To: Honorable Mayor and Members of City Council
From: Joy Eldredge, Utilities Director
Prepared By: Kevin Miller, Materials Diversion Administrator
TITLE:
Title
Solid Waste and Recycling Collection Rates
LABEL
RECOMMENDED ACTION:
Recommendation
Adopt a resolution establishing rates for collection of municipal solid waste, recyclable materials and compostables, with effective dates on July 1, 2025, January 1, 2026, January 1, 2027, January 1, 2028, and January 1, 2029.
Body
DISCUSSION:
BACKGROUND
The City’s Solid Waste and Recycling (SWR) Enterprise provides solid waste/recycling collection, operates the City’s Materials Diversion Facility (MDF), and manages state-mandated diversion requirements and programs. The SWR Fund consists of an annual budget of approximately $52.6 million (based on City’s Fiscal Year (FY)2025/26 proposed budget) to). Most services are provided through a contract with Napa Recycling and Waste Services, LLC (NRWS). Collection rates have historically been set annually based on contractual obligations, increased operating expenses, capital improvement needs, and revenue projections. The current collection rates were approved by the Napa City Council on July 23, 2019, became effective January 1, 2022, and have not been adjusted in the intervening three-and-half year period.
Solid waste and recycling collection is an essential service provided by the City. Collection rates are established to recover the cost of providing the service to the customer. The City’s Solid Waste & Recycling Division of the Utilities Department manages the expenditures and revenues of the SWR Enterprise to ensure that a high level of service is delivered at the most reasonable cost to customers. Costs typically increase each year based on inflation, contractual obligations, compliance with state laws and regulations as well as maintenance and operational requirements of the MDF. While revenues from collection rates are fairly stable each year, revenue from the sale of recyclable materials (16-21% of total SWR Fund revenue) is highly variable and is partially based on the volatile global commodity markets.
PROPOSED RATE ADJUSTMENTS
On April 15, 2025 (Agenda Item 16B) the City Council considered a comprehensive report concerning the status of the City’s Solid Waste Fund that included a projection of revenues, expenses and recommended proposed rate increases to be effective July 1, 2025, January 1, 2026, January 1, 2027, January 1, 2028, and January 1, 2029. A copy of that report (without attachments) is included as Attachment 2 to this staff report. The April 15th staff report and attachments to that report (including detail solid waste rate study, the Proposition 218 public notice and the PowerPoint presentation by staff to City Council on April 15, 2025) have been available for public review in the office of the City Clerk as well as online at www.cityofnapa.org/SolidWasteRates <http://www.cityofnapa.org/SolidWasteRates> since April 30, 2025. The April 15th Powerpoint presentation to the City Council is Attachment 3 and the full 291 page “Solid Waste & Recycling Collection Service Rate Study for 2025-2029” is included as Attachment 4. Both English and Spanish language translation of the Proposition 218 public notice and Frequently Asked Questions (FAQs) summary were added to both the online and hard copy files available for public review (see Attachments 5 and 6 for English versions of the rate notice and FAQs). In response to comments and direction from City Council members at the April 15th Council meeting, staff prepared a “FAQs, Tips and Best Practices for Businesses & Commercial Properties” that is Attachment 7 to this staff report. As identified in that report, staff recommended that the collection rates for solid waste and recycling service be increased as shown below:
PROPOSED MONTHLY RESIDENTIAL RATES FOR THE NEXT FIVE RATE YEARS
Monthly residential rates include weekly collection of solid waste (trash) and recyclable materials as well as compostable greenwaste, soiled paper, and food scraps.
