South Lake Tahoe City Council
December 12, 2023

3 293
Exhibit A-1
Sample Base Year Rate Application < '>nt11 I)
Base Year Rate Application
Financial Information for All Three Jurisdictions
Actual Auctt..:1 Estumt.S ~
Pnorv.. CIJrr9tllY•• a-.v .. Al Thr.. Al nw.. aty ot Sl r .nc1 EJ Ootldo ~or. .Jt.lritdictor. Oouglat. c.ounty COunty
$ Dntl'-- s s s s
• E.....-eomond F"""""-
7 L-1-C-.
• Otflee Sllan•
• Gen.Al Ind~\'. Colla
10 MRF_ond_,.....,._(Elllo<odo~)
ff ARF Pnnapat .net I,..,._ °'--(El Ocnda r--...1
12 '°"' .,_ °"""""" CollS s s I I
"I.
"fi EE*fi!MiiiFiMfM"'WS 1' MRI'_...,._ 14 RRF,._P_..
f7 MRF..-dRRFim..t~
18 RRFFundCttcat
1P R~ ...,..,..ac....

20. T04.ll Pas Through Costs
21 , ....... _ °'*"""9 eom"'"" 121 .... - °'*"""9 ....... < ..... "l .... , .... p- I• - C-.(ur. 20) • R•dtrflllRtvtr'Mn
Olyol_ ..... ,_
22 l.Hmit.ct~
2J .._ .. _ ... ~.,.,.,Oii
z.f M..._, ~ ps a8r;yW'd
2' au.16edW'llOI' .....
,. i'IOute:titNU • 1CS'I
21 HaUle MMCe - 2 cs.
28 HouM MMce - 3 c..
2f R...,.•-Al._MMC411
Dougj•~
JO 1 l21Jlllon cen •s=-----t ,, l2~c..
l2. l. l21Jlllonc..
33 32._.on~
.J.f an.unJ2"911anan(lllolhltMmoml'*""ic•r'llll) 1------t 35 Or>col '.12._.,., con - _,.,..,. .)f P•c:ut.e'tl'd
J7 1, 45-gmlon can
JI A~CMS
J9 ). 45-gllonc-. '° O\eertra ~Clr'l lllO .... .,...Ml'Vl(e,.., t-----t -4f <hall~ CM tded "'°""VI.,...
42 R..-. .. . AIOINt-MMOtt
EIOo<odo~
0 l..ll*na.dSM"itee
.. 4$ --!!-............... ... 32-~ .....
49 A...,.al......,_~
"1 Uw ort.h::cllecc.bleR•.,.•Acco.wllll
$1 fout ~ Atv.,_,..fwdtout R• °*'Oe 111 a.. Y...,
$2 eo..wn.a11 Rev.,.,.,.

53. La-. AIOllMnCe for t.hoolectibl• Comnwta• Atxolllt& " " ,.
$7
T• Comtneto• R.v.,.,_ CUI~ C.,.,,. in S... Vtwl
r,.,..,. sea.on Ind RRF "-"'~
R MactfitllS.....
12 12
12 12
12 12
12 12
12 12
12 12
12 12
12 12
12 12
12 Is
'' fotll ~- ConwlMtaail r...-... $1Rotl Ind R.Rf Rev--.- Prior IO-·~ (Une $' • 54 .._ 55> '2 Pttc«110..n&'1&1n9R•dlnllallCommwa.uTr.S•~Rac- UnelSO·lxt981 ) Fiscal Year:

Is Is Is
l/ '
,
A-3
294
Exhibit A-1
Sample Base Year Rate Application 0nt11 1)
Operating Information

63. Residential Accounts

54. Multi-family Accounts

65. Commercial Accounts

66. Total Accounts

67. Residential Refuse Tons

68. Residential Recycling Tone
69 Relidential Yard Waste Tons

70. Commercial Refuae Tons

71. Commercial Recycling Tons
72 "Free" Drop Boxes Provided (Monthly}

73. "Free" Bins Provided

74. 2 Yard Bin-Once per Week

75. 3 Yard Bin-Once per Week

76. 4 Yard Bin-Once per Week

77. 5 Yard Bin-Once per Week

78. 6 Yard Bin-Once per Week
Fiscal Year:

Base Year Rate Application
I
Prior Year Current Year
Audited Estimated
Information Information
All Three All Three
Junsdlcilons Junsdicbons
Percent
Change
Base Year
Projectad
lnfotm.11ion
City of SL T Ind El Dorldo
Douglu County County •.•• ,, .•.•
~
~I :1
•••1•1 111--ill
I I ~
A-4 Solid Waste Rate Setting Policies and Procedures Manual I
I
I
Percent
Change
I
I
~
!

295
Exhibit A-2
Sample Interim Year Rote Application
Chang• In Landntl Olspoul Costs
Interim Year Rate Application
Poor YHt LlndU Trppiog Fen Pet Ton
Pnot YUi LandM T~
1 Equ•ls. Total Pno< Yow l.ondfill DiepoNI Cosio
Year:

Pro,octod lnlonm Yoor l.ondlil Topping F- Per Ton
P "*'nmYewllndfilTona
Total F'ro_.i lni.rim Year Landfill Oospoool CoS10
Provide •n txpl•n•Uon of •"Y chenges In londl1ll ctspoul coats (1 t , l•nd!lll Uppng fees poid by !ht h•ncllite heuler, lendfill tonnage) Attach 1upporting documentation to this apphceUon aa appropnate To !ht - of my knowtodgo. lht do1a ond --in fw• pptica'"'",. C0111>1olo, 1<euro•. - con 19nt 'Mtll lht "1ltNctioM provided by 1hO SOutll Lake Tahoe Basin Was"' Management Authonl)' T""'
Cal10n C1ry Total
p 1 of1
A-5
296
Exhibit A-3
Sample Interim Year Rate Change Worksheet
Interim Year Rate Change Worksheet
Summary

1. Percent Rate Change Requested (City of South Lake Tahoe and El Dorado County) Percent Rate Change Requested (Douglas County)
Rate Schedule
(per customer. per month) Current Rate Rate Adjustment
2 Cly of South lake Tahoe s $

2.1 Unhmted """"'" 2.2. Mandated plClcup pe< 32-gallon can/bag

2.3 Mandated pckup pe< c\lbic ywd
2A Qualified senior race

2.5. House Hf'Vtee • 1 can

2.0 House service • 2 cans
27 House aervtee • 3 c.-.

2.8. Retidtnoal - Al other S«Voces

3. Douglas County
31 1, 32-galon can $ s
32 2. 32-galon cans
33 3, 32-galon cane
34 4, 32-galon cans

3.5 One exlnl 32-gallon con (also the seasonal Se<Vrce - J

3.0 On-call 32-gallon can bolled monthly/wrea-s - 37 Per cubic yard 38 1, 45-galonCSI
3g 2, 45-galon cone
310 ~aloncane
311 One txlnl 45-gallon con (also tho seasonal se<Vlet rota) 312 On-call 45-gallon con bolled monthlytwrears - - 3.13 Retidential - Al other servocos

4. El Dorado County
41 Unhmtad service $ $
42 Mandated pickup pe< 32-gillon carVbag
43 Mandated pckup per c..C.C yatd
44 Qualified-- - 45 ....._ t orvict per can
46 Rtfldtn al • Al other servoces
Year:

A-6 Solid Waste Rate Setting Policies and Procedures Manual P0g1' Io
NewRate
$
$
-
·-
$
~ 1 of2
297
Exhibit A-3
Sample Interim Year Rate Change Worksheet 0 ,ntinued)
Interim Year Rate Change Worksheet
Financial Information
1 2.

3. 4.

5. 6.
7 8.

9. 10.

11. 12.

13. 14.
15 16.
17 18.

19. 20.
21 22.
#§§i:@Mti3.fi(
Base Year Operating Costs (Other Than Land"H Disposal)
Total Allowable Operatilg Costs
Plus. Allowable Operating Profit
Plus. Total Pass Through Costs
Minus: LandM Disposal Costs
Equ•ls: Total Operatilg Costs (Other Than LandfiH Disposal) B11e Year Land"ll Disposal Costs
Total Landfill Disposal Coats
BH• Year Revenue Requirement
ti§i13ifii.I.1¥Ji.IR.J1£
Change In Operating Costs (Other Than Landftll Dlsposll) Projected Change in Consumer Price Index
Projected 85 Percent Change in Consumer Price Index
Change In LandftM Disposal Costs
Mu#ip/ied b
Equals:

MuH · . d b .

Equals:

Prior Year Total Landfil r ipl>i'g Fees Per Ton
Prior Year Total Landfil Tons
Total Prior Year Total Landfil Disposal Costs
Projected Intern. Year Total Landfill Tipping Fees Per Ton Pro'ecied Intern. Year Total Landfill Tona
Total Projected Interim Year Total Landfill Disposal Costs ProJecied Change In Total L•ndfill Disposal Costs
M§iililMflMll!lll.llQ§ld§·•••.;1.1:141.i;MIC
W.lghllld Change In Operating Costs (Othar Than Land"ll Dlsposal) Welghllld Change In Total Landftll Dlsposal Costs
Total Landfitt Disposal CoslS as 'II of Base Yr Revenue Requinlment Pro cied Chan e in Total Landfil D' sal Costs
Weightod Change in Total Londfil Disposal Costs
Total Chang•
$
s
$
s
M

23. 24

25. Total Percent Change l'I Costs 1._ ____ """'1 '11
AdJustmentforFranchtse Fee (1 - 'II) I 'II

26. 27

28. Year:

D1vldadby:

Equals:

Divided by.

Equals.

Percent Change In Existing Rates (City of South Lake Tahoe and El Dorado County) Total Percent Change in Costs I
Adjustment for Franchl98 Fee (1 - 'II) I
Percent Change In Existing Rates (Douglas County)
Page2of2
A-7
298
Exhibit A-4
Consumer Price Index (CPI) Percent Change Calculation Example Consumer Price Index (CPI) Percent Change Calculation Example lnlerimYHr: 2011
At>fllk .. 1on s..-.1on by: llJl/2010
Applk- CPI da .. UHd JuM leot to June 1010
Consumer Pri" lndn - All Ul'ban Consumers
- Id! CWROOOOSEHG02
Nol 5enonally ~od
,.,_ U.S. ""'f ......._
Item: Garbogo and lnlShllaM Period: DECEMBER 11183>100 -l"l.W. y- - - - - 267.l .MU 2lil.2
- 27l.I 27l6 27l.]
- -4 2*>9 211.1
- 2116.2 217.l 211.4
- 299.4 JOO.I :IOl.2
- l07.4 JOU J09.6
- 323 32<6 325.3
- 340.1•7 - 342.QJJ
- 356.901 351059 ]51.55
- m .m 372.30] J7l.241
»10 JI0.036 312.49 Jll.362
Consumor Pike - os ol June 200ll
Consumtr Pike - as ol June 2010
Chengo In Consumot Pnce lndu
-c-1n Consumo< Pike -
-261 l
27l.7
2121
290.l
JOll
JI0.2
326.1
343 216
lS9.Sl6
375 392
JIJ.615
37&582
31] 749
7107
t.~
-
Ml
274
292.2
291
JOI 7
l ll?
3273
343.l!lll
J61SD
375.5199
JIJ.4115
- ... - - Od
2692 2104 271.l 2716 271.1 -m1 >24.:1. - 2"'-" 211 211.6 ~ __ , .. I I U I - l 214.1 21S.I
- .-1.J. . -- · 2'4.1 m l02.4 J0).5 "llM2 l052 l05.9 l06.7 312.5 ]14.J JIS4 Jl7.l 119.1 32Cl.6
3211 3296 DU ll4l DS9 3J69
341136 345(111 347 14511 347.949 341.6M JS11Jfi,
J6l.IS9 l66.00 JQ96 )69 65 1 371 .155 371.641
37".512 in . .,. 377119 311.215 379.56 379.1(11
383.7,.g llJ.ll2 315.01 315.92 315909 311.116
A-8 Solid Waste Rate Setting Policies and Procedures Manual -
2719
Z116
215.4
297.4
JOH
32Cl.6
337.l
353439
371093
379.141
311.1114
- HIUl HAI.fl
269.1
275.S
2IJ
291.9
JOU
314
DO I
34S.58i
364.695
37'.402
314.l69
299

ATTACHMENT C
CROWE HORWATH REPORT (BASE YEAR 2018

RATE ANALYSIS OF STR)
300
Crowe Horwath.

November 12, 2017
Authority Staff
South Lake Tahoe Basin Waste Management Authority
1901 Airport Road
South Lake Tahoe, CA 96150
Subject: Base Year 2018 Rate Analysis of South Tahoe Refuse Company Crowe Honvath LLP
lnde pe nd nt Member Crowe Horwath ln1t!mat1onal
575 Market Street, Suite 3300
San Francisco, Cali fornia 94105-5829
Tel 4 15.576.1100
Fax 4 15.576.1110
www.crowehorwath.com
Crowe Horwath (Crowe) has completed its analysis of South Tahoe Refuse Company's (STR's) Base Year 2018 Rate Application (Application). The South Lake Tahoe Basin Waste Management Authority (JPA) contracted with Crowe to conduct an analysis of the Application, and to provide potential refuse collection rate changes for the JPA to consider effective January 1, 2018. This letter report documents results of our analysis, and is organized as follows:

1. Purpose of Analysis

2. Summary

3. Background of Analysis

4. Scope of Analysis

5. Rate Setting Adjustments

6. Results of Analysis.

1. Purpose of Analysis
The purpose of the 2018 Base Year Rate Analysis of South Tahoe Refuse Company (Analysis) is to assist the South Lake Tahoe Basin Waste Management Authority (JPA), and each respective JPA jurisdiction including the City of South Lake Tahoe, Douglas County, and El Dorado County (Specified Parties), with their establishing solid waste collection rates charged by South Tahoe Refuse Company Inc. (STR). The analysis was conducted in accordance with JPA's 2012 Solid Waste Rate Setting Policies and Procedures Manual (Manual).

The information in this Analysis is based on estimates, assumptions and other data developed by Crowe Horwath LLP ("Crowe") from information provided by STR, knowledge of and participation in other studies, data supplied by the JPA, and other sources deemed to be reliable.

In the course of preparing this Analysis, we have not conducted an audit, review, or compilation of any financial or supplemental data used in the accompanying Analysis. We have made certain projections of revenues and expenses which may vary from actual results because events and circumstances frequently do not occur as expected and such variances may be material. We have no responsibility to update this Analysis for events or circumstances occurring after the date above.

Our procedures and work product are intended for the benefit and use of the Specified Parties. This engagement was not planned or conducted in contemplation of reliance by any other party or with respect to any specific transaction and is not intended to benefit or influence any other party. Therefore, items of possible interest to a third party may not be specifically addressed or matters may exist that could be assessed differently by a third party.
301
Crowe Horwath.

Authority Staff
November 12, 2017

2. Summary

The analysis of the 2018 rate application and supporting documentation indicates a rate increase of 8.81 percent for the City of South Lake Tahoe, 6.81 percent for Douglas County and 9.34 percent for El Dorado County, effective January 1, 2018. This compares to STR's requested calendar year 2017 rate increase of 9.59 percent for the City of South Lake Tahoe and Douglas County and 10.19 percent for El Dorado County. Current and proposed residential rates are shown in Table 1 below:

Table 1
South Tahoe Refuse
Residential Rates with 8.81 Percent Rate Increase for the City of South Lake Tahoe, 6.81 Percent Rate Increase for Douglas County and 9.34 Percent Rate Increase for El Dorado County (Base Year 2018)
Current Rate (Per Proposed Rate Increase
Customer, Per Proposed Rate (Per (Per Customer, Per
Service Level Month) Customer, Per Month Month)
City of South Lake Tahoe
Unlimited service $ 26.55 $28.89 $2.34
Douglas County
1, 32-qallon can $17.72 $18.93 $1 .21
El Dorado County
Unlimited service $30.47 $33.32 $2.85

3. Background of Analysis
The joint powers authority (JPA) is comprised of the City of South Lake Tahoe, California; Douglas County, Nevada; and El Dorado County, California (Member Agencies). The JPA is responsible for overseeing regional cooperation regarding solid waste, and coordinating solid waste program planning and reporting for these Member Agencies.

The franchise hauler for the three (3) jurisdictions is STR. Each Member Agency has an exclusive franchise agreement with STR for collection and disposal of refuse. STR provides exclusive refuse collection, recycling, and transfer station operations to Member Agencies in accordance with terms specified in separate franchise agreements.

JPA rate setting follows the JPA's 2012 Solid Waste Rate Setting Policies and Procedures Manual, Volume 2 (Manual). The Manual allows STR to submit a base year rate application for the rate year 2018.

Our analysis was conducted in accordance with Steps 2, 3, 4, and 5 in Section 2 of the Manual. 1 Rate setting has generally followed an approximately three-year cycle with the prior base year rate analysis conducted for rate year 2015. There was no rate change in 2016. The JPA and STR followed the Interim Year Rate Setting Process in Section 3 of the Manual for interim rate year 2017. Recently approved rate changes granted to STR include:
2012 - 4.97 percent rate increase (City of South Lake Tahoe and Douglas County) and 4.48 percent rate increase (El Dorado County) - base year
1 The JPA allows for the franchise hauler to submit an interim year rate application in each of the "interim" two (2) years between "base" years, should the franchised hauler want to request an increase rates. 302
Crowe Horwath.

Authority Staff
November 12, 2017

2013 - 1.57 percent rate increase (City of South Lake Tahoe}, 1.53 percent rate increase (Douglas County), and 1.58 percent rate increase (El Dorado County) - interim year 2014 - 2.78 percent rate increase (City of South Lake Tahoe and El Dorado County) and 2.73 percent rate increase (Douglas County) - interim year
2015 - 2.88 percent rate increase (City of South Lake Tahoe and El Dorado County) and 2.66 percent rate increase (Douglas County) - base year
2016 - No rate change - interim year
2017 -1 .62 percent rate increase (City of South Lake Tahoe and El Dorado County) and 1.59 percent rate increase (Douglas County) - interim year.

In Table 2, we summarize residential rates since 2015.

Table 2
South Tahoe Refuse
Selected Residential Rates
(2015 to 2017)
Service Level
City of South Lake Tahoe
Unlimited service
Douglas County
1, 32-gallon can
El Dorado County
Unlimited service
I 2015
I $26.13
I $17.44
I $29.98
I 2016 I 2017
I $26.13 I $26.55
I $17.44 I $17.72
I $29.98 I $30.47
On May 31 , 2017, STR submitted its base year rate application to the JPA for rate year 2018 (hereafter referred to as the Application). We enclose a copy of this Application as Attachment A. The JPA requires the franchise hauler to submit a base year rate application once every three (3) years. In accordance with the Manual, rate year 2018 is a base year.

STR's Application to the JPA projected a rate increase was needed to cover a combined $1 ,552,766 estimated net shortfall, including franchise fees, for fiscal year 2018. STR requested an increase of 9.59 percent ($1 ,218, 133 projected total revenue shortfall} for the City of South Lake Tahoe and Douglas County and a 10.19 percent ($334,633 projected total revenue shortfall) for El Dorado County.

We relied on STR audited financial statements, internally prepared financial information, and operational data for our analysis. STR provided audited financial statements for rate year 2016, prepared by VT Williams & Associates. STR also provided internally prepared financial information and operational data for rate years 2017 (estimated) and 2018 (projected}, and additional information and data requested by Crowe.

4. Scope of Analysis
Our scope of services included the following tasks:

1. Verify the completeness of STR's Base Year 2018 Application

2. Analyze the Base Year 2018 Application and prepare responses

3. Identify rate adjustments, by line item, and rate adjustment tables

4. Analyze proposed adjustments with JPA and STR representatives, and clarify outstanding issues 303
Crowe Horwath.

Authority Staff
November 12, 2017

5. Determine the revenue requirement and associated rate adjustments

6. Prepare a draft report

7. Prepare a final report

8. Participate in JPA meeting.

For this analysis, we performed the following tasks:

Assessed if the Application was mathematically accurately and logically consistent Verified that the Application complied with the terms and conditions of the Manual Reconciled the Application to STR's Rate Year 2016 audited financial statements Analyzed STR financial information, operational data, and projections for reasonableness Assessed supporting data, worksheets, and documentation Analyzed historical actual, estimated, and projected revenues and expenses Analyzed cost allocation methods for reasonableness
Analyzed the assignment of revenues and expenses to each Member Agency Page4
Obtained and analyzed support for the assumptions used to project Rate Year 2017 and 2018 revenues and expenses
Confirmed the use of the allowed operating ratio
Confirmed the franchise fee calculation
Confirmed the accuracy of STR's calculated revenue requirement and associated rate adjustment Performed facility and operations site visit
Prepare draft and final reports
Participate in JPA and Member Agency preparation and meeting(s).

The JPA entered into a contract with Crowe on August 4, 2017 to provide these services. We submitted a detailed data request to STR on September 5, 2017. We also performed an on-site visit of STR facilities on October 6, 2017.

5. Rate Setting Adjustments
In this section, we identify adjustments to the STR rate application for calendar year 2018. Total adjustments result in a projected 2018 revenue shortfall of $1 ,370,489 combined for the three JPA Member Agencies. The revenue shortfall includes a Base Year 2018 revenue shortfall of $1 ,063,749 for the City of South Lake Tahoe and Douglas County combined; and a projected.Base Year 2018 revenue shortfall of $306,739 for El Dorado County. Attachment B includes the rate model with Crowe's rate adjustments summarized.

Adjustments are organized to generally match the organization provided in STR's rate application. The STR rate application is organized consistent with the guidance provided in the Base Year Rate Setting Process for allowable revenue and expense categories contained in the Manual, using the template located in Appendix A (Exhibit A-1) of the Manual. The remainder of this subsection is organized as follows:

Revenues
• Residential Collection Revenues
• Commercial Collection Revenues
• Forestry, Federal, and State Contracts
Non-Collection Revenue Allocation
Transfer Station and RRF Revenues
304
Crowe Horwath.

Authority Staff
November 12, 2017
Recycled Material Sales (MRF and Recycling Sales)
Operating Expenses
• Operating Expense Allocation
• Expense Escalation
• Direct Labor
• Equipment Costs and Facility Costs
• Landfill Disposal Costs
• Office Salaries
Operating Profit
Pass-Through Costs
MRF Principal Payments
(City and Douglas)
• RRF Principal Payments
(City and Douglas)
• MRF and RRF Interest Expenses
(City and Douglas).

Revenues
Residential Collection Revenues
General and Administrative Costs
MRF Principal and Interest Costs
(El Dorado County)
• RRF Principal and Interest Payments
(El Dorado County)
Other Interest Expenses
• Other Interest Expenses
• RRF Fund Credit
• Recycling Revenue Bonus
• Franchise Fees

STR estimated residential collection revenues to increase by $37,647, or 0.52 percent, between 2016 and 2017. STR estimated residential collection revenues to increase by $124,939 or 1.72 percent, between 2017 and 2018. This increase reflects the 2017 year-to-date trend, resulting in residential collection increases of $80,345 for the City of South Lake Tahoe, $44,918 for El Dorado County, and $323 for Douglas County.

STR projected residential uncollectible revenues of $6, 100 for Base Year 2018. This projected residential uncollectible revenue amount represents 0.08 percent of projected Base Year 2018 residential revenues.

This comparatively low uncollectible revenue level results from the ability for STR to use a liens process whereby unpaid amounts are included on the tax role, as leverage to collect on unpaid accounts. lmpact(s):

No change to Residential Collection Revenues in 2018.

Commercial Collection Revenues
STR estimated commercial collection revenues to increase by $347,051 or 6.14 percent, between 2016 and 2017. STR applied approximately the same percent (6.18 percent) increase to 2018 commercial revenues.

STR based projections of 2018 commercial revenues for each of the Member Agencies on historical trends between 2016 and 2017. The resulting 2018 projected commercial revenue increases were 7.0,

14.0 and 3.0 percent respectively for the City of South Lake Tahoe, El Dorado County, and Douglas County.
305
Crowe Horwath.

Authority Staff
November 12, 2017
STR projected commercial uncollectible revenues of $1 ,524 for Base Year 2018. This projected commercial uncollectible revenue amount represents 0.02 percent of projected Base Year 2018 commercial revenues.
lmpact(s):

No change to Commercial Collection Revenues in 2018.

Non-Collection Revenues Allocation

For 2018, STR allocated non-collection revenues, including: (1) transfer station and RRF revenues, (2) forestry, federal, and state contracts revenues; and (3) recycled materials sales, between (1) the City of South Lake Tahoe and Douglas County, and (2) El Dorado County. The non-collection revenue allocation is based on 2016 residential and commercial collection revenues.

Revenue allocation percentages were 79.19 percent and 20.81 percent, respectively, for the City of South Lake Tahoe and Douglas County combined, and El Dorado County. We verified this allocation calculation was supported and correct. This allocation method was applied to (1 ) transfer station and RRF revenues; and (2) forestry, federal, and state contracts revenues, and (3) recycled materials sales revenues. lmpact(s):

No adjustment.

Transfer Station and RRF Revenues
STR estimated transfer station revenues to increase by $133,953 or 10.0 percent, between 2016 and 2017. For 2018, STR projected transfer station revenues to increase at the same 10.0 percent increase as for 2016 to 2017. STR calculated an increase of $147,348 in 2018, totaling $1 ,620,829 in projected transfer station revenues.

STR estimated RRF revenues to decrease by $6,331 or 23 percent, between 2016 and 2017. This increase is based on the year-to-date 2017 trend. STR projected transfer station and RRF revenues to increase in 2018, by $27 ,430, or 127 percent, largely as a result of now taking wood chips to the Bently facility.
lmpact(s):

No adjustment.

Forestry, Federal, and State Contracts
STR estimated forestry, federal, and State contract revenues to increase by approximately $126,047, or

28.2 percent, between 2016 and 2017, largely driven by a new large commercial contract. STR projected no further change in forestry, federal, and State contract revenues for Base Year 2018. lmpact(s):

No adjustment.
306
Crowe Horwath.

Authority Staff
November 12, 2017
Recycled Material Sales (Materials Recovery Facility (MRF) and Recycling Sales)

STR estimated revenues associated with the MRF sale of recyclables to decrease by approximately $8,869, or 2.82 percent, between 2016 and 2017, largely driven by lower commodity prices for aluminum, plastic, and glass. This estimated decrease is based on the year-to-date 2017 trend. STR projected this decreasing trend in MRF recycled material sales revenues for 2018 (i.e., another 2.82 percent reduction).

STR estimated revenues associated with the recycling sales to decrease by approximately $54,532, or

4.59 percent, between 2016 and 2017. This estimated decrease is based on the year-to-date 2017 trend .

STR projected an additional 4.59 percent reduction in revenue for recycling sales for 2018 based on projected challenges with the overseas marketplace.
lmpact(s):

No adjustment.

Operating Expenses
Operating Expense Allocation
For 2018, STR allocated operating expenses between (1) the City of South Lake Tahoe and Douglas County, and (2) El Dorado County, based on Rate Year 2016 residential and commercial collection revenues. Revenue allocation percentages were 79.19 percent and 20.81 percent, respectively, for the City of South Lake Tahoe and Douglas County together, and El Dorado County. 2 We verified that the allocation calculation was supportable and correct.
lmpact(s):

Used collection revenue allocation percentages for operating expense allocations.

Expense Escalation
Per the Rate Manual, the CPI we used in this analysis should be based on the most current actual information for the U.S. City Average Garbage and Trash Collection CPI (CPI). For purposes of projecting inflationary costs, as shown in Table 3, we used a 2.12 percent CPI equal to the percent change from the March 2016 to the March 2017 index. We rounded the CPI increase to the nearest hundredth given its material effect on the projections and for consistency with prior assessments.

Table 3
Consumer Price Index (CPI)
Used by Crowe for Rate Setting Purposes
Description Index
March 2016 437.699
March 2017 446.987
Percent Chani:ie 2.12%
STR escalated certain general and administrative expenses for Base Year 2018, including advertising, utilities, and licenses and fees, using this escalation rate. 2 For comparison purposes, for the 2015 Base Year Rate analysis, STR allocated operating expenses between (1) the City of South Lake Tahoe and Douglas County, and (2) El Dorado County, based on Rate Year 2013 residential and commercial collection revenues. Revenue allocation percentages were 80.39 percent and 19.61 percent, respectively, for the City of South Lake Tahoe and Douglas County together, and El Dorado County.
307
Crowe Horwath.

Authority Staff
November 12, 2017
lmpact(s):

Used an escalation factor of 2.12 percent for selected inflationary costs.

Direct Labor

STR estimated wages and payroll to increase by approximately $168,044, or 2.56 percent, from 2016 to 2017. STR projected total direct labor expenses of $387,411 , or 5. 77 percent increase from 2017 to 2018.

This projected direct labor increase reflects various wage and benefit increases and decreases, including:

Cost of living adjustment of 3.40 percent applied to wages and salaries, payroll taxes, and employee benefits (based on increases to reflect 30 percent of the STR workforce is subject to new California minimum wage increases)
Officer salary increases to equal 6 percent of net revenue estimations for 2017 and 2018 Health insurance expense increase of 6.97 percent from 2017 to 2018; supported by estimates provided by the benefit plan administrator
Workers' compensation expense increase of 19.40 percent from 2017 to 2018 Pension expense increase, based on 7.0 percent of labor costs for qualifying employees (where qualifying employees must work at least 1,000 hours).

We noted that there was an approximately $65,000 labor savings resulting from the shorter travel distances experienced by STR with taking material to Carson City Landfill as opposed to Lockwood Landfill. This was however offset by an increase of three new employees needed for transfer hauling/end dump hauling resulting from growing volumes of both MSW and C&D material.

We calculated the two-year average of worker's compensation expenses (estimated 2017 and projected 2018) to normalize the large fluctuations in this cost and reflective of recent steps the company is undergoing to reduce the number of worker's compensation incidents and resulting claims. Worker's compensation costs for the past year (2017) were anomalous in terms of the large number of smaller claims which significantly increased the experience "mod rate: and the resulting amount paid. This reduced worker's compensation costs by $28,006.
lmpact(s):

Decrease in Direct Labor expenses by $28,006 for 2018.

Equipment Costs and Facility Costs
STR estimated equipment costs and facility costs to decrease by approximately $92,972, or 6.30 percent, between 2016 and 2017. STR projected equipment costs and facility costs to increase by $58,365 or 4.22 percent, between 2017 and 2018. This projected 2018 increase accounts for the following:

STR estimated depreciation costs to remain relatively flat over the 2016 to 2018 period, at $1 .2M.

The current depreciation for 2018 accounts for retirement of certain assets and additions of two new Peterbilt front loader collection trucks and two new Ford fork trucks needed to maintain compliance with California Air Resources Board (CARS) requirements.

STR estimated 2017 rent costs based on the year-to-date 2017 trend and projected 2018 rent costs set equal to Rate Year 2017 rent costs.

STR estimated 2017 repairs and maintenance costs based on the year-to-date 2017 trend. STR projected 2018 repairs and maintenan.ce costs to decrease at the same percentage as did 308
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between 2016 and 2017. This decrease was driven by replacement of older trucks required to maintain CARS engine compliance.
lmpact(s):

No adjustment.

