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Item 20 Staff Report Public Hearing to Consider Solid Waste Collection Services and Curbside Recycling Including Unlimited Collection and Consideration of the Modification of the Rate Structure and the Feasibility of Organic Pick-Up for the CommunityTOWN OF LOS GATOS COUNCIL AGENDA REPORT DATE: March 2, 1990 TO: MAYOR AND TOWN COUNCIL FROM: DEBRA FIGONE, INTERIM TOWN MANAGER COUNCIL AGENDA DATE: 3/5/90 ITEM NO:41;1 O SUBJECT: PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY RECOMMENDATION: That Council: 1. Reopen the Public Hearing, receive public testimony on: A. Curbside Recycling Rates; B. Garbage Collection Services and Rates. 2. Close the Public Hearing. 3. A. Affirm previous Council action to add the cost of the recycling program, $0.82/household/ month to the refuse collection bill of households currently served. B. Adopt the attached Resolution (Exhibit A6a.) approving variable -can garbage collection service at a monthly base rate of $4.96 (curbside) for a single -can and variable rates based on the number of cans collected. C. Direct Staff to continue to work with the West Valley Rate Review Committee, Green Valley Disposal Company, Inc., (GVDC), staff from the City of Sunnyvale, and community members to refine and implement the options described herein for a multi- faceted yard waste collection program with a report back to Council in October. 4. If the Council prefers a rate solution other than those identified by Staff, Council should provide Staff with more direction and continue the Public Hearing limited only to the discussion of rates. (continued on page 2) PREPARED BY: Regina A. Falkner, Mana Community Services Divi RAF:dr CS004:A:\SOLIDWST\RECYCLIN.PRO Reviewed by: Attorney TOWN COUNCIL ACTION DIRECTED TO: ACTION OF COUNCIL: PAGE 2 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 BACKGROUND: Public Hearings have been held on October 16 and December 4, 1989, to consider implementation of a Curbside Recycling Program; to review solid waste collection services --including unlimited collection; and, to review solid waste collection service rates. Attached is a staff report which is a culmination of previous reports prepared for the Public Hearings. It is divided into three parts. The first briefly discusses the purpose and status of the Curbside Recycling Program, lists alternative funding avenues, and more fully describes the recommended alternative. The second part of the report discusses garbage collection services, including unlimited can service. Additionally, this section discusses the individual relationships between the life of a landfill, unlimited refuse collection, and recycling. The pros and cons of unlimited refuse collection are listed. The third part of the report discusses rates for collection services including the Toter Program. This staff report is attached as Exhibit A and is followed by several attachments. An outline of Exhibit A and the corresponding attachments follows: I. II. Curbside Recycling Program A. Background and Program Description B. Alternative Funding Avenues (Exhibit Al) C. Summary of Staff Recommendation Regarding Rates (Exhibit A2) Garbage Collection Services A. B. C. D. E. F. III. Rates A. B. C. D. E. F. Background and Program Current Per -Can Refuse Illegal Dumping Unlimited Refuse Pros and Cons of Summary of Staff Description Collection System Collection System Unlimited Can Refuse Collection Recommendation Regarding Unlimited Can Service Services Background (Exhibit A4) Current Collection Rates Unlimited Can Collection Service Rates Recycling Costs Toter Program (Exhibit A5) Summary of Staff Recommendation Regarding Rate Changes (Exhibits A3 and A6) PAGE 3 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 A second staff report is attached as Exhibit B. The report is a status report regarding investigation into the development of a yard waste collection program for the Town. DISCUSSION: I. SUMMARY OF STAFF RECOMMENDATION REGARDING RECYCLING PROGRAM Curbside recycling has general economic benefit to all households and businesses in the community primarily because it will extend the life of the landfill. This will allow us to keep rates as low as possible for as long as possible. It will also help us to meet State legislative requirements and avoid financial penalties. By implementing an overall increase, the cost is spread over the entire population served. As there is general benefit to all clients from the recycling program (diversion of refuse from the landfill, extended landfill, reduced financial impact), this approach is fair and reasonable. The cost will be itemized on the client's bill only at Council's request. II. SUMMARY OF STAFF RECOMMENDATION REGARDING UNLIMITED CAN SERVICE Staff recommends that the Council continue variable can service. Reducing the waste stream deposited at the landfill has long been an objective of the Council. Provision of waste collection services on a per -can basis has helped in meeting this objective by charging customers incremental rates for each can of garbage collected. Although unlimited can service has often been requested by the community and even recommended Staff, evidence shows that less refuse is deposited at landfills in areas which have variable can rates. Continuance of variable can service is an essential financial incentive to households to recycle as it provides households the possibility of reducing their collection services through recycling or otherwise reducing and reusing refuse. Since our last report, it has been determined that the need to provide financial incentives for recycling by maintaining the variable can service outweighs the