CC SR 20220118 04 - SB1383 Regulatory Compliance Amendment w EDCO
CITY COUNCIL MEETING DATE: 01/18/2022
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consideration and possible action to approve an amended and restated f ranchise
agreement for solid waste collection with EDCO Disposal Corporation.
RECOMMENDED COUNCIL ACTION:
(1) Receive and file a summary report on the organics recycling and methane
reduction requirements of Senate Bill No. 1383 (SB 1383):
(2) Approve an amended and restated franchise agreement for solid waste collection
with EDCO Disposal Corporation to implement expanded services and new solid
waste rates in response to SB 1383 effective on April 1, 2022;
(3) Authorize Staff to issue a public notice to all residents, pursuant to Proposition 218,
regarding the new solid waste rates proposed to become effective on April 1, 2022
in response to SB 1383-related services; and,
(4) Set a public hearing on March 15, 2022, pursuant to Proposition 218, for the City
Council to receive public comments and consider approving the new solid waste
proposed rates.
FISCAL IMPACT: The cost for printing and mailing notices pursuant to Proposition 218
is approximately $20,000; which is in the Fiscal Year 2021-22 budget.
Amount Budgeted: $20,000
Additional Appropriation: N/A
Account Number(s): 213-400-0000-4311 $6,500
[Waste Reduction- Postage]
213-400-0000-5102 $7,500
[Waste Reduction- Advertising]
213-400-0000-5103 $6,000
[Waste Reduction- Printing]
ORIGINATED BY: Lauren Ramezani, Senior Administrative Analyst
REVIEWED BY: Ramzi Awwad, Director of Public Works
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Restated and Amended Franchise Agreement with EDCO Disposal Corporation
(page A-1, forthcoming as late correspondence)
B. Notice of Proposed Solid Waste Rate Adjustments and Public Hearing (page B-1
forthcoming as late correspondence)
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CITYOF RANCHO PALOS VERDES
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BACKGROUND:
The City’s solid waste and recycling contractual services are separated by residential
services (including multi-family) and commercial services. Tonight, there are two separate
items on the City Council’s agenda that pertain to each of these solid waste and recycling
services. This staff report, under Regular Business, discusses residential services and
multi-family services provided by the City’s current residential services contractor. A
separate City Council agenda item, under Consent Cale ndar, discusses commercial
services provided by multiple vendors.
In 2009, the City competitively procured a franchise agreement for solid waste collection
and processing (Agreement) with EDCO Disposal Corporation (EDCO). Under the terms
of the Agreement, EDCO was granted the right to provide exclusive service to all single-
family and multi-family customers in the majority of the City (Service Area 1). At that time,
a small section of the City (the Portuguese Landslide A rea, designated as Area 2) was
served by another waste hauler, Universal Waste Services.
In 2015, EDCO acquired Universal Waste Services’ route in Area 2. As a result, EDCO
became the City’s only residential waste hauler. Also in 2015, the City amended EDCO’s
Agreement to provide brush clearing events, modify the rate adjustment method, and
require EDCO to oversee the City’s street-sweeping contract. The 2015 amendment also
extended EDCO’s Agreement and included additional seven one-year extensions (based
on mutual consent) starting on July 1, 2020.
The scope of EDCO’s Agreement covers only single-family and multi-family residential
customers. The City provides for solid waste collection to commercial customers through
separate non-exclusive franchise agreements with seven waste haulers (one of which is
EDCO). These seven franchise agreements are proposed to be amended extending the
term through December 31, 2022 as a separate item on tonight’s agenda under the
Consent Calendar.
The term of the City’s Agreement with EDCO currently extends to June 30, 2023. In light
of new regulations enacted by the State of California via SB 1383, effective as of January
1, 2022, the City Council is being asked this evening to make changes to its residential
solid waste collection program by amending the existing Agreement with EDCO. The
City’s negotiations with EDCO were conducted in conjunction with the City Council Solid
Waste Subcommittee (Subcommittee), comprised of Mayor Bradley and Mayor Pro Tem
Ferraro, who endorse the Staff recommendations.
