PREPARED BY: AMANDA BOOTH DATE OF MEETING: 11/18/2024
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO (1) AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH RICHMOND SANITARY SERVICES INC., A SUBSIDIARY OF REPUBLIC SERVICES INC., FOR SOLID WASTE COLLECTION SERVICES; (2) ACCEPTING THE FINAL FRANCHISE FEE STUDY; AND (3) AUTHORIZING STAFF TO PROCEED WITH A PROPOSITION 218 MAJORITY PROTEST PUBLIC HEARING PROCESS RELATED TO PROPOSED INCREASES IN PROPERTY RELATED SOLID WASTE COLLECTION RATES
CEQA: Approval of a new solid waste collection agreement is categorically exempt pursuant to CEQA Guidelines Section15301(b) pertaining to existing facilities of both investor and publicly owned utilities to provide electrical power, natural gas, sewerage, or other public utility services. This proposed action also meets the CEQA Guidelines Section 15061(b)(3) common sense exemption. The collection and disposal of solid waste is not only mandated and regulated by state law but is also an essential service for public health and safety. Proposed action related to the Franchise Fee Study and Proposition 218 procedural requirements are not projects as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
FY 2023-2025 Council Priority Workplan Compliance Statements:
Item 202: Develop and Implement Long-Term Environmental Stewardship Goals is a major policy goal contained in the FY 2023-25 City Council Priority Workplan, effective May 1, 2023.
BACKGROUND
Franchise-Collection Agreement
The City of San Pablo has had a solid waste Franchise-Collection Agreement with Richmond Sanitary Services, Inc. (RSS), a subsidiary of Republic Services, Inc., since 1986. Over the years - 1994, 1999, 2000, 2002, 2007, 2012, and 2013, several amendments have been made to the agreement. The agreement gives RSS the exclusive right to collect all solid waste in the City through June 30, 2025, when the current Franchise-Collection Agreement terminates.
On May 15, 2023, through Resolution 2023-079, the City Council directed staff to coordinate with other interested West Contra Costa County agencies to develop a joint Request for Proposals (RFP) for Solid Waste Collection Services. City of San Pablo staff coordinated with the City of Richmond and released an RFP on January 5, 2024. On May 20, 2024, through Resolution 2024-063, the City Council directed staff to commence negotiations with the top-ranked proposer, Richmond Sanitary Services (RSS). Staff recommends City Council approval of the final negotiated Solid Waste Collection Agreement (Agreement), including an accompanying Rent Stabilization Side Letter for the 18-month period beginning July 1, 2025 and ending December 31, 2026. The new solid waste collection service rates are presented below and included in Attachment 1.
Final Agreement Negotiations
City staff, with the assistance of R3 Consulting Group, Inc. (R3), proceeded to negotiate the terms and conditions of a final Agreement between June 2024 through October 2024. Negotiations were productive, with the final negotiated Agreement providing key benefits to the City’s residents and businesses, including:
• General Terms and Conditions:
o 15-year term from July 1, 2025 through June 30, 2040.
o Two 5-year extensions at City’s option.
o Updated Agreement form, with up-to-date performance and legal standards.
o Preservation of all current programs for residents, businesses, and the City.
o $150,000 reimbursement for RFP process costs.
o Programs and services required for compliance with SB 1383.
• Solid Waste Collection Service Rates and Adjustments:
o Low Income Discount ($5 discount per month) to customers enrolled in PG&E’s CARE program.
o No adjustments to initial July 2025 solid waste collection service rates until January 1, 2027.
o Annual adjustments to solid waste collection service rates capped at 5% per Consumer Price Index for Water, Sewer, and Trash collection (CPI).
o Limitations on future changes in solid waste collection service rates due to changes in law or extraordinary changes in cost.
• Rate Smoothing and Stabilization:
o Use of $243,000 in the City’s solid waste rate-stabilization funds to offset customer rate increases from July 1, 2025 through December 31, 2026 (Attachment 2).
