Additional Documents — Victorville City Council, August 8, 2023

Revision to Agenda Item #1
• Revised staff report. Please see below for changes.
o Staff Report Changes
 Discussion Section:

Page 7 ends

savings of $1.90 per month for residents who cancel their extra trash cart.
• Revised Exhibit 1 to Resolution No. 23-068
o Solid Waste Rate Study Technical Memo
 Solid Waste Rate Schedule: Commercial Bins - Internal Compactors Table
• The Solid Waste Rate Schedule Commercial Bins - Internal Compactors table has been expanded to illustrate Proposed Monthly Rates, instead of Proposed Rates Per Pickup ($/PU).

Former Table:

Revised Table:

Item Number: 1

City Council / Board of Directors

Written Communications

Meeting of: August 8, 2023

Submitted By:

Doug Mathews, Director of Public Works and Water

Subject:

Consideration of Solid Waste Rate Study and Adoption of Resolution No. 23-068

Recommendation:

Staff recommends that the Honorable City Council adopt Resolution No. 23-068 in order to:
(1) Accept the 2023 Solid Waste Rate Study;
(2) Set October 3, 2023 as the date for the Public Hearing on the proposed adjustments to the rates and fee for solid wase collection and household hazardous waste services; and
(3) Authorize City Staff to prepare and mail Notices of the Public Hearing in accordance with Proposition 218.

Fiscal Impact:

This action will result in a fiscal impact of approximately $32,600, resulting from direct costs of mailing required hearing notices and notice publications. An additional appropriation is not required. This project will be funded entirely from the Solid Waste Fund No. 426 - Contract Services (4260400-52300). There is a current available balance of $128,831 in this account, so there are sufficient funds in t his account to cover the planned expense.

Strategic Plan Goal:

This item aligns with Goal A., Financial Stability; fostering fiscal health through disciplined long-term planning, cost control, increased revenues, and cost recovery.

Background:

City Management of Solid Waste and Recycling
Section 6.36.020 of the Victorville Municipal Code (VMC) states that it is the policy of the

City to provide for solid waste handling services and devise recycling/diversion programs to comply with California State laws.

Section 6.36.036(a) of the VMC states that the City shall provide solid waste and recycling service to all occupied premises in the City and that the City shall collect fees which are adopted by resolution of the City Council for the provision of the services.

Current Solid Waste Billing
The City bills approximately 31,300 single -family residential customers and 1,700 commercial customers each month for solid waste services. The solid waste rates include the costs for collection services, solid waste disposal, state mandated recycling/diversion programs, pavement impact fees, City costs to administer solid waste programs, and franchise fees. Household Hazardous Waste Fees are also billed to residential accounts, as a separate fee on the monthly bill.

Solid Waste Rate Adjustment Background
The City provides for collection of trash and recyclables through its franchised hauler, Victorville Disposal (Burrtec), per the terms of a contract that was executed in November 2009, and subsequen tly amended in 2014 and 2018. The City also has a contract for solid waste disposal with San Bernardino County as well as contracts for recycle material processing at the Victor Valley Materials Recovery Facility (MRF) and organic material processing at t he Victor Valley Compost Facility. All of these contracts include annual cost of living adjustment provisions.

2018 Solid Waste Rate Study and Resolution No. 18-012
In 201 8, the City retained NBS, an independent consulting firm to perform a comprehensive Solid Waste Rate Study. The key objectives of the study were to review the City’s solid waste operating budgets and to develop a financial plan to appropriately fund operations, establish adequate operating reserves, and ensure that residential and commercial solid waste rates (which had not been adjusted since 2008) met the projected financial needs for providing such services over the next five years.

After review of the Solid Waste Study and following appropriate Proposition 218 procedures, the City ad opted a solid waste rate resolution (Resolution No. 18 -012) on June 5, 2018. This resolution established a schedule of fees for five years, effective July 1, 2018, through fiscal year 2023.

State Law Senate Bill 1383 (Organics Recycling) Requirements When City Council Resolution No. 18 -012 was adopted in June 2018, the solid waste rates did not include the costs for full compliance with California state Senate Bill 1383 (SB 1383), because the regulations to implement SB 1383 had not yet been finalized by the State.

SB 1383 was enacted in 2016 and established the following goals to reduce emissions of

short-lived climate pollutants (SLCP), including methane emissions from landfills.

• Reduce organic waste disposal 50% by 2020 and 75% by 2025 compared to 2014 levels.
• Recover at least 20% of currently disposed surplus edible food for human consumption by 2025.

This bill required the California Department of Resources Recycling and Recovery (CalRecycle) to adopt regulations to achieve the ta rgeted goals for reducing organic waste disposal in landfills. In 2017, CalRecycle began a multi -year process to develop regulations, with the final regulations adopted in November 2020.

The SB 1383 regulations are wide -ranging, imposing multiple requirem ents on local jurisdictions, haulers, waste generators, landfill operators, and recycling facility operators.

Below are some of the major obligations the SB 1383 regulations imposed on the City and other covered jurisdictions:

• Adopt an enforceable ordinance requiring organic waste generators, haulers, and other entities within the jurisdiction to comply with the regulations. • Implement programs to recover organic materials from all residential and commercial waste generators, including multi-family residential complexes. • Implement a “container contamination minimization” program to monitor waste, recycle, and organics container contents and reduce contamination. The program may include route reviews (inspection of containers) and/or waste evaluations as well as follow up notifications to generators with violations. • Implement outreach and education programs to notify generators about diversion program requirements.
• Implement edible food recovery (rescue) programs to divert surplus edible food to food banks for distribution to residents.
• Notify “Tier One” and “Tier Two” edible food generators (as defined in SB 1383 regulations) about requirements.
• Procure “recovered organic waste products” such as compost or mulch in quantity and quality that meets or exceeds the target specified by CalRecycle. • Procure recycled paper products with at least 30% post -consumer recycled content.
• Implement compliance reviews for all commercial and multi -family accounts generating two or more cubic yards of materials per week (trash, o rganics, and recycling combined).
• Take enforcement actions including issuing Notices of Violation (which provide a time period for generators to come into compliance) and ultimately assessing penalties via the administrative citation process, but only as of January 1, 2024. • Maintain all implementation records in a central location that can be made available to CalRecycle within ten business days. The implementation records will include but are not limited to information about inspections, enforcement acti ons, outreach and education, program descriptions, procurement activities, edible food recovery programs, etc.

The City, through its contract with Victorville Disposal, has already implemented organics collection programs for commercial customers. Commer cial programs to recover food waste, garden trimmings, and wood waste started in FY 18/19 after the adoption of the previous rate Resolution No. 18-012 and the 2018 revision of the Victorville Disposal franchise agreement to add commercial organics collection services.

The City still needs to implement additional programs to fully comply with all the requirements of SB 1383. Major programs yet to be implemented include residential curbside organics collection utilizing a third (green) cart, container contamination minimization, inspection and enforcement, procurement of recovered organic waste products, outreach and education, and development of the “implementation record” to document compliance with SB 1383 requirements. The proposed 2023 solid waste rates include the costs for implementing expanded organics recycling services needed to comply with SB 1383.

Discussion:

Solid Waste Rate Study Update
Given its familiarity with the City’s existing solid waste rate structure and customer classes, the City again engaged NBS to review and update the 2018 Solid Waste Rate Study. The key objectives of the new Rate Study were to review the solid waste fund operating budget, develop an updated financial plan to appropriately fund operations and establish adequate operating reserves, and develop updated rates to ensure that residential and commercial solid waste rates meet the projected financial needs for providing such services over the next five years. A key objective of the updated Rate Study was to ensure that all costs associated with compliance with CA state law SB 1383 were incorporated into the solid waste rates for residential and commercial customers.

Street Sweeping

As part of the 2023 Solid Waste Rate Study, NBS was also requested to review the City’s street sweeping services and costs and provide an analysis of options for including street sweeping costs in the solid waste rates. The full Street Sweeping Costs analysis is included in the Solid Waste Rate Study (Exhibit 1 of Attachment A) . Some details from the NBS Study and a brief discussion of the costs and nature of the service are provided here.

City streets are swept for the benefit of customer properties receiving solid waste services, collecting debris from areas of accumulation (or removing trash from City streets) to dispose of at the landfill. Street sweeping is essentially a trash collection and disposal effort, some of which is the result of debris from trash barrels placed on the street during weekly collection days. Regular street sweeping removes unsightly and potentially harmful trash and debris from the streets and gutters bordering the homes and businesses of solid waste cu stomer property owners providing health and aesthetic benefits. Sweeping streets further prevents accumulation of debris from blocking storm

drain water facilities, minimizing localized flooding of customer properties during heavy rains.

The City’s total street sweeping costs for fiscal year 2022 were used as a baseline to project the total annual cost for providing street sweeping services to residential and commercial streets in the city on a going forward basis, utilizing City staff and equipment.

Future costs also include planned capital replacement costs.

Street sweeping benefits and costs are more directly related to the number of customer properties receiving solid waste services rather than a property’s specific container size or level of service. That is, both residential and commercial customers contribute to the cost-causation (i.e., they both generate the materials collected by street sweepers). While street sweeping fees could be collected from customer properties with commercial bins, roll-offs, and compactors, etc., the most direct nexus is to curbside collection customer properties, including both residential and commercial cans.

NBS has opined that street sweeping costs can and should be applied to residential and commercial curbside cust omer properties in an across -the-board manner, with a rate defined by dividing the annual cost of street sweeping operations by the number of residential and commercial curbside customer properties. City streets are swept as often as possible within the confines of budgeted staff and equipment, with commercial streets receiving more frequent sweeping due to a larger amount of trash that accumulates in these areas. Trash most often accumulates in center medians, intersections, cross gutters, and along curbed areas, but other areas are swept as well on an as needed or reported/requested basis.

The Solid Waste Rate Study (Exhibit 1 of Attachment A) presents the findings of the updated Solid Waste Rate Study and the Street Sweeping Costs analysis.

Current and Proposed Solid Waste Service Rates
All occupied premises in the City are provided with solid waste services and are subject to charges for the services. The solid waste rates include the costs for collection services, solid waste disposal, sta te mandated recycling/diversion programs, pavement impact fees, city costs to administer solid waste programs, and franchise fees. Collection costs are set per the terms of the City’s contract with Victorville Disposal and vary with service type. Other c osts are allocated to customer classes (residential vs. commercial) based on quantity of waste generated, then per unit costs are calculated based on the number of accounts (for residential) or the number of cubic yards (for commercial).

There are no chan ges to the current Solid Waste Rate methodology. However, several additional costs have been added to the rates as noted below:

• Organics Collection costs have been added to the rate for residential cart customers to cover the costs of new organics collection service required by State law SB 1383.
• Organics recycling program costs have been added to the residential cart rate to

cover other SB 1383 related costs.
• Street sweeping costs have been added to residential and commercial cart rates.

Summary of Proposed Rate Increases
To ensure sufficient funding for future operations as determined by the 2023 Solid Waste Rate Study and to allow for implementation of new organics recycling programs needed to comply with state SB 1383 mandates, both residential and com mercial rates are proposed to be increased. For residential customers, the monthly rate is proposed to increase by $12.15 per month from $30.77 to $42.92 per month, an increase of 39%. For a commercial customer using a three (3) cubic yard bin with weekly service, the increase will be $9.57 per month from $134.05 to $143.62 per month, a 7% overall increase.

The table below summarizes the proposed rate increase for a single-family residence with 95-gallon cart service.

Table 1 – Current and Proposed Residential (95-Gal Cart/Curbside pickup) Rate Components

The residential rate increase of $12.15 per month reflects the additional costs associated with provision of new organics recycling programs, CPI increases for collection and disposal services, and the incorporation of street sweeping costs. Major components of the increase include:
• Organics Program Costs: Costs associated with implementing new residential organics recycling programs as required by SB 1383 account for $7.37 or 60% of the increase. This includes the cost for organics collection (green cart program), organics processing, and other SB 1383 program costs.
• CPI Adjustment for Collection Costs: The 7.33% CPI adjustment (for FY 23/24) to collection services per the terms of the City’s franchise agreement resulted in a $1.34 increase in collection costs, representing 11% of the total $12.15 increase. • Street Sweeping Costs: The addition of street sweeping costs accounts for 83 cents per month or 6% of the total increase.

