HomeMy WebLinkAboutStaff Report 256-05CMR:256:05 Page 1 of 4
TO: HONORABLE CITY COUNCIL
ATTN: FINANCE COMMITTEE
FROM: CITY MANAGER DEPARTMENT: PUBLIC WORKS
DATE: MAY 17, 2005 CMR:256:05
SUBJECT: APPROVAL OF REFUSE RATE INCREASE; REQUEST FOR
ADOPTION OF A RESOLUTION TO AMEND UTILTY RATE
SCHEDULES R-1, R-2, AND R-3, AND UTILITIES RULE AND
REGULATION SCHEDULES 2, 3, 11 AND 24
RECOMMENDATIONS
Staff requests that the Finance Committee recommend that the Council approve an eight percent
refuse rate increase and adopt the attached resolution (Attachment A) changing Utility Rule and
Regulation Schedule to implement single stream recycling. Specifically:
1. Amend Utility Rate Schedules R-1, “Domestic Refuse Collection,” R-2, “Commercial
Refuse Collection,” and R-3, “Commercial Refuse Collection,” for an eight percent
increase in refuse rates for R-1, R-2, and R-3 for FY 2005-06 to maintain the Refuse
Fund Rate Stabilization Reserve (RSR) at the Council-adopted level; and
2. Amend Utilities Rule and Regulation Schedules 2 “Definitions and Abbreviations,” 3
“Description of Services,” 11 “Billing, Adjustments, and Payment of Bills,” and 24
“Special Recycling and Refuse Utility Regulations” to implement single stream
recycling.
BACKGROUND
The last rate increase applied across the Refuse Fund Utility Rate Schedule (R series) was May
2004 (CMR:238:04). At that time, Council approved an increase to Refuse Fund rates of
10 percent or $1.9 million in revenue annually. A rate increase was necessary to meet increased
financial obligations of the Refuse Fund and to maintain a Refuse Fund reserve consistent with
the Council-adopted reserve policy.
DISCUSSION
Staff is proposing an eight percent rate increase that would net $1.6 million in additional revenue
annually. This increase is necessary not only due to rising operating costs fo r the landfill and
recycling programs, but also to offset the cost of the following:
§ Initiation of the single stream recycling program—wheeled carts for both garbage and
recyclable materials (including yard waste) will be provided to residents to facilita te
automated collection by PASCO and an increased payment to PASCO of $287,878 for the
anticipated loss of nearly $640,000 in recycling revenue with implementation of the program.
BUDGET
’05 - ‘07
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§ Zero Waste program beginning in FY2006--$120,000 is budgeted for a waste
characterization study and consultant. The waste characterization study will determine what
materials are in Palo Alto’s garbage, their source and which materials have potential for
recycling. This information will be valuable in targeting future waste reduction activities and
in developing the Zero Waste policy.
§ Palo Alto’s share of the increased costs for the SMaRT Station contract with Sunnyvale is
$367,868. Of that, $154,000 is budgeted for a consultant to prepare plans and specifications
for the replacement of processing equipment at the SMaRT Station, $119,778 is for the
increase to the equipment replacement schedule and $94,090 is for CPI increase.
§ The ongoing cost to recycle construction and demolition materials is $435,000 annually since
PASCO must take materials to processing facilities outside of Palo Alto.
§ Back rent payments for the landfill to the General Fund have cost $5 million over the last
four years and interest payments of over $260,000 will continue annually through 2015, well
past the date of the anticipated landfill closure in 2011.
If a rate increase does not occur in FY 2005-06, the Refuse Fund reserve will fall $1.6 million
short of the Council-adopted minimum level of $2.1 million.
The proposed monthly rate would increase from $19.80 to $21.38 for residential customers with
one 32-gallon can service. The table below shows the current rate for single-family residents and
the proposed rate increase (see Utility Rate Schedule R-1 in Attachment B).
Refuse Rate for Sing le Family Dwellings
Service Level Current Rate Proposed Rate
Mini can (20 gallon) 15.62 16.87
One Standard Can (32 gallon) 19.80 21.38
Two standard cans (32 gallons each) 40.75 44.01
Three standard cans (32 gallons each) 61.70 66.64
Four standard cans (32 gallons each) 82.65 89.26
Staff surveyed surrounding jurisdictions to determine how Palo Alto’s proposed single-family
rates compare to other communities. Palo Alto provides more services from the Refuse Fund
than other jurisdictions, making it di fficult to equally compare the service levels. Palo Alto’s
premium services include backyard garbage collection, weekly street sweeping, monthly
hazardous waste collection, extensive recycling collection and waste diversion services, and
landfill and comp osting operations. The survey and the table below show that even with the
higher service levels, Palo Alto’s proposed rates are competitive in comparison to other
jurisdictions.
CMR:256:05 Page 3 of 4
Single Family Rates
from Surrounding Jurisdictions
Jurisdiction
Current ra te for one 32-
gallon can refuse service
Palo Alto proposed $21.38
Cupertino $17.88
Los Altos $22.87
Los Altos Hills $27.65
Mountain View $13.75
San Jose $18.30
Santa Clara $12.60
Sunnyvale $19.51
Average rate
(excluding Palo Alto) $18.94
Changes to the Utilities Rule and Regulation Schedules are necessary due to the initiation of the
single stream recycling program in FY 2006. Collection methods and containers will change
requiring amendments to the Utilities Rule and Regulation Schedules in order to match the
services that will be available. Adjustments related to refuse billing and inclusion of special
programs, such as clean-up day, are included in the Utilities Rule and Regulation Schedule
changes (Attachment C).
RESOURCE IMPACT
The proposed eight percent increase to refuse rates is estimated to generate $1.6 million to the
Refuse Fund in FY-06. Staff annually reviews and updates the Refuse Fund Ten Year Financial
Forecast to determine the rate increase percentage that may be required in subsequent years. The
projections assume that the expenses will increase by CPI at approximately three percent per
year.
ENVIRONMENTAL IMPACT
An increase in rates to meet financial reserve needs is not subject to review pursuant to the
California Environmental Quality Act (CEQA), California Public Resources Code section 21080,
subdivision (b)(8) and Title 14 California Code of Regulation section 15273 (a)(3). The
approval of revisions to the utility rules and regulations adopted by this resolution is not a project
under CEQA pursuant to Title 14 California Code of Regulations section 15061(b)(3) (can be
seen with certainty that there is no possibility of a significant effect on the environment) and
15378(b)(2) (continuing administrative activity).
ATTACHMENTS
Attachment A: Resolution
Attachment B: Utility Rate Schedules R-1, R-2, and R-3
Attachment C: Utilities Rule and Regulation Schedules 2, 3, 11, and 24
PREPARED BY: __________________________________________
MICHAEL JACKSON
Deputy Director, Public Works Operations
CMR:256:05 Page 4 of 4
DEPARTMENT HEAD: __________________________________________
GLENN S. ROBERTS
Director of Public Works
CITY MANAGER APPROVAL: __________________________________________
EMILY HARRISON
Assistant City Manager