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SR-01-14-2014-8ACity Council Meeting: January 14, 2014 Agenda Item: B - A To: Mayor and City Council From: Martin Pastucha, Director of Public Works Subject: Resource Recovery & Recycling Rate Study and Adoption of Zero Waste Strategic Plan Recommended Action Staff recommends that the City Council: 1. Adopt the Zero Waste Strategic Plan to achieve 95% diversion from the landfill by 2030. 2. Approve a three year plan to increase Resource Recovery & Recycling service rates and the establishment of a 5% operating reserve 3. Approve the setting of a public hearing in April 2014, in accordance with Proposition 218, to adopt Resource Recovery & Recycling rate increases. Executive Summary At a Council study session on March 19. 2013, staff presented the draft Zero Waste Strategic Plan which included various policies, programs, projected waste diversion percentages and estimated costs which would affect existing rates if the recommended programs were implemented over the next fifteen years. Council directed staff to communicate the Zero Waste Plan to all facets of the community and incorporate findings into the final plan. At the FY 2006 -07 Council Budget Study Session on June 20 2006, Council approved a resolution to increase solid waste rates by 7% and by a factor equal to the difference in the Los Angeles- Riverside - Orange County Consumer Price Index (CPI) for Wage Earners and Clerical Workers annually thereafter. No additional rate increases have been requested to recover full costs for Resource Recovery & Recycling services since that time. Staff recommends that Council adopt the Zero Waste Strategic Plan to achieve 95 percent waste diversion by 2030, approve a plan to increase service rates to establish a five percent operating reserve and set a public hearing in April 2014 to adopt the resource recovery and recycling rate increases. Background On June 23, 2009, Council directed staff to develop a Zero Waste Strategic Plan. The City began a Zero Waste Strategic Planning process to identify the new policies, programs and infrastructure that would enable the City to reach its Zero Waste goal of 95% diversion by 2030, or a per capita disposal rate of 1.1 pounds per person per day. The Zero Waste Strategic Plan will help the City strengthen its existing diversion operations while addressing significant fiscal challenges and emerging trends and technologies. The Plan will serve as a broad environmental and policy framework and will guide the future development of the City's Resource Recovery and Recycling policies, programs, and infrastructure. The Resource Recovery & Recycling Division (RRR) is the exclusive provider of solid waste collection services to residential and commercial customers. RRR recovers its cost of operations through solid waste rate charges to customers. On June 20, 2006 Council approved a five year rate adjustment plan providing that customer rates would only be adjusted by the Consumer Price Index, (CPI) or the Cost of Living Adjustment (COLA) whichever is higher. If an extraordinary adjustment was necessary within the five year period, such as unanticipated landfill disposal fee increases, the RRR Division used its fund balance to cover the cost of the adjustment. The Resource Recovery & Recycling rates have not been increased, except by CPI /COLA since FY 2006 -07. Since that time the City has expanded its waste diversion programs, seen increased costs in disposal fees, new organics processing fees, transportation fees, salaries and benefits increases, vehicle purchases price increases, maintenance and fuel increases, all requiring RRR to continue to reduce its existing reserves. The State of California enacted AB 939 legislation in 1989 which required that all municipalities divert 50% of waste from the landfill by 2010 and 75% by the year 2020. This sparked the increase in blue cart recycling programs at the municipal and county RAI levels throughout the late 1990's and the early 2000's. This legislation also led to development of additional opportunities for waste diversion, green carts for yard clippings, and food scraps composting programs to meet the mandatory state diversion requirements, all without additional state or federal funding to absorb costs for these new collection programs. In 2012, the State of California enacted AB 341 which mandates that all multi - family buildings with five or more units must implement a recycling program for its tenants, and all commercial entities generating four yards of trash weekly must also implement a recycling program for employees and clients /customers. The expenditures for outreach, marketing, collections, hauling and processing of these additional materials through this new mandate are currently being absorbed through a rate structure approved almost a decade ago. Operational issues have also had an impact on the cost of RRR programs. On October 31, 2013 Puente Hills Landfill, owned and operated by the Los Angeles County Sanitation District, maximized its lifetime capacity for waste disposal and officially closed. This closure has resulted in the City seeking out and disposing of waste at landfills at a further distance and a higher cost due to market demand for landfill space. Landfill disposal and waste to energy fees increase annually between 1.2% and 6.4 %, whereas the revenues received from rate payers for all services increase by CPI /COLA. The rate adjustments have been as low as 2.0% and as high as 3.7 %, an average of 2.8% over the last seven years. The existing fees collected by the