COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

November 24, 2010

BOARD MEETING DATE:

December 14, 2010

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Garbage and Recyclables Collection Rates in County Service Area No. 8 (North Fair Oaks)

RECOMMENDATION:

Acting as the governing board of the County Service Area No. 8 (North Fair Oaks), adopt a Resolution:

1.

Setting February 15, 2011 at 9:00 a.m. at your regularly scheduled Board meeting, as the time and place for a public hearing on the proposed garbage and recyclables collection rates for County Service Area No. 8 (North Fair Oaks); and

2.

Directing the Director of Public Works to send a notice of the proposed collection rates to each affected property owner.

BACKGROUND:

On June 16, 2009, your Board adopted Resolution No. 070189, which set the garbage and recyclables collection rates in County Service Area No. 8 (CSA-8) for FY 2009-10 and FY 2010-11.

On October 20, 2009, your Board adopted Resolution No. 070423 which approved a new franchise agreement with Recology San Mateo County (RSMC) to provide services for the collection of recyclable materials, organic materials, and solid waste. These services will be provided to CSA-8 and the Unincorporated Franchised Area within the South Bayside Waste Management Authority (SBWMA) service area, exclusive of CSA-8 and West Bay Sanitary District (County franchised area) from January 1, 2011 through December 31, 2020. The County franchised area is comprised of the following communities: Burlingame Hills, San Mateo Highlands and Baywood Park [Crystal Springs area], Harbor Industrial, Devonshire Canyon, Palomar Park, Oak Knoll, Kensington Square, Emerald Lake Hills, Sequoia Tract, Peninsula Golf Club, and Trailer Ranchero.

Rate Setting Procedures

The process to be followed for adopting the garbage and recyclables collection rates includes:

1.

Adopt a resolution of the proposed collection rates.

2.

Hold a public hearing and receive testimony on the proposed rates.

Articles XIIC and XIID of the State Constitution (Proposition 218), require notices be sent to property owners alerting them of the public hearing to consider any new or increased property related fees, and a mechanism for rejecting the fees via a “majority protest” at the public hearing. We are recommending that your Board direct us to notify each affected property owner of the proposed rates by mail and to explain that protests to the rates must be in writing. If there were a successful majority protest, the Board would terminate consideration of imposing a rate increase, and set the garbage and recyclables collection rates equal to the current rates for FY 2009-10.

DISCUSSION:

Under the new franchise agreement with RSMC, CSA-8 will receive significant service improvements that will include weekly “automated” collection services, single stream recycling, and food scrap collection. It is anticipated that these services will increase program effectiveness, be more convenient for 2,603 residential (one to four dwelling units per parcel) and 535 commercial parcels (five or more residential dwelling units per parcel and commercial parcels), and will increase diversion of solid waste from the landfill.

Service Levels and Public Education

The collection service to be provided by RSMC will utilize new collection service trucks with automated arms and therefore will require that customers place their carts near the curb or roadway for collection. Staff met with the North Fair Oaks Community Council (Council) on May 5, 2010 and with a subcommittee of the Council on May 27, 2010 to discuss the new collection program, minimum levels of service, and garbage related issues in CSA-8. Illegal dumping has been problematic in CSA-8 and was the primary driving factor in establishing the minimum levels of service for CSA-8 in the County Ordinance Code.

RSMC, SBWMA, and the County have been working collaboratively to implement an effective outreach program to educate customers within the service area about the new services. The Department will continue to outreach to those customers in CSA-8 and those who will be affected by the Unscheduled Services fees (e.g. Backyard Service vs. curbside service). We intend to notify each customer of record in CSA-8 that currently participates in backyard service collection to ensure that they are aware that continuation of backyard service will be subject to additional fees, unless a fee waiver is approved based on the customers physical ability to transport carts to the curb. Additionally, the County mailed a brochure to every property owner in CSA-8 of the upcoming changes in service, we have posted information on the Department’s website regarding the new service, and held evening public meetings on November 4, 2010 at the Fair Oaks Community Center and December 2, 2010 at the Belmont Library to discuss the changes in service.

Proposed Rates

The Department has conducted a detailed independent analysis of the customer base, existing and anticipated service levels, and revenue requirements specifically for CSA-8 and determined that no increase in the rates for commercial bin service is required. However, the Department is recommending a five percent (5%) rate increase for residential parcels and commercial parcels with cart service.

The proposed rates are listed in Exhibit A to the Resolution and would become effective on March 1, 2011. The charges based on the rates will appear on the property owner’s tax bill for FY 2011-12 for all parcels with residential dwellings, pursuant to County Ordinance Codes 4.04.200 and 4.04.220. Commercial parcels will continue to be billed by the service provider. Additionally, any Unscheduled Services requested by the customer will be billed directly to the customer by RSMC. The rate increases are predominately due to new collective bargaining agreements, new collection service trucks, and the cost of providing weekly service to all three carts for residential customers. The recommended rates also reflect an increase from three (3%) to five percent (5%) in the franchise fee that will be paid to the County.

Franchise Agreement Requirements

The Franchise Agreement with RSMC requires that interest be paid by the County on any balance owed to RSMC resulting from adopted rates that are insufficient to meet the revenue requirements.

The current franchise agreement with Allied Waste will expire on December 31, 2010 and allows SBWMA members to maintain a balancing account with the contractor. The purpose of the balancing account is to track the prior year’s surplus or insufficient revenue for services that were provided. A portion of the last two rate increases for CSA-8 has been applied to reducing the shortfall in the balancing account with Allied Waste in anticipation of the contract term ending. The amount currently due to Allied Waste for the 2009 revenue shortfall for CSA-8 based on SBWMA’s reconciliation of 2009 actual and projected 2010 costs is $28,000. The new contract with RSMC does not allow for the member agencies to maintain a balancing account, therefore, the rates must be set to adequately pay for the cost for the collection services provided by RSMC. The recommended rates for CSA-8 include sufficient revenue to pay off the outstanding amount of $28,000 in the balancing account for the 2009 rate year.

The last six months of Allied Waste’s contract costs (July through December of 2010) have been projected based on the actual costs incurred in providing collection services to CSA-8 customers from January through July 2010. A final adjustment for costs will occur in 2011 to close the franchise agreement with Allied Waste. Any remaining shortfall in the balancing account will be factored into future rates for 2012.

The Franchise Agreement allows for specific adjustments in RSMC’s compensation during the first three rate years to reflect the change in service collection methods and provision of service to a new area. Subsequent annual adjustments will be based on the consumer price index and are anticipated to be modest, which should provide additional rate stabilization.

County Counsel has reviewed and approved the Resolution as to form.

Approval of this action will contribute to the Shared Vision 2025 outcome of a Collaborative Community by continuing to promote regional garbage and recyclables solutions and engage residents in the process to adopt garbage and recyclables collection rates for the County franchised area.

FISCAL IMPACT:

The proposed rates reflect a five percent (5%) increase over the current rates for residential dwellings and commercial parcels utilizing cart service, and no increase in rates for commercial parcels that subscribe to bin services. Through SBWMA’s rate review process, the average rate increase for the SBWMA member agencies is approximately 16%.

We estimate that it will cost approximately $6,250 ($2 per property owner) to prepare, print and mail individual notices to each property owner and the cost will be paid by the revenue received from CSA-8.