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Home My WebLink AboutC27410 Burrtec - New Commercial Recycle Fee CITY OF PALM DESERT SPECIAL PROGRAMS DEPARTMENT STAFF REPORT REQUEST: APPRaVE REQUEST BY BURRTEC WASTE ANQ RECYCLING SERVICES TO ESTABLISH THE NEW COMMERCIAL RECYCLE FEE SUBMITTED BY: Frankie Riddle, Director of Speciai Programs DATE: September 26, 2013 CONTENTS: 1. Exhibit 36: Commercial rate sheets with new Commercial Recycle Fee included at bottom of Exhibit 3. Exhibit 4B: Residential Rates Adjustment 4. Service Rate Comparison Survey 5. Commercial Recycle Scenarios A-C 6. Resolution No. 2013-59 Recommendation By Minute Motion, 1. Approve the new Commercial Recycle Fee set at 35°/a of trash rate; 2. Approve implementation date of November 1, 2013, for the new Commercial Recycle Fee for customers already recycling (the fee will be applied to non- recycling commercial customers as the recycle program is implemented); 3. Waive further reading and adopt Resolution No. 2013-59 , approving the new Commercial Recycle Fee set at 35% of trash rate as provided for in Contract No. C-27410 Solid Waste Management Services; and 4. Apply new Commercial Recycle Fee to commercial customers. Executive Summary For more than 10 years, the City of Palm Desert has had a Free Commercial Recycle Program in place; however, without a mandate, many businesses refused to participate. With the passage of AB341, the State of California now mandates that commercial customers generating 4-yards or more of trash per week implement a recycle program. As the City and Burrtec educate businesses and implement required recycle programs, Burrtec's business operation will be impacted. If approved by City Council, the new Commercial Recycle Fee would commence on November 1, 2013. This fee is calculated to be 35% of the cost of the solid waste service. Resolution No. 2013-59 Staff Report Burrtec New Commercial Recycle Fee September 26, 2013 Page 2 Discussion At its meeting of August 22, 2013, City Council approved the 2013 residential and commercial PPI rate increase to be offset through the AB939 Fund; however, direction on the new �ommercial Recycl� Fee was continued to a Study �ession on S�ptember 26, 2013, for further discussion. With Council's approval to offset the 2013 rate increase to residential and commercial customers, the City will not be receiving future AB939 Tipping Fee revenue from Burrtec. Therefore, the only remaining funds are those that are currently in the AB939 Fund, which is approximately $4.5 million. Currently, the City/Burrtec has in place a Free Commercial Recycle Program. However, as stated in Section 4.6.4 of the Solid Waste and Recycle Contract with Burrtec, "once the State approved mandatory recycling the City and Burrtec may revisit the Free Commercial Recycle Program and the possible fee assessment annually. The City and Company shall negotiate in good-faith a fee at such time as the City or State mandates mandatory recycling." Since the passing of AB341, Burrtec is opting to request that a new Commercial Recycle Fee be approved to offset costs associated with the Commercial Recycle Program. The rate being proposed is 35% of the established commercial trash rate which is estimated to generate approximately $500,000 annually. This includes assessment of the 8% Franchise Fee which technically reduces the amount going to Burrtec to 27%. Staff has reviewed the proposed fee, compared it to rates within the market, and found that the fee is within reason. To give Council an idea of the potential impact to commercial customers, staff has included the attached examples which outline different scenarios and the possible resulting impacts based on various service levels. Since this is a fee, it should be noted that some commercial customers