That the City Council:
A.  Approve the Waste Infrastructure System Enterprise (WISE) Agreement with the County of Orange for municipal solid waste disposal rates and services; and,

B.  Authorize the City Manager to enter into an agreement with the County of Orange (County) for municipal solid waste disposal rates and services.

The County of Orange, through Orange County Waste & Recycling (OCWR) division, operates the County-owned landfill system, including three active landfills and approximately 20 inactive sites. Since 1997, Orange County cities have participated in the Waste Disposal Agreement (WDA), which provided guaranteed landfill capacity and disposal rates of at least 10% below non-contract customers. The WDA has been amended several times since then, in 2004, 2009, 2015, and most recently for a one-year extension in 2025.

As the WDA neared expiration, OCWR developed the successor Waste Infrastructure System Enterprise (WISE) Agreement. The Orange County City Managers Association (OCCMA), representing cities, sanitary districts, and special districts that rely on the landfill system, coordinated the review and negotiations of the proposed WISE agreement beginning in late 2024. In 2025, OCCMA secured a one-year extension of the then existing WDA terms through June 30, 2026, to allow additional time for negotiations.

The current WDA limits annual rate increases to the Consumer Price Index (CPI) and does not account for rising operational, regulatory, and environmental compliance costs. OCWR has indicated that additional capital funding is also needed to fund the future Brea Olinda landfill closure and to significantly expand the capacity of the landfill in San Juan Capistrano over the course of the proposed 10-year WISE agreement term. OCWR’s initial WISE proposal would have increased disposal rates from $43.76 per ton (FY 25-26 WDA rate) to $82.00 per ton in the first year and were projected to rise to nearly $107.00 per ton by 2035.

After significant negotiations, OCCMA representatives were able to secure an agreement on a phased rate structure for the first three years of the new WISE agreement. After the third year, starting in FY 29-30, the disposal rate will include a CPI adjustment.

Effective July 1, 2026, the increased disposal rates are expected to result in an estimated countywide 10% increase to monthly residential customer bills and an estimated 16% increase for commercial customers. These increases are in addition to any hauler-related cost increases associated with refuse services. The City's Fiscal Year 2026-27 rate schedule, which includes both the disposal and service component increases, is attached for City Council review.

While the primary focus of the negotiations was tied to the disposal rate, OCCMA also successfully negotiated the following key provisions:

All Orange County cities have been notified that the WISE Agreements must be approved by April 30, 2026 to avoid disposal rates up to 10% higher than proposed in the agreement. The ‘Participation Threshold’ for the WISE Agreement to become effective requires that enough cities that approve the agreement represent at least 50% of the disposal amount sent to the County landfills. If approved by Council, the agreement will be for a 10-year term, through June 30, 2036, with one optional 10-year extension.

Staff recommends that the City Council approve the proposed negotiated WISE agreement to avoid even higher immediate landfill disposal fees. Furthermore, staff have researched other potential waste disposal options and found that there are currently no other lower-cost options available to the City compared to utilizing the OCWR landfill sites in Orange County, even at the new higher proposed WISE agreement rate structure. Diverting La Habra waste to out-of-county landfills will result in significantly higher disposal fees to La Habra customers, in addition to a likely significant transportation surcharge from the City's current waste disposal contractor to deliver waste to more distant, out of county landfills.

The proposed WISE agreement will not result in any direct increase in expense to the General Fund; however, this agreement will result in increased costs to the City's Refuse Fund budget and, subsequently, to La Habra refuse service customers in the form of higher refuse rates. The table below is an estimate of the impact that the new OCWR disposal fees may have on the monthly refuse rate for the typical residential or commercial customer. This is in addition to an estimated 3.3% refuse services contractual rate increase already anticipated for next fiscal year due to CPI and fuel costs. Staff is currently analyzing refuse operations and service costs for FY 26/27 to determine what, if any, options there may be to help offset some of this anticipated increase in refuse rates in the next fiscal year.

Estimated Refuse Rate Impact of New Proposed WISE Agreement OCWR Landfill Disposal Fees

Refuse Rate Sample Category	Current FY 25/26 Monthly Rates	WISE Agreement Disposal Fee Monthly Impact in $	WISE Agreement Disposal Fee Monthly Impact as a %	Potential FY 26/27 Monthly Rates with new WISE Agreement Disposal Fees (not including any other adjustments)
Residential Cart	$30.10	$4.79	15.93%	$34.89
Commercial 3-Yard 1x Per Week	$182.75	$29.12	15.93%	$211.87