City pay for more than just refuse collections and disposal. A variety of programs tailored to increase diversion opportunities for residents and businesses are funded by fees. The fees pay for collection and processing of recyclables, food scraps, yard debris and bulky items, as well as equipment, infrastructure, container replacements, support services, alternative technology studies, education, marketing, outreach, public litter collection, household hazardous waste collection, and street sweeping services. Fees also pay for the monthly community 3 events which include paper shredding, compost give away, textile recycling, electronics recycling, costume swap, and other activities offered to all residents. The following chart shows that operational expenditures have been exceeding revenues regularly since FY 2009/10. Operational expenditures for salaries and wages, supplies and expenses, and Capital Improvement Projects (CIP) are listed as columns with the revenues graphed to demonstrate the comparison for past and future projections. Expenditure to Revenue Comparison 30,000,000 25,000,000 — CIP 20,000,000 — " Supplies /Expenses 15,000,000 Salaries /Benefits Revenue 10,000,000 — 5,000,000 FY07 /08 FY08 /09 FY09 /10 FY10 /11 FY11/12 FY12 /13 FY13/14 FY14 /15 FY15/16 FY16/17 City staff has monitored expenditures and implemented cost saving measures in daily operations for all line items that are not affected by outside increases such as landfill disposal costs. Table 1 below shows the operational savings in several line items since 2008. M Table 1 Five Year Operational Savings Fiscal Year Budget Actual Savings Percent = FY 2008 -09 $ 19,533,791 $ 18,573,876 $ 959,915; 4.9% FY 2009 -10 $ 19,822,435 $ 19,192,745 $_ 629,690 ` 3.2% FY 2010 -11 $ 19,839,367 $ 18,787,512 $ 1,051,855 5.3% FY 2011 -12 $ 20,826,803 $ 20,497,057 FY 2016 -17 $ 329,746 1.6% FY 2012 -13 $ 21,690,342 $ 19,594,491 $ 2,095,851 In spite of these efforts, the cost of Resource Recovery & Recycling operations continues to exceed the revenue received. There will be a fund deficit by FY2016 -17 if a structural adjustment to rates is not implemented. Unrestricted cash reserves have been used to offset the increased costs for services. Table 2 shows the reserve levels since FY 2009 -10 through to the projected deficit in FY 2016 -17. Table 2 Changes in the Cash Reserve Fund The decreases in the reserve fund are the result of several unscheduled events during past budgeted years and projections for the next three fiscal years. The reserve decrease in FY 2009 -10 was a result of one time funding needed for the design of the Resource Recovery Facility. Funds were spent in FY 2011 -12 for the initial start -up of the bulky item collection crew and the purchase of several additional vehicles to perform 5 CASH RESERVES Actual Actual Actual Actual Budget FY 2009 -30 FY 2010 -11 FY 2011.12 FY 2012 -13 FY 2013 -14 FY 2014 -15 FY 2015.16 FY 2016 -17 BEGINNING CASH BALANCE 4,062,138 3,773,868 3,882,791 2,211,677 3,593,135 1,286,161 982,434 566,562 ENDING CASH BALANCE 3773868 3883_791 2212 ,677 3593_135 1281 ,161 98434 565562 275727 Decrease /(Increase) in Cash Reserve 288,270 (108,923) 1,671,114 (1,381,458) 2,306,974 303,727 415,872 842,289 The decreases in the reserve fund are the result of several unscheduled events during past budgeted years and projections for the next three fiscal years. The reserve decrease in FY 2009 -10 was a result of one time funding needed for the design of the Resource Recovery Facility. Funds were spent in FY 2011 -12 for the initial start -up of the bulky item collection crew and the purchase of several additional vehicles to perform 5 collection services including the new organics collection program. In FY 2012 -13, operational procedures were implemented to achieve ongoing staffing and equipment savings and a one time savings in construction and demolition planning programs. Beginning in FY 2013 -14, the decrease in the reserve is a projection because the actual bottom line savings will not be known until the close of the Fiscal Year. All future fiscal year projections are based upon an estimated CPI of 2.5 %. Discussion Zero Waste Strategic Plan In order to gather input from the public on the proposed Zero Waste Plan staff initiated a number of efforts to reach out to system users for their input on the Plan. Community members and stakeholders were provided the opportunity to complete a survey regarding the City's proposed Zero Waste Strategic Plan. The Zero Waste survey solicited input on the potential policies, programs, and infrastructure options identified in the Plan. Separate surveys were provided for single - family residents, multi - family residents, and businesses, to collect input specific to the interests of these individual stakeholders. The City initially made the survey available at the annual Santa Monica Festival, and used interns to canvas the Farmer's Markets. Postcards were placed at all public counters and coffee shops around the City, and an email blast was sent out to over 4,000 businesses and residents. The City also reached out to the neighborhood associations, the Santa Monica Chamber of Commerce and the City's Rent Control Board to place ads in their newsletters. To obtain as many responses to the Zero Waste Strategic Plan survey as possible, staff provided incentives for the completion of the surveys within a specific timeframe. Single family residents received a free container cleaning service; multi - family residents received kitchen pails. Commercial businesses could attend one free paper shred event with