DISCUSSION:
1. Receive and File a Summary Report on SB 1383
SB 1382 has significant impacts on requirements for residential (and commercial haulers)
in the City as it relates to collection, processing, contamination monitoring, education, and
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reporting. Due to its complexity, the following summarizes the intent of SB 1383 and the
regulatory changes that warrant amending the existing Agreement with EDCO.
SB 1383 – Short-lived Climate Pollutants
In 2016, the State of California adopted SB 1383, which establishes methane emission
reduction targets of 50% of the 2014 levels by 2020, and a 75% reduction by 2025. The
state’s reason for creating SB 1383 is that the state believes that methane, which is
emitted when organic waste buried in landfills decomposes, contributes significantly to
global warming. SB 1383 became effective on January 1, 2022. SB 1383 is the most
significant change in solid waste regulations in California since 1989.
Under the requirements of SB 1383, all cities in the state are required to:
• Ensure that their waste haulers provide organics collection service, including the
collection of food waste from single-family residential customers.
• Conduct periodic education and outreach to all waste generators, including
generators of edible recoverable food.
• Ensure haulers implement specific practices to minimize contamination.
• Procure a minimum quantity of recovered organic waste products.
• Enhance existing edible food recovery programs to reduce the amount of
recoverable edible food sent to landfills.
• Develop inspection and compliance programs to ensure that waste generators
fulfill the requirements of the state’s recycling requirements.
• Prepare and submit annual compliance reports to CalRecycle.
Increased Cost of Processing Food Scraps Placed in Green Waste Carts
Under SB 1383, all jurisdictions must provide organics collection, including the ability for
single-family customers to place household food waste in their green waste carts. Food
waste has unique properties (high moisture content, low physical structure) that are
different from green waste (leaves, grass and yard trimmings). As a result of these
differences, it is more costly to process and compost green waste that includes food
waste. Not all composting facilities that accept green waste are permitted to accept green
waste that includes food waste. Those composting and processing facilities that are
permitted to accept green waste mixed with food waste have higher tipping /gate fees (the
price per ton to place material in a facility). As a result, the state’s requirement under SB
1383 that all jurisdictions must accept food waste in green waste carts is a significant
driver in the cost of organics collection.
2. Amended and Restated Franchise Agreement for Solid Waste Collection
On April 20, 2021, the City Council considered the requirements of SB 1383, and directed
Staff to enter into negotiations with EDCO for an updated Agreement that would address
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the requirements of SB 1383. The City Council requested that Staff address some
additional issues in its negotiations with EDCO. These additional issues included:
• A medical waste roundup event
• A potential Peninsula-wide solid waste contract
• Combining the City’s residential and commercial solid waste contracts
• Using recycled food waste as mulch on City trails/medians
• The potential future use of the site of the former Palos Verdes Landfill for an
organics recycling facility
In July 2021, EDCO submitted a proposal to the City, which was reviewed by Staff and
MSW Consultants, the consultant retained by the City to assist with SB 1383
implementation. In October 2021, Staff and MSW Consultants met with the Subcommittee
and discussed EDCO’s proposal.
Based on the Subcommittee’s feedback, a counteroffer was presented to EDCO in
November 2021. EDCO responded with a revised proposal which was discussed at a
second Subcommittee meeting on January 7, 2022. Shortly thereafter, City Staff
(including the Subcommittee) and EDCO agreed to terms of an amended and restated
Agreement to implement SB1383 (Attachment A), which incorporates the negotiated rates
and terms, for consideration by the City Council.
Key Terms of Proposed Agreement
The key terms and services included in the Agreement are outlined in Table 1 below.
Table 1 - Key Terms of Proposed Restated and Amended Agreement
Term of Agreement
Initial term will be for approximately seven years from April 1, 2022
through June 30, 2029. An option for an additional five-year term is
included upon mutual consent.
Peninsula-Wide
Solid Waste
Contract*
A Peninsula-wide waste contract is not possible at this time because of
varying expiration dates of existing contracts for the Peninsula cities.
