TO: Napa-Vallejo Waste Management Authority Board of Directors
FROM: Chris Celsi, Executive Director
REPORT BY: Chris Celsi, Executive Director
SUBJECT: Public Hearing Recommended 2025-2026 Fiscal Year Budget
RECOMMENDATION
4:00 P.M. PUBLIC HEARING - RECOMMENDED FISCAL YEAR 2025-2026 BUDGET
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Adoption of Resolution No. 2026-01 approving the recommended final Budget for Fiscal Year 2025-2026 (weighted vote required)
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EXECUTIVE SUMMARY
The Executive Director and Auditor-Controller are submitting for adoption a recommended final budget for FY 2025-2026. This item has been advertised and noticed for a public hearing. At the conclusion of the public hearing, adoption of Resolution No. 2026-01 approving of the FY2025-2026 Budget is requested.
PROCEDURAL REQUIREMENTS
1. Open Public Hearing
2. Staff Report
3. Public Comment
4. Close Public Hearing
5. Motion, second, discussion and vote on item
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 2025-2026. 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.
BACKGROUND AND DISCUSSION
FY 2024-2025
Operating Budget
The Authority's FY 2024-25 budget was based on an estimated waste flow to the Devlin Road Transfer Station (DRTS) of 276,000 tons for the year. Actual tonnage to date has been higher than budgeted and is expected to be closer to 290,000 tons by the end of the fiscal year. We are expected to see a surplus of $1.6 million net from Operations.
Total revenue for the fiscal year is expected to be approximately $24 million. The increase in revenue is due to higher incoming tonnages. However, because of higher tonnage and other increases of inter-departmental charges, we will experience higher transfer station, disposal and administration costs of approximately $22.4 million instead of our estimated $21.2 million. Our expenditures are rising by normal inflation percentages, but our revenues are not. We hope to address this during FY 25-26.
Capital Budget
The capital budget for FY 24-25 was estimated to be approximately $10.4 million. Our construction plans for our approved new C&D building were completed in October 2024. We were expected to start construction in April 2025, but due to an additional required approval, the start of construction will likely start in FY 25-26. Our scheduled Leachate Line Improvement project was delayed as well due to poor and missing as-built plans. This caused this project to be $60,000 over budget. Hence, our expected Capital Expenditures for FY 24-25 will amount to roughly $1.5 million.
Net Revenue and Reserves
Net revenue is expected to be closer to $1.6 million instead of our estimated $2.4 million. End of year cash reserves are expected to be about $32.5 million.
FY 2025-2026
Operating Budget
The proposed Operating budget of $23.3 million is based on a projected waste flow of close to 300,000 tons to the DRTS and total anticipated revenue of about $24 million. We are expecting an additional 8,000 tons from the City of Napa’s facility due to their lack of space. Transfer Station Operations ($11.8 million) and Disposal ($8 million) budgets reflect inflationary increases in contracted unit costs for services from Authority service providers. Transfer Station Operation costs also reflect an increase of nearly 10% in the second half of the fiscal year in anticipation of a new agreement with our current DRTS operator, Northern Recycling and Waste Operations Services, LLC (NROWS). We have also included an interest payment of $800,000 we expect to pay once financing is secured for the approved C&D building.
Revenue projections for FY 25-26 are based on the previously approved rate increase of $1.00 per ton for both franchise and non-franchise waste customers. These rates will go into effect on July 1, 2025 for non-franchise customers, and on October 1, 2025 for franchise customers. After the rate adjustments, rates will be $74 per ton for franchise haulers, $78 per ton for non-franchise waste, and $45 for minimum loads. In addition, we will be accepting clean concrete at $32 per ton. The City of Napa’s facility will no longer accept clean concrete due to space constraints. We are forecasting a net deficit of $12.1 net from Operations, and a year-end cash balance of $20.3 million. This reduction in our reserves is mainly due to most of the C&D construction costs occurring in FY 25-26.
Capital Budget
The nearly $39 million Capital Budget includes construction start and continuation of the C&D processing facility. It also includes replacing the nearly 30-year-old roof on the existing municipal solid waste disposal site building located at the transfer station.
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.
Operating Reserve
The Authority's Operating Reserve Policy requires maintaining an operating reserve no less than 1/6 of annual operating expenses and no more than 1/4 of annual expenses. The recommended Operating Reserve allocation of $3.8 million is consistent with this policy.
Capital Replacement Reserve
The Capital Replacement Reserve establishes a minimum reserve of $1.0 million and a maximum of $20.0 million, provided surplus funds are available after funding the Operating Reserve. The recommended allocation to the Capital Reserve for FY 25-26 is $4.8 million.
Recommendation
1. Approve the Recommended FY 25-26 Budget.
2. Adopt Resolution No. 2026-01 which sets forth the financing requirements for the Operating and Capital Improvement Programs for Fiscal Year 2025-2026 as follows:
Fund 8100 81000 - Operations
$23,291,700
Fund 8100 81010 - Capital Improvement
$38,995,000