public's desire for unlimited refuse collection. Staff will report back to Council on the tonnage disposed of at the landfill site on a semi-annual basis beginning September of this year. III. SUMMARY OF STAFF RECOMMENDATION REGARDING RATE CHANGES A. Rates The proposed rates to be effective May 1, 1990, are attached as Exhibit A6a. Based on current estimates, another rate increase would not be necessary until August 1, 1991. Rate changes would be made to reflect costs based on the actual service collection option chosen PAGE 4 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 by customers. Any potential rate changes required are currently scheduled to take place in August of each year; however, the Rate Review Committee is reviewing altering the review period. In reviewing the rate proposals developed by staff, it is important to recognize that each alternative is developed with a goal of creating a total revenue stream in order to cover the cost of refuse collection in our community. Rates are then set to collect the desired amount of revenue. Any individual rate for a category of users, such as commercial versus residential, or curbside service versus service for cans 30 or more feet from the curb, can be adjusted up or down. Any adjustment, however, would have impact on the other categories of users in order to maintain the same desired total revenue for the entire community. Making estimates for upcoming budgets are extremely difficult due primarily to the increased numbers of taxes and charges being added to landfill costs. For example, AB 939 has resulted in a charge of $0.50/ton of refuse dumped at the landfill from January 1 through June 30 of this year to raise revenue for administration on the State -run program. The fee will be $1.00 per ton beginning July 1, 1990. Additionally, $0.15 per ton is charged for the County Solid Waste Management Plan; $0.16 for the County Inspection Fee (this is expected to increase $0.10 this fiscal year). Guadalupe Rubbish Company is currently in the process of applying for annexation into the City of San Jose. San Jose charges a $3.00/ton business tax to raise revenue for its recycling programs. Guadalupe will apply to LAFCO for annexation in March; a Public Hearing is expected to be held in April. The Rate Review Committee will draft a letter for signature by the appropriate representative from each West Valley City. The letter will request that the tax be waived, or that the funds be returned to us for use for the West Valley recycling program. Attached as Exhibit 4b is a spread sheet including costs of the San Jose Business Tax. If Los Gatos is forced to pay this tax, a rate increase of approximately five percent would be necessary this Fall. The budget for the Fiscal Year 1990-91 assumes a five percent increase in rates over the current fiscal year, plus an increase of $150,000 for increased landfill costs. The Rate Review Committee will be reviewing audited Fiscal Year 1988-89 figures and the proposed Fiscal Year 1990-91 budget during the months of March and April. As always, the future projections of revenue and expenses should not receive much weight in your review. They are simply estimates provided for information only. PAGE 5 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 As you begin to analyze the rate question closer, you can see from Attachment 4a that on an annualized basis the estimated expenses in Los Gatos exceed estimated revenues by $156,313. This excess of expenses over revenues is offset by the surplus mentioned above of $317,950 which has resulted from the policy Memo to Mayor and Town Council of segregating revenues and expenses by community. This "surplus" has been reduced significantly over the years by not increasing rates since 1986. Minor impacts on the surplus include the cost of clean-up during the earthquake ($70,000) and the three- month subsidy of the recycling program ($22,475). Staff looked at a number of alternatives for rate adjustment. Version 1, Attachment A4a is the recommended alternative. It pro- poses an overall eighteen percent increase in rates effective May 1, 1990; this includes the cost of $0.82 cents for recycling starting in February of this year. This version provides equal increases to residential and commercial accounts. It is important to note that all the rate proposals are recommended for a May effective date. If rate adjustments are deferred another year, the community may be faced with even greater increases at that time. It is important to note that if unlimited service in any form is adopted by the Council, the Town may experience an increase in the volume of refuse collected within the Town. It will be impossible to accurately determine if that volume increase is actually due to increased refuse from our residents or simply that refuse previously hauled to the landfill by the homeowner or gardener is now being deposited curbside. A summary of the residential rate structure alternatives provided within this report follows: RESIDENTIAL FEES CURRENT VARIABLE UNLIMITED Unlimited; Curbside 0' - 5 $10.30 Unlimited; 6' - 30' $11.50 Unlimited; 31' - 130' $12.85 1 can; Senior Citizen; 0' - 5' $ 4.96 1 can; Senior Citizen; 5' - 30' $ 5.43 1 - 5 cans Walk/Drive over 130' $22.00 1 can; 0' - 5' $ 4.20 $ 4.96 1 can; 6' - 30' $ 4.60 $ 5.43 1 can; 31' - 130' $ 5.65 $ 6.67 1 can; over 130' $12.75 $15.05 PAGE 6 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 The Public Hearing to consider rate changes resulting from the implementation of the toter program was not held prior to its implementation, but deferred to be heard in conjunction with the Public Hearing regarding recycling. Since our last report, it has been