The current expiration dates of the contracts for Rolling Hills and for
Rolling Hills Estates is June 30, 2029. The contract in Palos Verdes
Estates is set to end on June 30, 2022. Palos Verdes Estates is
currently in negotiations with its waste hauler.
The negotiated term coincides with the expiration dates of Rolling Hills
and Rolling Hills Estates contracts, setting the stage for the possibility
of a future combined contract. When any Peninsula city considers
joining the City in a multi-jurisdictional agreement, EDCO will identify
savings and economies of scale to reduce rates or slow the growth of
operating costs.
Combined
Residential and
Both parties agree to begin good faith negotiations in three years for
EDCO to take over exclusive service for the commercial sector, after
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Commercial
Contract*
the required five-year notice of non-extension to existing commercial
haulers runs its course.
Effective Date
The Agreement will become effective on January 18, 2022 (or as soon
thereafter as the City and EDCO duly execute the Agreement). New SB
1383-compliant services will begin on April 1, 2022. Residents will then
be able to place organics in the green waste carts. Small kitchen
caddies will be provided to interested customers upon request.
Rate Adjustment
for Fiscal Year
2021-2022
EDCO will forego the single-family customer Consumer Price Index
(CPI) rate increase to which it was entitled in July of 2021 until April of
2022.
Rate Freeze The approved rates will be for a period of 15 months, from contract
approval until June 30, 2023.
New Rates
The new single-family rates will increase by 15.6% to cover the
additional cost of organics waste collection and recycling, and related
program implementation.
New Trucks EDCO will operate a fleet of new “near-zero” engine trucks utilizing
renewable natural gas (RNG).
Discounts Both parties agree to clarify the calculation for multiple discounts
available to customers.
Rate Adjustment
Methodology
Both parties agree to consider a simplified annual rate adjustment
methodology in accordance with solid waste industry standards.
Processing and
Disposal Facilities
EDCO will secure access to organics processing capacity. Both parties
agree to discontinue taking a portion of the City’s waste to Southeast
Resource Recovery Facility in Long Beach to help reduce disposal
costs and customer rates.
Public Outreach
and Education
EDCO will provide extensive public outreach and education to inform
customers of the new program, including multi-family technical
assistance and personal site visits.
Monitoring,
Recordkeeping
EDCO will monitor compliance, conduct enforcement, and keep a
database for SB 1383 reporting on behalf of the City.
Annual City Fees
and Rebate
EDCO will continue to pay the City approximately $648,100 in
Franchise Fees and approximately $163,700 in Environmental Fees.
Fees will increase when/if customer rates increase in the future.
Customers will continue to receive $296,000 in Recycling Rebates.
Tipping (Gate) Fee
increases
EDCO will accept the risk of market changes in the tipping (gate) fees
(the price per ton to place material in a processing facility) for organic
processing for the term of the agreement. However, the organics
tipping fee of $95 per ton would be adjusted each year based on the
CPI.
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Siting an Organics
Processing Facility
on Peninsula*
EDCO will work cooperatively to explore siting an organic processing
facility on the Peninsula in the former Palos Verdes Landfill site located
in the City of Rolling Hills Estates. The proposed Agreement provides a
re-negotiation of fees for any cost savings resulting from the
development of an organics recycling facility on the site.
Special Services
EDCO will continue to provide backyard service, and its smaller truck
(pup) collection service, upon request and for a special rate. EDCO will
continue its twice per year document shredding and brush clearing
events. EDCO will continue its limited free on-call bulky, electronics
waste, and used oil and filter collection services. EDCO will offer a new
free (limited) mail-back sharps disposal program.
Medical Waste*
The Los Angeles County Sherriff’s Department accepts unused
medications. EDCO will continue to include information about this
program in its public education materials.
Mulch
EDCO will provide no-charge mulch to residents (for pickup at the Civic
Center during events) and to the City for use on City trails and
medians.