volume limitations. The surveys included a series of questions; responders were asked to indicate whether they Strongly Agreed, Agreed, were Neutral, Disagreed or Strongly Disagreed with each question or statement. The survey questions and responses to the surveys are summarized below: Single- Family Survey The Single - Family Survey asked for input on 22 ideas for possible policies, programs, and infrastructure included in the Zero Waste Strategic Plan. A total of 1,034 surveys were viewed online with 238 surveys completed. Overall, residents strongly support the City's adoption of Zero Waste, and the policies, programs, and infrastructure options that will help the City to achieve Zero Waste. Eighteen of the 22 questions received a response of Strongly Agree or Agree from 75% or more of the responders. One third of the questions received a response of Strongly Agree or Agree from 90% or more of the responders. More than eighty percent (80 %) of single family residents who completed the survey were in favor of food waste recycling, additional public recycling containers citywide, additional education and outreach for new recycling programs and a two container collection system. 7 Multi - Family Survey The Multi - Family Survey asked for input on 15 ideas for possible policies, programs, and infrastructure included in the Zero Waste Strategic Plan. Although 602 web users viewed the multi - family survey online, only 113 surveys were completed. Overall, multi - family residents strongly support the City's adoption of Zero Waste, and the policies, programs, and infrastructure options that will help the City to achieve Zero Waste. Twelve of the 15 questions received a response of Strongly Agree or Agree from 75% or more of the responders. Residents acknowledged that they wanted to improve current recycling processes and future programs to divert hazardous items from landfills. Commercial Survey The Commercial Survey asked for input on 19 ideas for possible policies, programs, and infrastructure included in the Zero Waste Strategic Plan. A total of 84 surveys were completed out of 525 online views and 700 personal visits to businesses by summer interns. Overall, the responders indicated strong support for the City's adoption of Zero Waste, and the policies, programs, and infrastructure options that will help the City to achieve Zero Waste. Twelve of the 19 questions received a response of Strongly Agree or Agree from 75% or more of the responders. One fourth of the questions received a response of Strongly Agree or Agree from 90% or more of the responders. Responders to the survey supported additional recycling programs for their businesses and incentives for employees to reduce waste and reuse materials. Many were also in favor of manufacturer take -back programs. The results of the surveys and comments received from the public at these numerous venues were very positive and supportive of the City's proposed Zero Waste goals. As a result, these comments were included into the Zero Waste Strategic Plan for final adoption. The survey questions and results were added to the Zero Waste Strategic Plan as Appendix l and are attached. R Rate Study In May 2011, staff issued a RFP for a consultant to assist with the development of the Zero Waste Strategic Plan. On November 22 2011 Council approved HDR Engineering and HF &H Consultants to assist with the Plan. HF &H Consultants conducted the financial analysis on the Plan and the anticipated impact on rates for the proposed programs listed in the Zero Waste Plan. As a result of the analysis on the proposed programs and rates, HF &H was retained by the City in March 2013 to perform a more in depth rate study including an evaluation of the current rate structure. The rate study evaluated projected revenues, expenditures and the fund balance for a five year period, assuming continuation of the existing services and the existing rate structure. The rate study included an analysis of the alignment of current rate revenue with the cost of service for single family, multi - family and commercial customers; these are referenced in the report as service sectors. The objectives of the solid waste rate study are to: • Evaluate the adequacy of existing rates to reasonably fund current services and maintain target reserves • Compare existing rate revenues by service sector (residential, multi - family and commercial) to the cost of service. Operational costs for waste collection services are increasing annually. Unrestricted cash fund reserves are being used to continue to perform on -going services. The reserve fund is established as just that, reserve. The reserve fund should be used on a limited basis as a result of loss due to a catastrophic event or unscheduled events including unanticipated increases in landfill disposal fees, organics waste processing fees, or a substantial decrease in revenue. The rate study determined that a 5% reserve of the total revenue generated for the enterprise fund is sufficient. Additional waste management services to enhance diversion programs would not be implemented if rates are increased by only the CPI /COLA. Without an additional rate increase, the 10 reserve fund will be expended by FY 2016 -17 and the General Fund will become the lending agency to fund the ongoing waste management. Based on the data that RRR staff provided, the consultant developed scenarios based on rate adjustment recommendations for a three year period beginning July 1, 2014: Table 3 illustrates the current rate structure and calculates the unrestricted cash balance by adjusting