determined that the program does fall under the Franchise Agreement. However, the Rate Review Committee has not yet reached consensus on the way to incorporate the program to the Town's and resident's best benefit. Staff will return with a full report in April. A resolution must be adopted to modify the rates and incorporate unlimited service. Staff recommends adoption of Resolution A6a. Exhibit A6b has been prepared should Council elect to choose unlimi- ted refuse collection services. The resolution reflects the rate for the toter program, but does not reflect Council's concurrence. B. Franchise Agreement In an effort to keep refuse rates as low as possible, suggestions have been made by residents at previous Public Hearings that the Franchise Agreement be revised to incorporate incentives to GVDC to increase their efficiency. It has also been suggested that the GVDC budget be reviewed to assure that the Town is maximizing franchise revenue due it through the existing Agreement. If Council wishes to pursue these suggestions, it is recommended that the Town hire a consultant to perform these services. The expertise to complete these projects is held in house only by the Finance Manager; the time commitment required of the Finance Manager, the Community Services Manager, Finance and other support staff cannot be assumed without other projects being postponed. Although residents from the community could be recruited who have the necessary expertise, this would still require Staff time which is already fully dedicated. A full report regarding franchise fees to be obtained will be presented to Council in September. IV. SUMMARY OF STAFF RECOMMENDATION REGARDING YARD WASTE RECYCLING It is recommended that Staff be directed to continue to work with the West Valley Rate Review Committee, Green Valley Disposal Company, Inc. (GVDC), staff from the City of Sunnyvale, and community members to refine and implement the options described herein for a multi -faceted yard waste collection program. (The City of Sunnyvale has included a clause in their Agreement with GVDC that they work with Staff from the West Valley cities and Sunnyvale to develop a yard waste program for implementation in July of 1991. PAGE 7 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 Of the programs reviewed, the City of San Jose's Curbside Yard Waste Recycling Program is one of the newest. Their recent start has provided them the opportunity to test a variety of innovative methods tried in other communities. Their large size has also allowed them to test a variety of factors to test participation rates and costs. Their pilot program which started in March, 1989, will end June, 1990.) Their findings will be included in our report back to Council in October. FISCAL IMPACT: If the Resolution attached as Exhibit A6a, is approved, refuse collection services will increase 18 percent. This includes the cost of curbside recycling services. The recycling service, for the first three months of operation will be subsidized by the revenues received through the refuse collection program. A transfer of $22,475 from the Refuse Collection Program to the Recycling Program will offset the costs of services for February, March, and April. The new rates will take effect May 1, 1990. The fees for the Recycling Program and the new refuse rates will be charged beginning May 1, 1990. If the Town is forced to pay the San Jose Business Tax, as a result of the annexation of Guadalupe Landfill into San Jose, another rate increase of five percent will be necessary in August (See Exhibit A4). If Council wishes to hire a consultant to review the Franchise Agreement, the cost could be charged to the Refuse Collection Budget. EXHIBITS: A. Staff Report regarding waste management, including recycling and rates for collection. 1. Financing Alternatives - Memo from Rate Review Committee. 2. Council report dated January 17, 1990, regarding alternative rate structures to finance curbside recycling program, Phase I. 3. Summary table of alternative rate structures. 4. Memo regarding Refuse Collection Cost a. Los Gatos Rate Percent Projection b. Los Gatos Rate Percent Projection - Impact of San Jose Bus.Tax 5. Toter Program a. Letter of Description from GVDC 6. Draft Resolutions amending Refuse Collection Rates a. Volume -Based Service, including cost of Recycling b. Unlimited can service, including recycling) B. Memo regarding yard waste recycling program. PAGE 8 MAYOR AND TOWN COUNCIL PUBLIC HEARING TO CONSIDER SOLID WASTE COLLECTION SERVICES AND CURBSIDE RECYCLING INCLUDING UNLIMITED COLLECTION AND CONSIDERATION OF THE MODIFICATION OF THE RATE STRUCTURE AND THE FEASIBILITY OF ORGANIC PICK-UP FOR THE COMMUNITY MARCH 5, 1990 DISTRIBUTION: 1. Sue Marki, Div. of Recycling, 1025 "P" St., Sacramento 95814 2. David Wolf, First United Methodist Church of Los Gatos, 19 High School Court, Los Gatos 95032 3. Nancy Cardinet, 221 Jones Road, Los Gatos 95032 4. Claudette Lynch, 108 Cherrystone Court, Los Gatos 95032 5. Mrs. Campbell, 17020 Los Cerritos Drive, Los Gatos 95032 6. Mrs. Williams, First United Methodist Church of Los Gatos, 19 High School Court, Los Gatos 95032 7. Dr. Irving Olender, 178 Long Meadow Drive, Los Gatos 95030 8. Linger, 312 Harding, Los Gatos 95032 9. Delores Simone, 248 Old Adobe Road, Los Gatos 95030 10. John Snelham, 247 Old Adobe Road, Los Gatos 95030 11. Gerard Wen, GVDC, P.O. Box 1227, Los Gatos 95031 12. Barbara Lee, City of Campbell 13. Todd Argow, City of Saratoga 14. Rosemary Pierce, City of Monte Sereno 15. Marilyn Basham, 108 Teresita Way, Los Gatos 95032 16. Sara Stephenson, League of Women Voters, 12491 Jolene Ct., Saratoga 95070 17. Cynthia Dettner, LGS, 770 "L" Street, Suite 960, Sacramento 95814 18. Dick Gaines, 340 Johnson Avenue, Los Gatos 95032 19. Mrs. Albert Blake, 17511 Pine Street, Los Gatos 95032 20. Janet Foreman, City of Palo Alto, Public Works Dept., P.O. Box 10250, Palo Alto, CA 94303 21. Mark Bowers, City of Mountain View, Solid Waste Program Manager, P.O. Box 7540, Mountain View, CA 94039 22. Joseph Adinolfi, 148 Via de Tesoras, Los Gatos 95030 EXHIBIT A MEMORANDUM DATE: March 2, 1990 TO: MAYOR AND TOWN COUNCIL FROM: DEBRA FIGONE, INTERIM TOWN MANAGER SUBJECT: WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION RECOMMENDATION: A. Affirm previous Council action to add the cost of the recycling program, $0.82/household/ month to the refuse collection bill of households currently served. B. Adopt the attached Resolution approving variable -can garbage collection service at a monthly base rate of $4.96 (curbside) for a single -can and variable rates based on the number of cans collected. BACKGROUND: ti Attached is a staff report which is a culmination of previous reports prepared for the Public Hearings. It is divided into three parts. The first briefly discusses the purpose and status of the Curbside Recycling Program, lists alternative funding avenues, and more fully describes the recommended alternative. The second part of the report discusses garbage collection services, including unlimited can service. Additionally, this section discusses the individual relationships between the life of a landfill, unlimited refuse collection, and recycling. The pros and cons of unlimited refuse collection are listed. The third part of the report discusses rates for collection services including the Toter Program. An outline of the report follows: I. Curbside Recycling Program A. Background and Program Description B. Alternative Funding Avenues (Exhibit Al) C. Summary of Staff Recommendation Regarding Rates (Exhibit A2) II. Garbage Collection Services A. Background and Program Description B. Current Per -Can Refuse Collection System C. Illegal Dumping D. Unlimited Refuse Collection System E. Pros and Cons of Unlimited Can Refuse Collection Services F. Summary of Staff Recommendation Regarding Unlimited Can Service III. Rates A. Background (Exhibit 4) B. Current Collection Rates C. Unlimited Can Collection Service Rates D. Recycling Costs E. Toter Program (Exhibit A5) F. Summary of Staff Recommendation Regarding Rate Changes (Exhibit A3 and A6 DISCUSSION: I. CURBSIDE RECYCLING PROGRAM A. Background and Program Description Council directed Staff to pursue the implementation of a Curbside Recycling Program in the Town in order to minimize landfill costs, expand the life of the current landfill, conserve resources, and save energy. Furthermore, it is hoped that a Curbside Recycling Program will assist the Town in meeting State laws regarding diversion of waste from landfills. State law mandates 25 percent diversion goals for all jurisdictions by 1995 and 50 percent by the year 2000. In 1988, Santa Clara County adopted an amendment to the County Solid Waste Management Plan which set a goal of reducing the amount of waste disposed of in landfills by 25 percent by 1995. State and local goals such as those above are not unique to California and Santa Clara County. While the United States produces as much or more waste than any other nation, we are behind other industrialized nations in the management of waste. Over 80 percent of the nation's trash is simply buried. Meanwhile, our landfills are approaching or exceeding their capacity. Faced with public resistance to opening new landfills or siting waste incinerators, local governments throughout the nation are looking to recycling and waste reduction programs to extend the life of existing landfills as long as possible. With these goals in mind, Staff in conjunction with representatives from the other three West Valley cities (Monte Sereno, Saratoga, Campbell, and Los Gatos) developed a Curbside Recycling Program. A Request For Proposal for curbside recycling was written and distributed and the four responses were evaluated. GVDC's proposal was recommended by staff and approved by Council on August 7, 1989. The basic elements of the program are as follows: Recyclables are collected once per week on the same day as refuse collection. PAGE 3 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 All single-family homes and residential complexes of four or fewer units having "can" service are served. Materials collected: newspaper, glass, aluminum and tin cans, P.E.T. plastic (soft drink bottles), cardboard and waste oil. Most programs collect only the first four items. The contractor has provided two bin -type collection and storage containers to each household. The term of the Agreement is five years. The fee for services is $0.82/household/month. The contract allows for expansion of the initial program to include collection of other materials and provision of service to multi- family households and businesses. In addition to the initial phase of the curbside recycling program, a four phase approach to solid waste management has been adopted as listed below. A new phase is to be implemented approximately every six months. PHASE I: To market and implement the residential curbside recycling program. PHASE II: To implement a multi -family curbside recycling program. PHASE III: To implement, if feasible, a yard waste collection program. PHASE IV: To address the recycling needs of the commercial sector. B. Alternative Funding Avenues Staff recommends that the cost of the first phase of the Curbside Recycling Program be added to the refuse collection bill as originally approved. Cost of the services may be itemized on the bill at Council's