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 Overview of the Issues
What's Happening Next
Refuse Rates
Palo Alto Has Ambitious Environmental Goals
Refuse Rates Don't Cover the Costs of All the Services They Provide
Change Is Happening
Creating a Solution Together
Cost of Service Study
History of the Refuse Fund Conversation
Overview of the Issues
There are four key drivers shaping the future of how we deal with waste in our community. They are summarized below. Palo Alto Has Ambitious Environmental Goals – Our community is striving for goals that not only require us to change the way we do things on a personal level, but also to reevaluate our basic systems such as the types of services provided and long-term contractual agreements. Refuse Rates Don’t Cover the Costs of All the Services They Provide - They may be called ‘refuse’ rates but they cover many services other than garbage, such as street sweeping, household hazardous waste and recycling. A New Rate Structure is Needed – We are operating under an out-dated system that charges only for garbage, the very thing we are trying to minimize, to provide a spectrum of services; we need to create a new system that secures funding for the services we desire while complying with California law. Creating a Solution Together – With the community’s help, we will explore various options and develop a long-term solution to the challenges we face.
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What's Happening Next
March 6 – Presentation of Refuse Cost of Service Study Findings
Staff will present the Refuse Cost of Service Study findings, the residential rate modifications that result from the Cost of Service Study, possible rate phase-in options and next steps at the Council Finance Committee meeting on March 6 at 7PM in the Council Conference Room, City Hall, 250 Hamilton Ave.
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Refuse Rates
The following refuse rate changes are effective October 1, 2011:
To view your refuse rates, click on the appropriate link - resident, business with can service, business with bin service.
Background
On September 20, 2010, Palo Alto City Council approved refuse rate increases of 6% for residential customers and 9% for commercial customers that became effective on October 1, 2010. These rate increases were approved as temporary rates that would be effective for one year, pending the completion of a cost of service study. The cost of service study is scheduled for completion in November 2011.
While the cost of service study is not yet complete, the preliminary results of the study show that residential rates are not covering their proportional expenses and commercial rates appear to be exceeding expenses. For this reason, the proposed rates for Fiscal Year 2012 include both retaining the previous year’s 6% increase as well as an additional increase for residential customers, while no increase is proposed for commercial customers beyond retaining the previous year’s 9% increase. The City’s basic monthly refuse rates for residential customers have in the past consisted solely of a variable rate that was dependent on the size or number of garbage cans and the frequency of pickup. Other services such as recycling, yard trimmings composting, household hazardous waste, and street sweeping are also funded by the garbage-based rates. Most of the costs for all of these services are fixed and do not vary based on factors such as garbage can size.
As the first step in the process of improving the rate structure, the City is proposing a flat monthly charge of $4.62 per residential customer to reflect the fixed nature of many of the expenses. This flat monthly charge has been calculated to provide the revenue needed to balance expenses in the Refuse Fund for FY 2012. Return to top of page
Palo Alto Has Ambitious Environmental Goals
Palo Alto is at the forefront of many issues, and protecting the environment is one. Our community’s ambitious Zero Waste and climate protection goals put us at the forefront in rethinking not only the way we do things on a personal level, but also our basic systems, such as the types of services the community will need to achieve its goals and how we will pay for those services. We are not alone in our efforts, other cities are also working toward Zero Waste and climate protection. But we are on the leading edge. Zero Waste
Goal: Strive to eliminate waste to any landfill by 2021 - Palo Alto's progress: 74% diversion rate in 2009 (meaning 74% of our waste did not go to any landfill). This is far above the State and National average.