customer rates by 2.5% annually starting in FY 2014 -15 as the assumed CPI /COLA adjustment percentage. As shown in the table, if customer rates for all sectors are only adjusted by the City's projections for CPI /COLA for the five year period, the City will have an unrestricted cash balance of $ (247,250) for FY 2016 -17. Table3 Current Rates with CPI /COLA Adiustment Scenario 1: Sector Service Rates and a 5% Unrestricted Cash Balance The goal of Scenario 1 is to maintain an unrestricted cash balance of 5% of total expenditures in FY 2016 -17 and to align rate revenues with the cost of service among customer sectors (residential, multi - family and commercial). Each sector was analyzed to determine actual operating expenditures for services performed, rates required to 11 Actual 2012 -13 ; Projected 2013 -14 Projected 3014-15 Projected 2015-16 Projected `2016.17 CUSTOMER RATE ADJUSTMENT ASSUMPTIONS Single Family 3.00 2.40° 2.50 2.50° 2.50 Multi-Family 3.00° 2.40° 2.50 2.50 2.50 Commercial 3.00° 2.40° 2.50 2.50 2.50 NETREVENUE /(EXPENSE) ASA% OF SECTOR REVENUE Single Family -3Y -10% -5% -5% -7% Multi-Family 19% 13° 17% 17% 16% Commercial -28% -34° -30% -31% -33% ASH BALANCE ear -End Unrestricted Cash 5 3,108,800 5 1,680,286 1,220,116 $ 684,184 (247,250) Ending Unrestricted Cash Balance As A %of Total Expenditures 1391 7% 5% 3% Scenario 1: Sector Service Rates and a 5% Unrestricted Cash Balance The goal of Scenario 1 is to maintain an unrestricted cash balance of 5% of total expenditures in FY 2016 -17 and to align rate revenues with the cost of service among customer sectors (residential, multi - family and commercial). Each sector was analyzed to determine actual operating expenditures for services performed, rates required to 11 perform these services, and rates required to increase the reserve fund. This scenario provides for a 5% unrestricted cash balance by FY 2016 -17, and aligns rate revenues with the cost of service in each sector by the end of FY 2016 — 17. Table 4 Sector Service Rates Maintaining 5% Reserve Tables 5 through 7 illustrate the customer rate impacts of each scenario over the projection period. Rates used in the projections are the most commonly used service level rates based on the data provided for FY 2011 -12. In addition to the CPI /COLA, single family proposed rates increase slightly, multi - family proposed rates decrease and commercial proposed rates increase as well. All of these sector rates include waste, recycling and food waste collection services, bulky item and household hazardous waste collection programs, street sweeping services, public litter /recycling collection services, education and outreach materials and monthly reuse and recycling events. 12 Actual 2012-13 Projected.. 2013- 14..`. Projected 2014 -15 Projected 2015.16 Projected 2016.17 CUSTOMER RATE ADJUSTMENT ASSUMPTIONS Single Family 3.00° 2.40° 3.855 3.85° 185 Multi- Family 3.00° 2.40° 1.009 1.00 1.00° Commercial 3.00° 2AW 7.25 7.25 7.25° NETREVENUE((EXPENSE) ASA% OF SECTOR REVENUE Single Family -3 -10% 4 % -3% -2.9% Multi -Famil 19% 13% 15% 15% 12% Commercial -M -34% -25% -20% -17% ASH BALANCE Year-End Unrestricted Cash 3,108,800 1,680,286 5 1,450,573 1,409,334 1,281,491 Ending Unrestricted Cash Balance AsA %of Total Expenditures 13% 7% 6% 5% 5% Tables 5 through 7 illustrate the customer rate impacts of each scenario over the projection period. Rates used in the projections are the most commonly used service level rates based on the data provided for FY 2011 -12. In addition to the CPI /COLA, single family proposed rates increase slightly, multi - family proposed rates decrease and commercial proposed rates increase as well. All of these sector rates include waste, recycling and food waste collection services, bulky item and household hazardous waste collection programs, street sweeping services, public litter /recycling collection services, education and outreach materials and monthly reuse and recycling events. 12 Table 5 Single Family Rate Impact (One 95- gallon refuse cart) Table 6 Multi - Family Rate Impact (2 cubic yard bin collected twice per week) Percentage Current 201314 Rates - - Adjusted Monthly Rate Projected 2014-15 Projected 2015 -16 ' Projected 2016 -17 - BI- Monthly Rate Monthly Rate Monthly Rate Increase Monthly Rate Increase Monthly Rate Increase Single Family Increase (luly1,2014) CPI /COLA 2.50° $ 88.34 $ 44.17 $ 45.27 $ 1.10 $ 46.41 $ 1.14 $ 47.57 $ 1.16 Scenario 1: includes 3.85° $ 88.34 $ 44.17 $ 45.87 $ 1.70 $ 47.64 $ 1.77 $ 49.47 $ 1.83 (2.5 %CPI /COLA, plus 1.35 %) Table 6 Multi - Family Rate Impact (2 cubic yard bin collected twice per week) Table 7 Commercial Rate Impact (2 cubic yard bin collected twice per week) Percentage Current 201314 Rates Adjusted Monthly Rate Projected 2014 -15 Projected 203516 ` Projected 201617 BI- Monthly Rate Monthly Rate Monthly Rate Increase Monthly Rate Increase Monthly Rate Increase Multi - Family Increase (July 1, 2014) CPI /COLA 2.50° $ 324.93 $ 162.47 $ 119.78 $ 2.92 $ 122.78 $ 3.00 $ 125.85 $ 3.07 Scenario 1 1. $ 324.93 $ 162.47 $ 125.33 $ 8.47 $ 134.42 $ 9.09 $ 144.16 $ 9.74 Table 7 Commercial Rate Impact (2 cubic yard bin collected twice per week) Solid Waste Rate Comparison with Neighboring Communities Tables 8 - 9 summarize monthly solid waste rates under the City of Santa Monica's proposed solid waste rates for all scenarios and the current solid waste rates of several neighboring communities. The proposed monthly rate compares favorably with the other communities surveyed. 