Authorize City Manager to Approve
Amendment No. 5 of the Collection Service
Agreement Between City and Recology
and Recology Refuse Rate Increase
Effective January 1, 2024
Presented by:
Jim Howison & Carrie Baxter
September 2023
SLIDE
1 1. Background
2. Rate Adjustment and Findings
3. Comparison of Rates
4. Recommendations
AGENDA
SLIDE
2 August 2017
• New Agreement
Approved by City
Council
• 15-year term
(2018 – 2033)
December 2017
1st Amendment
• Creating low-
income rate
discount program
September 2018
2nd Amendment
• Revise refuse
rate indices and
time periods used
for rate
adjustments
May 2020
3rd Amendment
• Add infrequently
used service
rates, correct
typographical
errors
May 2022
4th Amendment
• Comply with SB
1383 Regulations
and implement 3
container organic
waste collection
for all customers
Background
New Agreement Went into Effect January 1, 2018
⎻ Exclusive right to provide collection services for 15-year term ⎻ New vehicle fleet and collection equipment
⎻ Superior customer service
⎻ Specialized website
⎻ Extensive public education and outreach
SLIDE
3 Background
Annual Rate Adjustments
1. Refuse Rate Index (RRI) Adjustments
• Standard adjustment methodology
• Based on:
o Financial statement of operating costs
o 5 bureau of labor statics indices (labor, diesel, vehicle replacement, vehicle maintenance, and all other)
o Change in disposal and processing costs
OR
2. Detailed Rate Review Adjustments
• Optional adjustment methodology, every third year (2020, 2023, 2026, etc.)
• Either Recology or city staff may request a detailed rate review • Based on:
o Actual operating costs
o Maintaining profit within terms of agreement (90% ratio) SLIDE
4 Background
2024 Detailed Rate Review
⎻ City requested Detailed Rate Review on 4/17/23
⎻ In response to request, Recology submitted its application 6/12/23 R3’s Approach to Detailed Rate Review
⎻ Reviewing and assessing reasonableness of application for completeness and mathematical accuracy
⎻ Reviewing and assessing the reasonableness of Recology’s revenue and expense allocations to the City’s franchise
⎻ Reviewing the reasonableness of the forecasted revenues and expenses
⎻ Reviewing the accuracy of calculated rate adjustment including:
• Proper application of Recology’s operating ratio (90%) • Proper calculation of franchise and AB 939 fees
SLIDE
5 Rate Application Details
⎻ Initial application requested 7.46% increase to customer rates ⎻ Total expenses, which includes for example, compensation, vehicle expenses, and deprecation totaled $32 million.
⎻ Recology’s annual profitability would equal $3.6 million Proposed Adjustments
⎻ Compensation reduced from $14.0 million to $13.2 million.
Total Proposed Adjustment: $807K
⎻ Asset depreciation reduced from $3.75 million to $3.10 million.
Total Proposed Adjustment: $600K
⎻ Profitability reduced from $3.6 million to $3.4 million.
Total Proposed Adjustment: $200K
⎻ Revenue reduced from $65 million to $63 million.
Total Proposed Adjustment: $2 million
⎻ Total rate adjustment reduced from 7.46% to 4.33%
Rate Adjustment and Findings
SLIDE
6 Comparison of Rates
Proposed 2024 residential customer rates were:
⎻ Approximately 51% higher than the overall County average for 20-gallon cart customers
⎻ Approximately 26% higher than overall County average for 32-gallon cart customers
⎻ Approximately 7% higher than overall County average for 65-gallon cart customers
⎻ Approximately 11% higher than overall County average for 95-gallon cart customers
Proposed 2024 commercial and multi-family
customer rates were:
⎻ Approximately 13% higher than overall County average for 1CY bins ⎻ Approximately 20% higher than overall County average for 2CY bins ⎻ Approximately 11% higher than overall County average for 3CY bins ⎻ Approximately 17% higher than overall County average for 4CY bins SLIDE
7 Comparison of Rates
Weekly Residential Garbage, Recycling, and Organic Waste Collection Rate Comparison
$22.91
$26.17
$28.64
$29.43
$29.78
$34.00
$35.56
$36.57
$38.15
$29.50
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
Sonoma Cotati Petaluma Sebastopol Healdsburg Cloverdale Windsor Santa Rosa - Current
Santa Rosa -
Proposed
Average (does not include Santa Rosa)
SLIDE
8 Comparison of Rates
4CY 1 Time Per Week
Commercial Rate Comparison*
* NOTE: Commercial Collection Rates include the selected trash rate bundled with recycling and organic waste for all comparable jurisdictions, except Windsor. The rates for Windsor include the rate for garbage collection, plus a weekly collection for a 96-gallon recycling and a 64-gallon organic waste cart for a more comparable comparison.
$515.56
$573.38
$589.98
$657.24
$734.69
$808.01
$961.99
$783.51
$817.44
$691.55
$0.00
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
Cloverdale Sonoma Cotati Sebastopol Petaluma Healdsburg Windsor Santa Rosa - Current
Santa Rosa -
Proposed
Average (does not include Santa Rosa)
SLIDE
9 Recommendations
Authorize City Manager to negotiate and
execute Amendment No. 5 to Solid Waste
Collection Services Agreement between City
and Recology
Approve the 4.33% increase set by Recology
to be effective January 1, 2023 as correct and
in accordance with the City’s existing Solid
Waste Collection Services Agreement
Santa Rosa
2024 Detailed Rate Review
September 2023
Jim Howison & Carrie Baxter