SR-503-001-02 (4)
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, ,. Gr..: 3ES : KR: MHE
Council Meeting: April 28, 1987
Santa Monica, California
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TO:
Mayor and City council
FROM:
City staff
SUBJECT: Recommendation for City Council to Adopt Resolution
Increasing Refuse Rates
INTRODUCTION
This report recommends that the City Council adopt the attached
resolution increasing the Solid Waste Management fees by 16% to
cover increased costs within the Solid Waste Management
enterprise. Approximately 57% of this increase is the result of
rising landfill costs. The rate increase should provide enough
additional revenue to cover the projected fund operating deficit
for two years. However, uncertainties concerning landfill fees
which may rise significantly again in 1988-89 may necessitate
another rate increase next year.
BACKGROUND
The scope of services provided by the Sol id Waste Management
enterprise includes refuse collection and disposal,
alley
cleaning, special collections, street sweeping, litter can
service, municipal composting, asphalt and concrete recycling,
recyclables buy-back center and a curbside/zone recyclables
pick-up program. These operations are funded by a current annual
budget of $6,014,300 including capital equipment.
Solid waste services are operated on an enterprise basis whereby
user fees and related revenues offset the entire cost of the
services. As the cost of the services increase rates must be
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Council Meeting: April 28, 1987
Santa Monica, California
adjusted upward to insure sufficient revenue to cover the cost of
the services. Rates were last increased by 15% in May, 1985. At
that time, it was projected that the increase would sustain the
solid waste management operation for two years without requiring
further increase. This projection has proved accurate inasmuch
as the projected fund balance for June 30, 1987, is ($65,296),
which is very near the break-even point.
This projected balance
includes an unanticipated cost of approximately $141,900 for fuel
storage and dispensing facilities replacement at the City Yards.
This proj ect is currently under construction on an emergency
basis due to underground leaks.
Operating costs continue to increase.
CUrrent projections
indicate that if the same level of service is provided without a
rate increase, yearly operating deficits will occur in the amount
of ($591,479) in budget year 1987/88 and ($878,878) in 1988/89
for a cumulative deficit of $1,535,653 including the ($65,296)
negative fund balance at the year ending June 30, 1987, (See
Exhibit I).
DISCUSSION OF COST INCREASES
While certain cost factors have remained relatively stable over
the past two years, most costs continue to rise.
The maj or
categories where projected cost increases are expected to occur
are the following:
Labor
The Teamster contract allows for a 4% increase in
FY1987-88; however, the contract expires on June 3D, 1988, and
labor cost increases for the second year of the proposed rate
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Council Meeting: April 28, 1987
Santa Monica, California
increase are unknown.
Increases for the three other bargaining
units (MEA, STA, and MTA) are unknown for both FY1987-88 and
FY1988-89.
In addition, labor costs have increased due to the
decision to convert two as-needed positions used for alley
cleaning positions to permanent positions.
other operating Costs - The major operating cost increase facing
the Solid Waste Management enterprise is the increase in landfill
costs.
Staff has learned that the landfill costs will double
from $4.60 a ton to $9.20 a ton effective July 1, 1987.
This
increase will add an additional cost of $450,000 to the operating
expenses.
Further I staff was apprised that the landfill rates
could only be guaranteed for one year and further cost increases
should be expected. Staff has contacted other landfill operators
and has determined that the landfill presently used is the most
cost-effective location considering rates, travel time, operating
costs and distance even with increased rates.
other operating
costs are estimated to increase 5% per year over the next two
years.
capi tal Equipment
Capital costs for items such as refuse
trucks, long-haul transfer tractors and trailers, and street
sweepers are projected to increase at least 6% per year.
PROPOSED CHANGES IN THE CURRENT LEVEL OF SERVICE
Hazardous Waste Response and Storage
To be able to provide better response to emergency hazardous
waste incidents and provide some level of hazardous material
disposal service, staff recommends that a hazardous waste
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Council Meeting: April 28, 1987
Santa Monica, California
response and storage capability be established.