§ These are restricted-Prop. 218 funds distributed to the City as a member agency from WCCIWMA that can be administered and applied to solid waste and recycling related costs only.
o Phased-in adjustments to City’s franchise fee, starting at 10% July 1, 2025 and then changing to 12.5% on January 1, 2027 and 15% on January 1, 2028.
• Fleet Electrification:
o RSS will use zero-emission electric vehicles for solid waste collection vehicles servicing residential and small business collection carts in the City (i.e., “side-loading vehicles”).
o Five new side-loaders will be deployed in 2025, making the City of San Pablo the first public agency in California to benefit from full electrification of residential solid waste collection services.
o The benefits of electrification include reduced air pollutants, fewer carbon emissions, less noise, and a safer working environment for solid waste vehicle operators.
o Electrification of solid waste collection fleets is required by the California Air Resources Board 10% by 2030, 25% by 2033, 50% by 2036,75% by 2039 and 100% by 2042.
• New and Enhanced Services for Customers:
o New bulky waste collection services for multi-family dwellings (similar to those currently provided to single-family dwellings).
o Additional large item pickup for single-family dwellings (3 total).
o New curbside collection of holiday trees in late December and early January (starting 2025).
o Expansion of the City’s “mini-dumpster day” program.
o Expansion of the City’s “dump voucher” program.
o New “move in/out” collection services.
o Kitchen top compost pail on request.
o Potential for future ability for customers to share services (pending development of program requirements and changes to City’s Municipal Code).
• New and Enhanced Community Services:
o Bulky item service for City facilities.
o Illegal dumping removal assistance.
o Additional bins for large City clean-ups known as “Dumpster Days.”
o Bin allocations for “Mini-Dumpster Days.”
o Collection at all City facilities and events.
• New and Enhanced Outreach and Education Services:
o Enhanced outreach, education, and reporting requirements.
o Newsletters with information about solid waste and recycling.
o Improved container signage to reduce contamination.
Taken altogether, the terms and conditions of the new recommended Solid Waste Collection Agreement with RSS will help ensure that:
• Solid waste collection services provided to the City meet current regulatory, legal, and performance standards.
• Residential and commercial solid waste customers are provided with solid waste collection services that provide multiple means for disposal and recycling of solid waste materials at competitive rates.
• The City is compensated for its costs associated with managing and administering the Agreement and critical aspects of the solid waste and sanitation system.
Solid Waste Rates
Solid waste rates paid by residents and businesses in the City are comprised of two components:
• A “collection rate”, which compensates RSS for the collection services provided per the City’s Agreement and is subject to City authorization.
• A separate “post-collection rate”, which compensates Republic Services for post-collection services provided per the Post-Collection Agreement between Republic Services and the regional joint powers authority, RecycleMore (of which the City is a member agency). Authorization of the post-collection rate component is made by vote of the RecycleMore Board of Directors, of which the City has one voting member.
The solid waste collection service rates included in the recommended Agreement with RSS are collection rates only and do not include post-collection rates. Therefore, City Council approval of the recommended Agreement will only affect collection rates.
It should be noted that RSS’s current solid waste collection service rates are scheduled for adjustment on January 1, 2025 per the terms and conditions of the current agreement, however, the amount of that adjustment is not yet known and the result will not affect the July 1, 2025 rates in the recommended Agreement. Therefore, for the purposes of clarity and simplicity, this staff report compares the current July 1, 2024 collection service rates to the negotiated July 1, 2025 rates.
City of San Pablo Proposed Solid Waste Collection Rates
Table 1 below shows a summary of current collection service rates per the existing agreement with RSS compared to the proposed July 1, 2025, January 1, 2027, and January 1, 2028 collection service rates. The collection service rates include the following:
• July 1, 2025:
o City’s use of rate stabilization funds to offset customer rates.
o Current franchise fee at 10% of collection service revenues.
o Initial July 2025 collection service rates will remain in place for eighteen months, through December 31, 2026. This is to prevent 3 collection rate increases in a 12-month period.
• January 1, 2027:
o Franchise fee adjustment from 10% to 12.5% of collection service revenues.
o CPI up to the 5% annual cap.