request. Since the cost will be set for five years, by agreement, residents will not experience an increase in the fee for the recycling services although they most likely see their refuse collection bill continue to increase. Reviewed but not recommended alternatives include the following: Increased franchise fee to pay for the program. This would result in higher refuse rates for GVDC customers with minimal revenue to the Town. General Fund contribution. This option would require that the Town re -prioritize its current projects in order to make the necessary funds available. PAGE 4 , MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 This service will not be subject to the franchise fee as it would increase the monthly cost of the recycling program by 10 percent and the additional revenues to the Town would be minimal. A full report regarding the funding alternatives is attached as Exhibit Al. Attached as Exhibit A2 is a copy of the January 17, 1990, Staff Report regarding the distribution of costs of the recycling program to households depending on the number of cans collected. Staff did not recommend this approach as there is not necessarily a correlation between the number of cans collected and whether or not households recycle. Both Staff and Council have received a number of calls from residents regarding the $0.82 fee. The vast majority of callers have been households with limited incomes who already recycle and have only one or two cans of garbage. Although the cost could be spread among all residents according to the volume of refuse collected at their homes, the fee becomes excessive to residents with three, four or five -can service as the bulk of residents receive one and two -can service. Instead of spreading the cost of recycling services, Staff recommends that variable fee rates for garbage collection be continued. Through this alternative, residents pay only for what they dispose of. This provides incentive to reduce refuse by reducing waste, reusing materials, and recycling. Residents are essentially rewarded for recycling. Through continuance of the variable can rates, the Town will be better able to meet the primary economic objective of diverting waste from the landfill. In previous reports, staff has recommended unlimited refuse collection services. This recommendation was developed to meet resident's requests for the increased refuse service level provided through unlimited garbage collection. Although this would be a benefit to many households in the community, it has since been determined that those currently receiving one and two -can service do not wish to subsidize the service. Additionally, the possibility of lowering the number of cans paid for by a household is a primary financial incentive for participation in the curbside recycling program. Provision of unlimited refuse collection can be reviewed again when rates are reassessed next year. C. Summary of Staff Recommendation Regarding Recycling Rates Curbside recycling has general economic benefit to all households and businesses in the community primarily because it will extend the life of the landfill. This will allow us to keep rates as low as possible for as long as possible. It will also help us to meet State legislative requirements and avoid financial penalties. By implementing an overall increase, the cost is spread over the entire population served. As there is general benefit to all clients from the recycling program (diversion of refuse from the landfill, extended landfill, reduced financial impact), PAGE 5 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 this approach is fair and reasonable. The cost will be itemized only at Council's request. II. GARBAGE COLLECTION SERVICES A. Background and Program Description In 1983, the Town entered into a twenty-year contract with GVDC, Inc. for garbage collection. The long-term Agreement was negotiated in light of the Town's concern about having sufficient landfill space over the next two decades. The Agreement with GVDC guaranteed the Town access to the Guadalupe landfill for the length of the Agreement. B. Current Per -Can Refuse Collection System To encourage the long-term life of the landfill, Council established and maintained a per -can collection fee. It was important to begin to establish a "value" to refuse so that the commodity of the landfill would also be "valued." It was decided that unlimited collection rates were contrary to that goal. Volume -based rate structures also accomplish the following: - homeowners become aware of just how much garbage they generate; homeowners see how much recycling can help, and receive an immediate economic benefit for sorting recyclables from their trash; the trash hauler is able to charge each homeowner a fair price for the hauling and disposal of his/her trash. C. Illegal Dumping One criticism of volume -based rates is that they lead to increases in illegal dumping. However, the number of complaints received by GVDC about illegal dumping have been minimal. An average of about 13 drop-off boxes (DOB) customers, or 1.6 percent, register complaints on a monthly basis. Drop-off boxes are bins utilized for a limited period of time by customers to collect refuse materials. These are usually used at construction or remodel sites. Cost of rental includes drop-off and pick-up of the box and disposal fee. Town Staff has not noted significant illegal dumping of household garbage in Town receptacles, or on public or private property. D. Unlimited Refuse Collection System Among others, local communities which currently have unlimited can collection services include the City of San Jose and the other three West Valley Cities. Available