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    26.    
City Council Regular
Meeting Date: 02/14/2017  

SUBJECT:
PROPOSED SOLID WASTE RATE INCREASES
RECOMMENDATION:
  1. Approve an appropriation budget amendment in the amount of $28,300 from the General Fund Unreserved Fund Balance to the City Manager’s Department Contract Services budget. 
  2. Direct staff to administer the Proposition 218 majority ballot process and send out notice of the proposed increases and protest ballots to all property owners and current customers of solid waste services in accordance with Resolution No. 2015R-43.
  3. Set a Public Hearing on May 9 2017, for the City Council’s consideration of the proposed solid waste rate increases.
BACKGROUND/ANALYSIS:
Rate Adjustments
 
Solid Waste
 
Republic Services Inc. is the sole and exclusive provider of collection, transportation, recycling, composting, and disposal of residential and commercial solid waste services in the City of Chino Hills.  Agreements for Residential and Commercial solid waste services between Republic Services and the City establish collection rights, service levels, and waste collection rates through January 31, 2021. 
 
The waste collection rates charged to residential and commercial customers are comprised of a disposal component rate and a service component rate.  These rates can be adjusted annually.  Pursuant to the agreement, the disposal component rate is adjusted commensurately with the actual cost of disposal that Republic Services reasonably anticipates for the year.  However, the rate cannot increase more than the cumulative percentage rate of the consumer price index for Los Angeles – Long Beach all urban consumers.  The service component rate may be increased up to the 80% of the annual percentage change in the April-to-April Producers Price Index for Finished Goods and shall not increase more than 7% per year.
 
Proposition 218
 
In addition to the solid waste collection rate provision established in the Residential and Commercial agreements, the City’s ability to adjust rates is governed by Proposition 218.  In November 1996, the California electorate approved Proposition 218 that requires certain procedures be followed with regard to “property-related” fee increases imposed by governmental agencies.  It requires that any agency imposing or increasing any property-related fee or charge must provide written notice to the affected property owner of record.  Proposition 218 establishes that solid waste rate increases are subject to a “majority protest” process that provides that if a majority of the parcels in the City protest the proposed rate increase, the City cannot impose the increase. 
 
The City has received questions and comments in prior years, regarding the majority protest process.  This specific process was included in Proposition 218 which was approved as an Amendment to the California Constitution by the California electorate in 1995.  This is not a process that was developed by the City.  The majority protest process is part of the California Constitution, and it is mandatory that the City adhere to this voter enacted process.
 
In compliance with Proposition 218 requirements, a Notice to Parcel Owners of a Proposed Water and Solid Waste Rate Increases and Notice of a Public Hearing was set for May 10, 2011.  The notice included a proposed schedule of rate adjustments and a Protest Ballot.  Additionally, to the extent a tenant rather than a property owner was the customer, a notice was sent to the tenant utilizing the water billing and/or trash billing address that the City had on file.  Upon conclusion of the Public Hearing the majority protest threshold was not met, allowing for the approval of the ordinance establishing rates for five years, expiring June 2016.
 
In May of 2016, the City received a request from Republic Services for a rate adjustment for both the Residential and Commercial Agreements.  The requested increases were in accordance with the provisions of the residential and commercial solid waste agreements.  Unfortunately, the City was unable to pass the rate increase through to customers due to the June 30, 2016 expiration of the Proposition 218 authorization established for refuse collection in May of 2011.  The City has absorbed the increases until new rates can be established via the Proposition 218 process.
 
Initially, the City evaluated the feasibility of conducting a Proposition 218 majority protest process to establish water, sewer, and solid waste rates.  However, additional analysis is needed for water and sewer rates, thus staff is proposing to send protest ballots for solid waste only.  Therefore staff proposes that the City conduct a Proposition 218 majority protest process for solid waste rates in accordance with the procedures established by Resolution No. 2015R-43.
 
Professional Services
 
To assist staff in conducting a Proposition 218 majority protest process, the staff proposes to have the City Manager execute an agreement with Koppel & Gruber Public Finance (K & G) in an amount not to exceed $10,800.  K & G has assisted the City in previous Proposition 218 proceedings.  Staff determined that K & G continues to be the most qualified consulting firm to prepare and conduct the Proposition 218 proceedings.
 
The consulting fees do not include the mailing house cost for postage and printing.  Staff proposes to have the City Manager execute an agreement with Mailing Systems Inc. in an amount not to exceed $17,500.  The notice and ballot will be mailed to property owners and the tenant (where the tenant is the customer).  It is estimated that approximately 28,000 notices will be mailed.
 
Listed in the table below is the tentative timetable of proceedings:
February 14, 2017 Direct staff to administer the Proposition 218 process;
February 15 – March 23, 2017 Staff works with Consultant, City Attorney, printer and mail-house in preparation of ballots for mailing;
March 24, 2017 Mail ballots to residents;
March 25 – May 8, 2017 45 days requirement prior to election;
May 9, 2017 Public Hearing Date and Election Day; 1st Reading of Ordinance;
May 23, 2017 2nd Reading of Ordinance;
May 24 – June 22, 2017 30-Day requirement;
June 23, 2017 30-Day requirement ends;
July 1, 2017 Rates become effective.

 
ENVIRONMENTAL (CEQA) REVIEW:
This action is not a project within the meaning of the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., “CEQA”) and CEQA Guidelines (Title 14 California Code of Regulations §§ 15000, et seq.) Section 15378 and is therefore exempt from CEQA. Discussion of a possible ordinance will not result in any direct or indirect, physical change in the environment.
FISCAL IMPACT:
Decrease to General Fund Unreserved Fund Balance for professional services, consulting fees, printing and mailing house costs, in the amount of $28,300.
REVIEWED BY OTHERS:
The City Attorney, City Clerk and the Finance Director have reviewed this item.
Attachments
Resolution No. 2015R-43

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