will experience a savings on their monthly solid waste bill — to varying degrees; however, on the other hand, some businesses will not experience a savings, but rather, an increase even with recycling, depending on the level and aggressiveness of recycling the business undertakes. In addition, attached are the new rate sheets (Exhibit 3A —C) which includes the new commercial recycle rates (Exhibit 3B). As reflected on Exhibit 3B, if you compare a three yard trash bin serviced once a week to a three yard recycle bin serviced once a week, the recycle fee will be 35% of the trash fee. Carrying this across the board for all comparable bin sizes and service levels should reflect that the recycle fee in each case is 35% of the trash fee. Resolution No. 2013-59 Staff Report Burrtec New Commercial Recycle Fee September 26, 2013 Page 3 Fiscal Analvsis If the new Commercial Recycle Fee is approved, it would generate 8% in franchise fees estimated at $40,000. If not approved, there is no impact to the City's General Fund. However, if the fee is approved and applied to the AB939 Fund, which currently has approximately $4.5 million, the impact would be approximately $500,000 annually on an on-going basis. Submitted By: � C1TY COUNCILA�ON APPROVED `� DENTEI) RECEIVED OTHER Frankie Ri�ile, Director of Special Prograr�l'�ETI G DAT - " AYES: 7 � � f� I'/7j� Approval: NOCS: ABSENT: '"� AI3STAIN: � VCRIFIED BY: � Original ou Fi1e with City rk'a Office J M. 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(c)From Step One above. (d)"index Change"multiplied by"Allowable Portion of Index Change." (e)From"Percentage of Rate Revenue Net of Franchise Fees"in Step Two. (�From last column in Step Three. (g)Not all rate categories are shown in this exampte. (h)The weighted rate adjustment should be applied to the totai rate,inciuding Franchise Fee portion of the rate. (i)From weighted rate adjustment in Step Four. Q)"Currer�t Monthly Rate"plus"Rate Change." (k)Recycling fee is a negative$.03 per-ton as the fee was used to offset 2013l14 rate increase 9/512013 SERVICE RATE COMPARISON SURVEY RESIDENTIAL SERVICE RATE Residential Jurisdiction Tax Roll Rate Cathedral City $ 15.11 Coachella $ 18.06 Indio $ 15.40 La Quinta $ 12.48 Palm Desert $ 10.77 Rate to Residents is still $10.58 for a 96 gallon container COMMERCIAL SERVICE RATE Commercial Jurisdiction 3yd (1x per wk) Cathedral City $ 139.66 Coachella $ 109.48 Indio $ 104.86 La Quinta $ 114.78 Palm Desert $ 99.91 Rate to Commercial Customers $98.33 for a 3-yard bin serviced once a week Commercial Jurisdiction 3yd (3x per wk) Cathedral City $ 366.86 Coachella $ 308.68 Indio $ 294.63 La Quinta $ 295.89 Palm Desert $ 232.85 SCENARIO A ��5�'�_)��[�,[Z Df?H.4 �i�7'��" �.I��"tf�k��r'I'LY �'.��iZTiCtP�TE [N RECYCLE PROGRAM SCENARIO # 1: RETAIL BUSINESS AREA(multiple retail businesses) Two 4-yard Trash Sins with 4 Times per Week Service & No Recycle Service A. CURRENT SERVICE-Business ABC only has trash service and is not participating in the FREE commercial recycle program; therefore, the state mandatory commercial recycling requirement has not been met and business ABC MUST implement a recycling program. Chart lA: Current Service: Twa 4-yard trash with 4 times per week service & NO recycle service $1,000.00 Total Monthly ' Trash Charge,$833.38 Charges,$833.38 $500.00 , $600.00 , ,_.,_ - , _ . $400.00 8•32 Trash 1'ons 8.32 Total Monthly Tons $200.Q0 -- :, ,,.. -. ...._.__... . , .. .,. � $0.00 - . - _. _.