Fifty thousand
dollars ($50,000) first year cost is proposed to provide this
service. The details of how the $50,000 will be allocated will
be determine in the next few weeks.
Recycling Program status
The recycling program consists of single family curbside
collection, drop-off zones for mUlti-family areas, and the
operation of a drop-off and buy-back center operated by
Ecolo-Haul, at the Ci ty Yards.
Of these operations only the
buy-back center produces a positive cash flow to the City of
approximately $15,000 per year.
Costs of collecting recyclable materials from residents far
exceed the revenue earned from the sale of the materials.
However, there are many indirect benefits of providing the
collection services.
It currently costs the City $167 per ton to collect recyclables
from the curbsides and zones. Cost of regular refuse collection
is approximately $59 per ton.
The Current market price for
recyclables (newspaper, mixed cans and glass) is approximately
$30 per ton. Therefore the net cost of collecting recyclables is
$167 less $30 or $137 per ton.
If a cost avoidance credit of
$59 per ton1 is allowed for each ton of recyclables diverted from
the waste stream, then the net cost to provide the recycling
service is $78 per ton. The City collects approximately 2,000
1 The cost avoided for regular refuse collection because the
material is diverted from the waste stream by the recycling
program.
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Council Meeting: April 28, 1987
Santa Monica, California
tons of recyclables per year.
Therefore if the recyclable
collection program were eliminated, approximately $156,000 could
be saved per year. This translates to 3% of the proposed rate
increase.
The benefits of providing a recyclable collection program include
the following:
1. Convenience
Curbside and zone collection is the most
convenient to the average resident.
This convenience
encourages more participation.
2. Commitment
Providing the collection service further
demonstrates the commitment the City has made to consumer
recycling.
3. Energy Savings - Curbside and zone collection operated by the
City results in net energy savings.
If individuals were to
take their recyclables to a central drop-off center, ten
times as much fuel would be required per ton of recyclables
collected.
Hundreds of individual auto trips would be
required by individuals to equal a single collection trip by
a City crew.
4. Conserving Landfill Space - Although the percentage diverted
from the refuse stream by recycling is very small, it is the
foundation for a lifestyle that will be essential in the
future.
Landfill space is dwindling and environmental
concerns of air and water pollutions as a result of
landfilling continue to increase. Resource reuse is the most
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Council Meeting: April 28, 1987
Santa Monica, California
environmentally sound alternative for reducing the waste
stream that requires 1andfilling.
Long-Range Solid Waste Management Plans
Waste reduction and resource recovery appear to be the only
available alternatives to landfilling.
Solid waste managers in
all areas of the Country agree that material recycling will be an
important part of the long-range solid waste management plans of
every agency.
Approved landfill space in Los Angeles County is rapidly
diminishing. The landfill currently used by the City, known as
Sunshine Canyon located near Newhall, has an operating permit
through 1992.
However, current environmental requirements for
landfill operations, such as clay liners, gas mitigation systems,
etc., will cause future landfill permits to be extremely
difficult to obtain. Also, the installation of the clay liners,
gas recovery systems, and leachate controls in an approved
landfill will
mean that
costs
to users will
increase
dramatically. As mentioned earlier in this report, the City's
landfill costs will double in FYl987/88 and further increases are
expected in future years.
It appears to staff that a regional
refuse disposal crisis is developing and will be upon us within
three to five years.
Wi th this situation approaching, staff has been investigating
several alternatives to landfilling over the last few years. One
of these
alternatives
is the recycling program.
Other
al ternati ves are:
construction of waste-to-energy facilities,
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Council Meeting: April 28, 1987
Santa Monica, California
and construction of refuse processing plants that sort reusable
materials and process the remaining material for fuel at some
other site or for pulp to produce building materials. None of
these technologies are currently economically feasible for Santa
Monica. There are unsolved environmental issues with the waste
to energy plants and markets have not been developed for refuse
pulp based building materials.
