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HomeMy WebLinkAboutReso 68-23 Prop 218 2023 MBGS RateRESOLUTION NO. 68-23 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA, APPROVING MORRO BAY GARBAGE SERVICE RATE ADJUSTMENT APPLICATION ADJUSTING SOLID WASTE COLLECTION RATES THE CITY COUNCIL City of Morro Bay, California WHEREAS, on September 13, 2022, the City Council approved the restated Solid Waste, Recycling, and Organic Services Franchise Agreement (Agreement) with Morro Bay Garbage Service (MBGS) for collection, processing, and disposal services, adding provisions allowing for California Senate Bill 1383 (SB 1383) implementation and compliance as well as updating the rate setting process to reflect requirements of Proposition 218; and WHEREAS, on December 5, 2022, MBGS District Manager, Jeffrey Clarin, submitted a rate adjustment application requesting a 30.62% increase to residential and commercial solid waste, recycling, and organic materials collection, processing, and disposal rates effective March 1, 2023; and WHEREAS, the rate application projected a $956,532 shortfall projection in revenue needed to provide residential and commercial solid waste, recycling, and organic materials services in the Agreement between the City and MBGS; and WHEREAS, the rate application stated several factors as the basis for the proposed increase, including increased wages and materials costs due to post -pandemic inflation; and WHEREAS, the rate application also stated reduced revenues from the sale of recyclables resulting from recycling markets not rebounding after downturns as well as excess global supply of recyclables due to limited overseas acceptable of materials during and since the pandemic contributed to the shortfall; and WHEREAS, receipt of the application obligated the City to evaluate the rate application for reasonableness, discuss findings with MBGS, follow Proposition 218 noticing requirements, facilitate a protest process, and for the City Council to hold a public hearing and vote on the requested rate increase; and WHEREAS, the City retained R3 Consulting Group (R3) to evaluate the rate application for reasonableness of the rate increase, specifically reviewing projected revenue and expenditures submitted as well as additional information provided by MBGS, including audited financial statements; and WHEREAS, the R3 evaluation resulted in identifying recommended changes in costs for depreciation, company return, and franchise fees based on industry standards and change in depreciation schedule for containers and vehicles; and WHEREAS, subsequent discussions between R3 staff, City staff, and MBGS resulted in an agreed upon negotiation down of these costs that reduced the projected shortfall to $701,230 while still allowing MBGS to recover its costs of providing refuse service as permitted by Proposition 218; and WHEREAS, the rate increase was recalculated and reduced to 20.20%; and WHEREAS, the increase is necessary for MBGS to continue providing safe, environmentally sound, and reliable solid waste, recycling, and green waste/organics collection, transportation, and disposal/processing services to Morro Bay citizens; and WHEREAS, the original requested rate increase that was to go into effect March 1, 2023, was pushed back to October 15, 2023, due to the thorough review of rates and negotiations with MBGS; and WHEREAS, the increased costs of service continued to be incurred by MBGS during the evaluation and negotiation period; and WHEREAS, MBGS requested a temporary 9-month increase of 18.38% from the October 15, 2023 effective date in order to recoup the increased costs of providing services in the Agreement during the interim period; and WHEREAS, this temporary increase will expire July 15, 2024; and WHEREAS, Proposition 218 notices regarding the requested MBGS 20.20% rate increase and 18.38% 9-month temporary rate increase, were sent on August 23, 2023, to all property owners and customers, and a public hearing regarding that matter was held on October 10, 2023; and WHEREAS, sufficient protests were not received to prevent the rate increase; and WHEREAS, a review of the Rate Adjustment Application has been completed in accordance with the adopted solid waste rate setting policies. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA, AS FOLLOWS: Section 1. The City Council approves the revised Morro Bay Garbage Service's (MBGS) Rate Adjustment Application to increase the solid waste collection rates by 20.20% and the 9- month temporary increase of 18.38% as outlined in Exhibit A, effective October 15, 2023.The Council hereby ratifies the Proposition 218 process and adopts the solid waste rates proposed by MBGS as set forth in the Notice of Public Hearing mailed to all residential and commercial property owners on August 23, 2023, and pursuant to Proportion 218 finds as follows: a) Fee for Service Provided Only: Revenues derived from the fee may not be used for any purpose other than that for which the fee was imposed. The fees collected are used to pay MBGS for the solid waste, recycling, and organics collection, processing, and disposal services it provides to the City's residential and commercial customers, and MBGS's accrual of direct and unforeseen costs incurred by MBGS as a result of: 1. Increased costs associated with post -pandemic inflation affecting supply chain and labor markets with increases to wages, container and truck repairs, tires, fuel and other petroleum related products; 2. Increased Material Recovery Facility tipping fees due to limited overseas acceptance of recycling materials with some products exceeding demand and/or requiring lower contamination rates that require more labor to sort those materials out; and 3. Decreased revenues associated with recycling commodity markets not healthily rebounding from initial downturn of the recycling market values. b) Fee not to Exceed Cost of Service: Revenues derived from the fee may not exceed the funds required to provide solid waste service. The City's cost for solid waste service is established by its agreement with MBGS, which permits MBGS to recover its actual costs. It is found that MBGS's Rate Adjustment Application after R3's evaluation and subsequent negotiations tc reduce the initial request to a 20.20% increase of the solid waste collection rates and the 9-month temporary 18.38% increase to recoup increased costs for the interim period while the rate application evaluation was completed will not result in more fees being collected than are needed to provide collection services. This conclusion is further supported by all findings of fact presented at the City Council hearing, including without limitation those facts stated in the accompanying staff report, all of which evidence is incorporated herein by this reference. c) Fee not to Exceed Proportional Cost: The amount of the fee may not exceed the proportional cost of the solid waste service attributable to the parcel. The City's rate structure has historically been designed to be proportional, cost -based, and to meet the general requirements of fairness and equity under Proposition 218. Nothing in the rate adjustments at Exhibit A alters the methodology of apportionment (i.e., proportionality) of the rate structure. More specifically, the proposed rate adjustment is based on the overall revenue required to fund all of MBGS's Morro Bay operations, and rates will be adjusted similarly across all lines of business, consistent with past practice and common in the solid waste industry. This conclusion is further supported by all findings of fact presented at the City Council hearing, including without limitation those facts stated in the accompanying staff report, all