data suggests that there is an increase in waste PAGE 6 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 collected and deposited at the landfill when unlimited garbage collection services are provided rather than a per -can rate. For example, according to staff representatives of the City of Saratoga, after converting from a per -can to unlimited can collection services early in 1983, the Cities experienced a substantial increase in garbage deposited at the landfill. They suggest that there was limited growth in the community to account for some, but not all, of this increased tonnage. Inversely, when cities convert from unlimited to per -can or other volume -based services, they have experienced both an increase in the amount of materials recycled and a reduction in the amount of waste deposited at the landfill. E. Pros and Cons of Unlimited Can Refuse Collection Services PROS - increased service level to residents meet the desire of residents to have unlimited service convenient to residents reduce number of trips residents need to make to the landfill site reduced cost for 28 percent of households; four percent of the customers experiencing an increase currently receive two -can service, 18 percent receive three -can service and the remaining six percent pay for collection of four or five cans (if $7.90/mo. curbside rate is adopted) CONS - increased costs for 72 percent of households; 30 percent receive one - can service and 42 percent receive two -can service. - potential increase in waste disposal at the landfill site attributed to our community - possible increase in rates over time due to increased cost of disposing more materials and landfill site potential removal of incentive to recycle and compost possible shortened length of landfill site F. Summary of staff recommendation regarding unlimited can service Staff recommends that the Council continue variable can service. Reducing the waste stream deposited at the landfill has long been an objective of PAGE 7 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 the Council. Provision of waste collection services on a per -can basis has helped in meeting this objective by charging customers incremental rates for each can of garbage collected. Although unlimited can service has often been requested by the community, evidence shows that less refuse is deposited at landfills in areas which have variable can rates. Continuance of variable can service is an essential financial incentive to households to recycle as it provides households the possibility of reducing their collection services through recycling or otherwise reducing and reusing refuse. Furthermore, since our last report, it has been determined that the need to provide financial incentives for recycling by maintaining the variable can service outweigh the public's desire for unlimited refuse collection. Staff will report back to Council on the tonnage disposed of at the landfill site on a semi-annual basis beginning September of this year. III. RATES A. Background Rates for refuse collection services are established following a rate review process that includes the review of Green Valley's revenue and expenditures by representatives of the Cities of Monte Sereno, Campbell, Saratoga and Town of Los Gatos. The Rate Review Committee meets independently and then together with representatives of Green Valley to discuss the cost and revenue of providing refuse collection services to our communities. Cost savings measures are also reviewed with the goal of reducing expenditures. As Council is aware, beginning in the early 1980's a census of the amount of refuse collected by Green Valley Disposal Company was conducted by an independent firm. The firm's task was to determine the total refuse collected and determine the refuse collected in each community. This census was conducted based on concerns of the Campbell and Los Gatos representatives that Saratoga and Monte Sereno may not have been paying for their fair share of the cost of refuse collection in their communities. As a result of that census, the proportionate share of refuse from each community was established and a policy was adopted that each community would establish a separate rate structure to collect enough revenue to support the cost of providing services in their community. By 1986, that policy was fully implemented by all the West Valley Cities mentioned above. As a result of that policy, Monte Sereno and Saratoga were required to raise their rates dramatically to cover costs. Campbell and Los Gatos, however, acquired a surplus of revenue over expenditures. Therefore, staff has not recommended a rate increase in Los Gatos since 1986 and a surplus of revenues over expenditures currently exists. In setting future rates, staff is proposing to utilize this surplus to normalize rates. That is, to set rates so that any potential rate increases in the future match the PAGE 8 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 rate of inflation and do not result in significant double-digit increases in the future. In reviewing the various rate proposals developed by staff, it is important to recognize that each alternative is developed with a goal of creating a total revenue stream in order to cover the cost of refuse collection in our community. Rates are then set to collect the desired amount of reve- nue. Any individual rate for a category of users, such as commercial versus residential, or curbside service versus service for cans 30 or more feet from the curb, can be adjusted up or down. Any adjustment, however, would have impact on the other categories of users in order to maintain the same desired total revenue for the entire community. Staff