12 - Public Hearing Solid Waste Annual Charge Costa Mesa Sanitary District
…an Independent Special District
Protecting our community’s health and the environment by providing solid waste and sewer collection services.
www.cmsdca.gov
Memorandum
To: Board of Directors
From: Scott Carroll, General Manager
Date: June 27, 2013
Subject: Solid Waste Annual Charge
Summary
On April 18, 2013, staff presented to the Board of Directors the proposed solid waste rate
for FY 2013-14 and 2014-15. The Board approved continuing the public hearing to June
27, 2013 so that staff can renegotiate with CR&R on lowering the hauler and/or
recycling/disposal rates.
Before determining the annual solid waste charge per residential parcel in CMSD, staff
needs to determine the total cost it takes to operate the solid waste program. To do that
staff looks at five (5) key expenses, which are described in more details below.
Staff Recommendation
That the Board of Directors reconvenes the public hearing and approves Resolution No.
2013-833 confirming and adopting the Report and directing Clerk to File with County
Auditor.
Analysis
The following are the five (5) key expenses of the District’s Solid Waste Program and how
the annual charge is calculated.
1. Hauler Rate
The hauler rate of $9.1554 was established when the contract was executed with
CR&R in 2006. The hauler rate of $9.1554 has remained unchanged since 2006.
ITEM NO. 12
Board of Directors
June 27, 2013
Page 2 of 8
For the purpose of this report the rate will remain unchanged; however, staff and
CR&R are negotiating lowering this rate by $0.25 to $8.9054. An amendment to
CR&R’s agreement that includes the rate reduction will be presented to the Board
on July 25, 2013.
To determine the annual cost for the hauler, the rate is multiplied by the total CMSD
hou sehold served. In FY 2013-14, staff is estimating 21,571 households will be
served. The annual hauler cost is calculated below.
Household Rate Monthly Cost Annual Cost
21,571 X 9.1554 $197,491 X 12 = $2,369,892
2. Recycling/Disposal Rate
Th e recycling/disposal rate consists of a transfer station fee for recycling, which is
set at $41.22 per ton, and half of the landfill tipping fee due to CMSD’s 50%
diversion requirement. In 2006, the landfill tipping fee was $22.00 a ton so CR&R’s
disposal fee is $11.00. The District’s Recycling/Disposal Rate is $52.22 after
adding together the transfer station fee ($41.22) and CR&R’s disposal fee ($11.00).
This rate has remained unchanged since 2006. For the purpose of this report the
rate will remain unchanged; however, staff and CR&R are negotiating lowering this
rate by $0.25 to $51.97 per ton. An amendment to CR&R’s agreement that
includes the rate reduction will be presented to the Board on July 25, 2013.
Note: The current tipping fee is $31.37 a ton; however, OC Waste & Recycling is
going to increase the tipping fee in FY 2013-14 by 2.16%. The new tipping fee in
FY 2013-14 will be $32.05 a ton. Half of this fee is $16.02, which means the actual
recycling/disposal rate should be $57.24, but CR&R has agreed not to raise this
rate.
To determine the annual recycling/disposal cost, the rate is multiplied by the
es timated total tonnage. Staff is estimating the total tonnage in FY 2013-14 will be
39,851 tons. The annual recycling/disposal cost is calculated below.
Tonnage Rate Annual Cost
39,850 X 52.22 = $2,080,967
3. Salaries and Benefits
The FY 2013-14 Budget for salaries and benefits is $517,400
Board of Directors
June 27, 2013
Page 3 of 8
4. Operations and Maintenance (O&M)
O&M consists of professional services, legal services, election costs, tools and
equipment, building maintenance, postage, etc. The FY 2013-14 Budget for O&M
is $254,560.
5. Programs
This expense consists of CMSD special programs such as sharps, HHW,
scavenging, education, pharmaceutical and telephone book recycling. The FY
2013-14 Budget for Programs is $130,900 .
The total for these five (5) expenses is $5,275,382 , as shown below.
Hauler $2,369,892
Recycling/Disposal 2,080,967
Salaries & Benefits 517,400
O&M 254,560
Programs 130,900
TOTAL: $5,353,719
REVENUES
Before calculating the annual charge, staff looks at other revenue sources to help offset
the expenses identified above. Other revenue sources include additional container charge,
property taxes, investment earnings and CR&R contributions such as education programs
and scavenging. The estimated revenue from these sources is identified below.
Additional Container Charge 100,000
Property Taxes 200,000
Investment Earnings 50,000
Other 100,000
TOTAL: $450,000
When these revenues are used to offset the total expenses the net cost is $4,903,719 as
shown below.
5,353,719 – 450,000 = 4,903,719
Board of Directors
June 27, 2013
Page 4 of 8
ANNUAL CHARGE
CMSD needs to calculate a charge that will generate enough revenue to cover the net
expense of $4,903,719. To determine the annual charge staff divides the net rate with the
total household as shown below.
