TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Erick Lee, Public Works Director
Jeff Page, Utilities Manager
Anna Luke-Jones, Solid Waste Administrator
SUBJECT:Title
Conduct Public Hearing to Consider Adopting New Refuse Rates for Residential and Commercial Solid Waste Collection Services, Effective July 1, 2025, Through June 30, 2030 (Potential Budget Impact) (Public Works Lee).
(Estimated Time: 30 Mins.)
A) CONDUCT PUBLIC HEARING
B) ANNOUNCE PROTESTS
C) ADOPT RESOLUTION NO. 25-0050
Body
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RECOMMENDATION:
Staff recommends that the City Council:
A) Conduct a public hearing to consider adopting new residential and commercial solid waste collection service rates, effective July 1, 2025;
B) Consider the Proposition 218 protest ballots submitted to the City Clerk by the close of the public hearing; and
C) Consider adopting the attached Resolution No. 25-0050 adopting the annual proposed rate increases from July 1, 2025 through June 30, 2030.
FISCAL IMPLICATIONS:
There is a possible fiscal implication with this report, depending on the number of Proposition 218 protests received by solid waste rate payers during the 45-day protest period. If at least 50% + 1 of the parcels protested the potential rates, City Council cannot adopt the rates, and the City must pay the difference in rates from the General Fund. If less than 50% + 1 of the parcels protested the potential rates, City Council may adopt the rates, which get passed on to the customer.
Potential Rate Changes if Protest Requirement Not Reached
Residential and commercial solid waste hauling fees (rates) are fully paid by the customers receiving refuse service. The City also receives a City Recovery Cost (CRC) for the administration and oversight of the program and solid waste contractor. There are three factors that determine the rates presented in the Proposition 218 process: the Consumer Price Index (CPI) increase to base service rates, the special rate adjustment approved by City Council at its December 3, 2025 meeting, and the City Recovery Cost that is calculated annually. The three factors are summarized as follows:
1. CPI increase for FY25-26 is 4.4% for all Waste Management (WM) services.
2. Special one-time adjustment includes a 2.51% increase for residential single-family and multifamily cart customers and a 5.4% increase for multi-family bin customers, commercial businesses, and extra services.
3. City Recovery Cost for FY25-26 is 5% applied to WM services except temporary bin rentals and roll-off bins.
Based on the three factors above, the FY2025-2026 rates will increase over current rates by the following:
- 11.91% for single-family and multi-family cart customers (4.4% CPI + 2.51% special increase + 5% CRC)
- 14.8% for multi-family bin customers, commercial customers and extra services (4.4% CPI + 5.4% special increase + 5% CRC)
- 4.4% for temporary bin rentals and roll-off bins (4.4% CPI)
How Billing Sectors are Determined
It is important to clarify how billing sectors are determined to ensure proper communication of exactly how each sector will be impacted by the special adjustment increase.
Single-family billing
Single-family residential accounts are identified by a dedicated water meter for the residence. While a complex of townhomes may appear to be a multi-family complex, if each townhome has its own dedicated water meter, the townhomes are billed as single-family residential accounts. The residential customer rate is based on the size and quantity of their landfill carts. There is no itemized charge for recycling and organics carts. In 2015, City Council adopted citywide organics, and a one-time rate adjustment was added to the landfill rate to compensate for the citywide program. In the current franchise agreement, which became effective July 1, 2020, WM includes costs for organics into the landfill rate.
Multi-family billing
Multi-family accounts are identified by a water meter accommodating more than one residence. In circumstances where two units appear to be single-family units, if the units share one water meter they are identified as multi-family. There is more than one billing structure for multi-family accounts.
The first billing structure a multi-family account may be assigned is a “multi-family cart” customer. Multi-family customers with two through nine units that utilize 100% carts (no cubic yard bins) for all material types (landfill, residential and organics) pay a flat rate based on the number of units.