|
Cart Size |
Current Rate Adopted 1/1/2022 |
Proposed Rate Effective 7/1/2025 |
Proposed Rate Effective 1/1/2026 |
Proposed Rate Effective 1/1/2027 |
Proposed Rate Effective 1/1/2028 |
Proposed Rate Effective 1/1/2029 |
Total Cumulative Change |
Average Monthly Change per Year |
|
20-gal |
$30.54 |
$34.20 |
$37.62 |
$40.63 |
$43.88 |
$46.51 |
$15.97 |
$3.19 |
|
35-gal |
$38.29 |
$42.88 |
$47.17 |
$50.94 |
$55.02 |
$58.32 |
$20.03 |
$4.01 |
|
65-gal |
$58.71 |
$65.76 |
$72.34 |
$78.13 |
$84.38 |
$89.44 |
$30.73 |
$6.15 |
|
95-gal |
$90.30 |
$101.14 |
$111.25 |
$120.15 |
$129.76 |
$137.55 |
$47.25 |
$9.45 |
On April 15, 2025, the City Council authorized staff to prepare and issue a notice of a public hearing to all rate payers and property owners of record on the maximum proposed solid waste rates to become effective July 1, 2025, January 1, 2026, January 1, 2027, January 1, 2028, and January 1, 2029. For commercial and roll-off box service customers, full rate tables were provided for existing and proposed rates effective July 1, 2025 (12% increase) with text describing proposed rates effective January 1, 2026 (10% increase), January 1, 2027 (8% increase), January 1, 2028 (8% increase) and January 1, 2029 (6% increase). As described in more detail in the April 15th staff report , an independent cost recovery study was conducted focused on commercials organics collection and aligning collection service rates for food scrap composting and yard trimmings collection service in response to requirements of SB 1383. Additionally, the Council authorized staff to schedule a June 17, 2025 public rate hearing to consider adoption of updated SWR collection rates.
Attachment 5 contains the rate notice that was mailed to all property owners and ratepayers on April 30, 2025. In accordance with Proposition 218 this mailing met the minimum 45-day public review period in advance of the scheduled public hearing on June 17, 2025, for adoption of the proposed rates.
PRIMARY DRIVERS OF PROPOSED RATES
As noted above, solid waste and recycling collection service rates were last increased in January 2022. Since that last rate adjustment, many significant changes have occurred and solid waste and recycling collection service rates (“Solid Waste Rates”) need to be adjusted to address the changes that directly impact the City’s ability to provide solid waste and recycling collection services to its customers. At current collection service rates, every $310,000 in additional costs is approximately 1% of collection service rate revenue. As described in detail in Attachment 2, the April 15, 2025 Staff Report, the three primary drivers for the proposed Solid Waste Rate adjustments are as follows:
• NRWS Contract and Impact of SB 1383 Compliance: approximately $2.8 million per year.
• Major Capital and System Improvements: annual debt service for the SWRB is slightly under $900,000 per year and an average annual need of $3.74 million per year to implement deferred capital projects.
• Dramatically Increased Fuel and Electricity Costs: a $1.07 million increase over the study period.
ADJUSTMENT TO RESIDENTIAL LOW/FIXED INCOME ASSISTANCE PROGRAM
The City’s low-income assistance program called “RateShare” utilizes the qualification criteria based on the established Pacific Gas & Electric (PG&E) California Alternate Rates for Energy (CARE) program. City staff is recommending that the program be increased from $10 to $15 per month ($180 per year) and be offered to 1,500 eligible households increased from the previous threshold of 1,250 households. Materials sales revenue is proposed to be used as the source of revenue for this new low-income assistance program at a level of $270,000 per year (1,500 households X $180 per year for qualifying residential customers).
SB1383-COMPLIANT COMMERCIAL ORGANICS RATE STRUCTURE
Since SB 1383 made the collection of the full spectrum of compostable organic waste mandatory, it was recognized that the “no charge” commercial yard trimmings service needs to be consolidated and merged with the current commercial food scraps collection service rates (currently 75% of commercial MSW collection rates. The results of an independent study are detailed in Attachment 2 to this staff report.