Climate Protection
Goal: Reduce greenhouse gas (GHG) emissions to match California’s state emission reduction goal
2012 target: 5% reduction in GHG emissions (from 2005 levels)
2020 target:15% reduction in GHG emissions (from 2005 levels) 
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Refuse Rates Don’t Cover the Costs of All the Services They Provide
They may be called ‘refuse’ rates but they help pay for much more than garbage – street sweeping, household hazardous waste, recycling collection and more. In fact, Palo Alto residents enjoy a combination of services not available anywhere else in the Bay Area. Services provided by your refuse rates: - Garbage collection and disposal
- Recycling and yard trimmings collection and processing
- Operation of the recycling center
- Weekly street sweeping
- Household hazardous waste collection events
- Landfill operation and closure costs
- Free “annual clean-up day” pick-up of bulky items
A rate increase is necessary now because the current rates do not cover the costs of all the services listed above. The problem stems from a combination of factors: the economic downturn; conservation efforts; and our current refuse rate structure, where we only charge for garbage. As we reduce the amount of garbage we create, revenue to pay for services decreases. But the costs for the services don’t decrease in the same way. Many of the costs are fixed; they don’t change as garbage amounts decrease. Other costs, while not necessarily fixed, are linked to services that do not have anything to do with the amount of garbage disposed (e.g., weekly street sweeping and household hazardous waste collection). We know our rate system is no longer appropriate for our community and we are working on changing it. However, such a large change takes time and we want to do it right. This rate increase will provide a short-term fix, and provide us time to figure out a long-term solution together. Return to top of page
A New Rate Structure Is Needed
Palo Alto is experiencing major challenges in our Refuse Fund that are symptomatic of changes in local policies and state mandates. Because our community’s environmental protection goals and extensive services place us at the forefront of change, we are running into these issues sooner than other communities -- but the fundamental challenges we face with our refuse rates is something that other communities will eventually need to address as well. Our current refuse rate system is based on an out-dated premise – that landfilling is the best way (environmentally, socially and economically) to deal with most of our waste. This premise made sense when it gained acceptance back in the early 20th Century. But our policies and laws have changed, our opinions and issues have changed, even our waste has changed. It is time for our refuse rate system to change as well. Our system charges only for garbage, the very thing we are now trying to minimize, to fund and provide a spectrum of services. We need to create a new system that secures funding for the services that our community desires.
Palo Alto's refuse system and refuse rate structure has evolved several times over the past century, reflecting changes in how we think about and manage waste in the community. We are again at a point in time where we need to rethink our refuse rate structure.
In addition to fundamentally changing our refuse rate structure to ensure sustainable funding for the many services they pay for, our refuse rates must comply with California law. California’s Proposition 218 requires that refuse rates be proportional to the actual cost of providing services to each ratepayer, and prohibits subsidies between different types of customers. The initial findings from a Cost of Service study currently underway show that residential customers in Palo Alto are being subsidized by commercial customers. When the Cost of Service study is finalized, the results must be used to ensure that the rate structure addresses the requirements of Proposition 218.
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Creating a Solution Together
As we change our principles and models, and move toward doing things differently, we must reconfigure our refuse rate systems to fit our new needs. Waste is a community issue and with the community’s help, we will explore various options and develop a long-term solution to the challenges we face. Help us create a new system that secures funding for the services we desire while complying with California law. Please check back for information on upcoming public meetings to review new system options and brainstorm ways to create a system that works for our community.
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Cost of Service Study
The cost of service study is a key tool that will help us effectively reconfigure our refuse rate system. It is scheduled for completion in November 2011. This tool will allow us to create various refuse rate system models and test their viability. Upon completion of the tool and a menu of model options, we will be meeting with the community to explore these options and develop a long term solution.
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History of the Refuse Fund Conversation
Staff Reports and Presentations to the City Council and Community City Council - September 19, 2011
Staff Report
Video of meeting
Community Environmental Action Partnership (CEAP) Meeting - July 14, 2011
Presentation
City Council - July 25, 2011
Staff Report
Presentation
Video of meeting
Finance Committee - July 19, 2011
Staff Report
Presentation
Video of meeting
Finance Committee - July 5, 2011
Staff Report
Presentation
Video of meeting
Finance Committee – May 24, 2011 – no report (budget hearing)
Video of meeting Finance Committee – April 5, 2011
Staff Report
Presentation
Video of meeting
Finance Committee – Feb 1, 2011
Staff Report
Presentation
Video of meeting City Council – September 20, 2010
Staff Report
Presentation
Video of meeting
Finance Committee – July 20, 2010
Staff Report
Presentation
Video of meeting
Finance Committee – July 6, 2010
Staff Report
Presentation
Video of meeting
Finance Committee – June 14, 2010
Staff Report
Video of meeting Finance Committee – May 27, 2010
Meeting minutes
Video of meeting Finance Committee – April 6, 2010
Staff report
Video of meeting
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