13 Percentage 'Current 201314 Rates Adjusted Monthly Rate Projected 201415 Projected 201516 " Projected 201617 ` Bi- Monthly Rate Monthly Rate Monthly Rate Increase Monthly Rate Increase Monthly Rate Increase Commercial Increase '. (July 1, 2014) CPI /COLA 2.50 $ 233.72 $ 116.86 $ 119.78 $ 2.92 $ 122.78 $ 3.00 $ 125.85 $ 3.07 Scenario 1: includes 7.25 $ 233.72 $ 116.86 $ 125.33 $ 8.47 $ 134.42 $ 9.09 $ 144.16 $ 9.74 (2.5% CPI /COLA, plus 4.75 %) Solid Waste Rate Comparison with Neighboring Communities Tables 8 - 9 summarize monthly solid waste rates under the City of Santa Monica's proposed solid waste rates for all scenarios and the current solid waste rates of several neighboring communities. The proposed monthly rate compares favorably with the other communities surveyed. 13 Table 8 FY 2013 -14 - Current Rates City i Sin' le Family 95) Multi- Family Commercial (2yd) Beverly Hills .0104 per square foot lot size $ 18.31 per unit $ 105.40 Burbank $ 49.13 $ 138.09 $247.91 Culver City $ 41.86 (64 gallon container) < 4 units use single family rate; >4 units use commercial rate $ 186.13 Los Angeles $ 36.32 $ 24.33 per unit NA Pasadena $ 40.99 $ 50.44 196gallon $ 157.34 Santa Monica $ 44.17 $ 162.47 $116.86 Table 9 Sector Service Rate with a 5% Unrestricted Cash Balance As stated earlier, the Zero Waste Strategic plan identifies new policies, programs and infrastructure that will enable the City to reach its Zero Waste goal of 95% diversion by 2030, or a per capita disposal rate of 1.1 pounds per person per day. These programs will also affect existing rates from FY 2014 -15 through FY 2029 -2030. For each selected program, the incremental change in the annual cost for the program and the cost per ton diverted was estimated. The cost estimates provide a reasonable basis for understanding the potential cost impacts and how costs between programs compare to one another. The estimates presented are not intended to calculate the W, Sin Ie Faroii 95 i Multi- Family 'Commercial 4jd= Beverly Hills .0104 per square foot lot size $ 18.31 per unit $ 105.40 Burbank $ 49.13 $ 138.09 $247.91 Culver City $ 41.86 (64 gallon container) < 4 units use single family rate; >4 units use commercial rate $ 186.13 Los Angeles $ 36.32 $ 24.33 per unit NA Pasadena $ 40.99 $ 50.44/96 gallon $ 157.34 Santa Monica $ 45.87 $ 164.09 $ 125.33 As stated earlier, the Zero Waste Strategic plan identifies new policies, programs and infrastructure that will enable the City to reach its Zero Waste goal of 95% diversion by 2030, or a per capita disposal rate of 1.1 pounds per person per day. These programs will also affect existing rates from FY 2014 -15 through FY 2029 -2030. For each selected program, the incremental change in the annual cost for the program and the cost per ton diverted was estimated. The cost estimates provide a reasonable basis for understanding the potential cost impacts and how costs between programs compare to one another. The estimates presented are not intended to calculate the W, precise results of each program. The tables present a "low" and "high" estimate of the incremental change in the Division's cost associated with the implementation of these programs. The range of costs is reflective of the range experienced in other communities that have implemented these or similar programs. Table 10 presents the incremental annual change in program costs, the estimated tons diverted by program, and the cost/(savings) per diverted ton for each of the selected programs. Table 10 Using the cost analysis data, the percentage impact on existing customer rates for each of the selected program options was calculated. The rate impacts for each selected program are cumulative. The rate impacts are based on fiscal year 2013 budget data 15 No tow High ' Low Midpoint iHigh Residential' Food Scraps Collection Short $ 90,346 $ 132,755 1,124 $ 80 $ 99 $ 118 Behavior Change Marketing Short $ 28,582 $ 60,418 410 $ 70 $ 109 $ 147 Weekly Organics and Recyclables COI lection; Bi- Weekly Refuse Collection Short-Med $ (157,402) $ (137,671) 504 $ (312) $ (292) $ (273) Wet /Dry Collection Med -Long $ (295,135) $ (252,622) 562 $ (525) $ (487) $ (449) Residuals Processing Long $ 10,716 $ 13,211 1,248 $ 9 $ 30 $ 11 Multi- Family Low High ' Low Midpoint High Behavior Change Marketing Short $ 211,746 $ 375,609 1,549 $ 137 $ 190 $ 242 Bulky Item Collection; Move-In/Move-Out Program Short-Med $ 160,896 $ 230,483 176 $ 916 $ 1,114 $ 1,312 Weekly Organics and Recyclables Collection; BI-Weekly Refuse Collection Short-Med $ (229,434) $ (201,057) 2,694 $ (85) $ (80) $ (75) Food Scraps Collection - Cart Customers Medium $ 39,381 $ 58,132 476 $ 83 $ 102 $ 122 Food Scraps Collection - Bin Customers Medium $ 130,258 $ 300,681 463 $ 281 $ 465 $ 649 Wet /Dry Collection Med -Long $ (94,878) $ (81,319) 1,615 $ (59) $ (55) $ (50) Residuals Processing Long $ 29,006 $ 35,760 3,377 $ 9 $ 10 $ 11 Commercial LOW High Low Midpoint High Behavior Change Marketing Short $ (101,132) $ (44,065) 2,831 $ (36) $ (26) $ (16) Food Scraps Collection Medium $ 456,964 $ 615,261 3,975 $ 115 $ 135 $ 155 Wet /Dry Collection Med -Lang $ (210,325) $ (185,492) $ (76) (71) Expansion of Mandatory Commercial Recycling Long $ 214,645 $ 355,382 906 $ 237 $ 315 f$39 2 Residuals Processing Long $ 41,976 $ 51,750 4,887 $ 9 $ 10 11 Using the cost analysis data, the percentage impact on existing customer rates for each of the selected program options was calculated. The rate impacts for each selected program are cumulative. The rate impacts are based on fiscal year 2013 budget data 15 and cumulative future tonnage diversion assumptions. An average change of the "Low" and "High" rate impacts are