Speaker 13: or ASI. And I'm going to turn it over to Marva Sheehan with H.f. and each to walk you through that process and the results. And at the end of Marv's presentation, Marva Staff Ken, Kenny, Criswell, Busa and the team will be available for any questions that you may have.
Speaker 1: Thank you. Hello there.
Speaker 2: Good evening. At a mayor and council, Marva Sheehan partnered nature consultants. And I've been here for several years now. So every year or just first, we start with RCI, which provides your recycling solid waste and organics collection in the city for your residents, residences, businesses. And part of that agreement that is with the city is a rate setting process. And there are two methods that we use the index best method, which is every two years and then every third year is a detailed cost review. And this year was the year that we did the detailed cost review and we look at their actual cost and then come up with what we feel that are tied in with the requirements per the agreement and then compare that with estimated revenues and come up with the estimated or with the projected rate adjustment. At the conclusion of our report this year and after our work week came, that is a 7.31% increase. After discussions with staff and with RCI, we ended up deciding to use part of the Rate Stabilization Fund, which you had been accumulating each year, as well as funds from their bouncing account, which had our recycling revenues have been going into that fund. So this was a time to start using that. And then also in discussions with RCI on adjusting some of the cost in order to get to the number that we ended up with, that it ends up that the rates are going would be going up 4.21%, which is about what CPI had been. So it kind of ties in with that as well. With with that, there's a quarterly impact to the 32 gallon rate, which is the majority of your ratepayers of about $5, $20 for the year. So pretty insignificant when you think in terms of the amount of services and what your residents and businesses are receiving here. And as far as in comparison with the county, we had a rate survey that was part of your packet and you're still in a really good position again considering the level of service that you are receiving. And with that, I'll answer any questions that you have.
Speaker 1: So Counsel, do we have any questions? Councilmember Odie.
Speaker 0: I.
Speaker 4: Have a couple of. Thank you. So who did the heavy lifting on the negotiation? Do we know what that was?
Speaker 9: Who did you know.
Speaker 4: Who did the heavy lifting on on saving us from 7.3 to 4.3.
Speaker 5: Liam in our office worked with a C.I. on that. On that.
Speaker 4: Okay. So kudos to that person or persons. I just have a question. I'm just a little quick prefix. Preface, preface. Sorry, it's getting late. I'm on the Stop Waste Board and there was some discussion here in the staff report on Operation National Sword, and I know that's putting a lot of pressure on recycling and recycling rates. And I think there's some new regulation that came down, you know, from the state. Can we can somebody just talk a little bit about.
Speaker 2: Sure, I'll talk a bit on the recycling, then I'll let Kent talk, give you a little more from the company's perspective. Our our firm has been working with a lot different agencies dealing with National Sword and.
Speaker 1: Just audience members who may be listening. Do you want to explain that?
Speaker 4: That's kind of what I was hoping that we can.
Speaker 2: You know, because absolutely, you know, those of.
Speaker 4: Us in Stop Waste hear it. And by the way, Maria's here, she stuffs that with me and very excellent. So I just give a quick shout out to Maria.
Speaker 2: Great. So China back really at the end of 2017 put out basically that they were going to restrict the the types of materials that were they were going to be taking in part of China's efforts on clean air environment issues. So they implemented what we called National Sword. That's kind of the U.S. term for it. That went into effect March of 2018. That limited the types of materials they take. The probably more importantly is they set a standard for contamination and that it goes down to the point 5%, which is very, very small as far as contamination levels. Most I'm not sure there's a Merv that can really meet that level. So what happened is, as a result, material didn't go to China and therefore they had to find alternative markets. Last year when we were here, we were just right. Really in the early brinks of it, there was concerns about even finding places for the materials to go. And there was a thought of if people were going to have to landfill, what was going to happen to especially this is all predominately mixed paper and also in mixed paper. It only has a certain shelf life before it starts disintegrating. So there was lots of issues last spring and summer. Through that time they've kind of worked through, for the most part, materials. Being able to be moved is just that. The price where at one point they were getting over $100 a ton for it is now and I think can you can talk to it it's break even or having to pay a month ago I think they were paying $11 or so attempting to move it. It's going now to places like Pakistan and Vietnam and other sources, but they weren't set up for the amount of material to get there. And then part of the issue was, well, which was one that I hadn't thought of. There was we have a lot of ships coming this way from China with material. And so back hauling to China, getting load that way was fairly easy going to these other countries. We didn't have the same level of ship. So there was you might have a purchase order to get there, but you didn't you couldn't get containers in or ship to be able to get it there. So there was a lot that's been going on with that. But the biggest thing is the fact that the pricing on paper and cardboard has dropped dramatically. And so the and for you, your commodity revenue share went into this balancing account. So it hasn't impacted the rates as much at this point. But for a lot of agencies where they netted the revenues against the cost to process, it's coming back quite a bit. You want to give the companies perspective, okay.