There are several ways that residents may be able to lessen the impact of the solid waste Pavement Impact Fee $0.75 $0.29 ($0.46)
Organics Program $0.00 $0.90 $0.90 $0.90
Organics Collection $0.00 $4.20 $4.20 $4.20
AB 939 Fee $1.01 $0.94 ($0.07)
Street Sweeping (NEW) $0.00 $0.83 $0.83
Franchise Fee $2.28 $3.12 $0.84
Admin $3.40 $5.18 $1.78 $0.27
Disposal $5.03 $7.82 $2.79 $2.00
Collection $18.30 $19.64 $1.34
Total $30.77 $42.92 $12.15 $7.37
Change in
SFR Rate
SB 1383
Costs
Solid Waste Residential
Fees (95-Gal. Cart) FY'22/23 FY'23/24

services rate increase. First, many households (ap proximately 20%) currently have an extra trash cart. It is likely that many of these households will be able to cancel their extra trash cart once they receive a new green cart for garden trimmings and food scraps. The proposed rate for an extra trash cart is $13.93 per month. By canceling their extra trash cart, these residents will see a $1.90 decrease in their monthly bill. A new, 65-gallon trash cart option is also being added for residential customers. The smaller cart offers a $2.88 per month savings vs. standard 95-gallon trash service. A 35-gallon trash cart for those with minimal amounts of solid waste offers a $5.34 per month savings vs. 95 -gallon service.

Table 2 summarizes rate changes for residential customers and a variety of commercial customer types.

Table 2 – Current and Proposed Residential and Commercial Rates ($/Month)

Table 3 shows the percentage increases across a variety of customer types. Larger increases in FY 23/24 reflect the addition of new organics programs and street sweeping costs. Proposed increases for FY 24/25 onward range from 8.2% to 4.5% to keep pace with anticipated inflation factors.

Table 3 – Current and Proposed Residential and Commercial Rates (% Increases)

The Household Hazardous Waste Fee is charged to residentia l accounts to pay for the cost of the City’s Household Hazardous Waste (HHW) program which includes operation of the HHW Center. The HHW fee has been 32 cents per unit per month since 2018. Due to rising costs for staffing and disposal of collected wastes , the HHW fee is proposed to increase, beginning in FY 24/25, as noted below:

Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single Family Residential $30.77 $42.92 $46.44 $49.25 $51.49 $53.83 Multi-Family Residential $30.77 $42.92 $46.44 $49.25 $51.49 $53.83 Commercial Can $38.95 $43.30 $46.36 $48.98 $51.03 $53.17 Commercial Bin (3.0 CY Bin, 1 Pickup/week) $134.05 $143.62 $148.49 $154.54 $160.85 $167.44 Comm. Compactor Bin (1.5 CY, 1 Pickup/week) $113.34 $109.94 $114.95 $119.21 $123.64 $128.25 Commercial Recycling (3 CY Bin, 1 Pickup/week) $95.77 $106.84 $114.87 $121.85 $129.79 $138.96 Roll-offs (10 CY Roll-Off, 1 Pickup/week) $867.65 $960.83 $1,013.08 $1,081.25 $1,154.27 $1,232.49 Customer Class Projected Solid Waste Rates (Partial List)Current Rates
Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single Family Residential 39.5% 8.2% 6.1% 4.5% 4.5%
Multi-Family Residential 39.5% 8.2% 6.1% 4.5% 4.5%
Commercial Can 11.2% 7.1% 5.7% 4.2% 4.2%
Commercial Bin (3.0 CY Bin, 1 Pickup/week) 7.1% 3.4% 4.1% 4.1% 4.1% Commercial Compactor Bin (1.5 CY, 1 Pickup/week) -3.0% 4.6% 3.7% 3.7% 3.7% Commercial Recycling (3 CY Bin, 1 Pickup/week) 11.6%* 7.5% 6.1% 6.5% 7.1% Roll-offs (10 CY Roll-Off, 1 Pickup/week) 10.7% 5.4% 6.7% 6.8% 6.8% *Note: Commercial Recycling goes up by more than other rates due to the addition of Admin. and AB 939 Fees.

Customer Class Projected Solid Waste Rates (Partial List)

Proposed HHW Rate
Current Rate FY 24/25 FY 25/26 FY 26/27 FY 27/28
$.32/unit/mo $.37 $.39 $.41 $.44
$ Increase $.05 $.02 $.02 $.03
% Increase 15.2% 2.3% 2.7% 6.7%

The Rate Study includes a comparison of the proposed new residential and commercial rates to rates in neighboring jurisdictions. It is difficult to make equivalent rate comparisons, however, because the solid waste services provided vary between jurisdictions.

Next Steps
Proposition 218 – Adoption of Proposed Solid Waste and Household Hazardous Waste Rates

Proposition 218, a voter -adopted ballot initiative, added Articles XlllC and XlllD to the California Constitution to create rules and limitations on the imposition of assessments, taxes, and fees. Section 6 of Article XlllD, which applies to property-related fees such as sewer, requires a public hearing be scheduled to consider adoption of any new rates or fees and notification to be sent to the record owner of each identified parcel upon which any new (or increased) fees, rates or charges are proposed to be imposed. The required notification is a public hearing notice, which must be mailed at least forty-five (45) days in advance of the public hearing, and must describe the amount of the fee or charge proposed to be imposed upon each parcel; the basis upon which the amount of the proposed fee or charge was calculated; the reason for the fee or charge; together with the date, time, and location of the public hearing.

Upon adoption of Resolution No. 23 -068, the Rate Study will be accepted, and a public hearing will be scheduled to take place at the City Council’s regularly-scheduled meeting on October 3, 2023 (the "Public Hearing"). Notice of the Public Hearing (the "Notice") will also be prepared by City Staff (in consultation with the City Attorney) and mailed to the record owner of each identified parcel upon which the City proposes to impose the proposed Solid Waste and Household Hazardous Waste Rates 45 days prior to the Public Hearing date. Each record owner will have the right to submit a written protest against the proposed new rates in the manner to be set forth in the Notice. The Notice will also provide the procedures by which such protests will be considered valid and counted.

Although specific protest procedures are not set forth in Proposition 218, such written protests typically are submitted by mail or in person to the City Clerk no later than the conclusion of the public hearing. Written protests may require the signature of the record owner of the affected parcel and inclusion of parcel number identification information to ensure authenticity and proper tabulation. In the case of multiple owners of a parcel, only one protest per parcel is counted.

At the October 3, 2023 Public Hearing, the City Council will hear testimony and consider all valid written protests against the proposed Solid Waste and Household Hazardous

Rates received by the City Clerk prior to the close of the Public Hearing. If valid written protests are presented by a majority of owners of the identified parcels (50% plus one, a “Majority Protest”), the City Council will not impose the proposed Solid Waste and Household Hazardous Rates. If there is no Majority Protest, the City Council may adopt the new rates by resolution. The new rates will be effective for all billings made on or after November 1, 2023 and on each July 1 thereafter, for fiscal years 2025, 2026, 2027, and 2028.

Staff remains available for any questions the Council may have.

Attachments: A. Resolution No. 23-063

ATTACHMENT A

OFFICE LOCATIONS:

Temecula – Corporate Headquarters
32605 Temecula Parkway, Suite 100
Temecula, CA 92592

San Francisco – Regional Office
870 Market Street, Suite 1223
San Francisco, CA 94102

California Satellite Offices
Atascadero, Davis
Huntington Beach,
Joshua Tree, Riverside
Sacramento, San Jose

www.nbsgov.com

Final Report
Solid Waste Rate Study
August 2023

Summary of Solid Waste Rate Analysis Page 2 July 2023

TABLE OF CONTENTS

INTRODUCTION AND OVERVIEW ........................................................................................... 4 RATE STUDY METHODOLOGY ................................................................................................ 4 RESULTS OF THE SOLID WASTE RATE STUDY........................................................................... 5 Financial Plan ...................................................................................................................... 5 Customer Classes and Rate Components ........................................................................... 8 Summary of Adjustments to Rate Components ............................................................... 10 Summary of Projected Residential and Commercial Rates .............................................. 15 Comparison of Rates in Other Cities ................................................................................. 16 FINDINGS AND RECOMMENDATIONS .................................................................................. 18 NBS’ PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS ....................................................... 18

APPENDIX – DETAILED RATE SCHEDULES

STREET SWEEPING TECHNICAL MEMORANDUM

Summary of Solid Waste Rate Analysis Page 3 July 2023

FIGURES

Figure 1 - Primary Components of a Rate Study ........................................................................................... 4 Figure 2 - Summary of Solid Waste Financial Plan ........................................................................................ 6 Figure 3 - Summary of Solid Waste Financial Plan ........................................................................................ 7 Figure 4 - Projected Single-Family Rates Through FY’27/28 ....................................................................... 16 Figure 5 - Projected Commercial 3-CY Bin Rates Through FY’27/28 ........................................................... 16 Figure 6 - Comparison of Rates for Other Local Jurisdictions ..................................................................... 17 Figure 7 - Comparison of Commercial Rates for Other Local Jurisdictions ................................................. 17 TABLES

Table 1 - Summary of Solid Waste Revenue Requirements ......................................................................... 5 Table 2 - Summary of Solid Waste Reserves ................................................................................................. 7 Table 3 - Number of Residential Accounts .................................................................................................... 8 Table 4 - Number of Commercial Bins Accounts .......................................................................................... 8 Table 5 - Current and Proposed Residential (95-Gal Can/Curbside pickup) Rate Components ................. 10 Table 6 - Current and Proposed Residential and Commercial Rates ($/Month) ........................................ 13 Table 7 - Current and Proposed Residential and Commercial Rates (% Increases) .................................... 13 Table 8 - Current and Proposed Residential and Commercial Rates ($ Increases) ..................................... 13 Table 9 - Current and Proposed Residential Rates and Annual Percentage Increases ............................... 14 Table 10 - Current and Proposed Commercial Rates and Annual Percentage Increases ........................... 14 Table 11 - Current and Projected Street Sweeping Program Costs ............................................................ 15 Table 12 - Projected Street Sweeping Rates ............................................................................................... 15

Summary of Solid Waste Rate Analysis Page 4 July 2023

INTRODUCTION AND OVERVIEW
The City of Victorville (City) contracts for all solid waste services within the City, including refuse collection and disposal for residential and commercial customers, recycling, operation of the City’s Materials Recovery Facility (MRF), and organics material processing. The City provides collection services under a franchise agreement with Victorville Disposal., Landfill disposal services are provided by San Bernardino County through a contract. Recycling and organics processing services are provided through separate contracts with Burrtec Waste Industries. Additionally, the City must now implement expanded organics recycling programs in order to comply with the requirements of California state Senate Bill (SB) 1383 (SB 1383). These new programs include but are not limited to a curbside residential organics collection program, expanded commercial organics collection programs, edible food recovery, compost procurement, education, and outreach and more.

The City last updated its solid waste rates in 2018 (NBS performed the rate study), and the City retained NBS to update its current solid waste rates.

The additional SB 1383 costs are the primary changes to the current rates, although the City has also determined that street sweeping costs should be added to the solid waste rates rather than continuing to fund street sweeping through various other sources.

The new rates will incorporate these additional SB 1383 and street sweeping cost components and will be based on the financial plan developed as a part of this study. This memo summarizes the analysis and the recommended new rates.

RATE STUDY METHODOLOGY
Rate studies typically include the three components shown in Error! Reference source not found.:

Figure 1 - Primary Components of a Rate Study

Preparation of a Financial Plan – This plan incorporates current and projected budget data, including projected expenses and revenues. Revenue consists of both rate- and non-rate revenues. Rate revenues are the fees and charges the City uses to collect r evenue for solid waste services. Miscellaneous other revenues such as late fees, recyclable material sales, and interest earnings would be considered non-rate revenues This plan also evaluated current and planned reserve -fund levels, which are discussed fu rther below.

Cost of Service Analysis – This component focuses on equitably allocating costs to the various customer classes, or types of service, such as single -family residential, commercial bins, roll -offs, etc. In the City’s case, many of the charges a re established in the City’s hauler agreement with Victorville Disposal,

Step 3: Rate Design - Considers
what rate structure will best meet
the District’s need to collect rate
revenue from each customer class.

Step 2: Cost-of-Service Analysis –
Proportionately allocates the revenue
requirements to the customer classes
in compliance with industry standards
and State Law.

Step 1: Financial Plan/ Revenue
Requirements – Compares current
sources and uses of funds and
determines the revenue needed
from rates and project rate
adjustments.

FINANCIAL PLAN/

REVENUE

REQUIREMENTS

COST-OF-SERVICE

ANALYSIS

RATE DESIGN

ANALYSIS
1 2
3 Summary of Solid Waste Rate Analysis Page 5 July 2023

although the City’s administrative and overhead costs are also allocated and incorporated into solid waste rates.