illustrated in Table 11. Table 11 Weekly Organics and Recyclables Collection; Bi -I $ (157,402)I $ (137,671)I 5041 Weekly Refuse Collection Wet /Dry Collection $ (295,135) $ (252,622) 562 Weekly Organics and Recyclables Collection; Bi -I $ (229,434) $ (201,057)) 2,694 Weekly Refuse Collection Wet /Dry Collection I $ (94,878) $ (81,319) 1,615 Behavior Change Marketing 1 $ (101,132) $ (44,065) 2,831 Wet /Dry Collection $ (210,375) $ (185,492) 2,620 The most cost effective programs are those that result in net cost savings. These programs are illustrated in Table 12. Table 12 T Rate Adjustment Alternatives As stated previously, there will be a fund deficit by FY2016 -17 if existing rates remain with only an annual CPI /COLA increase. If a rate adjustment is not implemented, staff would continue to analyze existing operations to streamline programs to seek additional savings. Streamlining existing services may include a reduction in the daily bulky item (illegal dumping) collection program, elimination of the commercial food waste collection program, and implementing monthly, rather than weekly residential street sweeping services. Council may also determine that the proposed five percent cash reserve be decreased which would lessen the proposed rate adjustment. Lowering the proposed five percent cash reserve would not ensure available funds for extraordinary events such as unanticipated landfill disposal fees, additional state and federal recycling mandates, or increased organics processing fees. An Integrated Waste Management System is essential to the infrastructure of trash collections as we know it today. Landfills are closing; programs, policies and alternative technologies need to be further developed in order to sustain waste generation and waste processing operations. The City will continue to evaluate the efficacy of each strategy, and modify the Plan as necessary to meet the zero waste goals and objectives, and to adjust to the changing social, environmental, and economic conditions within the City. Next Steps If directed by Council to proceed with the rate adjustment and the establishment of a 5% operating reserve, staff will initiate the Proposition 218 requirements for public noticing of the proposed changes to affected property owners. Proposition 218 created a category of fees known as "property- related fees." Such fees may not be imposed or increased unless a local government conducts a majority - protest proceeding. A 45 day notice /response period will be in effect from the date notices are distributed. At the end of the protest period the final tally of voters will be presented to Council at a public 17 hearing. If no majority protest is received, Council would then be able to adopt the rates for implementation on July 1, 2014. Financial Impacts & Budget Actions There is no immediate financial impact or budget action necessary as a result of adopting the Zero Waste Strategic Plan. Staff will return to Council if specific budget actions are required in the future for implantation of program initiatives. There is no budget impact from authorizing staff to proceed with Proposition 218 noticing. If Council decides to approve the proposed sector service rates after the protest period, there will be an increase to the FY2014/15 Garbage /Refuse Collection revenue. The amount of the rate impact will be presented to Council with the rate adoption staff report. Future year increases will be reflected in the proposed budgets. Prepared by: Kim Braun, Resource Recovery and Recycling Manager Approved: Forwarded to Council: Martin Pas ucha Rod Gould Director of Public Works City Manager Attachments: Attachment: Zero Waste Strategic Operations Plan Appendix I — Zero Waste Survey iE (� city of santa monica zero waste strategic operations plan appendix I 1 -1 1 °� city anta monica of s zero waste strategic operations plan appendix I Zero Waste Surveys In order to gather input from the public, interested community members and stakeholders were given the opportunity to complete a survey regarding the City's proposed Zero Waste Strategic Plan. The Zero Waste survey solicited input on the potential policies, programs, and infrastructure options identified in the Plan. Separate surveys were provided for single - family residents, multi - family residents, and businesses, to enable input specific to the interests of these individual stakeholders. To get the word out, the City initially made the survey available at the annual Santa Monica Clover Park Festival, and used interns to canvas the Farmer's Markets. The City created postcards that were placed at all the public counters and coffee shops around the City, and an email blast was sent out to over 4,000 businesses and residents. The City also reached out to the neighborhood associations and to the Santa Monica Chamber of Commerce to place ads in their newsletters. The surveys included a series of questions, and responders were asked to indicate whether they Strongly Agreed, Agreed, were Neutral, Disagreed or Strongly Disagreed with each question or statement. The survey questions and responses to the surveys are summarized below, and copies of the surveys are included at the end of this Appendix. Single-Family Survey The Single - Family Survey asked for input on 22 ideas for possible policies, programs, and infrastructure included in the Zero Waste Strategic Plan. A total of 238 surveys were completed. Overall, residents strongly support the City's adoption of Zero Waste, and the policies, programs, and infrastructure options that will help the City to achieve Zero Waste. Seventeen