HomeMy WebLinkAboutAccept Rainbow Environmental Services' proposal for a Commer A)O)
City of Huntington Beach
I
File #: 18-151 MEETING DATE: 7/16/2018
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Travis K. Hopkins, PE, Director of Public Works
Subject:
Accept Rainbow Environmental Services' proposal for a Commercial Organic Waste Recycling
Program including a 2.18% Commercial Trash Rate Adjustment
Statement of Issue:
California's Mandatory Commercial Organics recycling law (AB 1826) requires businesses that
generate a specified amount of food and other organic waste material per week to arrange for
recycling service for that material. Currently there is no rate component in the commercial waste
disposal rates to accommodate this State mandated service. Rainbow Environmental Services
(Rainbow) is proposing an Organic Waste Recycling Program (Program) that includes a 2.18%
increase in all commercial trash collection rates effective September 1, 2018.
Financial Impact:
Commercial trash service is arranged, invoiced, and collected directly from the customer by Rainbow.
There is no direct expense to the city for this commercial organic waste program.
Recommended Action:
Accept Rainbow Environmental Services' proposal for Organic Waste Recycling program to comply
with AB 1826.
Alternative Action(s):
Do not accept Rainbow Environmental Services' proposal for the Organic Waste Recycling program.
Direct staff to proceed accordingly. This alternative will delay program implementation.
Analysis:
The State has identified decomposing organic wastes in California landfills as a significant source of
greenhouse gas emissions. Californians landfill more than 30 million tons of solid waste annually and
approximately 30% of that material is organic material that could be recycled through composting and
conversion to energy. As defined in the statute, organic waste includes food waste and food-soiled
paper waste along with more traditional compostable materials such as yard waste and landscape
trimming.
To reduce organic waste disposal and greenhouse gas emissions from landfills, the State legislature
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power 877'Leastar t.
File #: 18-151 MEETING DATE: 7/16/2018
enacted AB 1826 requiring collection and recycling of organic waste from businesses that meet
specific waste generation thresholds. The current commercial waste collection rates do not include a
component to provide the segregated collection and recycling of organics required by statute.
Implementation Timeline
Program implementation is in tiers based on the amount and type of waste that a business
generates. Rainbow's Program is inclusive of Tiers 1 and 2 with rates effective September 1, 2018.
Following is the state's implementation schedule for full compliance.
Tier 1 -- April 1, 2016: Businesses that generate 8 cubic yards or more of organic waste per
week shall recycle their organic waste. Affected businesses: 88 Current participation: 14
Tier 2 -- January 1, 2017: Businesses that generate 4 cubic yards or more of organic waste per
week shall recycle their organic waste. Projected businesses: 43
Tier 3 - January 1, 2019: Businesses that generate 4 cubic yards or more of solid waste (all trash
and organics) shall recycle their organic waste. Projected businesses: 1,570
Tier 4 - January 1, 2020: If there has not been a significant reduction in landfill organics to 50
percent of 2014 level, a business that generates 2 cubic yards or more of solid waste per week
will recycle their organic wastes. Enforcement of this tier is at the discretion of CalRecycle.
Proposed Program
Through an ongoing pilot program, Rainbow is providing food waste organics collection to some of
the businesses under the April 1, 2016 deadline. The proposed Program will enable Rainbow to
provide food waste organics recycling, outreach, and education to affected businesses to achieve
compliance through the first two Tier thresholds. Rainbow estimates its annual cost to provide
organics recycling service to Huntington Beach businesses through the January 1, 2019 threshold is
$632,566. The Program includes a 2.18% increase in all commercial trash rates and spreads the cost
across the entire commercial sector, regardless of whether the business produces organic waste or
meets the Tier 1 or Tier 2 threshold. The businesses that are within those thresholds and produce
organics will also pay for a separate organic waste recycling container at prices equal to the
container rates for regular trash.
The proposed Program creates a rate structure for organics recycling until January 1, 2019. On
January 1, 2019, businesses that generate 4 cubic yards of trash or more will be required to
participate. The introduction of additional organic waste, collection route efficiencies, and changing
markets for collected material will require Rainbow to propose another rate schedule reflecting the
costs for increased participation and potential savings from route efficiencies.