� _.. _ �� URRENT RATES (FREE Commercial Recycling) �Trash Char�e Total Monthly Char�es B. MINIMAL RECYCLE PROGRAM IMPLEMENTED - Business ABC implemented commercaal recycle program with no changes to trash service, since the business cut their trash service in half, result is a $268.50 monthly savings. Rec�clable materials include: mostly cardboard, paper and film plastics, with some plastic, metal, and glass containers. Chart 1B: Service changed to: 4- ard trash & 4- ard rec cle with 4 times er week service $600.OQ Total Monthly Charges,$564.88 $500.00 Trash Charge,$416.69 $400A0 Monthly Savings, $300.00 -� _ _ 39%Diversian � $268.50 Recycle Charge, 6.78 Total Monthly $200.00 4.16 Trash Tons $148.19 Tons ._ _.Y ._, . .. $100.00 2,62 Recycle Tons - - $0.00 �._-- -_�_ _ .� _ ADD RECYCLE SERVICE (RATES WITH RECYCLE CHARGE) �Trash Charge � Recycle Charge Total Monthly Charges ■ Monthly Savings C. AGGRESSIVE RECYCLE PROGRAM IMPLEMENTED-Business ABC implemented a more aggressive commercial recycle program with City assisting by providing education and internal recycle containers, which increased recycle service & decreased trash service, result is a�298.86 monthly savings. Chart 1C: Service changed to: 4- ard trash with 3 times er week service & 4- ard rec cle with b times er week service Total Monthly Charges,$534.52 $500.00 - $400.00 Monthly Savings, Trash Charge,$321.60 56��p Diversion $298 86 $300.00 Recycle Charge, $212.92 . 3.12 Trash Tons � $200.00 � 7A5 Total Monthly $100.00 3.93 Recycle Tons Tons . 1,�.� � .. ,: �f� . , $0.00 _ ,.. _ AGGRESSIVE RECYCLE PROGRAM (RATES WITH RECYCLE CHARGE) �Trash Charge � Recycle Charge Total Monthly Charges ■t Monthly Savings Trash tons calculated @ 120 Ibs. per cubic yard �Recycle tons calculated @ 75.5 Ibs. per cubic yard (per industry standards). . SCENARIO B ( �;��t'��Il{;4� �'[_:�d��:'�''i'�,"�' �:4RT�(.'1PATES I'� RI:CYCLE PROGR<�1'I 5CENARIO # 2: BUSINESS CENTER (multiple business) Two 4-yard Trash with 3 Times per Week Service & 3-yard Recycle Bin with 1 Time per Week Service A. CURRENT SERVICE-Business XYZ has trash and FREE commercial recycle service. Recyclable materials include: mostly paper, cardboard, with some film plastics, and plastic, metal, & glass containers. Chart 2A: Current Service: Two 4- ard trash with 3 times er week service & 3- ard rec cle with 1 time er week service $7�0.00 Trash Charge,$643.20 Total Monthly Charges,$643.20 $600.00 . _ �:.., $500.00 $400.00 ' $300.00 $200.00 6.24 Trash Tons 7�"��r$1°� 6.73 Tota� Monthly Tons $100.00 Recycle Charge,$O.OQ $0.00 :. - �1 � CURRENT RATES(FREE Commercial Recycling) �Trash Charge � Recycle Charge Total Monthiy Charges B. MINIMAL RECYCLE PROGRAM IMPLEMENTED - Business XYZ did not change current trash or recycle service, only change is the NEW commercial recycle rate, result is an additional $34.97 per month charge. Chart 2B: Current Service (with NEW commercial recycle rate): Two 4- ard trash with 3 times er week service & 3- ard rec cle with 1 time er week service $800.00 Total Monthly $700.00 Trash Charge,$643.2U Charges,$678.17 $600.00 :-� - Y $500.00 $400.00 _ ,..., _ ��.... ._.., ,'. �.:�. . .. _ . �.- _-_ __.__. ,_ . ?°%Diversion $300.00 6.24 Trash Tons Recycle Charge, 6.73 Total Monthly Tons $200.00 $34.97 $100.00 � . �..... :.-.:. �€� ��. - � $0.00 : RATES WITH RECYCLE CHARGE � Trash �harge � Recycle Charge Total Monthly Charges C. AGGRESSIVE RECYCLE PROGRAM IMPLEMENTED - Business XYZ implemented a more aggressive commercial recycle program with City assisting by providing education and internal recycle containers,which increased recycle service&decreased trash service,result is a$108.68 monthly savings. Chart 2C: Service changed to: 4- ard trash with 3 times er week service & 4- ard rec cle with 4 times er week service $600.00 Tota)Monthly Charges,$534.52 $500.00 : $400.00 46%Divers's�n Trash Charge,$321.60 - $300.00 ` Recycle Charge, $212.92 $200.00 °-�: _. �.,. . ,� �_-,�,..e ,,,_„ ` _ .. ,.., . ..,_ ,.. ..... _ MonthlySavirtgs, $100.00 3.12 Trash Tons 2.62 Recycle Tons 5.74 Total Monthly $108.68 Tons $0.00 _.-v��.