HomeMy WebLinkAbout1/21/2025 Item 6b, Floyd and Buckingham - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: January 21, 2025
TO: Mayor and Council
FROM: Aaron Floyd, Utilities Director
PREPARED BY: Meg Buckingham, Solid Waste and Recycling Program Manager
VIA: Whitney McDonald, City Manager
SUBJECT: ITEM 6b - NOTICE OF INTENT TO RESTATE THE SOLID WASTE,
RECYCLING, AND ORGANICS FRANCHISE AGREEMENTS AND
REVIEW THE PROPOSED 2025 SOLID WASTE RATES
Staff received the following questions, regarding the proposed adjustment to integrated
solid waste rates. The questions are below with staff’s response shown in italics:
1) On page 431 of the packet, it says, “The rate adjustment for Jan 1, 2026 is
not expected to exceed 8% and rate adjustment for Jan 1, 2027, 2028 and
2029 are not expected to exceed 7%.” Can you explain in greater detail the
“not to exceed” rate of 8% for 2026? (Especially as it relates to the current
2025 increase of 7.98%.)
During rate adjustment negotiations, the garbage company expressed concerns
that implementing commercial bin recycling charges in 2025 could lead to
significant downsizing of customer container sizes as a means to offset the new
costs. City staff committed to meeting with the garbage company a few months
after the proposed changes would take effect to assess the impacts. If the revenue
loss proves substantial, the City may agree to allow the garbage company to
conduct a revenue reconciliation exercise for the January 1, 2026, rate adjustment.
The eight percent calculation is not a projection but rather a parameter if all rate
adjustment factors meet their maximum level for the next rate adjustment. These
estimated factors assume a five percent increase tied to the capped Consumer
Price Index, a rise in the profit allowance from nine to ten percent, and a majority
of commercial customers enrolled in bin recycling downsizing their collection
services (60 percent of customers downsizing was used for calculation purposes).
Similar calculations were completed for the interim years 2027, 2028, and 2029,
with rate adjustments not exceeding seven percent if all maximum metrics are
realized.
Having adequate trash, recycling, and organics services is mandated on a state
and local level to protect public health and safety. To support compliance, the
garbage company will partner with the City to ensure that downsizing requests are
justified based on actual waste generation.