State Requirements
Commercial trash service is arranged and billed directly between the customer and Rainbow. The city
does not provide billing or collection services for commercial trash services. However, under AB
1826, the State is requiring cities to provide commercial organics program monitoring, enforcement,
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File #: 18-151 MEETING DATE: 7/16/2018
public education, and annual reporting to CalRecycle. Staff time will be required to provide these
functions, as well as an anticipated increase in customer inquiries. Not providing the Program will
expose the City to compliance orders and possible monetary penalties for non-compliance. The
maximum penalty provided in the statute is $10,000 per day.
Environmental Status:
The adjustment of commercial trash rates is statutorily exempt from the California Environmental
Quality Act ("CEQX) pursuant to CEQA Guidelines Section 15273, which exempts the
establishment, structuring, restructuring or approval of rates, tolls, fares, and other charges for the
purpose of meeting operating expenses..
Additionally, acceptance of Rainbow Environmental Service's commercial organic waste recycling
program would be exempt pursuant to CEQA Guidelines Section 15061(b)(3), which exempt projects
where it can be seen with certainty that there is no possibility that the activity in question may have a
significant effect on the environment.
Strategic Plan Goal:
Non-Applicable - Administrative Item
Attachment(s):
1 . Huntington Beach Tiers 1 and 2 AB 1826 Proposal and Rate Schedule
City of Huntington Beach Page 3 of 3 Printed on 7/11/2018
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"T�I REPUBLIC'
SERVICES
Weil handle it from here:
Required Revenue $ 632,566
Operating Assumptions
2,492 tons
11,076 yards
87 customers
AB 1826 Compliance - Commercial Sector Wide Rate Allocation
$ 632,566 Revenue Requirement
$ 208,526 MSW rate (food charged same as MSW)
$ 424,040 Amount to allocate to commercial & industrial sectors
$ 19,410,000 Annual Commercial + Industrial Revenue
2.18% AB 1826 Increase to Commercial and Rates�l�
Monthly Rate based on Collection Frequency Organics Container
Container Size 1X 2X 3X 4X 5X 6X Contamination
1 Cubic Yard Bin -
Refuse or Organics
(2) $ 83.23 $ 131.82 $ 166.48 $ 185.01 $ 217.41 $ 252.02 $ 100.00
64 Gallon Organics
Cart(2) $ 45.00 $ 90.00 $ 135.00 $ 180.00 $ 225.00 $ 270.00 $ 50.00
Footnotes:
(1)Commercial Sector Wide rate allocation of 2.18%applies to Commercial rates Only. Residential rates are not impacted.
(2) Rates herein provide for full compliance for AB 1826 Tiers 1 &2 through December 31, 2018. 5% Franchise Rate Included
880
Huntington Beach ♦ 2 AB 1826 Compliance Model
REPUBLIC'
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Revenue Requirement $ 632,566 100% Notes
Food Material Processing $ (236,750) -37.4% CORe Facility in Orange for Organics to Slurry to LA Co. Sanitation, Agromin - Chino
Service & Admin $ (267,567) -42.3% FTE Driver& FTE Helper w/benefits, Truck, Containers, Marketing, Outreach, Admin
Total AB 1826 Costs $ (504,317) -79.7%
Interest Expense $ (17,653) -2.8%
Income Tax $ (44,238) -7.0%
Net income $ 66,358 10.5%
881
AB 1826 MANDATORY ORGANICS RECYCLING
CITY OF HUNTINGTON BEACH R
SUBMITTED TO CITY ON 07/03/18 gy�V