-�� ,�-� �.._ - �..';;�� AGGRESSIVE RECYCLE PROGRAM (RATES WITH RECYCLE CHARGE) �Trash Charge � Recycle Charge Total Monthly Charges ■ Monthly Savings Trash tons calculated @ 120 Ibs. per cubic yard 8� Recycle tons calculated @ 75.5 Ibs. per cubic yard (per industry standards). SCENARIO C � i��"t()�'I[::R CT.:R��N"Ci_�' �':�f�'� t�"IPr�."I�ES I� RECI'CL� PKOGRAi11 SCENARIO #3: RETAIL LOCATION (one business) 3-yard Trash & 3-yard Recycle Bins with 2 Times per Week Service A. CURRENT SERVICE - Business has trash and FREE commercial recycle service. Recyclable materials include: mostly cardboard, paper an.d film plastics, with some plastic, metal, and glass containers. Chart 3A: Current Service: 3- ard trash & 3- ard rec cle with 2 times er week service $200.00 Trash Charge, Total Monthly $175.69 Charges,$175.69 $150.00 , ' - � ,.......,..,,. .,,. . .-.... . . :. ,_. , $100.00 1.56 Trash Tons 2.54 Total Monthly Tons 39°l Dive�: $50.00 _._: . . ,_ .,.:.>..- - ` Recycie Char e,$0.00 � �� i . . � � $�.�0 �. .... .... ... . . . . . . .. .,- : � ,.- .,;.,... .,.,.. .�..�. .. .�� . .._ _._ .._. . . . CURRENT RATES(FREE Commercial Recycling) �Trash Charge � Recycie Charge Total Monthly Charges B. MINIMAL RECYCLE PROGRAM IMPLEMENTED - Business did not change current trash or recycle service, only change is the NEW commercial recycle rate, result is an additional$62.48 per month charge. Chart 3B: Current Service (with NEW commercial recycle rate): 3- ard trash & 3- ard rec cle with 2 times er week service Total Monthly $250.00 Charges,$238.17 $200.00 Trash Charge,$175.69 $150A0 _ , . .._ , _.,.. ._ . . ,,._-.., . 39io�iversion 1.56 Trash Tons Recycle Charge, $100.00 2.54 Total Monthly Tans $62.48 $50.00 ,, .. . _,.._ .:s:.. :.-..._ .._...o,3-. .98 Recycle Tons � � � `" $0.00 ,� � RATES WITH RECYCLE CHARGE �Trash Charge � Recycle Charge Total Monthly Charges C. AGGRESSIVE RECYCLE PROGRAM IMPLEMENTED - Business implemented a more aggressive commercial recycle program with City assisting by providing education and internal recycle containers, which increased recycle service& decreased trash service, result is an additional$40.96 per month charge. Chart 3C. Service changed to: 4- ard trash with 1 time er week service & 3- ard rec cle with 3 times er week service $250.00 Total Monthly Charges,$216.65 $200.00 t� Trash Charge, $150.00 $135.15 59°o Diversion ��. = Recycle Charge, ,._,, _� _. �. . r __ ... $10Q.00 $81.50 1.04 Trash Tons - ''�'=` "µ- '= -� - 2.51 Total Monthiy Tons $50.00 -,..._ .:,.,, .;:.... ........ . 1 47 Recycle Tons .. � $0 00 ' . : .., ,>_....... : :,_ y ,�.��_ .. _�... . _ . _ ,�s�.;:�-..�...�� _, ___ ,._... _�...__� RATES WITH RECYCLE CHARGE �Trash Charge � Recycle Charge Total Monthly Charges Trash tons calculated @ 120 Ibs. per cubic yard 8� Recycle tons calculated @ 75.5 Ibs. per cubic yard (per industry standards). RESOLUTION NO. 2013- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, APPROVING THE NEW ADJUSTED RATE SCHEDULE OF FEES (EXHIBIT 3A, 3B, AND 3C) FOR RESIDENT, COMMERCIAL, AND ROLL-OFF) FOR THE COLLECTION, RECYCLING, AND DISPOSAL OF MUNICIPAL SOLID WASTE AND RESIDENTIAU COMMERCIAL RECYCLING AND NEW COMMERCIAL RECYCLE RATE CONTAINED IN CONTRACT NO. C27410 — SOLID WASTE MANAGEMENT SERVICES WHEREAS, on the 1 St day of June 2009, the City entered into an exclusive contract with Burrtec Waste and Recycling, LLC and approved the Agreement at its meeting of May 21, 2009. WHEREAS, Burrtec now provides solid waste collection and residential and commercial recycling services to the residents and businesses within Palm Desert; and WHEREAS, the franchise agreement sets forth rates for solid waste collection and recycling services within the City of Palm Desert as provided in Exhibits 3A, 3B, and 3C and 4A, 4B, and 4C and commencing on the second year of said