Food Waste as
Compost Material
for City Medians
and Rights-of-Way*
Providing compost from food waste is not practical at this time because
of the need to transport the food waste for processing and then return it
to its application site. Mulch is more readily available and more
frequently used on City medians and rights-of-way.
* Subcommittee-Requested Items
Impact on Current Rates
The impact of these new terms and services on current customer rates is shown below in
Table 2 and Table 3. Approximately 95% of the single-family residences in the City
receive automated cart service. Table 2 shows the impact of proposed rates on single-
family residential customers with automated cart service in Area 1 and Area 2. The
monthly rate charged to single-family customers with automated cart service is based on
the size of the refuse cart chosen by the customer. Table 2 shows the current rate for
each size of refuse cart, the proposed rate, the adjustment amount, and the percent
change. Table 2 shows that the rates charged to single-family residential customers with
automated service are proposed to increase by 15.6%.
Table 2 – Impact of Proposed Rates on Single-family Automated Customers in Area 1 and Area 2
Cart Size Current Rate Proposed
Rate
Adjustment
Amount
Percent
Change
35 gallon cart $22.54 $26.06 $3.52 15.6%
64 gallon cart $29.01 $33.54 $4.53 15.6%
96 gallon cart $35.45 $40.99 $5.54 15.6%
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The City’s rate schedule includes separate rates for multi-family customers in Area 1 and
Area 2. The monthly rates for multi-family customers with bin service is based on the size
and number bins, and the number of pickups per week selected by the custome r. The
most common level of bin service is typically a single 3-yard bin collected once per week.
Table 3 below the shows the impact of the proposed rates on multi-family customers in
Area 1 and Area 2. Table 3 shows that the rates for multi-family bin customers in both
Area 1 and Area 2 are proposed to increase by 3%. The percentage increase for multi-
family customers is lower than that of single-family customers because the rate increase
excludes organics. Multi-family customer green waste is typically handled by landscapers;
therefore, organics collection and processing is not included in the rates shown in Table
3. Multi-family residential customers may apply for a de minimis waiver from the
requirements of SB 1383, or obtain services from EDCO for an additional fee.
Table 3 – Impact of Proposed Rates on Multi-family Customers
Multi-family customers may contract with EDCO for organics collection and processing
under the rate structure in Table 4.
Table 4 – Impact of Proposed Rates on Multi-family Customers
Recycling Rebate
A unique feature of the solid waste rate structure in the City of Rancho Palos Verdes is
the Recycling Rebate. The Recycling Rebate is an amount that is deducted from each
customer’s monthly charge to reflect the California Redemption Value (CRV) of the bottles
and cans that customers place in EDCO’s recycling carts. Table 5 below shows the
Recycling Rebate per dwelling unit credited to customers in Area 1 and Area 2. The
amounts shown in Table 5 are deducted each month from the rates charged to customers
shown in Table 2 and Table 3.
Service Area Current Rate Proposed
Rate
Adjustment
Amount
Percent
Change
Area 1 $140.03 $144.23 $4.20 3.0%
Area 2 $122.91 $126.60 $3.69 3.0%
1 2 3
64 gallon cart $83.71 $167.43 $251.14 $33.49
96 gallon cart $94.00 $187.99 $281.99 $37.60
2-yard bin $158.05 $316.09 $474.14 $63.22
Each Additional Bin/Cart
64 gallon cart $79.53 $159.06 $238.58
96 gallon cart $89.30 $178.59 $267.89
2-yard bin $150.14 $300.29 $450.43
1st Bin/Cart Pickups per Week Extra Pickups
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Table 5 – Monthly Customer Recycling Rebate
As a result, the effective amount paid by customers for solid waste services is less than
the total rates that are charged to customers. Table 6 shows the proposed rates, the
recycling rebate, and the total amount paid by single-family customers for each size of
automated cart. For example, after deducting the Recycling Rebate ($1.58), the net
amount paid by a single-family customer with an automated 96-gallon refuse cart is
proposed to be $39.41 per month (current rate is $35.45).