of which evidence is incorporated herein by this reference. d) Other Findings, Proposition 218 also requires that the fee or charge may not be imposed for a service unless (i) the service is actually used by, or immediately available to, the property, and (ii) the fee or charge is not imposed for general governmental services. Both these findings are met. Because the fees are paid directly to MBGS for their refuse and recycling services (including organics recovery), the fees are (i) used directly by MBGS for its costs of making such services immediately available throughout the City, and (ii) are not otherwise allocated to other general governmental services. This conclusion is further supported by all findings of fact presented at the City Council hearing, including without limitation those facts stated in the accompanying staff report, all of which evidence is incorporated herein by this reference. Section 2. The Council has fully considered this matter and has: a) Reviewed the information submitted herewith regarding the proposed solid waste service rate adjustment for residential and commercial accounts, the parcels to which the proposed fee adjustment would apply, and the reasons and basis for the adjustment and the fees; b) Provided notice of the proposed fee adjustment to the record owners (or renters responsible for payment of the fee) of all parcels to which the proposed fee adjustment would apply in accordance with Article XIIID of the California Constitution; c) Heard and received all written protests from any owners (or renters) of real property subject to the fee; d) Taken and received oral and documentary evidence pertaining to the proposed fee adjustment; and e) Been fully informed of this matter. Section 3. The Council finds that insufficient written protests were presented to prevent the residential and commercial component of the proposed MBGS solid waste rate schedule from being imposed. Section 4. The Council finds that based on these facts and the circumstances and information received during the public hearing, the changes in residential and commercial solid waste rates proposed by MBGS are necessary and are hereby adopted, contingent upon there being no majority protest from a majority of all property owners under an omnibus protest by all those permitted to protest the proposed new rate system. (Morgan v. Imperial Irrigation District (2014) 223 Cal.AppAth 892.) Said solid waste rates shall take effect on October 15, 2023. Section 5. The Council authorizes the City Manager to execute an amendment to the City's franchise agreement with MBGS, to replace the maximum rate schedule in the agreement with the newly adopted rate structure in Exhibit A. PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 1011 day of October 2023 by the following vote: AYES: Wixom, Barton, Edwards, Ford, Landrum NOES: None ABSENT: None ABSTAIN: None RECUSE: None a CAR WIXOM, Mayor ATTEST: NA SWANSON, City Clerk EXHIBIT A Motto Say Garbage Solid Waste Service Rates - Effective 10/15/2023 City of Morro Bay Service Description Service Frequency Currently Monthly Rate Effective 7/1/2022 Proposed Rate Adjustment % Proposed Monthly Rate Effective 10/15/2023.) MONTHLY SINGLE-FAMILY AND MULTI -UNIT RESIDENTIAL SERVICE (4 UNITS OR LESS) Price per month for specified waste wheeler collected each week. Residential customers must use the waste wheelers provided by the garbage company. This solid service fee for residential trash collections (container with black or gray lid) includes once a week pick-up of one greenwaste/organics container (green lid), and one recycling container (blue lid). The fees listed below do not include the updated IWMA fee of 4.4 percent of the Garbage Company's gross receipts. MINI -CAN SERVICE One 19 gallon waste wheeler container 1 $15.59 $3.15 $18,74 ECONOMY RATE One 32 gallon waste wheeler