Landfill Disposal Costs
STR estimated landfill disposal costs to increase by approximately $212,448, or 21 percent, between 2016 and 2017. STR projected landfill disposal costs of $1,510,900 for 2018, representing a 22 percent increase from 2017. Landfill disposal costs include Lockwood landfill and Carson City landfill dump fees; disposal costs related to e-waste, tire, asphalt, and food waste recycling; and alternative daily cover (ADC) dump fees.

Tables 4 and 5, below, provides a summary of the dump fees for Lockwood landfill and Carson City landfill, for FY 2016 and FY2017. Per STR's contract with Lockwood landfill, the rate per ton of MSW/C&D increases each April, based on an index. The landfill disposal costs and tonnage do not include disposal costs and tonnages for other "dump fee" services, such as fore-Waste, Freon, tires, tire recycling, and other materials processing and disposal.

Table 4
FY 2016 Actual Landfill Disposal Costs and Tonnage
ADC ADC ADC C&D/ C&D/ C&D/ MSW/ MSW/ MSW/ Landfill Cost/ . Tons Costs Cost/ Tons Costs Cost/ Tonnage• Costs Ton Ton Ton Lockwood $11.42 3,037.38 $34,155 $22.55 269.10 $6,068 $17.15b 42,733.90 $732,959.54 Carson 0.00 10,911 .97 0.00 24.00 1,417.29 34,015 24.00 2,248.25 53,958.00 Citv
Total 13,949.35 $34,155 1,686.39 $40,083 44,982.15 $786,917.54 Tons: 60,617.89 Costs: $861,155
• STR disposes of MSW and C&D (as Alternative Daily Cover, or ADC) at Lockwood Landfill and MSW and C&D at Carson City landfill.
b Per STR's contract with Lockwood landfill, the annual tipping fee increased to $17.15 in April 2016.

Table 5
FY 2017 Estimated Landfill Disposal Costs and Tonnage
ADC ADC ADC C&D/ C&D/ MSW/ MSW/ MSW/ Landfill Cost/ Tons Costs Cost/ Tons C&D I Costs Cost/ Tonnage• Costs Ton Ton Ton Lockwood $11.42 0 $0.00 $22.55 1,029.75 $22,221 $17.71b 36,214.76 $641 ,350.63 Carson 0.00 15,531.06 0.00 24.00 1,867.94 44,831 24.00 12,879.50 309,935.99 City
Total 15,531 .06 $0.00 2,897.67 $67,052 49,094.26 $951 ,286.62 Tons: 67,523.01 Costs: $1,019.938
• STR disposes of MSW and C&D (as Alternative Daily Cover, or ADC) at Lockwood Landfill and MSW and C&D at Carson City landfill.
b Per STR's contract with Lockwood landfill, the annual tipping fee increased to $17.71 in April 2017.

In projecting landfill dump fees, STR accounted for changes in both tonnage and tipping fees. STR provided documentation from landfills to support the tipping fees they used in their projections. STR has made an operational change to employ a greater use of Carson City Landfill, and is currently managing the flow of materials to both Lockwood and Carson City Landfills depending on the material type, fee, trucking staff availability, time of year, and the ultimate disposition (e.g., disposal versus diversion). Below we summarize STR landfill disposal cost assumptions for 2016 and 2017. 309
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2016

• In May of 2016, Carson City Landfill added a long-haul trailer tipper so STR began taking some MSW loads from Lockwood Landfill to the Carson City Landfill beginning on 5/10/16 to minimize trucking time due to shorter travel distances. At that time, the tip fee rate was $24.00 per ton for MSW and C&D; and ADC material was accepted at Carson City Landfill at no charge. • STR sent approximately 24% of its MSW loads (based on tonnage) to Carson City Landfill in 2016.
• FY 2016 included ADC "dirty" dirt and a tip fee per yard which varied based on the rate determined by Waste Management and the weekly fuel and environmental surcharge fees.

Starting in FY 2017, ADC dirty dirt was redirected to the Carson City Landfill where it is accepted as ADC with no tip fee.
2017
• In 2017, STR redirected some of the C&D loads that had been going to the Carson City Landfill to Lockwood Landfill after the Lockwood Landfill began accepting these C&D loads as ADC. C&D material that had been dumped at the Carson City Landfill for $24.00 per ton is now being redirected to Lockwood for $22.55 per ton where in can be used as ADC and can be counted as diversion instead of disposal. These C&D loads cannot be counted as ADC if taken to the Carson City Landfill.
• In 2017, STR experienced an increase of over 6,900 tons for disposal, and 11 percent overall increase.
• STR sent approximately 45% of its MSW loads (based on tonnage) to Carson City Landfill in 2017, almost double the amount from 2016.

Other Disposal Items (which represent primary drivers for the Landfill Disposal Cost increase):
• STR had paid Tahoe Asphalt (not a related party) a processing fee of $1 .50 per ton to recycle asphalt and concrete. As a result of new facility permitting requirements, Tahoe Asphalt raised their fee for the first time to $2.50 per ton effective 5/1/17. This accounted for $50,003 of the 2016 to 2017 Disposal Cost increase.
• STR uses Full Circle Compost for food waste and green waste composting. In 2016, the tip fee for food waste was $30.00 per yard with a 30-yard minimum charge. Full Circle increased the rate to $36.00 per yard effective 5/1/17 but the 30-yard load minimum requirement was removed. Full Circle also charges a fee to open pine needle bags and process the material; this rate was $5.00 per yard in 2016, but due to contamination in the loads Full Circle increased the rate to $6.50 per yard effective 5/1/17. This accounted for $93,273 of the 2016 to 2017 Disposal Cost increase.

STR has made efforts to employ the two landfills to optimize its disposal/ADC mix. These year-over-year disposal cost increases are supported by increases in Landfill disposal volumes as well as increase in tipping fee rates charged by third-parties (e.g., for composting and asphalt recycling). Note that for the Landfill to Carson City shift, STR realized offsetting cost savings which are captured in the Direct Labor cost category.

Within the category of the other materials disposal (other than Landfill Disposal items discussed above, including Freon, asphalt, tire recycling, composting), to normalize the wide fluctuations and the uncertainty for trends in this cost category, for 2018 we used the average of the Application's 2017 estimated and 2018 projection for the project year. STR amounts for 2016,· 2017, and 2018 were 310
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$260,609, $284,465 and $412,033. The large 2018 increase reflected projected increases in tonnages.

This reduced this portion of the projection by $63,784. lmpact(s):

Decrease in Disposal costs by $63,784 in 2018.

Office Salaries
STR estimated office salaries to increase by $43,895, or 3.87 percent, between 2016 and 2017. STR projected office salary expenses of $1,248,396 for 2018, representing a 5.94 percent increase for 2014.

This projected increase accounts for projected wage and benefit changes as follows:

COLA of 3.40 percent for wages and salaries, payroll taxes, and employee benefits Health insurance expense increase of 6.97 percent from 2017 to 2018 Workers' compensation expense increase of 19.40 percent from 2017 to 2018 Pension expense increase, based on 7.0 percent of labor costs for qualifying employees (where qualifying employees must work at least 1,000 hours).
lmpact(s):

No adjustment.

General and Administrative Costs
Cost of Goods Sold
STR estimated cost of goods sold to decrease by approximately $33,314, or 5 percent, between 2017 and 2018. This estimated decrease is based on the year-to-date 2017 trend. This reduction results from across the board reductions in COGS paid for materials due to declining recycling market prices.

Advertising. Postage. Utilities. Licenses and Fees
STR escalated advertising, postage, utilities, and licenses and fees using year-to-date 2017 trends. STR projected 2018 costs based on applying the 2.12 CPI percent increase to estimated 2017 costs.

Professional Fees
STR estimated professional fees to increase by 15.1 percent, between 2017 and 2018, based on year-todate expenditures. We projected professional fees for 2018 based on annualizing the three-year amount for 2016 through 2018. This adjustment reduced projected professional fee expenses by approximately $26,667 in 2018 to $365, 786.

Bad Debts
STR projected bad debts of $7,624 for 2018. STR also included projected 2018 bad debt costs of $7,624 within the allowance for uncollectible residential accounts and commercial accounts, within Section V Revenues without Rate Change in Base Year of the application. We reduced General and Administrative Costs for the double counting of bad debt of $7 ,624 for 2018. 311
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General Insurance

STR estimated general insurance expenses to increase by $42,853, or 21 . 70 percent, between 2017 and 2018. STR provided general insurance documentation pertaining to the increased costs. In total, general insurance is expected to increase by 21 . 70 percent for STR and related parties. We did not make adjustments to STR's projection of 2018 general insurance costs.

Gain (loss) Sale of Equipment
STR's actual gain (loss) sale of equipment in 2016 equaled $80,505, primarily as a result of the sale of a fully depreciated Peterbilt front loader. STR projected no sale of equipment in 2017 and 2018, therefore $0 in gains/(losses).

We calculated projected 2018 sale of equipment using a three-year average, incorporating sales for 2016, 2017, and 2018. We calculated the three-year average at ($26,835), which reduced the sale of equipment expense by $26,835 for 2018.

STR estimated a fuel increase of $8,717, or 2.0 percent, between 2016 and 2017. This increase is based on the year-to-date 2017 trend. STR estimated a fuel increase of $31 ,879, or 7.00 percent, based on published projections of fuel price escalations. We used a fuel price escalation in 2018 of 2.12 percent (equal to the CPI) and in line with the actual change from 2016 to 2017. This adjustment decreased fuel costs by $22,224.

Hazardous Materials
STR projected hazardous materials costs to increase by the annual CPI change of 2.12 percent, as described expense escalation subsection, above. We accept this projection. lmpact(s):

Decrease in general and administrative costs by $83,350 in 2018.

MRF Principal and Interest Payments (El Dorado County)
STR projected El Dorado County's portion of MRF principal and interest payments of $6,672 for 2018.

The MRF debt financing is through a Union Bank term loan of $2 million. STR estimated that approximately 38.3 percent of the term loan is related to the MRF. STR allocated 38.3 percent of financing costs, to MRF principal and interest payments. STR then determined El Dorado County's portion of MRF principal and interest payments, based on the 2016 collection revenue allocation percentage (20.81 percent). We found this approach to determining the MRF principal and interest cost for El Dorado County reasonable.
lmpact(s):

No adjustment.

RRF Principal and Interest Payments (El Dorado County)
STR projected El Dorado County's portion of 2018 RRF principal and interest payments to equal $190,085. The RRF debt financing is through a California Pollution Control Financing Authority (CPCFA) 2008 Bond of $16.615 million. STR determined El Dorado County's portion of RRF principal and interest 312
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payments, based on the 2016 total collection revenue allocation percentage (20.81 percent). We found this approach to determining the MRF principal and interest cost for El Dorado County reasonable. lmpact(s):

No adjustment.

Other Interest Expenses
Other interest expenses include interest on debt used to finance STR operations, excluding the MRF/RRF building financing. STR projected other interest expenses of $65,908 for 2018. STR then determined El Dorado County's portion of other interest expenses, based on the 2016 total collection revenue allocation percentage (20.81 percent). STR included other interest expenses of $13,715 for El Dorado County's portion, under allowable operating costs.
lmpact(s):

No adjustment.

Operating Profit
In accordance with the Manual, for the City of South Lake Tahoe and Douglas County, a profit is allowed based on a sliding scale which varies with STR's recovery percentage; and for El Dorado County, a profit is allowed, based on a targeted operating ratio ranging between 87 and 91 percent. In a base year, if rates change, STR applies an 89 percent operating ratio for base year calculation.

In the Application, STR used an 87 percent operating ratio for the City of South Lake Tahoe and Douglas County, and an 89 percent operating ratio for El Dorado County. STR provided Waste Facility Diversion Summary Reports, which included monthly tons diverted through six (6) operations: (1) MRF floor sort, (2) MRF line sort, (3) RRF, (4) alternate daily cover (ADC), (5) recycle center, and (6) direct export. Based on its diversion reports, STR's recovery rate was 65 percent for 2016 and 2017.

We calculated operating profit, based on our adjustments to the estimated 2017 and projected 2018 allowable operating costs. We decreased operating profits by $25,229 in 2018. lmpact(s):

Decrease in Operating Profits by $25,229 in 2018.

Pass-Through Costs
MRF Principal Payments (City and Douglas)
STR projected the City of South Lake Tahoe and Douglas County's portion of MRF principal payments of $20,954 for 2018. The MRF debt financing was through a Union Bank term loan of $2 million (which was subsequently refinanced to a Bank of America loan in FY15). STR estimated that approximately 38.3 percent of the term loan is related to the MRF. For the Union Bank term loan, STR projected principal payments based on loan balances. STR allocated 38.3 percent of financing costs, to MRF principal payments. STR then determined the City of South Lake Tahoe and Douglas County's portion of MRF principal payments, based on the 2016 collection revenue allocation percentage (79.19 percent). lmpact(s):

No adjustment.
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RRF Principal Payments (City and Douglas)

STR projected the City of South Lake Tahoe and Douglas County's portion of RRF principal payments of $577,238 in 2018. The RRF debt financing is through a CPCFA 2008 Bond of $16.615 million. For the bond financing , STR projected principal payments based on bond balances. STR allocated 100 percent of financing costs, to RRF principal payments. STR then determined the City of South Lake Tahoe and Douglas County's portion of RRF principal payments, based on the 2016 total collection revenue allocation percentage (79.19 percent).
lmpact(s):

No adjustment.

MRF and RRF Interest Expenses (City and Douglas)
STR projected the City of South Lake Tahoe and Douglas County's portion of MRF and RRF interest payments of $150,904 for 2018. The MRF debt financing was through a Union Bank term loan of $2 million (which was subsequently refinanced to a Bank of America loan in FY15). STR estimated that approximately 38.3 percent of the term loan is related to the MRF. The RRF debt financing is through a CPCFA 2008 Bond of $16.615 million.

For the MRF and RRF debt financing, STR projected principal payments based on debt balances, and interest payment based on general ledgers. STR then determined the City of South Lake Tahoe and Douglas County's portion of MRF and RRF interest payments, based on the 2013 collection revenue allocation percentage (79.19 percent).
lmpact(s):

No adjustment.

Other Interest Expenses
Other interest expenses are interest on debt used to finance STR operations, excluding the MRF/RRF building financing. Recently financed assets include several new trucks. STR projected other interest expenses of $65,908 for 2018. STR then determined the City of South Lake Tahoe and Douglas County's portion of other interest expenses, based on the 2013 total collection revenue allocation percentage (79.19 percent). STR included other interest expenses of $52, 194, for the City of South Lake Tahoe and Douglas County's portion, under pass-through costs.
lmpact(s):

No adjustment.

RRF Fund Credit
STR removed the RRF fund credit which had been paid to JPA jurisdiction ratepayers , to account for excess rate revenues collected during the construction of the RRF. On March 2, 2012, the JPA approved a RRF fund credit of $4,722,285, with a six (6) year payback period, applied in base years, beginning in 2012. The credit amount was determined by dividing the credit of $4,722,285 by six years, resulting in fund credit amounts of $787,048. ·
Collection rates in the previous six (6) years had included a total annual RRF fund credit of $787,047, based on a total RRF revenue balance and the six (6) year payback period. As 2017 represents the final 314
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year, STR removed the RRF Fund Credit from the rate base. This is the most significant factor in causing rates to increase for 2018, and effectively represents approximately 50% of the requested rate increase. lmpact(s):

No adjustment.

Recycling Revenue Bonus
In accordance with the Manual, STR is allowed a recycling revenue bonus, which is tied to STR's diversion levels. For 2018, STR is allowed a 50 percent recycling revenue share, by exceeding the minimum diversion rate of 47 percent. STR projected a recycling revenue bonus of $343,269 for 2018.

This calculation is based on: (total recycling revenues less cost of goods sold) x 0.50, or ($1 ,379,595- $693,058) x 0.50, or $343,269. This $343,269 share amount is included as a pass through cost in the rate model.
lmpact(s):

No change in Recycling Revenue Bonus.

Franchise Fees
STR calculated and allocated projected franchise fees , based on 2015 projected collection revenues and transfer fees, multiplied by franchise fee rates . The Manual allocates franchise fees based on gross residential, commercial, and recycling revenues. The City of South Lake Tahoe and El Dorado County receive five (5) percent of gross revenues and Douglas County receives three (3) percent. Below, we list the revenue sources used for Member Agency franchise fee calculations:

City of South Lake Tahoe, 5 percent of the following:

City residential collection revenues
City commercial collection revenues
Transfer station and RRF revenues
El Dorado County, 5 percent of the following:
• County residential collection revenues
• County commercial collection revenues
Douglas County, 3 percent of the following:

County residential collection revenues
County commercial collection revenues.

Recycling material sales revenues, which includes MRF and recycling sales revenues , are not included in franchise fee calculations. STR projected franchise fees of $716,264 for 2018, including franchise fees of $575,361 for the City of South Lake Tahoe and Douglas County, and franchise fees of $140,903 for El Dorado County.

We projected franchise fees of $734,352 for 2018, including franchise fees of $580,394 for the City of South Lake Tahoe and Douglas County, and franchise fees of $153,958 for El Dorado County. The larger franchise fee number is the result of the calculation being applied to revenues which have been increased to reflect the proposed rate change. STR had applied the franchise fee to revenues prior to the proposed rate change.
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lmpact(s):

Increase in franchise fee costs by $18,088 in 2018.

6. Results of Analysis

Crowe's Analysis of the Application, and as shown in Attachment B, results in an 8.37 percent combined rate increase for the City of South Lake Tahoe and Douglas County; and a 9.34 percent rate increase for El Dorado County, assuming an implementation date of January 1, 2018. These rate increases will cover the following revenue shortfalls:
$877,600 revenue shortfall for the City of South Lake Tahoe, 8.81 percent rate increase for Base Year 2018 (difference from Douglas County is due to franchise fee differences (5% of gross revenues for SL T and 3% of gross revenues for Douglas County)) $186,149 revenue shortfall for the City of South Lake Tahoe and Douglas County, 6.81 percent rate increase for Base Year 2018
$306,739 revenue shortfall for El Dorado County, a 9.34 percent rate increase for Base Year 2018.

Accounting for the aforementioned adjustments results in the rate increases shown in Table 6 on the following page.

Option to Spread Rate Increase
The JPA requested that we calculate the impact of spreading the 2018 base year rate change across both 2018 and 2019 in the following fashion:
67 percent of the 2018 rate increase effective on January 1, 2018 33 percent of the 2018 rate increase effective on January 1, 2019 Results of this analysis are shown in Table 7 below:

Table 7
Optional 2018 Base Year Rate Increase
Spread Over Two Rate Years (2018 and 2019)
Percent of City of
Date of Rate Rate Change South Lake
Change Applied Tahoe
January 1, 2018 67% 5.90%
January 1, 20193 33% 2.91%
Total 100% 8.81%
Douglas
County

4.56%

2.25%

6.81%
El Dorado
County

6.26%

3.08%

9.34%
This Analysis is substantially different from an audit, examination, or review in accordance with Generally Accepted Auditing Standards, the objective of which is to express an opinion regarding STR financial statements. Accordingly, we do not express such an opinion. 3 Does not include the impact of a potential interim year rate change that STR may apply for which would become effective January 1, 2019.
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Table 6
Proposed Residential Rate Structure
Base Year 2018 (January 1, 2018)
Service
City of South Lake Tahoe
Unlimited service
Mandated pickup per 32-gallon can/bag
Mandated pickup per cubic yard
Qualified senior rate
House service - 1 can
House service - 2 cans
House service - 3 cans
Residential - All other services
Douglas County
1, 32-gallon can
2, 32-gallon cans
3, 32-gallon cans
4, 32-gallon cans
One extra 32-gallon can
On-call 32-gallon can billed monthly/arrears
Per cubic yard
1, 45-gallon can
2, 45-gallon can
3, 45-gallon can
One extra 45-gallon can
On-call 45-gallon can billed monthly/arrears
Residential - All other services
El Doracb County
Unlimited service
Mandated pickup per 32-gallon can/bag
Mandated pickup per cubic yard
Qualified senior rate
House service per can
Residential - All other services
Current Rate
(Per Customer,
Per Month)
$26.55

5.67 37.96

22.20 30.41

34.28 38.14
-
$17.72

34.11 52.02

68.42 4.45
-

28.63 21.49
41 .31

62.95 5.41
-

84.03 $30.47

6.38 36.53

26.58 3.86

16.71

Recommended
Rate (Per Rate Increase
Customer, Per (Per
Month, with the Customer, Per
Recommended Month)
Increase)

8.81%
$28.89 $2.34

6.17 0.50
41 .30 3.34

24.15 1.95

33.09 2.68

37.30 3.02
41 .50 3.36
- -

6.81%
$18.93 $1.21

36.43 2.32

55.56 3.54

73.08 4.66

4.75 0.30
- -

30.58 1.95

22.95 1.46

44.12 2.81

67.23 4.28

5.78 0.37
- -

89.75 5.72

9.34%
$33.32 $2.85

6.98 0.60

39.94 3.41

29.06 2.48

4.22 0.36

18.27 1.56
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The consulting services did not contemplate obtaining the understanding of STR internal controls or assessing control risk, tests of accounting records and responses to inquiries by obtaining corroborating evidential matter, and certain other procedures ordinarily performed during an audit or examination. Thus, this engagement was not intended to provide assurance that we would become aware of significant matters that would be disclosed in an audit or examination.

As part of this Analysis, the JPA agreed to be responsible to: make all management decisions and perform all management functions; designate an individual who possesses suitable skill, knowledge, and/or experience, preferably within senior management to oversee our services; evaluate the adequacy and results of the services performed; accept responsibility for the results of the services; and establish and maintain internal controls, including monitoring ongoing activities. The JPA has authority for recommending rate changes to each JPA jurisdiction, and each JPA jurisdiction has the ultimate authority to approve rate changes.

Crowe's fees are not dependent upon the outcome of this report and Crowe is independent with respect to any other economic interests.
* * * * *
We appreciate the contribution of JPA management and your input and direction on this project. We also thank STR management for its timely responses to our data requests. If you have any questions regarding this report, please call Erik Nylund at (415) 230-4963, or email [email protected] .

Very truly yours,
318
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Attachment A: 2018 Base Year Rate Application

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Summary
Base Year Rate Application
Percent Rate Change Requested (City of South Lake Tahoe and Douglas County) Percent Rate Change Requested (El Dorado County) 10.19%11 ;@ffitjiilMl;ltjftiiM@M!, Rate Sc:hedute
(per CUSIOmer, per month) Current Rate Rate Adjustment New Rate Cily of South Lake Tahoe

2. 1 Unlimited service
2 2 Mandated pid<up per 32-galon can/bag

2.3 Mandaled pid<up per cubic yanf

2.4. OuaNfled senk>< rate

2.5. Hou~ Mtf'Vice · 1 can

2. 6. House aervK:.e • 2 cans

2. 7 House MttVice · 3 cans

2.B Resktential · Mother services
Oougla1 Coonry

3. 1 1. 32-galon can

3.2. 2, 32-galon cans
3 3. 3, 32-gallon can1

3.4. 4, 32..galon cans

3.5. One extra 32-gallon can (also the seasonal service rate)

3. 4 ~ 32~alon can biled monthty/arrears

3. 7 Per cubic yard
3 8. 1, 45-galon can

3.9. 2, <5·galon cans
J. 10 3, 45-galoo cans
J. 11. One extra 45-galon can (also the seasonaj a.ervk:e rate) J. 12 On-cal 45-galon can baed monthfy/arrears
3 13. Resldendal - Mother service•
El Corado Coonly

4. 1. Unlimited aervice

4.2. Mandated pid<up per 3211alon can/bag
• 3. Mandated pid<up per cubic yanf

4.4. Quafifted 1enfor rate

4. 5. Houae service per can

4.8. Residential - Mother services (Area B - formel1y ARD) (1)
s 26.55

5.67 37.96

22.20 30.41
3-4.28

38.14 s 17.72
3-4.11

52.02 68.42

4.45 nil

28.&3

21.49 41 .31

62.95 5.41
n/a

64.03 s 30.47

6.38 36.53
2658

3.66 16.71
To the best of my knowledge, the data and information in this appication Is c:omplete, •ccurate, and oonsi>tent with the instructions provided by the South Lake Tahoe Basin Waste Management Authority.

Name: JeHery r.uman TIU.: Proslden1
s
s
s
Signature: Cate: May 31 , 2017
(1)

2.55 s 29.10

0.54 6.21

3.64 41 .60

2.13 24.33

2.92 33.33

3.29 37.57

3.66 41.80
-

1.70 s 19.42

3.27 37.31

4.99 57.01
6 .56 74.98

0.43 4.88
n/a

2.75 31.38

2.08 23.51

3.96 4'.27
6 .04 &a.ff

0.52 1.93
nla

8.08 92.09

3.11 $ 33.61
0,85 7.03

3.72 40.25

2.71 29.29

0.39 4.26

1.70 18.41
(1) R?' ~.not lndude Ille 11reet sweeping (SO 25), the nui1ance abatebaunent (S0.25), or the dean community aurohargoa (S0.40).

Fiscal Year: 2018 ee summanes o s.gm 1can assump ions an re po Pa e1of3

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Base Year Rate Application
Rnanclal lnformatlon for All Three Jurisdictions ~Aullled E.tlarnMed PriorY.. CW!WllY ..

NATlwM AIThrM
··••·"!if!.1131Wil&13§i( --l/l/Jlll 7 m 11
°""'._ U51,71l I 1.711.tol • E!qulfl"*ll ea. Mid !"Kilty Coltt 1,471,75 1 1.393779 .__"""' t .Q21.S71 1.24 1020 """"- 1,114,479 1171374 •. Gen.•lnl~COIUI l .3H.l64 3.331'64 •• MRI' Pnndp91 Md .,....,._ P.,.,,,.m '1=I DorldO County) 11,092 l ,&33 " RAF Pitndpml Md.,..._,,.,...,.... (El Dcnda Count,, ltl,807 115585 °"" ~ ... Ellf*MI .... , 11,077 .. Toti! ............ Operwdng c.t. I ,, .. _.,. • W05111S4 IA ... II 2.d71,14t I 2.1004411
p;•ew•.n·+·F·nas11.r;e•12+·'h''" 11 MRF Ptindplf Peymenb fCIY Ml DoMgm) fl. RRf'Prindpm,.,....tcfyMd~
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:u. 0ntUlfal2 ....... CM(ailsotbe ....... .W."'9)

35. Qn.c.11 32-Qlbl CM billed "'°"'"'lsr ... ... """""""' "· 1, '5i1tlDnCM ... 2, •s.o-oncaill ,.. :l, 45-oa1Gnc.-1:1
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5S. Tl'Msltf Stlllioft and RAF Rlh'Wllm WCJ FORESTRY, FED. STATE CONTRACTS)

51. R-_._.~...._
S7. Total R-(\.NI 61 • S4 + 56 +.SS)
t ,DOU 15
111,131

10.110
-12
--14,11)
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s.e.su11 1• 8,000,370 • 1.11 4..wt use.tee t ,!OS.IMI 1.440.245 16116 717 • tl.780.113 • uoe.iul1 m.oals
INIS.llM I 1 w 1S3 lt
1972.207 I I 1.207 tl'tit
•1. TM•Resldlwlllal,~T,....,SUtMM . ... fR"~,.._ .. Aaeek"'Ol(l.JntlSl•$4•M) &Z. Plf'Cenl°'MD91ri~~ ..... ~Rltn~llO •U'lel1)
,. Fiscal Year:
&l•YMr
City of SL T and EJ Donado
Oouola• Coumy CMlftty
= lr3Dl2011 5121.290 • 1 14.2,051
1 1•.SOO
2,6117 "'·""' ,212
11 .842.803 s
ttnt"".711 ""'
.,. ... m .2>1 , .. _

52.191
2 ... 720
.........
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, .. 4..511.704
• 11.40
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,.. ... 112.154
14,982
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aatt

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(l,t42)
Ul7.118 s t ,nt.214
t 121272

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s75.)51 Is
f,211,tSlft
.... ,.

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251,771
,,,.,.,.
8,872
190.015
n .11 s 3 70193
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321
Crowe Horwath.

Authority Staff
November 12, 2017
Operating Information
Base Year Rate Application
Priof'Year Current Year Base Year
Audited EaUmated Percent Projected
Information lnformaUon Change lnfonn1tlon
Al Three Al Tlvee CftyotSLTand ......... JurisdictJons Jurisdictions Oouglls County

63. Residential Acoo\mls

64. Muli-famiy Accounts

65. Commercial Accounts

68. Total Accounts

61. Residenttal Refuse Tons

68. Residen1lal Recycllng Tona

69. Residenllal Yard Waste Tona

70. Commercial Retuse Tona

71. Commerdal Recydlng Tons
Commerdal Yard Waste Tona

72. "Free• Drop Boxes Provided (lloothlyJ

73. "Free'" Bins Provided

14. 2 Yard Bin-Once per W eek

15. 3 Yard Bin-Once per Week

76. • Yard Bin-Once per Week
n. 5 Yard Bin-Once per Week

18. 8 Yard Bin- Once per Week
City - per cubic yard
Douglas - per cubic yard
El Dorado - per cubic yard
City · compacted per cubic yard
Douglas • compacted per cubic yard
El Dorado • compacted per cubic yard
City • per 32 gal can/bag
Douilla• • per 32 gal can/bag
El Dorado • per 32 gal can/bag
(1) Amounts are baaed on management's ealimate.

Fiscal Year: 2018
#NYJHMel.f§FllM1Mfi m
18,996 19,007 006% 12,617
3,515 3,515 000% 3,504
954 957 0.31% 823
23,465 23,479 0.06% 16,944
22,652 25,170 111 2% 22,480
• 0.014 •2.010 5.14% 37,574
3,957 • .875 1612% 4,175
23,202 28,727 23.81% 25,857
•o 988 48,016 17.15% 42,884
• .054 5,335 31.82% 4 ,765
:I
i#4@iM•@H41$11G HU,,iijiiil;Mlb
%
%
%
%
%

30.20 30.89 1.82% 33.83

25.61 28.02 1.80% 28.52

35.95 38.53 1.61% 0.00

42.37 43.06 1.63% 47. 19

33.09 33.62 1.80% 38.84

48.13 48.91 1.62% 0.00

4.16 • .23 1.66% 4.84

4.02 4.08 1.49% 4.47

6.28 6,38 1.59% 0.00
"°""'>'
8,453
28 138
8,817
3,509
5 884
852
4,004
8 ,893
7«
~ I

0.00 0.00

40.25 0.00

0.00 53.90

0.00 0.00

7.03 P""'°nt
Change

0.33'11.

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25~

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10.1CN
Page3 of 3
See summaries of significant assumptions and accounting policies and accompanying independent accountants' report

322
Crowe Horwath.

Authority Staff
November 12, 2017
Attachment B: Crowe Rate Model with Adjustments

323
Altowable Operating Expenses
Direct Labor
Equipmlflt Costs and Facility Costs
Landfil Disposal Costs
O"fice Salaries
General and Adrrinistratiw Costs
MRF Principal and Interest Payments (El Dorado County)
RRF Principal and Interest Payrrents (El Dorado County) Other Interest
Total Operating Expenses
Allowable Operating Profit
Operating Ratio
Alov.ebte Operating Profit
Pass. Through Costs without Franchise Fees
MRF Principal Payments (City and Douglas)
RRF Principal Payments (City and Douglas) MRF and RRF Interest Expensas (City and Douglas) Other Interest
RRF Fund Credit
Recycling Revenue Bonus
Total Pass-through E>q:>enses
Revenue Requirement without Franchise Fees
Revenues
Residential Rewnues Subtotal
Less: Alov-ence for Uicolectible Residential Accounts
Total Residential Rewnues (wlhout Rate Change in Basa Year) CoITTTiercial Revenues
Less: Alk:Mance for Lncolectible CoITTTiercial Accounts Total Corrmercial Revenues (Wthout Rate Change in Base Year) Transfer Station and RRF Rewnues (AND FORESTRY, FED.