4,903,719 21,571 = 227.33 12 = $18.94
The annual charge needed to pay for solid waste expenses is $18.94 per residential
parcel .
FY 2014-15
Using the same calculations above, staff has calculated the annual charge for FY 2014-15,
which is described in more details below.
1. Hauler Rate
Household Rate Monthly Cost Annual Cost
21,845 X 9.1554 $200,000 X 12 = $2,400,000
2. Recycling/Disposal Rate
Tonnage Rate Annual Cost
40,214 X 52.22 = $2,099,975
3. Salaries and Benefits
The FY 2014-15 Budget for salaries and benefits is $565,300
4. Operations and Maintenance
O&M consist of professional services, legal services, election costs, tools and
equipment, building maintenance, postage, etc. The FY 2014-15 Budget for O&M
is $269,085
5. Programs
This expense consists of CMSD special programs such as sharps, HHW,
scavenging, education, pharmaceutical and telephone book recycling. The FY
2014-15 Budget for Programs is $140,500 .
The total for these five (5) expenses is $5,474,860 , as shown below.
Board of Directors
June 27, 2013
Page 5 of 8
Hauler $2,400,000
Recycling/Disposal 2,099,975
Salaries & Benefits 565,300
O&M 269,085
Programs 140,500
TOTAL: $5,474,860
REVENUES
Staff is estimating other revenue sources will be flat in FY 2014-15.
When these revenues are used to offset the total expenses the net cost is $4,945,935 as
shown below.
5,474,860 – 454,000 = 5,020,860
ANNUAL CHARGE
CMSD needs to calculate a charge that will generate enough revenue to cover the net
expense of $5,020,860. To determine the annual charge staff divides the net rate with the
total household as shown below.
5,020,860 21,571 = 232.76 12 = $19.40
The annual charge needed to pay for solid waste expenses is $19.40 per residential
parcel.
RECOMMENDATION
Last year, the Board approved reducing the solid waste annual charge from $239.40
($19.95 a month) to $228.00 ($19.00 a month). Based on the calculations above, the
annual charge would decrease slightly again to $227.33 ($18.94 a month) in FY 2013-14,
but the charge will increase in FY 2014-15 to $232.76 ($19.40 a month) and would require
the District to comply with Prop 218 procedures.
Staff performed a long term rate stabilization analysis at an annual charge of $216 .0 0 or
$18.00 a month in FY 2013-14 and in FY 20 14 -15. The analysis includes allocating the
District’s undesignated Solid Waste Reserves to offset projected net deficit balances in the
Board of Directors
June 27, 2013
Page 6 of 8
Solid Waste Fund. Attachment A demonstrates the District could maintain an annual
charge of $216.00 for the next six years when allocating the undesignated reserves and
the fund balance can stabili ze the charge for at least six years. Attachment B is a solid
waste survey that shows CMSD’s proposed full rate will rank 17 th out of 35 Orange County
communities.
The recommend solid waste rate of $216 or $18.00 a month will generate $4,659,000 in
charges. The proposed annual charge of $4,659,000 will not exceed the funds required to
provide the services as identified below.
FY 2013-14
Hauler $2,369,892
Recycling/Disposal 2,080,967
Salaries & Benefits 517,400
O&M 254,560
Programs 130,900
TOTAL: $5,353,719
FY 2014-15
Hauler $2,400,000
Recycling/Disposal 2,099,975
Salaries & Benefits 565,300
O&M 269,085
Programs 140,500
TOTAL: $5,474,860
In addition, the revenue from the charge will not be used for any purpose other than for
which the charge is imposed. For instance, no funds derived from the charges will be
used for liquid waste programs. Also, the proposed charge imposed upon any parcel or
person as an incident of property ownership does not exceed the proportional cost of the
service attributable to the parcel.
Furthermore, the proposed charge is not imposed for service unless the service is actually
use by, or immediately available to, the owner of the property in question. For instance,
properties are only charged if they are occupied. Vacant lands are not charged for solid
waste service.
Board of Directors
June 27, 2013
Page 7 of 8
Finally, no charge is imposed for general governmental services such as police, fire,
ambulance, parks or streets but is only imposed for sewer services.
Strategic Plan Element & Goal
This item adheres to the objective and strategy of Strategic Element 7.0, Finance , which
states:
“Objective: To ensure the short and long-term fiscal health of the District
Strategy: The Di strict will forecast and plan revenue and expenditures and maintain
appropriate reserves and investments to provide financial resources to fund current and
planned operations and projects.”
Legal Review
District Counsel has reviewed and approved the resolution.
