Recology Proposed Rate Adjustment at 3/13/18 Council Meeting

Article Source: City of San Bruno CA

DATE: March 13, 2018

TO: Honorable Mayor and Members of the City Council

FROM: Jim O'Leary, Interim Finance Director

SUBJECT: Adopt Resolution Initiating Property Owner Notice and Protest Process as Required by Proposition 218 for 2018-19 Garbage Rate Increase Proposed by Recology San Bruno

BACKGROUND:

The City's franchise agreement with Recology San Bruno became effective July 1, 1998. According to this agreement, Recology is entitled to annual rate adjustments based on a Detailed Rate Year analysis every two to three years and Interim Rate Year analysis other years. Recology requested the Interim Rate Year adjustment for 2018-19 on January 30, 2018.

Recology San Bruno has requested an Interim Year Rate adjustment in accordance with the franchise agreement with the City. The requested garbage service rate adjustment is 2.45% based on the change in the Consumer Price Index (CPI) between January 1, 2017 and December 31, 2017 and increased landfill disposal costs.

DISCUSSION:

Staff is recommending the City use a public hearing and protest procedure consistent with Proposition 218. Proposition 218 was approved by the voters in 1996 and establishes legal requirements for imposing or increasing property-related taxes, assessments, fees, and charges. The applicability of Proposition 218 to garbage rate adjustments has not been legally established. In an abundance of legal caution and to assure broad-based information to property owners on the proposed rates, the process can be followed for the Recology rate adjustment.

In accordance with the Franchise Agreement, Recology requests an Interim Rate Year adjustment totaling 2.45%. This Interim Rate Year adjustment blends 80% of the change in CPI (amounting to 2.47%) and the percentage increase for disposal costs (2.33% as an authorized Pass-Through expense). The net calculation for 2018-19 amounts to 2.45% adjustment. Based on the proposed rate adjustment, charges for a 32-gallon residential toter will increase by $0.72, from $29.37 to $30.09.

This increase would be effective for bills produced after July 1, 2018.

Staff recommends that the City Council authorize the mailing of public notices and schedule the public hearing for formal approval of the rate increase. The increase of 2.45% is based on the applicable formula dictated by the franchise agreement for an Interim Rate Year. The City Council Ad-hoc Garbage Committee reviewed Recology's rate request on March 8, 2018 and will report its recommendation at the City Council meeting.

Solid waste collection and disposal rates vary among San Mateo County cities based on several factors. Costs for service can depend upon the frequency of recycling collection, organics composting, ratio of residential and commercial customers, and unique operational constraints in some jurisdictions. The following is a listing of current (adjustments may be pending) monthly rates in fifteen nearby locales for a residential

32-gallon toter:

Atherton

$50.00

San Bruno (Proposed)

$30.09

Hillsborough

48.22

Half Moon Bay

26.69

Pacifica

36.07

Daly City

26.03

Belmont

35.38

Menlo Park

26.03

San Carlos

33.47

Colma

24,10

Millbrae

33.05

Burlingame

23.85

South San Francisco

31.82

Foster City

22.77

Brisbane

31.67

San Mateo

21.24

The public hearing and protest procedures consistent with Proposition 218 provide notice to property owners 45-days in advance of a public hearing, following which the City Council can act to approve the rate increase. Only if written protests are received from a majority of property owners would the proposed rate increase be disallowed. The following schedule outlines the City's implementation of the proposed process for considering the proposed rate adjustment.

March 13: City Council directs staff to provide 45-day notice to property owners.

March 23: Notices mailed / start 45-day period.

May 8: City Council holds public hearing, considers any protests, take action to introduce new rate ordinances for first reading, end of 45-day protest period.

May 22: City Council conducts second reading and takes action to adopt new rates by ordinance.

July 1: New 2018-19 rates become effective.

The action proposed for consideration at this time is review of the proposed rates and the property owner notice. No action approving the proposed rate increases will occur until May when the public hearing will be scheduled.

FISCAL IMPACT:

The amount and explanation of the proposed rate adjustment is outlined in the Discussion section of this report. The proposed rate increase does not have a direct effect on City operations.

ALTERNATIVES:

• Recology San Bruno is entitled to an Interim Rate Year adjustment in 2018-19. The City Council may direct that the proposed adjustment be amended using other factors in its determination.
• Do not proceed with the process to adopt new rates at this time.

RECOMMENDATION:

Adopt resolution initiating property owner notice and protest process as required by Proposition 218 for 2018-19 garbage rate increase proposed by Recology San Bruno.

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FULL Council Agenda Packet WITH Staff Reports can be viewed and downloaded from:

https://sanbruno.ca.gov/gov/elected_officials/city_council_minutes_n_agendas.htm

This document should be available late Friday before the Tuesday Council Meeting

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Robert Riechel

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WEB: http://SanBrunoPatch.com

My Posts: http://patch.com/users/robert-riechel

Photo Credit: San Bruno CA Patch Archives

Source Credit: San Bruno CA City Council

Web Site: https://sanbruno.ca.gov

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