Speaker 4: What's important? Let people know this because we're recycling more and more. And I think we should understand that, you know, there's some pressures, but we still want to keep doing it.
Speaker 10: Mayor Council My name is Ken Kenny. I'm the controller with HCI. The recycling market's really I'd sum up as spot market prices are very, very depressed. It's going to take a long time for them to recover. Again, as Marva said, the markets are shifting dramatically and it's just not the same as when China was taking the material . You know, again, $150 a ton for makes paper.
Speaker 11: Which was the.
Speaker 10: Bulk of the recycling that was being moved. Now we're at times paying to to move the material. The good news is we are moving material. We've not had to landfill anything. And we believe. We will continue to move material and it will just take a long time for the markets to mature and get back. The contamination issues mean we have to do more work to clean up the quality, to make the material marketable. And with that, that's really what it is, a spot market day to day, and it's going to take a long time to recover from that thing.
Speaker 1: Thank you.
Speaker 10: Thanks. Okay.
Speaker 1: Counsel, ready? Any further questions?
Speaker 4: I mean, is there any, you know, any long term policy implications of all of this that we need to consider as we go forward in our in our contracts? And I remember Oakland just, you know, sent out a bit maybe two or three years ago and there was a big sticker shock. Right. So I mean.
Speaker 2: Well, I think, you know, new contracts, what we're seeing now were for there were years ago contracts you got there's kind of a net revenue back to the city in a revenue share. It might be 20 or $25 a ton would come back to the city. That's obviously is gone. And then the contracts kind of went to a net zero where it said, okay, holla processor, you better risk reward, it's all yours. Now really what we're seeing is establishing a processing fee and looking at the revenue kind of separate and having kind of parameters and ways of how you're calculating at which you got your contract is kind of like that. You have a processing fee and you have a revenue share, so you're really kind of set ahead of the game from a lot of contracts. But that's really I think the key is, if I could stress anything to the residents is, you know, clean, keeping your materials clean that you'll get those those containers that clean and dry and then not keeping garbage out of the recycling is probably the best message that we could send in order to, because no matter what, the material's going to be clean.
Speaker 1: Thank you. Good advice. Okay. Councilmember Daisuke.
Speaker 7: Hi. Thank you for the report. By the way, I always like reading it. It's so very detailed and transparent, the way in which information is packaged and conveyed. The question that I have tonight is several days ago we council received an email about a resident concerned about theft of from blue bins, the recycling bins. So the question I have is, has RCI or the city quantified the amount of dollars we lose when recyclables are taken out of the blue bins by what I shall call street recycling entrepreneurs? So do we cause for? With regard to the impacts of changes in policy by the People's Republic of China, you seem to have quantified that impact on a something on the order of $25 a ton resulting from from China's change in policy. But when it comes to theft the is from from the blue bins do we know.
Speaker 0: Yeah.
Speaker 2: I'll have to defer to ECI and staff on that. I know from my background it's a very difficult number to capture because it's kind of you don't know what you don't know, but I'll defer to them.
Speaker 7: Okay.