Financial Review
Currently, there is approximately $4,148,224 in undesignated Solid Waste Reserves. If
revenues remain flat and assuming expenses increased 3% a year, the Solid Waste Fund
Balance will be exhausted by 2019-20 . Staff recommends maintaining a minimum Fund
Balance of $2,295,000 to pay for on-going expenses before the assessment revenues are
dispersed from the County to the District. Given that the District has a dry period from
June through October, staff recommends maintaining at least five month worth of
reserves, which is approximately $2 .3 million. An annual charge of $216 ($18.00 a month)
will generate an estimated $4,659,000 for FY 2013-14 and FY 2014-15 . As a result, the
District will be projected to have a negative net balance of ($244,860) in FY 2013-14 and a
negative net balance of ($361,860 in FY 2014-15. Funds from the undesignated Solid
Waste Reserves will be allocated to balance the proposed two year budget. The annual
charge would have to increase by 2019-20 in order to keep a minimum of $2 .3 million in
reserves. However, the charge increase would be the first in thirteen years.
Committee Recommendation
Not applicable
Public Notice Process
Copies of this report are on file and will be included with the entire agenda packet for the
June 27 , 2013 Board of Directors regular meeting at District Headquarters and on District’s
website.
Board of Directors
June 27, 2013
Page 8 of 8
Alternative Actions
1. Refer the matter back to staff
Reviewed by:
Marc Davis
District Treasurer/Interim Accounting Manager
Attachments A . Long Term Solid Waste Rate Study
B . Solid Waste Rate Survey
C. Solid Waste Power Point Presentation
D. Resolution No. 2013-833 Adopting Solid Waste Annual Charge
Public Hearing –
Solid Waste Annual Charges
Board of Directors Meeting
June 27, 2013
Solid Waste Annual Charge
5 key expenses
1. Hauler Rate - $9.1554 per household
Household Rate Monthly Cost Annual Cost
21,571 X 9.1554 $197,491 X 12 = $2,369,892
Solid Waste Annual Charge
5 key expenses
2. Recycling/Disposal Rate - $52.22 per ton
Transfer Station Fee: $41.22
Recycling Fee: Landfill tipping fee – 50% Diversion ($22 -$11) = $11
$41.22 + $11.00 = $52.22
Solid Waste Annual Charge
5 key expenses
2. Recycling/Disposal Rate - $52.22 per ton
Tonnage Rate Annual Cost
39,850 X 52.22 = $2,080,967
Solid Waste Annual Charge
5 key expenses
3. Salaries and Benefits
Proposed FY 2013-14 - $517,400
4. Operations and Maintenance (O&M)
Proposed FY 2013-14 - $254,560.
Solid Waste Annual Charge
5 key expenses
5. Programs
Proposed FY 2013-14 - $130,900
Solid Waste Annual Charge
5 key expenses
1. Hauler $2,369,892
2. Recycling/Disposal 2,080,967
3. Salaries & Benefits 517,400
4. O&M 254,560
5. Programs 130,900
TOTAL: $5,353,719
Solid Waste Annual Charge
Revenues
Additional Container Charge 100,000
Property Taxes 200,000
Investment Earnings 50,000
Other 100,000
TOTAL: $450,000
Solid Waste Annual Charge
Revenues
5,353,719 – 450,000 = $4,903,719
1. The proposed charge will not exceed the funds
required to provide the service ($5,353,719)
Solid Waste Annual Charge
Revenues
Annual Charge
4,903,719 / 21,571 = 227.33 12 = $18.94
The proposed annual charge per residential parcel
FY 2013-14: $227.33 or $18.64 a month
FY 2014-15: $232.76 or $19.40 a month
Solid Waste Annual Charges
Revenues
Proposed Annual Charge
FY 2013-14: $216.00 or $18.00 a month
FY 2014-15: $216.00 or $18.00 a month
2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20
Expenses 5,353,860 5,474,190 5,638,415 5,807,568 5,981,795 6,161,249 6,346,086
Annual Charge 4,659,000 4,659,000 4,659,000 4,659,000 4,659,000 4,659,000 5,912,180 $274.08 Annual or $22.84 monthly
Add Contain 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Property Tax 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Investment 50,000 54,000 53,000 50,000 46,000 40,000 40,000
Contributions 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Other 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Total Revenue: 5,109,000 5,113,000 5,112,000 5,109,000 5,105,000 5,099,000 6,352,180
Net: (244,860) (361,190) (526,415) (698,568) (876,795) (1,062,249) 6,094
Fund Balance 4,148,224 3,942,398 3,617,020 3,121,511 2,447,172 1,586,081
Net Balance 3,903,364 3,581,208 3,090,605 2,422,943 1,570,378 523,832
Notes
After 2014-15, expenses increase 3% per year
Fund Balance earning 1% interest per year
Solid Waste Annual Charges –
$18.00 a month Projections
1 Placentia 22.22
2 Stanton 21.09
3 Garden Grove 20.46
4 Cypress 19.97
5 Villa Park 19.96
6 Yorba Linda 19.56
7 Anaheim 19.53
8 Huntington Bch 18.96
9 Brea 18.78
10 Santa Ana 18.73
11 Fullerton 18.60
12 Laguna Niguel 18.56
13 La Habra 18.40
14 Fountain Valley 18.16
15 San Juan Cap 18.14
16 San Clemente 18.02
17 CMSD 18.00 Average 16.77
18 Newport Beach 17.84 Median 17.84
19 Seal Beach 17.30
20 Laguna Beach 17.21
21 La Palma 16.55
22 Buena Park 15.62
23 Aliso Viejo 15.46
24 Dana Point 15.35
25 Laguna Hills 15.33
26 Tustin 15.09
27 Midway City 14.75
28 Lake Forest 13.76
29 Rancho SM 13.47
30 Newport Coast 12.74
31 Los Alamitos 12.28
32 Mission Viejo 12.11
33 Orange 12.20
34 Irvine 11.81
35 Laguna Woods 10.00
Solid Waste Annual Charge
2. The proposed charge will be strictly
used for solid waste programs. No funds will
be used for liquid waste collection, CIP or
administration
3. The proposed charge will not exceed
the proportional cost of the service
attributable to the parcel.