REPUBLIC
i
seRvrces
2018 Rate Calculation
2018 Organics 5%
Refuse Base Sector Wide 2018 Refuse Franchise 2018 MRF
Rate Allocation Rate Fee Rate 2018 Rate
1 YARD
1 X PER WEEK $ 75.10 2.18% $ 76.74 $ 3.84 $ 2.66 $ 83.23
2 X PER WEEK $ 117.83 2.18% $ 120.40 $ 6.02 $ 5.40 $ 131.82
3 X PER WEEK $ 147.58 2.18% $ 150.80 $ 7.54 $ 8.14 $ 166.48
4 X PER WEEK $ 162.26 2.18% $ 165.80 $ 8.29 $ 10.92 $ 185.01
5 X PER WEEK $ 189.91 2.18% $ 194.05 $ 9.70 $ 13.66 $ 217.41
6 X PER WEEK $ 219.59 2.18% $ 224.38 $ 11.22 $ 16.42 $ 252.02
2 YARD
1 X PER WEEK $ 122.26 2.18% $ 124.93 $ 6.25 $ 4.70 $ 135.87
2 X PER WEEK $ 175.24 2.18% $ 179.06 $ 8.95 $ 9.22 $ 197.23
3 X PER WEEK $ 219.66 2.18% $ 224.45 $ 11.22 $ 14.98 $ 250.65
4 X PER WEEK $ 257.62 2.18% $ 263.24 $ 13.16 $ 20.04 $ 296.44
5 X PER WEEK $ 317.20 2.18% $ 324.11 $ 16.21 $ 25.04 $ 365.36
6 X PER WEEK $ 364.27 2.18% $ 372.21 $ 18.61 $ 30.08 $ 420.90
3 YARD
1 X PER WEEK $ 156.27 2.18% $ 159.68 $ 7.98 $ 4.71 $ 172.37
2 X PER WEEK $ 235.36 2.18% $ 240.49 $ 12.02 $ 10.50 $ 263.02
3 X PER WEEK $ 317.16 2.18% $ 324.07 $ 16.20 $ 20.54 $ 360.82
4 X PER WEEK $ 372.54 2.18% $ 380.66 $ 19.03 $ 30.14 $ 429.83
5 X PER WEEK $ 477.02 2.18% $ 487.42 $ 24.37 $ 37.68 $ 549.47
6 X PER WEEK $ 557.72 2.18% $ 569.88 $ 28.49 $ 45.22 $ 643.59
3 YARD COMPACTOR
1X PER WEEK $ 327.10 2.18% $ 334.23 $ 16.71 $ 350.94
2X PER WEEK $ 503.34 2.18% $ 514.31 $ 25.72 $ 540.03
3X PER WEEK $ 698.45 2.18% $ 713.68 $ 35.68 $ 749.36
4X PER WEEK $ 839.33 2.18% $ 857.63 $ 42.88 $ 900.51
5X PER WEEK $1,071.79 2.18% $ 1,095.16 $ 54.76 $ 11149.91
6X PER WEEK $ 1,256.84 2.18% $ 1,284.24 $ 64.21 $ 1,348.45
Organics 2018 5%
Sector Wide Refuse Franchise Calculated
2018 Rate Allocation Rate Fee 2018 Total
40 Yd DOB(4) $ 499.26 2.18% $ 510.14 $ 24.96 $ 535.11
8 Yd DOB(4)Lowboy $ 544.09 2.18% $ 555.95 $ 27.20 $ 583.16
RAB-Weekday $ 64.19 2.18% $ 65.59 $ 3.21 $ 68.80
RAB-Weekend $ 79.47 2.18% $ 81.20 $ 3.97 $ 85.18
40 Yd Compactor(8)Tons $ 632.02 2.18% $ 645.80 $ 31.60 $ 677.40
40 Yd Compactor Haul plus Disposal $ 168.06 2.18% $ 171.72 $ 8.40 $ 180.13 plus disposal of$56.92 per ton
40 Yd Compactor Recycling,Haul Only $ 168.06 2.18% $ 171.72 $ 8.40 $ 180.13 no disposal
Dry Run Roil Off $ 76.40 2.18% $ 78.07 $ 3.82 $ 81.89
Overweight $ 60.09 2.18% $ 61.40 $ 3.00 $ 64.40 per ton
Extra Yardage $ 45.85 2.18% $ 46.85 $ 2.29 $ 49.14
Steam Clean/Deodorize Compactor $ 127.36 2.18% $ 130.14 $ 6.37 $ 136.50
Recycle Contamination $ 45.85 2.18% $ 46.85 $ 2.29 $ 49.14
882
AB 1826 MANDATORY ORGANICS RECYCLING
CITY OF HUNTINGTON BEACH
SUBMITTED TO CITY ON 07/03/18 ��
REPUBLIC
SERVICES
SOURCE SEPARATED RECYCLING MIXED WASTE PROCESSING
STATE STATE
RECYCLING 5%FRAN RECYCLING 5%FRAN
SERVICE LEVELS BASE RATE FEE FEE RATE SERVICE LEVELS BASE RATE FEE FEE RATE
3 YARD 3 YARD
1 X PER WEEK $ 135.73 $ $ 6.79 $ 142.51 1 X PER WEEK $ 159.68 $ 4.71 $ 7.98 $ 172.37
2 X PER WEEK $ 204.42 $ $ 10.22 $ 214.64 2 X PER WEEK $ 240.49 $ 10.50 $ 12.02 $ 263.02
3 X PER WEEK $ 275.46 $ $ 13.77 $ 289.24 3 X PER WEEK $ 324.07 $ 20.54 $ 16.20 $ 360.82
4 X PER WEEK $ 323.56 $ $ 16.18 $ 339.74 4 X PER WEEK $ 380.66 $ 30.14 $ 19.03 $ 429.83
5 X PER WEEK $ 414.31 $ $ 20.72 $ 435.02 5 X PER WEEK $ 487.42 $ 37.68 $ 24.37 $ 549.47
6 X PER WEEK $ 484.40 $ $ 24.22 $ 508.62 6 X PER WEEK $ 569.88 $ 45.22 $ 28.49 $ 643.59
2 YARD 2 YARD