of the 22 questions received a response of Strongly Agree or Agree from 75% or more of the responders. One third of the questions received a response of Strongly Agree or Agree from 90% or more of the responders. programs that received lower support included enforcing anti - scavenging, curbside textile recycling, and document shredding. The results are tabulated below. Policy Options Single - family residents were asked whether they support the following policy options: 1. Formal commitment to achieving Zero Waste by 2030. Strongly Agree or Agree: 88% Neutral: 8% Disagree or Strongly Disagree: 4% 1 -2 city of santa monica appendix I zero waste strategic operations plan 2. Expansion of recycling efforts at City facilities. Strongly Agree or Agree: 95% Neutral: 4% Disagree or Strongly Disagree: 1% 3. Evaluate and identify improvements to residential curbside recycling program and incorporate rate structure incentives. Strongly Agree or Agree: 94% Neutral: 4% Disagree or Strongly Disagree: 2% 4. Require manufacturers to take back their products. Strongly Agree or Agree: 74% Neutral: 17% Disagree or Strongly Disagree: 9% 5. City educating residents about sustainable purchasing practices. Strongly Agree or Agree: 87% Neutral: 11% Disagree or Strongly Disagree: 2% 6. Increasing enforcement of anti - scavenging ordinance for curbside recycling containers. Strongly Agree or Agree: 39% Neutral: 24% Disagree or Strongly Disagree: 37% 7. Bans on hard to recycle materials, such as plastic bags and Styrofoam food packaging. Strongly Agree or Agree: 74% Neutral: 16% Disagree or Strongly Disagree: 10% Program Options Single- family residents were asked whether they support the following program options: 8. Residential food waste recycling Strongly Agree or Agree: 82% Neutral: 12% Disagree or Strongly Disagree: 6% 1 -3 city of Santa monica zero waste strategic operations plan 9. Business food waste recycling program Strongly Agree or Agree: 94% Neutral: 4% Disagree or Strongly Disagree: 2% 10. Two container weekly collection program (organics and recycling) Strongly Agree or Agree: 73% Neutral: 16% Disagree or Strongly Disagree: 11% appendix I 11. Increased educational outreach, with regular updates, circulation, and announcements. Strongly Agree or Agree: 86% Neutral: 10% Disagree or Strongly Disagree: 4% 12. Free technical assistance to businesses Strongly Agree or Agree: 88% Neutral: 9% Disagree or Strongly Disagree: 3% 13. Online service to reduce /stop junk mail Strongly Agree or Agree: 90% Neutral: 7% Disagree or Strongly Disagree: 3% 14. School recycling programs Strongly Agree or Agree: 96% Neutral: 3% Disagree or Strongly Disagree: 1% 15. Curbside textile recycling program Strongly Agree or Agree: 65% Neutral: 29% Disagree or Strongly Disagree: 6% 16. Re -Use programs, such as Citywide Yard Sale Strongly Agree or Agree: 79% Neutral: 19% Disagree or Strongly Disagree: 2% 1 -4 {5'® city of Santa monica zero waste strategic operations plan 17. Recycling collection containers in public places Strongly Agree or Agree: 96% Neutral: 4% Disagree or Strongly Disagree: 0% Infrastructure Optioaes Single- family residents were asked whether they support the following infrastructure options: appendix I 18. Development of regional organics composting facilities in partnership with neighboring cities. Strongly Agree or Agree: 82% Neutral: 14% Disagree or Strongly Disagree: 4% 19. Development of residual waste recycling facilities in partnership with neighboring cities Strongly Agree or Agree: 85% Neutral: 10% Disagree or Strongly Disagree: 5% 20. Development of self -haul facility to recycle furniture, mattresses and white goods. Strongly Agree or Agree: 77% Neutral: 17% Disagree or Strongly Disagree: 6% 21. Establishment of a permanent household hazardous waste collection program within City limits. Strongly Agree or Agree: 92% Neutral: 7% Disagree or Strongly Disagree: 1% 22. Regular document shredding services. Strongly Agree or Agree: 53% Neutral: 36% Disagree or Strongly Disagree: 11% 1-5 � ®..._ city of santa monica zero waste strategic operations plan appendix I it ulti -F raffly Siuvtev The Multi - Family Survey asked for input on 15 ideas for possible policies, programs, and infrastructure included in the Zero Waste Strategic Plan. A total of 113 surveys were completed. Overall, multi - family residents strongly support the City's adoption of Zero Waste, and the policies, programs, and infrastructure options that will help the City to achieve Zero Waste. Twelve of the 15 questions received a response of Strongly Agree or Agree from 75% or more of the responders. Questions that received lower support included satisfaction with their current recycling processes and satisfaction with current work to divert hazardous items from landfills. The results are tabulated for each question below. Policy Options Multi - family residents were asked whether they support the following policy options: 1. Formal commitment to achieving Zero Waste by 2030. Strongly Agree or Agree: 93% Neutral: 6% Disagree or Strongly Disagree: 1% 2. Evaluate and identify improvements to recycling program and incorporate rate structure incentives. Strongly Agree or Agree: 94% Neutral: 3% Disagree or Strongly Disagree: 3% 3. Satisfaction with your building's current recycling processes Strongly Agree or Agree: 340/a Neutral: 23% Disagree or Strongly Disagree: 43% 4. City educating residents about sustainable purchasing practices Strongly Agree or Agree: 89% Neutral: 8% Disagree or Strongly Disagree: 3% 5. Require manufacturers to take back their products. Strongly