STA TE CONTRACTS)
Recycled Material Sales
Total Revenues
Net Shortfall (Surplus) without Franchise Fees
Residential and Commercial Franchise Fees
Net Shortfall (Surplus) with Franchise Fees
Total Residential, Commercial, Transfer Station, and RRF Revenues Prior to Rate Change
Percent Change in Existing Residential/CommerciaVTransfer Station/RRF Rates
FY 2018 Base Year Projection Crowe Horwath Adjustments Adjusted Amount City of SL T and El Dorado Al Merriler City of SL T and El Dorado All Merriler City of SL T and El Dorado An Merriler Douglas County County Agencies Douglas County County Agencies Douglas County County Agencies $ 5,628,290 $ 1,478,926 $ 7,107,216 (22,178) (5,828) $ (28,006) $ 5,606,112 $ 1,473,098 $ 7,079,210 1, 142,051 300,093 1,442, 144 1, 142,051 300,093 1,442, 144 1,196,500 314,400 1,510,900 (50,510) (13,273) (83,784) 1,145,990 301 ,127 1,447,116 988,620 259,776 1,248,396 988,620 259,776 1,248,396
2,687,232 706,526 3,393,758 (66,005) (17,345) (83,350) 2,621 ,227 689, 181 3,310,408 6,672 6,672 6,672 6,672
190,085 190,085 190,085 190,085
13,715 13,715 13,715 13,715
11 ,642,693 $ 3,270,193 $ 14,912,886 $ (138,693) $ (36,447) $ (175,140) $ 11 ,504,000 $ 3,233,746 $ 14,737,746 87% 89% 87% 89% 87% 89%
1,739,713 $ 404,181 $ 2,143,894 $ (20,725) $ (4,504) $ (25,229) $ 1,718,988 $ 399,677 $ 2,118,665 20,594
577,238
150,904
52,193
289,720
1,090,649
20,594
577,238
150,904
52, 193
20,594
577,238
150,904
52,194
20,594
577,238
150,904
52,194
53,549 343,269 289,720 53,549 343,269
53,549 $ 1, 144, 198 $ 1 $ $ 1 $ 1,090,650 $ 53,549 $ 1, 144, 199 14,473,055 $ 3,727,923 $ 18,200,978 $ (159,418) $ (40,951) $ (200,368) $ 14,313,637 $ 3,686,972 $ 18,000,610 5,032,688 $ 2,344,153 $ 7,376,841 $ $ $ $ 5,032,688 $ 2,344,153 $ 7,376,841 (4,570) (1 ,530) (6, 100) (4,570) (1 ,530) (6, 100)
5,028,118 $ 2,342,623 $ 7,370,741 $ $ $ $ 5,028,118 $ 2,342,623 $ 7,370,741 5,898,820 $ 473,900 $ 6,372,720 $ $ $ 1 $ 5,898,820 $ 473,900 $ 6,372,721 (1,142) (382) (1 ,524) (1,142) (382) (1,524)
5,897,678 $ 473,518 $ 6,371 ,196 $ $ $ 1 $ 5,897,678 $ 473,518 $ 6,371 ,197 1,776,214 $ 466,729 $ 2,242,943 $ 1 $ 1 $ 1,776,214 $ 466,730 $ 2,242,944 1, 128,272 251 ,323 1,379,595 1, 128,272 251 ,323 1,379,595 13,830,282 $ 3,534, 193 $ 17,364,475 $ $ 1 $ 2 $ 13,830,282 $ 3,534, 194 $ 17,364,476 642,773' $ 193,730 $ 836,503 $ (159,418) $ (40,950) $ (200,366) $ 483,355 $ 152,781 $ 636,137 575,361 $ 140,903 $ 716,264 $ 5,033 $ 13,055 $ 18,088 $ 580,394 $ 153,958 $ 734,352 1,218,134' $ 334,633 $ 1,552,767 $ (154,385) $ (27,894J $ (182,278) $ 1,063,749 $ 306,739 $ 1,370,489 12,702,010 3,282,870 15,984,880 12,547,626 3,254,977 15,802,603 12,702,010 3,282,871 15,984,881

9.59% 10.19% 9.71 % - 1.23% -0.86% -1.15% 8.37% 9.34% 8.57% )>
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324
NOTICE OF HEARING .

SOUTH LAKE TAHOE CITY COUNCIL

WILLL BE CONSIDERING A REQUEST BY
SOUTH TAHOE REFUSE CO. TO INCREASE

SOLID WASTE REFUSE RATES
NOTICE IS HEREBY GIVEN that the City
Council of the City of South Lake Tahoe
will be
conducting a public hearing on Tuesday, December 12, 2017 at 9:00 a.m. (or soon thereafter) in the City Council Chambers located at 1901 Airport Road, South Lake Tahoe, California to con- sider a request by South Tahoe Refuse Co. to increase solid waste refuse base rate to cover rising costs of delivering the service, primarily due to higher operating costs including landfill disposal cost increases, household hazardous waste disposal costs, utility costs, insurance costs, and higher labor costs. The proposed base rate in- crease is 8.81 % or $2.34 per month for residential unlimited service. All interested persons are invited to attend and give input on this matter. For more information, please contact the South Tahoe Refuse Company at (530) 541-5105 or address com- ments to the City Council in care of Assistant City Clerk at epalazzo@cizyofslt us.

Susan Alessi , City Clerk
City of South Lake Tahoe
1901 Airport Road
South Lake Tahoe, CA 96150 salessj@cjzyofslt us
(530) 542-6004
Pub: December 1, 2017 Ad#0000155656
325
NOTICE

PROPOSED SOLID WASTE RATE ADJUSTMENTS
AND PUBLIC HEARING ON DECEMBER 12, 2023
NOTICE IS HEREBY GIVEN that on Tuesday, December 12, 2023, at 5:30 p.m., a public hearing will be held at the City of South Lake Tahoe City Council Chambers located at 1901 Lisa Maloff Way, South Lake Tahoe, CA 96150 to consider proposed adjustments to the City’s residential and commercial solid waste rates, provided by South Tahoe Refuse (STR).

The costs of collection and processing of the waste stream in the City of South Lake Tahoe has gone up. As a result, STR, the City’s franchised waste hauler, proposes to increase the collection rates charged, as shown on in this notice.

PROPOSED SOLID WASTE RATES
The City maintains a solid waste franchise agreement with STR for collection and disposal services. The franchise agreement includes provisions for adjustments to the rates charged for these services. The Rate Setting Policy and Procedures Manual is used by the three partners in the South Lake Tahoe Basin Waste Management Authority (JPA): the City of South Lake Tahoe, El Dorado County, and Douglas County. The JPA has reviewed the proposed rate increase and provided a recommendation to the City and other agency partners.

A base year adjustment is reviewed every three years. The base year adjustment proposed for 2024 is an increase of 11.05% as shown in the table following this section.

PUBLIC HEARING AND PROTEST PROCEEDINGS
As the property owner/ratepayer, you have the right to protest the proposed rate increases. If it is determined that a majority of property owners/rate payers have submitted a formal protest, the proposed fee change must be rejected.

Only one protest notice is allowed per parcel. If you choose to protest, you must submit a signed written protest to the City Clerk on or before the close of the public hearing. The written protest must contain your full name and signature (or that of an authorized representative), the address of service, and a statement that you are protesting the proposed rate increases.

Original written protests can be mailed or personally delivered to the City Clerk, but must be received by no later than the close of the public hearing on December 12, 2023. Written protests may be mailed to: City Clerk
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
If you have any questions regarding this notice or the proposed rate adjustments, or you would like more information, please email [email protected]. 326

RESIDENTIAL
The City’s solid waste rates were last adjusted January 1, 2023. If the proposed rate increase is approved it will go into effect January 1, 2024.

TABLE A: RESIDENTIAL SOLID WASTE PROPOSED RATE INCREASES Service Rate Frequency 2023 base
rate
Base Year
(11.05%)
2024
Base
Rate
Unlimited Monthly $ 37.15 $ 4.11 $ 41.26
Mandated pickup per 32-gallon can/bag Per pickup $ 7.78 $ 0.86 $ 8.64 Mandated pickup per cubic yard Per pickup $ 52.05 $ 5.75 $ 57.80 Qualified Senior Rate Monthly $ 22.90 $ 2.53 $ 25.43
Household service: 1 can Monthly $ 42.44 $ 4.69 $ 47.13 Household service: 2 cans Monthly $ 47.76 $ 5.28 $ 53.04 Household service: 3 cans Monthly $ 53.04 $ 5.86 $ 58.90 *Clean Tahoe Rate included in Base Rate Monthly $ 0.73 $ 0.08 $ 0.81 *Base Rate does not include monthly City surcharge amounts for Street Sweeping ($0.25) and Nuisance Abatement ($0.25)

ADDITIONAL RESIDENTIAL SERVICE FEES
In addition, beginning January 1, 2024, the following services are subject to the following fees per occurrence:

Bulky Item (City) $ 35.00 Replacement of Animal-Resistant Cart $ 260.00 Bulky Item (Clean Tahoe) $ 30.00 Contamination (car; any size) $ 25.00 Animal Cleanup (Clean Tahoe) $ 35.00
Return for Service (if container not set
out) $ 25.00
Replacement of Recycling or Yard Waste Cart $ 70.00 Overfilled Trash Carts $ 10.00 327

COMMERCIAL
The City’s solid waste rates were last adjusted January 1, 2023. If the proposed rate increase is approved it will go into effect January 1, 2024.

ADDITIONAL COMMERCIAL SERVICE FEES
In addition, beginning January 1, 2024, the following services are subject to the following fees per occurrence:

Bulky Item (City) $ 35.00
Steam Clean (owns container) Single SixYard Bin $ 35.00 Bulky Item (Clean Tahoe) $ 30.00 Steam Clean (owns container) Compactor $ 100.00 Animal Cleanup (Clean Tahoe) $ 35.00 Inaccessible $ 35.00 Contamination (food waste) $ 35.00 Roll-Off Inaccessible $ 125.00 Contamination (bin) $ 50.00 Replacement of Recycling or Yard Waste Cart $ 70.00 Contamination (cart) $ 25.00 Replacement of Animal-Resistant Cart $ 260.00 Overfilled Bin $ 35.00 Replacement or Repair of Bin Fees Vary Overfilled Cart $ 35.00 Late Fee/Resume Service Fee $ 35.00 TABLE B: COMMERCIAL SOLID WASTE PROPOSED RATE INCREASES Service Rate Frequency 2023 base
rate
Base Year
(11.05%)
2024
Base
Rate
Per cubic yard Per pickup $ 42.50 $ 4.70 $ 47.20
Per 32-gallon can Per pickup $ 5.85 $ 0.65 $ 6.50
Per 45-gallon can Per pickup $ 7.27 $ 0.80 $ 8.07
Compacted rate per yard Per pickup $ 59.64 $ 6.59 $ 66.23 *A Clean Tahoe Rate of 2.33% is included in the base rate Per cubic yard Per pickup $ 0.99 $ 0.11 $ 1.10
Per 32-gallon can Per pickup $ 0.14 $ 0.02 $ 0.16
Per 45-gallon can Per pickup $ 0.17 $ 0.02 $ 0.19
Compacted rate per yard Per pickup $ 1.39 $ 0.15 $ 1.54 328
Crowe LLP
Independent Member Crowe International
575 Market Street, Suite 3300
San Francisco, California 94105-5829
Tel 415.576.1100
Fax 415.576.1110
www.crowe.com
October 20, 2023
Authority Staff
South Lake Tahoe Basin Waste Management Authority
1901 Airport Road
South Lake Tahoe, CA 96150
Subject: Draft Report – Base Year 2024 Rate Analysis of South Tahoe Refuse Company Crowe LLP (Crowe) has completed its analysis of South Tahoe Refuse Company’s (STR’s) Base Year 2024 Rate Application (Application). The South Lake Tahoe Basin Waste Management Authority (JPA) contracted with Crowe to conduct an analysis of the Application, and to provide potential refuse collection rate changes for the JPA to consider effective January 1, 2024. This letter report documents results of our analysis, and is organized as follows:

A. Purpose of Analysis
B. Summary
C. Background of Analysis
D. Scope of Analysis
E. Base Year 2024 Rate Setting Analysis and Adjustments F. Senate Bill 1383 2025/26 Rate Setting Analysis and Adjustments G. Results of Base Year 2024 Analysis
H. Results of Senate Bill 1383 2025/26 Analysis.

There are four (4) attachments to this report.
• Attachment A – Proposed Residential Rate Structure
• Attachment B – 2024 Base Year Rate Application
• Attachment C – Crowe Base Year 2024 Rate Model with Adjustments • Attachment D – Crowe Combined Base Year 2024 and SB 1383 Implementation Rate Model with Adjustments.

A. Purpose of Analysis
The purpose of the 2024 Base Year Rate Analysis of South Tahoe Refuse Company (Analysis) is to assist the South Lake Tahoe Basin Waste Management Authority (JPA), and each respective JPA jurisdiction including the City of South Lake Tahoe, Douglas County, and El Dorado County (Specified Parties), with their establishing solid waste collection rates charged by South Tahoe Refuse Company Inc. (STR). The base year analysis was conducted in accordance with JPA’s Solid Waste Rate Setting Policies and Procedures Manual (Manual).

The information in this Analysis is based on estimates, assumptions and other data developed by Crowe LLP (“Crowe”) from information provided by STR, knowledge of and participation in other studies, data supplied by the JPA, and other sources deemed to be reliable. 329
Authority Staff Page 2
October 20, 2023
Draft Report
In the course of preparing this Analysis, we have not conducted an audit, review, or compilation of any financial or supplemental data used in the accompanying Analysis. We have made certain projections of revenues and expenses which may vary from actual results because events and circumstances frequently do not occur as expected and such variances may be material. We have no responsibility to update this Analysis for events or circumstances occurring after the date above.

Our procedures and work product are intended for the benefit and use of the Specified Parties. This engagement was not planned or conducted in contemplation of reliance by any other party or with respect to any specific transaction and is not intended to benefit or influence any other party. Therefore, items of possible interest to a third party may not be specifically addressed or matters may exist that could be assessed differently by a third party.

The JPA agreed to be responsible to make all management decisions and perform all management functions; designate an individual who possesses suitable skill, knowledge, and/or experience, preferably within senior management to oversee these services; evaluated the adequacy and results of the services performed; and accepted responsibility for the results of the services.

B. Summary
STR submitted an application for two rate changes:
1) Base Year 2024 Rate Request
2) Senate Bill 1383 2025/26 Rate Increase Request.

Crowe analyzed each of these two requests. The impact of each of them is summarized below:

1. Base Year 2024 Rate Request
The analysis of the 2024 rate application and supporting documentation indicates a rate increase of 11.05 percent for the City of South Lake Tahoe, 8.15 percent for Douglas County, and 8.33 percent for El Dorado County, effective January 1, 2024. This compares to STR’s requested calendar year 2024 rate increase of 12.29 percent for the City of South Lake Tahoe and Douglas County and 10.09 percent for El Dorado County. Current and proposed residential and commercial rates are shown in Tables 1 and 2 below. The complete recommended 2024 rate structure is provided in Attachment A of this report.

2. Senate Bill 1383 2025/26 Rate Increase Request
Th analysis of the SB 1383 request and supporting documentation, as shown in Attachment D, results in an additional 10.16 percent rate increase, combined for the three jurisdictions. This compares to the

10.72 percent rate increase requested by STR. We view this as a maximum rate increase and recommend that the JPA work with STR on how to implement this rate change in advance of 2025. We recommend that the JPA and STR review updated and more refined estimated costs of this SB 1383 program as part of the next 2025 interim year rate change process. Under a two-year phased scenario, the 10.16 percent rate increase represents a 5.08 percent rate increase implemented January 1, 2025 and another 5.08 percent rate increase implemented January 1, 2026. These 2025 and 2026 rate increases do not consider the impacts of the interim year rate setting process for 2025 and 2026 as specified in the Rate Manual.
330
Authority Staff Page 3
October 20, 2023
Draft Report
Table 1
South Tahoe Refuse
Residential Rates with 11.05 Percent Base Year Rate Increase for the City of South Lake Tahoe,

8.15 Percent Base Year Rate Increase for Douglas County and 8.33 Percent Rate Increase for El Dorado County (Base Year 2024)
Service Level
Current Rate (Per
Customer, Per Month)
Proposed Rate (Per
Customer, Per Month
Proposed Rate Increase
(Per Customer, Per Month)
City of South Lake Tahoe
Unlimited service1 $37.15 $41.26 $4.11
Douglas County
1, 32-gallon can $23.37 $25.27 $1.90
El Dorado County
Unlimited service $40.77 $44.17 $3.40
Table 2
South Tahoe Refuse
Commercial Rates with 11.05 Percent Base Year Rate Increase for the City of South Lake Tahoe,

8.15 Percent Base Year Rate Increase for Douglas County and 8.33 Percent Rate Increase for El Dorado County (Base Year 2024)
Service Level
Current Rate (Per
Customer, Per Month)
Proposed Rate (Per
Customer, Per Month
Proposed Rate Increase
(Per Customer, Per Month)
City of South Lake Tahoe
Per cubic yard $42.50 $47.20 $4.70
Douglas County
Per cubic yard $34.30 $37.10 $2.80
El Dorado County
Per cubic yard $48.88 $52.95 $4.07
1 Excluding City surcharges for street sweeping ($0.25) and nuisance abatement ($0.25). 331
Authority Staff Page 4
October 20, 2023
Draft Report
C. Background of Analysis
The joint powers authority (JPA) is comprised of the City of South Lake Tahoe, California; Douglas County, Nevada; and El Dorado County, California (Member Agencies). The JPA is responsible for overseeing regional cooperation regarding solid waste and coordinating solid waste program planning and reporting for these Member Agencies.

The franchise hauler for the three (3) jurisdictions is STR. Each Member Agency has an exclusive franchise agreement with STR for collection and disposal of refuse. STR provides exclusive refuse collection, recycling, and transfer station operations to Member Agencies in accordance with terms specified in separate franchise agreements.

JPA rate setting follows the JPA’s 2012 Solid Waste Rate Setting Policies and Procedures Manual, Volume 2 (Manual). The Manual allows STR to submit a base year rate application for the rate year 2024.

Our analysis was conducted in accordance with Steps 2, 3, 4, and 5 in Section 2 of the Manual.2 Rate setting has generally followed an approximately three-year cycle with the prior base year rate analysis conducted for rate year 2024. The JPA and STR followed the Base Year Rate Setting Process in Section 3 of the Manual for base rate year 2024. Recently approved rate changes granted to STR include:
• 2016 – No rate change – interim year
• 2017 – 1.62 percent rate increase (City of South Lake Tahoe and El Dorado County) and 1.59 percent rate increase (Douglas County) – interim year.
• 2018 – 8.81 percent rate increase (City of South Lake Tahoe and El Dorado County) and 6.81 percent rate increase (Douglas County) – base year
• 2019 – 3.11 percent rate increase (City of South Lake Tahoe and El Dorado County) and 3.05 percent rate increase (Douglas County) – interim year.
• 2020 – 2.93 percent rate increase (City of South Lake Tahoe and El Dorado County) and xx percent rate increase (Douglas County) – interim year.
• 2021 – 9.04 percent rate increase (City of South Lake Tahoe and El Dorado County) and 8.82 percent rate increase (Douglas County) – base year
• 2022 – 3.77 percent rate increase (City of South Lake Tahoe and El Dorado County) and 3.69 percent rate increase (Douglas County) – interim year.
• 2023 – 4.96 percent rate increase (City of South Lake Tahoe and El Dorado County) and 4.86 percent rate increase (Douglas County) – interim year.

In Table 3, we summarize residential rates since 2016.
2 The JPA allows for the franchise hauler to submit an interim year rate application in each of the “interim” two (2) years between “base” years, should the franchised hauler want to request an increase rates. 332
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Table 3
South Tahoe Refuse
Selected Residential Rates (2016-2023)
Service Level 2016 2017 2018 2019 2020 2021 2022 2023
City of South Lake Tahoe
Unlimited Service $26.13 $26.55 $28.89 $29.79 $30.66 $33.43 $35.89 $37.65 Douglas County
1, 32-gallon can $17.44 $17.72 $18.93 $19.51 $20.07 $21.50 $22.29 $23.37 El Dorado County
Unlimited Service $29.98 $30.47 $32.38 $34.38 $35.39 $37.43 38.84 $40.77 In June of 2023, STR submitted its base year rate application to the JPA for rate year 2024 (hereafter referred to as the Application). We enclose a copy of this Application as Attachment B. The JPA requires the franchise hauler to submit a base year rate application once every three (3) years. In accordance with the Manual, rate year 2024 is a base year.

STR’s Application to the JPA projected a Base Year 2024 rate increase was needed to cover a combined $2,734,573 estimated net shortfall, including franchise fees, for fiscal year 2024. STR requested an increase of 12.29 percent ($2,283,489 projected total revenue shortfall) for the City of South Lake Tahoe and Douglas County and 10.09 percent ($451,084 projected total revenue shortfall) for El Dorado County.

We relied on STR audited financial statements, internally prepared financial information, and operational data for our analysis. STR provided audited financial statements for rate year 2022. STR also provided internally prepared financial information and operational data for rate years 2023 (estimated) and 2024 (projected), and additional information and data requested by Crowe.

D. Scope of Analysis
Our scope of services included the following tasks:

1. Verify the completeness of STR’s Base Year 2024 Application and Senate Bill 1383 2025/26 Special Rate Request

2. Analyze the Base Year 2024 Application and Senate Bill 1383 2025/26 Special Rate Request and prepare responses

3. Request additional data and clarification from STR

4. Identify rate adjustments, by line item, and rate adjustment tables

5. Analyze proposed adjustments with JPA and STR representatives, and clarify outstanding issues

6. Determine the revenue requirement and associated rate adjustments

7. Prepare a draft report

8. Prepare a final report

9. Participate in JPA meeting.
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For this analysis, we performed the following tasks:
• Assessed if the Application was mathematically accurately and logically consistent • Verified that the Application complied with the terms and conditions of the Manual • Reconciled the Application to STR’s Rate Year 2022 audited financial statements • Analyzed STR financial information, operational data, and projections for reasonableness • Assessed supporting data, worksheets, and documentation • Analyzed historical actual, estimated, and projected revenues and expenses • Analyzed cost allocation methods for reasonableness
• Analyzed the assignment of revenues and expenses to each Member Agency • Obtained and analyzed support for the assumptions used to project Rate Year 2024 and 2025 revenues and expenses
• Confirmed the use of the allowed operating ratio
• Confirmed the franchise fee calculation
• Confirmed the accuracy of STR’s calculated revenue requirement and associated rate adjustment • Prepare draft and final reports
• Participate in JPA and Member Agency preparation and meeting(s).

The JPA entered into a contract with Crowe on August 15, 2023 to provide these services. We submitted a detailed data request to STR on July 24, 2023, another data request to STR on September 14, 2023, and a final data request on October 3, 2023. This is in addition to several more informal requests through the months of September and October.

E. Base Year 2024 Rate Setting Analysis and Adjustments In this section, we identify adjustments to the STR Base Year 2024 rate application for calendar year 2024. Total adjustments result in a projected 2024 revenue shortfall of $2,310,822 combined for the three JPA Member Agencies. The revenue shortfall includes a Base Year 2024 revenue shortfall of $1,938,394 for the City of South Lake Tahoe and Douglas County combined; and a projected Base Year 2024 revenue shortfall of $372,428 for El Dorado County. Attachment C includes the rate model with Crowe’s rate adjustments summarized.

Adjustments are organized to generally match the organization provided in STR’s rate application. The STR rate application is organized consistent with the guidance provided in the Base Year Rate Setting Process for allowable revenue and expense categories contained in the Manual, using the template located in Appendix A (Exhibit A-1) of the Manual. The remainder of this subsection is organized as follows:
• Revenues
o Residential Collection Revenues
o Commercial Collection Revenues
o Forestry, Federal, and State Contracts
o Non-Collection Revenue Allocation
o Transfer Station and RRF Revenues
• Recycled Material Sales (MRF and Recycling Sales)
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• Operating Expenses
o Operating Expense Allocation
o Expense Escalation
o Direct Labor
o Equipment Costs and Facility Costs
o Landfill Disposal Costs
o Office Salaries
o General and Administrative Costs
o MRF Principal and Interest Costs
(El Dorado County)
o RRF Principal and Interest Payments
(El Dorado County)
o Other Interest Expenses
• Operating Profit
• Pass-Through Costs
o MRF Principal Payments
(City and Douglas)
o RRF Principal Payments
(City and Douglas)
o MRF and RRF Interest Expenses
(City and Douglas).
o Other Interest Expenses
o RRF Fund Credit
o Recycling Revenue Bonus
o Franchise Fees
Revenues
Residential Collection Revenues
STR estimated residential collection revenues to increase by $406,000, or 4.00 percent, between 2023 and 2024. This increase reflects the 2023 year-to-date trend, and an expectation that residential revenues will increase in 2024 by a rate similar to that experienced from 2022 to 2023.

Impact(s):
• No change to Residential Collection Revenues in 2024.

Commercial Collection Revenues
STR estimated commercial collection revenues to increase by $765,226 or 8.6 percent, between 2023 and 2024. STR based projections of 2024 commercial revenues for each of the member agencies on historical trends between 2022 and 2023. The resulting 2024 projected commercial revenue increases were 6, 24.0 and 11.0 percent respectively for the City of South Lake Tahoe, El Dorado County, and Douglas County.

Impact(s):
• No change to Commercial Collection Revenues in 2024.

Non-Collection Revenues Allocation
For 2024, STR allocated non-collection revenues, including: (1) transfer station and RRF revenues, (2) forestry, federal, and state contracts revenues; and (3) recycled materials sales, between (1) the City of 335
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South Lake Tahoe and Douglas County, and (2) El Dorado County. Non-collection revenue totaled $4,442,852.

Revenue allocation percentages were 81.0 percent and 19.0 percent, respectively, for the City of South Lake Tahoe and Douglas County combined, and El Dorado County. We verified this allocation calculation was supported and correct. This allocation method was applied to (1) transfer station and RRF revenues; and (2) forestry, federal, and state contracts revenues, and (3) recycled materials sales revenues.

Impact(s):
• No adjustment.

Transfer Station and RRF Revenues
STR estimated transfer station and RRF revenues to increase by $48,819 or 2.2 percent, between 2022 and 2023. For 2024, STR projected transfer station revenues to increase at the 2.7 percent increase.

STR calculated an increase of $61,671 in 2024, totaling $2,340,793 in projected transfer station revenues.

Impact(s):
• No adjustment.

Forestry, Federal, and State Contracts
STR estimated forestry, federal, and State contract revenues to increase by approximately $123,851, or

30.0 percent, between 2022 and 2023, largely from camping facilities opening that had previously been closed. STR projected a small 4.0 percent ($19,847) change in forestry, federal, and State contract revenues for 2024 as the company does not foresee dramatic changes with operations associated with these contracts.

Impact(s):
• No adjustment.

Recycled Material Sales (Materials Recovery Facility (MRF) and Recycling Sales) STR estimated revenues associated with the MRF sale of recyclables to decrease by approximately $119,400, or 29.2 percent, between 2022 and 2023, largely driven by lower commodity prices. This estimated decrease is based on the year-to-date 2023 trend. STR projected MRF recycled material sales revenues to remain flat for 2024 (i.e., equal to the same as 2023).

STR estimated revenues associated with the curbside recycling sales to also remain flat for 2024 (at $1,223,851) based on projected continued challenges with the recycling marketplace.

Impact(s):
• No adjustment.
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Operating Expenses
Operating Expense Allocation
For 2024, STR allocated operating expenses between (1) the City of South Lake Tahoe and Douglas County, and (2) El Dorado County, based on Rate Year 2022 residential and commercial collection revenues. Revenue allocation percentages were 81 percent and 19 percent, respectively, for the City of South Lake Tahoe and Douglas County together, and El Dorado County.3 We verified that the allocation calculation was supportable and correct.

Impact(s):
• Used collection revenue allocation percentages for operating expense allocations.

Expense Escalation
Per the Rate Manual, the CPI we used in this analysis should be based on the most current actual information for the U.S. City Average Garbage and Trash Collection CPI (CPI). For purposes of projecting inflationary costs, as shown in Table 4, we used a 6.26 percent CPI equal to the most recent change in the average annual index (i.e., the average from June 2022 to May 2023 divided by the average index from June 2021 to May 2022). We rounded the CPI increase to the nearest hundredth given its material effect on the projections and for consistency with prior assessments.

Table 4
Consumer Price Index (CPI)
Used for Rate Setting Purposes
Description Index
Average Annual Index from June 2021 to May 2022 531.971 Average Annual Index from June 2022 to May 2023 565.269 Percent Change 6.26%
STR escalated certain general and administrative expenses for 2024, including advertising, utilities, and licenses and fees, using this escalation rate.

Impact(s):
• Used an escalation factor of 6.26 percent for selected inflationary costs. This contrast with the company’s calculated escalation factor of 6.67 percent. 3 For comparison purposes, for the 2015 Base Year Rate analysis, STR allocated operating expenses between (1) the City of South Lake Tahoe and Douglas County, and (2) El Dorado County, based on Rate Year 2013 residential and commercial collection revenues. Revenue allocation percentages were 80.39 percent and 19.61 percent, respectively, for the City of South Lake Tahoe and Douglas County together, and El Dorado County.
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Direct Labor
STR estimated wages and payroll to increase by approximately $908,343, or 9.6 percent, from 2022 to 2023. STR projected total direct labor expenses to increase by $456,730, or 4.4 percent increase from 2023 to 2024. This projected direct labor increase reflects various wage and benefit increases including:
• Actual labor increases equal to 10% which included a 4.00% COLA on 7/1/22 plus another COLA of

3.77% on 1/1/23. Pay scale adjustments accounted for the other 2.23% • Another 4.00% COLA is anticipated for FY24
• Officer salary increases to equal 6 percent of net revenue estimations for 2023 and 2024 • Health insurance expense remaining relatively flat from 2022 to 2024 • Workers’ compensation expense increase of 14.91 percent from 2023 to 2024 • Pension expense increase, based on 8.5 percent of labor costs for qualifying employees (where qualifying employees must work at least 1,000 hours).

Impact(s):
• No adjustment.

Equipment Costs and Facility Costs
STR estimated equipment costs and facility costs to increase by approximately $161,781, or 10.1 percent, between 2022 and 2023. STR projected equipment costs and facility costs to decrease by $90,527 or 5.1 percent, between 2023 and 2024. Factors contributing to changes in these costs included the following:
• STR estimated depreciation costs to remain relatively flat over the 2022 to 2024 period, at $1.3M.

