TO: Board of Supervisors
FROM: Steven Lederer, Director of Public Works
REPORT BY: Steven Lederer, Director of Public Works
SUBJECT: Public Hearing to Consider Adoption of a Resolution Adjusting Rates for Collection of Solid Waste, Recyclables, Green Waste and Food Waste for the Unincorporated Area of Garbage Zone One
RECOMMENDATION
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PUBLIC HEARING - Zone One Rates
Adopt a Resolution adjusting rates effective October 1, 2024, for the residential and commercial operational cost associated with the collection of solid waste, recyclables, green waste, and food waste applicable to the Unincorporated Area of Garbage Zone One, a service which is provided by Napa County Recycling and Waste Services, LLC. (Fiscal Impact: $16,200 net revenue; Zone One; Budgeted; Discretionary)
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BACKGROUND
This item is specifically exempt from the voting requirements of Article XIIIC of the California Constitution because these fees are imposed by a private third party, Napa County Recycling and Waste Services, LLC (NCRWS), under the Franchise Agreement as granted by the County to NCRWS on May 3, 2005 and amended and restated on December 19, 2017. Pursuant to Government Code section 66016, the resolution, data, and rates to be considered were made available to the public.
On May 30, 2024, the County received an application for an adjustment of rates for the operational cost associated with the collection of solid waste, recycling, green waste, and food waste services from Napa County Recycling and Waste Services, LLC (NCRWS).
The Department of Public Works completed their review of the request pursuant to Amendment No. 4 to Franchise Agreement No. 180215B (Franchise Agreement). In accordance with the approved Franchise Agreement, commercial rates are recommended to increase by an average of 2.5%. Residential rates would increase from 16% for a 96 gallon cart to 35.4% for a 20 gallon cart. The proposed residential and commercial rates are set forth in Exhibit A of the attached Resolution.
NCRWS Rate Package - Summary:
On May 30, 2024 the Public Works Department received an application for an adjustment of rates for the operational cost associated with the collection of solid waste, recycling, green waste, and food waste from NCRWS in Garbage Zone One (Zone One), which serves much of the south county. The Public Works Department completed their review of the application, pursuant to Article 6 - Contractor Compensation and Customer Rates, of the amended and restated Franchise Agreement between the County and NCRWS. Under Article 6, NCRWS is entitled to request one rate adjustment annually. Per the amended and restated Franchise Agreement, the County shall adjust rates, either up or down, to reflect:
1. Contractor Compensation adjusted for agreed upon profit and inflation; and,
2. Actual changes in any of the pass-through components (Solid Waste Tip Fee, Green Waste Tip Fee, Net Recycling Processing Fee, Food Waste Tip Fee, and the Carpet Tip Fee) of each rate. The impact of changes to the pass through costs is applied to each rate and is dependent on the services rendered, resulting in different percentages for different rates.
Contractor Compensation and Pass-Through components of the proposed rates are described more fully below.
1. Contractor Compensation at 2.4% for agreed upon profit and CPI (capped at 5% per Section 6.2C of our agreement)
2. Increase in the Solid Waste disposal fee from $72/ton to $73/ton
3. Increase in the Green Waste tip fee from $49/ton to $55/ton
4. Increase in the Carpet Waste tip fee from $55/ton to $59/ton.
5. Increase in the Food Waste Tip Fee from $57/ton to $65/ton
6. Increase in the Recycling Processing fee from a CREDIT of $55/ton to a CHARGE of $25/ton.
The large increase in residential rates is driven almost entirely by increased pass through costs charged by the City of Napa’s Materials Diversion Facility (MDF). More than $10/cart is related to increased costs for processing green waste and food waste, and the collapse of recycling markets, resulting a charge for processing recyclables, versus the credit that we received last year.
Comparing Zone 1 rates to others in the County:
Zone 1, 35 gallon cart=$52.34
UVDS, County unincorporated, 32 gallon cart=$57.87
City of Napa, 35 gallon cart=$38.29 (this is a 2022 rate, and the City is planning to propose a substantial increase in the near future).
The public was notified of the public hearing and consideration of the resolution to increase rates for the collection of solid waste and recyclables. The public notices were and/or will be published (newspaper and website) in the Napa Valley Register on August 10, 2024 and August 15, 2024. The public notice indicates that all relevant documents regarding the proposed rate increase will be available at the Clerk of the Board. Pursuant to the amended and restated Franchise Agreement, NCRWS has posted the change of rates on their website and will be providing all customers with written notice of approved rate adjustments with their September bill.
PROCEDURAL REQUIREMENTS
1. Open Public Hearing.
2. Staff reports.
3. Public comment.
4. Close Public Hearing.
5. Motion, second, discussion and vote on the item.
FISCAL IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
Yes |
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Where is it budgeted? |
Fund 2180-Zone 1 Garbage |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Approving the rates allows for recovery of costs for performing a critical service and an increase in franchise fee revenue consistent with the terms of the franchise agreement. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
The County receives franchise fee revenue that equals 10% of the fee revenue collected by NCRWS. The franchise fees are utilized to reimburse the County for expenses incurred related to Zone 1. This action would increase the County's franchise fee commensurate with increased revenue generated by the increased fees. |
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Consequences if not approved: |
The County will not receive the additional franchise fee revenue generated by the proposed increase to offset costs incurred by the County on behalf of Zone 1 rate payers. The County would also be in breach of its contract with NCRWS. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: ENVIRONMENTAL DETERMINATION: These fees are not subject to the California Environmental Quality Act pursuant to Title 14 of the California Code of Regulations, Section 15273(a)(1) and (2).