After extensive independent analysis (see Appendix P of Attachment 4 to this staff report), the recommended 5-year rates for commercial organics (see Appendix K of Attachment 4) are anticipated to achieve the optimal cost-recovery rates for SB 1383’s new mandatory collection requirements for commercial and multifamily customers. The recommended rates are anticipated to sufficiently cover the collection and processing costs of the commercial and multifamily food scraps and yard trimming services, while also incentivizing compliance with SB 1383’s mandatory requirements. The rates also incorporate increased costs to NRWS for operation impacts and equipment capitalization necessary to expand its food scraps and yard trimmings collection routes and processing at the MRF. It is anticipated that by the fifth year, commercial and multifamily customers will be able to co-collect their food scraps and yard trimmings into the same container, thereby reducing route collection costs at that time. Accordingly, staff recommends the new food scraps collection rates be reduced over time to 45% (or less) of MSW collection rate structure.
PROPOSTION 218 NOTICE AND PUBLIC OUTREACH
As noted above, at the April 15, 2025, meeting, the City Council directed staff to mail a notice to all NRWS customers and to all City property owners listing the proposed new collection rates and to agendize the public hearing to consider adoption of the proposed changes to collection rates for this June 17, 2025 meeting. The proposed collection rates for 2025, 2026, 2027, 2028 and 2029 are included in the Resolution in Attachment 1. A copy of the notice is included in Attachment 5. The notice was posted on the City’s web site along with the related staff presentation, staff report and attachment materials presented at the April 15th City Council meeting (see Attachments 2, 3 and 4).
In addition, staff took the following actions since April 15th:
• FAQs - Prepared a general Frequently Asked Questions (“FAQs”) document on the proposed SWR collection rates. This was posted online April 29th and can be viewed at: •FAQs Utilities - Solid Waste Rates (English) <https://www.cityofnapa.org/Faq.aspx?TID=55>
• Commercial Tips - Prepared an FAQs, Tips & Best Practices for Businesses & Commercial Properties aimed at City (NRWS) commercial accounts. This tip sheet can be viewed at: Commercial-FAQs-Tips--Best-Practices---English-PDF <https://www.cityofnapa.org/DocumentCenter/View/14389/Commercial-FAQs-Tips--Best-Practices---English-PDF>
• Chamber of Commerce - Reached out to the Napa Chamber of Commerce and gave a presentation to their Government Affairs committee on June 4, 2025. The presentation utilized the two above documents and the Chamber of Commerce plans to distribute the best practices sheet to its members as a part of its upcoming newsletter.
• Napa Taxpayers Group - Reached out to the Napa Taxpayers Group and gave a presentation (and answered questions) at their board meeting on May 14, 2025.
• Spanish Language Information/Outreach - In addition to providing a Spanish version of the Proposition 218 notice (available at CIUDAD DE NAPA <https://www.cityofnapa.org/DocumentCenter/View/14283/Solid-Waste-and-Recycling-Rates-Notice---Spanish-PDF> ), the FAQs ( •FAQs Utilities - Solid Waste Rates (Spanish) <https://www.cityofnapa.org/Faq.aspx?TID=78>) and Commercial Tips (Commercial-FAQs-Tips--Best-Practices---Spanish-PDF <https://www.cityofnapa.org/DocumentCenter/View/14388/Commercial-FAQs-Tips--Best-Practices---Spanish-PDF>) noted above. The information was sent to the Hispanic Chamber of Commerce. The Spanish Proposition 218 notice and general FAQs were distributed in hard copy form to 13 Spanish-speaking locations throughout Napa and the NRWS payment center on Lincoln Avenue.
As of June 11, 2025, the City has received 258 valid written rate comments and/or rate protests concerning the proposed rates. If any comments and/or protests are received either prior to or at the June 17, 2025, public hearing, the City Clerk will update this total for consideration by City Council.
COMPLIANCE WITH CEQA AND PROPOSITION 218 UTILITY RATES
Attachment 1 to this report (Resolution establishing solid waste and recycling collection rates for July 2025 through December 2029) includes a very detailed and thorough discussion of both applicable California Environmental Quality Act provisions and proposition 218 refuse collection rate compliance.