The current depreciation for 2024 accounts for retirement of certain assets and additions of two new Peterbilt front loader collection trucks, a used Caterpillar excavator, an end dump trailer, and a pickup truck.
• STR estimated 2023 rent costs based on the year-to-date 2023 trend and projected 2024 rent costs set equal to 2023 rent costs.
• STR estimated 2024 repairs and maintenance costs based on a three-year average of costs from 2021 to 2023.

Impact(s):
• No adjustment.
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Landfill Disposal Costs
STR estimated landfill disposal costs to increase by approximately $50,939, or 3.3 percent, between 2022 and 2023. STR projected landfill disposal costs of $1,747,013 for 2024, representing a 11 percent increase from 2023. Landfill disposal costs include Lockwood landfill and Carson City landfill dump fees; disposal costs related to e-waste, tire, asphalt, and food waste recycling; and alternative daily cover (ADC) dump fees.

Tables 5 and 6, below, provides a summary of the dump fees for Lockwood landfill and Carson City landfill, for FY 2022 and FY 2023. Per STR’s contract with Lockwood landfill, the rate per ton of MSW/C&D increases each April, based on an index. The landfill disposal costs and tonnage do not include disposal costs and tonnages for other “dump fee” services, such as for e-Waste, Freon, tires, tire recycling, and other materials processing and disposal.

Table 5
FY 2022 Actual Landfill Disposal Costs and Tonnage
a STR disposes of MSW and C&D (as Alternative Daily Cover, or ADC) at Lockwood Landfill and MSW and C&D at Carson City landfill. b Per STR’s contract with Lockwood landfill, the annual tipping fee increased by 4.71 percent to $21.55 in April 2022.

Table 6
FY 2023 Estimated Landfill Disposal Costs and Tonnage
a STR disposes of MSW and C&D (as Alternative Daily Cover, or ADC) at Lockwood Landfill and MSW and C&D at Carson City landfill. b Per STR’s contract with Lockwood landfill, the annual tipping fee increased by 5.15 percent to $22.66 in April 2023. c Per STR’s contract with Carson City landfill, the annual tipping fee increased by 4.75 percent to $25.14 in December 2022.

Twelve Months Lockwood Landfill (7/1/21 - 6/30/22) Carson City Landfill (7/1/21 - 6/30/22) TOTAL (7/1/21 - 6/30/22) Tons Tip Fee $
Rate per
Ton Tons Tip Fee $
Rate per
Ton Tons Tip Fee $
Rate per
Ton
MSW 17,140.75 $ 364,143.20 $ 21.24 28,356.53 $ 680,556.72 $ 24.00 45,497.28 1,044,699.92 $ 22.96 C&D - $ - 7,970.28 $ 191,286.72 $ 24.00 7,970.28 $ 191,286.72 $ 24.00 C&D as ADC 751.49 $ 16,946.09 $ 22.55 - $ - $ - 751.49 16,946.09 $ 22.55 Green Waste - $ - - $ - $ - - - $ -
ADC - $ - 14,871.11 $ - $ - 14,871.11 - $ -
Total 17,892.24 $ 381,089.29 $ 21.30 51,197.92 $ 871,843.44 $ 17.03 69,090.16 $ 1,252,932.73 $ 18.13 Tonnage EXCLUDING nocharge ADC 33% 67% Total tons excluding no-charge ADC 54,219.05 100%
18% 82% 100%

ACTUAL ACTUAL ACTUAL
Twelve Months Lockwood Landfill (7/1/22 - 6/30/23) Carson City Landfill (7/1/22 - 6/30/23) TOTAL (7/1/22 - 6/30/23) Tons Tip Fee $
Rate per
Ton Tons Tip Fee $
Rate per
Ton Tons Tip Fee $
Rate per
Ton
MSW 7,844.11 $ 170,866.13 $ 21.78 35,376.23 $ 896,029.22 $ 25.33 43,220.34 1,066,895.35 $ 24.69 C&D - $ - 12,285.83 $ 302,506.94 $ 24.62 12,285.83 $ 302,506.94 $ 24.62 C&D as ADC 436.12 $ 9,834.51 $ 22.55 - $ - $ - 436.12 9,834.51 $ 22.55 Green Waste - $ - - $ - $ - - - $ -
ADC - $ - 15,375.16 $ - $ - 15,375.16 - $ -
Total 8,280.23 $ 180,700.64 $ 21.82 63,037.22 $ 1,198,536.16 $ 19.01 71,317.45 $ 1,379,236.80 $ 19.34 Tonnage EXCLUDING nocharge ADC 15% 85% Total tons excluding no-charge ADC 55,942.29 100%
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In projecting landfill dump fees, STR accounted for changes in both tonnage and tipping fees. STR provided documentation from landfills to support the tipping fees they used in their projections. STR continues to make the operational change to employ a greater use of Carson City Landfill, and is currently managing the flow of materials to both Lockwood and Carson City Landfills depending on the material type, fee, trucking staff availability, time of year, and the ultimate disposition (e.g., disposal versus diversion).

Other disposal items (which represent primary drivers for the Landfill Disposal Cost increase) include:
• STR had paid Tahoe Asphalt (not a related party) a processing fee of $3.50 per ton to recycle asphalt and concrete. Tahoe Asphalt raised their fee by $4.50 per ton to $8.00 per ton beginning December 2022. This accounted for $107,762 of the 2023 to 2024 Disposal Cost increase. • STR has made efforts to employ the two landfills to optimize its disposal/ADC mix. These year-overyear disposal cost increases are supported by increases in Landfill disposal volumes as well as increases in tipping fee rates charged by third-parties (e.g., for composting and asphalt recycling).

Impact(s):
• No adjustment.

Office Salaries
STR estimated office salaries to increase by $287,636, or 22.3 percent, between 2022 and 2023. STR projected office salary expenses of $1.511,051 for 2024, representing a 5.2 percent decrease for 2024.

This projected increase from 2022 to 2024 accounts for projected wage and benefit changes as follows:
• Wage increases for office staff of between $4 and $6 per hour • Two additional headcount, including one HR manager and one office staff person • Workers’ compensation expense increase of 14.91 percent from 2023 to 2024 • Pension expense increase, based on 8.5 percent of labor costs for qualifying employees (where qualifying employees must work at least 1,000 hours).

Impact(s):
• We reduced office salaries by the fully burdened cost of $129,125.47 to account for one AP/GL accountant position that will be transitioned into the company but will replace activities currently performed by an officer (eliminating potential double counting of the benefit provided by the officer who is effectively paid to perform this function).
• Minor adjustment ($62.80) to account for difference in CPI used to escalate some costs in this category (6.26 percent vs. 6.67 percent)
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General and Administrative Costs
Cost of Goods Sold
STR estimated cost of goods sold to remain flat from 2023 to 2024 to align with stable expected recycling revenue.

Advertising, Postage, Utilities, Licenses and Fees
STR escalated advertising, postage, utilities, and licenses and fees using year-to-date 2023 trends. STR projected 2024 costs based on applying the CPI percent increase to estimated 2024 costs.

Contract Labor
STR estimated contract labor to increase by 8.6 percent, between 2024 and 2024, based on alignment with the growth in commercial revenues. This contract labor is largely paid to Tahoe Basin Containers, a related party to service compactors in the STR service area. We adjusted the projection of contract revenue for 2024 based on annualizing the three-year amount for 2021 through 2023 and adding the CPI.

This adjustment reduced contract labor expenses by approximately $209,086 in 2024.

General Insurance
STR estimated general insurance expenses to increase by $124,786, or 26.0 percent, between 2023 and 2024. Total general insurance for 2024 equals $604,734. STR provided general insurance documentation pertaining to the increased costs (premiums). In total, general insurance premiums are quoted to increase by 26 percent for STR and related parties. We did not make adjustments to STR’s projection of 2024 general insurance costs.

Fuel
STR estimated a fuel increase of $49,719, based on applying the CPI escalation, between 2023 and 2024. This increased fuel costs to $844,036. We verified fuel costs by evaluating detailed fuel documentation for usage and prices paid.

Hazardous Materials
STR projected hazardous materials costs to increase by the 10 percent. We adjusted this to the CPI (6.26%) as described expense escalation subsection, above. This reduced the 2024 cost by $6,006.

Impact(s):
• Decrease in general and administrative costs by $221,684 in 2024. 341
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MRF Principal and Interest Payments (El Dorado County)
STR projected El Dorado County’s portion of MRF principal and interest payments of $7,503 for 2024.

The MRF debt financing is through a Bank of America term loan of $2 million. STR estimated that approximately 38.3 percent of the term loan is related to the MRF. STR allocated 38.3 percent of financing costs, to MRF principal and interest payments. STR then determined El Dorado County’s portion of MRF principal and interest payments, based on the 2023 collection revenue allocation percentage (19 percent). We found this approach to determining the MRF principal and interest cost for El Dorado County reasonable.

Impact(s):
• No adjustment.

RRF Principal and Interest Payments (El Dorado County)
STR projected El Dorado County’s portion of 2024 RRF principal and interest payments to equal $168,048. The RRF debt financing is through a California Pollution Control Financing Authority (CPCFA) 2008 Bond of $16.615 million. STR determined El Dorado County’s portion of RRF principal and interest payments, based on the 2023 total collection revenue allocation percentage (19 percent). We found this approach to determining the RRF principal and interest cost for El Dorado County reasonable.

Impact(s):
• No adjustment.

Other Interest Expenses
Other interest expenses include interest on debt used to finance STR operations, excluding the MRF/RRF building financing. STR projected other interest expenses of $142,293 for 2024. STR then determined El Dorado County’s portion of other interest expenses, based on the 2024 total collection revenue allocation percentage (19 percent). STR included other interest expenses of $27,041 for El Dorado County’s portion, under allowable operating costs.

Impact(s):
• No adjustment.
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Operating Profit
In accordance with the Manual, for the City of South Lake Tahoe and Douglas County, a profit is allowed based on a sliding scale which varies with STR’s recovery percentage; and for El Dorado County, a profit is allowed, based on a targeted operating ratio ranging between 87 and 91 percent. In a base year, if rates change, STR applies an 89 percent operating ratio for base year calculation.

In the Application, STR used an 87 percent operating ratio for the City of South Lake Tahoe and Douglas County, and an 89 percent operating ratio for El Dorado County. STR provided Waste Facility Diversion Summary Reports, which included monthly tons diverted through six (6) operations: (1) MRF floor sort, (2) MRF line sort, (3) RRF, (4) alternate daily cover (ADC), (5) recycle center, and (6) direct export. Based on its diversion reports, STR’s recovery rate was 65 percent for 2023 and 2024.

We calculated operating profit, based on our adjustments to the estimated 2023 and projected 2024 allowable operating costs. We decreased operating profits by $50,720 in 2024.

Impact(s):
• Decrease in Operating Profits by $50,720 in 2024.

Pass-Through Costs
MRF Principal Payments (City and Douglas)
STR projected the City of South Lake Tahoe and Douglas County’s portion of MRF principal payments of $21,064 for 2024. The MRF debt financing was through a Bank of America term loan of $2 million (which was subsequently refinanced to a Bank of America loan in FY15). STR estimated that approximately 38.3 percent of the term loan is related to the MRF. For the Bank of America term loan, STR projected principal payments based on loan balances. STR allocated 38.3 percent of financing costs, to MRF principal payments. STR then determined the City of South Lake Tahoe and Douglas County’s portion of MRF principal payments, based on the 2023 collection revenue allocation percentage (81 percent).

Impact(s):
• No adjustment.

RRF Principal Payments (City and Douglas)
STR projected the City of South Lake Tahoe and Douglas County’s portion of RRF principal payments of $590,403 in 2024. The RRF debt financing is through a CPCFA 2008 Bond of $16.615 million. For the bond financing, STR projected principal payments based on bond balances. STR allocated 100 percent of financing costs, to RRF principal payments. STR then determined the City of South Lake Tahoe and Douglas County’s portion of RRF principal payments, based on the 2023 total collection revenue allocation percentage (81 percent).

Impact(s):
• No adjustment.
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MRF and RRF Interest Expenses (City and Douglas)
STR projected the City of South Lake Tahoe and Douglas County’s portion of MRF and RRF interest payments of $136,743 for 2024. The MRF debt financing was through a Union Bank term loan of $2 million (which was subsequently refinanced to a Bank of America loan in FY15). STR estimated that approximately 38.3 percent of the term loan is related to the MRF. The RRF debt financing is through a CPCFA 2008 Bond of $16.615 million.

For the MRF and RRF debt financing, STR projected principal payments based on debt balances, and interest payment based on general ledgers. STR then determined the City of South Lake Tahoe and Douglas County’s portion of MRF and RRF interest payments, based on the 2023 collection revenue allocation percentage (81 percent).

Impact(s):
• No adjustment.

Other Interest Expenses
Other interest expenses are interest on debt used to finance STR operations, excluding the MRF/RRF building financing. Recently financed assets include new trucks. STR projected other interest expenses of $115,252 for 2024. STR then determined the City of South Lake Tahoe and Douglas County’s portion of other interest expenses, based on the 2023 total collection revenue allocation percentage (81 percent).

STR included other interest expenses of $115,252, for the City of South Lake Tahoe and Douglas County’s portion, under pass-through costs.

Impact(s):
• No adjustment.

Recycling Revenue Bonus
In accordance with the Manual, STR is allowed a recycling revenue bonus, which is tied to STR’s diversion levels. For 2024, STR is allowed a 50 percent recycling revenue share, by exceeding the minimum diversion rate of 47 percent. STR projected a recycling revenue bonus of $499,686 for 2024. This calculation is based on: (total recycling revenues less cost of goods sold) x 0.50, or ($1,512,720-$513,348) x 0.50, or $499,686.

This $499,686 share amount is included as a pass through cost in the rate model.

Impact(s):
• No change in Recycling Revenue Bonus.
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Franchise Fees
STR calculated and allocated projected franchise fees, based on 2023 projected collection revenues and transfer fees, multiplied by franchise fee rates. The Manual allocates franchise fees based on gross residential, commercial, and recycling revenues. The City of South Lake Tahoe receives six (6) percent of gross revenues, El Dorado County receive five (5) percent of gross revenues and Douglas County receives three (3) percent of gross revenues. Below, we list the revenue sources used for Member Agency franchise fee calculations:
• City of South Lake Tahoe, increased from 5 to 6 percent of the following:
o City residential collection revenues
o City commercial collection revenues
o Transfer station and RRF revenues
• El Dorado County, 5 percent of the following:
o County residential collection revenues
o County commercial collection revenues
• Douglas County, 3 percent of the following:
o County residential collection revenues
o County commercial collection revenues.

Recycling material sales revenues, which includes MRF and recycling sales revenues, are not included in franchise fee calculations. STR projected franchise fees of $1,201,220 for 2024, including franchise fees of $983,246 for the City of South Lake Tahoe and Douglas County, and franchise fees of $217,974 for El Dorado County.

We projected franchise fees of $1,179,150 for 2024, including franchise fees of $964,892 for the City of South Lake Tahoe and Douglas County, and franchise fees of $214,258 for El Dorado County. The adjustments to the franchise fee number is the result of modifying the figures based on lower revenue requirement from the other adjustments noted in previous sections of the report.

Impact(s):
• Decrease in franchise fee costs by $22,070 in 2024.

F. Results of Base Year 2024 Analysis
Crowe’s Analysis of the Application, and as shown in Attachment C, results in a 11.05 percent rate increase for the City of South Lake Tahoe, a 8.15 percent rate increase for Douglas County; and a 8.33 percent rate increase for El Dorado County, assuming an implementation date of January 1, 2024. These rate increases will cover the following revenue shortfalls:
• $1,615,910 revenue shortfall for the City of South Lake Tahoe, 11.05 percent rate increase for 2024 (difference from Douglas County is due to franchise fee differences (6% of gross revenues for SLT and 3% of gross revenues for Douglas County))
• $322,484 revenue shortfall for Douglas County, or a 8.15 percent rate increase for 2024 • $372,428 revenue shortfall for El Dorado County, or a 8.33 percent rate increase for 2024. 345
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G. Senate Bill 1383 2025/26 Rate Setting Analysis and Adjustments The company submitted a request for significant program changes intended to comply with California Senate Bill 1383 (SB 1383) requirements. This bill requires a reduction in organic waste disposal of 75 percent by 2025 and necessitates that all jurisdictions need to provide organic waste collection services to all residents and businesses.

STR has proposed the following primary operational changes in conjunction with this SB 1383 rate request, some of which are also intended to improve STR collection efficiencies, upgrade equipment, and move to a new three-cart system (e.g., including animal resistant carts):
• Increase in MSW routing (8 new semi-automated routes) • Increase in single stream routes (7 new automated routes); service every other week • Increase in green waste routes (7 new automated routes); service every other week • Purchase/deploy 12,501 new animal resistant toters for MSW • Purchase/deploy 21,225 new toters for single stream recycling • Purchase/deploy 31,091 new toters from green waste recycling • Purchase/finance 9 new trucks, including 4 new rear-loader trucks and 4 mini-side-loader trucks • Additional labor to serve new routes
• Additional fuel, insurance, maintenance of new trucks • Additional collection department manager and customer service representative • Changes to materials mix (increasing greenwaste, decreasing MSW), resulting in changes in materials management costs.

In Table 7 below, we summarize the requested incremental costs associated with this SB 1383 program change. In total, we project adjusted incremental new costs of the SB 1383 program of $2,342,503. Our understanding is that the member agencies and STR have discussed spreading these costs using a phased implementation, with half of the costs included in rates to be set beginning January 1, 2025 and the other half of the costs for rates to be set January 1, 2026.

Table 7
Senate Bill 1383 Program Costs
Effective January 1, 2025
Description of Program Change Requested Incremental Costs Crowe Adjusted Incremental Costs New carts – annual depreciation ($6.7M purchase) $900,444 $873,058 8 new trucks ($3.34M purchase) $333,942 $333,942
New driver costs $236,091 $236,091
New fuel costs $47,980 $43,339
Other new labor, consulting, and marketing $428,811 $378,811 Change in materials mix (increased greenwaste,
decreased MSW)
$55,468 $44,546
Other costs, profit $467,301 $432,716
Total SB 1383 program costs $2,470,037 $2,342,503
Crowe Adjustments ($127,534)
346
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H. Results of Senate Bill 1383 2025/26 Analysis
Crowe’s Analysis of the SB 1383 request, as shown in Attachment D, results in an additional 10.16 percent rate increase, combined for the three jurisdictions. This compares to the 10.72 percent rate increase requested by STR. We view this as a maximum rate increase to the member agencies and recommend that the JPA work with STR on how to implement this rate change in advance of 2025. We recommend that the JPA and STR review updated and more refined estimated costs of this SB 1383 program as part of the next interim year rate change process. Under a two-year phased scenario, the

10.16 percent rate increase represents a 5.08 percent rate increase beginning January 1, 2025 and another 5.08 percent rate increase beginning January 1, 2026. These 2025 and 2026 rate increases do not consider the impacts of the interim year process specified in the Rate Manual. * * * * *
This Analysis is substantially different from an audit, examination, or review in accordance with Generally Accepted Auditing Standards, the objective of which is to express an opinion regarding STR financial statements. Accordingly, we do not express such an opinion.

The consulting services did not contemplate obtaining the understanding of STR internal controls or assessing control risk, tests of accounting records and responses to inquiries by obtaining corroborating evidential matter, and certain other procedures ordinarily performed during an audit or examination. Thus, this engagement was not intended to provide assurance that we would become aware of significant matters that would be disclosed in an audit or examination.

As part of this Analysis, the JPA agreed to be responsible to: make all management decisions and perform all management functions; designate an individual who possesses suitable skill, knowledge, and/or experience, preferably within senior management to oversee our services; evaluate the adequacy and results of the services performed; accept responsibility for the results of the services; and establish and maintain internal controls, including monitoring ongoing activities. The JPA has authority for recommending rate changes to each JPA jurisdiction, and each JPA jurisdiction has the ultimate authority to approve rate changes.

Crowe‘s fees are not dependent upon the outcome of this report and Crowe is independent with respect to any other economic interests.
* * * * *
We appreciate the contribution of JPA management and your input and direction on this project. We also thank STR management for its timely responses to our data requests. If you have any questions regarding this report, please call Erik Nylund at (415) 230-4963, or email [email protected]. 347
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Attachment A: Proposed Residential Rate Structure
348
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Attachment A
Proposed Residential Rate Structure
(January 1, 2024)
Summary
Rate Change

1. Percent Rate Change Requested (City of South Lake Tahoe) 11.05% excluding SB 1383 Percent Rate Change Requested (Douglas County) 8.15% excluding SB 1383 Percent Rate Change Requested (El Dorado County) 8.33% excluding SB 1383 Residential Rate Schedule
Current Rate Rate Adjustment New Rate

2. City of South Lake Tahoe

2.1. Unlimited service Note 1 $ 37.15 $ 4.11 $ 41.26

2.2. Mandated pickup per 32-gallon can/bag 7.78 0.86 8.64

2.3. Mandated pickup per cubic yard 52.05 5.75 57.80

2.4. Qualified senior rate Note 1 22.90 2.53 25.43

2.5. House service - 1 can Note 1 42.44 4.69 47.13

2.6. House service - 2 cans Note 1 47.76 5.28 53.04

2.7. House service - 3 cans Note 1 53.04 5.86 58.90

2.8. Residential - All other services - - -

3. Douglas County

3.1. 1, 32-gallon can $ 23.37 $ 1.90 $ 25.27

3.2. 2, 32-gallon cans 44.98 3.67 48.65

3.3. 3, 32-gallon cans 68.59 5.59 74.18

3.4. 4, 32-gallon cans 90.22 7.35 97.57

3.5. One extra 32-gallon can (also the seasonal service rate) 5.86 0.48 6.34

3.6. On-call 32-gallon can billed monthly/arrears n/a n/a -

3.7. Per cubic yard 37.74 3.08 40.82

3.8. 1, 45-gallon can 28.33 2.31 30.64

3.9. 2, 45-gallon cans 54.47 4.44 58.91

3.10. 3, 45-gallon cans 83.01 6.77 89.78

3.11. One extra 45-gallon can (also the seasonal service rate) 7.14 0.58 7.72

3.12. On-call 45-gallon can billed monthly/arrears n/a n/a -

3.13. Residential - All other services 128.32 10.46 138.78

4. El Dorado County

4.1. Unlimited service $ 40.77 $ 3.40 $ 44.17

4.2. Mandated pickup per 32-gallon can/bag 8.54 0.71 9.25

4.3. Mandated pickup per cubic yard 48.88 4.07 52.95

4.4. Qualified senior rate 26.58 2.21 28.79

4.5. House service per can 5.16 0.43 5.59

4.6. Residential - All other services (Area B - formerly ARD) 22.42 1.87 24.29 Rate Schedule
Base Year Rate Application
(per customer, per month)
349
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Attachment B: 2024 Base Year Rate Application
350
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351
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Draft Report
352
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353
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Attachment C: Crowe Base Year 2024 Rate Model with Adjustments 354
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Financial Information for All Three Jurisdictions
Crow e Crow e Crow e
Requested Adjustments Projected Requested Adjustments Projected Requested Adjustments Projected 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024 6/30/2024

5. Direct Labor $ 8,748,545 $ (72) $ 8,748,474 $ 2,052,654 $ (17) $ 2,052,637 $ 10,801,199 $ (88) $ 10,801,111

6. Equipment Costs and Facility Costs 1,354,963 - 1,354,963 317,912 - 317,912 1,672,875 - 1,672,875

7. Landfill Disposal Costs 1,415,012 - 1,415,012 332,001 - 332,001 1,747,013 - 1,747,013

8. Office Salaries 1,328,529 (104,637) 1,223,892 311,710 (24,551) 287,159 1,640,239 (129,188) 1,511,051

9. General and Administrative Costs 4,494,977 (179,555) 4,315,422 1,054,648 (42,129) 1,012,519 5,549,625 (221,684) 5,327,940

10. MRF Principal and Interest Payments (El Dorado County) - - - 7,503 - 7,503 7,503 - 7,503

11. RRF Principal and Interest Payments (El Dorado County) - - - 168,048 - 168,048 168,048 - 168,048 Other Interest Expenses (El Dorado County) - - - 27,041 - 27,041 27,041 - 27,041

12. Total Allowable Operating Costs $17,342,026 $ (284,264) $ 17,057,761 $ 4,271,517 $ (66,696) $ 4,204,821 $ 21,613,543 $ (350,961) $ 21,262,582 Section II--Allowable Operating Profit

13. Operating Ratio 87.00% 87.00% 89.00% 89.00%

14. Allow able Operating Profit $2,591,337 $ (42,476.30) $2,548,861 $527,940 $ (8,243) $519,697 $3,119,278 $ (50,720) $3,068,558 Section III--Pass Through Costs without Franchise Fees

15. MRF Principal Payments (City and Douglas) 21,064 - $21,064 $0 - $0 $21,064 - $21,064

16. RRF Principal Payments (City and Douglas) 590,403 - 590,403 0 - 0 590,403 - 590,403

17. MRF and RRF Interest Expenses (City and Douglas) 136,743 - 136,743 0 - 0 136,743 - 136,743 Other Interest Expenses (City & Douglas) 115,252 - 115,252 0 - 0 115,252 - 115,252

18. RRF Fund Credit 0 - 0 0 - 0 0 - 0

19. Recycling Revenue Bonus 404,726 - 404,726 94,960 - 94,960 499,686 - 499,686

20. Total Pass Through Costs $1,268,188 $0 $1,268,188 $94,960 $0 $94,960 $1,363,148 $0 $1,363,148 Section IV--Revenue Requirement without Franchise Fees

21. $21,201,551 $ (326,741) $20,874,810 $4,894,418 $ (74,940) $4,819,478 $26,095,969 $ (401,681) $25,694,288 Section V--Revenues without Rate Change in Base Year
Current
Residential Revenues Rate/Month Months
City of South Lake Tahoe

22. Unlimited service $ 37.15 12 $ 6,411,941

25. Qualified senior rate 22.90 12 38,747

26. House service - 1 can 42.44 12 2,037

27. House service - 2 cans 47.76 12 573

28. House service - 3 cans 53.04 12 -
Douglas County

30. 1, 32-gallon can $ 23.37 12 $ 403,834

31. 2, 32-gallon cans 44.98 12 181,899

32. 3, 32-gallon cans 68.59 12 34,569

33. 4, 32-gallon cans 90.22 12 4,331

37. 1, 45-gallon can 28.33 12 108,447

38. 2, 45-gallon cans 54.47 12 30,721

39. 3, 45-gallon cans 83.01 12 5,977

42. Residential - All other services 128.32 12 4,620
El Dorado County

43. Unlimited service $ 40.77 12 - $ - $ 3,162,447 - $ 3,162,447 $ 3,162,447 - $ 3,162,447

44. Mandated pickup per 32-gallon can/bag 8.54 12 - - - - - - - -

45. Mandated pickup per cubic yard 48.88 12 - - - - - - - -

46. Qualified senior rate 26.58 12 - - 34,448 - 34,448 34,448 - 34,448

47. House service per can 5.16 12 - - 62 - 62 62 - 62

48. Residential - All other services (Area B - formerly ARD) 22.42 12 - - 43,315 - 43,315 43,315 - 43,315

49. Residential Revenues Subtotal $ 7,227,696 - $ 7,227,696 $ 3,240,272 - $ 3,240,272 $ 10,467,968 - $ 10,467,968

50. Less: Allow ance for Uncollectible Residential Accounts - - - - - - - - -

51. Total Residential Revenues (w ithout Rate Change in Base Year) $ 7,227,696 - $ 7,227,696 $ 3,240,272 - $ 3,240,272 $ 10,467,968 - $ 10,467,968

52. Commercial Revenues $ 8,977,425 - $ 8,977,425 $ 674,372 - $ 674,372 $ 9,651,796 - $ 9,651,796

53. - - - - - - - - -

54. $ 8,977,425 - $ 8,977,425 $ 674,372 - $ 674,372 $ 9,651,796 - $ 9,651,796

55. 2,373,290 - 2,373,290 556,840 - 556,840 2,930,131 - 2,930,131

56. Recycled Material Sales 1,322,897 - 1,322,897 189,824 - 189,824 1,512,721 - 1,512,721

57. Total Revenues (Lines 51 + 54 + 55 + 56) $19,901,307 - $ 19,901,307 $ 4,661,308 - $ 4,661,308 $ 24,562,616 - $ 24,562,616 Section VI--Net Shortfall (Surplus)

58. Net Shortfall (Surplus) w ithout Franchise Fees (Line 21 - Line 57) $ 1,300,243 (326,741) $ 973,503 $ 233,109 (74,940) $ 158,170 $ 1,533,353 (401,681) $ 1,131,672

59. Residential and Commercial Franchise Fees $ 983,246 (18,354) $ 964,892 $ 217,974 (3,716) $ 214,258 $ 1,201,220 (22,070) $ 1,179,150

60. Net Shortfall (Surplus) w ith Franchise Fees (Lines 58 + 59) $ 2,283,489 (345,095) $ 1,938,394 $ 451,084 (78,656) $ 372,428 $ 2,734,573 (423,751) $ 2,310,822 Section VII--Percent Change in Rates

61. $18,578,411 - $ 18,578,411 $ 4,471,484 - $ 4,471,484 $ 23,049,895 - $ 23,049,895

62. 12.29% -1.86% 10.43% 10.09% -1.76% 8.33% 11.86% -1.84% 10.03% City of SLT and Douglas County El Dorado County All Three Jurisdictions Base Year Rate Application
Forecast (without SB 1383)
Base Year
Total Residential, Commercial, Transfer Station, and RRF Revenues Prior to Rate Change (Line 51 + 54 + 55)
Percent Change in Existing Residential/Commercial/Transfer Station/RRF Rates (Line 60 ÷ Line 61)
Section I--Allowable Operating Costs
Total Allow able Operating Costs (Line 12) plus Allow able Operating Profit (Line 14) plus Total Pass Through Costs (Line 20)
Total
Less: Allow ance for Uncollectible Commercial Accounts
Total Commercial Revenues (w ithout Rate Change in Base Year) Transfer Station and RRF Revenues (AND FORESTRY, FED, STATE 355
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Attachment D: Crowe Combined Base Year 2024 and SB 1383 Implementation Rate Model with Adjustments
356
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Draft Report
Financial Information for All Three Jurisdictions
All Three Crow e SB 1383
Jurisdictions Adjustments Projected
6/30/2024 6/30/2024 6/30/2024

5. Direct Labor $ 11,037,291 $ (88) $ 11,037,202

6. Equipment Costs and Facility Costs 2,934,650 (27,386) 2,907,264

7. Landfill Disposal Costs 1,802,481 (10,922) 1,791,559

8. Office Salaries 1,890,050 (129,188) 1,760,862

9. General and Administrative Costs 5,784,781 (287,926) 5,496,855

10. MRF Principal and Interest Payments (El Dorado County) 7,503 - 7,503

11. RRF Principal and Interest Payments (El Dorado County) 51,405 - 51,405 Other Interest Expenses (El Dorado County) 146,794 - 146,794