• January 1, 2028:
o Franchise fee adjustment from 12.5% to 15% of collection service revenues.
o CPI up to the 5% annual cap.
• January 1, 2029 and beyond:
o Only subject to the annual CPI adjustment (capped at 5%).
|
Container Size |
1-Jan-24 |
1-Jul-25 |
1-Jan-27 |
1-Jan-28 |
|
20-gal |
$ 23.49 |
$ 29.41 |
$ 32.50 |
$ 35.00 |
|
32-gal |
$ 25.41 |
$ 31.66 |
$ 34.99 |
$ 37.68 |
|
64-gal |
$ 50.14 |
$ 60.57 |
$ 66.93 |
$ 72.08 |
|
96-gal |
$ 75.12 |
$ 89.76 |
$ 99.20 |
$ 106.83 |
|
1-cy |
$ 227.55 |
$ 288.49 |
$ 316.68 |
$ 341.04 |
Table 1 - Summary of Maximum Solid Waste Collection Service Monthly Rates through January 1, 2028
Table 2, below, shows the monthly dollar increase for each of the years described above (July 1, 2025, January 1, 2027 and January 1, 2028).
Table 2 - Summary of Changes in Solid Waste Collection Service Monthly Rates through January 1, 2028
|
Container Size |
1-Jul-25 |
1-Jan-27 |
1-Jan-28 |
|
20-gal |
$ 5.92 |
$ 3.09 |
$ 2.50 |
|
32-gal |
$ 6.25 |
$ 3.33 |
$ 2.69 |
|
64-gal |
$ 10.43 |
$ 6.36 |
$ 5.15 |
|
96-gal |
$ 14.64 |
$ 9.44 |
$ 7.64 |
|
1-cy |
$ 60.94 |
$ 28.19 |
$ 24.36 |
.
Total Estimated Solid Waste Rates (including Collections and Post-Collection Services)
For purposes of comparison, the total monthly rates shown in Tables 3 and 4 below include:
• 2025 City of San Pablo collections rates services as outlined in Tables 1 and 2.
• 2025 post-collection rates scheduled for RecycleMore Board approval
• Assumed adjustments to post-collection rates of 5% on January 1, 2026, 2027 and 2028.
It should be noted that future changes in post-collection rates may occur as part of RecycleMore’s process to secure post-collection services effective July 1, 2025, and which will be the subject of future actions of the RecycleMore Board of Directors. Therefore, the assumption of 5% annual change in post-collection rates in 2026 through 2028 is for demonstration purposes only. Table 3, below, shows estimates of the total monthly solid waste rates inclusive of known collection service rates and estimated post-collection service rates.
Table 3 - Estimated Total Monthly Solid Waste Rates through January 1, 2028
|
Container Size |
1-Jan-24 |
1-Jan-25 |
1-Jul-25 |
1-Jan-26 |
1-Jan-27 |
1-Jan-28 |
|
20-gal |
$ 30.86 |
$ 31.76 |
$ 37.36 |
$ 37.76 |
$ 41.27 |
$ 44.21 |
|
32-gal |
$ 38.34 |
$ 39.45 |
$ 45.60 |
$ 46.30 |
$ 50.36 |
$ 53.82 |
|
64-gal |
$ 74.17 |
$ 76.32 |
$ 86.48 |
$ 87.78 |
$ 95.50 |
$ 102.08 |
|
96-gal |
$ 111.19 |
$ 114.42 |
$ 128.66 |
$ 130.61 |
$ 142.09 |
$ 151.86 |
|
1-cy |
$ 278.55 |
$ 286.03 |
$ 342.73 |
$ 345.44 |
$ 376.48 |
$ 403.83 |
Table 4, below, shows the monthly dollar estimated increase in total solid waste rates, inclusive of known collection service rates and estimated post-collection service rates.
