TO: Napa-Vallejo Waste Management Authority Board of Directors
FROM: Chris Celsi, Executive Director
REPORT BY: Chris Celsi, Executive Director
SUBJECT: Public Hearing Recommended 2026-2027 Fiscal Year Final Budget
RECOMMENDATION 2025-2026 Operating Budget paragraph
4:00 P.M. PUBLIC HEARING - RECOMMENDED FISCAL YEAR 2026-2027 BUDGET
title
Adoption of Resolution No. 2027-01 approving the recommended Final Budget for Fiscal Year 2026-2027 (weighted vote required)
PROCEDURAL REQUIREMENTS
1. Open Public Hearing
2. Staff Report
3. Public Comment
4. Close Public Hearing
5. Motion, second, discussion and vote on item
body
EXECUTIVE SUMMARY
The Executive Director and Auditor-Controller are submitting for adoption a recommended final budget for FY 2026-2027. This item has been advertised and noticed for a public hearing. At the conclusion of the public hearing, adoption of Resolution No. 2027-01 approving of the FY2026-2027 Budget is requested.
FY 2025-2026 Operating Budget
The Authority's FY 2025-26 budget was based on an estimated waste flow to the Devlin Road Transfer Station (DRTS) of 300,000 tons for the year. Actual tonnage was lower than budgeted and is expected to be closer to 292,000 tons by the end of the fiscal year.
Total Operating Revenue for the fiscal year is expected to be approximately $23.8 million, which was slightly less than the estimated $24 million. In September 2025, we approved our new Devlin Road Transfer Station tipping rates. However, those rates were not effective until November 2025. It is our estimation DRTS did not realize close to $500,000 in revenue had the increase in tipping rates started in July. The increased rates did help generate more revenue with slightly lesser tonnage, which resulted in less handling and disposal costs.
Operating Expenditures were less than anticipated. Lower tonnage means less handling and disposal charges. Our new contract with Northern Recycling and Waste Operations (NROWS) did not become effective until January 2026, which kept our costs a little lower. Additionally, the start of our new construction loan was not effective until October 2025. This too saved us an interest only payment in 2025-2026. We anticipate costs of approximately $22.8 million instead of our estimated $23.3 million.
Capital Budget
The Capital Expenditures budget for FY 25-26 was estimated to be approximately $39 million. Much of that expenditure was intended to occur with the construction of our new C&D Facility. We expected to start construction in August 2025, but due to the additional required approvals, the start of construction began in October 2025. Additionally, we had planned to replace the DRTS roof, but do not expect replacement of the DRTS roof to occur until FY 2026-2027. Our estimated actual Capital Expenditures for FY 25-26 will be closer to $13.4 million.
The Authority’s Total Expenditures (Operating + Capital) were approximately $36.25 million. The Authority had budgeted closer to $62.29 million, but delays in construction and roof replacement reduced it closer to one-third of the total amount.
Net Revenue and Reserves
Net revenue is expected to be closer to $1 million surplus (Revenues less Operating Expenditures) instead of our estimated $1.63 million surplus. This is due mostly to less actual revenue, added diesel fuel surcharge costs and unanticipated engineering costs at the landfill. End of year cash reserves are expected to be about $42.34 million, of which $20.16 million was from loan proceeds.
FY 2026-2027 Operating Budget
The proposed Operating Expenditures budget of $27.66 million is based on a projected waste flow of close to 295,000 tons (2% increase) to DRTS and total anticipated revenue of about $28.4 million. Transfer Station Operations ($13.94 million) and Disposal ($8.36 million) budgets reflect the Authority’s new contract and inflationary increases, respectively, in contracted unit costs for services from Authority service providers. Transfer Station Operation costs reflect an overall increase of nearly 21% with our current DRTS operator, (NROWS). We have also included a principal payment of $1.69 million and interest payment of $734,000 for securing financing of the approved C&D Facility. Total Expenditures for FY 2026-2027 is estimated to be $51.1 million. We expect a Net Deficit of $22.67 million.
Revenue projections for FY 2026-2027 are based on the previously approved rate increase of $8.00 per ton for both franchise and non-franchise waste customers. These rates went into effect on November 1, 2025, for both non-franchise customers and franchise customers. Rates are currently $81 per ton for franchise haulers, $85 per ton for non-franchise waste haulers, and $45 for Self-Haul loads. In addition, we are accepting clean concrete for $32 per ton. Clean dirt is now accepted at $45 per ton. Effective July 1, 2026, non-franchise loads will increase to $91 per ton, Self-Haul loads will be charged $48 per load, Clean Concrete will be charged $34 and Clean Dirt will be charged $48 per ton. Effective October 1, 2026, all franchise loads will be charged $87 per ton. Effective January 2026, the Authority will share equally in net recycling revenue with NROWS. We are forecasting a net surplus of $760,000 from Operations, and a year-end cash balance of $19.6 million.
Capital Budget
The nearly $23.4 million Capital Budget includes construction continuation of the C&D Facility. The facility is expected to be completed by June 2027. We are planning to replace the nearly 32-year-old roof on the existing municipal solid waste disposal site building located at the transfer station. The cost of replacing the roof is unknown at this time, but we believe it will be closer to $1 million because the project work will likely occur during alternative work periods (early or late evening) to avoid transfer station service interruptions. In addition to those major projects, we plan to update and replace the ACSL Gas PLC with a cost of approximately $130,000. If we complete the C&D construction on time, we will look into beginning the Buy Back Area Improvement project.
Reserves
The Authority Board adopted Operating Reserve and Capital Replacement Reserve policies in 2011 and updated the Operating Reserve Policy in 2017. The Capital Reserve policy was updated in 2015 and 2019.
Although, the Authority expects a Net Deficit this year, the Authority will maintain approximately $19.66 million in Reserve Cash Balance. The Authority also has claimed nearly $600,000 in yearly depreciation, which will be added to our Reserve Cash Balance in the near future. The Authority's Operating Reserve Policy requires maintaining an operating reserve of no less than 1/6 of annual operating expenses and no more than 1/4 of annual operating expenses. The recommended Operating Reserve allocation of $4.61 million is consistent with this policy.
The Authority also has $12.6 million in reserve allocated for the American Canyon Sanitary Landfill Post Closure Liability. Staff is researching whether we need to allocate this entire amount or pledge a yearly amount to keep those funds available, if needed.
Capital Replacement Reserve
The Capital Replacement Reserve establishes a minimum reserve of $1 million and a maximum of $20 million, provided surplus funds are available after funding the Operating Reserve. The recommended allocation to the Capital Reserve for FY 26-27 of $2.2 million is consistent with this policy.
Recommendation
1. Approve the Recommended FY 26-27 Budget.
2. Adopt Resolution No. 2027-01 which sets forth the financing requirements for the Operating and Capital Improvement Programs for Fiscal Year 2026-2027 as follows:
Fund 8100 81000 - Operations
$27,660,481
Fund 8100 81010 - Capital Improvement
$23,437,000
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
This is the proposed operating budget for Fiscal Year 2026-2027. Adoption of a budget is required to continue operations of the Authority in the coming fiscal year. |
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Is it Mandatory or Discretionary? |
Mandatory |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
The budget covers only one fiscal year, however, decisions made in this fiscal year will impact the Authority’s financial stability in the future. |
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Consequences if not approved: |
Expenditures cannot be made. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California
Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.