12. Total Allowable Operating Costs $ 23,654,955 $ (455,511) $ 23,199,445 Section II--Allowable Operating Profit

13. Operating Ratio 87.00%

14. Allow able Operating Profit $3,534,648 (65,829) $3,468,820 Section III--Pass Through Costs without Franchise Fees

15. MRF Principal Payments (City and Douglas) $21,064 $0 $21,064

16. RRF Principal Payments (City and Douglas) 96,289 0 96,289

17. MRF and RRF Interest Expenses (City and Douglas) 133,715 0 133,715 Other Interest Expenses (City & Douglas) 625,647 0 625,647

18. RRF Fund Credit 0 0 0

19. Recycling Revenue Bonus 499,686 0 499,686

20. Total Pass Through Costs $1,376,402 $0 $1,376,402
Section IV--Revenue Requirement without Franchise Fees

21. $28,566,005 (521,339) $28,044,666
Section V--Revenues without Rate Change in Base Year
Current
Residential Revenues Rate/Month Months
City of South Lake Tahoe

22. Unlimited service $ 37.15 12 $ 6,411,941

25. Qualified senior rate 22.90 12 38,747

26. House service - 1 can 42.44 12 2,037

27. House service - 2 cans 47.76 12 573

28. House service - 3 cans 53.04 12 -
Douglas County

30. 1, 32-gallon can $ 23.37 12 $ 403,834

31. 2, 32-gallon cans 44.98 12 181,899

32. 3, 32-gallon cans 68.59 12 34,569

33. 4, 32-gallon cans 90.22 12 4,331

37. 1, 45-gallon can 28.33 12 108,447

38. 2, 45-gallon cans 54.47 12 30,721

39. 3, 45-gallon cans 83.01 12 5,977

42. Residential - All other services 128.32 12 4,620
El Dorado County

43. Unlimited service $ 40.77 12 $ 3,162,447 $ - $ 3,162,447

44. Mandated pickup per 32-gallon can/bag 8.54 12 - - -

45. Mandated pickup per cubic yard 48.88 12 - - -

46. Qualified senior rate 26.58 12 34,448 - 34,448

47. House service per can 5.16 12 62 - 62

48. Residential - All other services (Area B - formerly ARD) 22.42 12 43,315 - 43,315

49. Residential Revenues Subtotal $ 10,467,968 $ - $ 10,467,968

50. Less: Allow ance for Uncollectible Residential Accounts - - -

51. Total Residential Revenues (w ithout Rate Change in Base Year) $ 10,467,968 $ - $ 10,467,968

52. Commercial Revenues $ 9,651,796 $ - $ 9,651,796

53. - - -

54. $ 9,651,796 $ - $ 9,651,796

55. 2,930,131 0 2,930,131

56. Recycled Material Sales 1,512,721 0 1,512,721

57. Total Revenues (Lines 51 + 54 + 55 + 56) $ 24,562,616 $ - $ 24,562,616 Section VI--Net Shortfall (Surplus)

58. Net Shortfall (Surplus) w ithout Franchise Fees (Line 21 - Line 57) $ 4,003,390 $ (523,575) $ 3,479,814

59. Residential and Commercial Franchise Fees $ 1,201,220 $ (27,709) $ 1,173,511

60. Net Shortfall (Surplus) w ith Franchise Fees (Lines 58 + 59) $ 5,204,609 $ (551,284) $ 4,653,325 Section VII--Percent Change in Rates

61. $ 23,049,895 $ - $ 23,049,895

62. 22.58% -2.39% 20.19%
PROJECTED SB 1383 Incremental Rate Increase 10.72% 10.16% Base Year Rate Application
Forecast
Base Yr + SB 1383
Total Residential, Commercial, Transfer Station, and RRF Revenues Prior to Rate Change (Line 51 + 54 + 55)
Percent Change in Existing Residential/Commercial/Transfer Station/RRF Rates (Line 60 ÷ Line 61)
Section I--Allowable Operating Costs
Total Allow able Operating Costs (Line 12) plus Allow able Operating Profit (Line 14) plus Total Pass Through Costs (Line 20)
Total
Less: Allow ance for Uncollectible Commercial Accounts
Total Commercial Revenues (w ithout Rate Change in Base Year) Transfer Station and RRF Revenues (AND FORESTRY, FED, STATE 357
Clean Tahoe Program
FY 2023/24 Budget
1 of 3
CATEGORY FY 2023/24

REVENUE
Animal-in-Trash Cleanup Service Fees 3,000
Bulk Item Pickup 300
California Tahoe Conservancy (TRCD) 6,000
City of SLT/STR
City Commercial Surcharge 130,000
City Residential Surcharge 120,000
Transfer Station Fees (collected by STR ) 40,000
Total City of SLT/STR 290,000
Community Cleanup Day
Cleanup Day Sponsorship 5,000
Cleanup Day Gate Receipts 3,000
Total Community Cleanup Day 8,000
El Dorado County
County Commercial Surcharge 1,300
County Residential Surcharge 11,300
El Dorado County Parcel Assessment 29,000
Total of El Dorado County 41,600
Field Fees
Reimbursement of Dump Fees 4,000
Service Fees 3,000
Total Field Fees 7,000
Grants 3,000
Mattress Pickup Reimbursement Program 700
Memberships 1,500
Miscellaneous
Amazon Smile disbursement 75
Bank Interest 40
Stock Dividend 200
Donations/fundraing opportunities 200
Total Miscellaneous: 515
South Tahoe Redevelopment Area
Dump Fee Reimbursement 550
Labor Fees 6,500
Total So. Tahoe Redevelopment Area 7,050
North Shore Administartion Fee 11,000
$379,665

EXPENSES
Advertising/Outreach 2,000
358
Clean Tahoe Program
FY 2023/24 Budget
2 of 3
CATEGORY FY 2023/24
Community Cleanup Days (Tahoma & S Shore)
PR/Advertising 700
Tonnage/Transportation (South Shore) 5,000
Tonnage/Transportation (Tahoma) 2,000
Misc. and Supplies 500
Total Cleanup Days 8,200
Dues/Subscriptions/Memberships 1,900
Dump Fees 12,000
Education/Training/Event Attendance 1,500
Events - GSRC, Sping Clean, etc. 2,200
Field Supplies 3,000
General Admin/Program Expense 500
Insurance
General Liability 2,000
Directors' Liability 1,300
Total Insurance 3,300
Internet & Email
Internet Service Provider 700
Website maintenance & hosting, email hosting 1,500
Total Internet & Email 2,200
Membership Expense
Advertising & Mailings 700
Mileage Reimbursements 300
Minor Equipment Purchase
office/event equipment 2,000
field equipment purchase 500
Total Minor Equipment Purchase 2,500
Office Expense
Misc. Office Supplies 750
Copy Machine Lease 2,300
Postage 500
Total Office Expense 3,550
Payroll Expenses
Employer Taxes 20,000
Gross Payroll
Program Assistant (PT) 29,000
Executive Director 58,000
Field Crew 115,000
Field Crew OT & Holiday 1,270
203,270
359
Clean Tahoe Program
FY 2023/24 Budget
3 of 3
CATEGORY FY 2023/24
Retirement Plan
Administrative Costs 1,500
Employer Contribution 7,500
Health Stipened 23,000
Workers' Comp 13,000
Total Payroll Expenses 281,270
Professional Fees
Accounting/bookkeeping 2,300
HR consulting 0
Legal Fees 1,000
Total Professional Fees 3,300
Rent
Office 17,000
Total Rent 17,000
Repairs
Computer repairs 500
Equipment Repairs 500
Total Repairs 1,000
Uniforms 1,000
Utilities
Electric 2,000
Natural Gas 0
Telephone (Office & Mobile) 3,620
Total Utilities 5,620
Vehicles
Fuel 12,000
Insurance 6,500
Maintenance 3,525
Registration 1,600
Miscellaneous 3,000
Total Vehicles 26,625
TOTAL EXPENSES $379,665
TOTAL PROFIT/LOSS $ -
360
City Council
December 12, 2023
STR Rate Analysis
Base Year Rate Setting (2024)
Public Hearing
361
Agenda
1 Background and Scope of Analysis
2 Approach
3 Result of Base Year Analysis (2024)
4 SB 1383 Analysis
362
Background and Scope of Analysis
363
Introduction
Setting rates for Base Year 2024; Effective January 1, 2024 • Year 2021 was a base year (detailed review of revenues, costs, profits) • Year 2022 was an interim year
• Year 2023 was an interim year
• Year 2024 is a base year (detailed review of revenues, costs, profits) • STR also submitted an application for an SB 1383 rate increase 364
Background and Scope of Analysis
• June - STR submitted application
• August/September - Crowe analyzed the application in accordance with the methodology in the Rate Manual
• Submitted multiple data requests
• Interviewed company management
365
Approach
366
Approach
Crowe performed the following tasks:
1) Checked calculations
2) Reviewed the reconciliation of the application to audited F/S 3) Evaluated escalations
4) Challenged assumptions
5) Conducted some testing related to cost allowability
6) Interviewed management
7) Compared revenues and costs with prior trends in actual revenues and costs 8) Compared escalations against cost drivers (e.g., tonnage, accounts) 367
Results of Base Year Analysis
(2024)
368
Requested and Crowe
Recommendations
369
Base Year 2024 Increase:

Residential Services Proposed Changes:

11.05% for the City of South Lake Tahoe

8.33% for El Dorado County

8.15% for Douglas County
370
Commercial Rate Proposed Changes:

Base Year 2024 Increase:

11.05% for the City of South Lake Tahoe

8.33% for El Dorado County

8.15% for Douglas County
371
On October 23, 2023, the South Lake Tahoe Basin
Management Authority (JPA) accepted Crowe’s
Recommendations and recommended that the
findings be submitted to each jurisdiction for
consideration.
372
Crowe also Reviewed the SB 1383 Analysis
(Statewide Mandatory Organic Waste Collection)
However, JPA did not take any action on the SB 1383
proposed rate increases, and this evaluation was
deferred to 2024.
373
Proposition 218 Notice and Requirement
• The city notified property owners and customers 45 days before the Public Hearing by mailing written notices of the proposed residential and commercial increase for the solid waste services before October 27, 2023. • Those property owners and customers have the right to protest the proposed rate increase by submitting a written protest to the City Clerk any time before the Public Hearing on December 12, 2023.
• If less than a majority of the property owners and customers file written protests to the proposed rate increase, the City Council may approve the proposed changes to the solid waste rates.
374
Questions ? Thank you!
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From: Adele Margolis
To: Susan Blankenship
Subject: Re: Protest of Proposed Solid Waste Rate Adjustments Date: Thursday, November 9, 2023 11:30:23 PM
Attachments: image001.png
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe.

Hello Susan,
Thank you for clarifying that an email protest is a valid delivery method. We wish to register our protest of the Proposed Residential Rate Adjustment.

We are residents of the City of South Lake Tahoe, not unincorporated El Dorado County.

Best regards,
Adele Margolis
On Thu, Nov 9, 2023 at 9:20 AM Susan Blankenship <[email protected]> wrote:

I should say, I accept written protests for resident within the City, not the County.

Susan Blankenship, CMC
City Clerk
http://www.cityofslt.us
Please note that email correspondence with the City of South Lake Tahoe, along with attachments, may be subject to the California Public Records Act, and therefore may be subject to disclosure unless otherwise exempt.

From: Adele Margolis >
Sent: Thursday, November 9, 2023 9:13 AM
To: Susan Blankenship <[email protected]>
Subject: Protest of Proposed Solid Waste Rate Adjustments 417
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe.

Hello City of SLT Staff,
We received the Notice of Proposed Solid Waste Rate Adjustments and are registering our protest of the Residential Rate Adjustments.

Is there a way to register our protest via this email? Or do all ratepayer protests need to be written and mailed to the City via snail mail?
Best regards,
Adele Margolis
--
Adele Margolis
This is a verified communication from the City of South Lake Tahoe. If you suspect that this message was not sent from a verified source, contact the City of South Lake Tahoe IT department at [email protected]
--
Adele Margolis
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: December 12,
2023
Agenda Item #:14
Agenda Item: Amendments to Cannabis Ordinance, Public Safety License Ordinance, and Clean Indoor Air Ordinance Regarding On-Site Consumption, Medicinal Delivery, and to Remove Outdated Provisions Regarding Development Agreements and Existing Medical Marijuana Dispensaries Executive Summary: At the City Council meeting on August 8, 2023, Councilmember John Friedrich requested that the issue of on-site consumption be brought back to City Council for discussion, which was seconded by Councilmember Tamara Wallace. On September 26, 2023, the Planning Commission adopted Resolution No. 2023-015, recommending to City Council amend the Cannabis Ordinance to allow on-site consumption at permitted retailers and microbusinesses with a retail component. Two versions of an ordinance amending the South Lake Tahoe City Code are included for Council consideration: Version 1 allowing on-site consumption at cannabis retailers, and Version 2 continuing to prohibit on-site consumption but making other changes necessary because of changes in state law and circumstances. This item was continued from the meeting on November 21, 2023.

Requested Action / Suggested Motions: Pass a Motion to hold a first reading (by title only) of Version 1 (allowing on-site consumption) or Version 2 (continuing to prohibit on-site consumption) and refer second reading to January 9, 2024, of an Ordinance amending the following sections of the South Lake Tahoe City Code: (1) Article X of Chapter 6.55 (Cannabis Regulations) Regarding On-Site Consumption at Cannabis Retailers, Medicinal Delivery, and to Remove Outdated Provisions Regarding Development Agreements and Existing Medical Marijuana Dispensaries; (2) Chapter 4.180 (Cannabis Public Safety License Ordinance) Regarding On-Site Consumption at Cannabis Retailers and Curbside Delivery; and (3) Chapter 4.100 (Clean Indoor Air and Health Protection) Regarding On-Site Consumption at Cannabis Retailers and to Comply with Changes in State Law on Smoking in Workplaces.

Responsible Staff Member: Heather Stroud, City Attorney Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirova, Director of Finance Attachments:
01 - Staff Report - Cannabis Ordinance.docx
02 - Ordinance Amending Cannabis Regulations - Version 1 Allowing On-Site Consumption.docx 03 - Clean Indoor Air Ordinance Redline Version 1.pdf
04 - Public Safety License Ordinance Redline Version 1.pdf 05 - Cannabis Ordinance Redline Version 1.pdf
06 - Ordinance Amending Cannabis Regulations - Version 2.docx 07 - Clean Indoor Air Ordinance Redline Version 2.pdf
08 - Public Safety License Ordinance Redline Version 2.pdf 09 - Cannabis Ordinance Redline Version 2.pdf
10 - 2023 South Lake Tahoe Scorecard from Public Health Institute.pdf 12-Notice of Public Hearing 11 21 2023.pdf
11- Planning Commission Res 2023-015.pdf
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City Council Agenda Report- December 12, 2023 Page 1 of 4 City of South Lake Tahoe
Report to City Council
Meeting Date: December 12, 2023
Title: Amendments to Cannabis Ordinance, Public Safety License Ordinance, and Clean Indoor Air Ordinance Regarding On-Site Consumption, Medicinal Delivery, and to Remove Outdated Provisions Regarding Development Agreements and Existing Medical Marijuana Dispensaries
Location: Citywide
Responsible Staff Member: Heather L. Stroud, City Attorney (530) 542-6046 Background:

On February 19, 2019, City Council adopted Ordinance No. 2019-1126 (“Cannabis Ordinance”), which regulates cannabis businesses in order to ensure the health, safety, and welfare of the residents of and visitors to the City of South Lake Tahoe. Since that time, the City has issued Cannabis Use Permits, Public Safety Licenses, and Development Agreements to five cannabis businesses to operate in the City, in addition to the existing dispensary (Tahoe Wellness Center).

Currently, there are three permitted retailers with delivery: Embarc Tahoe, Cannablue, and Tahoe Green, and one microbusiness permitted: Tahoe Wellness Center. The City Council terminated former microbusiness Perfect Union SLT’s Development Agreement and Cannabis Use Permit on June 15, 2021, and microbusiness Redefining Organics has ceased operations and failed to renew their Public Safety License by the deadline November 9, 2023, which resulted in the automatic termination of its cannabis use permit under South Lake Tahoe City Code section

6.55.780(D).

At the City Council meeting on August 8, 2023, Councilmember John Friedrich requested that the issue of on-site consumption be brought back to City Council for discussion, which was seconded by Councilmember Tamara Wallace. On September 26, 2023, the Planning Commission adopted Resolution No. 2023-015, recommending to City Council amend the Cannabis Ordinance to allow on-site consumption at permitted retailers and microbusinesses with a retail component. This item was continued from the City Council meeting on November 21, 2023.

Issue and Discussion:

During last year’s discussion, City Council members expressed some concern about allowing onsite consumption at that time as there were not robust alternative transportation options available for customers who may become impaired, and there were no measurable limits for testing cannabis impairment while driving, unlike alcohol. Because the full City Council has not yet provided direction on whether on-site consumption is supported at this time, two versions of the ordinance are included for consideration: one allowing on-site consumption (Version 1) and one continuing to prohibit it (Version 2). If Version 1 of the ordinance is selected, then amendments to other parts of the South Lake Tahoe City Code would be required, including the Public Safety License Ordinance (Chapter 4.180) and Clean Indoor Air and Health Protection (Chapter 4.100). 447
City Council Agenda Report- December 12, 2023 Page 2 of 4 Identical updates are included in both Version 1 and Version 2 of the ordinance to reflect changes in state law regarding medical cannabis delivery (Senate Bill 1186), and clean-up changes to remove the development agreement requirement because of passage of the cannabis tax with Measure G and to remove the provision for existing medical cannabis dispensaries which is no longer applicable.

On-Site Consumption
Several of the retail businesses have indicated interest in pursuing on-site consumption. During stakeholder meetings held in 2021, stakeholders generally did not have concerns. Some of the stakeholders who work with children were in favor of allowing on-site consumption because it would allow parents a safe space to consume cannabis outside of the home. Another benefit would be to provide an alternative to reduce illegal consumption in public and reduce smoking or vaping by visitors in hotel rooms. The main concern with on-site consumption expressed would be customers leaving after consuming cannabis products and driving while impaired.

If permitted by the local jurisdiction, on-site consumption is allowed under state law (Business & Professions Code section 26200(g)) in accordance with the following requirements:
 Must have state license as cannabis retailer or microbusiness with retail component  Access restricted to customers age 21 and up
 No alcohol or tobacco may be sold or consumed on premises  Consumption of cannabis cannot be visible from a public place or non-restricted area Cities in California that have allowed on-site consumption include West Hollywood, Eureka, Desert Hot Springs, Coachella, Palm Springs, San Francisco, Berkeley, Oakland, and National City.

Jurisdictions that are considering allowing on-site consumption but have not yet authorized it include Sacramento, which currently has a City Council subcommittee considering a pilot program that has not yet been considered by the full Council, Washoe County, Nevada, where the County Commissioners voted in July 2023 to not allow on-site consumption at this time because of public safety concerns about impaired driving, and Reno, which has put its discussion of permitting onsite consumption lounges on hold as of February 2023 because there are no more Nevada state licenses for this business type available.

Version 1 of the proposed ordinance includes the following provision recommended by City Council:
 Permitted retailers and microbusinesses with a retail component may apply to add an onsite consumption lounge indoors within their existing retail cannabis business footprint by applying to amend their Public Safety License.
 Permitted retailers and microbusinesses with retail component may apply to add an on-site consumption lounge expanding the existing retail cannabis business footprint by applying to amend their Cannabis Use Permit, in addition to amending their Public Safety License as described above.
 The related changes to the Public Safety License Ordinance (Chapter 4.180) include the following provisions as recommended by City Council in 2022:
o Hours of operation limited to end by 2:00am (consistent with closing time for bars), with sales to end by 10:00pm as required by state law
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City Council Agenda Report- December 12, 2023 Page 3 of 4 o Ventilation plan designed to prevent flow of smoke to all other areas of retail establishment and neighboring businesses and properties o Plan for adequate security and lighting to protect safety of patrons o Measures to prevent loitering in outdoor areas including parking lot o Employee of cannabis business must be present in consumption area at all times o Employee training on assisting customers to avoid overconsumption of edibles required
o Applicants required to cut off service to impaired patrons and provide option for safe ride home for customers such as shuttle, taxi, or ride-share service  Opened and unfinished cannabis products must be securely repackaged before leaving the site
 Cannabis products ingested, smoked, or vaped in consumption lounges must be purchased on-site
 Consumption lounge must be a separate indoor space, or separate outdoor space not visible to the public and situated and ventilated to prevent odors perceptible to neighboring properties, with separate entrance from retail store
 Additionally, an amendment is proposed to the Public Safety License ordinance to permanently allow curbside delivery at retailers, which was first allowed as an emergency measure during the Covid pandemic. State law has since been amended to permanently allow curbside delivery.
 Related changes to the Clean Indoor Air and Health Protection Ordinance (Chapter 4.100) are required to allow smoking at permitted cannabis retailers in a consumption lounge which is physically separated from the rest of the premises, in compliance with state law.

Additional updates to this ordinance for consistency with current state law on smoking in workplaces is included.

Medicinal Cannabis Delivery
In 2022, the Legislature passed Senate Bill 1186 (The Medicinal Cannabis Patients’ Right of Access Act), which effective January 1, 2024, prohibits cities from adopting or enforcing any regulation that directly or indirectly prohibits retail delivery of medicinal cannabis to patients or caregivers. Specifically, SB 1186 prohibits regulations that limit the number of businesses authorized to deliver medicinal cannabis in the city, limits the operating hours of medicinal cannabis businesses, limits the number or frequency of medicinal cannabis sales by delivery, limits the types or quantities of medicinal cannabis, or requires the establishment of a physical premises within the city. Both versions of the Cannabis Ordinance contain exemptions from the cannabis business requirements applicable to medicinal cannabis delivery in accordance SB 1186. A Public Safety License would still be required for any cannabis retailer from outside the city conducting delivery of medicinal cannabis within the city.

Measure G / Development Agreements
Measure G passed in the November 2022 election, establishing a cannabis business and professions tax. Because of the passage of this ballot measure, the community benefit fee collected through development agreements is now offset by the amount of the tax. The current development agreements will remain in place until their terms expire in 2024-2025, but the proposed changes would remove the development agreement requirement for any new cannabis business, should City Council elect to reopen the competitive process for any open permit types.

Both versions of the Cannabis Ordinance remove the development agreement provisions.

Existing Medical Marijuana Dispensaries
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City Council Agenda Report- December 12, 2023 Page 4 of 4 Additionally, both versions of the ordinance remove Section 6.55.840 (Existing permitted medical marijuana dispensaries) and references to this section because it is no longer needed. The only cannabis business that was subject to this provision, Tahoe Wellness Center, received a cannabis use permit in 2022 and is now operating under the same regulatory framework as the other cannabis businesses. It is important to note that currently, Tahoe Wellness Center is not counted towards the cap of four retailers (or microbusiness with retailer component) authorized to operate in the city based on Subsection 6.55.740(A)(9). If this provision is removed as proposed, then Tahoe Wellness Center would be counted towards the cap, and there would be no additional retail licenses available since four are currently operating. Staff does not recommend increasing the number of retail licenses at this time.

Financial Implications:

The proposed amendments to the Cannabis Ordinance could result in additional revenue to the City if they result in additional business activities, in the form of additional cannabis business and professions taxes collected.

Environmental Considerations:

Both versions of the proposed ordinance would allow for additional or expanded cannabis business activities, however it does not change the intensity or density of cannabis business uses beyond what is currently allowed in Table 6.55.740. The proposed ordinance is consistent with the 2030 General Plan policies. The 2030 General Plan Environmental Impact Report (EIR) adequately addresses the potential environmental impacts of the proposed ordinance. The General Plan EIR is available on the City website at: https://www.cityofslt.us/575/General-Plan. No further environmental analysis is required under California Environmental Quality Act (CEQA) Guidelines section 15162 because the proposed ordinance is within the scope of the previous EIR and there are no substantial changes to the project or the circumstances that require major revisions to the previous EIR due to new significant environmental effects not discussed in the previous EIR, significant effects previously examined that would be more severe, or mitigation measures or alternatives previously found not to be feasible that would substantially reduce one or more significant effects.

Policy Implications:

Applicable General Plan policies include:

Policy LU‐5.1: Locally Serving Commercial
The City shall ensure that commercial uses are responsive to the needs and wishes of the community and encourage users to shop locally, which will reduce Vehicle Miles Traveled (VMT) from purchasing items outside the Lake Tahoe Basin.

Policy ED‐1.1: High‐Tech and Environmentally-Sustainable Business The City shall support programs and activities that promote business/job retention, expansion, and new business/job development including high‐tech and environmentallysustainable businesses.

Policy ED‐1.7: Year‐Round Community
The City shall provide economic incentives and regulatory reform that support an economically diverse and prosperous year‐round community for city residents and visitors alike. 450
Ordinance 2024-XXX December 12, 2023 Page 1 of 30
Ordinance 2024-XXX
Adopted by the City of South Lake Tahoe
City Council
January 9, 2024
An Ordinance Amending the South Lake Tahoe City Code Chapter 6.55, Article X (Cannabis Regulations), Chapter 4.180 (Cannabis Public Safety License Ordinance), and Chapter 4.100 (Clean Indoor Air and Health Protection) to Allow On-Site Consumption at Cannabis Retailers, Allow Curbside Delivery, Remove Outdated Provisions Regarding Development Agreements and Existing Medical Marijuana Dispensaries, and to Comply with Changes in State Law Regarding Smoking in Workplaces

FINDINGS
A. On February 5, 2019, the City Council adopted Ordinance No. 2019-1126 (“Cannabis Ordinance”), which regulates cannabis businesses in order to ensure the health, safety, and welfare of the residents of and visitors to the City of South Lake Tahoe.

B. On February 10, 2022, the Planning Commission conducted a public hearing to consider amendments to the Cannabis Ordinance, and adopted Resolution No. 2022-001 recommending that the City Council adopt an ordinance amending Article X of Chapter 6.55 (Cannabis Regulations) of the South Lake Tahoe City Code to allow on-site consumption and make other changes.

C. On March 15, 2022, the City Council voted instead to adopt a version of the ordinance to continue to prohibit on-site consumption, but included the other changes recommended by the Planning Commission, including allowing permittees to hold multiple non-retail permits and increasing the maximum canopy size for cultivators to 22,000 square feet.

D. At the City Council meeting on August 8, 2023, Councilmember John Friedrich requested that the issue of on-site consumption be brought back to City Council for discussion, which was seconded by Councilmember Tamara Wallace.

E. In 2022, the California Legislature adopted Senate Bill 1186 (The Medicinal Cannabis Patients’ Right of Access Act), which effective January 1, 2024, prohibits cities from adopting or enforcing any regulation that directly or indirectly prohibits retail delivery of medicinal cannabis to patients or caregivers, and the proposed ordinance is consistent with SB 1186.

F. Measure G passed in the November 2022 election, establishing a cannabis business and professions tax that is intended to take the place of the community benefit fee contained in development agreements. While the current development agreements will remain in place until their terms expire in 2024-2025, the proposed ordinance would remove the development agreement requirement for any new cannabis business that becomes licensed at a later date. 451
Ordinance 2024-XXX December 12, 2023 Page 2 of 30
G. The only business that was subject to Section 6.55.840 (Existing permitted medical marijuana dispensaries), Tahoe Wellness Center, received a cannabis use permit in 2022 and is now operating under the same regulatory framework as the other cannabis businesses such that this provision is no longer needed, and the proposed ordinance would delete it and other references to it.

H. The City allowed curbside delivery during the Covid pandemic under an emergency order without issue, and since then, the Department of Cannabis Control has amended its regulations to permanently allow curbside delivery under 4 Cal. Code Regulations section 15402(d).

I. Under Labor Code section 6404.5, smoking is generally prohibited in workplaces statewide, requiring amendments to the City’s Clean Indoor Air and Health Protection Ordinance which has a number of exceptions that are no longer allowed under state law. Notwithstanding Labor Code section 6405.5, Business and Professions Code section 26200(g) allows local jurisdictions to allow for the smoking, vaporizing, and ingesting of cannabis and cannabis products on the premises of a licensed cannabis retailer or microbusiness with a retailer component with certain operational requirements that are set forth in this Ordinance.

J. In accordance with Government Code section 65853, the Planning Commission reviewed and considered the amendments to the zoning and use regulations in Title 6 of the South Lake Tahoe City Code at a duly noticed public hearing and made a recommendation to City Council by adopting Resolution No. 2023-015.

Now, Therefore, the City Council of City of South Lake Tahoe does ordain as follows:

SECTION 1. Chapter 4.100 (Clean Indoor Air and Health Protection) of the South Lake Tahoe City Code is amended to read in its entirety as follows:

Chapter 4.100

CLEAN AIR AND HEALTH PROTECTION
Sections:

4.100.010 Purposes.

4.100.020 Authority.

4.100.030 Definitions.

4.100.040 Smoking prohibitions – Public places.

4.100.050 Places where smoking is permissible.

4.100.060 Violation and penalties.

4.100.010 Purposes.

The U.S. Environmental Protection Agency (EPA) has determined that tobacco smoke is a major source of indoor air pollution and the Surgeon General’s 1986 report on the health consequences of involuntary smoking concludes that exposure to tobacco smoke places healthy nonsmokers at increased risk for developing lung cancer. Other health hazards of involuntary smoking include respiratory infection, decreased exercise tolerance, decreased respiratory function, bronchoconstriction, and bronchospasm. While all members of the population are truly at increased 452
Ordinance 2024-XXX December 12, 2023 Page 3 of 30
risk due to exposure to sidestream tobacco smoke, it constitutes a special health hazard for children, the elderly and people with chronic lung disorders.

The Surgeon General labels smoking “the largest single preventable cause of death and disability for the U.S. population.”
More than 80 percent of El Dorado County residents are nonsmokers, and the number of nonsmokers is steadily increasing. Opinion surveys show that a majority of both nonsmokers and smokers favor restrictions on smoking in public places.

Air pollution caused by smoking is an offensive annoyance and irritant. Smoking results in serious and significant physical discomforts of nonsmokers, and constitutes a public nuisance in public places.

This chapter attempts to find a compromise that allows smokers to smoke, and others to breathe smoke-free air.

Health and Safety Code section 11362.3 prohibits smoking cannabis or cannabis products in a public place and in a location where smoking tobacco is prohibited.

This chapter is not to be interpreted as requiring any establishment to provide a smoking area.

4.100.020 Authority.

This chapter is enacted pursuant to Health and Safety Code section 118910 for the purpose of restricting and regulating smoking in public places in order to reduce the hazards and nuisances which smoking causes to those who are involuntarily exposed.

4.100.030 Definitions.

As used in this chapter, the words and phrases shall have the following meanings:

A. “On-site consumption lounge” means a facility operating with a city-issued public safety license and cannabis use permit where cannabis and cannabis products may be smoked, vaped, or ingested within the confines of the facility.

B. “Person” means any natural person, partnership, corporation, unincorporated association, joint venture, business trust, joint stock company, club, or other organization of any kind.

C. “Smoking” means inhaling, exhaling, burning, or carrying any lighted or heated pipe, cigar, cigarette, or any other lighted or heated tobacco or plant product intended for inhalation, in any manner or in any form. Smoking includes the use of an electronic smoking device that creates an aerosol or a vapor, in any manner or in any form, or the use of any oral smoking device for the purpose of circumventing the prohibition of smoking.

D. “Tobacco shop” means any business establishment, the main purpose of which is the sale of tobacco products, including, but not limited to, cigars, pipe tobacco, and smoking accessories.

