HomeMy WebLinkAboutStaff Report 165-08CMR:165:08 Page 1 of 4
TO: HONORABLE CITY COUNCIL
ATTN: FINANCE COMMITTEE
FROM: CITY MANAGER DEPARTMENT: PUBLIC WORKS
DATE: MARCH 18, 2008 CMR:165:08
SUBJECT: REQUEST FOR ADOPTION OF A RESOLUTION ADOPTING A
REFUSE RATE INCREASE AND AMENDING UTILITY RATE
SCHEDULES R-1, R-2, AND R-3
RECOMMENDATION
Staff requests that the Finance Committee recommend that the City Council adopt the attached
resolution to:
(a) approve a ten percent refuse rate increase for Fiscal Year (FY) 2008-09, effective
July 1, 2008, which will increase annual revenues by $2.5 million; and
(b) approve the changes to the Refuse Rate Schedules, as attached.
BACKGROUND
The last rate increase applied across the Refuse Fund Utility Rate Schedule (R series) occurred in
June 2007 (CMR:281:07). At that time, Council approved an increase to Refuse Fund rates of 13
percent or $2.8 million in revenue annually. A rate increase was necessary due to rising costs in
landfill and recycling programs.
DISCUSSION
Staff is proposing a ten percent rate increase that would net $2.5 million in additional revenue
annually. This increase is necessary to maintain a Refuse Fund reserve consistent with the
Council-adopted reserve policy, and to meet the increased financial obligations of the Refuse
Fund including the following:
Palo Alto Sanitation Company (PASCO) compensation - $370,000. This adjustment is a
result of Consumer Price Increases and an operating ratio adjustment. The current refuse
and recycling contract with PASCO allows staff to perform a good-faith review of
PASCO’s compensation and to recommend adjustments when PASCO goes outside the
targeted operating ratio range set in the contract.
Relocation of Landfill Facilities- $500,000. This adjustment is for the relocation of the
landfill entry including tollbooth, scale and administrative trailer in order to begin filling
in the area where they are currently located.
BUDGET
’08 - ‘09
CMR:165:08 Page 2 of 4
Zero Waste Implementation - $377,500. Approved by Council September 2007, initial
implementation projects include expanding the use of recycling receptacles in the
downtown areas, hiring needed staffing to meet zero waste goals, expanding the zero
waste outreach campaign, and creating a grant program to promote refuse and recycling
for local businesses.
Sunnyvale Materials Recovery and Transfer (SMaRT®) Station - $190,000. This request
is above the 2008 budget needs for ongoing debt service owed on the equipment
replacement at SMaRT Station.
Los Altos Treatment Plant (LATP) Site - $200,000. This adjustment will begin the
process to develop the LATP site for future use including annexation into Palo Alto,
environmental assessment, a remediation plan for removal of contamination and to
coordinate any permitting required by oversight agencies.
City Composting Operation - $150,000. Additional grinding and screening services are
needed to maintain the compost operation.
Refuse Fund Reserve - $719,500. Adjustment to maintain the Council-adopted reserve.
The proposed monthly rate would increase from $24.16 to $26.58 for residential customers
with one 32-gallon can service. The table below shows the current rate for single-family
residents, the proposed rate increase (see Utility Rate Schedule R-1 in Attachment B), and
the proposed difference.
Refuse Rate for Single Family Dwellings, Utility Rate Schedule R-1
Service Level Current Rate Proposed Rate Proposed Difference
Min Can $19.06 $20.97 $1.91
One standard can (32
gallons)
$24.16 $26.58 $2.42
Two standard cans
(32 gallons each)
$49.73 $54.70 $4.97
Three standard cans
(32 gallons each
$75.30 $82.83 $7.53
Four standard cans
(32 gallons each)
$100.86 $110.95 $10.09
Staff surveyed surrounding jurisdictions to compare Palo Alto’s proposed single-family rates
with other communities’ rates. Although it appears that Palo Alto’s proposed rate is at the high-
end of the spectrum, Palo Alto provides more service by the Refuse Fund than do other
jurisdictions which makes it difficult 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
composting operations.
CMR:165:08 Page 3 of 4
Current Single Family Rates
From Surrounding Jurisdictions
Jurisdiction Current rate (FY 2007-08)
for one 32-gallon can refuse
service
Los Altos Hills $28.03
Palo Alto proposed $26.58
San Jose $25.80
Los Altos $24.14
Sunnyvale $23.12
Cupertino $19.13
Santa Clara $16.25
Mountain View $15.75
Average rate $21.75
RESOURCE IMPACT
Staff estimates that the proposed 10 percent increase to the refuse rates will generate $2,507,000
to the Refuse Fund in FY 2008-09. If a rate increase does not occur in FY 2008-09, the Refuse
Fund reserve will fall short of the Council-adopted minimum level of $2,506,866. Staff annually
reviews and updates the Refuse Fund ten-year forecast to determine the rate increase percentage
that may be required in subsequent years.
POLICY IMPLICATIONS
Proposition 218 Notice
The recommended refuse rate increase may be subject to the notice and protest hearing
procedures of Proposition 218, and in an abundance of caution the City is conducting the
proposed refuse rate increase procedures in accordance with those requirements. Pursuant to
Proposition 218, the City must provide written notice of any new or increased refuse utility fee to
those subject to the proposed fee. A public hearing on the new or increased fee must be held not
less than 45 days after mailing the written notice. If written protests against the proposed fee are
presented by a majority of those subject to the fee, the City may not impose the fee.
Public Works Department staff is currently working with Utilities Department staff on the
“Notice of Utility Rate Change” that will be mailed to impacted customers and property owners.
ENVIRONMENTAL IMPACT
An increase in rates to meet financial reserve needs and operating expenses is not subject to
California Environmental Quality Act (CEQA), pursuant to California Public Resources Code
section 21080(b)(8) and Title 14 of the California Code of Regulations section 15273 (a)(1) and
(3).
ATTACHMENTS
Attachment A: Resolution
Attachment B: Utility Rate Schedules R-1, R-2, and R-3
CMR:165:08 Page 4 of 4
PREPARED BY: __________________________________________
JANET FOREMAN
Executive Assistant
DEPARTMENT HEAD: __________________________________________
GLENN S. ROBERTS
Director of Public Works
CITY MANAGER APPROVAL: __________________________________________
EMILY HARRISON
Assistant City Manager