Table 6 – Proposed Single-Family Cart Rates Net of Recycling Rebate
Table 7 below shows the proposed multi-family rates with the recycling rebate (assuming
four dwelling units), and the total amount paid by multi-family customers for a single 3-
yard bin picked up once per week in both Area 1 and Area 2. After deducting the Recycling
Rebate for four units ($1.58 x 4 = $6.32), the net amount paid by a multi-family customer
with single 3-yard bin picked up once per week in Area 1 is proposed to be $137.91 per
month.
Table 7 – Proposed Multi-family Rates Net of Recycling Rebate
Service Area
Recycling
Rebate per
Dwelling Unit
Area 1 $1.58
Area 2 $1.31
Cart Size Proposed
Rate
$26.06
($1.58)
$24.48
$33.54
($1.58)
$31.96
$40.99
($1.58)
$39.41
Recycling Rebate
Amount Paid by Customer
96 gallon cart
35 gallon cart
64 gallon cart
Recycling Rebate
Total Rate
Amount Paid by Customer
Total Rate
Recycling Rebate
Amount Paid by Customer
Total Rate
Service Level Area 1 Area 2
$144.23 $126.60
($6.32) ($5.24)
$137.91 $121.36
One each 3-yard
bin picked up
once per week
Total Rate
Recycling Rebate
Amount Paid by Customer
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Comparison to Rates in Other Jurisdictions
Chart 1 below compares the net rate paid by customers (after deducting the Recycling
Rebate) for single-family solid waste collection in the City of Rancho Palos Verdes with
rates for similar solid waste rates charged in other jurisdictions. Each stacked bar in Chart
1 represents the amount paid by ratepayers broken down between the fee amount (if any)
that is retained by the City, and the waste hauler’s portion of the rate. The bars in Chart
1 are sorted by the hauler portion of the rate, and not by the total rate paid by the
customer.
The two bars in Chart 1 with the hauler portion of the rate shown in green represent the
current and proposed net amount paid by customers for a 96-gallon automated refuse
cart in the City of Rancho Palos Verdes. A review of Chart 1 shows that, although the
proposed rates in Rancho Palos Verdes are h igher than most cities in the South Bay (as
is the case with all Peninsula cities), they are lower than any other city on the Peninsula.
The fact that the rates for all the cities on the Peninsula are all higher than other cities in
the South Bay may be due to the distance from solid waste infrastructure (waste haulers’
vehicle maintenance yards, material recovery facilities, composting facilities, etc.),
making them more costly to serve. Chart 1 shows that the EDCO rates in the City are fair
and reasonable.
Chart 1 – Rate Comparison – Single-family Residential
Chart 2 below also compares the net rate paid by customers (after deducting the
Recycling Rebate) for multi-family solid waste collection in the City of Rancho Palos
Verdes with rates for similar solid waste rates charged in other jurisdictions. Each stacked
bar in Chart 2 represents the amount paid by ratepayers broken down between the fee
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Rates Charged to Customer Broken Down by City Fee and Hauler Portion
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$0.00
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~ -:-..o" ~~'lo
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D City Fees D Hauler Portion
amount (if any) that is retained by the City, and the waste hauler’s portion of the rate. The
bars in Chart 2 are sorted by the hauler portion of the ra te, and not the total rate paid by
the customer.
Chart 2 includes two sets of bars with the hauler portion of the rate shown in green. These
two sets of bars represent the current and proposed rates in Areas 1 and 2, respectively.
A review of Chart 1 shows that the multi-family rates in the City of Rancho Palos Verdes
are more competitive than the rates for similar service in other South Bay cities. It is
interesting to note that the multi-family rates for the Peninsula cities are not positioned on
the right of Chart 2 in the same way that the single-family rates are positioned on the right
of Chart 1. This may be due to the fact that the cities on the Peninsula may have a smaller
proportionate share of multi-family revenue than other South Bay cities. Chart 2 shows
that the EDCO multi-family rates in the City are fair and reasonable.