1 X PER WEEK $ 106.19 $ $ 5.31 $ 111.50 1 X PER WEEK $ 124.93 $ 4.70 $ 6.25 $ 135.87
2 X PER WEEK $ 152.20 $ $ 7.61 $ 159.81 2 X PER WEEK $ 179.06 $ 9.22 $ 8.95 $ 197.23
3 X PER WEEK $ 190.78 $ $ 9.54 $ 200.32 3 X PER WEEK $ 224.45 $ 14.98 $ 11.22 $ 250.65
4 X PER WEEK $ 223.75 $ $ 11.19 $ 234.94 4 X PER WEEK $ 263.24 $ 20.04 $ 13.16 $ 296.44
5 X PER WEEK $ 275.50 $ $ 13.77 $ 289.27 5 X PER WEEK $ 324.11 $ 25.04 $ 16.21 $ 365.36
6 X PER WEEK $ 316.38 $ $ 15.82 $ 332.20 6 X PER WEEK $ 372.21 $ 30.08 $ 18.61 $ 420.90
1 YARD 1 YARD
1 X PER WEEK $ 65.23 $ $ 3.26 $ 68.49 1 X PER WEEK $ 76.74 $ 2.66 $ 3.84 $ 83.23
2 X PER WEEK $ 102.34 $ $ 5.12 $ 107.46 2 X PER WEEK $ 120.40 $ 5.40 $ 6.02 $ 131.82
3 X PER WEEK $ 128.18 $ $ 6.41 $ 134.59 3 X PER WEEK $ 150.80 $ 8.14 $ 7.54 $ 166.48
4 X PER WEEK $ 140.93 $ $ 7.05 $ 147.97 4 X PER WEEK $ 165.80 $ 10.92 $ 8.29 $ 185.01
5 X PER WEEK $ 164.94 $ $ 8.25 $ 173.19 5 X PER WEEK $ 194.05 $ 13.66 $ 9.70 $ 217.41
6 X PER WEEK $ 190.72 $ $ 9.54 $ 200.26 6 X PER WEEK $ 224.38 $ 16.42 $ 11.22 $ 252.02
160 GALLON
1X PER WEEK $ 51.38 $ $ 2.57 $ 53.94 ORGANICS PROCESSING
5%FRAN
2X PER WEEK $ 80.35 $ $ 4.02 $ 84.37 SERVICE LEVELS BASE RATE FEE RATE
3X PER WEEK $ 100.65 $ $ 5.03 $ 105.68 1 YARD
4X PER WEEK $ 110.66 $ $ 5.53 $ 116.19 1 X PER WEEK $ 79.40 $ $ 3.84 $ 83.23
5X PER WEEK $ 129.51 $ $ 6.48 $ 135.99 2 X PER WEEK $ 125.80 $ $ 6.02 $ 131.82
6X PER WEEK $ 149.761 $ $ 7.49 $ 157.24 3 X PER WEEK $ 158.94 $ $ 7.54 $ 166.48
95 GALLON 4 X PER WEEK $ 176.72 $ $ 8.29 $ 185.61
1X PER WEEK $ 32.05 $ $ 1.60 $ 33.66 5 X PER WEEK $ 207.71 $ $ 9.70 $ 217.41
2X PER WEEK $ 50.22 $ $ 2.51 $ 52.73 6 X PER WEEK $ 240.80 $ $ 11.22 $ 252.02
3X PER WEEK $ 62.90 $ $ 3.15 $ 66.05 CONTAMINATION I $ 100.00
4X PER WEEK $ 69.17 $ $ 3.46 $ 72.62 65 GALLON
5X PER WEEK $ 80.95 $ $ 4.05 $ 84.99 1 X PER WEEK $ 42.86 $ $ 2.14 $ 45.00
6X PER WEEK $ 93.60 $ $ 4.68 $ 98.28 2 X PER WEEK $ 85.71 $ $ 4.29 $ 90.00
65 GALLON 3 X PER WEEK $ 128.57 $ $ 6.43 $ 135.00
1X PER WEEK $ 22.42 $ $ 1.12 $ 23.54 4 X PER WEEK $ 171.43 $ $ 8.57 $ 180.00
2X PER WEEK $ 35.16 $ $ 1.76 $ 36.92 5 X PER WEEK $ 214.29 $ $ 10.71 $ 225.00
3X PER WEEK $ 44.04 $ $ 2.20 $ 46.24 16 X PER WEEK $ 257.14 $ $ 12.86 $ 270.00
4X PER WEEK $ 48.41 $ $ 2.42 $ 50.83 CONTAMINATION $ 47.62 $ 2.38 $ 50.00
5X PER WEEK $ 56.67 $ $ 2.83 $ 59.50
6X PER WEEK $ 65.52 $ $ 3.28 $ 68.79
883
1 '
Mandatory
Commercial Organics
Recycling
Background
The State has identified organic waste in California landfills as a
significant source of methane, a greenhouse gas
Statewide, approximately 10 million tons of organic waste is landfilled
annually- materials that could otherwise be composted or converted
to energy for generating electricity
AB 1826 was enacted in 2014 and became effective in 2016
Mandatory commercial organics recycling
Defines organics to include food waste and food-soiled paper waste, plus
landscape materials and wood
•
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1
AB 1826 Requirements
Affected businesses are required to separate and recycle their
organic waste
Cities are required to have a program by which businesses can
recycle organics.
Identify affected businesses
Provide education and outreach
Monitor compliance
Report annually to CalRecycle
Rainbow Proposed Program
