HomeMy WebLinkAbout14 - Approval of 2020 Residential Recycling Fee Study and Setting of Public Hearing for Residential Recycling Service Fee RatesQ �EwPpRT
CITY OF
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<,FORN'P City Council Staff Report
January 26, 2021
Agenda Item No. 14
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David A. Webb, Public Works Director - 949-644-3311,
dawebb@newportbeachca.gov
PREPARED BY: Micah O. Martin, Deputy Director, Public Works,
mmartin@newportbeachca.gov
PHONE: 949-644-3059
TITLE: Approval of 2020 Residential Recycling Fee Study and Setting of
Public Hearing for Residential Recycling Service Fee Rates
ABSTRACT:
The City's current Schedule of Rents Fines, and Fees (SRFF) includes a Recycling
Service Fee, which was last updated on December 8, 2009 and has since remained at
$3 per residential unit per month. This fee was recently studied by the City's fee
consultant, MGT of America, and found to be in need of adjustment so as to recover the
cost associated with State mandated recycling efforts for providing residential refuse
recycling services. The fee calculation includes the recycling related cost of the City's
current contracts with CR&R Incorporated and staff costs related to recycling.
Staff now requests City Council review and approve the 2020 Residential Recycling Fee
Study; set a public hearing for March 23, 2021 to consider increasing the City's Recycling
Service Fee rate in accordance with the Fee Study; and authorize noticing all effected
residential property owners in compliance with Proposition 218 State Law of said
proposed fee increase and public hearing date.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Approve the 2020 Residential Recycling Fee Study;
c) Direct staff to send a notice of proposed Recycling Service Fee rates and public
hearing date for consideration to all effected residential property owners in compliance
with Proposition 218 State Law; and
d) Set the date of March 23, 2021 for the tabulation of protests votes and conduct a
public hearing of proposed Recycling Service Fee rates pending the result of the
protest vote.
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Approval of 2020 Residential Recycling Fee Study and
Setting of Public Hearing for Residential Recycling Fee Rates
January 26, 2021
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FUNDING REQUIREMENTS:
The adopted budget includes sufficient funding for the completion of this study and public
noticing. Under the current $3 per residential unit per month rate, the Recycling Services
Fee generates approximately $970,000 in revenue, which covers approximately
20 percent of the annual City residential refuse cost of $4,960,000 for providing the
services.
If approved, this fee update would generate an additional approximate $1,361,000, in
General Fund revenue and establish full cost recovery for the portion of the residential
refuse contracts related to collection of recyclable materials in accordance with current
State mandates. Moving forward, the rates would be adjusted and generally increase by
Consumer Price Index (CPI). It should be noted that additional State mandates related
to recycling are increasing costs and the fee may need to be reviewed again in the near
future.
DISCUSSION:
In accordance with City of Newport Beach Municipal Code Chapter 6.04, Garbage,
Refuse, and Cuttings, the City covers the cost and expense of collecting, hauling away
and disposing of solid waste with property tax revenues through the City's General Fund.
As a result of changes in state law, in 1990, the City Council adopted Ordinance No. 90-
6 establishing a Recycling Service Fee to recover the costs incurred by the City in
satisfying State mandated recycling requirements. The City's current SRFF includes a
Recycling Service Fee which was last updated on December 8, 2009 and has since
remained at $3 per residential unit per month.
The Recycling Service Fee was recently studied by the City's fee consultant, MGT of
America. The Recycling Service Fee is a cost of service fee based solely on recovery of
those operational costs associated with collection of recyclable materials in accordance
with state mandates. Each fee rate is based on the annual contract costs, the diversion
rate for recyclable material vs. landfill, the number of households subject to the fee, and
City staff time related to contract management and program administration. Because
there are two separate residential refuse collection contracts with CR&R Incorporated,
one for Newport Coast and the other for the remaining area of the City (excluding Newport
Coast and some areas of Santa Ana Heights which receive residential refuse service from
the Costa Mesa Sanitary District) to provide residential trash collection services, the study
resulted in two different calculations and resulting Recycling Service fees.
A combination of factors has necessitated a study of the Recycling Service Fee including:
• The current fee has not been studied or otherwise updated since 2009;
• Operating costs associated with the collection of recyclable materials have increased
over time and the current fee does not accurately reflect those cost increases;
• In contrast with the purpose of City Council Ordinance No. 90-6, the City's General
Fund is currently bearing a large portion of the cost to provide residential recycling
services;
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Approval of 2020 Residential Recycling Fee Study and
Setting of Public Hearing for Residential Recycling Fee Rates
January 26, 2021
Page 3
• The current per month fee is not uniformly applied to all single-family residential units
within the City;
• The City Council working group on refuse related issues was in support of staff's
recommendation to perform an updated fees study; and
• The demand for residential recycling services has increased per the initial
implementation of AB 939 (Integrated Waste Management Act of 1989) and the newly
adopted State mandate SB 1383 (Short-lived Climate Pollutants). Therefore, this fee
may need to be reviewed again in the near future as more State mandates are
imposed on the City.
The attached 2020 Recycling Service Fee Study recommends increasing the Recycling
Service fee associated with residential refuse collection and processing. Currently, there
is no residential Recycling Services fee applied to residential units within the Newport
Coast area. This is because the City's Recycling Service fee was never applied as part
of the annexation of Newport Coast into the City. The proposed Recycling Service fee
for Newport Coast residential units per the fee study is $5.86 per residential unit per
month.
The current fee for the City area (excluding Newport Coast, as well as some areas of
Santa Ana Heights which receive residential refuse service from the Costa Mesa Sanitary
District) is $3.00 per residential unit. The proposed fee for the City area (excluding
Newport Coast, as well as some areas of Santa Ana Heights) is $6.28 per residential unit
per month.