4.100.040 Smoking prohibitions – Public places.

Except as specifically provided, it is unlawful for any other person to smoke in the public places named and described in subsections (A) through (C) of this section, inclusive, and other public places similarly situated, including but not limited to the following areas:

A. Outdoor public recreation areas owned, operated, or maintained by the city, including parks and beaches as defined in SLTCC 8.05.010, golf courses, and campgrounds; 453
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B. Parking lots, parking structures, and parking areas owned, operated, or maintained by the city; and
C. Other places in which members of the general public congregate or otherwise frequent.

4.100.050 Places where smoking is permissible.

Smoking may be permitted in all locations where smoking is not prohibited by this chapter, including the following locations:

A. Residential units, including those which are used for home occupations under the provisions of SLTCC 6.55.280; provided, however, that this exemption shall not authorize smoking in any day care or child care facility.

B. On-site consumption lounges as applied to smoking of cannabis and cannabis products only.

C. Areas where smoking is permitted within certain workplace areas under Labor Code section 6404.5, as may be amended.

It shall not constitute a violation of SLTCC 4.100.040 for a person to smoke in a location where smoking has been authorized in the manner prescribed by this section.

4.100.060 Violation and penalties – Smoking or posting.

Any person who violates the prohibitions contained in SLTCC 4.100.040 shall be guilty of an infraction, punishable in the manner hereinafter prescribed:

A. A fine not exceeding $100.00 for a first violation.

B. A fine not exceeding $200.00 for a second violation of this chapter within one year.

C. A fine not exceeding $500.00 for each additional violation of this chapter within one year.

SECTION 2. Chapter 4.180 (Cannabis Public Safety License Ordinance) of the South Lake Tahoe City Code is amended to read in its entirety as follows:

Chapter 4.180

CANNABIS PUBLIC SAFETY LICENSE ORDINANCE
Section:

4.180.010 Purpose and intent.

4.180.020 Definitions.

4.180.030 Cannabis businesses – General provisions.

4.180.040 Cannabis public safety license – General provisions.

4.180.050 Public safety license and public safety license renewal – Approval and denial.

4.180.060 Expiration and renewal of cannabis public safety licenses.

4.180.070 Suspension and revocation by chief of police.

4.180.080 No vested rights.

4.180.010 Purpose and intent.

It is the purpose and intent of this chapter to establish a cannabis public safety license and the procedures for issuance of said license. A cannabis public safety license shall be required as a condition for the continued operation of any cannabis business as set forth in this chapter. The 454
Ordinance 2024-XXX December 12, 2023 Page 5 of 30
regulations in this chapter are meant to ensure the health, safety, and welfare of the residents of the city of South Lake Tahoe. Cannabis businesses within the city must comply with all provisions of the South Lake Tahoe City Code for obtaining permits and licenses for a cannabis business and must comply with the state cannabis laws and all other applicable local and state laws. Nothing in this chapter permits activities that are otherwise illegal under state or local laws.

4.180.020 Definitions.

As used in this chapter:
“Applicant” means any person who is required to file an application for issuance of a cannabis public safety license to operate a cannabis business under this chapter, including without limitation an individual owner, operator, or agent of a cannabis business. “Application for renewal” shall mean an application for a renewed cannabis public safety license, which application may be submitted by a licensee.
“Cannabis” shall have the meaning set forth in Cal. Bus. & Prof. Code § 26001(f) and as subsequently amended.
“Cannabis business” shall include:
a. Any business, facility, use, establishment, property, or location, whether fixed or mobile, where a commercial cannabis activity takes place.
b. Any building, facility, use, establishment, property, or location where any person or entity establishes, commences, engages in, conducts, or carries on, or permits another person or entity to establish, commence, engage in, conduct, or carry on, any activity that requires a state license under Cal. Bus. & Prof. Code § 26000 and following, including but not limited to cannabis cultivation, cannabis distribution, cannabis manufacturing, cannabis testing and cannabis retail sales, and the operation of a cannabis microbusiness.
“Cannabis products” shall have the meaning set forth in Cal. Bus. & Prof. Code § 26001(k) and as subsequently amended.
“Cannabis use permit” shall mean a use permit issued for the operation of a cannabis business pursuant to Article X of Chapter 6.55 SLTCC.
“Commercial cannabis activity” shall include the cultivation, possession, manufacturing, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products, or acting as a cannabis event organizer for temporary cannabis events.
“Cultivation” shall mean any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.
“Curbside delivery” shall mean a sale of cannabis or cannabis products from a licensed retail storefront or licensed microbusiness with retailer component that is delivered to a customer in their vehicle parked immediately outside the retail or microbusiness premises. “Licensee” shall mean the cannabis business owner identified to the city as such, and to whom a city cannabis public safety license has been issued.
“Operator” shall mean any person responsible for management of the cannabis business; any person listed as an officer, director, manager, or member in statement of information filed with the Secretary of State for a cannabis business; any person listed in a governing document for a cannabis business, 455
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such as bylaws, articles of incorporation, or operating agreement; any person owning an interest in the cannabis business, unless the interest is solely a security, lien, or encumbrance; and any person that supervises an employee of the cannabis business.
“Owner” shall have that meaning set forth in Cal. Bus. & Prof. Code § 26001(ap) and as it may be amended.
“Permittee” shall mean any person issued a cannabis use permit under Article X of Chapter 6.55 SLTCC.
“Police chief” shall mean the chief of the city of South Lake Tahoe police department. “Property” shall mean the designated structure or structures and land specified in the cannabis use permit application that is owned, leased or otherwise held under the control of the applicant or permittee where the commercial cannabis activity will be or is conducted. “State cannabis laws” means and includes Cal. Health & Safety Code §§ 11362.1 through 11362.45; Cal. Health & Safety Code § 11362.5 (Compassionate Use Act of 1996); Cal. Health & Safety Code §§ 11362.7 through 11362.83 (Medical Marijuana Program); Cal. Bus. & Prof. Code § 26000 et seq. (Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”)); all state laws enacted or amended pursuant to SB-94, Chapter 27, Statutes of 2017; the California Attorney General’s Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use issued in August 2008, as such guidelines may be revised from time to time by action of the Attorney General; Cal.

Labor Code § 147.5; Cal. Rev. & Tax. Code §§ 34010 through 34021.5; Cal. Fish and Game Code § 12029; Cal. Water Code § 13276; all state regulations adopted by the Department of Cannabis Control; any license issued by the Department of Cannabis Control; and all other applicable laws of the state of California regulating cannabis or cannabis products. “State license” shall mean a license from the Department of Cannabis Control issued pursuant to Division 10 of the Cal. Bus. & Prof. Code.

4.180.030 Cannabis businesses – General provisions.

A. Cannabis Use Permit and Public Safety License Required to Operate. It shall be unlawful for any person to engage in, to conduct or carry on (or to permit to be engaged in, conducted or carried on) in or upon property located within the city the operation of a cannabis business unless that person has first obtained and continues to maintain in full force and effect a valid cannabis use permit issued by the city for that property and that type of cannabis business and a valid cannabis public safety license issued by the city to the owner and/or operator of the cannabis business, pursuant to this chapter.

B. Imposition of Public Safety License Fees.

1. Every application for a cannabis public safety license or renewal of such license shall be accompanied by a license fee in an amount set forth by separate resolution of the city council, which amount is calculated to recover the city’s full cost of reviewing, issuing and administering said license. The application fee shall include the standard city fees for fingerprinting, photographing, and background check costs and shall be in addition to any other business license fee or permit fee imposed by this code or other governmental agencies.

2. A fee for renewal of a public safety license will be due annually.

C. Conditions of Operation.
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1. Security Plan. A licensee shall provide adequate security on the premises of the cannabis business. The following minimum security standards shall be maintained at all times:
a. Surveillance System.
i. Each cannabis business shall be monitored at all times by a digital closedcircuit television surveillance system. Surveillance systems shall meet any applicable state law requirements, including those set forth in Title 4 of the California Code of Regulations § 15044, and any subsequently enacted regulation. The camera and video recording surveillance system must be capable of providing surveillance of both interior and exterior areas of the cannabis business and must be of adequate quality, color rendition and resolution to allow the ready identification of an individual on or adjacent to the property. The recordings shall be maintained at the cannabis business or other location accessible to the police department for a period of not less than ninety (90) days.
ii. A sign shall be posted inside and at the entrances to the establishment indicating that the premises are under camera/video surveillance. iii. The surveillance system recordings shall be maintained in such manner as to allow remote access by the police department. The police chief may request that the permittee provide secured electronic access to video feeds of the surveillance system in real time, to be provided via an online portal or through other software deemed acceptable to the police chief. b. Loitering Adjacent to a Cannabis Business. Licensees shall take reasonable measures to reduce loitering by cannabis business members, patrons, guests and invitees in public areas, sidewalks, alleys and areas surrounding the property and adjacent premises during the business hours of the cannabis business. c. Identification Verification System. Each cannabis business shall require identification upon entry to the cannabis business and shall implement electronic verification of identification provided to ensure that applicable age restrictions in SLTCC 6.55.800(A)(5) are complied with.
d. On-Site Consumption. If a retail cannabis business or a microbusiness with a retailer component includes an on-site consumption area, adequate security and lighting shall be provided for the on-site consumption area to protect the safety of patrons and protect the premises from theft.
e. Curbside Delivery. Curbside delivery of cannabis or cannabis products must occur under video surveillance that meets the requirements of SLTCC

4.180.030(C)(1)(a)(i) for recording point-of-sale areas. Retail employees engaging in curbside delivery must verify each customer’s age and identity.

2. Nuisances Prohibited. A licensee shall take reasonable steps to correct objectionable conditions that constitute a nuisance on any public sidewalk or public space abutting the cannabis business premises.
a. For purposes of this section, “objectionable conditions that constitute a nuisance” means public consumption of cannabis or cannabis products, disturbance of the peace, drug trafficking, disposing of litter or trash, or excessive loud noise. 457
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b. For purposes of this section, “reasonable steps” means all of the following:
i. Calling the local law enforcement agency. Timely calls to the local law enforcement agency that are placed by the licensee, or his or her agents or employees, shall not be construed as evidence of objectionable conditions that constitute a nuisance.
ii. Requesting those persons engaging in activities causing objectionable conditions to cease those activities, unless the licensee, or his or her agents or employees, feels that their personal safety would be threatened in making that request. iii. Making good faith efforts to remove items that facilitate loitering, such as furniture, except those structures approved or permitted by the local jurisdiction.

The licensee shall not be liable for the removal of those items that facilitate loitering.

3. On-site Consumption Operations. A licensee with an on-site consumption area shall maintain the following operating conditions, in addition to the operating conditions in this Subsection C, at all times:
a. No person under 21 years of age shall be allowed in the on-site consumption area.

Employees shall notify patrons verbally and through posting of a conspicuous sign that entry into the premises by persons under the age of 21 is prohibited. b. Hours of operating for cannabis sales shall be limited to 6:00am to 10:00pm, and hours of operation in the on-site consumption area shall end no later than 2:00am, or as further limited by the cannabis use permit.
c. The licensee shall implement a ventilation plan to prevent the flow of smoke to all other areas of the cannabis business and neighboring businesses and properties, such that odor generated is not detected outside the consumption area. d. The licensee shall provide employee training on how to assist customers to avoid overconsumption of edibles. This training must include information about various products the consumption area sells, such as potency, absorption time, and effects. e. A responsible employee of the cannabis business must be present in the on-site consumption area at all times when it is open to customers. f. Cannabis products ingested, smoked, or vaped in an on-site consumption area must be purchased on-site.
g. An employee of the cannabis business must securely repackage a customer’s opened and unfinished cannabis products before the customer leaves the on-site consumption area.
h. The sale or consumption of alcohol or tobacco products is not allowed on the premises.
i. A licensee allowing smoking or vaping shall comply with SLTCC 4.100 (Clean Air and Health Protection).
j. Employees must cut off service to impaired customers and provide an option for a safe ride home, such as a shuttle, taxi, or ride-share service. 458
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4. State License Required to Operate. Operation of a cannabis business shall not commence until a licensee has obtained a valid state license. Licensees shall maintain a valid state license at all times during operation of a cannabis business.

D. Inspection of Cannabis Business.

1. City officials may enter and inspect, investigate, audit, or review any licensee’s cannabis business, without prior notice, to ensure compliance and enforcement of the provisions of this chapter. An inspection, investigation, review or audit may be conducted at any time that the licensee is exercising privileges under the license or at such time otherwise as agreed to by the police chief and the licensee.

2. No licensee or any other person shall refuse, impede, obstruct, or interfere with an inspection pursuant to this chapter.

3. This subsection shall not be construed to require a licensee to cooperate with a request that would require the licensee to waive any constitutional or statutory privilege or to comply with a request for information or other matters within an unreasonable period of time in light of the time constraints of the licensee’s business.

E. Notification to Police Department of Security Breaches. Each licensee shall notify the chief of police immediately after discovering any of the following: diversion, theft, loss, or any criminal activity involving the cannabis business; significant discrepancies identified during inventory; or any other breach of security.

F. Transfer of Cannabis Public Safety Licenses Prohibited. Cannabis public safety licenses issued pursuant to this chapter shall be nontransferable to a different person or entity. Any attempt to transfer or any transfer of ownership or control of a cannabis business shall be grounds for revocation of the cannabis public safety license by the chief of police.

4.180.040 Cannabis public safety license – General provisions.

A. Application Procedures.

1. Public safety license application must be approved prior to the applicant initiating the cannabis use permit application process as set forth more fully in Article X of Chapter

6.55 SLTCC.

2. The city council may set further application procedures and requirements by separate resolution.

B. Application Filing Requirements. A complete cannabis public safety license application or application for renewal or amendment along with all required fees and materials required by this chapter shall be submitted in order for a person, entity, and/or business to be considered for a cannabis public safety license. All cannabis public safety license applications or applications for renewal or amendment shall be filed with the chief of police using forms and authorizations provided by the city.

1. Eligibility for Filing. Public safety license applications and applications for renewal or amendment shall be filed by the owner and/or operator of the cannabis business.

2. Cannabis public safety license applications and applications for renewal or amendment shall include:
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a. For each licensee, owner, operator and employee of the cannabis business, a fully legible copy of one valid government-issued form of photo identification, such as a state driver’s license or identification card. Acceptable forms of government-issued identification include, but are not limited to, driver’s license or photo identity cards issued by the State Department of Motor Vehicles (or equivalent), a passport issued by the United States or by a foreign government, U.S. Military ID cards (active duty or retired military and their dependents) or a permanent resident card. b. If the cannabis business is incorporated, a certified copy of the articles of organization, certificate(s) of amendment, bylaws, and statement(s) of information filed with the California Secretary of State for the cannabis business. c. If the cannabis business is a limited liability company, a certified copy of the articles of organization, certificate(s) of amendment, operating agreement, bylaws, and statement(s) of information filed with the California Secretary of State for the cannabis business.
d. If the cannabis business is an unincorporated association, a copy of the articles of association and any filings made with the California Secretary of State. e. The name, address, electronic mail address and mobile phone number of the applicant’s or licensee’s current designated agent for service of process. f. Emergency Contact. The name, electronic mail address, and mobile phone number of an owner, operator, or manager to act as an on-site community relations staff person to whom the city may provide notice of any operating problems associated with the cannabis business.
g. A statement dated and signed by each applicant, under penalty of perjury, that the applicant has personal knowledge of the information contained in the application, that the information contained therein is true and correct.

3. In addition to a completed public safety license application or application for renewal, applicants or licensees shall provide and submit the following information to the chief of police:
a. The applicant and each owner, operator and employee shall consent to fingerprinting and a criminal background investigation, and shall undergo fingerprinting and a criminal background investigation. b. Security Plans. Applicants shall provide a plan to provide adequate security on the premises of the cannabis business. The plan shall include standards showing the cannabis business’s ability to comply with the conditions of SLTCC 4.180.030(C).

C. Ongoing Filing and Reporting Requirements. Where a cannabis business or licensee replaces, hires, appoints or employs new operators and/or employees to its cannabis business, all such operators and employees shall be required to submit to fingerprinting and a criminal background investigation pursuant to subsection (B)(3) of this section. A cannabis business or licensee has an ongoing obligation to immediately report to the police chief any conviction for an offense listed in SLTCC 4.180.050(A)(3) imposed on an owner, operator and/or employee of the cannabis business or licensee. A cannabis business or licensee shall also have an ongoing obligation to immediately report to the chief of police any of the events listed in SLTCC 4.180.050(A)(4) or (A)(5).
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4.180.050 Public safety license issuance, renewal, and amendment – Approval and denial.

A. Criteria for Issuance. Cannabis public safety license applications or applications for renewal or amendment shall be approved where the chief of police confirms that the following criteria have been met:

1. The applicant and each owner, operator and employee of the cannabis business have authorized and completed fingerprinting.

2. The applicant and each owner, operator and employee of the cannabis business have authorized the use of their fingerprinting results to run a state and nationwide criminal background check.

3. The results of the criminal background checks establish that the applicant, owner(s), operator(s), and employees have not been convicted of an offense that is substantially related to the qualifications, functions, or duties of a cannabis business.

The following offenses are substantially related to the qualifications, functions, or duties of a cannabis business:
a. A violent felony conviction, as specified in Cal. Penal Code § 667.5(c). b. A serious felony conviction, as specified in Cal. Penal Code § 1192.7(c). c. A felony conviction involving fraud, deceit, or embezzlement. d. A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling any controlled substance to a minor; or selling, offering to sell, furnishing, offering to furnish, administering, or giving any controlled substance to a minor.
e. A felony conviction for drug trafficking with enhancements pursuant to Cal. Health & Safety Code § 11370.4 or 11379.8.
f. Conviction for any controlled substance felony subsequent to licensure shall be grounds for revocation of a license or denial of the renewal of a license.

4. The applicant has not been convicted, cited, fined, or penalized by the state or any city, county, or city and county, or enjoined by any court of law, in the five years immediately preceding the application for a cannabis public safety license or cannabis public safety renewal license, for any unauthorized cannabis activities.

5. The applicant has not been convicted, cited, fined, or penalized by the state or any city, county, or city and county, or enjoined by any court of law, in the five years immediately preceding the application for a cannabis public safety license or cannabis public safety renewal license, for cultivation or production of a controlled substance on public or private lands.

6. Security Plan. The applicant or licensee has provided a security plan providing the minimum standards set forth in SLTCC 4.180.030(C)(1).

7. Minimum Age. The applicant or licensee, and each owner, operator and employee of the cannabis business, is at least 21 years of age.

B. In addition to the criteria in Subsection A, the chief of police shall approve amendments to cannabis public safety licenses to allow on-site consumption at retailers or microbusinesses 461
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with a retailer component where the chief of police confirms the following criteria have been met:

1. The applicant has provided a site plan that shows the area designated for on-site consumption is physically separated and has a separate secure entrance from the retail storefront, and the area designated for on-site consumption is not visible from a public space and is situated and ventilated to prevent odors perceptible from neighboring properties.

2. If the site plan shows that adding an on-site consumption area will result in expansion of the area for retail use permitted by the cannabis use permit, the planning commission has approved an amendment to the cannabis use permit allowing the enlargement of retail space under SLTCC 6.55.760.

3. The applicant has provided an updated security plan providing the minimum standards set forth in SLTCC 4.180.030(C)(1)(d).

4. The applicant has provided an operations plan providing the minimum standards set forth in SLTCC 4.180.030(C)(3).

C. Criteria for Denial. Cannabis public safety licenses shall not be issued, renewed, or amended where the chief of police confirms that one or more of the criteria set forth in subsection (A) or (B) of this section have not been met. If the chief of police denies the cannabis public safety license application or application for renewal or amendment, he or she shall specify in writing the reasons for the denial of the application or application for renewal, and notify the applicant that the decision shall become final unless the applicant seeks an appeal pursuant to subsection (D) of this section.

D. Appeal from Chief of Police Determination. An applicant who disagrees with the chief of police’s decision to approve or deny a cannabis public safety license application or application for renewal or amendment may appeal the decision to the city council in accordance with the appeal provisions of Chapter 2.35 SLTCC, Administrative Appeals.

4.180.060 Expiration and renewal of cannabis public safety licenses.

A. Cannabis public safety licenses shall expire one year after their issuance.

B. Cannabis public safety licenses must be renewed on an annual basis prior to expiration by filing with the chief of police an application for renewal and a renewal fee in an amount set forth by separate resolution of the city council, which amount is calculated to recover the city’s full cost of reviewing, issuing and administering said license.

C. The application for renewal and the renewal fee shall be filed at least 30 days, but not more than 60 days, prior to the expiration of the public safety license. If a timely renewal application is filed, the licensee’s cannabis public safety license shall not expire until the date that the chief of police approves or denies the public safety license application for renewal.

D. An application for renewal shall be subject to all filing requirements set forth in SLTCC

4.180.040(B) and (C).

E. The chief of police shall issue or deny an application for renewal in accordance with the provisions of SLTCC 4.180.050.
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4.180.070 Suspension and revocation by chief of police.

A. A cannabis public safety license issued under the terms of this chapter shall be suspended or revoked by the chief of police if he or she concludes any of the following:

1. The cannabis business or licensee has violated any of the requirements of this chapter.

2. The cannabis business is being operated in a manner which violates the security plan required by this chapter.

3. The cannabis business is being operated in a manner which constitutes a nuisance.

4. The cannabis business has failed to comply with the conditions of operation set forth in SLTCC 4.180.030(C).

5. The cannabis business has ceased to operate for 30 days or more.

6. Results of a criminal background check establish that a licensee, owner(s), operator(s), and/or employee has been convicted of an offense that is substantially related to the qualifications, functions, or duties of a cannabis business, as set forth in SLTCC

4.180.050(A)(3).

7. The applicant has been convicted, cited, fined, or penalized by any state or any city, county, or city and county, or enjoined by any court of law, in the five years immediately preceding the application for a cannabis public safety license or cannabis public safety renewal license, for any unauthorized cannabis activities.

8. The applicant has been convicted, cited, fined, or penalized by the state or any city, county, or city and county, or enjoined by any court of law, in the five years immediately preceding the application for a cannabis public safety license or cannabis public safety renewal license, for cultivation or production of a controlled substance on public or private lands.

9. The cannabis business is being operated in a manner which conflicts with or violates state cannabis laws.

10. A licensee’s cannabis use permit issued pursuant to Chapter 6.55 SLTCC has been terminated or revoked.

11. A licensee has attempted to transfer or has transferred a cannabis public safety license to another person or entity.

12. A licensee’s state license has been suspended, terminated, or revoked.

B. Expiration. Any cannabis public safety license revoked pursuant to this subsection shall be deemed to be expired and shall no longer entitle the licensee to any privileges authorized by the cannabis public safety license.

C. Appeal from Chief of Police Determination. A licensee who disagrees with the chief of police’s decision to suspend or revoke a cannabis public safety license may appeal the police chief’s decision to the city council in accordance with the appeal provisions of Chapter 2.35 SLTCC, Administrative Appeals.
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4.180.080 No vested rights.

No person(s) shall have any vested rights to a cannabis public safety license, right or interest under this chapter, regardless of whether such person(s) cultivated, sold, distributed or otherwise engaged in acts related to the use of cannabis prior to adoption of the ordinance codified in this chapter.

SECTION 3. Article X (Cannabis Regulations) of Chapter 6.55 of the South Lake Tahoe City Code is amended to read in its entirety as follows:

Article X. Cannabis Regulations

6.55.700 Purpose and intent.

6.55.710 Definitions.

6.55.720 Residential cultivation of cannabis.

6.55.730 Cannabis businesses – Use permit, development agreement, and public safety license required.

6.55.740 Cannabis businesses – General provisions.

6.55.750 Cannabis use permit application requirements.

6.55.760 Review, issuance, and/or denial of cannabis use permit applications.

6.55.770 Appeal from planning commission determination.

6.55.780 Suspension and revocation by planning commission.

6.55.790 [Reserved]

6.55.800 Cannabis businesses – Conditions of operation.

6.55.810 Business license tax liability.

6.55.820 No vested rights.

6.55.830 Public nuisance.

6.55.700 Purpose and intent.

It is the purpose and intent of this article to regulate the cultivation, manufacturing, testing, and sales of medical and adult-use cannabis in order to ensure the health, safety, and welfare of the residents of the city of South Lake Tahoe. The regulations in this article are meant to ensure compliance with the state cannabis laws and are not intended to and do not interfere with a patient’s right to use medical cannabis as authorized by the state cannabis laws. Nor do these regulations criminalize the possession or cultivation of cannabis for medical or nonmedical purposes as permitted by the state cannabis laws. Cannabis businesses within the city must comply with all provisions of the city code for obtaining permits for a cannabis business and must comply with the state cannabis laws and all other applicable local and state laws.

6.55.710 Definitions.

For the purposes of this article, the following words and phrases shall have the following meanings:
“Applicant” means any person who is required to file an application for a cannabis use permit to operate a cannabis business under this article, including without limitation an individual owner, operator, or agent of a cannabis business.
“Cannabis” shall have the meaning set forth in Section 26001(f) of the Business and Professions Code and as subsequently amended.
“Cannabis business” shall include:
a. Any business, facility, use, establishment, property, or location, whether fixed or mobile, where a commercial cannabis activity takes place.
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b. Any building, facility, use, establishment, property, or location where any person or entity establishes, commences, engages in, conducts, or carries on, or permits another person or entity to establish, commence, engage in, conduct, or carry on, any activity that requires a state license under Business and Professions Code Section 26000 and following, including but not limited to cannabis cultivation, cannabis distribution, cannabis manufacture, cannabis testing and cannabis retail sales, and the operation of a cannabis microbusiness. “Cannabis product” shall have the same meaning as in Section 11018.1 of the Health and Safety Code.
“Canopy” means all areas occupied by any portion of a cannabis plant, encompassing all vertical planes (i.e., stacking of plants), whether contiguous or noncontiguous on any one site. The canopy shall be measured by taking the longest length and widest width of existing plants (including all gaps, walkways, and open areas between plants) and multiplying the longest length by the longest width to get the area of the cannabis canopy. Each level of a stacked cultivation will be calculated as a separate canopy.
“Commercial cannabis activity” shall include the cultivation, possession, manufacturing, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products, or acting as a cannabis event organizer for temporary cannabis events.
“Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.
“Cultivator” means any cannabis business engaged in cultivation activities, but specifically excluding cultivation in a private residence or accessory dwelling unit authorized pursuant to SLTCC 6.55.720. “Day care center” shall have that meaning as set forth in Section 1596.76 of the Health and Safety Code.
“Delivery” means the commercial transfer of cannabis or cannabis products to a customer or patient. “Delivery” also includes the use by a retailer of any technology platform. “Delivery operation” means a cannabis business that engages in or otherwise provides deliveries. “Distribution” means the procurement, sale, and transport of cannabis and cannabis products between licensees.
“Distributor” means any cannabis business engaged in distribution. “Drug paraphernalia” shall have the meaning set forth in California Health and Safety Code Section 11014.5, and as subsequently amended.
“Edible cannabis product” means cannabis that is intended to be used, in whole or in part, for human consumption.
“Extraction” means a process by which cannabinoids are separated from cannabis plant material through chemical or physical means.
“Identification card” shall have the meaning set forth in California Health and Safety Code Section 11362.7(g), and as may be amended from time to time.
“Manufacture” means to compound, blend, extract, infuse, package, label, or otherwise make or prepare a cannabis product.
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“Manufacturer” means any cannabis business that conducts any activities involving the manufacture of a cannabis product.
“Medicinal cannabis” or “medicinal cannabis product” shall have the meaning set forth in California Business and Professions Code Section 26001(al)(1), which includes cannabis or a cannabis product, respectively, intended to be sold for use pursuant to the Compassionate Use Act of 1996 (Proposition 215), found at California Health and Safety Code Section 11362.5, by a medicinal cannabis patient in California who possesses a physician’s recommendation. “Microbusiness” means a cannabis business that engages in commercial cannabis activities of at least three of the following types of cannabis businesses: retailer, distributor, manufacturer, cultivator. “Operator” shall mean any person responsible for management of the cannabis business; any person listed as an officer, director, manager, or member in the Statement of Information filed with the Secretary of State for a cannabis business; any person listed in a governing document for a cannabis business, such as bylaws, articles of incorporation, or operating agreement; any person owning an interest in the cannabis business, unless the interest is solely a security, lien, or encumbrance; and any person that supervises an employee of the cannabis business. “Owner” shall have that meaning set forth in Section 26001(ap) of the Business and Professions Code and as it may be amended.
“Package” or “packaging” means any container or wrapper that may be used for enclosing or containing any cannabis or cannabis products. The term “package” does not include any shipping container or outer wrapping used solely for the transportation of cannabis or cannabis products in bulk quantity to another licensee or licensed premises. “Park” shall mean any land, with public access, intended to provide recreation. For the purposes of this article, “park” also includes public beaches.
“Permittee” shall mean any person issued a cannabis use permit under this article. “Physician” shall mean a licensed medical doctor, including a doctor of osteopathic medicine as defined in the California Business and Professions Code. “Property” shall mean the designated structure or structures and land specified in the cannabis use permit application that is owned, leased or otherwise held under the control of the applicant or permittee where the commercial cannabis activity will be or is conducted. “Retailer” means any cannabis business that engages in the sale of cannabis or cannabis products to customers, including medical and adult-use cannabis or cannabis products. “School” means any public or private school providing instruction in kindergarten or any of grades one to 12, inclusive, but does not include any private school in which education is primarily conducted in private homes.
“State cannabis laws” means and includes California Health and Safety Code Sections 11362.1 through 11362.45; California Health and Safety Code Section 11362.5 (Compassionate Use Act of 1996); California Health and Safety Code Sections 11362.7 to 11362.83 (Medical Marijuana Program); California Business and Professions Code Section 26000 et seq. (Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)); all state laws enacted or amended pursuant to SB-94, Chapter 27, Statutes of 2017; the California Attorney General’s Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use issued in August 2008, as such guidelines may be revised from time to time by action of the Attorney General; California Labor Code Section 466
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147.5; California Revenue and Taxation Code Sections 34010 through 34021.5; California Fish and Game Code Section 12029; California Water Code Section 13276; all state regulations adopted by the Department of Cannabis Control; any license issued by the Department of Cannabis Control; and all other applicable laws of the state of California regulating cannabis or cannabis products. “Testing laboratory” means a laboratory, facility, or entity that offers or performs tests of cannabis or cannabis products and is licensed by the Department of Cannabis Control. “Youth centers” shall mean any youth center, as defined in Section 11353.1(e)(2) of the Health and Safety Code, any playground, as defined in Section 11353.1(e)(1) of the Health and Safety Code, and any child day care facility, as that term is defined in Section 1596.750 of the Health and Safety Code.

6.55.720 Residential cultivation of cannabis.

A. No person or entity may cultivate cannabis in any residence in the city, except that a person may cultivate no more than six living cannabis plants inside his or her private residence or inside an accessory structure to his or her private residence located upon the grounds of that private residence that is fully enclosed and secured against unauthorized entry; provided, that the owner of the property provides written consent expressly allowing the cannabis cultivation to occur, there is no use of gas products (CO2, butane, propane, natural gas, etc.) on the property for purposes of cannabis cultivation, and the cultivation complies with Health and Safety Code Section 11362.2(a)(3), as it may be amended.