Long-range refuse disposal issues are regional by nature, and
many jurisdictions utilize the same landfills. Therefore, these
agencies are facing the same refuse disposal issues as Santa
Monica.
staff proposes that Santa Monica take the lead in forming a
consortium of local cities, e.g., Culver City, Beverly Hills,
Inglewood, El Segundo, Manhattan Beach and the city of Los
Angeles to explore joint venture opportunities to avert a solid
waste crisis. The consortium could consider technical as well as
political solutions to the problem.
As part of the recommendations outlined in this report, staff is
requesting Council to direct them to initiate a planning
consortium with other interested cities in the region to propose
technical and political solutions to the area's solid waste
management problems.
BUdget/Financial Impact
The 16% rate increase will produce $788,432 per year in
additional revenue to the Refuse Fund. This additional revenue
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Council Meeting: April 28, 1987
Santa Monica, California
will offset the projected deficits for FY1986/87 and FY1987/88
(See Exhibit II). As discussed above, landfill costs may greatly
increase again in FY1988j89. The amount of increase is unknown
at this time. Therefore, another increase or a reduction in the
service level, may be necessary one year from now.
Implementation of a 16% rate increase will result in the
following monthly rates for typical Santa Monica customers.
USER TYPE CURRENT WITH 15% INCREASE
Single Family $ 10.01 11.61
10 Unit Apartment 63.65 73.83
with 2 bins 2jwk.
Commercial Service 139.08 161.33
1 bin 6/wk.
commercial Service 45.71 53.02
1 bin 2jwk.
*(See Attached Resolution for complete fee schedule)
The rates resulting from this increase will put Santa Monica
Refuse service rates for residential customers relatively high
when compared to local comparable cities (See Exhibit III).
However, Santa Monica includes the cost of street cleaning and
recycling and a minimum of twice per week service in the refuse
fee. The comparable Cities listed include only the cost of
refuse collection in their rates. The proposed rates for
commercial users remain very competitive with other agencies and
local private refuse companies.
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Council Meeting: April 28, 1987
Santa Monica, California
Recommendation
1. It is recommended that the City Council adopt the attached
Resolution increasing rates for refuse collection and
disposal by 16%.
2. It is further recommended that Council direct staff to
initiate discussions with other cities in the region to
explore the feasibility of forming a planning consortium to
develop the best strategies for addressing the impending
solid waste disposal problems.
Prepared by: Stanley E. Scholl, Director of General Services
Ken Redfern, Maintenance Manager
Marsha Eubanks, Administrative Analyst
Attachments: Resolution
Exhibits I, II, & III
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DESCR I PT ION
BEGINNING FUND BALANCE
REVENUE
REFUSE COLLECTION FEES
DUMP USE FEES
DEBRIS REMOVAL
ST HIGHWAY CLEANING
BEACH LOT SWEEPING
RECYCLE LEASE RENTAL
RECYCLE MATERIALS
WEED ABATEMENT
STORM DRAIN MAINT CREDIT
INTEREST ON FUND BALANCE
EXHIBIT I NCM 4/21/87
PROJECTION OF FY 87/88 & 88/89 INCOME (LOSS), AND
FUND BALANCE FOR REFUSE FUND
WITHOUT RATE INCREASE, WITH HAZ MAT
(711/87)
EXPENSES(3)
TOTAL OPERATING REVENUE
REFUSE COLLECTION AND DISPOSAL
STREET CLEANING
RECYCLl NG
CIP REFUSE COLL/DISPOSAL
CIP STREET CLEANING
TOTAL EXPENSE
HAZARDOUS MATERIALS PROGRAM
ENDING FUND BALANCE
OPERATING INCOVE (LOSS)
(6/30/88)
87/88
88/89
(65,296)(1) (7/1/88)
(656,775)
4,927,700 (2)
4,927,700
105,000 (2)
105,000
25,000 (2)
25,000
28,000 (2)
28,000
13,800 (2)
15,000
73,312 (2)
85,000
65,749 (2)
65,749
1,700 (2)
1,700
50,000 (2)
50,000
o
5,290,261
5,303,149
4,102,140 (4) 4,307,247
780,429 (4) 819,450
373,171 (4) 391,830
497,000 (4) 611,000
79,000 (4) 0
50,000 (4) 52,500
5,881,740 6,182,027
(591,479) (878,878)
(656,775) (6/30/89) (1,535,653)
FOOTNOTES.