Rate Design Analysis – In most rate studies, this component determine s how rate revenue is collected from customer classes. The City’s solid waste rate structure is already established and will only be modified as needed to accommodate the SB 1383 and street sweeping-related charges.

RESULTS OF THE SOLID WASTE RATE STUDY
Financial Plan
The financial plan incorporates the planned expenditures and both rate and non-rate revenues, such as fees, interest earnings, and miscellaneous revenues . Although the financial plan identifies how closely revenues match overall expenditures, the overall rate increases each year do not directly tie to the various rate components for each customer class and service level. Th e cost-of-service analysis and rate design determine those individual components.

Table 1 and Figure 2 summarize the net revenue requirements, which is the total revenues less non-rate revenues minus total operating expenses, and revenues under current and proposed rates. Net revenue requirements are the revenue required from rates over the next five years and directly impact the increases in rates. These rate increases are passed on to the individual rate components, which vary based on the changes in the costs included in each rate component.

Table 1 - Summary of Solid Waste Revenue Requirements

Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Sources of Solid Waste Funds
SW-Admin Fee 3,164,800 3,164,800 3,164,800 3,164,800 3,164,800 3,164,800 SW-Solid Waste Fee 16,471,778 16,471,778 16,471,778 16,471,778 16,471,778 16,471,778 Pavement Impact Fee Revenue 506,000 206,000 506,000 506,000 506,000 506,000 Rate Revenue 20,142,578 19,842,578 20,142,578 20,142,578 20,142,578 20,142,578 Revenue from Other Solid Waste Fees: 1,398,000 1,514,700 1,531,173 1,557,589 1,585,389 1,616,070 Source Reduction/Recycling Revenues: 1,503,848 1,420,700 1,425,500 1,430,462 1,435,592 1,440,895 Street Sweeping Contract Services - 7,100 7,400 7,700 8,000 8,300 Non-Rate Revenue 2,901,848 2,942,500 2,964,073 2,995,751 3,028,980 3,065,265 Total Sources of Funds $23,044,426 $22,785,078 $23,106,651 $23,138,329 $23,171,558 $23,207,843 Uses of Solid Waste Funds
SW-Hauling Charges 12,572,400$ 15,209,718$ 15,818,107$ 16,450,831$ 17,108,864$ 17,793,219$ SW-Disposal Charges 4,787,000$ 4,519,400$ 4,700,176$ 4,888,183$ 5,083,710$ 5,287,059$ Source Reduction and Recycling 2,366,807$ 2,461,310$ 2,559,762$ 2,662,153$ 2,768,639$ 2,879,385$ Customer Service 967,521$ 1,008,908$ 1,049,264$ 1,091,235$ 1,134,884$ 1,180,280$ Add'l SB 1383 Organics Proram Costs -$ -$ 581,700$ 611,000$ 642,000$ 674,000$ Street Sweeping -$ 568,148$ 754,361$ 1,096,300$ 1,167,600$ 1,243,500$ Pavement Impact 506,000$ 206,000$ 506,000$ 506,000$ 506,000$ 506,000$ All Other Operating Costs 2,153,708$ 2,516,651$ 2,909,077$ 3,005,200$ 3,105,168$ 3,275,399$ Total Operating Expenses 23,353,437$ 26,284,135$ 28,372,447$ 29,804,902$ 31,010,866$ 32,332,841$ Total Uses Less Non-Rate Revenue $20,451,589 $23,341,635 $25,408,374 $26,809,151 $27,981,886 $29,267,576 Total Rate Revenue After Rate Increases 23,044,426 23,932,138 25,613,217 26,844,125 27,911,274 29,031,183 Surplus (Deficiency) after Rate Increase (309,011) 590,503 204,843 34,974 (70,612) (236,394) Summary of Sources and Uses of Funds and
Net Revenue Requirements
Projected

Summary of Solid Waste Rate Analysis Page 6 July 2023

Figure 2 - Summary of Solid Waste Financial Plan

Reserve Funds – Table 2 and Figure 3 summarize the solid waste reserve funds over the next five years and indicate that reserves exceed the minimum in each of the years. The following are the recommended reserve fund target year-end balances:
• Operating & Maintenance (O&M) Reserve – This reserve is intended to cover emergency and unplanned costs, as well as normal cash -flow management. Typical utility O&M reserves are intended to cover for three months (90 days) of annual operating costs. In the City’ s case, this three-month reserve only applies to City O&M costs, and excludes costs related to contracted operations (i.e., the hauler agreement) and disposal costs. Contracted operations were excluded because they are not likely to change and disposal costs are not a direct operating cost addressed by this reserve. This target reserve amounts to approximately $1.65 to $2.2 million over the next five years.
• Capital and MRF Repair & Replacement Reserve – This reserve provides emergency funds related to capital ass ets, including materials recovery facility (MRF) and corporation yard rolling stock, buildings, and structures. Because most of the collection and disposal rolling stock and maintenance facilities are provided by the contracted hauler ( Victorville Disposal ), the City’s capital assets are relatively small. However, with the broader new requirements of SB 1383, there is additional risk that new equipment and/or changes in the MRF operations will require additional reserves. The analysis assumes that 40 percent of the value of City -owned capital assets, which is approximately $1.6 to $1.85 million over the five year rate period, is a reasonable target reserve level.

$23.4 mil.
$23.3 mil.
$25.4 mil.
$26.8 mil. $28.0 mil.
$29.3 mil.
$0 mil.
$5 mil.
$10 mil.
$15 mil.
$20 mil.
$25 mil.
$30 mil.
$35 mil.

FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Total Obligations
Fiscal Year Ending June 30
Solid Waste Revenue Requirements vs.

Revenue Under Existing and Recommended Rate Increases
Net Revenue Requirements
Solid Waste Funding w/ Current Rates
Solid Waste Funding w/ Proposed Rates

Summary of Solid Waste Rate Analysis Page 7 July 2023

Table 2 - Summary of Solid Waste Reserves

Figure 3 - Summary of Solid Waste Financial Plan

Although the amount of the projected reserve is greater than the targeted minimum, it is recommended to maintain the additional reserve and monitor fund balance as the new rates are implemented. There are several “unknowns” which could impact expenses and revenues in future years, including costs for SB 1383 mandated procurement of Recovered Organic Waste Product. In addition, it is unknow how many residential customers will turn in their extra trash carts when they receive an additional cart for organics recycling. If 75% of the residential customers who have an extra trash cart decide to turn in their extra trash cart, this could reduce revenues by over $240,000 per year. In addition, residents may choose the new 65-gallon trash carts, further reducing revenues. If the extra reserve is maintained or increases in future years, then a decision can be made to use the extra reserve to delay or reduce a future rate increase.

Inflation and Growth Projections – Assumptions regarding cost inflation were used to project future revenues and expenses for the study period. The following annual inflation factors were used in the analysis:
• No customer growth is expected.
• General cost inflation is 4 percent.

Budget
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Solid Waste O&M Reserve Fund
O&M Reserve Fund Ending Balance 4,704,410$ 3,725,682$ 3,856,312$ 3,725,969$ 3,501,984$ 3,107,972$ O&M Reserve Fund Recom. Min. Target 1,372,000 1,587,000 1,692,000 1,837,000 1,918,000 2,018,000 Capital and MRF Repair & Replac. Reserve Fund
Capital & MRF R&R Reserve Fund Balance -$ 1,569,231$ 1,643,443$ 1,722,326$ 1,789,017$ 1,860,485$ Capital & MRF R&R Reserve Min. Target 1,520,000 1,581,000 1,644,000 1,710,000 1,778,000 1,849,000 Ending Balance - Unrestricted Reserves 4,704,410$ 5,294,913$ 5,499,755$ 5,448,295$ 5,291,001$ 4,968,457$ Recom. Min. Target - Unrestricted Reserves 2,892,000$ 3,168,000$ 3,336,000$ 3,547,000$ 3,696,000$ 3,867,000$ Ending Reserve Fund Balances and
Recommended Reserve Targets
Projected
$4.7 mil.
$5.3 mil. $5.5 mil. $5.4 mil. $5.3 mil.
$5.0 mil.
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Ending Reserves ($ mil.)
Fiscal Year Ending June 30
Ending Solid Waste Reserve Fund Balances vs.

Recommended Reserve Targets
Ending Balance - Unrestricted Reserves
Recom. Min. Target - Unrestricted Reserves

Summary of Solid Waste Rate Analysis Page 8 July 2023

• Fuel cost inflation is 9 percent.
• Materials Recovery Facility (MRF) inflation is 6.5 percent. • Collection system cost inflation is 5 percent.
• Landfill cost inflation is 3 percent.
• AB 939 cost inflation is 4 percent.

Customer Classes and Rate Components
The City’s solid waste rates are identified by residential and commercial customer classes that define the type of service (size of container and number of pickups per week) that customers receive. The following are the various customer classes:

Residential Classes – Typical residential service (single-family and multi-family) is once per week collection of a 95 -gallon trash container and 6 5-gallon recycling container. There are approximately 31,300 single family and 1,000 multi -family residential accounts. A smaller 65- and 35-gallon trash container is also available, and extra carts are provided as requested. Because some commercial businesses receive the same type of service as residential customers (i.e., 95 -gallon cans plus 65-gallon recycling cans with one pickup per week), these commercial accounts are considered the same as residential accounts for ratemaking purposes. Table 3 shows the number of accounts.

Commercial Bins – The City’s commercial rate schedule includes a large variety of services based on container size and number of pickups per week; Table 4 summarizes the most common levels of service and container sizes . Roll-off containers make up a much smaller type of commercial service. There are approximately 174 roll-off accounts.

Table 3 - Number of Residential Accounts

Table 4 - Number of Commercial Bins Accounts
Type Size Frequency Units
Single-Family Residential (SFR) 95 gal. 1 31,338
SFR- Extra Green Cans 95 gal. 1 6,353
SFR- Extra Blue Cans 60 gal. 1 2,610
SFR-Hardship 95 gal. 1 252
Total Single-Family Accounts* 31,338
Multi-Family Residential (MFR) 95 gal. 1 994
MFR- Extra Green Cans 95 gal. 1 12
MFR- Extra Blue Cans 60 gal. 1 6
Total Multi-Family Accounts* 994
Commercial Cans 95 gal. 1 64
Commercial Cans-Extra Green 95 gal. 1 6
Commercial Cans-Extra Blue 60 gal. 1 25
Total Commercial Accounts* 64
Residential Service (Once/week)

Summary of Solid Waste Rate Analysis Page 9 July 2023

Rate Components – The following are the rate components included in the solid waste rates:
• Collection charges for refuse, recycling, organic materials, including bin rental (as defined in the City’s hauler agreement).
• Disposal charges (as per the Waste Delivery Agreement contract between the City and San Bernardino County ). Disposal charges also includes MRF residue disposal costs and organic material processing costs.
• AB 939 fees covers MRF operational and maintenance costs as well as the costs for membership in the Mojave Desert & Mountain Recycling Authority.
• Pavement Impact fees recover a portion of the costs of street repair that is directly related to the impacts of refuse collection vehicles on the City’s streets. • Administrative fees recover miscellaneous administrative and program management costs. • New Organics Recycling/Diversion Program Costs to comply with CA state law SB 1383. • Franchise fees are for a payment to the City ’s General Fund as part of the hauler’s agreement and is currently set at 8% of the above fees and charges. • Household Hazardous Waste Fee pays for the cost of operating the City’s Household Hazardous Waste (HHW) Program. The City HHW Collection Center is located on Loves Lane and staffed by Victorville Disposal under contract to the City. Hazardous materials are disposed of through a contract with the San Bernardino County Fire Protection District. The HHW fee is charged to only residential customers: commercial accounts cannot use the HHW facility and are not charged the HHW fee.
• Street Sweeping fees, which were previously funded through other sour ces, are now proposed to be funded through the solid waste program. Proposed fees are a monthly charge to all single- family, multi-family, and commercial 95-gallon can/recycling service with one pickup per week.

These customers account for approximately 96 percent of solid waste customers (roll -offs and commercial bins make up the remainder).

Each of these fees has been examined and adjusted as needed to reflect inflation-related cost increases, agreement-related cost increases, and new or increasing operational costs. The following is a summary of the adjustment factors considered in this analysis.