is suggesting a specific set of rates in the two alternatives pro- vided that Council may agree or disagree with philosophically. If there is a difference in approach, then staff direction should be provided and the Public Hearing be continued, limited to further discussion of rates. A more detailed memorandum discussing the analysis of rates is attached as Exhibit 4. B. Current Collection Rates Refuse collection rates were last increased in 1986. Rates are based on the distance from the curb that the cans are placed and the number of cans collected. Los Gatos per -can rates for homes within 0 to 5 feet of the curb are currently as follows: One can rate Two can rate Three can rate Four can rate Five can rate $ 4.20 per month 7.15 per month 10.15 per month 13.85 per month 17.90 per month When comparing garbage rates of other communities, it is important to recognize that they are based on the mix of residential and commercial properties in the community. Commercial properties have historically subsidized garbage rates, so that the more commercial properties in the community, the lower the garbage rates. San Jose, however, has a high percentage of commercial customers and a very large residential base. Rates can also be affected by the physical terrain of the community. More hilly terrain will result in more expensive rates than cities that have more flatland areas. C. Unlimited Can Collection Service Rates The Town's existing rate for two -can service (which reflects a large number PAGE 9 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 of household customers) is higher than San Jose's rate for unlimited service. San Jose currently charges $6.90 for unlimited service; this does not include costs for their curbside recycling program. For the four communities receiving service from GVDC, the rates are as follows: Campbell (high commercial base) $ 7.00/mo. unlimited at curb Saratoga (no commercial base) $14.30/mo. unlimited at curb Monte Sereno (no commercial base) $19.50/mo. unlimited at curb Los Gatos can also receive unlimited service from GVDC, if there is a policy decision to do so. The proposed rate for unlimited can collection service is $10.30/mo. for garbage collected at the curb. The fees for collection of refuse at a location other than the curb would continue to vary. It should also be noted that hard to serve areas will continue to be served on a volume -based basis. These customers comprise approximately six percent of the residents served. The following is a listing of the residential fees for unlimited can collection under Versions I & II: Unlimited; Curbside 0' - 5 Unlimited; 6' - 30' Unlimited; 31' - 130' 1 can; Senior Citizen; 0' - 5' 1 can; Senior Citizen; 5' - 30' 1 - 5 cans Walk/Drive over 130' UNLIMITED $10.30 $11.50 $12.85 $ 4.96 $ 5.43 $22.00 A variety of other options could be considered. The recommended rate structure, if unlimited refuse collection is chosen, is attached in Resolution form as Exhibit A6b. The next billing cycle during which an increase can become effective is May 1, 1990. Because an increase was not adopted to become effective November 1, 1989, as originally proposed, future increases may need to be slightly higher than originally estimated. Councilmember Carlson requested staff to provide the cost of garbage collection if it is unsubsidized by the commercial sector. The average cost per resident served is $12.36/mo. This is arrived at by dividing the total cost of providing services to the residential customers ($1,129,246) divided by the number of households (7,614) divided by twelve months. This figure does not include any subsidy from the commercial sector. PAGE 10 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 D. Recycling Costs A rate increase of $0.82 per household per month will be necessary to finance the Curbside Recycling Program. This has been included in the fees as reflected in the resolution. The cost will be itemized only at Council's specific request. E. Toter Program In July of 1988, GVDC tested an alternative type of trash receptacle in areas of Campbell and Saratoga. The program began in Los Gatos in May 1989. The container is a large molded plastic receptacle on wheels, commonly referred to as a "toter". The company assessed the feasibility and customer response to the containers by providing them to about 300 customers in both communities for a trial basis. The containers were put in use beginning in mid -June for six to ninety days, at no cost to the customer. Participation in the test was voluntary. If customers did not wish to use the large containers, they were asked to simply call GVDC to have the toters removed. Information was provided to the customers before the test, and a questionnaire was used after the test period to determine satisfaction and potential interest in using the containers on a wide scale. Based on the positive response in the two communities, GVDC made the service available to all residents receiving can refuse service in the West Valley cities. The toters have been distributed throughout the community, one route at a time. Before the toters were distributed, an informational letter was sent to all potential residents notifying them that they would be receiving a toter on a trial basis. If they did not wish to use the services, they were asked to call GVDC. When the toters were delivered, an informational packet was hung on the door knob. Mid -way through the trial period, they received a postcard stating that the client needed to notify GVDC if they did not wish to continue the service. If the client did not wish to receive services, but were billed, GVDC picked up the toter and revised the billing. The toters have