STAFF RECOMMENDATION
Staff recommends adoption of the proposed rates as shown in Attachment 1 to cover the base contractual and programmatic obligations of the SWR Fund. While the proposed rates would use some reserve funds in the initial years, they will also provide replenishment of SWR reserves in later years and reestablish a SWR rate stabilization reserve account by the fifth rate-year (City FY2029/30). By City FY2029/30, the SWR rate stabilization reserve account is projected to total approximately $6.8 million which would be approximately 10.5% of the overall SWR Fund revenue for that City FY (projected at $64.8 million in the rate study). As described in the rate study, replenishing the SWR rate stabilization reserve allows the City to weather the storm of volatile materials sales revenue (which has varied as much as 121% in the past ten calendar years).
FINANCIAL IMPACTS:
The proposed rates will not generate revenues in excess of funds required to provide the services listed and reflect the cost of providing these services. The proposed budget (with no rate adjustment assumed) shows a $5.2M deficit in FY2025/26 and $5.7M in FY2026/27 (which would exhaust all SWR Fund reserves under the proposed SWR Fund City budget). The proposed rates are necessary to address this deficit position and establish a rate stabilization fund to withstand volatility in the material sales market. To cover costs as described above, the proposed collection service rates are projected to generate $5,456,176 in additional collection service revenue for FY2025/26 as compared to FY2024/25, $3,263,785 in additional revenue for FY2026/27 as compared to FY2025/26, $2,986,405 in additional revenue for FY2028/29 as compared to FY2027/28, and $1,335,863 in additional revenue for FY2029/30 as compared to FY2028/29.
Total SWR Fund reserves were $4,459,531 at the end of FY2023/24 ($3,571,579 in operating reserve, $537,952 in capital project reserve, $0 in rate stabilization reserve and $350,000 in liability/emergency reserve). Under proposed rate adjustments, total SWR Fund reserves are projected to be replenished. The detailed discussion on projected reserve balances is contained in sections 4.3 and 5.3 of the rate study (contained in Attachment 4 to this staff report).
If the proposed solid waste and collection rates are adopted by Council, staff will include a mid-year adjustment to City’s FY2025/26 budget to revenues and expenditures for collection service and the enhanced low/fixed income assistance program.
CEQA:
The Utilities Director has determined that the Recommended Action described in this Agenda Report is not subject to CEQA, pursuant to CEQA Guidelines Section 15378 and 15273 and Public Resources Code Section 21080(b)(8) because (1) the increase in charges are for the purpose of meeting operational and maintenance expenses of solid waste services; and (2) the charges constitute the creation of a funding mechanism/other government fiscal activity that does not involve any commitment to any specific project that may result in a potentially significant physical impacts on the environment.
DOCUMENTS ATTACHED:
ATCH 1 - Resolution Establishing Solid Waste and Recycling Collection Rates to become Effective July 1, 2025, January 1, 2026, January 1, 2027, January 1, 2028, and January 1, 2029
EX A - 2025 Rate Tables
EX B - 2026 Rate Tables
EX C - 2027 Rate Tables
EX D - 2028 Rate Tables
EX E - 2029 Rate Tables
EX F - SWR Fund Reserve Policy
ATCH 2 - Staff report for Agenda Item 16B from 4-15-25 City Council Meeting
ATCH 3 - PPT presentation on Proposed Rates from 4-15-25 City Council Meeting
ATCH 4 - Solid Waste & Recycling Collection Service Rate Study for 2025-2029
ATCH 5 - Proposition 218 Notice for Proposed SWR Rates (mailed 4-30-2025)
ATCH 6 - Frequently Asked Questions (FAQs) for Proposed SWR Rates
ATCH 7 - FAQs, Tips & Best Practices for Businesses & Commercial Properties
NOTIFICATION:
Greg Kelley, General Manager, Napa Recycling & Waste Services (courtesy copy)
Mike Murray, CFO, Napa Recycling & Waste Services (courtesy copy)
Steve Lederer, Napa County Public Works Director (courtesy copy)
Peter Ex, Napa County Local Enforcement Agency (courtesy copy)