Overview of Rate Adjustments – Individual rates for each customer classes were adjusted as follows:
• Refuse, recycling, and organics collection service costs were adjusted based on the Consumer Price Index, as identified in the terms of the City’s contract with Victorville Disposal. • Other solid waste and recycling program costs are allocated to residential and commercial customers based on the percentage of refus e that is attributable to the two different sectors -- residential and commercial. The current allocation is 55% residential and 45% commercial. Once the percentage of costs is determined for each sector, the residential rate is then further allocated based upon the most recent number of residential units (32,614 units) and the commercial rate Commodity Size Frequency Quantity
Trash 1.5 CY 1 /week 178
Trash 2.0 CY 1 /week 125
Trash 3.0 CY 1 /week 310
Trash 3.0 CY 2 /week 184
Trash 3.0 CY 3 /week 177
Total Commercial Bins* 1,312
Commercial Bins (Most Common Service Levels - Partial List) * Since this is a partial list, the total is higher than those listed here.

Summary of Solid Waste Rate Analysis Page 10 July 2023

is based on cubic yards per year (873,750 total cubic yards/year), including 584,900 cubic yards of trash and 288,850 cubic yards of recyclables and organics. • Disposal costs reflect higher landfill costs and organics processing costs. • The franchise fee has remained unchanged at 8% per the City’s agreement with Victorville Disposal.
• Administrative fees reflect increases in City overhead and operating costs, including those related to new mandated programs such as SB 1383.
• Street sweeping fees are based on the City’s current operating costs for the City properties served by this program plus the nee d to add an additional street sweep er operator, for a total of five instead of four, and an equipment replacement plan.

Table 5 summarizes the current and proposed fees for residential/commercial 95-gallon can curbside pickup services.

Table 5 - Current and Proposed Residential (95-Gal Can/Curbside pickup) Rate Components

As the table above shows, costs associated with implementation of SB 1383 programs account for $7.37 or 60% of the total residential rate increase. The addition of street sweeping costs accounts for another $0.83 or 6% of the total increase. Combined, SB 1383 costs and sweeping costs account for 6 6% of the total proposed increase. However, the street sweeping charge is temporarily low due to ARPA funding of street sweeper replacements; this cost will be borne by the City in the future and increase this rate component to $2.80 per residential account in FY 25/26.

Over the past two years, the Collection component has increased significantly due to CPI adjustments per the franchise agreement. For FY 22/23, the collection component increased by 8.59% and for FY 23/24, the collection component is increasing an additional 7.33%. The 7.33% increase in collection costs added $1.34 to the residential collection cost for FY 23/24. The $1.34 represents 11% of the total $ 12.15 residential rate increase.

Summary of Adjustments to Rate Components
The following are descriptions of how individual rate components were adjusted.

Refuse, Recycling, and Organics Collectio n Fee – Section 10.06 of the First Amended, Consolidated and Restated Exclusive Franchise Agreement between the City of Victorville and Victorville Disposal, Inc., from 2009 as subsequently updated by Amendment Number 2 in 2018 provides that:

Pavement Impact Fee $0.75 $0.29 ($0.46)
Organics Program $0.00 $0.90 $0.90 $0.90
Organics Collection $0.00 $4.20 $4.20 $4.20
AB 939 Fee $1.01 $0.94 ($0.07)
Street Sweeping (NEW) $0.00 $0.83 $0.83
Franchise Fee $2.28 $3.12 $0.84
Admin $3.40 $5.18 $1.78 $0.27
Disposal $5.03 $7.82 $2.79 $2.00
Collection $18.30 $19.64 $1.34
Total $30.77 $42.92 $12.15 $7.37
Change in
SFR Rate
SB 1383
Costs
Solid Waste Residential
Fees (95-Gal. Cart) FY'22/23 FY'23/24

Summary of Solid Waste Rate Analysis Page 11 July 2023

Contractor’s compensation as set forth in Attachment E, Contractor Service Unit Rates, shall be adjusted each July 1 st by an amount equal to the average January to January change in the Consumer Price Index for All Urban Consumers for Riverside-San Bernardino-Ontario as published by the United States Department of Labor, Bureau of Labor Statistics (“CPI”).” The CPI adjustment due for FY 23/24 is 7.33%. The CPI adjustment for the prior year, FY 22/23, was 8.59%.

The two most recent increases are much larger than prior increases, which have typically ranged between 1-3% annually.

As a result of the 7.33% adjustment to collection costs for FY 23/24, the residential collection service cost will increase $1.34 per month, to $19.64 per month, up from $18. 30/month. In addition, the new residential organics collection program will add another $4.20 to the residential c ollection component, bringing the total residential collection cost to $ 42.92 per month for three -can service. Commercial customers will also see a 7.33% increase in refuse , recycling, and organics collection component costs.

Actual dollar increases for commercial customers will vary, depending on their level of service. For a customer with a 3-cubic yard trash bin emptied once per week, the collection component will be $ 53.66 per month, up from $49.99 per month previously.

Dump/Disposal Fees – The Dump/Disposal Fee component of the solid waste rate pays for the following three items: disposal of trash from residential and commercial waste collected by Victorville Disposal ; disposal of residue from the Victor Valley MRF processing center; and organic material processing costs.

Refuse from City residents and businesses is disposed of at San Bernardino County’s Victorville landfill per the terms of the December 1997 Waste Delivery Agreement between the City of Victorville and the County of San Bernardino and subsequent amendments. Each July, the County adjusts the landfill rate for a cost- of-living increase as outlined in the Waste Delivery Agreement . The County landfill rate increased 3.2% for FY 23/24, from $40.75 per ton to $42.07 per ton. MRF residue is also disposed at the County landfill at the Waste Disposal Agreement contract disposal rate.

Organic materials are processed at the Victor Valley Compost Facility operated by Burrtec Waste Industries. For FY 23/24, processing fees increased 8.7% at the compost facility.

Disposal/processing costs are allocated to each customer class based on the tonnage generated/disposed.

The residential disposal fee for FY 23/24 is calculated to be $7.82 per month, based on an average waste generation of 1.49 tons/year per household; the landfill disposal rate of $42.07 per ton; estimated organics generation of .37 tons per household and a processing fee of $106.58/ton; and MRF residue of .10 tons (200 pounds) per year. Residential organics proc essing costs are estimated to comprise $2.00 per month of the total. The commercial disposal rate is based on an average of 91 pounds per cubic yard of trash and works out to $2.62 per cubic yard, including $.55/cubic yard for organics processing. Disposal fees are not assessed on commercial recycle bins.

AB 939/Recycling Program Costs – The AB 939 Fee covers the City’s portion of costs of operating the Victor Valley MRF as well as the costs of membership in the Mojave Desert and Mountain Recycling Authority. .Revenues from the sale of recyclable materials help offset MRF operating costs, but do not cover 100% of the costs. Due to increased recyclable volumes, higher revenues are forecast, and t he AB 939 Fee is therefore decreasing for residential customers to 9 4 cents per month (down from $1.01/month) and decreasing to 34 cents per cubic yard (down from 42 cents/yard) for commercial customers.

Organics Program Fee – SB 1383 was enacted in 2016 and imposed numerous requirements on jurisdictions for new organics collection programs, plus requirements for outreach and education, inspection and enforcement, container contamination minimization, and record-keeping for the new organics programs. SB 1383 regulations also mandate that jurisdictions procure .08 tons per capita per year of “Recovered Organic Waste Products,” which could include compost, mulch, renewable gas, and electricity from renewable gas, as well as several other products. According to calculations from CalRecycle, by 2025, Victorville is required to procure the equivalent of 5,900 tons/year or 14,754 cubic

Summary of Solid Waste Rate Analysis Page 12 July 2023

yards/year of compost. The quantity required to be procured increases from 30% of the total by 2023; 65% by 2024; and 100% of the total by 2025 and beyond.

The Organics Program Fee component pays for the above mentioned expenses, including compost procurement at the 30% level, but does not include organics collection costs. (Organics collection costs are included in the Collection Fee component of the rate.) Commercial customers were charged an Organics Fee starting in 2018, since commercial organics programs were implemented back in 2018 in response to CA state law AB 1826 (Mandatory Commercial Organics Recycling). For residential customers, the Organics Fee is proposed to be a new component of the rate starting in FY 23/24 to coincide with implementation of residential organics programs. The residential cost is 90 cents per month and the commercial cost is 38 cents per cubic yard of trash. Going forward, the City will need to evaluate options and additional costs for reaching 100% of the Recovered Organic Waste Product procurement goal. This is an unknown for future years. To the extent that there is a positive Solid Waste fund balance reserve, this will help cover additional costs associated with meeting the full procurement goal.

Administrative Fee – This fee component covers the cost for City administration of solid waste and recycling programs, which includes customer service and billing functions. The Administrative Fees portion of the rate works out to $ 5.18 per month for residential accounts and $1.8 9 per cubic yard for commercial customers.

Street Sweeping Fee – Street sweeping fees are proposed to be included in solid waste rates. As discussed in detail later in this report, the costs are recommended to be allocated equally to residential and commercial curbside customers, resulting in a fee of $2.09 per account per month. However, due to ARPA funding for street sweeper replacements in FY 23/24 and FY 24/25, the fee was reduced to $0.83 and $1.99, respectively. Including street sweeper replacements at the City’s cost, the fee will increase to $2.80 in FY 25/26.

Pavement Impact Fee – The Pavement Impact Fee covers a portion of the costs to maintain roads damaged by solid waste collection vehicles. In 2018, the City of Victorville Engineering Division completed an Analysis of Pavement Damage Costs from Refuse/Recy cling Vehicles . This analysis concluded that approximately 40% of the damage to roads is associated with refuse/recycling collection vehicles and that the cost of this damage is approximately $3,484,800 per year. Revenues from the Pavement Impact Fee are used as the funding source for the City’s annual $506,000 base -year match that is required for Victorville to receive Road Maintenance and Rehabilitation Account —Local Streets and Roads funding.

Due to growth in the number of residential and commercial c ustomers and the accumulation of a small surplus of these fu nds, the Pavement Impact Fee is proposed to decrease to 29 cents per residential account per month and 9 cents per cubic for commercial customers. Once that one-time use of surplus funds has been used, the fee in FY 24/25 will be 71 cents for residential and 22 cents per cubic yard for commercial.

Household Hazardous Waste Fee – The HHW Fee has been 32 cents per residential unit per month since 2018. Due to increased costs for staffing and disposal services, it is proposed to increase the HHW Fee by 5 cents per month, up to 37 cents per month starting in FY 24/25.

Based on the various costs included in each of the residential/commercial curbside fees and the commercial bin and roll-off services, Table 6 summarizes the projected residential and commercial solid waste rates. Tables 7 and 8 summarize the rate increases in dollars and percentages.

Summary of Solid Waste Rate Analysis Page 13 July 2023

Table 6 - Current and Proposed Residential and Commercial Rates ($/Month)

Table 7 - Current and Proposed Residential and Commercial Rates (% Increases)

Table 8 - Current and Proposed Residential and Commercial Rates ($ Increases)

Summary of Residential 95-Gal. Can Rate Component Escalators – Based on the v arious inflation and cost-related adjustments to the residential 95 -gallon can rates, Table 9 summarizes the cost -of-service based rate components and/or the annual escalation rates. The hig hlighted and bold italics rates show the calculated cost-of-service rate components, while the annual percentage escalations are the annual adjustments where these percentages are applied to the previous year’s rate component.

Summary of Commercial 95-Gal. Can Rate Component Escalators – Similar inflation and cost -related adjustments to the commercial property 95-gallon can rates are shown in Table 10. As with the residential rates, the highlighted and bold italics rates show the calculated cost-of-service rate components, while the annual percentage escalations are the annual adjustments where these percentages are applied to the previous year’s rate component.

Customer Class Projected Solid Waste Rates (Partial List) FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single Family Residential $12.15 $3.52 $2.81 $2.23 $2.34 Multi-Family Residential $12.15 $3.52 $2.81 $2.23 $2.34 Commercial Can $4.35 $3.06 $2.63 $2.04 $2.15
Commercial Bin (3.0 CY Bin, 1 Pickup/week) $9.57 $4.86 $6.05 $6.31 $6.59 Comm. Compactor Bin (1.5 CY, 1 Pickup/week) -$3.40 $5.01 $4.26 $4.43 $4.61 Commercial Recycling (3 CY Bin, 1 Pickup/week) $11.07 $8.04 $6.98 $7.94 $9.16 Roll-offs (10 CY Roll-Off, 1 Pickup/week) $93.18 $52.25 $68.17 $73.02 $78.22 Dollar Increase from Previous Year
Customer Class Projected

Summary of Solid Waste Rate Analysis Page 14 July 2023

Table 9 - Current and Proposed Residential Rates and Annual Percentage Increases

Table 10 - Current and Proposed Commercial Rates and Annual Percentage Increases

Similar adjustments were made for roll-offs, bins, and compactor bins.