Table 4 - Estimated Annual Change in Total Monthly Solid Waste Rates through January 1, 2028
|
Container Size |
1-Jan-25 |
1-Jul-25 |
1-Jan-26 |
1-Jan-27 |
1-Jan-28 |
|
20-gal |
$ 0.90 |
$ 5.60 |
$ 0.40 |
$ 3.51 |
$ 2.94 |
|
32-gal |
$ 1.11 |
$ 6.15 |
$ 0.70 |
$ 4.06 |
$ 3.46 |
|
64-gal |
$ 2.15 |
$ 10.16 |
$ 1.30 |
$ 7.72 |
$ 6.58 |
|
96-gal |
$ 3.23 |
$ 14.24 |
$ 1.95 |
$ 11.48 |
$ 9.78 |
|
1-cy |
$ 7.48 |
$ 56.70 |
$ 2.71 |
$ 31.04 |
$ 27.35 |
Table 5 below, compares the City’s 2026 total estimated monthly solid waste rates to other local communities. Rates shown for comparison communities are based on current 2024 rates and an assumption that such rates will increase by 5% in 2025 and 2026. The results for residential rates are shown in Table 5 and Chart 1, on the following page - note that the results are in ascending order by 32-gallon service, which is the most commonly subscribed service level. The City’s new maximum solid waste collection service rates per the recommended new Agreement compare favorably to other communities.
Table 5 - Comparison of Estimated 2026 Residential Monthly Solid Waste Rates
|
City |
20-Gallon |
32-Gallon |
64-Gallon |
96-Gallon |
|
Pleasant Hill |
$ 33.31 |
$ 38.31 |
$ 51.75 |
$ 76.98 |
|
Martinez |
$ 31.06 |
$ 44.50 |
$ 54.67 |
$ 104.15 |
|
Benicia |
$ 38.61 |
$ 45.38 |
$ 56.43 |
$ 77.36 |
|
San Pablo (New) |
$ 37.76 |
$ 46.30 |
$ 87.78 |
$ 130.61 |
|
Pinole* |
$ 38.97 |
$ 47.23 |
$ 84.23 |
$ 122.54 |
|
Richmond* |
$ 38.90 |
$ 47.66 |
$ 90.25 |
$ 134.13 |
|
Vallejo |
N/A |
$ 50.00 |
$ 81.11 |
$ 112.23 |
|
Hercules* |
$ 42.80 |
$ 50.90 |
$ 89.92 |
$ 130.21 |
|
Concord |
N/A |
$ 53.18 |
$ 71.91 |
$ 88.18 |
|
Oakland |
$ 57.07 |
$ 64.79 |
$ 114.30 |
$ 171.76 |
|
Berkeley |
$ 51.30 |
$ 67.66 |
$ 93.60 |
$ 112.47 |
|
Albany |
$ 62.93 |
$ 70.46 |
$ 121.78 |
$ 173.07 |
|
El Cerrito |
$ 55.00 |
$ 72.00 |
$ 142.96 |
N/A |
*Pinole, Richmond and Hercules are all currently negotiating new solid waste collection agreements.
Chart 1 - Comparison of Estimated 2026 Residential Monthly Solid Waste Rates
Table 6 and Chart 2, on the following page, show the comparison of estimated 2026 monthly solid waste rates for the common subscription size of one (1) cubic yard serviced once weekly. It should be noted that rates shown for City of San Pablo include baseline levels of recycling and organics service - this may not be the case for all communities listed.
Table 6 - Comparison of Estimated 2026 Commercial 1 Cubic Yard Monthly Solid Waste Rates
|
City |
1 Cubic Yard |
|
Berkeley |
$ 187.50 |
|
Martinez |
$ 230.63 |
|
Pleasant Hill |
$ 276.97 |
|
Albany |
$ 280.72 |
|
Richmond* |
$ 312.70 |
|
Oakland |
$ 316.54 |
|
Pinole* |
$ 339.34 |
|
San Pablo (New) |
$ 345.44 |
|
Hercules* |
$ 359.39 |
|
Vallejo |
$ 453.68 |
|
El Cerrito |
$ 499.63 |
*Pinole, Richmond and Hercules are all currently negotiating new Solid Waste Collection Agreements.
