b)(8) of the Public Resources Code and Section 15273 of the CEQA Guidelines, which states that CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for the purpose of meeting operating expenses, including employee wage rates. The new solid waste rates would ensure that the City has the ability to continue to provide municipal solid waste management services, and therefore, are exempt from CEQA
Financial Impacts and Budget Actions
The proposed new rates will impact the RRR (54) Fund as follows:
• Revenues: An estimated $6.1 million in additional utility billing revenues in FY 2023-24.
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• Expenditures: An estimated $3.7 million in additional operating and capital expenditures in FY 2023-24.
• FTEs: An addition of 18 FTE permanent positions, offset by a deletion of 2.88 FTE as-needed positions, for a net increase of 15.12 FTE positions.
The proposed revenues, expenditures and positions are included in the FY 2023-25 Proposed Biennial Budget, and one-time vehicle expenditures of $1.2 million will be including in a subsequent budget process.
The estimated subsidy required for the Solid Waste Rate Assistance Program is also included in the FY 2023-25 Proposed Biennial Budget. The General Fund will reimburse the RRR Fund for the subsidy amount annually based on actual need through an interfund transfer. Future year funding is contingent on Council budget approval.
Prepared By: Yvonne Yeung, Resource Recovery and Recycling Administrator Approved Forwarded to Council
Attachments:
A. Solid Waste Rate Study 2023-2028
B. Staff Report - Five-Year Rate Study 2023-2028 (Web Link) C. Five Year Solid Waste Rate Table 2023-2028
D. Sustainability Commission Letter of Support
E. Resolution - Solid Waste Rates 2023-2028
F. Written Comments