Street Sweeping Rates – The City is proposing to incorporate street sweeping rates into the solid waste rates. NBS prepare a separate analysis of the cost of service for street sweeping services that recommended uniform charges to all curbside residential and commercial properties (i.e., 95-gallon can or smaller cans if the customers chose a 65- or 35-gallon trash can).1 Street sweeping costs were allocated to customer classes based on total annual solid waste revenues for calendar year 2022. We believe this represents a reasonable basis for the allocation of benefits to customer classes.

This analysis also evaluated three rate alternatives, including one that allocated street sweeping costs to all residential and commercial customers (i.e., commercial bins and roll-offs) and two that allocated street sweeping costs solely to curbside residential and commercial customers, which represent approximately 96 percent of all solid waste customers.

The recommended rate allocates street sweeping costs equally to all curbside customers because this approach:

1 Analysis of Street Sweeping Funding Alternatives, Technical Memorandum, NBS, July 2023. (Included in the Appendix) Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Franchise Fee $2.28 8.0% 8.0% 8.0% 8.0% 8.0%
Collection Increase (CPI) $18.30 $19.64 5.0% 5.0% 5.0% 5.0% Organics Component (SB 1383) N.A. $0.90 5.0% 5.0% 5.0% 5.0% Organics Collection (SB 1383) N.A. $4.20
Disposal (County LF Cost Increase) $5.03 $7.82 3.0% 3.0% 3.0% 3.0% AB 939 Fee (Resid. & Comm.) $1.01 $0.94 4.0% 4.0% 4.0% 4.0% Pavement Impact Fee for Resid. $0.75 $0.29 144.8% 0.0% 0.0% 0.0% City Admin Fee (CPI) $3.40 $5.18 5.0% 5.0% 5.0% 5.0%
Street Sweeping (COS Adjustment) N.A. $0.83 $1.99 32.4% 5.0% 5.0% Total $30.77 $42.92 $46.44 $49.25 $51.49 $53.83
Effective Rate Increase N.A. 39.5% 8.2% 6.1% 4.5% 4.5%
Cost-of-service derived rates are highlighted in bold italic.

FY’23/24 rates assume a full year of service; some programs may be only partial years (for both revenues and expenses).

Current Rate
($/Mo.)
Projected Residential (95-Gal. Can) Solid Waste Rates
or Percent Rate IncreaseComponent of Residential
95-Gal. Can Rates
Effective Rate Increases (sum of all rate components)
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Franchise Fee $2.89 8.0% 8.0% 8.0% 8.0% 8.0%
Collection Increase (CPI) $24.97 7.3% 5.0% 5.0% 5.0% 5.0% Organics Component (SB 1383) ($/CY) $0.82 $0.77 5.0% 5.0% 5.0% 5.0% Disposal (County LF Cost Increase) $5.32 $5.34 3.0% 3.0% 3.0% 3.0% AB 939 Fee (Resid. & Comm.) $1.01 $0.94 4.0% 4.0% 4.0% 4.0% Pavement Impact Fee for Resid. $0.75 $0.29 144.8% 0.0% 0.0% 0.0% City Admin Fee (CPI) $3.20 $5.18 5.0% 5.0% 5.0% 5.0%
Street Sweeping (COS Adjustment) N.A. $0.83 $1.99 32.4% 5.0% 5.0% Total $38.95 $43.30 $46.36 $48.98 $51.03 $53.17
Effective Rate Increase N.A. 11.2% 7.1% 5.7% 4.2% 4.2%
Cost-of-service derived rates are highlighted in bold italic.

FY’23/24 rates assume a full year of service; some programs may be only partial years (for both revenues and expenses).

Component of Residential
95-Gal. Can Rates
Current Rate
($/Mo.)
Projected Commercial (95-Gal. Can) Solid Waste Rates

Summary of Solid Waste Rate Analysis Page 15 July 2023

• Treats residential and commercial customers equally.
• Makes the rates per account minimal compared to other rate options. • Is easy to understand and administer.

In the recommended street sweeping rate option, t here is no adjustment for smaller ca ns, since street sweeping rates are intended to apply to residential and commercial properties, regardless of can size.

Table 11 summarizes the street sweeping program costs, including the small amount of revenue the City receives for contracted street sw eeping services. The FY 24/25 costs include the addition of one more street sweeper operator, increasing the total to five street sweeper operators. Table 12 summarizes the projected street sweeping rates for curbside residential and commercial customers for FY 23/24, FY 24/25, and FY 2025/26, including the adjustments for the temporary ARPA funding street sweeper replacements.

Table 11 - Current and Projected Street Sweeping Program Costs

Table 12 - Projected Street Sweeping Rates

Summary of Projected Residential and Commercial Rates
Figures 4 and 5 below illustrate the projected single-family (95-gal.) and commercial (3 CY) bin rates for FY 2023/24 through FY 2027/28.

FY 2021/22
Actuals
FY 2023/24
Projected
FY 2024/25
Projected
220 - Gas Tax Operating Expenses $327,794 $392,390 $503,730 220 - Gas Tax Equipment Expenses $7,576 $7,576 $9,725
202 - Storm Drain Operating Expenses $154,708 $160,076 $205,498 370 - LMADS/MAD Wages & Benefits $7,854 $8,107 $10,407
(Currently Unfunded) Capital Replacement $250,000 $250,000 $275,000 (Currently Unfunded) Annual Capital Replacement -- -- $25,000 Total Annual O&M $747,932 $818,148 $1,029,361
(less) Special Service
Fees
Contract Street Sweeping
Services ($6,870) ($7,200) ($7,600)
Net Annual O&M $741,062 $810,948 $1,021,761

1. Although not shown in this table, ARPA funds were available for street sweeper replacements in FY 23/24 and FY 24/25, but have been reflected in the street sweeping rate component.

Street Sweeping Program Costs
St. Sweeping
Annual
St. Sweeping
Costs
Type Units ($/Year)2
Curbside Accounts FY'23/24 FY'24/25 FY'25/26
Single-Family Resid. (SFR) 31,338 $542,726 $1.44 $2.63 $2.80 Multi-Family Resid. (MFR) 994 $17,215 $1.44 $2.63 $2.80 Commercial Cans 64 $1,108 $1.44 $2.63 $2.80
Total Curbside Services 32,396 $561,048 $1,021,761 $1,096,300 Adjusted Costs for ARPA Funding $311,048 $746,761
Adjusted Rates for ARPA Funding $0.83 $1.99
Street
Sweeping
Rates
Rates($/Unit/Mo.)
Calculation of Street Sweeping
Rates for Solid Waste Customers

Summary of Solid Waste Rate Analysis Page 16 July 2023

Figure 4 - Projected Single-Family Rates Through FY’27/28

Figure 5 - Projected Commercial 3-CY Bin Rates Through FY’27/28

Comparison of Rates in Other Cities
Figure 6 below provides an overview of comparable rates in similar cities in the region. With the SB 1383 mandates applying to these cities, some may not have fully adjusted their rates to account for these additional costs yet.

$30.77 $30.77 $30.77 $30.77 $30.77
$42.92
$46.44
$49.25
$51.49 $53.83
$0
$10
$20
$30
$40
$50
$60
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Proposed Monthly Rates
Monthly Bill
Current 95 gal Solid Waste, 60 gal recycling
Proposed 95 gal Solid Waste, 60 gal recycling
Single-Family Residential Bill Comparison - Current vs.

Projected Through FY 2027/28
$134.05 $134.05 $134.05 $134.05 $134.05
$143.62 $148.49 $154.54 $160.85 $167.44
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Proposed Monthly Rates
Monthly Bill
Current 3.0 yd Bin 1 PU/WK
Proposed 3.0 yd Bin 1 PU/WK
Commercial Bin Bill Comparison - Current vs. Projected
Through FY 2027/28

Summary of Solid Waste Rate Analysis Page 17 July 2023

Figure 6 - Comparison of Rates for Other Local Jurisdictions

Figure 7 below illustrates rate comparisons for commercial bin collection rates (3 CY, one pickup per week) for similar communities in the region. This comparison indicates that Victorville has some of the lowest commercial bin rates in the area.

Figure 7 - Comparison of Commercial Rates for Other Local Jurisdictions

Rate Model – NBS and City staff worked closely together to develop a rate model to evaluate the three rate study components, as discussed in Rate Study Methodology. The result is an Excel-based rate model that incorporates the analysis and the recommended rates. Thi s model provides the full documentation of the rate analysis, along with detailed rate schedules for each customer class and level of service and has been provided to City staff for future updates as needed. The recommended rates are provided in the Appendix attached to this memo.

$34.72
$39.94
$37.21 $37.21 $34.97
$31.02 $30.77 $30.57 $29.96
$0.83
$7.37
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Victorville -
Proposed
Lancaster Apple
Valley
Adelanto Hesperia
(2-95 Gal.)
Barstow Victorville -
Current
Rancho
Cucamonga
Rialto
(60-Gal.)
Comparison of Single-Family Solid Waste Rates ($/Mo.)
SB 1383
Street Sweeping
$238.43 $237.85 $230.49 $229.36 $214.78 $205.90
$167.38
$149.79 $143.62 $141.63 $134.05
$0
$50
$100
$150
$200
$250
$300
Rialto
(Burrtec)
Rancho
Cucamonga
Barstow
Proposed
Hesperia Lancaster Barstow
Current
Adelanto
(Burrtec)
Apple Valley Victorville -
Proposed
Apple Valley
Current
Victorville -
Current
Comparison of Comm. 3-CY Bin (1x/wk) Rates ($/Mo.)

Summary of Solid Waste Rate Analysis Page 18 July 2023

FINDINGS AND RECOMMENDATIONS
The following are the primary findings and recommendations resulting from this rate analysis.

Summary of Findings – Since the City’s solid waste rates were last reviewed in the cost-of-service analysis completed in March of 2018, environmental and regulatory requirements have increased significantly.

California State law SB 1383 mandated extensive organic material recycling/diversion programs. These have significantly inc reased the City’s operating costs, including the contracted services provided by Victorville Disposal. This places the City in the difficult position of adopting non-optional rate increases to pay for these new programs to comply with the law , or else face daily State-mandated fines for non - compliance.

Apart from moving street sweeping program costs into the solid waste utility, this study evaluated the various factors contributing to higher rates , and the recommended rates are those necessary to adequately fund the City’s solid waste services and meet contractual collection and disposal costs.

Recommendations – The following are the actions that NBS, in consultation with City staff, recommend the City take regarding the solid waste rates:
• Review the results of this study and consider proceeding with the adoption process to implement these recommended rates.
• Approve the proposed new rates and formally adopt the recommended reserve fund level as part of the rate resolution.
• Have the City’s legal counsel review the proposed rates and Prop 218 notices to ensure that they comply with existing statutes and legal requirements.
• Direct City staff to proceed with sending out Prop 218 notices to begin the protest ballot process required under State law prior to formal adoption and implementation of these rates. • After a minimum of 45 days after the initial mailing of the Prop 218 notices, determine whether a majority protest to the proposed rates was received. Assuming there was not a majority protest, adopt the proposed rates in a public hearing (scheduled for October 3, 2023 at this time). • Assuming rates are adopted at an October 3, 2023 public hearing , direct staff to implement the new rates, with an effective date of November 1, 2023.
• Whenever a utility adopts new rates, it is advisable to closely monitor the rate revenue generated from those new rates in the next few years to ensure adequate revenues are being collected or whether revenues may be adequate to postpone future increases . The City should follow this advice.

NBS’ PRINCIPAL ASSUMPTIONS AND CONSIDERATIONS
In preparing this memo and the findings included herein, NBS has relied on several principal assumptions and considerations regarding financial and operational matters, including Victorville’s billing records, accounting reports, City program cost analyses, and other conditions and events projected to occur in the future. We have assumed this information and these assumptions were provided by sources that are reliable; NBS has not independently verified this data.

While we believe NBS’ use of such information and assumptions is reasonable for the purpose of this rate study, memo and its findings, some assumptions will invariably not materialize as s tated herein or may vary significantly due to unanticipated events and circumstances. Therefore, the actual results can be expected to vary from those projected to the extent that actual future conditions differ from those assumed by us or provided to us by others.