(1) FROM FROM 86/87 FUND POSITION PROJECTION
(2) FROM 87/88 BUDGET REQUEST WITHOUT
RATE INCREASE
(3) EXPENSES PROJECTED TO INCREASE 5% IN 88/89
(4) FROM 87/88 BUDGET REQUEST.
o
EXH I BIT II
PROJECTION OF FY 87/88 & 88/89 INCOME (LOSS), AND
FUND BALANCE FOR REFUSE FUND
WITH 16% RATE INCREASE, WIiH HAZ MAT
DESCRIPTION
87/88
88/89
BEGINNING FUND BALANCE
(711/87)
(65,296)(1) (7/1/88)
131,657
REVENUE
REFUSE COLLECTION FEES
5,716,132 (2)
5,716,132
DUMP USE FEES
105,000 (4)
105,000
DEBRIS REMOVAL
25,000 (4)
25,000
ST HIGHWAY CLEANING
28,000 (4)
28,000
BEACH LOT SWEEPING
13,800 (4)
15,000
RECYCLE LEASE REWTAL
73,312 (4)
85,OOQ
RECYCLE MATERIALS
65,749 (4)
65,749
WEED ABATEMENT
1,700 (4)
2,000
SiORM DRAIN MAINT. CREDIT
50,000 (4)
50,000
INTEREST ON FUND BALANCE
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TOTAL OPERATING REVENUE
6,078,693
6,091,881
EXPENSES(3)
REFUSE COLLECTION AND DISPOSAL
4,102,140 (4) 4,307,247
780,429 (4) 819,450
373,171 (4 ) 391,830
497,000 (4) 611,000
79,000 0
50,Oao (4) 52,500
5,881,740 6,182,027
STREET CLEANING
RECYCliNG
CIP REFUSE COLL/DISPOSAL
CIP STREET CLEANING
HAZARDOUS M4TERIALS PROGRAM
TOTAL EXPENSE
OPERATING INCO~E (LOSS)
196,953
(90,146)
ENDING FUND BALANCE
(6/30/88)
131,657 (6/30/89)
41,511
FOOTNOTES
(1) FROM FROM 86/87 FUND POSITION PROJECTION.
(2) FROM 87/88 BUDGET REQUEST WITH 15%
RATE INCREASE
(3) EXPENSES PROJECTED TO INCREASE 5% IN 88/89
(4) FRO~ 87/88 BUDGET REQUEST.
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EXHIBIT III
Comparison of Refuse Rates with other cities
Monthly refuse rates for various services in near-by cities compared to the
proposed 16% increase are:
COIlll'llercial Commercial
City single-Family MUlti-Family 1 Bin/2 weekly 1 Bin/6 Weekly
Culver city $ 7.16 $75.00 $75.00 $225.00
Beverly Hills N/A N/A 60.00 139.00
Glendale 10.30 19.20-Duplexes 46.40 126.20
Torrance 8.00 N/A N/A N/A
Pasadena 14.60 74.00 74.00 206.00
Santa Monica 11.61 73.93 53.02 159.01
( 16%)
It should be noted that Santa Monica collects refuse from single-family
residences twice a week whereas all the other cities shown make collections
from single-family residences only once a week. In addition, Santa Monica
charges all customers for both street sweeping and recycling services.