Chart 2 - Comparison of Estimated 2026 Commercial 1 Cubic Yard Monthly Solid Waste Rates
Franchise Fee Study
As part of the new solid waste collection agreement process, City staff contracted with R3 to conduct a Franchise Fee Study (Attachment 3). The purpose of the study was to comprehensively analyze and calculate:
• The City costs for performing the required management, administration, regulatory compliance and enforcement, solid waste collection and clean-up, and other obligations associated with the RSS Agreement and the sanitation system.
• A potential annual use charge to RSS for special and lasting access to use government property in the public right-of-way for placement of solid waste containers and collection of the solid waste contents.
• The annualized costs for pavement repair, maintenance, and rehabilitation resulting from the unique impacts on City street pavement caused by RSS’ solid waste collection vehicles during the course of providing sanitation service.
The recommendation to adjust the franchise fee incrementally from 10% of collection service revenues to 15% of collection service revenues is supported by the results of the Franchise Fee Study. More specifically, those results determined that the City’s current and projected franchise fee revenues do not exceed the City’s actual reasonable costs pertaining to the management, administration, regulatory compliance, and enforcement obligations associated with its solid waste collection activities. The City’s proposed franchise fee does not include costs associated with RSS’ use of the public right-of-way or impacts on City street pavement, although those costs were evaluated in the fee study.
Proposition 218 Majority Protest Public Hearing
The proposed fees under the new Solid Waste Collection Agreement with RSS are considered property related fees subject to the provisions of Proposition 218. To implement a new or increased property-related fee, the City must adhere to the following procedures:
• Provide written notice by mail of the proposed fee to the record owner of each parcel upon which the fee is proposed to be charged.
• Conduct a public hearing regarding the proposed fee not less than 45 days after mailing the notice.
• At the public hearing, consider all written protests against the proposed fee. If written protests against the proposed fee are submitted by a majority of owners of the parcels that will be subject to the proposed fee, City Council cannot approve the proposed fee.
Upon City Council approval of the new Solid Waste Collection Agreement with RSS, the City will mail notices to all property owners in the City no later than December 6th and conduct a public hearing on January 21, 2025 to consider all written protests in accordance with the procedural requirements of Proposition 218.
Public Safety Standing Committee Recommendation
On October 21, 2024, City staff presented the Solid Waste Collection Agreement, the franchise fee study, and an overview of the Proposition 218 majority protest public hearing process to the Public Safety Standing Committee (Pabon-Alvarado; Xavier), and the Committee voted to have staff finalize all terms and conditions of the new Solid Waste Collection Agreement for formal Council consideration and approval, and further recommended that the City Council authorize staff to proceed with the Proposition 218 majority protest public hearing process.
City Attorney Permissive Language Authorization
For any aspects of the proposed contract between the City and RSS, the City Council will grant one-time permissive language authority to the City Attorney to finalize said agreement as all major salient provisions of the proposed contract are hereby authorized via adopted City Council Resolution.
FISCAL IMPACT
Within thirty days of contract execution, the Agreement provides that RSS will pay the City $150,000 to compensate the City for its costs associated with the request for proposals and contract negotiation process. This payment will cover the City’s cost share for R3’s consulting services associated with these activities per the MOU with the City of Richmond as well as City’s staff and legal costs associated with the new Agreement.
Franchise Fee Revenues to City
The recommended adjustments to the franchise fee (from the current 10% in 2025 to 12.5% in 2027 and 15% in 2028) will increase cost-recovery funds paid to the City by approximately $75,000 in FY 2026, $260,000 in 2027, and $270,000 in 2028. Current annual franchise fee revenues are estimated at $575,000, which is less than half of the City’s costs associated with the management and administration of the Agreement and the sanitation system. R3 estimates that the City’s franchise fee revenues in 2026 will be approximately $650,000, increasing to approximately $910,000 in 2027 and $1,180,000 in 2028.
ATTACHMENTS:
Att A - Resolution
Att B - Solid Waste Collection Agreement
Att C - Rate Stabilization Side Letter
Att D - Franchise Fee Study