Summary of Solid Waste Rate Analysis Page 19 July 2023

APPENDIX – DETAILED RATE SCHEDULES

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Single- and Multi-Family and Comm. Carts
95 gal Solid Waste, 65-gal Recycle, 65-gal Organics $30.77 $42.92 $46.44 $49.25 $51.49 $53.83 65 gal Solid Waste, 65-gal Recycle, 65-gal Organics N/A $40.04 $43.23 $45.95 $48.09 $50.32 35 gal Solid Waste, 65-gal Recycle, 65-gal Organics $25.50 $37.58 $40.94 $43.59 $45.66 $47.82 Additional 95-gallon Trash Container $14.05 $13.93 $14.55 $15.19 $15.87 $16.58 Additional 65-gallon Recycling Container* $1.81 $1.99 $2.08 $2.19 $2.30 $2.41 Additional 65-gallon Organics Container* N/A $13.93 $14.55 $15.19 $15.87 $16.58 Hardship Rate** $24.78 $39.05 $42.38 $44.99 $47.01 $49.12 Hardship & Small Can Rate** $21.17 $33.71 $36.88 $39.33 $41.18 $43.12 Resid. using trash bin: 65-gal Recycle Cart-Required N/A $15.12 $15.88 $16.67 $17.50 $18.38 Resid. using trash bin: 65-gal Organics Cart-Required N/A $20.46 $21.82 $22.79 $23.81 $24.87 Commercial Cans
95 gal Solid Waste, 65 gal recycling $38.95 $43.30 $46.36 $48.98 $51.03 $53.17 Additional 95-gallon Trash Container $11.30 $15.24 $15.90 $16.47 $17.06 $17.69 Additional 65-gallon Recycling Container N/A $15.12 $15.88 $16.67 $17.50 $18.38 Miscellaneous Charges:*** (Per Occurance)
Late Set Out/Return Trip-Trash, Recycle, Organics $20.21 $18.04 $18.67 $20.00 $20.00 $20.70 Contaminated Recycle/Organics, Empty as Trash $21.56 $19.84 $20.53 $22.00 $22.00 $22.77 Change size/number of carts (in excess of once/year) $33.68 $34.86 $36.08 $38.65 $38.65 $40.00 * The first additional recycling can is free; this charge applies to more than 2 recycling cans. ** Only if granted by the City; applies only to single-family accounts. *** Applies to both resdiential and commercial can service.

SOLID WASTE RATE SCHEDULE Proposed Monthly RatesCurrent Rates
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week

1.5 1 $68.25 $73.16 $77.10 $80.27 $83.58 $87.03

1.5 2 $130.59 $139.48 $147.03 $153.01 $159.25 $165.75

1.5 3 $192.34 $205.80 $216.96 $225.74 $234.91 $244.48

1.5 4 $254.39 $272.12 $286.88 $298.48 $310.58 $323.20

1.5 5 $316.44 $338.44 $356.81 $371.22 $386.25 $401.92

1.5 6 $378.48 $404.76 $426.74 $443.95 $461.91 $480.65

1.5 7 $440.53 $471.08 $496.66 $516.69 $537.58 $559.37

1.5 8 $502.58 $537.40 $566.59 $589.42 $613.24 $638.09

1.5 9 $564.62 $603.72 $636.52 $662.16 $688.91 $716.82
2 1 $90.39 $96.87 $100.17 $104.27 $108.54 $113.00
2 2 $173.12 $185.30 $191.48 $199.22 $207.30 $215.72
2 3 $255.85 $273.73 $282.78 $294.17 $306.06 $318.45
2 4 $338.58 $362.16 $374.09 $389.13 $404.81 $421.18
2 5 $421.31 $450.58 $465.39 $484.08 $503.57 $523.91
2 6 $504.04 $539.01 $556.69 $579.03 $602.33 $626.64
2 7 $586.77 $627.44 $648.00 $673.99 $701.09 $729.36
2 8 $669.50 $715.86 $739.30 $768.94 $799.85 $832.09
2 9 $752.23 $804.29 $830.60 $863.89 $898.61 $934.82
Proposed Monthly RatesSOLID WASTE RATE SCHEDULE
Commercial Bins
Current
Rates

Summary of Solid Waste Rate Analysis Page 20 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week
3 1 $134.05 $143.62 $148.49 $154.54 $160.85 $167.44
3 2 $258.15 $276.26 $285.44 $296.97 $308.99 $321.53
3 3 $382.24 $408.90 $422.40 $439.40 $457.13 $475.62
3 4 $506.34 $541.54 $559.35 $581.83 $605.27 $629.72
3 5 $630.43 $674.18 $696.31 $724.26 $753.40 $783.81
3 6 $754.52 $806.83 $833.27 $866.69 $901.54 $937.90
3 7 $878.62 $939.47 $970.22 $1,009.12 $1,049.68 $1,091.99 3 8 $1,002.71 $1,072.11 $1,107.18 $1,151.55 $1,197.82 $1,246.08 3 9 $1,126.81 $1,204.75 $1,244.13 $1,293.98 $1,345.96 $1,400.18 4 1 $180.78 $193.75 $200.35 $208.53 $217.08 $225.99
4 2 $346.24 $370.60 $382.95 $398.44 $414.59 $431.45
4 3 $511.70 $547.46 $565.56 $588.35 $612.11 $636.90
4 4 $677.16 $724.31 $748.17 $778.25 $809.63 $842.36
4 5 $842.62 $901.17 $930.78 $968.16 $1,007.15 $1,047.81 4 6 $1,008.08 $1,078.02 $1,113.39 $1,158.06 $1,204.66 $1,253.27 4 7 $1,173.53 $1,254.87 $1,295.99 $1,347.97 $1,402.18 $1,458.73 4 8 $1,338.99 $1,431.73 $1,478.60 $1,537.88 $1,599.70 $1,664.18 4 9 $1,504.45 $1,608.58 $1,661.21 $1,727.78 $1,797.22 $1,869.64 Proposed Monthly RatesSOLID WASTE RATE SCHEDULE
Commercial Bins (Cont.)
Current
Rates
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Roll-Off Size (CY) 1x/Week $/Pickup
10 $867.65 $200.23 $221.73 $233.79 $249.52 $266.37 $284.42 20 $978.49 $225.81 $250.89 $269.57 $286.54 $304.69 $324.09 30 $1,089.33 $251.38 $280.05 $301.01 $318.89 $337.98 $358.37 40 $1,200.16 $276.96 $309.21 $332.46 $351.25 $371.28 $392.64 * Disposal costs, if any, will be charged based on actual tonnage charges determined at landfill or other disposal/recycling site, plus Franchise Fee.

Current
Per Pickup
Rates
Proposed Rates (Cost per Pickup)*SOLID WASTE RATE SCHEDULE Solid Waste Roll-Offs
& Recycling Roll-Offs
Current
Monthly
Rates
(Note: disposal cost plus 8% franchise fee will be added)

Summary of Solid Waste Rate Analysis Page 21 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week

1.5 1 $49.10 $54.76 $58.85 $62.41 $66.45 $71.11

1.5 2 $92.01 $102.69 $110.52 $117.28 $124.99 $133.92

1.5 3 $134.91 $150.62 $162.19 $172.15 $183.53 $196.72

1.5 4 $177.81 $198.55 $213.86 $227.02 $242.07 $259.52

1.5 5 $220.72 $246.48 $265.54 $281.90 $300.61 $322.33

1.5 6 $263.62 $294.40 $317.21 $336.77 $359.15 $385.13

1.5 7 $306.52 $342.33 $368.88 $391.64 $417.69 $447.93

1.5 8 $349.42 $390.26 $420.55 $446.51 $476.23 $510.74

1.5 9 $392.33 $438.19 $472.22 $501.38 $534.77 $573.54
2 1 $64.87 $72.35 $77.77 $82.48 $87.83 $94.01
2 2 $122.07 $136.26 $146.66 $155.64 $165.88 $177.74
2 3 $179.27 $200.16 $215.56 $228.80 $243.94 $261.48
2 4 $236.48 $264.06 $284.45 $301.96 $321.99 $345.22
2 5 $293.68 $327.97 $353.35 $375.13 $400.04 $428.96
2 6 $350.89 $391.87 $422.24 $448.29 $478.09 $512.70
2 7 $408.09 $455.77 $491.14 $521.45 $556.14 $596.44
2 8 $465.29 $519.68 $560.04 $594.61 $634.20 $680.17
2 9 $522.50 $583.58 $628.93 $667.78 $712.25 $763.91
3 1 $95.77 $106.84 $114.87 $121.85 $129.79 $138.96
3 2 $181.57 $202.69 $218.22 $231.59 $246.87 $264.56
3 3 $267.38 $298.55 $321.56 $341.34 $363.95 $390.17
3 4 $353.18 $394.40 $424.90 $451.08 $481.03 $515.78
3 5 $438.99 $490.26 $528.25 $560.83 $598.10 $641.38
3 6 $524.80 $586.12 $631.59 $670.57 $715.18 $766.99
3 7 $610.60 $681.97 $734.94 $780.31 $832.26 $892.60
3 8 $696.41 $777.83 $838.28 $890.06 $949.34 $1,018.21
3 9 $782.22 $873.68 $941.62 $999.80 $1,066.42 $1,143.81 4 1 $129.73 $144.70 $155.53 $164.95 $175.66 $188.01
4 2 $244.14 $272.51 $293.32 $311.28 $331.77 $355.49
4 3 $358.55 $400.32 $431.11 $457.60 $487.87 $522.96
4 4 $472.96 $528.13 $568.91 $603.93 $643.98 $690.44
4 5 $587.36 $655.93 $706.70 $750.25 $800.08 $857.92
4 6 $701.77 $783.74 $844.49 $896.58 $956.18 $1,025.39
4 7 $816.18 $911.55 $982.28 $1,042.90 $1,112.29 $1,192.87 4 8 $930.59 $1,039.36 $1,120.07 $1,189.23 $1,268.39 $1,360.35 4 9 $1,045.00 $1,167.16 $1,257.86 $1,335.55 $1,424.50 $1,527.82 $/Pickup
Proposed Monthly Rates ($/mo.)Current
Rates

SOLID WASTE RATE SCHEDULE
Comm. Bins -
Recycling
Current
Rates

Summary of Solid Waste Rate Analysis Page 22 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) 1x/Week $/Pickup
10 $1,170.36 $270.08 $298.76 $314.67 $329.88 $345.85 $362.59 15 $1,225.78 $282.87 $313.34 $330.46 $346.21 $362.72 $380.04 16 $1,236.87 $285.43 $316.25 $333.62 $349.47 $366.10 $383.53 20 $1,281.20 $295.66 $327.92 $346.25 $362.53 $379.60 $397.49 28 $1,369.87 $316.12 $351.24 $371.53 $388.66 $406.60 $425.40 29 $1,380.96 $318.68 $354.16 $374.69 $391.92 $409.98 $428.89 30 $1,392.04 $321.24 $357.08 $377.84 $395.19 $413.35 $432.38 35 $1,447.46 $334.03 $371.66 $393.64 $411.51 $430.23 $449.83 40 $1,502.88 $346.82 $386.24 $409.43 $427.84 $447.11 $467.28 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week

1.5 1 $113.34 $109.94 $114.95 $119.21 $123.64 $128.25

1.5 2 $220.47 $213.05 $222.73 $230.89 $239.38 $248.20

1.5 3 $327.61 $316.15 $330.50 $342.57 $355.11 $368.14

1.5 4 $434.75 $419.26 $438.28 $454.25 $470.84 $488.08

1.5 5 $541.89 $522.36 $546.05 $565.92 $586.57 $608.03

1.5 6 $649.02 $625.47 $653.83 $677.60 $702.30 $727.97

1.5 7 $756.16 $728.57 $761.60 $789.28 $818.03 $847.91

1.5 8 $863.30 $831.68 $869.38 $900.96 $933.77 $967.86

1.5 9 $970.43 $934.78 $977.15 $1,012.63 $1,049.50 $1,087.80 2 1 $150.51 $145.92 $152.57 $158.22 $164.09 $170.19
2 2 $293.36 $283.39 $296.27 $307.12 $318.40 $330.12
2 3 $436.21 $420.87 $439.97 $456.02 $472.71 $490.04
2 4 $579.06 $558.34 $583.67 $604.93 $627.01 $649.97
2 5 $721.91 $695.81 $727.37 $753.83 $781.32 $809.89
2 6 $864.76 $833.29 $871.07 $902.73 $935.63 $969.81
2 7 $1,007.61 $970.76 $1,014.77 $1,051.64 $1,089.94 $1,129.74 2 8 $1,150.46 $1,108.24 $1,158.47 $1,200.54 $1,244.25 $1,289.66 2 9 $1,293.31 $1,245.71 $1,302.17 $1,349.44 $1,398.56 $1,449.59 3 1 $224.23 $217.19 $227.08 $235.46 $244.18 $253.23
3 2 $438.51 $423.40 $442.63 $458.82 $475.64 $493.12
3 3 $652.78 $629.61 $658.18 $682.17 $707.10 $733.01
3 4 $867.06 $835.82 $873.73 $905.53 $938.57 $972.89
3 5 $1,081.33 $1,042.03 $1,089.28 $1,128.88 $1,170.03 $1,212.78 3 6 $1,295.61 $1,248.24 $1,304.83 $1,352.24 $1,401.49 $1,452.67 3 7 $1,509.88 $1,454.45 $1,520.38 $1,575.59 $1,632.96 $1,692.55 3 8 $1,724.15 $1,660.66 $1,735.93 $1,798.95 $1,864.42 $1,932.44 3 9 $1,938.43 $1,866.87 $1,951.48 $2,022.30 $2,095.88 $2,172.33 4 1 $301.02 $291.84 $305.14 $316.43 $328.18 $340.38
4 2 $586.72 $566.79 $592.54 $614.24 $636.79 $660.23
4 3 $872.42 $841.74 $879.94 $912.05 $945.41 $980.08
4 4 $1,158.12 $1,116.68 $1,167.34 $1,209.85 $1,254.03 $1,299.93 4 5 $1,443.82 $1,391.63 $1,454.74 $1,507.66 $1,562.65 $1,619.78 4 6 $1,729.52 $1,666.58 $1,742.14 $1,805.47 $1,871.26 $1,939.63 4 7 $2,015.22 $1,941.52 $2,029.54 $2,103.27 $2,179.88 $2,259.48 4 8 $2,300.91 $2,216.47 $2,316.94 $2,401.08 $2,488.50 $2,579.32 4 9 $2,586.61 $2,491.42 $2,604.34 $2,698.89 $2,797.12 $2,899.17 Current
Rates

SOLID WASTE RATE

SCHEDULE
Commercial Bins -
Internal Compactors
Current
Rates
Proposed Monthly Rates ($/mo.)
Current
Mo. Rates
* Disposal costs will be charged based on actual tonnage charges determined at the landfill or other disposal/recycling site, plus Franchise Fee.