container 1 $24.95 $5.04 $29.99 STANDARD RATE One 64 gallon waste wheeler container 1 $49.90 $10.08 $59.98 PREMIUM RATE One 96 gallon waste wheeler container 1 $74.136 $15.12 $99.98 SERVICE AWAY FROM THE STREET CURB (IN YARD) Additional per month per can or container charge $13.60 $2,75 $16.35 COMMERCIAL - OTHER CHARGES. Rates for all commercial customers include recycling or greenwaste/organics pickup once per week, included with the garbage service rate. Customers can choose from a 64 or 96 gallon blue commingled recycle waste wheeler or a 32 or 64 gallon organics waste wheeler included with the garbage service rate (96 gallon waste wheelers can only be used with green waste due to weight). The fees listed below do not include the updated JWMA fee of 4.4 percent of the Garbage Company's gross receipts. If you need more frequent recycling, including organics/greenwaste service, it can be provided at 50% of the garbage service rates for the specified level of service required. MONTHLY COMMERCIAL WASTE WHEELERS SERVICE One 32 Gallon Waste Wheeler 1 $51.52 $10.41 $61.93 One 32 Gallon Waste Wheeler 2 $10037 $20.32 $120.89 One 32 Gallon Waste Wheeler 3 $131.55 $26.57 $158.12 One 32 Gallon Waste Wheeler 4 $162.52 $32.83 $195.35 One 32 Gallon Waste Wheeler 5 $211.61 $42.75 $254.36 One 32 Gallon Waste Wheeler 6 $260.65 $52.65 $313.30 One 64 Gallon Waste Wheeler 1 $74.75 $15.10 %9.85 One 64 Gallon Waste Wheeler 2 $131.50 1$26.56 1 $158.06 One 64 Gallon Waste Wheeler 3 $190.86 $38.55 $229.41 One 64 Gallon Waste Wheeler 4 $259.01 $52.12 S310.13 Service Description Service Frequency Currently Monthly Rate Effective 7/1/2022 Proposed Rate Adjustment % Proposed Monthly Rate Effective 10/15/2023o One 64 Gallon Waste Wheeler 5 5322-60 565.17 5387.77 One 64 Gallon Waste Wheeler 6 $376.79 $76.11 5452.90 One 96 Gallon Waste Wheeler 1 $100.55 $20.31 $120.86 One 96 Gallon Waste Wheeler 2 5175.34 535.42 $210.76 One 96 Gallon Waste Wheeler 3 1 $257,92 $52.10 1 $310.02 One 96 Gallon Waste Wheeler 4 $343.10 $69.31 5412.41 One 96 Gallon Waste Wheeler 5 $417.95 $84.43 5502.38 One 96 Gallon Waste Wheeler 6 $510.81 $103.18 5613.99 MONTHLY COMMERCIAL CONTAINER SERVICE - (CUBIC YARDS) 1 Yd Container 1 $126.97 $25,63 $152.50 1 Yd Container 2 $196.55 $39.70 $236.25 1 Yd Container 3 $253.34 $51.17 $304.51 1 Yd Container 4 $317.86 $6411 $382.07 1 Yd Container 5 $366.95 $74.12 5441.07 I Yd Container 6 $457,29 $92.37 $549.66 1 Yd Container 7 $690.84 $139.55 $830.39 1.5 Yd Container 1 5155.27 531.36 $186.63 1.5 Yd Container 2 $255.97 $51.71 5307.68 1.5 Yd Container 3 $343.77 $69.44 5413.21 1.5 Yd Container 4 5436.66 588.21 5524.87 1.5 Yd Container 5 $524,44 $105.94 $630.38 1.5 Yd Container 6 $625.13 $126.28 $751.41 1.5 Yd Container 7 5917.08 $18515 $1,102.33 2 Yd Container 1 $186.27 $37.63 $223.90 2 Yd Container 2 $325.63 $65.78 5391.41 2 Yd Container 3 $436.66 $813.21 $524.87 2 Yd Container 4 $555.44 $112.20 $667.64 2 Yd Container 5 5679.36 $137.23 $816.59 2 Yd Container 6 $803.25 $162-26 $965.51 2 Yd Container 7 $1,153.56 $233.02 $1,386.58 3 Yd Container 1 $240.51 548.58 $289.09 3 Yd Container 2 $436.66 S88.21 $524.87 3 Yd Container 3 $614.83 $124.20 $739.03 3 Yd Container 4 5780.00 5157.56 $937.56 3 Yd Container 5 $1,009,79 $203,98 $1,213.77 3 Yd Container 6 $1,164.65 $235.26 $1,399.91 Service Description Service Frequency Currently Monthly Rate Effective 7/1/2022 Proposed Rate Adjustment % Proposed Monthly Rate Effective 10/15/2023 3 Yd Container 7 $1,573.42 S317.83 $1,891.25 4 Yd Container 1 $317.86 $64.21 $382.07 4 Yd Container 2 $591.56 $119.50 $711.06 4 Yd Container 3 $821.28 S165.90 $987.18 4 Yd Container 4 $1,097.55 $221.71 51,319.26 4 Yd Container 5 $1,373.77 $277,50 $1,651.27 4 Yd Container 6 $1,554.48 $314.00 $1,868.48 4 Yd Container 7 $2,021.60 $408.36 $2,429.96 6 Yd Container 1 $476.22 $96.19 $572-40 6 Yd Container 2 $864.61 $174.65 $1,039.26 6 Yd Container 3 $1,217.34 $245.90 $1,463.24 6 Yd Container 4 $1,544.43 5311.97 S1,856A0 6 Yd Container 5 $1,999.37 $403.87 $2,403.24 6 Yd Container 6 $2,306.02 $465.82 $2,771.84 6 Yd Container 7 $3,115.38 $629.31 $30744.69 8 Yd Container 1 $629.42 $127.14 $756.56 9 Yd Container 2 $1,171.27 $236.60 $1,407.87 8 Yd Container 3 $1,626.15 $328.48 $1,954.63 8 Yd Container 4 $2,173,18 $438.98 $2,612.16 8 Yd Container 5 $2,720.06 $549.45 $3,269.51 8 Yd Container 6 $3,077.82 $621.72 $3,699.54 8 Yd Container 7 $3,321.78 $671.00 $3,992.78 EXTRA COUECnON SERVICE OPTIONS Over stacked Garbage & extra bags Minimum/unit Per Occurrence $12.47 $2.52 $14.99 Over stacked Greenwaste & extra bags Minimum/unit Per Occurrence $9.09 $1.63 $9.72 Over stacked Blue Bin & extra bags Minimum/unit Per Occurrence S6.24 $1.26 $7.50 Monthly charge for additional 64 or 96 gallon recycle service Each $4.17 $0.84 $5.01 Monthly charge for additional 32 or 96 gallon green waste service Each $8.09 $1.63 $932 Monthly charge for additional commercial 96 gallon recycle service Each $25.14 $5.08 $30.22 Service level changes more than once per 12 months Per Occurrence S11.39 $2.30 $13.69 Small item pickup (TV, toilet) Each $23.69 $4.79 $28.48 Service Description Service Frequency Currently Monthly Rate Effective 7/1/2022 Proposed Rate Adjustment % Proposed Monthly Rate Effective 10/15/2023 Per white good article/appliance Each $79,33 $16.02 595.35 Per mattress or box spring Each $23.70 $4.79 $28.49 Change waste wheeler size (once per year free) Per Occurrence $11.39 $2.30 $13.69 Re -deliver fee -if pulled for collections Per Occurrence $45.33 $9.16 S54.49 Install locking device an bin Each $100.57 $20.32 $120.89 Extra bin cleaning Each $79.99 $16.16 $96.15 Garbage extras on your scheduled pickup day Per Yard $20.61 $4.16 $24.77 Loose Cardboard Per Yard $10.34 $2-09 $12.43 Garbage extras - NOT ON YOUR SCHEDULED PICKUP DAY Per Bag $16.97 $3.43 $20.40 Garbage extras - NOT ON YOUR SCHEDULED PICKUP DAY Per Yard $32.71 $6.61 $39.32 Compactors Per Ton $66.97 $13.53 S80.50 Bin Rental Per Month 546.96 $9.49 $56.45 Temp Bin Rental Per Day $2.61 $0.53 S3.14 Stand by time Per Hour $90.96 $18.37 $109.33 Trip charge Per Occurrence $11.39 $2.30 $13.69 Damage/Destruction of bins or waste wheelers Each Replacement/repair at market price ADDITIONAL INFORMATION ALL CUSTOMERS: 1. Customers requesting Temporary Bins or Roll -off Box Service can call the office for current rates. 2. Polystyrene (Styrofoam, Plastic #6) is not collected for recycling and should be thrown away as trash. Please bag Styrofoam packing peanuts before placing in trash container. 3. It is encouraged to bag your trash in the garbage container but do not bag your recyclables or green waste in their respective containers and keep it loose. 4. Recycling, Greenwaste/Organics and Garbage containers should be spaced 3 feet apart away from any obstacles (i.e., mailboxes, cars, etc) before 6:013am on collection service day. 5. The fee schedule above only includes the Garbage Company rates and does not include IWMA fees, which are separately noted an the billings. 6. Cleaning fees will be billed on a time and materials basis. 7. Late Fees are imposed for residential customers over 30 days delinquent. The fee Is 1.5% per month of the outstanding charge, with a minimum fee of $5.00. No prior notice is required, as this late fee policy is stated at the bottom of every bill. 8. Customers can be responsible for contamination fees. 9. The rates effective October 15, 2023 in the above table DO NOT include the temporary retroactive rate recovery surcharge of 18.38% that will expire on July 15, 2024 or the annual Consumer Price Index adjustments that will occur January I of 2024, 2025, 2026, and 2027. Any additional recycling, including greenwaste/organic services are dwged out at 50% of the garbage rate.