The second billing structure a multi-family account may be assigned is a “commercial” customer. If a multi-family building has 10 or more units, it is billed as a “commercial” customer because, at that size, it will have cubic yard bin(s) for at least one material type for tenants to use. Also, if a multi- family building of any unit count obtains a commercial cubic yard bin for any of its material types, its billing status changes from a “multi-family cart” customer to a “commercial” customer. The reason for this change relates to its utilization of commercial services. For example, if a multi-family building with four units has landfill, recycling, and organics carts but chooses to replace the landfill carts for a three -cubic-yard commercial bin, that multi-family account changes their billing structure from the “multi- family cart” customer (flat rate based on number of units) to a “commercial” customer. “Commercial” customers are billed based on the size and collection frequency of the containers. Additionally, while residential collection is once per week for all residential accounts, commercial accounts create their own service schedule and can have service more than once per week.
Commercial billing
All business parcels are “commercial” customers. “Commercial” customers are billed based on the size and collection frequency of the landfill and recycling containers. Commercial accounts create their own service schedule and can have service more than once per week. “Commercial” customers can have carts, bins, or a mix of both. The cost of recycling carts and bins is 50% lower than the cost of landfill carts and bins of the same size. There is no itemized charge for commercial organics carts. As mentioned in the single-family billing section, in 2015, City Council adopted citywide organics, and a one-time rate adjustment was added to the landfill rate to compensate for the citywide program. In the current franchise agreement, WM includes their costs for organics in the landfill rate.
BACKGROUND:
The City has franchised its residential and commercial solid waste services with a private hauler since the early 1980s. The last Request for Proposal (RFP) process for solid waste hauler selection was awarded to WM in 2019, with an effective date of July 1, 2020. The franchise agreement is for seven fiscal years (FY) plus three one-year optional extension years, for a potential of 10 total years (July 1, 2020 through June 30, 2027 + optional FY2028 + optional FY2029 + optional FY2030).
Proposition 218 Background and Process
In November 1996, California voters passed Proposition 218, the “Right to Vote on Taxes Act,” and added Articles XIIIC and XIIID to the California Constitution. Article XIIID imposes substantive and procedural requirements to impose or increase property-related fees, such as the proposed refuse collection service charges. This constitutional amendment protects taxpayers by limiting the methods in which local governments can create or increase taxes, fees, and charges without taxpayer consent. Proposition 218 requires voter approval prior to any imposition or increase of general taxes, assessments, and certain user fees, including charges paid by rate payers for refuse services.
The City last went through the refuse Proposition 218 process in the spring of 2020. This process preceded the start of the franchise agreement with WM. On May 5, 2020, City Council held a Public Hearing to count all the protest votes received and adopted Resolution Nos. 20-0028 and 20-0029. The new rates went into effect July 1, 2020. The Proposition 218 vote is valid for five years. The City is currently in its fifth and final year of the approved solid waste Proposition 218 period. Therefore, the City is pursuing this Proposition 218 process again for the next five-year period that commences on July 1, 2025.
December 3, 2024 City Council Meeting
The request for a special rate adjustment was made by WM to City Council at their August 20, 2024 meeting. City Council directed staff to negotiate the terms and return to Council for consideration. At their meeting on December 3, 2024, the City Council adopted Resolution No. 24-0137, approving Amendment No. 2 to the franchise agreement with WM, allowing for a one-time special rate adjustment to be included with this Proposition 218 process.
Sectors where the 2.51% increase will apply:
- Residential single-family customers
- Multi-family cart customers (100% carts - landfill, recycling and organics; no use of commercial cubic yard bins)
Sectors where the 5.4% increase will apply:
- Multi-family customers who utilize commercial cubic yard bin(s)
- Commercial business customers (whether they use carts or cubic yard bins)
- Extra services as outlined in Exhibit 3 of the WM franchise agreement (for example, lock services for bins, commercial business bulky item pick-ups, emergency collection and disposal, etc.)
Sectors where the special adjustment increase does not apply:
- Temporary bin rentals
- Roll-off bins
March 18, 2025 City Council Meeting
The City Council initiated the Proposition 218 process and set the date of May 20, 2025 for the Public Hearing. The Proposition 218 notice and rate sheets was attached to the report for Council’s view.
DISCUSSION:
In order to pass along the proposed FY2026 rate increases to residential and commercial customers, including the proposed annual CPI increase for the following four years and the “special adjustment” approved by the City Council at their December 3, 2024 meeting, the City is required to undertake a Proposition 218 protest ballot process. This included setting a date for a public hearing to hear protests against the proposed rates and the CRC fee, and, assuming no majority protest, approving the new rates and CRC fee for implementation, effective July 1, 2025.