agreement new rates may be applied at 100% of the PPI with a 5% cap unless otherwise approved and to become effective July 1 St of each year; and WHEREAS, the Riverside County Waste Resources Management District (RCWRMD) sets the landfill tipping fees and effective July 1, 1996, reduced the landfill tipping fee from $38.50 to $30.00 per ton; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, California, as follows: SECTION 1: That the City Council of the City of Palm Desert, California, rescinds all previous resolutions. SECTION 2: The annual rate increase shall be 100% of PPI with a 5% cap. SECTION 3: That the City Council of the City of Palm Desert, California, effective September 1, 2013, ratifies the 1 .2% Producer Price Index and 1.85% gate/disposal fee increases for solid waste collection and recycling service requested by Burrtec Waste and Recycling as provided for in the Franchise Agreement. Resolution No. 2013- SECTION 4: That the County of Riverside has increased the per ton gate/disposal fee at the transfer station/landfill from $40.54 to $41.28 an increase of $.74. SECTION 5: The City Council of the City of Palm Desert, California, approves the new solid waste rate increases for 2013 as reflected in each Exhibit 3 to become effective October 1, 2013, for residential customers who are directly billed and September 1, 2013 for master billed HOAs/residential and commercial customers. SECTION 6: That the City Council of the City of Palm Desert, California, effective as outlined in Section 5 above will utilize the $1 .87 (formerly $4.19) per ton tipping fee plus an additional $.03 per ton so that residential and commercial customers (excluding roll off and other special services) do not absorb the PPI and gate/disposal fee increases for 2013. SECTION 7: That the additional $.03 per ton be paid from the City's AB939 Fund. SECTION 8: The City Council of the City of Palm Desert, California, approves the new commercial recycle rate structure established at 35% of the trash fee and to include the 8% Franchise Fee. Rate reflected on Exhibit 3B to become effective November 1, 2013. SECTION 9: That the New Commercial Recycle Rate Structure as outlined in Exhibit 3B and the Roll Off Service Rates as outlined in Exhibit 3C shall be passed on to the those that utilizes these services. SECTION 9: All other solid waste and commercial recycling rates, services, 8% franchise fee, any other fees, reports, etc. shall be in accordance with the Agreement currently in effect. Resolution No. 2013- PASSED, APPROVED, AND ADOPTED this 26th day of September, 2013, by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: JAN C. HARNIK, MAYOR ATTEST: RACHELLE D. KLASSEN, CITY CLERK CITY OF PALM DESERT, CALIFORNIA C1 � Y 0 � P � CM DESER � �� 7;-5 i o Fxen WnRwc lln►vr: PAI.M Di:srisr, CALIFORNIA c�zz6o-2578 TBL: 760 346-06�� infi�(��'cityulpalmdcsert.or� ._.._ ..._. ..._.. ..._... .___ _..._. ._._ . ...... . .. . .... .._... .. .._ _.._ ... _ .. ..__. _..__ ._... NOTICE OF CONTINUED PUBLIC HEARING NOTICE IS HEREBY GIVEN that at its regular meeting of Thursday, August 22, 2013, the Palm Desert City Council continued the following Public Hearing to the meeting of September 26, 2013, at 4:00 p.m.: CONSIDERATION OF REQUEST BY BURRTEC WASTEAND RECYCLING SERVICES FOR APPROVAL OF THE ANNUAL PRODUCER PRICE INDEX (PPI)AND COUNTY OF RIVERSIDE GATE/DISPOSAL FEE INCREASES, AND APPROVAL OF THE NEW COMMERCIAL RATE. NOTE: The continued matter relates only to Consideration of the New Commercial Recycle Fee and its implementation, which will a/so be the subject of a Study Session to be conducted at 2:00 p.m. on September 26, 2013, with a separate Notice to be made for same. R HEL E D. KLASSEN, C Y CLERK CITY OF PALM DESERT, CALIFORNIA AUGUST 23, 2013 �b. g��PFINiF�ONAftx(tIDfAPkA