Chart 2 – Rate Comparison – Multi-family Residential
Based on the above, EDCO will begin SB 1383 compliant organics collection services on
April 1, 2022. To cover the increased cost of these services, rates for single -family
customers are proposed to increase by 15.6% effective April 1, 2022. Multi -family bin
rates are proposed to increase by 3%, also on April 1, 2022. EDCO will forego the rate
increase to which it was entitled in July of 2021 until April of 2022. After this adjustment,
EDCO’s rates will continue to be competitive in relation to solid waste rates in other cities
in the South Bay and the lowest of the cities on the Palos Verdes Peninsula. EDCO’s
future rates will only be adjusted each year based on inflation.
If acceptable, Staff recommends that the City Council approve the amended and restated
Agreement with EDCO that is endorsed by the City Council Subcommittee. Once the
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Rates Broken Down by City Fee and Hauler Portion
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agreement is executed, EDCO will begin its public education campaign and prepare to
commence its new services on April 1, 2022.
The amended and restated agreement (Attachment A) is particula rly lengthy and
complex. As a result, minor modifications may be needed. The amended and restated
agreement reflects all material agreements between the City and EDCO, and, if approved,
will become effective on, or shortly after, January 18, 2022. However , because of the
particular complexity of the agreement, the City requests the ability to work with the City
Attorney to make minor modifications to enhance the clarity and efficiency of the
document. Any substantive modifications will be presented to the City Council on March
15, 2022.
3. Proposition 218 Public Noticing
To approve the proposed rates, the City must undertake a “majority protest” process
pursuant to Proposition 218. The City Council is required to set a public hearing. At least
45 days prior to the public hearing, the City is required to notify all residents by mail of the
proposed rates, and the date, time, and place of the public hearing (Attachment B). At the
public hearing, the City Council is required to receive public comments, and co nsider
approving the proposed rates.
If the City Council approves the Restated and Amended Franchise Agreement, Staff
recommends that the City authorize staff to issue the required public notice to all residents
regarding the new solid waste rates discussed in the previous section.
4. March 15, 2022 Public Hearing
Pursuant to Proposition 218, Staff recommends that the City Council set a public hearing
on March 15, 2022 to receive public comments and consider approving the proposed
solid waste rates.
ADDITIONAL INFORMATION:
EDCO’s Performance
During the 11 years EDCO has been serving the City of Rancho Palos Verdes, the City
has conducted three audits of EDCO’s performance. These audits covered the years from
the beginning of the Agreement through 2020. The scope of these audits covered EDCO’s
operations, customer service, and financial requirements. In each of these audits, EDCO
was found to be properly performing in accordance with the terms of its Agreement.
At the City Council meeting on April 20, 2021, Councilmembers, City Staff, and a former
mayor (as part of public comments), universally testified to the superior service provided
to the City by EDCO over the years.
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CONCLUSION:
Based on EDCO’s performance reflected in the results of the audits of EDCO, and the
public comments at the April 20, 2021 meeting, it is evident that EDCO is delivering
reliable, high-quality service to the City’s residents. Based on the comparison of EDCO’s
proposed rates to other cities, it is evident that the SB 1383-compliant rates proposed by
EDCO are reasonable. Based on the services and key terms included in the Restated
and Amended Franchise Agreement, it is evident that EDCO will be well -equipped to
continue assisting the City in complying with state regulations related to diverting
recyclables and organic waste. As a result, the recommended Agreement with EDCO will
enable the City to continue to meet its solid waste program objectives.
Staff therefore recommends the City Council approve the amended and restated
Agreement with EDCO, authorize Staff to issue a notice to all residents regarding the new
solid waste rates, and set a public hearing on March 15, 2022 to receive public comments
and consider approving the new proposed rates.
ALTERNATIVES:
In addition to the Staff recommendations, the following alternative actions are available
for the City Council’s consideration:
1. Direct Staff to negotiate changes the amended and restated agreement with EDCO
for SB 1383 compliance.
2. Reject the amended and restated agreement with EDCO for SB 1383 compliance
and direct Staff to begin a new procurement process.
3. Take other action, as deemed appropriate.
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