Utilities Rate Advisory Commission Special Meeting Workshop on Proposed Rate Adjustments for Recycling and Solid Waste Services - October 6, 2020

This special meeting of the Utilities Rate Advisory Commission (URAC) convened on October 6, 2020, as a workshop to discuss proposed rate adjustments for Recycling and Solid Waste (RSW) services. The commission received a detailed financial presentation from the city's consultant, Matt Hobson of FCS Group, covering cost drivers, a two-year rate plan, and a cost-of-service analysis. No votes were taken; the meeting was informational and focused on commissioner questions and discussion.

Discussion Items

• Presentation by Matt Hobson (FCS Group): The consultant summarized the financial forecast for the city's solid waste fund, highlighting major cost drivers such as a 6% annual increase in garbage tipping fees, a 4% annual increase in labor costs, and a significant rise in yard and food waste tipping fees due to SB 1383 compliance. The yard and food waste tipping fee is projected to increase from $65 per ton in 2021 to $94 per ton in 2022, adding approximately $3.2 million in costs. The forecast assumes account growth of just under 1% per year and includes $1 million in new revenue from expanded food waste collection.
• Proposed Two-Year Rate Plan: The recommended plan would increase the monthly bill for a 64-gallon garbage cart by $4.85 (from $42.59 to $47.44) in the first year (FY2022) and by $1.73 (to $49.17) in the second year (FY2023). Specific service increases: garbage – 3.25% each year; recycling – no change; yard and food waste – 31.75% in year one, 5.75% in year two; street sweeping – 25% in year one, 5% in year two. The plan is designed to achieve a 90-day operating reserve target for each service and overall fund.
• Cost-of-Service Analysis: The analysis compared revenues and costs for 32-gallon, 64-gallon, and 96-gallon garbage carts. It found that current rates are within 5% of cost of service, considered acceptable. Commissioner Megan Fidell questioned the allocation of costs, particularly the midday trips to transfer stations, arguing that small carts should not bear those costs. Staff noted that time-and-motion studies would be needed to refine cost allocations. City Attorney Mike Voss confirmed the rate study is compliant with Proposition 218, which requires proportional cost-of-service charges, but noted flexibility in how costs are allocated.
• Discussion on Future Rate Needs: Chair Thomas asked about the next projected rate increase. Staff indicated that the proposed plan should sustain operations through at least FY2025, barring changes such as the pending recycling contract renegotiation, fleet electrification, or dissolution of the Solid Waste Authority. Commissioner Fidell raised concerns about factors city council had discussed (e.g., fleet electrification, SWA dissolution, contract buyout) that were not in the current analysis.

Key Outcomes

• No formal votes were taken; the meeting was a workshop for receiving information and providing feedback.
• Commissioner Megan Fidell requested that the October 28, 2020 commission agenda include a discussion of the December 3, 2019 City Council meeting where the previous RSW rate increase was approved. She provided a transcript of that meeting. Chair Thomas asked commissioners to submit any such requests to him and staff by the end of the week to ensure timely agendizing.
• Staff will circulate the December 3, 2019 City Council meeting materials, including resolutions, to the commission.
• The tentative schedule for the rate adjustment process was outlined: public hearing in February 2021, City Council review in April 2021, and implementation on July 1, 2021.
• Next meeting: October 28, 2020, where unanswered questions from this workshop will be addressed.