California Assembly Bill AB 1826 (signed into law on September 28, 2014) stipulates that local governments are to facilitate compliance with this law by establishing and implementing additional recycling programs. The purpose of this regulation is to separate commercial organic waste from the waste stream and divert it from landfills. Organic waste primarily consists of food waste and green waste. Since food waste makes up the majority of commercial organic waste deposited in the landfills, the focus of this proposed action is on food waste.
AB1826 specifies that on or after January 1, 2016, local agencies shall implement an organic waste recycling program to divert organic waste from qualifying businesses subject to the law, as well as report to CalRecycle on their progress in implementing an organic waste recycling program. To this end, the City of Brea adopted a program on February 2, 2016, but did not include fees for this service. At that time, Republic Services was also identified as the exclusive hauler for organic waste and would facilitate the conversion of food waste to renewable energy.
The recycling requirements are intended to be phased in over several years and will help the state meet its goal to recycle 75% of its waste by 2020. Specifically for organic waste, AB 1826 requires businesses and multi-family dwelling units of five units or more meeting the following criteria to arrange for recycling services:
- Tier 1: On or after April 1, 2016, a business that generates 8 cubic yards or more of organic waste per week (approximately 30 businesses)
- Tier 2: On or after January 1, 2017, a business that generates 4 cubic yards or more of organic waste per week (approximately 47 additional businesses)
- Tier 3: On or after January 1, 2019, a business that generates 4 cubic yards or more of commercial solid waste per week (additional number of businesses to be determined)
- Future Tier?: On or after January 1, 2020, dependent on compliance results (50% reduction as compared to 2014), may expand to businesses that generate 2 cubic yards or more of commercial solid waste per week
Implementation Options:
As shared with City Council at a number of study sessions over the last year, the City has been considering two implementation options, Generator or Sector-Wide Pricing. The following is a summary of each of these two options along with pros and cons for consideration.
I. Single User “Generator” Pricing Option:
Full program costs are covered by organic waste generators that subscribe to this program. Cost includes collection, disposal, processing, monitoring, and annual education. For discussion purposes, we'll assume the single user generator subscribes for a 1.5 yard container collected three times per week:
- Example: 1.5 yard organic container collected 3X per week, $543.58 per month
Pros:
- Non-organic municipal solid waste generators rate are not affected by separate food recycling program
- Businesses that develop alternative means of handling organic waste, other than contracting with another hauler, do not need to subscribe
- By definition, this option meets AB1826 mandate requirements
Cons:
- 100% of the program cost must be covered by the Tier 1 & 2 businesses subscribers. Higher cost due to expected low volume collection route.
- Low expected participation. May lead to more aggressive CalRecycle enforcement requirements in order to increase participation in the future.
- Negative impact on Tier 3 businesses since future pricing will be dependent on success of Tier 1 & 2
II. Sector-Wide Pricing Option:
Increase of refuse rates of 3.73% over a period of 10 months to be spread across the entire business sector. Cost includes collection, disposal, processing, monitoring, and annual education. Businesses that generate organics will also pay for any organic containers they may need. In working with Republic, they have agreed to phase in the proposed rate increase over the following 10 month period as noted below:
- Initial increase: September 1, 2018: 2.24%
- Full increase: July 1, 2019: Additional 1.49%
The following examples show the difference in organic rates between businesses that generate organics from those that do not. For an "apples to apples" comparison with Generator Only pricing, a 1.5 yard organic container serviced 3 times per week is assumed in Example 2:
- Example 1 (Non-Organic Generator – No Organic Container Needed):
- Current monthly rate for typical 3 yard commercial container collected 3X per week = $335.34. Total rate increase for organics: $12.51 per month. See breakdown below:
- Additional $7.51 per month on September 1, 2018
- Additional $5.00 per month on July 1, 2019
- Example 2 (Organic Generator – Additional 1.5 Yard Container Serviced 3X Per Week):
- Total rate increase for organics: $12.51 per month (phased-in per Example 1) plus $231.60 for container = $244.11 per month
- Container cost becomes effective when businesses request for the organic container(s)
Pros:
- Minimizes rate impact on affected businesses
- Creates higher participation and better results for Tier 1 & 2 businesses
- Sanitation districts need to plan their ‘food waste’ capacity and receiving a steady and predictable increase over the next three years is the optimal approach
- Since the compliance threshold will increase to 4 CY of commercial solid waste on January 1, 2019, most businesses will be required to recycle their organics and would benefit from spreading of the costs
Cons:
- Charged to all 1,058 Commercial, Industrial and Multi-Family accounts
- Businesses that do not generate organics will be affected
- Organic rate increase is in addition to annual CPI increases, effective July 1st of each year
In accordance to a similar deal with other cities served by Republic, Republic has agreed to a rate adjustment rebalancing mechanism for the organic waste collection rate. Since the organic waste collection rate increase is based on Republic’s estimated cost for providing the program, the rebalancing mechanism will evaluate the true cost of the organics program and ensure that the organic waste collection rate is accurate and fair for eligible businesses. In January of each calendar year, Republic and City will review actual tonnage collected and compare to the initial collection threshold assumed for the organics program. If collection is higher than the assumed threshold, the rates will need to be increased by a proportional amount in the following fiscal year. However, effective July 1, 2022, the rates can be decreased if tonnage levels have not reached the expected levels. The ability to decrease rates in the future does not begin until 2022 to allow for the organics program participation to increase and to allow for Republic to make capital investments in the program over the first 4 years.
Outreach:
Since late 2016 to present, City staff and Republic have reached out to affected businesses regarding AB1826 requirements and proposed fee options and conducted a community workshop on March 2, 2017. In addition, staff have also worked closely with the Chamber of Commerce and presented the rate options to the Chamber of Commerce Board on January 25, 2017.
If this program continues to move towards approval, City staff will work with Republic and the Chamber of Commerce to contact all affected businesses once again and alert them of any important upcoming City Council meeting dates where this item will be further considered.
Potential Next Steps:
- Select implementation option and direct staff to bring back formal program fee details for City Council consideration at an upcoming City Council meeting
- If City Council concurs with program details at said meeting, City Council to set Public Hearing date for final consideration and adoption of fees
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