a volume larger than three regular garbage cans. The fee for collection of the garbage contained in the toter is $10.15; the same cost as three -can service. An additional $2.00/month fee is charged for rental of the toter. Benefits of the large containers include: dispensing with multiple cans and bags at the curb; ease of moving, as the container is on wheels; lids are permanently attached; and, in the long term, if enough were put in use, a semi -automatic collection system would be possible which would eventually reduce costs. Rates for the toter program have been incorporated into the proposed Resolution. A notation has been made on the attachment to the Resolution PAGE 11 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 that the rate is noted, but approval is contingent upon further review. The Public Hearing to consider rate changes resulting from the implementation of the toter program was not held prior to its implementation, but deferred to be heard in conjunction with the Public Hearing regarding recycling. Since our last report, it has been determined that the program does fall under the Franchise Agreement. However, the Rate Review Committee has not yet reached consensus on the way to incorporate the program to the Town's and resident's best benefit. Staff will return with a full report in April. F. Summary of Staff Recommendation Regarding Rate Changes The variable can collection option provides resident's options. Customers may be motivated to reduce their household waste and recycle to obtain the less expensive rates. The proposed rates to be effective May 1, 1990, are attached as Exhibit A6a. Based on current estimates, another rate increase would not be necessary until August 1, 1991. Rate changes would be made to reflect costs based on the actual service collection option chosen by customers. Any potential rate changes required are currently scheduled to take place in August of each year; however, the Rate Review Committee is reviewing altering the review period. It is important to note that if unlimited service in any form is adopted by the Council, the Town may experience an increase in the volume of refuse collected within the Town. It will be impossible to accurately determine if that volume increase is actually due to increased refuse from our residents or simply that refuse previously hauled to the landfill by the homeowner or gardener is now being deposited curbside. A summary of the two rate structure alternatives provided within this report is attached as Exhibit 3. A resolution must be adopted to modify the rates and incorporate unlimited service. Staff recommends adoption of Resolution A6a. Exhibit A6b has been prepared should Council elect to choose unlimited refuse collection services. The Resolution reflects the rate for the toter program, but does not reflect Council's concurrence. The Rate Review Committee has not finalized rates for the program although it has been determined that the Franchise Fee does apply to the toter program. This issue will be pursued and enforced according to the Franchise Agreement. CONCLUSION: Staff recommends that Council adopt the draft resolution attached as Exhibit 6.c. To finance the curbside recycling program by charging each customer eligible for participation in the program (all households receiving "can" versus "bin" service) equally. This cost can be reflected separately in the bill or rolled into the refuse cost. PAGE 12 MEMO TO MAYOR AND TOWN COUNCIL WASTE MANAGEMENT INCLUDING RECYCLING AND RATES FOR COLLECTION MARCH 5, 1990 With regard to refuse collection services, adoption of this resolution will continue rates based on volume, rather than the unlimited option. Both the Recycling Program and the variable can service are necessary to help the Town to meet legislative requirements regarding solid waste management. In the long term, these services will also keep disposal service costs at a minimum. If Council prefers a rate solution other than those identified by Staff, it is requested that Council provide Staff with more direction with regard to another alternative and continue this portion of the Hearing, only. To assure timely commencement of the recycling program it is necessary for the Agreement with GVDC to be approved at this meeting. FISCAL IMPACT: If the staff recommendation is approved, the cost of the recycling program and refuse collection will continue to be borne by the households and businesses served. Similarly, the cost of curbside services will be paid by the households receiving the services. The recycling service, for the first three months of operation will be subsidized by the revenues received through the refuse collection program. A transfer of $22,475 from the program to the Recycling Program will offset the costs of services for February, March, and April. The resolution, if adopted, will take effect May 1, 1990. The fees for the Recycling Program and the new refuse rates will be charged beginning that quarter. EXHIBITS: A. Staff Report regarding waste management, including recycling and rates for collection. 1. Financing Alternatives - Memo from Rate Review Committee. 2 Council report dated January 17, 1990, regarding alternative rate structures to finance curbside recycling program, Phase I. 3. Summary table of alternative rate structures. 4. Memo regarding Refuse Collection Cost a. Los Gatos Rate Percent Projection b. Los Gatos Rate Percent Projection - Impact of San Jose Business Tax 5. Toter Program a. Letter of Description from GVDC 6. Draft Resolutions amending Refuse Collection Rates a. Volume -Based Service, including cost of recycling b. Unlimited can service, including recycling CSD05:A:\memos\wastmgmt