Process
The Proposition 218 process requires that the City mail a notice to each prospective rate payer identifying the proposed rate increases and conduct a public hearing to consider the rate increases at least forty-five days after the notices are mailed. At the public hearing, the City Council must consider all protests or objections to the proposed refuse collection service charge. At the conclusion of the public hearing, the City Council must receive the protests total from the City Clerk and then tabulate the written protests against the proposed refuse collection service charges and determine whether a majority protest exists. Unless protests are received from a majority of rate payers (50% + 1), the rates may be adopted by a majority vote of City Council at the public hearing.
A Proposition 218 notice was sent to all rate payers in the City of Manhattan Beach. To ensure transparency, staff also sent the notice to all occupants at the property address (if the owner is not the tenant). Although only the rate payer can submit a protest for the property, the notice was sent to occupants to notify them of potential rate changes.
If the Protest Threshold is Met
If the City receives a majority protest (50% + 1), it will not be able to impose the new rates on residential and commercial customers. Under such a scenario, the City would be required to subsidize the difference between the upcoming, new contractor rate and the previously approved customer rate. Note, however, that there are no time restrictions for when the City could initiate a new Proposition 218 process for the same solid waste hauling fees. Therefore, re-balloting could occur at any time should this procedure fail.
Timeline
The following timeline represents the Proposition 218 process schedule for proposing to adopt new solid waste hauling fees, effective July 1, 2025:
March 18, 2025
City Council adopted a resolution to begin Proposition 218 protest ballot process for voters to either approve or reject the five-year schedule of solid waste hauling fee increases.
March 28, 2025
Proposition 218 postmark date for mailing notices to property owners.
April 3, 2025
Community meeting provided businesses and residents an opportunity to further review the proposed rate increases and ask any questions they may have.
May 20, 2025
City Council conducts a public hearing to count all Proposition 218 protest votes received and considers whether to adopt a resolution approving a five-year schedule of rate increases for refuse services, beginning July 1, 2025.
July 1, 2025
(If resolution adopted) Effective date of new rates.
PUBLIC OUTREACH:
Public outreach was performed in multiple ways:
This Proposition 218 process was mentioned in the August 20, 2024 and December 3, 2024 staff reports regarding WM’s request for a special adjustment.
Community Meeting
A hybrid (in-person and Zoom) Community Meeting was held during the 45-day protest period on Thursday, April 2, 2025 at 6:00 PM in the City Council Chambers. Solid Waste Administrator Anna Luke-Jones gave a presentation, and Public Works Director Erick Lee provided comments. Members of the Waste Management team were in attendance to assist with any questions about their service. The meeting was advertised in a print ad in The Beach Reporter on March 27, 2025 and April 3, 2025, and on the City’s website and calendar, and in an e-notification.
The Beach Reporter Print Ads
In addition to the required Proposition 218 notice to all property owners, the City printed five 5 x 7 ads in The Beach Reporter on March 27th, April 3rd, April 10th, April 17th, and April 24th. Three Public Hearing Notices were published on May 1st, May 8th and May 15th. Ads reminded residents to read their notices and submit their Proposition 218 protest ballots, attend the community meeting on April 3rd and attend the Public Hearing taking place May 20th.
www.beachreporter.com <http://www.beachreporter.com> Banner Digital Ad
A banner digital ad was on www.beachreporter.com <http://www.beachreporter.com> from April 2, 2025 - May 19, 2025. This banner was on the website homepage. Any community member with pop-up blockers selected on their digital device would not be able to see this type of digital ad.
www.manhattanbeach.gov/Refuse218 <http://www.manhattanbeach.gov/Refuse218>
The City created a dedicated section of the Refuse Services page for the Proposition 218 process. This section included a timeline, documents and resources, a recording of the April 3rd Community Meeting, and contact information for additional questions.
refuse@manhattanbeach.gov <mailto:refuse@manhattanbeach.gov> email was set up and included on the Proposition 218 notice for community members to submit any questions about the Proposition 218 process.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has reviewed this report and determined that no additional legal analysis is necessary.
ATTACHMENTS:
1. Resolution No. 25-0050
2. PowerPoint Presentation