Agree or Agree: 71% Neutral: 20% Disagree or Strongly Disagree: 8% V city of Santa monica zero waste strategic operations plan 6. Bans on hard to recycle materials, such as plastic bags and Styrofoam food packaging. Strongly Agree or Agree: 77% Neutral: 15% Disagree or Strongly Disagree: 8% Program Options Multi- family residents were asked whether they support the following program options: 7. Residential food waste recycling. Strongly Agree or Agree: 85% Neutral: 9% Disagree or Strongly Disagree: 6% appendix I 8. Increased educational outreach with regular updates, circulation, and announcements. Strongly Agree or Agree: 89% Neutral: 9% Disagree or Strongly Disagree: 2% 9. Curbside textile recycling collection. Strongly Agree or Agree: 75% Neutral: 20% Disagree or Strongly Disagree: 5% 10. Reuse program, such as Citywide Yard Sale. Strongly Agree or Agree: 86% Neutral: 13% Disagree or Strongly Disagree: 1% 11. Recycling collection containers in public places. Strongly Agree or Agree: 95% Neutral: 5% Disagree or Strongly Disagree: 0% Infrastructure Options Multi - family residents were asked whether they support the following infrastructure options: 12. Development of regional organics composting facilities in partnership with neighboring cities. Strongly Agree or Agree: 91% Neutral: 6% Disagree or Strongly Disagree: 3% Ej city of santa monica zero waste strategic operations plan appendix I 13. Does your building currently work to divert hazardous items from landfills, such as batteries, ink, paint, and other E- Waste? Strongly Agree or Agree: 25% Neutral: 14% Disagree or Strongly Disagree: 61% 14. Use of posters, signs, decals or promotional materials to help neighbors recycle. Strongly Agree or Agree: 79% Neutral: 16% Disagree or Strongly Disagree: 5% 15. Development of self -haul facility to recycle furniture, mattresses and white goods. Strongly Agree or Agree: 79% Neutral: 17% Disagree or Strongly Disagree: 4% Commercial Survey The Commercial Survey asked for input on 19 ideas for possible policies, programs, and infrastructure included in the Zero Waste Strategic Plan. A total of 84 surveys were completed, overall, the responders indicated strong support for the City's adoption of Zero Waste, and the policies, programs, and infrastructure options that will help the City to achieve Zero Waste, Thirteen of the 19 questions received a response of Strongly Agree or Agree from 75% or more of the responders. One fourth of the questions received a response of Strongly Agree or Agree from 90% or more of the responders. The results are tabulated for each question below. Policy Options Commercial businesses were asked whether they support the following policy options: 1. Business policies for waste reduction. Strongly Agree or Agree: 96% Neutral: 1% Disagree or Strongly Disagree: 3% 2. Business recycling Strongly Agree or Agree; 98% Neutral: 1% Disagree or Strongly Disagree: 1% 1 -8 city of santa monica zero waste strategic operations plan 3. Satisfaction with current recycling program. Strongly Agree or Agree: 68% Neutral: 14% Disagree or Strongly Disagree: 18% 4. Staff responsible to ensure recycling. Strongly Agree or Agree: 76% Neutral: 13% Disagree or Strongly Disagree: 11% 5. Employee incentives to reduce, reuse, and recycle. Strongly Agree or Agree: 72% Neutral: 21% Disagree or Strongly Disagree: 7% 6. Require manufacturers to take back their products. Strongly Agree or Agree: 61% Neutral: 28% Disagree or Strongly Disagree: 11% Progs•ain OPtRotts Commercial businesses were asked whether they support the following program options: appendix I 7. Weekly collection program that separates wet waste (organics) from dry waste (recycling). Strongly Agree or Agree: 81% Neutral: 13% Disagree or Strongly Disagree: 6% 8. Increased education outreach, with regular updates, circulation, and announcements. Strongly Agree or Agree: 88% Neutral: 7% Disagree or Strongly Disagree: 5% 9. Facilities for compostabie materials. Strongly Agree or Agree: 90% Neutral: 6% Disagree or Strongly Disagree: 4% 1 -9 :city of Santa monica zero waste strategic operations plan 10. Native or low water, low maintenance plans to reduce trimmings and water use. Strongly Agree or Agree: 60% Neutral: 33% Disagree or Strongly Disagree: 7% 11. Recycling of hazardous items, such as batteries, ink, paint, and other E- waste. Strongly Agree or Agree: 84% Neutral: 8% Disagree or Strongly Disagree: 8% 12. Use of recyclable or compostable packaging material. Strongly Agree or Agree: 95% Neutral: 4% Disagree or Strongly Disagree: 1% 13. Use of reusable shipping containers. Strongly Agree or Agree: 93% Neutral: 6% Disagree or Strongly Disagree: 1% 14. Use of returnable pallets. Strongly Agree or Agree: 83% Neutral: 17% Disagree or Strongly Disagree: 0% 15. Use of posters, signs, decals, or promotional materials to help employees recycle. Strongly Agree or Agree: 70% Neutral: 22% Disagree or Strongly Disagree: 8% 16. Support Santa Monica's Green Business Certification Program. Strongly Agree or Agree: 79% Neutral: 17% Disagree or Strongly Disagree: 4% 17. Procurement of recyclable products for your business operations. Strongly Agree or Agree: 93% Neutral: 5% Disagree or Strongly Disagree: 2% appendix I 1 -10 city of santa monica Mi.,.., zero waste strategic operations plan 18. Desire to receive more information on Green Business Certification Program. Strongly Agree or Agree: 59% Neutral: 32% Disagree or Strongly Disagree: 9% 19. Interest in learning more about Zero Waste, Strongly Agree or Agree: 75% Neutral: 19% Disagree or Strongly Disagree: 6% appendix I I -11