That the City Council:
A. Conduct a duly noticed public hearing on a resolution amending the Master Schedule of Fees pertaining to refuse collection fees; and

B. ADOPT AND APPROVE RESOLUTION NO. ____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA, CALIFORNIA, AMENDING THE MASTER SCHEDULE OF FEES PERTAINING TO REGULATED REFUSE COLLECTION FEES CHARGED BY CR&R TO ITS CUSTOMERS.

The current agreement with CR&R, Incorporated (CR&R) provides for the annual adjustment of rates based on a formula which calculates the change in the consumer price index (CPI), the landfill disposal fee, and the producer price index (PPI). These help determine the costs for refuse services, landfill disposal costs, and fuel costs. This formula ensures that rates cover a fair cost for providing refuse services. The current agreement with CR&R was approved on December 3, 2018. The initial term continues through June 30, 2025, and can be extended with additional 2-year terms at the City’s sole option until June 30, 2031.

Every five years, the City holds a noticed public hearing regarding these rate adjustments. The last hearing was held on August 6, 2018.  Tonight, a hearing is scheduled to allow the application of the inflation adjustment for the next five years as required by the agreement with CR&R. Notice of the hearing was mailed by staff to 12,274 customers on June 21, 2023.

If approved, the proposed rate and fee changes will go into effect on August 8, 2023 for fiscal year 2023-2024 and will also provide for automatic annual inflationary cost increases for fiscal years 2024-25, 2025-26, 2026-27 and 2027-28, based on a formula detailed in Attachment 3. 

The formula used by the City to calculate potential rate adjustments includes three factors: 
- The cost of refuse services;
- Landfill/recycling disposal costs; and
- Fuel costs. 

These factors are themselves influenced by changes in the Consumer Price Index (CPI) for Los Angeles/Long Beach/Anaheim area and the Producer Price Index (PPI) for natural gas. This formula ensures that rates cover the cost of providing refuse services and protect the ratepayers against unexpected fluctuations in the CPI.
 
State of California Regulations:

One of the primary reasons some of the newly included refuse rates are being presented for Council consideration is to be in compliance with the recent changes in state law due to SB 1383.

· State Senate Bill, SB 1383:
This law established multiple new regulations which include recycling and organics mandates for single family residential homes, business, and multifamily complexes; edible food recovery requirements for food waste generators (such as restaurants and grocery stores); inspections and monitoring requirements; and other requirements. This bill also requires cities to conduct enforcement actions against noncompliant refuse customers starting on January 1, 2024. This includes customers who may contaminate a cart or bin. If the City fails to show they are conducting SB 1383 enforcement activities, the State may open enforcement actions against the City. The state already tracks the number of SB 1383 enforcement actions and inspections conducted each year by the City of La Habra.

New Services – Commercial Rates:

· Commercial Cart Rollout Service
With this new service, carts will be rolled out to the street by CR&R staff to the street curb for servicing. This service is upon request by the business, but in certain cases may be required to comply with SB 1383 if the business or multi-family complex is unable to take the carts to the curb.  Currently, this service does not exist. If approved, the monthly rate for commercial rollout service once a week will be $39.12. This rate is added on to the monthly cart service fee.

New Services/Other Commercial Fees:

· Recycling Contamination Processing Fee - Carts
If approved, this fee will be applied to a customer’s bill if the customer contaminates any of the three carts (Trash, Recycling, Organics) with the wrong waste stream. If the Franchisee observes contamination on three consecutive occasions within a six-month period, a contamination fee may be imposed on the  customer.  The new fee will be $39.21 per violation.

· Recycling Contamination Processing Fee - Bins
If approved, this fee will be applied to a customer’s bill if the customer contaminates their bin with the wrong waste stream. This includes trash, recycling, or organics services. If the Franchisee observes contamination on three consecutive occasions within a six-month period, a contamination fee may be imposed on the  customer.  The new fee will be $39.21 per violation.

· Commercial Rolloff Account Setup Fee
If approved, this fee will be charged to setup a new rolloff account. This fee applies to permanent or temporary rolloff services. The new fee will be a one-time charge of $32.67.

· Commercial Cart Delivery Fee
If approved, this fee will be a one-time fee charged per container for each cart. The new fee will be a one-time charge of $32.67.

· Commercial Bin Delivery Fee
If approved, this fee will be a one-time fee charged per container for each bin. The new fee will be a one-time charge of $32.67.

Summary of Resident Calls and Protest Letters:

At the time this report was prepared, staff received two calls related to the rate notice.  Both calls could be considered to be an objection to the proposed rate changes.  In addition to the calls received by staff, there were nine protest letters sent to the City, listed as Attachment 4.  In its hearing notice, the City committed to not adopting the proposed rates if it received written protests from more than 50% of parcel affected. 

If these rates are approved, the impact to the General Fund will result in a gradual increases in Franchise Fee revenue from year to year depending on the amount of rate change from year to year. The impact to the Refuse Fund would be similar and would ensure that revenues keep up with increasing costs due to inflation. Additional revenue from new service rates are not expected to be significant. Currently, total gross revenues from all of the extra fees is around $55,000 annually. The new fees could be expected to generate an estimated $15,000 per year.

Assuming their current level of service, residential customers will not see significant changes to their bills over the next fiscal year. At the proposed rate, residential customers’ refuse bills will likely increase by $2.08 per month or $24.96 for the year. Future changes depend on the rate of growth in inflation. If CPI inflation is high, refuse rate costs could increase by $25 annually. If CPI inflation is low, refuse rate costs may only increase by $6 annually or may not even not increase at all.

Based on the proposed fee schedule, most commercial customers will realize small to moderate changes on their monthly trash bill during the current fiscal year, depending on the type of service that they are currently using.  These costs will increase in future years depending on the rate of growth in inflation. For the most common bin service, a 3-yard bin, one time a week, the increase will be $15.07 per month or $180.84 for the year. Future changes depend on the rate of growth in inflation. If CPI inflation is high, the same bin service could increase by $180 annually. If CPI inflation is low, refuse rate costs may only increase by $36 annually or may not even not increase at all.