Both of these proposed new rates, if adopted, will be subject to an annual CPI adjustment
in accordance with Government Code Section 53756.
Staff is asking for Council consideration to review and approve the Residential Recycling
Service Fee Study, consisting of the cost of service and recommended fee increases
brought forward by the Public Works Department, and to set the date of March 23, 2021
for the tabulation of protests votes and conduct a public hearing of proposed Recycling
Service Fee rates pending the result of the protest vote. If approved, staff will move
forward with mailing the necessary Proposition 218 Notice (at least 45 days prior to the
public hearing) to all impacted residential property owners within the City refuse service
area to inform them of the proposed fee adjustments and the March 23, 2021 public
hearing date to allow for submission of a protest vote. This notice will provide detailed
information about the fee adjustment recommendations with rate adjustments effective
April 2021. At the public hearing, any protests votes will be tabulated to determine
whether Recycling Service Fee rates can be approved and go into effect. The rate
increase could not be approved if a majority of affected property owners voted No on the
rate increase proposal.
Information regarding the 2020 Residential Recycling Fee Study will be provided on the
City of Newport Beach website at:
https://newportbeachca.gov/government/departments/2021-residential-recycling-fee-
study
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Approval of 2020 Residential Recycling Fee Study and
Setting of Public Hearing for Residential Recycling Fee Rates
January 26, 2021
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ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A — 2020 Residential Recycling Fee Study
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ATTACHMENT A
CITY OF NEWPORT BEACH
2020 RECYCLING SERVICES STUDY
15 January 2021
Mr. David A. Webb I Public Works Director
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
SUBJECT: RECYCLING SERVICES FEE STUDY
Dear Mr. Webb:
**i*i M GT
CONSULTING GROUP
At the request of the City of Newport Beach (City), MGT of America Consulting, LLC (MGT) has completed
a study of the Recycling Services fee and with this letter presents staff with the calculations and resulting
fees for consideration. MGT calculated the cost to provide recycling services in the City of Newport Beach
in conformance with well-established cost accounting methodologies.
SCOPE OF SERVICES
The current Recycling Services fee as shown on the Schedule of Rents, Fines, and Fees (SRFF) is $3.00 per
residential unit per month. The City requested that MGT analyze all costs associated with providing
recycling services to Newport Beach residents to determine whether the $3.00 fee is adequately recovering
costs.
MGT has determined that the cost to provide recycling services to Newport Beach residential units is as
follows:
MONTHLY FEE PER RESIDENTIAL UNIT
Excluding Newport Coast $6.28
Newport Coast $5.86
METHODOLOGY
The City provided MGT with the following data used to calculate the costs:
Staff time associated with the City's recycling program. This includes time spent on program
management and contract oversight. MGT calculated fully burdened labor rates for staff and
multiplied these labor rates by the annual hours spent on the recycling program to determine
annual city staff costs expended on the recycling program.
***** M GT
CONSULTING GROUP
14-5
CITY OF NEWPORT BEACH
2020 RECYCLING SERVICES STUDY
**i*i M GT
CONSULTING GROUP
• Annual Recycling Contract Costs. There are two separate contracts with CR&R Incorporated, one
for Newport Coast and the other for the remaining area of the City provided trash services.
• Percentage of waste diverted. This information is used to determine what percentage of the
contract expense is associated with recycling (diverted) vs sent to landfills. These percentages are
used to reduce the contract expense to that which is only associated with the recycling program.
• Number of residential units associated with each of the two contracts: the number of units in
Newport Beach excluding Newport Coast, and the number of units in Newport Coast. This
information is used to determine the cost per residential unit, separated by contract.
STUDY RESULTS
The following represents a summary of the data on which the proposed fee was calculated:
ANNUAL STAFF EXPENSE
Senior Management Analyst PW - Refuse $147.95 120.00
Code Enf Officer Trainee PW - Envtal Liability $45.41 240.00,
Total annual cost for staff time: $28,651.60
ANNUAL RECYCLING CONTRACT COSTS
Excluding Newport Coast $ 4,160,688 48.36% $ 2,012,108.72
Newport Coast $ 741,164 40.65% $ 301,283.17,
Total annual recycling contract costs: $2,313,391.88
Grand total annual costs for Residential Recycling program: $2,342,043.48
NUMBER OF RESIDENTIAL UNITS
Excluding Newport Coast 27,017
Newport Coast 4,335
Total residential units: 31,352
***** M GT
CONSULTING GROUP
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CITY OF NEWPORT BEACH ***** MGT
2020 RECYCLING SERVICES STUDY CONSULTING GROUP
ANNUAL COST PER RESIDENTIAL UNIT
Excluding Newport Coast $0.92 $74.48 $75.40
Newport Coast $0.86 $69.50 $70.36.
MONTHLY FEE PER RESIDENTIAL UNIT
Excluding Newport Coast $6.28
Newport Coast $5.86
�Y0Ju1'uuI_\:a'��rsrd�'u1�01�Z_\�I�Z�I�r'�:\�K9I9I9I�0I07srd[0l01-y
The proposed fee for Newport Coast residential units is $5.86 per residential unit per month and the
proposed fee for the remaining residential units in the City, currently receiving recycling services, is $6.28
per residential unit per month.
The City confirmed that all items included in the calculation are solely related to operational costs incurred
by the City in satisfying state -mandated recycling requirements. Costs related to organics are excluded
from these calculations.
Please do not hesitate to contact us if you have any questions or comments about this study. We look
forward to continuing to be of service to the City of Newport Beach.
Sincerely,
E rv�, L { 2 lJi to v�,
Erin L Payton
Director, MGT Financial Services
MGT of America Consulting, LLC
Cell: 503.358.3808
epayton@mgtconsulting.com
***** M GT
CONSULTING GROUP
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