B. Amortization of Existing Residential Cultivation Permits. All residential cultivation permits previously issued by the city are hereby deemed amortized and are null and void.

C. No Vested Rights. No person(s) shall have any vested rights to any permit, right or interest under this article, regardless of whether such person(s) cultivated cannabis prior to adoption of the ordinance codified in this article.

D. Public Nuisances. Cultivation shall not create a public nuisance and adversely affect the health or safety of persons residing in or near the residence where the cultivation occurs. A public nuisance may be deemed to exist if cultivation produces:

1. Odors which are disturbing to people of normal sensitivity residing or present on adjacent or nearby properties or areas open to the public;

2. More than three substantiated responses to valid confirmed complaints in a one-year time period to the residence from law enforcement officers;

3. More than three disruptions in a one-year time period to the free passage of persons or vehicles in the neighborhood;

4. Excessive noise which is disturbing to people of normal sensitivity on adjacent or nearby properties or areas open to the public in accordance with SLTCC 4.70.160;

5. Adverse effects to health or safety through creation of mold, mildew, dust, glare, heat, noise, noxious gases, odor, smoke, traffic, parking, vibration, or other impacts, or be hazardous because of the use or storage of materials, processes, products or wastes.

E. Environment. Runoff and waste disposal by the residence where cultivation occurs must be in compliance with any applicable city, county, regional, state, and federal laws and regulations.

A violation of any applicable city, county, regional, state, or federal law will be deemed a violation of this article.
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F. Cultivation of cannabis in residences shall be in conformance with the following requirements:

1. Cultivation shall only occur in fully enclosed and secure structures. All outdoor cultivation of cannabis is strictly prohibited.

2. Cultivation shall only occur in residences which are in full compliance with the city code, including the building code and fire code.

3. No cooking, baking, or alteration as to form and substance of cannabis for commercial purposes, and/or sale, is permitted in a residence which cultivates cannabis.

4. From a public right-of-way, there shall be no exterior evidence of cannabis cultivation occurring at the residence.

6.55.730 Cannabis businesses – Use permit and public safety license required.

It shall be unlawful for any person to engage in, to conduct or carry on (or to permit to be engaged in, conducted or carried on) in or upon property located within the city, the operation of a cannabis business unless that person has first obtained and continues to maintain in full force and effect: a valid cannabis use permit issued by the city for that property and a valid cannabis public safety license issued by the city to the owner and/or operator of the cannabis business, pursuant to Chapter

4.180 SLTCC.

6.55.740 Cannabis businesses – General provisions.

A. Cannabis Businesses Allowed.

1. Only those types of cannabis businesses set forth in this section shall be allowed within the city:
a. Retailers.
b. Microbusinesses.
c. Testing labs.
d. Cultivators.
e. Manufacturers.
f. Distributors.
g. Delivery operations.

Any and all cannabis businesses, activities, nonprofits, associations, enterprises, collectives, cooperatives or dispensaries not expressly described herein are expressly prohibited. Temporary cannabis events are prohibited within the city.

2. No more than one cannabis business may exist in the same suite or unit on a lot or parcel of property.

3. An owner and/or operator of a cannabis business may not own or operate more than one retail cannabis business, including a microbusiness with a retailer component, within the city.

4. No more than four retailers are permitted in the city, including microbusinesses with a retailer component. Delivery operations of medicinal cannabis to medicinal cannabis 468
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patients or their primary caregivers within the city that originate from retailers outside the city’s jurisdictional limits are not subject to this limitation.

5. No more than two microbusinesses are permitted in the city, unless after the application period referenced in SLTCC 6.55.750(C) there are open permits for retailers, cultivators, manufacturers, or distributors, in which case the city council may adopt a resolution to reopen the application period to allow additional microbusinesses combining the open permit types.

6. No more than two cultivators are permitted in the city.

7. No more than four manufacturers are permitted in the city.

8. Distributors are permitted in the city only as part of a microbusiness, unless one or more of the permitted microbusinesses do not include a distributor component, in which case a distributor shall be permitted for each microbusiness without a distributor component.

B. Limitations on Location.

1. Permissible Zoning. Subject to limitations described in this article and other parts of SLTCC Title 6, and applicable regulations of the Tahoe Regional Planning Agency, cannabis businesses may operate only in a location where such land use will be consistent with the land uses authorized under the applicable area plan, plan area statement, and/or community plan for such location. Table 6.55.740 sets forth the applicable permissible use categories for each type of cannabis business.

Table 6.55.740
City Cannabis
Business Type
TRPA Permissible
Use Categories
a. Retailers
(including delivery
operations)
“food and beverage
retail sales” and
“general
merchandise stores”
b.

Microbusinesses
i. Retailer See a.
ii. Distributor See f.
iii.

Manufacturer
See e.
iv. Cultivator See d.
c. Testing labs “industrial services”
d. Cultivators “industrial services”
e. Manufacturers “food and kindred
products” and “small
scale
manufacturing”*
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City Cannabis
Business Type
TRPA Permissible
Use Categories
f. Distributors “wholesale and
distribution”
* The applicable TRPA permissible use category for a manufacturer will depend on the type of cannabis product being manufactured.

2. Areas and Zones Where Cannabis Businesses Are Not Permitted. a. Notwithstanding subsection (B)(1) of this section, a cannabis business may not operate on a parcel or lot located within 1,000 feet of a school, or 600 feet of a youth center, or 600 feet of a day care center, or 150 feet of any park, any religious institution, any residential or outpatient drug or alcohol treatment facility licensed by the State Department of Health Care Services, or hospital, that is in existence at the time the cannabis use permit is issued.

Distances under this subsection shall be calculated as a straight line from any parcel line of the property on which the cannabis business is located to the parcel line of the real property on which the facility, building, or structure, or portion of the facility, building or structure, in which the listed use occurs or is located. Locational restrictions shall apply to an entire parcel if any portion of the parcel is located within the applicable buffer distance.
b. Cannabis businesses may not operate on a parcel or lot located within a residential designated land use area, as depicted in the city’s general plan.

C. Transfer of Cannabis Use Permits.

1. Permit – Site Specific. A permittee shall not operate a cannabis business under the authority of a cannabis use permit at any place other than the parcel and specified address of the cannabis business stated in the application for the permit. All permits issued by the city pursuant to this article shall be nontransferable to a different location.

2. Transfer of a Permitted Cannabis Business. A permittee shall not transfer ownership or control of a cannabis business or attempt to transfer a cannabis use permit to another person unless and until the transferee obtains an amendment to the cannabis use permit from the planning commission to the permitting requirements of this article stating that the transferee is now the permittee. Such an amendment may be obtained only if the transferee files an application with the development services department in accordance with all provisions of this article accompanied by the required transfer review application deposit.

3. Request for Transfer with a Revocation or Suspension Pending. No cannabis use permit may be transferred (and no permission for a transfer may be issued) when the development services department has notified the permittee in writing that the permit has been or may be suspended or revoked for noncompliance with this chapter and a notice of such suspension or revocation has been provided.

4. Transfer without Permission. Any attempt to transfer a cannabis use permit either directly or indirectly in violation of this chapter is declared void, and the permit shall be deemed revoked.
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6.55.750 Cannabis use permit application requirements.

A. Cannabis Public Safety License. Applicants seeking a cannabis use permit to operate a cannabis business within the city shall first submit an application for a cannabis public safety license. Upon the chief of police’s, or their designee’s, approval of the application for a cannabis public safety license, the applicant may submit an application for a cannabis use permit to operate a cannabis business.

B. Except as set forth in this article, applications for cannabis use permits shall be processed consistent with Article VII (Use Permits and Variances). The city manager, or their designee, may recommend, and the city council may establish by resolution, any necessary procedures and application requirements.

C. Use Permits for Retailers, Cultivators, Manufacturers, Distributors, and Microbusinesses.

Because only a limited number of retailers, cultivators, manufacturers, distributors, and microbusinesses are permitted, an application period for these businesses shall be established that allows applicants to be placed on a qualified applicant list. The process and selection criteria for selection of the best applicants to be placed on the qualified applicant list shall be established by resolution of the city council.

D. Applications shall include a requirement that applicants demonstrate owner consent to operate a cannabis business on the property. Applications for cannabis retailers shall also include a statement as to whether the use will include delivery of cannabis and cannabis products to locations outside the retailer’s property. If delivery services will be provided, the application shall describe the operational plan and specific extent of such service, security protocols, and how the delivery services will comply with the requirements set forth in this article and state law.

E. Site Plan. Applicants shall submit a site plan that shall include a floor plan, and a scaled premises diagram showing the boundaries of the cannabis business and property with all boundaries, dimensions, entrances and exits, interior partitions and walls, with labeling of each room, windows and common shared entryways. If the proposed cannabis business consists of only a portion of the property, the diagram shall be labeled indicating which part of the property is the proposed cannabis business and what the remaining property is used for.

F. Cost Recovery. Every application for a cannabis use permit shall be accompanied by a deposit (in an amount established by resolution of the city council) and the applicant shall replenish such deposit at the request of the city to allow for recovery of the city’s full cost of reviewing and issuing said permit.

6.55.760 Review, issuance, and/or denial of cannabis use permit applications.

A. Criteria for Issuance. In addition to the required findings for issuance of a special use permit in SLTCC 6.55.620(B), the planning commission, or the city council on appeal, shall make all of the following findings in determining whether to grant, modify, or deny a cannabis use permit for any cannabis business:

1. If the cannabis business is a microbusiness, retailer, manufacturer, distributor, or cultivator, the applicant is on the qualified applicant list established and maintained by the city.

2. The cannabis use permit application is complete and the applicant has submitted all information and materials required.
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3. The proposed location of the cannabis business will comply with the buffer requirements in SLTCC 6.55.740(B) and is not likely to have a potentially adverse effect on the health, peace, or safety of persons due to the proximity of the proposed cannabis business to a school, youth center, park, church, state licensed drug or alcohol treatment facility, or hospital.

4. The proposed location of the cannabis business is not likely to have a potentially adverse effect on the health, peace, or safety of persons due to the proposed cannabis business’s proximity to another existing or permitted cannabis business, and no significant nuisance issues or problems are likely or anticipated.

5. The design of the cannabis business is compatible with the city’s design guidelines.

6. The property is located on a property which is consistent with all development standards of this title.

7. The location is not prohibited under the provisions of this title or any local or state law, statute, rule, or regulation.

8. The cannabis business will not violate any provision of the SLTCC or condition imposed by a city-issued permit, or any provision of any other local or state law, regulation, or order, or any condition imposed by permits issued in compliance with those laws.

9. The site plan for the cannabis business has incorporated features necessary to assist in reducing potential nuisance and crime-related problems. These features may include, but are not limited to, procedures for allowing entry; reduction of opportunities for congregating and obstructing public ways and neighboring property; and limiting furnishings and features that encourage loitering and nuisance behavior.

B. Supplemental Findings – Cannabis Testing Laboratory. In addition to the findings required for the approval of a cannabis use permit as set forth in subsection (A) of this section, the planning commission, or the city council on appeal, shall consider the following supplemental findings in determining whether to grant, modify, or deny a cannabis use permit for a testing lab:

1. The owners, permittees, operators, and employees of the testing lab will not be associated with any other form of commercial cannabis activity.

2. The testing lab meets the accreditation requirements set forth in Business and Professions Code Section 26100(h) and any applicable regulations enacted by the Department of Cannabis Control.

3. The testing lab operating plan demonstrates proper protocols and procedures for statistically valid sampling methods and accurate certification of cannabis and cannabis products for potency, purity, pesticide residual levels, mold, and other contaminants according to adopted industry standards.

C. Supplemental Findings – Cultivators. In addition to the findings required for the approval of a cannabis use permit as set forth in subsection (A) of this section, the planning commission, or the city council on appeal, shall consider the following supplemental findings in determining whether to grant, modify, or deny a cannabis use permit for a cultivator:

1. The cultivation of cannabis for commercial purposes shall only be cultivated within a fully enclosed space.
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2. The cultivation of cannabis for commercial purposes shall be limited to 22,000 square feet of total canopy size per property.

3. The cultivation of cannabis will be conducted in accordance with all applicable federal, state, and local laws and regulations governing the use of pesticides.

4. The applicant for cultivation for cultivation of cannabis with a total canopy size greater than 5,000 square feet per property has submitted documentation that electrical power used for commercial cannabis activity meets the average electricity greenhouse gas emissions intensity required by the local utility provider pursuant to the California Renewables Portfolio Standard Program, and has submitted an energy efficiency plan showing measures being taken to minimize energy consumption in lighting, HVAC, and dehumidifying equipment.

D. Supplemental Findings – Manufacturers. In addition to the findings required for the approval of a cannabis use permit as set forth in subsection (A) of this section, the planning commission, or the city council on appeal, shall consider the following supplemental findings in determining whether to grant, modify, or deny a cannabis use permit for a manufacturer:

1. The manufacturer shall be limited to 2,500 square feet of fully enclosed space.

2. The manufacturer shall not undertake any volatile extraction activities, and shall only conduct the operations authorized under the “Type 6,” “Type N,” or “Type P” license categories, as defined in the Department of Cannabis Control regulations, Title 4 of the California Code of Regulations, Section 17006, as may be amended.

E. Criteria for Denial. The planning commission shall deny an application that meets any one of the following criteria:

1. Any supervisor, employee, or person having a 10 percent or more financial interest in the cannabis business has been convicted of a felony or a drug-related misdemeanor reclassified by Section 1170.18 of the California Penal Code (Proposition 47) within the past 10 years. A conviction within the meaning of this subsection means a plea or verdict of guilty or a conviction following a plea of nolo contendere;

2. Any person who is listed on the application or is an owner or operator, is a licensed physician making patient recommendations for medical cannabis pursuant to Section 11362.7 of the Health and Safety Code;

3. Any person who is listed on the application or is an owner or operator is less than 21 years of age;

4. The proposed cannabis business does not comply with the provisions of this article or state cannabis laws; and

5. The planning commission is unable to make a required finding contained in this section.

F. Planning Commission Determination. If the planning commission, by a majority vote of a quorum of commissioners, denies the application, the planning commission shall specify in writing the reasons for the denial of the application, and notify the applicant that the decision shall become final unless the applicant seeks an appeal pursuant to Chapter 2.35 SLTCC.

G. Indemnification. Cannabis use permits shall contain a condition requiring the dispensary, through its management members, to execute an agreement in a form approved by the city 473
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attorney whereby the cannabis business (1) releases the city, and its agents, officers, elected officials, and employees from any injuries, damages, or liabilities of any kind that result from any arrest or prosecution of the cannabis business or its management members, employees, or members for violation of state or federal laws, (2) defends, indemnifies and holds harmless the city and its agents, officers, elected officials, and employees for any claims, damages, or injuries brought by any party arising out of the city’s decision to permit the operation of the cannabis business, and (3) defends, indemnifies and holds harmless the city and its agents, officers, elected officials, and employees for any claims, damages, or injuries of any kind brought by adjacent or nearby property owners or other third parties due to the operations at the cannabis business.

6.55.770 Appeal from planning commission determination.

An applicant or any interested party who disagrees with the planning commission’s decision to issue, issue with conditions, or to deny or revoke a cannabis use permit may appeal the planning commission’s decision to the city council in accordance with the appeal provisions of Chapter 2.35 SLTCC.

6.55.780 Suspension and revocation by planning commission.

A. Authority to Suspend or Revoke a Cannabis Use Permit. Any permit issued under the terms of this article may be suspended or revoked by the planning commission.

B. A cannabis use permit may be revoked if it appears to the planning commission that the cannabis business has violated any of the requirements of this article or the security plan required pursuant to Chapter 4.180 SLTCC, or the cannabis business is being operated in a manner which constitutes a nuisance, or the cannabis business has ceased to operate for 30 days or more, or the owner or operator of the cannabis business fails to maintain a valid and current public safety license, or the cannabis business is being operated in a manner which conflicts with or violates state cannabis laws.

C. Any cannabis use permit revoked pursuant to this section shall be deemed to be expired and shall no longer entitle the permittee to any uses authorized by the cannabis use permit.

D. Revocation, expiration or nullification of a cannabis public safety license pursuant to SLTCC

4.180.060 and 4.180.070 shall automatically terminate the cannabis use permit issued to the licensee and shall terminate the ability of the licensee to operate a cannabis business without initiation of revocation proceedings by the planning commission.

E. Annual Review of Cannabis Businesses. The development services department is hereby authorized to conduct an annual review of the operation of each permitted cannabis business within the city for full compliance with the operational, record-keeping, nuisance and other requirements of this article, in coordination with any other departments of the city. Each cannabis business shall pay a fee in an amount established by resolution of the city council which shall be collected in order to reimburse the city for the time involved in the annual review process. The staff may initiate a permit suspension or revocation process for any cannabis business which, upon completion of an annual review, is found not to be in compliance with the requirements of this chapter or which is operating in a manner which constitutes a public nuisance. Staff may, based upon its annual review of the operation of a cannabis business, place on a planning commission meeting agenda, a proposal to suspend or revoke a cannabis use permit.
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6.55.800 Cannabis businesses – Conditions of operation.

A. All Cannabis Businesses. All cannabis businesses shall be operated, maintained, and managed on a day-to-day basis in compliance with the following operational conditions and requirements:

1. State Licensing and Compliance with State Cannabis Laws. The city recognizes that state law requires dual licensing at the state and local level for all cannabis businesses.

All operators shall therefore be required to diligently pursue and obtain a state cannabis license at such time as the state begins issuing such licenses, and shall comply at all times with all applicable state cannabis laws.

2. Cannabis Public Safety License. A cannabis business shall maintain a cannabis public safety license at all times. The failure to maintain a cannabis public safety license, revocation of a cannabis public safety license, or lapse in renewal of a cannabis public safety license shall be the basis for immediate termination of the right to operate a cannabis business under a cannabis use permit.

3. Employees. It shall be unlawful for the applicant, owner, operator, or any other person effectively in charge of any cannabis business to employ any person who is not at least 21 years of age.

4. Minors. Persons under the age of 21 years shall not be allowed on the premises of a cannabis business unless they are a qualified patient. The entrance to each cannabis business shall have, clearly and legibly posted, a notice indicating that persons under the age of 18 are prohibited from entering the premises unless they are a qualified patient and they are in the presence of their parent or guardian.

5. Every cannabis business shall display, at all times during its regular business hours, the cannabis use permit and cannabis public safety license issued for such cannabis business in a conspicuous place so that the same may be readily seen by all persons entering the cannabis business.

6. No cannabis business shall hold or maintain a license from the State Department of Alcoholic Beverage Control for the sale of alcoholic beverages, or operate a business on the premises of the cannabis business that sells alcoholic beverages, or otherwise allow alcoholic beverages to be possessed, distributed, or consumed on the premises.

7. No cannabis business shall be a retailer of tobacco products.

8. Operation of a cannabis business shall not result in illegal redistribution or sale of cannabis obtained, or the use or distribution in any manner which violates state cannabis laws or this article.

9. Odors. All cannabis businesses shall be sited and/or operated in a manner that prevents cannabis odors from being detected off site. All structures utilized for indoor cannabis cultivation shall be equipped and/or maintained with sufficient ventilation controls (e.g., carbon scrubbers) to eliminate nuisance odor emissions from being detected off site.

10. Security. The cannabis business shall at all times comply with all elements of its security plan, submitted as a part of its cannabis public safety license application pursuant to Chapter 4.180 SLTCC.
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11. Signage and Advertising. The cannabis business shall comply with all applicable provisions of Chapter 6.40 SLTCC and any applicable Tahoe Regional Planning Agency regulations. All advertising shall comply with Business and Professions Code Section 26151.

12. On-Site Consumption. On-site consumption is allowed at permitted retailers and microbusinesses with a retailer component upon approval of an amended public safety license under SLTCC 4.180.050 and, if the addition of on-site consumption increases the floor area used for retail, approval of an amended cannabis use permit under SLTCC 6.55.800(B)(2).

13. Additional Conditions. The planning commission may impose additional conditions which it deems necessary to ensure that operation of the cannabis business will be in accordance with the standards and regulations provided in this title, the standards set forth by separate resolution of the city council, and applicable state laws.

B. Supplemental Conditions – Retailers. In addition to each of the conditions of operation set forth in subsection (A) of this section, a cannabis retailer shall be operated, maintained, and managed in compliance with the following supplemental conditions:

1. Retailers may not sell drug paraphernalia and implements that may be used to ingest or consume cannabis except where such sales and operations comply with Health and Safety Code Section 11364.5.

2. Retailers shall not be enlarged in size (i.e., increased floor area) without the planning commission’s prior review and approval and an approved amendment to the existing cannabis use permit applied for and issued pursuant to the requirements of this article.

3. Retailers shall only sell, deliver, or give away medical cannabis to individuals authorized to receive medical cannabis in accordance with state cannabis laws. Retailers of medical cannabis shall require such persons receiving medical cannabis to provide valid official identification, such as a Department of Motor Vehicles driver’s license or State Identification Card, each time he or she seeks to purchase medical cannabis.

4. Hours of Operation. Retailers may only operate during the hours between 6:00 a.m. through 10:00 p.m., except that authorized on-site consumption areas may operate until 2:00 a.m. with no cannabis sales after 10:00 p.m. The planning commission may further restrict a retailer’s days and hours of operation as a condition of a cannabis use permit.

A retailer shall post its approved days and hours of operation on a sign located on the street frontage of the cannabis business in a manner consistent with the city’s sign regulations. Delivery operations of medicinal cannabis to medicinal cannabis patients or their primary caregivers are not subject to these limited hours of operation.

5. Retailers shall not have a physician on-site to evaluate patients and/or provide recommendations for the use of medical cannabis.

6. State Seller’s Permit. Retailers shall, at all times during operation, maintain a valid seller’s permit required pursuant to Part 1 (commencing with Section 6001) of Division 2 of the California Revenue and Taxation Code.

7. Retailers shall make available lock bags on site for purchase or shall provide information on how to obtain a lock bag.
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8. Cannabis and cannabis products shall only be sold as pre-packaged consumer products, and each type of product shall be pre-packaged in a uniform amount per package. Cannabis and cannabis products shall be pre-packaged for general sale and not at the request of any specific customer.

C. Supplemental Conditions – Cultivators. In addition to each of the conditions of operation set forth in subsection (A) of this section, a cannabis cultivation operation shall be operated, maintained, and managed in compliance with the following supplemental conditions:

1. Outdoor commercial cultivation prohibited. The cultivation of cannabis for commercial purposes may only be cultivated within a fully enclosed space.

2. The cultivation of cannabis for commercial purposes shall be limited to 22,000 square feet of total canopy size per property.

3. The cultivation of cannabis must be conducted in accordance with all applicable federal, state, and local laws and regulations governing the use of pesticides. Any fumigation or insecticidal fogging shall comply with the California Fire Code Chapter 26 (Fumigation and Insecticidal Fogging).

4. Screening. Cannabis plants shall not be visible from any location beyond the property.

5. Cultivators shall maintain either the “Type 1A” (specialty indoor), “Type 1B” (specialty mixed-light), “Type 1C” (specialty cottage), “Type 2A” (small indoor), “Type 2B” (small mixed-light), “Type 3A” (indoor), “Type 3B” (mixed-light) or “Type 4” (nursery) licenses as defined in Business and Professions Code Section 26061, and issued by the Department of Cannabis Control, at all times of operation.

6. Cultivators may not engage in retail sales at the same property as cultivation.

D. Supplemental Conditions – Delivery Operations. In addition to each of the conditions of operation set forth in subsection (A) of this section, a cannabis delivery operation shall be operated, maintained, and managed in compliance with the following supplemental conditions:

1. Delivery operations shall only be operated by a permitted cannabis retailer that has a physical location and a retail storefront in the city open to the public. A cannabis retailer shall not conduct sales exclusively by delivery. Delivery operations of medicinal cannabis to medicinal cannabis patients or their primary caregivers within the city that originate from retailers outside the city’s jurisdictional limits are not subject to this limitation, but any such delivery operation is required to obtain a public safety license under Chapter 4.180 SLTCC.

2. Vehicles used for deliveries shall have a GPS tracker, and records shall be maintained regarding the location of all deliveries. No more than maximum of $3,000 in cash, or equivalent value of cannabis or cannabis products, may be carried at any time.

E. Supplemental Conditions – Microbusinesses. In addition to each of the conditions of operation set forth in subsection (A) of this section, each microbusiness shall be operated, maintained, and managed in compliance with the following supplemental conditions:

1. Except as modified by this subsection (E), each microbusiness with a retail component shall comply with all conditions of operation set forth in subsection (B) of this section, each microbusiness with a cultivator component shall comply with all conditions of operation set forth in subsection (C) of this section, each microbusiness with a 477
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manufacturer component shall comply with all conditions of operation set forth in subsection (F) of this section, and each microbusiness with a distributor component shall comply with all conditions of operation set forth in subsection (G) of this section.

2. Microbusinesses undertaking manufacturing activity shall utilize only extraction processes that employ nonvolatile solvents for the purposes of extracting cannabinoids and processes that are recognized as safe pursuant to the Federal Food, Drug, and Cosmetic Act. Microbusinesses undertaking manufacturing activity shall maintain a license of the “Type 6,” “Type N,” or “Type P” license categories, as defined in Title 4 of the California Code of Regulations, Section 17006, as may be amended.

3. The cultivation of cannabis for commercial purposes by microbusinesses shall be limited to 10,000 square feet of total canopy size per property.

4. A microbusiness with a retail component may engage in retail sales on the same property as a cultivation component, but shall limit access to the public to only the retail component of the microbusiness.

F. Supplemental Conditions – Manufacturers. In addition to each of the conditions of operation set forth in subsection (A) of this section, manufacturers shall be operated, maintained, and managed in compliance with the following supplemental conditions:

1. Manufacturers shall not engage in on-site retail sales of cannabis or cannabis products.

2. Manufacturers shall utilize only extraction processes that employ nonvolatile solvents and are recognized as safe pursuant to the Federal Food, Drug, and Cosmetic Act.

3. Standard of Equipment. Manufacturing, processing, and analytical testing devices used by manufacturers must be UL (Underwriters Laboratories) listed or otherwise certified by an approved third party testing agency or engineer and approved for the intended use by the city’s building official and fire code official.

4. Food Handler Certification. All owners, employees, volunteers, or other individuals that participate in the production of edible cannabis products shall be state-certified food handlers. The valid certificate number of each such owner, employee, volunteer, or other individual must be on record at the property where the individual participates in the production of edible cannabis products.

5. Edible Cannabis Product Manufacturing. Manufacturers that sell or manufacture edible cannabis products shall obtain a county health permit to sell and/or manufacture edible cannabis products. Permit holders shall comply with county health permit requirements.

6. The manufacturer shall maintain a manufacturer license of “Type 6,” “Type N,” or “Type P” license categories, as defined in Title 4 of the California Code of Regulations, Section 17006, as may be amended.

G. Supplemental Conditions – Distributors. In addition to each of the conditions of operation set forth in subsection (A) of this section, distributors shall be operated, maintained, and managed in compliance with the following supplemental conditions:

1. No distributor may distribute cannabis from an unlicensed cannabis cultivator or manufacturer. Distributors may only distribute cannabis products between other licensed businesses within the state of California.
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2. Distributors may not sell cannabis products directly to consumers, and cannabis distribution facilities shall be fully enclosed and inaccessible to the general public.

H. Maintenance, Access to, and Inspection of Records.

1. Every cannabis business shall maintain on-site, at the property designated for the operation of the cannabis business, all records of the cannabis business.

2. Financial Records. The cannabis business shall maintain a written accounting record or ledger of all cash, receipts, credit card transactions, reimbursements, (including any inkind contributions), and any and all reasonable compensation for services provided by the cannabis business, as well as records of all operational expenditures and costs incurred by the cannabis business in accordance with generally accepted accounting practices and standards typically applicable to business records.

3. Record Retention Period. The records required in this subsection shall be maintained by the cannabis business for a period of five years and shall be made available to the city within 24 hours of written request.

4. A duly designated city police department or finance department representative may enter and shall be allowed to inspect the premises of every cannabis business as well as the financial and membership records of the cannabis business required by this article at any time during the cannabis business’s designated business hours, or at any appropriate time to ensure compliance and enforcement of the provisions of this article.

Such representative may also require the cannabis business to also provide access to such financial records electronically. It shall be unlawful for any owner, operator, or any other person having any responsibility over the operation of the cannabis business to refuse to allow, impede, obstruct or interfere with an inspection of the cannabis business or the required records thereof.

6.55.810 Business license tax liability.

An operator of a cannabis business shall be required to apply for and obtain a business and professions tax certificate pursuant to Chapter 3.35 SLTCC as a prerequisite to obtaining a cannabis use permit or operating within the city pursuant to the terms of this article. The cannabis businesses shall be subject to sales tax and other applicable taxes in a manner required by state law.

6.55.820 No vested rights.

No person(s) shall have any vested rights to any permit, right or interest under this chapter, regardless of whether such person(s) cultivated, sold, distributed or otherwise engaged in acts related to the use of cannabis prior to adoption of the ordinance codified in this article.

6.55.830 Public nuisance.

Any use or condition caused or permitted to exist in violation of any provision of this article shall be and hereby is declared a public nuisance and may be subject to administrative citations as set forth in Chapter 2.30 SLTCC, summarily abated by the city pursuant to Chapter 4.40 SLTCC and/or Code of Civil Procedure, Section 731, or subject to any other remedy available to the city.

SECTION 4. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision will not affect the validity of the remaining portions of this Ordinance. The City Council declares that it would have passed this Ordinance and each and every section, subsection, sentence, 479
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clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or unconstitutional.

SECTION 5. The City Council finds that the 2030 General Plan EIR adequately addresses the potential environmental impacts of the proposed ordinance and that no further environmental analysis is required to comply with the California Environmental Quality Act (CEQA), and CEQA Guidelines section 15162 because the proposed ordinance is within the scope of the previous EIR and there are no substantial changes to the project or the circumstances that require major revisions to the previous EIR due to new significant environmental effects, new information of substantial importance that shows the project will have significant effects not discussed in the previous EIR, significant effects previously examined would be more severe, or mitigation measures or alternatives previously found not to be feasible would substantially reduce one or more significant effects.

SECTION 6. The City Clerk is directed to certify this Ordinance and cause it to be published in the manner required by law.

SECTION 7. This Ordinance shall become effective 30 days following its adoption.

Adopted by the City of South Lake Tahoe City Council on January 9, 2024 by the following vote:

Yes:

No:

Abstain:

Absent:
________________________ Date:_________
Mayor
Attest:
________________________
Susan Blankenship, City Clerk
First Reading:

Published:

Second Reading:

Effective:

The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
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Chapter 4.100 Clean Indoor Air and Health Protection
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Chapter 4.100

CLEAN INDOOR AIR AND HEALTH PROTECTION
Sections:

4.100.010 Purposes.

4.100.020 Authority.

4.100.030 Definitions.

4.100.040 Smoking prohibitions – Public places.

4.100.050 Smoking prohibitions – Workplaces.

4.100.060 050 Places where smoking is permissible.

4.100.070 Exemption procedures.

4.100.080 Posting requirements.

4.100.090 Retaliation prohibited.

4.100.100 060 Violation and penalties – Smoking or posting.