Proposed Rates per Pickup ($/PU)*SOLID WASTE RATE

SCHEDULE
Compactor Boxes
(Note: disposal cost plus 8% franchise fee will be added) Current Rates
(Per Pickup)

Summary of Solid Waste Rate Analysis Page 23 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Bin Size (CY) Pick ups/week
65 gal. - Organics 1 $33.88 $43.90 $46.15 $46.06 $48.21 $50.47 65 gal. - Organics 2 $61.64 $74.08 $77.89 $77.70 $81.28 $85.04 65 gal. - Organics 3 $85.38 $99.79 $104.94 $104.64 $109.42 $114.42 65 gal. - Organics 4 $109.47 $125.92 $132.42 $132.02 $138.01 $144.28 65 gal. - Organics 5 $141.28 $160.54 $168.83 $168.32 $175.98 $183.99 65 gal. - Organics 6 $157.11 $177.54 $186.74 $186.11 $194.50 $203.29 95 gal. - Greenwaste 1 N/A $40.67 $42.77 $42.61 $44.52 $46.51 95 gal. - Greenwaste 2 N/A $73.38 $79.03 $78.70 $82.19 $85.84 95 gal. - Greenwaste 3 N/A $101.42 $109.46 $108.96 $113.73 $118.73 95 gal. - Greenwaste 4 N/A $130.41 $140.88 $140.21 $146.32 $152.72 95 gal. - Greenwaste 5 N/A $167.90 $181.24 $180.40 $188.30 $196.56 95 gal. - Greenwaste 6 N/A $165.37 $173.09 $172.78 $180.86 $189.33 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $23.95 $25.15 $26.40 $27.73 $29.11
N/A $2.00 $2.10 $2.21 $2.32 $2.43
N/A $61.00 $64.05 $67.25 $70.62 $74.15
N/A $35.00 $36.75 $38.59 $40.52 $42.54
N/A $45.00 $47.25 $49.61 $52.09 $54.70
N/A $40.00 $42.00 $44.10 $46.31 $48.62

N/A N/C N/C N/C N/C N/C
N/A $85.00 $89.25 $93.71 $98.40 $103.32
*Includes up to 3 items. Additional items at $14 each.

Current Rates Proposed Rates
Commercial Bin Cleaning/Exchange
Locking Device Setup-Trash
Optional Residential Walkup Service-
Additional Charge Per Month
Extra Trash Bags-Per Bag
Bulky Pickup, Extra Service-Residential or
Commercial locations*
Cart Cleaning/Exchange Fee

SOLID WASTE RATE SCHEDULE
Organics Program Current Rates
Locking Device Setup-Recycle
Return Trip Fee-Dry Run-Rolloff/Compactors
Service

SOLID WASTE RATE SCHEDULE
Miscelleaneous Fees
Proposed Monthly Rates

Summary of Solid Waste Rate Analysis Page 24 July 2023

FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $132.35 $138.97 $145.92 $153.22 $160.88
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $483.91 $508.11 $533.51 $560.19 $588.20
N/A $489.51 $513.99 $539.68 $566.67 $595.00
N/A $495.11 $519.87 $545.86 $573.15 $601.81
N/A $500.71 $525.75 $552.03 $579.63 $608.62
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $187.71 $197.10 $206.95 $217.30 $228.16
N/A $197.11 $206.97 $217.31 $228.18 $239.59
N/A $206.51 $216.84 $227.68 $239.06 $251.01
N/A $215.91 $226.71 $238.04 $249.94 $262.44
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
N/A $326.78 $343.12 $360.27 $378.29 $397.20
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Cost Per Residential Unit per Month 0.32$ 0.32$ 0.37$ 0.39$ 0.41$ 0.44$ Proposed Rates*SOLID WASTE RATE SCHEDULE
Household Hazardous Waste Fee Rate
Schedule
Current Rates
(Note: disposal cost plus 8% franchise fee will be added) (Note: disposal cost plus 8% franchise fee will be added) * Up to 1 week.

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Mixed
Construction and Demolition Waste
Current Rates Proposed Rates*
Bin Size (CY)
10 Bin Size (CY)
Bin Size (CY)
3 40
Proposed Rates*
20 30
40 * Up to 1 week. Includes 3 tons of disposal. Excess disposal billed at landfill rate.

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Residential Clean Current Rates Proposed Rates* * Disposal costs will be charged based on actual tonnage charges determined at the landfill or other disposal/recycling site, plus Franchise Fee. * Disposal costs will be charged based on actual tonnage charges determined at the landfill or other disposal/recycling site, plus Franchise Fee.

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Residential Clean
Out
Current Rates Proposed Rates*
10 20
30 40
Bin Size (CY)

SOLID WASTE RATE SCHEDULE
Temporary Services Fees - Source Separated
Material
Current Rates

Analysis of Street Sweeping Funding Alternatives Page 1 July 2023

TECHNICAL MEMORANDUM

TO: Doug Mathews, Director of Public Works and Water, City of Victorville Dana Armstrong, Environmental Programs Manager, City of Victorville FROM: Greg Clumpner, Director, NBS Utility Rate Practice Group Jeremy Tamargo, Senior Consultant, NBS Utility Rate Practice Group RE: ANALYSIS OF STREET SWEEPING FUNDING ALTERNATIVES
DATE: July 2023

INTRODUCTION AND BACKGROUND
The City has asked NBS to evaluate alternatives for funding the City’s street sweeping program, including (1) examples of how other cities are funding similar programs, (2) available funding alternatives, (3) street sweeping rate design issues, and (4) street sweeping rate alternatives. This technical memo addresses these issues.

While the City’s residential and commercial customers may see street sweeping as a “free” service, the current street sweeping funding sources summarized in Table 1 are nonetheless real costs to the City. If street sweeping could be added to the cost of other programs, such as the solid waste program, these funding sources could be better used for other services, such as the storm drainage and street maintenance programs.

The contracted revenue is to provide services to Caltrans for some state routes and a parking lot.

FY’24/25 includes a 25% increase in O&M costs for street sweeper s and $25,000 to fund the annual replacement cost of a mobile screen shaker.

As with many municipal services, funding mechanisms were often established many years ago and reflect historical practices and it is not always clear how they were originally created.

EXAMPLES OF STREET SWEEPING FUNDING IN OTHER CITIES
In the following examples, street sweeping services are provided by city personnel and funded either through a direct fee or incorporated into solid waste rates. Details are provided below.

1. Although not shown in this table, ARPA funds were available for street sweeper replacements in FY 23/24 and FY 24/25, but have been reflected in the street sweeping rate component.

Street Sweeping Program Costs

Analysis of Street Sweeping Funding Alternatives Page 2 July 2023

City of Madera – In its last rate study, the City decided to incorporate street sweeping costs into the solid waste rates. The following is an excerpt from the City’s cost-of-service rate study2 that was completed in 2022 (and rates were subsequently adopted):

The City currently has a street sweeping fee of $0.0248 per foot of street exposure and a fee of $0.0125 for additional cleaning. The City currently expects to collect about $406,637 from t hese fees in FY 2021/22, although actual costs are approximately $660,000 with the difference of about $261,000 funded by the City’s General Fund and other Enterprise fund transfers. The nexus of the benefits of street cleaning to either the per- foot charges or the costs collected from various residential and commercial customers is not abundantly clear3, and NBS recommends incorporating the street sweeping costs into solid waste rates on a broader basis from all customers. While this would increase solid waste rates, it would also eliminate the current street sweeping charges.

The street sweeping program benefits solid waste customers in two ways: (1) the direct benefit to residents and businesses receiving the street/curb cleaning in front of their home a nd/or business and, (2) improved sanitation and trash removal in other public areas (streets) not necessarily tied to an individual solid waste customer. The nexus between these street sweeping benefits and the cost allocated to all solid waste customers would support including these costs on an across-the-board basis.

Street Sweeping costs were incorporated into solid waste rates but not as a separate fee. Street sweeping costs accounted for about 7% (or $2.24/month/customer) of the new standard residential solid waste rate of $32/month.

City of Redding – Like the City of Madera, street sweeping services in Redding are provided by City personnel and the City incorporates them into residential, commercial customer, and drop boxes customer class rates.

While there are also solid waste rates for transfer station customers, street sweeping costs were not included in these rates. All solid waste rates were documented in the City’s 2020 Cost of Service Rate Study.4 The City’s total street sweeping costs for FY’19/20 were $1.22 million; these costs were allocated between residential and commercial classes by the total miles of street sweeping provided, with a smaller amount allocated to roll-off/drop boxes based on City estimates. Street sweeping costs were allocated to residential and commercial curbside customers without a distinction in the costs allocated between difference size waste carts (i.e., 95-, 65-, and 45-gallon carts were all allocated the same street sweeping cost). The average cost per residential customer for street sweeping was approximately $1.45/account/month.

City of Fresno – Fresno provides its own street sweeping program (vs. contracted with a waste management company) and funds these service through a “Sanitation Fee” that includes median landscape maintenance, street sweeping, street tree maintenance, and litter control.

For the existing level of service, which the City considers significantly underfunded, the City collects a Sanitation fee of about $7.40/month/customer, of which the street sweeping portion is about $2.09/month/customer. The

2 City of Madera, Solid Waste Rate Study, Final Report, April 2022, NBS. 3 The City has no formal documentation of how these rates were developed or the rationale for this approach. 4 City of Redding, Utility Rate Program Update, Final Report, February 2020, NBS.

Analysis of Street Sweeping Funding Alternatives Page 3 July 2023

City believes the appropriate level (which they referred to as an “enhanced level” of service), the estimated Street Sweeping costs for FY’22 were about $6.9 million for actual street sweeping, plus a one-time equipment replacement costs of about $5.5 million. On an annual budgeting basis, total annual costs were estimated to be about $8.1 million, with the $5.5 million replacement cost reflected as a $1.2 million/year loan repayment.

The City has about 110,000 single-family customers plus about 40,000 multi-family units if they are counted as 50% of a single-family equivalent customer: this totals about 150,000 customers. The estimated cost of the “enhanced” level of street sweeping was about $4.37/month/customer (i.e., this excluding median landscape and street tree maintenance and litter control).

STREET SWEEPING FUNDING ALTERNATIVES
Although the Proposition 218 approval mechanisms can be onerous, the legislature carved out three exemptions for water, sewer, and solid waste services, meaning there is a fairly simple “protest ballot” process used to approve these types of parcel-related charges. The City Attorney’s office has provided their legal opinion on whether street sweeping services can be included in solid waste rates and concluded that this is legal under Prop 218 provided that it is properly allocated to the properties being served.