Commercial trash and recycling services are arranged, invoiced
and collected directly between customer and Rainbow
Environmental/Republic Services
At the July 2 study session, Rainbow staff provided an overview of
the Organics Collection Program they are proposing for Huntington
Beach businesses
Organics collection and recycling services include:
Food donation through Waste Not OC organization
Green waste collection for processing by Composting
Food waste collection for processing by Biogas to Energy
Current commercial solid waste collection rates do not include a
component to provide the segregated collection and recycling of
organics
Rainbow Proposed Program
► Rainbow is proposing a 2.18% rate increase in order to provide
organics collection and recycling services at rates equal to the rates
for commercial solid waste
Rainbow's cost to provide program is$632,566
This proposal is for Tiers 1 and 2 until January 1, 2019
Includes savings through shared routing with City of Fountain Valley.
Effective September 1, 2018
Additive rate adjustment to cover AB1826 Tier 3 Implementation is
anticipated to come forward in the next six month to twelve months.
Rainbow Proposed Program
The rate increase will apply across the entire commercial sector,
regardless of whether a business produces organics waste or meets
the Tier 1 and 2 thresholds
Businesses that meet the thresholds will also pay for a separate
organics recycling container in addition to the regular container
Equal rates will help to ensure maximum participation by the
affected businesses
1 '
Rainbow Proposed Program
To help ensure program success Rainbow's proposal includes
On site waste audits to confirm organics generation
Educational outreach materials
Training, support and guidance for their customers on how to implement
organics separation and recycling
Rainbow estimates that Tier 1 and Tier 2 implementation affects
approximately 130 businesses
Tier 1 -businesses that generate >8 cubic yards of organics
Tier 2-generate > 4 cubic yards of organics
Based on preliminary field audits and ongoing pilot collections program
Rainbow Proposed Program
Source-separated food waste collected under this program will be
transported directly to processing facilities—not to Huntington
Beach MRF
CORe facility in Orange, CA
Agromin in Chino, CA
Rainbow has already invested in partnerships and equipment to
provide the necessary offsite processing capacity
Additional investments will include dedicated trucks, specialized
containers, route staff, and outreach services
1
Rainbow Proposed Program
2018 AB 1826 Compliant Proposed Rates Comparison
1 YARD BIN PER MONTH
PROPOSED AB 1826 PROPOSED
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Summary
► State law requires certain businesses to recycle organic waste
► The commercial trash service is arranged and billed directly between
customer and Rainbow, and the city does not provide any of the billing
or collection services
► Under AB 1826 the city is required to have an organics recycling
program and to provide monitoring, education and annual reporting
Rainbow has proposed an AB 1826 compliant Organics Recycling
Program that includes a 2.18% rate increase across the commercial
sector
Not providing a program could expose the city to state compliance
orders and possible monetary penalties
QU2StIOnS2