Solid Waste Annual Charge
4. The charge is not imposed for service
unless the service is actually use by, or
immediately available to, the owner of the
property in question.
5. The proposed charge is not for general
government services (e.g. police, fire, parks,
streets, etc.).
Solid Waste Annual Charge
Recommendation
That the Board of Directors approves Resolution
No. 2013-833 confirming and adopting this report
and directing Clerk to File with County Auditor.
RESOLUTION NO. 2013-833
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
COSTA MESA SANITARY DISTRICT ADOPTING
ANNUAL CHARGES FOR SOLID WASTE
WHEREAS, the Board provides for the collection of trash and related solid waste
services through its exclusive franchisee to all residential areas within the District; and
WHEREAS, pursuant to the authority granted to sanitary districts under Health and
Safety Code Sections 5470 et seq., the District has determined to impose those charges for that
service and collect that charge on the tax roll in the same manner as general taxes; and
WHEREAS, since imposing that annual charge on the Assessment Roll, Proposition 218
was enacted, and since 1996, a mailed protest hearing was noticed and conducted before fees
were imposed; and
WHEREAS, the Board of Directors has determined to reduce the rates for annual
charges for solid waste this year but desires to adopt the report imposing the charges pursuant
to the provisions of Health and Safety Code Sections 5470 et seq.; and
WHEREAS, said reduction in rates will not result in any person paying an increased
amount and is thus exempt from the mailed notice procedures pursuant to Government Code
Section 53750(h); and
WHEREAS, published notice has been duly given of this hearing as provided in
Government Code Section 6066 and Health and Safety Code Section 5473.1;
NOW, THEREFORE, the Board of Directors of the Costa Mesa Sanitary District does
hereby RESOLVE as follows:
Section 1. That the fees, rates, and charges imposed herein have been reduced
from those previously adopted to an annual charge of $216.00 and are imposed on the tax roll
pursuant to the procedures provided in Health and Safety Code Section 5473.
Section 2. That the appropriateness of said fees was established in accordance with
California Constitution Article XIIID in previous years.
Section 3 . That the Board has conducted the hearing and has determined that a
protest did not occur.
Section 4 . That the written report describing the parcels and charges provided for in
Health and Safety Code Section 5473 are hereby adopted in accordance with Health and Safety
Code section 5473.3 and shall be filed with the District Clerk.
Section 5 . That the Clerk is hereby directed to file a copy of the report with the
Auditor before August 9, 2013, with a statement endorsed on the report over his signature that
the report has been finally adopted by the Board of Directors, and the Auditor shall enter the
charges against the parcels as they appear on the assessor’s roll. It is acknowledged that said
report will be prepared in an electronic format, which will be transmitted to the Auditor.
This Resolution shall take effect upon its adoption.
PASSED AND ADOPTED by the Board of Directors of the Costa Mesa Sanitary District
at a regular meeting held on the 27 th day of June, 2013.
____________________________ __________________________
James Ferryman Arthur Perry
President of the Board of Directors Secretary of the Board of Directors
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF COSTA MESA )
I, Scott Carroll, Clerk of the Costa Mesa Sanitary District, hereby certify that the
above and foregoing Resolution No. 2012-833 duly and regularly passed and adopted
by said Board of Directors at a regular meeting thereof held on the 27 th day of June
2013.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
the Costa Mesa Sanitary District, this 27 th day of June 2013.
_________________________________
Scott Carroll
Clerk of the Costa Mesa Sanitary District