Under Prop 218, street sweeping services could hypothetically be funding through one or some combination of the City’s other utilities:
• Water
• Sewer
• Solid Waste
Essentially as long as a utility can adequately demonstrate that the benefits to utility customer properties are equal to the charges they are paying for street sweeping (or any other service), those charge or rates can be justified under Prop 218 (subject of course to approval by legal counsel and adopted by the administrative body).

That is, the validity of this would rely on the nexus, or relationship between the benefits provided to water, sewer, or solid waste customer properties and the amount they pay for these services. In NBS’s opinion, the most tangible benefits of street sweeping accrue to solid waste customers for the following reasons:
• Street sweeping collects and disposes of solid waste that accumulates on the streets through normal activities of residential and commercial customers that, for health and sanitary reasons, ne ed to be removed and disposed.
• Street sweeping is performed in both residential and commercial areas, providing direct benefits to these solid waste customer properties as well as secondary benefits to the community as a whole. • While the City provides soli d waste services through a contractor Victorville Disposal, street sweeping operations are provided directly by City personnel and equipment in a similar manner to solid waste collection and disposal. That is, street sweepers use City streets to collect th e trash and refuse materials which City personnel then disposed of.

The benefits of street sweeping to water and sewer customers are typically associated with (1) protection of the City’s groundwater resources (e.g., from pollution that may otherwise conta minate these resources) and (2) avoidance of floodwaters entering sewer collection systems and reduce effluent flowing to the treatment facilities (which in the absence of removal of street debris would increase localized flooding and intensify infiltratio n and

Analysis of Street Sweeping Funding Alternatives Page 4 July 2023

inflow of contaminated waters into the sewer collection system). There are also benefits to the stormwater system specifically and more generally to public safety, such as minimizing localized flooding by keeping stormwater collection basins clear of debris.

In short, NBS sees many other public agencies using solid waste utilities to collect street sweeping funding and, as a relatively common practice, we believe it has a generally high level of acceptance by the public. We also believe the benefits of street sweeping are most directly connected to solid waste operations.

STREET SWEEPING RATE DESIGN ISSUES
The questions regarding how street sweeping costs could or should be collected through solid waste rates, assuming the City decides to pursue this path, include:
• Should the street sweeping cost be collected through a specific charge or rate that is separately identified vs. being generally incorporated into solid waste rates? • What financial impacts might this have on the City’s franchise fee payments? • How should street sweeping costs be allocated to solid waste customers? • What should the “rate design” of street sweeping charge be – that is, what solid waste customers pay what amount, and does this demonstrate a reasonable cost-basis as required under Prop 218? While these questions have legal components that should be answered by the City’s legal counsel (and we believe have been), there are ratemaking components to consider. While this is a fairly simple cost-of-service rate study, we believe it is suf ficient to justify including street sweeping rates in the solid waste rate schedules and adopt them through the City’s Prop 218 approval process.

Franchise Agreement Issues – Because of the implications for the City’s solid waste franchise agreement, it is NBS’ opinion that the street sweeping should be a separate charge so that it can be segregated from other solid waste program costs. Since street sweeping is a City-provided service that does not impact the privately contracted solid waste services, it should not be used to increase franchise fees paid to Burrtec.

Street Sweeping Benefits – Street sweeping benefits are more broadly defined compared to services for specific sizes of refuse containers and specific number of pickups per week. That is, both residential and commercial customers contribute to the cost-causation (i.e., they both generate the materials collected by street sweepers), and residential customers are in a sense, also the generators of waste materials in the commercial areas of town served by commercial bins and roll -offs. In other words, were it not for residential cust omers frequenting commercial areas of town, there would be minimal waste generation in these areas.

Street Sweeping Rate Design – NBS’ opinion is that, while street sweeping fees could be collected from commercial bins, roll -offs, and compactors, etc., the most direct nexus is to curbside collection customers, including both residential and commercial cans. We also believe that street sweeping benefits accrue to residential and commercial curbside customer properties regardless of the size of their collection can (i.e., whether they have a 95 -, 65 -, or 35 -gallon collection can). In essence, the benefit is to a household or household equivalent, regardless of the size of their collection can. Because of this, we believe street sweeping rates can and should be applied to residential and commercial curbside customers in an across -the-board manner. We believe this approach is consistent with the City’s Attorney’s opinion regarding street sweeping costs being collected through solid waste charges.

Analysis of Street Sweeping Funding Alternatives Page 5 July 2023

STREET SWEEPING RATE ALTERNATIVES
NBS has prepared three alternatives for collecting street sweeping costs through solid waste rates. These alternatives assume that street sweeping costs can be allocated to solid waste customers on the basis of the total amount of solid waste rate revenue each customer class pays, as shown in Table 2. We believe the total rate revenues broadly reflect the level of solid waste services received by customer classes. Also, as we have argued elsewhere, street sweeping benefits are more directly related to the number of customer properties served rather than a property’s specific container size or level of service (i.e., number of pickups per week).

As shown in Table 2, over 96% of solid waste customers are curbside accounts. Additionally, because of the relatively small number of customers and the complexity of service options for commercial bins and roll - off/compactors (e.g., combinations of container size and number of collections per week as shown in the City rate schedules), allocating costs to commercial bins and roll -off/compactors would be far more complex than necessary.

As we have also stated, street sweeping costs could be allocated entirely to curbside customers, which represent more than 96% of all customers. However, the three street sweeping rate alternatives shown in Table 3 follow different cost allocation methodologies with different resulting rates:

Option 1 – Costs are allocated to customer classes based on total number of solid waste rate revenues shown in Table 2. Rates are then calculated by dividing the allocated costs by the number of units (i.e., accounts, containers, or bins). This results in large disparities in the charges for each account type.

Option 2 – Costs are allocated to curbside customer based on the percentages of solid waste rate revenue within the curbside collection accounts only. The street sweeping rates are then calculated by dividing the allocated costs by the number of curbside accounts. This results in charges to commercial cans that are over three times as much as multi-family residential cans.

Option 3 – Costs are allocated to curbside customer properties based on the number of solid waste curbside collection accounts only. The street sweeping rates are then calculated by dividing the allocated costs by the number of curbside accounts. This results in the same charges to all residential and commercial curbside accounts (i.e., 95-gal. cans).

FY'22 Revenue1 % of Revenue Size Frequency Units % of Units Curbside Accounts
Single-Family Resid. (SFR) $9,353,724 57.6% 95 gal. 1 /week 31,338 93.4% Multi-Family Resid. (MFR) $280,876 1.7% 95 gal. 1 /week 994 3.0% Commercial Cans $55,822 0.3% 95 gal. 1 /week 64 0.2%
Total Curbside Services $9,690,422 59.7% 32,396 96.6%
Commercial Bins
Trash 1.5 CY 1 /week 178
Trash 2.0 CY 1 /week 125
Trash 3.0 CY 1 /week 310
Trash 3.0 CY 2 /week 184
Trash 3.0 CY 3 /week 177
Commercial Bin Totals $5,008,266 30.9% 974 2.9%
Roll Off/Compactor Accts $1,530,581 9.4% Varies Varies 174 0.5% Total $16,229,269 100.0% 33,544 100.0%

1. July '21 through June '22 solid waste rate revenue, Source: Sanitation Billings Summary.xlsx Type
Table 2 - Analysis of Street Sweeping Cost Allocation Data for Solid Waste Customers

Analysis of Street Sweeping Funding Alternatives Page 6 July 2023

As shown in T able 3, street sweeping rates are significantly different for these three options. Although all three alternatives have a cost-of-service basis, selecting a recommended approach considers other factors, as discussed below. Option 3 also shows the adjusted rate to account for temporary ARPA funding for street sweeper replacements in those two year. The full costs of replacements would be incurred in FY 25/26. Including inflation, that results in a rate of $2.89 per residential account.

Street Sweeping Rates – The FY’24/25 Option 3 street sweeping rate of $2. 63/month shown in Table 3 includes an additional 25% in operating costs to fund one additional street sweeper operator (an increase from four to five operators), plus the $250,000/year for street sweeper replacement and $25,000/year for a mobile screen shaker replacement (on a 10-year replacement cycle). Without the additional street sweeper operator, the FY’24/25 rate of $2.63 would drop by $0.38 to $2.25.

Selecting a Rate Alternative – Some of the basic ratemaking philosophy and industry standards in utility rate analysis that are relevant to selecting a street sweeping rate alternative are discussed below.

Legal interpretations of Prop 218 have evolved over time and in 2015, following the San Juan Capistrano ruling, the Association of California Water Agencies (ACWA) conducted a workshop to discuss the ratemaking implications for water agencies. One such workshop5 in 2015 resulted in two key principles for consideration in the face of the perceived legal challenges and the potential increase in litigation:
• Cost apportionment is not a determination that lends itself to precise calculations. • Ratemaking does not have to be perfect.

Other industry authorities on utility ratemaking, such as the American Water Works Association (AWWA), publishes the Principles of Water Rates, Fees, and Charges 6 (commonly referred to as the “M1 Manual”). This

5 ACWA Board of Directors Workshop Agenda Packet, July 30, 2015, p. 8 of 95. 6 American Water Works Association (AWWA), Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, Seventh Edition, 2017.

Annual
St. Sweeping
Costs
Street
Sweeping
Rates
Annual
St. Sweeping
Costs
Street
Sweeping
Rates
Annual
St. Sweeping
Costs
Type ($/Year) ($/Unit/Mo.) ($/Year)1 ($/Unit/Mo.) ($/Year)2 Curbside Accounts FY'23/24 FY'24/25 FY'25/26
Single-Family Resid. (SFR) $323,360 $0.86 $541,555 $1.44 $542,726 $1.44 $2.63 $2.80 Multi-Family Resid. (MFR) $9,710 $0.81 $16,262 $1.36 $17,215 $1.44 $2.63 $2.80 Commercial Cans $1,930 $2.51 $3,232 $4.21 $1,108 $1.44 $2.63 $2.80 Total Curbside Services $334,999 $561,048 $561,048 $1,021,761 $1,096,300 Adjusted Costs for ARPA Funding $311,048 $746,761
Adjusted Rates for ARPA Funding $0.83 $1.99
Commercial Bins

1.5 CY $31,641 $14.81

2.0 CY $22,220 $14.81

3.0 CY $55,105 $14.81

3.0 CY $32,708 $14.81

3.0 CY $31,463 $14.81
Commercial Bin Totals $173,137
Roll Off/Compactor Accts $52,912 $25.34
Total Street Sweeping Costs ('23/24) $561,048

1. Costs allocated based on % of cubside revenues.

2. Costs allocated based on % of curbside units (i.e., 95-gal. cans).

Street
Sweeping
Rates
Option 3 - Curbside Units EquallyOption 1 - Total Revenue Basis Option 2 - Curbside Rev. Only ($/Unit/Mo.)
Table 3 - Calculation of Street
Sweeping Rates
for Solid Waste Customers

Analysis of Street Sweeping Funding Alternatives Page 7 July 2023

manual is accepted as the industry standard for cost -of-service analysis and utility rate studies. Some of the relevant guiding principles when considering how utility rates are calculated include:
• There is no “one right way” to design a rate study.7
• “No rate structure meets all utility objectives equally, and not all objectives are valued the same by the utility or its customers.”2
• “The purpose of the cost-of-service analysis is to equitably distribute the revenue requirements between the various customer classes of service served by the utility… and determine the cost differences, if any, exist between serving the various customer classes.”8
• “In most cost-of-services analyses, the basis for allocating costs is cost causation, by recognizing the parameter or parameters that most influence the level of cost incurred.”9 • “The full revenue requirements should be equitably recovered from customers or classes of customers in proportion to the cost of servicing those customers. However, …other considerations may, at times, be equally important in determining rates and charges and may better reflect emerging objectives of the utility or the community it serves, including water-use efficiency, revenue stability, and affordability.”10 In selecting a street sweeping rate alternative, while the City must adhere to Prop 218 mandates, it must also not lose sight of the over -arching principles that have been reinforced since Prop 218 was adopted in 1996. That is, ratemaking needs to be based on reasonable assumptions and reasonable rate calculations. As noted above, this does not mean they must “be perfect” or “precise” or follow any one particular calculation or methodology.

NBS RECOMMENDATIONS
NBS’ professional opinion is that Option 3 is preferred because:
• It treats residential and commercial customers equally. • The rates are minimal compared to some included in Options 1 or 2. • It is easy to understand and administer.

Therefore, NBS recommends the City use Rate Option 3 as presented in Table 3 above.

7 AWWA, 2017, p. 104.
8 AWWA, 2017, p. 5.
9 AWWA, Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, Fifth Edition, 2000. p. 182. 10 AWWA, 2017, p. xix.

Victorville City CouncilAugust 8, 2023

Victorville City Council
August 8, 2023