4.100.110 Retaliation remedies.

4.100.120 Enforcement.

4.100.130 Provision to repeal ordinance.

4.100.010 Purposes.

The U.S. Environmental Protection Agency (EPA) has determined that tobacco smoke is a major source of indoor air pollution and the Surgeon General’s 1986 report on the health consequences of involuntary smoking concludes that exposure to tobacco smoke places healthy nonsmokers at increased risk for developing lung cancer. Other health hazards of involuntary smoking include respiratory infection, decreased exercise tolerance, decreased respiratory function, bronchoconstriction, and bronchospasm. While all members of the population are truly at increased risk due to exposure to sidestream tobacco smoke, it constitutes a special health hazard for children, the elderly and people with chronic lung disorders.

The Surgeon General labels smoking “the largest single preventable cause of death and disability for the U.S. population.”
Employees subject to prolonged exposure to sidestream smoke in the workplace have been found in scientifically conducted studies to experience a decrease in job productivity and some have been forced to take periodic sick leave because of reactions to secondhand smoke. Furthermore, studies have shown higher costs to the employer are associated with smoking in the workplace due to increases in absenteeism, accidents, costs of medical care, loss of productivity, and cleaning and maintenance requirements. A recent scientific study has reported that sidestream smoke from tobacco may cause a significant amount of cardiovascular disease in the United States and that the number of deaths from this cause may exceed the deaths caused by lung disease associated with sidestream smoke. Smoking in public places and workplaces is a major cause of fires and damage to merchandise and equipment as well as costly maintenance and repairs to furniture and fixtures. The health care costs produced by smoking related ailments and diseases constitute a heavy and avoidable financial drain on our community. 481
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More than 80 percent of El Dorado County residents are nonsmokers, and the number of nonsmokers is steadily increasing. Opinion surveys show that a majority of both nonsmokers and smokers favor restrictions on smoking in public places and places of employment.

Air pollution caused by smoking is an offensive annoyance and irritant. Smoking results in serious and significant physical discomforts of nonsmokers, and constitutes a public nuisance in public places and workplaces.

This chapter attempts to find a compromise that allows smokers to smoke, and others to breathe smoke-free air.

Health and Safety Code section 11362.3 prohibits smoking cannabis or cannabis products in a public place and in a location where smoking tobacco is prohibited.

This chapter is not to be interpreted as requiring restaurants or barsany establishment to provide a smoking area.

4.100.020 Authority.

This chapter is enacted pursuant to the provisions of the Health and Safety Code section 118910 for the purpose of restricting and regulating smoking in public places and in places of work in order to reduce the hazards and nuisances which smoking causes to those who are involuntarily exposed.

4.100.030 Definitions.

As used in this chapter, the words and phrases identified in SLTCC 4.100.010 through 4.100.120 shall have the following meanings:

A. “On-site consumption lounge” means a facility operating with a city-issued public safety license and cannabis use permit where cannabis and cannabis products may be smoked, vaped, or ingested within the confines of the facility.

A. “Bar” means an area which is devoted to the serving of alcoholic beverages for consumption on the premises and in which the serving of food, if any, is incidental to the consumption of alcoholic drinks. When a bar is operated within a building in conjunction with another use, such as a restaurant, only the area utilized primarily for the consumption of alcoholic beverages shall constitute the bar. The dining area of a restaurant utilized primarily for the serving and consumption of food shall not constitute a bar, even though alcoholic beverages may be served therein. An establishment that serves food in the bar, and where there are fewer seats where food is served in the bar than seats at the bar, qualifies as a bar.

B. “Commercial enterprise” shall mean any business entity formed for profit-making purposes, including professional corporations and other entities under which legal, medical, dental, engineering, architectural, or other professional services are delivered, and shall also include any person charged with the responsibility of controlling conduct on behalf of the above described enterprises upon any premises regulated by provisions of this chapter.

C. “Nonprofit entity” shall mean corporation, unincorporated association or other entity created for charitable, philanthropic, educational, character building, political, social or other similar purposes, the net proceeds from the philanthropic, educational, character building, political, 482
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social or other similar purposes, the net proceeds from the operations of which are committed to promotion of the objects or purposes of the organization and not to private gain, together with any person charged with the responsibility of controlling conduct on behalf of the above described entities upon any premises regulated by the provisions of this chapter. A public agency is not a “nonprofit entity” within the meaning of this section.

DB. “Person” means any natural person, partnership, corporation, unincorporated association, joint venture, business trust, joint stock company, club, or other organization of any kind, except the county or any other public agency.

E. “Enclosed area” shall mean all space between a floor and ceiling which is served by a common heating, ventilating or air conditioning system, and is enclosed on all sides by solid walls or windows (exclusive of door or passageways) which extend from the floor to the ceiling, including all space therein screened by partitions which do not extend to the ceiling or are not solid, “office landscaping,” or similar structures.

F. “Members of the general public” includes shoppers, customers, patrons, patients, students, clients and other similar invitees of a commercial enterprise or nonprofit entity, but excludes employees thereof, sales representatives, service repair persons, and persons delivering goods, merchandise or services to a commercial enterprise, nonprofit entity or county.

G. “Office” means an area enclosed by walls containing a desk, table or similar furnishings for clerical, administrative or supervisory work, a complex of such enclosures and a building containing such enclosures whether or not the building is utilized primarily for other purposes such as retailing, wholesaling or storage, or manufacturing, together with all hallways, stairways, elevators, escalators, restrooms, lobbies, waiting rooms, reception areas, entry areas, and conference rooms within or associated with the complex of such enclosures, including:

1. Legal, medical, dental, engineering, accounting, counseling and other professional offices;

2. Insurance, real estate, ticket, collection agency, and other offices where business services are offered to or goods or services are offered to or may be ordered by or may be paid for by members of the general public.

H. “Lobby/reception area” means an area that must be passed through in order to get to another destination.

I. “Restaurant” means any coffee shop, cafeteria, luncheonette, soda fountain, “fast food service,” and other establishment where cooked or otherwise prepared food is sold to members of the general public for consumption on the premises. The term does not include a cafeteria or lunchroom defined as a “workplace” by subsection (L)(3) of this section, whether or not members of the general public incidentally frequent the facility.

JC. “Smoking” means lighting, inhaling, exhaling, or burning, or carrying any lighted or heated pipe, cigar, cigarette, weed, or plant, or carrying any lighted pipe, lighted cigar, lighted cigarette, lighted weed, lighted plant, or any other lighted or heated ignited combustible tobacco or plant product intended for inhalation, substance in any manner or in any form. Smoking includes the use of an electronic smoking device that creates an aerosol or a vapor, in any manner or in any 483
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form, or the use of any oral smoking device for the purpose of circumventing the prohibition of smoking.

KD. “Tobacco storeshop” means a place utilized primarily for the sale to members of the general public at retail of tobacco products or accessories, and in which the sale of any other products is merely incidentalany business establishment, the main purpose of which is the sale of tobacco products, including, but not limited to, cigars, pipe tobacco, and smoking accessories.

L. “Workplace” means any enclosed area which is occupied by two or more employees of a commercial enterprise, nonprofit entity or the city including but not limited to places:

1. Utilized for:
a. The manufacturing, processing, assembly, maintenance, or repair of any products, goods, equipment, tools, appliances, furnishing or other object; or b. The physical storage for purposes of wholesaling, future utilization for operational purposes, or future transfer preceding consumption or other utilization of any products, goods, merchandise, materials, supplies, equipment, tools, appliances or furnishings.

2. Utilized or operated for a purpose described by SLTCC 4.100.040 and from which members of the general public are excluded.

3. Utilized as a union hall, cafeteria, lounge, lunchroom, restroom, conference room, training room, lecture room or classroom primarily for the use or benefit of employees.

4. A private residence, including either an attached or detached garage, utilized as a workplace for a home business, including but not limited to use as a licensed day care facility, except when not frequented by members of the general public.

4.100.040 Smoking prohibitions – Public places.

A. Except as specifically provided, it is unlawful for any member of the general public or any other person, including an employee, to smoke in the public places named and described in subsections (A)(1) through (13C) of this section, inclusive, and other public places similarly situated, including but not limited to the following areas:

1. Common work areas occupied by employees performing clerical, technical, administrative or other business or work functions;

2. Merchandise display areas, checkout stations, and counters and other pay stations;

3. Hallways;

4. Restrooms;

5. Elevators, escalators, stairways;

6. Lobbies (unless a special room and/or outdoor ventilation system is installed);

7. Reception areas;

8. Waiting rooms;

9. Service lines;

10. Classrooms, meeting or conference rooms, or lecture halls; 484
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11A. Outdoor public recreation areas owned, operated, or maintained by the city, including parks and beaches as defined in SLTCC 8.05.020010, golf courses, and campgrounds; 12B. Parking lots, parking structures, and parking areas owned, operated, or maintained by the city; and
13C. Other places in which members of the general public congregate for service or otherwise frequent.

B. Stores. The prohibitions contained in subsection (A) of this section shall be applicable to:

1. The enclosed common areas of shopping malls;

2. Automobile dealerships, furniture or other showrooms for the display of merchandise offered for sale at retail;

3. Grocery, specialty, department and other stores which sell goods or merchandise at retail; and

4. Service stations, stores or shops for the repair or maintenance of appliances, shoes, or motor vehicles, barbershops, beauty shops, cleaners and laundromats, video game, and other amusement centers, and other similar establishments offering services or products to members of the general public.

C. Banks. The prohibitions of subsection (A) of this section shall be applicable to banks, including savings and loan associations, credit unions and other similar institutions which offer financial services to members of the general public.

D. Hotels/Motels. The prohibitions of subsection (A) of this section shall be applicable to hotels and motels in which guests typically rent lodging for continuous periods less than 30 days.

Smoking is permissible in rental rooms, manager’s unit/residence and in on-premises restaurants and bars as provided in this section and SLTCC 4.100.060. The availability of all nonsmoking rooms will be prominently posted in the lobby sign-in area. The rooms so designated will be posted as “Smoking Prohibited” and ashtrays removed. Customers seeking accommodations will be routinely advised of the availability of nonsmoking rooms.

E. Terminals. The prohibitions of subsection (A) of this section shall be applicable to depots and other terminals utilized by members of the general public for the purpose of being transported upon or departing from airplanes, trains, buses and taxis.

F. Buses and Public Transit. Smoking by either passengers or operators shall be prohibited within buses, and all public transit conveyances operated by or licensed by the county or city.

G. Theaters. The prohibitions of subsection (A) of this section shall be applicable to theaters, including motion picture theaters, meeting halls and auditoriums where motion pictures or live theatrical musical or dramatic productions are made to an audience consisting of members of the general public assembled for the purpose of witnessing the performance or presentation; provided, that neither this section or subsection (A) of this section shall be construed to prevent smoking by performers in connection with a stage production or by persons making a presentation concerning addiction to tobacco or other drugs. 485
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H. Recreational Facilities. The prohibitions contained in subsection (A) of this section shall be applicable to sports pavilions, gymnasiums, exercise rooms, health spas, boxing arenas, swimming pools, roller and ice skating rinks, and other similar places where members of the general public assemble to either engage in physical exercise, participate in athletic competition or witness sports events.

Smoking is prohibited at all times within the seating areas of an enclosed arena and in any surrounding enclosed concourses where food and beverages are dispensed.

I. Recreation Halls. The prohibitions of subsection (A) of this section shall be applicable to recreation halls and other similar facilities where members of the general public bowl, play bingo or cards, dance or engage in recreational, character building or cultural activities. An owner or operator may permit persons to smoke within a portion, not exceeding 50 percent of the main activities area, of such facility and not including restrooms, lounges, and kitchens. Signs will be posted in the manner prescribed by SLTCC 4.100.080. It shall not constitute a violation of this chapter to smoke in a location where smoking has been authorized.

The provisions of this subsection shall not be construed to in any manner restrict or otherwise impair the authority of an owner or operator to prohibit smoking in such recreation hall.

J. Restaurants. Within all restaurants, the prohibitions of subsection (A) of this section shall be applicable to lobbies, waiting areas, restrooms and such dining seating areas as are allocated for nonsmoking. After adoption of the ordinance codified in this section the owner, manager, or operator shall post a notice at the restaurant entrance that a nonsmoking section is available. It shall not constitute a violation of this chapter to smoke in a location where smoking has been authorized.

The provisions of this section shall not be construed to in any manner restrict or otherwise impair the authority of an owner or operator to increase the nonsmoking seating in a restaurant or bar.

Smoking is prohibited and is unlawful in every publicly or privately owned restaurant except under the following circumstances where smoking may be permitted at the option of the establishment:

1. Any area exterior to the building in which the establishment is located.

2. The smoking of tobacco in any bar as defined in SLTCC 4.100.030.

3. The smoking of tobacco in an interior area shall be limited to not more than 50 percent of contiguous floor space of the dining area which is specifically designated and signed as a smoking area. Signs as prescribed by SLTCC 4.100.080 shall be used.

K. City Buildings. Smoking is prohibited except where other restrictions have been agreed to through the meet and confer process prior to the effective date of the ordinance codified in this chapter and such restrictions remain in effect.

L. Places of Exhibition. The prohibitions contained in subsection (A) of this section shall be applicable to libraries, museums, aquariums, galleries, convention halls and similar facilities where members of the general public assemble for the purpose of viewing the exhibition of art, 486
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artifacts, objects of historical or cultural significance, products, merchandise, equipment, appliances or services.

M. Schools. The prohibitions contained in subsection (A) of this section shall be applicable to any school or educational institution operated by a commercial enterprise or nonprofit entity for the purpose of providing academic classroom instruction, trade, craft, computer or other technical training, or instruction in dancing, artistic, musical or other cultural skills.

The prohibitions contained in subsection (A) of this section shall be applicable to public school facilities when school district management authorizes their use by members of the general public other than students.

N. Day Care Facilities. The prohibitions contained in subsection (A) of this section shall be applicable to private residences during the time when such residences are operated as licensed day care facilities for children.

4.100.050 Smoking prohibitions – Workplaces.

Smoking is prohibited in enclosed workplaces of commercial enterprises, nonprofit entities and all city owned and managed buildings except as allowed per SLTCC 4.100.040(K) including but not limited to open office areas, shared offices, private offices except as allowed per SLTCC

4.100.060, hallways, restrooms, escalators, elevators, stairways, lobbies, reception areas, and waiting rooms, classrooms, meeting or conference rooms, and auditoriums.

On-site cafeterias, lunchrooms and lounges shall be deemed workplaces and smoking prohibited therein, whether or not such facilities are open to members of the general public. A completely separate room with a separate ventilation system may be used per employer discretion.

Each commercial enterprise, nonprofit entity and the county shall comply with these smoking prohibitions and be responsible for their implementation in the workplace, and “No Smoking” signs shall be posted in the manner prescribed by SLTCC 4.100.080.

4.100.060050 Places where smoking is permissible.

Smoking may be permitted in all locations where smoking is not prohibited by this chapter, including the following locations:

A. Bars, whether operated as a separate business entity, or physically separated facilities within a restaurant, nightclub or other business.

B. Private clubs during events attended exclusively by members of the organization and their invited guests and from which members of the general public are excluded.

C. Within conference/meeting rooms, public and private assembly rooms, banquet rooms, dining rooms or areas of restaurants, hotels and motels, while these places are occupied for private functions to which only persons specifically invited are entitled to attend and from which members of the general public are excluded.

D. In an enclosed place wherein this chapter specifically permits smoking, notwithstanding the fact that such location is a workplace.
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E. In a private office or similar enclosed private workplace to which members of the general public are not routinely invited and wherein the tobacco smoke does not, through a common ventilation system or otherwise, affect other areas of the workplace.

F. Manager’s unit/residence of a hotel/motel to which members of the general public are not routinely invited and wherein the tobacco smoke does not, through a common ventilation system or otherwise, affect other areas of the hotel/motel which are designated as nonsmoking areas under this chapter.

GA. Residential units, including those which are used for home occupations under the provisions of SLTCC 6.55.280 and 6.55.290; provided, however, that this exemption shall not authorize smoking in any day care or child care facility except as set forth in SLTCC 4.100.040(N).

B. On-site consumption lounges as applied to smoking of cannabis and cannabis products only.

C. Areas where smoking is permitted within certain workplace areas under Labor Code section 6404.5, as may be amended.

It shall not constitute a violation of SLTCC 4.100.040 for a person to smoke in a location where smoking has been authorized in the manner prescribed by this section.

The foregoing places are not considered workplaces subject to the provisions of SLTCC

4.100.050. Employers will, however, attempt to find a reasonable alternative accommodation where feasible for nonsmoking employees who do not wish to be assigned to work in a smoking permissible area. The foregoing exempt places do not include city owned or managed buildings.

4.100.070 Exemption procedures.

Any owner or manager of a business or other establishment subject to this chapter may apply to the director of the El Dorado County department of environmental management for an exemption or modification to its provisions. Exemptions may only be granted on:

A. A showing by the petitioner of significant financial hardship due to compliance; or B. The proposed implementation of an alternative approach or technology which would provide equivalent protection from the health hazards of sidestream smoke; or C. Proof that the only persons using the premises are smokers, no member of the public will be present, and no other workplace will be affected by smoke.

An application for exemption will be accompanied by payment of a reasonable fee established by board of supervisor resolution which will cover the cost of preparation for the hearing, and the application will include any data required by the department. The department will review the application and submit it, with recommendations, for hearing by the environmental health director. The applicant will be entitled to present evidence at the hearing, which will be scheduled within 30 days of the receipt of the application. The department will, after taking into consideration the testimony received at the hearing, issue its findings and recommendations within 10 days of the completion of the hearing. The department will complete procedural action on the application and notice the city council and interested parties within 10 days of its receipt from the director of environmental health.

The applicant or other interested parties may appeal the department’s decision to the city council within 30 days of receipt of action notification by the department. Upon appeal, the city council will set a hearing within 60 days, and make a final determination at that hearing. Any 488
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establishment holding a currently valid exemption shall not be required to pay additional administrative fees to maintain its exemption.

4.100.080 Posting requirements.

Each owner, operator, manager or other person having control of an establishment or facility within which smoking is regulated by this chapter shall conspicuously post in every place where smoking is prohibited “No Smoking” signs, or the international “No Smoking” symbol consisting of a pictorial representation of a burning cigarette enclosed in a red circle with a red bar across it, with letters not less than one inch in height.

An owner, operator, or manager of a building wherein, pursuant to these regulations, smoking is not permitted in any space in the building may limit the “No Smoking” posting to first floor entrances and exits and to the elevator lobby areas of all other floors.

Motion picture theaters shall show upon the movie or live action screens for at least five seconds prior to the showing of each feature motion picture the message that smoking is prohibited within the audience seating and other areas as specified.

Restaurants shall post at their entrances a sign stating that nonsmoking seats are available.

Likewise, recreational halls shall post signs alerting users of the availability of nonsmoking rooms. Smoking permitted areas in which smoking is permitted will be posted as such.

Motels and hotels will prominently post in the lobby a sign notifying patrons of the availability of nonsmoking accommodations. The rooms so designated will be posted as nonsmoking rooms, and ashtrays removed.

4.100.090 Retaliation prohibited.

It shall be unlawful for a commercial enterprise, nonprofit entity or city to retaliate against any members of the general public or an employee or applicant for employment of the enterprise, entity or city because such members of the general public, employee or applicant seeks enforcement of the provisions of this chapter.

4.100.100060 Violation and penalties – Smoking or posting.

Any person who violates the prohibitions contained in SLTCC 4.100.040 and any person who violates SLTCC 4.100.080 by failing to post the signs or take the other actions required by this section shall be guilty of an infraction, punishable in the manner hereinafter prescribed:

A. A fine not exceeding $100.00 for a first violation.

B. A fine not exceeding $200.00 for a second violation of this chapter within one year.

C. A fine not exceeding $500.00 for each additional violation of this chapter within one year.

4.100.110 Retaliation remedies.

Violation of any of the provisions of SLTCC 4.100.090 or 4.100.100 shall be remedial through civil action filed in a court of competent jurisdiction for injunctive or other appropriate relief.

4.100.120 Enforcement.

It shall be the responsibility of the El Dorado County director of the environmental management department to enforce, on behalf of the city, the provisions of this chapter. The director shall be authorized to prosecute, in the name of the city, pursuant to the provisions of Section 25132 of the Government Code, civil actions for recovery of fines for violations of this chapter made infractions by SLTCC 4.100.110 or violations of SLTCC 4.100.040 and 4.100.050. In the performance of the enforcement responsibilities assigned by this chapter, the director of the county environmental management department shall:
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A. Affirmatively seek the support and cooperation of other local public agencies, such as fire protection districts, to provide information, assistance and advice in the enforcement of the provisions of this chapter;
B. Establish a telephone number through which all complaints by citizens relating to violations of this chapter may be directed or referred;
C. Reduce such complaints to writing, and analyze the frequency and volume thereof in relation to alleged violations of this chapter by or at particular establishments or facilities; D. Conduct on-site inspection of any establishment or facility with respect to which the nature and volume of complaints suggest long-standing and pronounced violation of any of the provisions of this chapter;
E. Provide to the owner, operator or manager of any such establishment or facility a copy of the provisions of this chapter and such advisory assistance to rectify future violations as may be necessary to achieve compliance with the provisions of this chapter; F. Follow up such investigations and advice with a written directive explaining in detail the steps required in order to achieve future compliance with the provisions of this chapter; and G. If the violations do not cease following the expiration of a reasonable period of time, commence civil actions for the recovery of infraction fines pursuant to the provisions of SLTCC

4.100.100 or request commencement of a civil proceeding by the county counsel and/or city attorney, pursuant to the provisions of SLTCC 4.100.110, as may be appropriate.

The provisions of SLTCC 4.100.090 shall not be remedial by either the director of environmental management, or any other county official or city official. Any member of the general public, an employee or applicant for employment may, pursuant to the provisions of SLTCC 4.100.110, commence in his or her name a civil action for injunctive relief, monetary damages or other appropriate relief against a person who violates SLTCC 4.100.090 pursuant to the provisions of SLTCC 4.100.110. A member of the general public or employee shall also be authorized to individually commence a civil action pursuant to the provisions of SLTCC 4.100.110 for injunctive relief, monetary damages or other appropriate relief for the purpose of remedying any other violation of the provisions of this chapter.

4.100.130 Provision to repeal ordinance.

In the event the 1966 contract between the city of South Lake Tahoe and county of El Dorado requiring the health officer to enforce the ordinance codified in this chapter is terminated, the ordinance shall be automatically repealed without further city council action. 490
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Chapter 4.180 CANNABIS PUBLIC SAFETY LICENSE

ORDINANCE

The South Lake Tahoe City Code is current through Ordinance 1175, passed September 8, 2023.

Chapter 4.180

CANNABIS PUBLIC SAFETY LICENSE ORDINANCE
Section:

4.180.010 Purpose and intent.

4.180.020 Definitions.

4.180.030 Cannabis businesses – General provisions.

4.180.040 Cannabis public safety license – General provisions.

4.180.050 Public safety license and public safety license renewal – Approval and denial.

4.180.060 Expiration and renewal of cannabis public safety licenses.

4.180.070 Suspension and revocation by chief of police.

4.180.080 No vested rights.

4.180.010 Purpose and intent.

It is the purpose and intent of this chapter to establish a cannabis public safety license and the procedures for issuance of said license. A cannabis public safety license shall be required as a condition for the continued operation of any cannabis business as set forth in this chapter. The regulations in this chapter are meant to ensure the health, safety, and welfare of the residents of the city of South Lake Tahoe. Cannabis businesses within the city must comply with all provisions of the South Lake Tahoe City Code for obtaining permits and licenses for a cannabis business and must comply with the state cannabis laws and all other applicable local and state laws. Nothing in this chapter permits activities that are otherwise illegal under state or local laws.

4.180.020 Definitions.

As used in this chapter:
“Applicant” means any person who is required to file an application for issuance of a cannabis public safety license to operate a cannabis business under this chapter, including without limitation an individual owner, operator, or agent of a cannabis business.
“Application for renewal” shall mean an application for a renewed cannabis public safety license, which application may be submitted by a licensee.
“Cannabis” shall have the meaning set forth in Cal. Bus. & Prof. Code § 26001(f) and as subsequently amended. “Cannabis business” shall include:
a. Any business, facility, use, establishment, property, or location, whether fixed or mobile, where a commercial cannabis activity takes place.
b. Any building, facility, use, establishment, property, or location where any person or entity establishes, commences, engages in, conducts, or carries on, or permits another person or entity to establish, commence, engage in, conduct, or carry on, any activity that requires a state license under Cal. Bus. & Prof. Code § 26000 and following, including but not limited to cannabis cultivation, cannabis distribution, cannabis manufacturing, cannabis testing and cannabis retail sales, and the operation of a cannabis microbusiness. “Cannabis products” shall have the meaning set forth in Cal. Bus. & Prof. Code § 26001(ik) and as subsequently amended.
“Cannabis use permit” shall mean a use permit issued for the operation of a cannabis business pursuant to Article X of Chapter 6.55 SLTCC.
“Commercial cannabis activity” shall include the cultivation, possession, manufacturing, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products, or acting as a cannabis event organizer for temporary cannabis events. 491
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ORDINANCE

The South Lake Tahoe City Code is current through Ordinance 1175, passed September 8, 2023. “Cultivation” shall mean any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.
“Curbside delivery” shall mean a sale of cannabis or cannabis products from a licensed retail storefront or licensed microbusiness with retailer component that is delivered to a customer in their vehicle parked immediately outside the retail or microbusiness premises.
“Licensee” shall mean the cannabis business owner identified to the city as such, and to whom a city cannabis public safety license has been issued.
“Operator” shall mean any person responsible for management of the cannabis business; any person listed as an officer, director, manager, or member in statement of information filed with the Secretary of State for a cannabis business; any person listed in a governing document for a cannabis business, such as bylaws, articles of incorporation, or operating agreement; any person owning an interest in the cannabis business, unless the interest is solely a security, lien, or encumbrance; and any person that supervises an employee of the cannabis business. “Owner” shall have that meaning set forth in Cal. Bus. & Prof. Code § 26001(alap) and as it may be amended. “Permittee” shall mean any person issued a cannabis use permit under Article X of Chapter 6.55 SLTCC. “Police chief” shall mean the chief of the city of South Lake Tahoe police department. “Property” shall mean the designated structure or structures and land specified in the cannabis use permit application that is owned, leased or otherwise held under the control of the applicant or permittee where the commercial cannabis activity will be or is conducted.
“State cannabis laws” means and includes Cal. Health & Safety Code §§ 11362.1 through 11362.45; Cal. Health & Safety Code § 11362.5 (Compassionate Use Act of 1996); Cal. Health & Safety Code §§ 11362.7 through 11362.83 (Medical Marijuana Program); Cal. Bus. & Prof. Code § 26000 et seq. (Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”)); all state laws enacted or amended pursuant to SB-94, Chapter 27, Statutes of 2017; the California Attorney General’s Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use issued in August 2008, as such guidelines may be revised from time to time by action of the Attorney General; Cal. Labor Code § 147.5; Cal. Rev. & Tax. Code §§ 31020 and 34010 through 34021.5; Cal. Fish and Game Code § 12029; Cal. Water Code § 13276; all state regulations adopted pursuant to MAUCRSAby the Department of Cannabis Control; any license issued pursuant to MAUCRSAby the Department of Cannabis Control; and all other applicable laws of the state of California regulating cannabis or cannabis products. “State license” shall mean a license from the state Department of Cannabis Control issued pursuant to Division 10 of the Cal. Bus. & Prof. Code.

4.180.030 Cannabis businesses – General provisions.

A. Cannabis Use Permit and Public Safety License Required to Operate. It shall be unlawful for any person to engage in, to conduct or carry on (or to permit to be engaged in, conducted or carried on) in or upon property located within the city the operation of a cannabis business unless that person has first obtained and continues to maintain in full force and effect a valid cannabis use permit issued by the city for that property and that type of cannabis business and a valid cannabis public safety license issued by the city to the owner and/or operator of the cannabis business, pursuant to this chapter.

B. Imposition of Public Safety License Fees.

1. Every application for a cannabis public safety license or renewal of such license shall be accompanied by a license fee in an amount set forth by separate resolution of the city council, which amount is calculated to recover the city’s full cost of reviewing, issuing and administering said license. The application fee shall include the standard city fees for fingerprinting, photographing, and background check costs and shall be in addition to any other business license fee or permit fee imposed by this code or other governmental agencies.

2. A fee for renewal of a public safety license will be due annually. 492
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ORDINANCE

The South Lake Tahoe City Code is current through Ordinance 1175, passed September 8, 2023.

C. Conditions of Operation.

1. Security Plan. A licensee shall provide adequate security on the premises of the cannabis business. The following minimum security standards shall be maintained at all times:
a. Surveillance System.
i. Each cannabis business shall be monitored at all times by a digital closed-circuit television surveillance system. Surveillance systems shall meet any applicable state law requirements, including those set forth in Title 4 of the California Code of Regulations Title 16, § 15044, and any subsequently enacted regulation. The camera and video recording surveillance system must be capable of providing surveillance of both interior and exterior areas of the cannabis business and must be of adequate quality, color rendition and resolution to allow the ready identification of an individual on or adjacent to the property. The recordings shall be maintained at the cannabis business or other location accessible to the police department for a period of not less than ninety (90) days. ii. A sign shall be posted inside and at the entrances to the establishment indicating that the premises are under camera/video surveillance.
iii. The surveillance system recordings shall be maintained in such manner as to allow remote access by the police department. The police chief may request that the permittee provide secured electronic access to video feeds of the surveillance system in real time, to be provided via an online portal or through other software deemed acceptable to the police chief. b. Loitering Adjacent to a Cannabis Business. Licensees shall take reasonable measures to reduce loitering by cannabis business members, patrons, guests and invitees in public areas, sidewalks, alleys and areas surrounding the property and adjacent premises during the business hours of the cannabis business. c. Identification Verification System. Each cannabis business shall require identification upon entry to the cannabis business and shall implement electronic verification of identification provided to ensure that applicable age restrictions in SLTCC 6.55.800(A)(5) are complied with. d. On-Site Consumption. If a retail cannabis business or a microbusiness with a retailer component includes an on-site consumption area, adequate security and lighting shall be provided for the on-site consumption area to protect the safety of patrons and protect the premises from theft. e. Curbside Delivery. Curbside delivery of cannabis or cannabis products must occur under video surveillance that meets the requirements of SLTCC 4.180.030(C)(1)(a)(i) for recording point-of-sale areas.

Retail employees engaging in curbside delivery must verify each customer’s age and identity.

2. Nuisances Prohibited. A licensee shall take reasonable steps to correct objectionable conditions that constitute a nuisance on any public sidewalk or public space abutting the cannabis business premises. a. For purposes of this section, “objectionable conditions that constitute a nuisance” means public consumption of cannabis or cannabis products, disturbance of the peace, drug trafficking, disposing of litter or trash, or excessive loud noise.
b. For purposes of this section, “reasonable steps” means all of the following:
i. Calling the local law enforcement agency. Timely calls to the local law enforcement agency that are placed by the licensee, or his or her agents or employees, shall not be construed as evidence of objectionable conditions that constitute a nuisance.
ii. Requesting those persons engaging in activities causing objectionable conditions to cease those activities, unless the licensee, or his or her agents or employees, feels that their personal safety would be threatened in making that request.
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ORDINANCE