Speaker 10: Good evening, Madam Mayor. Members of the Council. Chris Melville, General Manager of ECI. Councilmember Desai. Specifically, we haven't done our quantitative analysis to understand the specific amount of revenue loss from these items, but they're typically the more valuable items the petty, the aluminum things that can be turned into the redemption centers for money. So it is a direct offset in revenue. That would be interesting to understand what the impact is on rates.
Speaker 7: Thank you. I just wanted to make sure to ask that question.
Speaker 10: Okay. I would like to also circle back real quick to Councilmember Ortiz question about contract elements that could have an impact on long term recycling costs and so forth. And one of the things to keep in mind right now is that recycling capacity is quite a valuable element, and you have three years or so left on this franchise agreement. And so as communities contemplate what's happening long term, it's important to consider if you want to have discussions about ramping up recycling capacity on a longer basis of something could be done now. It could impact or could have the effect of a rate smoothing effect. So you're not seeing these large jumps in future years.
Speaker 1: Thank you. Any further questions.
Speaker 0: For the controller? Yeah. I'm sorry.
Speaker 1: Jim. Mr. Judy.
Speaker 4: Sorry. I'm sorry. That's okay. I think there were I also had a question about I think there were two bills that passed in Sacramento. I mean, just so the public is informed on what those are. Maybe you could just touch on those briefly, the impact.
Speaker 10: Sure. There are actually several, maybe 32, maybe 341. The most recent coming into full effect right now is HB 1383, which passed. It's actually a climate pollutant bill of greenhouse gas reductions, but has a significant element on, um, composting and food scraps. Recycling and things like that, has a tremendous amount of regulation attached to it that will have cost impacts associated with service. But again, we're happy to talk to the city and work through those things to lessen those impacts as much as possible.
Speaker 4: Thank you.
Speaker 1: Okay. Thank you. Do we have any public comment?
Speaker 0: We do not have any speakers.
Speaker 1: Okay. Any further discussion?
Speaker 7: One more question.
Speaker 1: Councilmember de Desai.
Speaker 7: In the HFA report on page 14, at the very top there is a discussion there about profits and it reads as follows We found that ECI correctly calculated the allowable profit by applying a 90% operating ratio, i.e. approximately a 10% profit to its allowable operating cost. However, due to the calculated adjustments described above, we recommend an $88,800 decrease to Acres profit. So was that recommendation is that built into the the the the profit? I mean, the rate changes that we're contemplating?
Speaker 2: Absolutely. Okay. It's all it's basically a mathematical the first part, because we take their operating costs and calculate the profit, because we reduce their costs, that associated profit gets subtracted as well. So it ends up netting out. Yes. Okay.
Speaker 7: So it's okay. I was just responding to the word recommend. So I was wondering if it was not only recommended, but.
Speaker 2: It's included in the in the recommended way to just.
Speaker 0: Make you question.
Speaker 1: Any further counsel comments or questions. Okay. So what we're looking for is an adoption of a resolution establishing integrated waste collection ceiling rates and service fees for Alameda County Industries for period 18, which is July 2019 to June 2020. Do I have a motion to adopt this resolution?
Speaker 9: So moved.
Speaker 1: I have a motion to have a second. It's been moved by Vice Mayor Knox. Right. Seconded by Councilmember de Sung. May we have a voice vote, please?
Speaker 0: Yes.
Speaker 3: Councilman DeSantis? Yes. Knox White.
Speaker 0: Yes. Yes. Yes.
Speaker 3: Mayor.
Speaker 1: As Ashcraft. Yes.
Speaker 3: Okay.
Speaker 1: That carries the motion passes unanimously. The resolution is adopted. Thank you, everyone. All right. Moving on down the agenda. We are on agenda item six e.
Speaker 3: Public hearing to consider adoption of resolution approving the engineer's report, confirming diagraming assessment and awarding the levee of assessments. Island city landscaping and lighting district 84 attached to all zones, various locations throughout the city.
Public Hearing to Consider Adoption of Resolution Establishing Integrated Waste Collection Ceiling Rates and Service Fees for Alameda County Industries, Inc. for Rate Period 18 (July 2019 to June 2020). (Public Works 0274)