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Last Updated: Nov 27, 2014

Refuse Rates


Our refuse rates don’t just pay for garbage, they pay for much more – weekly street sweeping, household hazardous waste, recycling and other services. 

Our refuse rate system has in the past charged only for garbage, the very thing we are trying to minimize, to fund and provide these services. We have been working to improve the refuse rate system to one that more transparently and sustainably funds the services that are provided. This section was created to keep you updated on what’s happening.

Quicklinks

What's Happening Next
Background
Refuse Rate Increases
Cost of Service Study Findings
History of the Refuse Fund Conversation



What's Happening Next

New changes in street sweeping have allowed for a rate reduction. Beginning November 1, 2014, you're Refuse Rate will be reduced by $1.40 per month.

Otherwise, we've been able to hold Refuse Rates steady at the 2012 level. They will be good until July 2015.
 
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Background

Our refuse rates pay for a variety of services in addition to garbage collection and disposal, including recycling, yard trimmings, the annual clean up day, weekly street sweeping, and household hazardous waste. Although they fund many services, refuse rates in Palo Alto and other communities have traditionally been based solely on the garbage can size and collection frequency, so that a customer with a 64-gallon garbage cart would be charged a rate about double that of a customer with a 32-gallon garbage cart. This type of rate structure suggests that the cost of providing refuse services varies dramatically according to the amount of garbage produced by a customer. Of course, the cost of providing recycling, yard trimmings, household hazardous waste and street sweeping services is largely unrelated to the amount of garbage produced. Even the cost of providing garbage service is mostly fixed, so that reducing the amount of garbage results in only small changes to the costs.

In recent years, a combination of reduced business garbage generation due to the economic recession and a strong trend of residential customers switching to smaller garbage cart sizes reduced the revenue to the Refuse Fund below the level of expenses.  This resulted in losses that depleted the Fund’s reserves, which are supposed to be available to avoid drastic increases to rates in the event of unforeseen or one-time expenses.

In 2010, the City began a cost of service study for the Refuse Fund.  The cost of service study had two main goals:

  1. Recommend changes to the refuse rate structure that ensure sustainable revenue
  2. Ensure that the rates charged are proportional to the cost of providing service, to satisfy the requirements of California’s Proposition 218

The cost of service study and the rate model developed during the study were completed in early 2012. The proposed residential refuse rate increases for July 1, 2012 are based on the findings of the cost of service study.

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Refuse Rate Increases

The July 1, 2012, refuse rate increase for residential customers was implemented so that revenues from the residential sector would better cover expenses, and to increase the transparency of the rate structure by allowing customers to see the cost of some of the specific services that are provided. Rate increases are typically needed to cover the relatively small annual cost increases that result from inflation. For instance, the City’s contract with GreenWaste of Palo Alto and the contract with the operator of the Sunnyvale SMaRT Station both have provisions for annual increases based on the consumer price index. The rate increases for July 1, 2012, however, were in response to the cost of service study’s finding that residential expenses exceed revenues. Rates for commercial customers were not changed. The cost of service study developed the fixed monthly costs per residential customer for street sweeping, the annual clean up day and household hazardous waste service.  
 

2012 Refuse Rates

(includes $1.40 rate reduction from street sweeping changes starting November 1, 2014)

  
Fixed Rate Components
 Refuse Service  Rate (per month)
 Street Sweeping   $5.26
 Annual Clean Up Day   $2.17
 Household Hazardous Waste    $1.07

 
Variable Monthly Rates
 Volume of Garbage  Rate
 Mini-can/20-gallon  $13.79
 32-gallon  $31.64
 64-gallon  $67.84
 96-gallon  $101.76

   

To view your current refuse rates, click on the appropriate link - resident, business with can service, business with bin service.

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Cost of Service Study Findings

The most important findings of the cost of service study are that:

  1. The rate increase and expense reductions from the past year have stabilized the finances of the Refuse Fund, so that revenues are projected to exceed expenses for the next several years even without rate increases.
  2. The residential sector of customers has expenses that are greater than its revenues, while the commercial sector of customers has revenues that are greater than its expenses.

Click here to view the Cost of Service Study Report.
 
The cost of service study allocates all of the Refuse Fund’s expenses to the appropriate customer sector and specific service. The study found that the residential sector’s expenses are greater than the revenue that is being generated by residential rates. Meanwhile, the commercial sector of customers is generating more revenue through its rates than the expenses that are allocated to it. California’s Proposition 218, which was passed by voters in 1996, mandates that refuse rates not exceed the proportional cost of providing the service.

In the past year, the City has closed the Palo Alto landfill, the Recycling Center, and the City’s composting operation, in addition to implementing a number of other expense reductions. In October 2011, a residential rate increase that consisted of a fixed monthly charge for every residential customer was implemented. The reduction in expenses and increase in revenues from these changes results in a greatly improved financial outlook for the Refuse Fund. Revenues are expected to approximately equal expenses for the fiscal year that ends on June 30, 2012. Revenues are expected to exceed expenses for the following three or four fiscal years even without rate increases.

A key component of the study has been the development of a model for projecting budget revenues and expenses, and for calculating refuse rates.  The model will be updated and used on an ongoing basis to adjust refuse rates, compare customer sector revenues and expenses, and analyze the rate impacts of service changes.

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History of the Refuse Fund Conversation

Staff Reports and Presentations to the City Council and Community

City Council - April 17, 2012
Staff Report

City Council - March 6, 2012
Staff Report
Presentation

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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Last Updated: Oct 31, 2014