With expenses continuing to outpace revenue for Recology Sonoma Marin, the company received approval from the Board of Supervisors last week to increase rates for customers by 30 percent.
The jump was expected: a cost-based rate review process was outlined in the original consent agreement between the county and Recology, which has serviced West Marin for two years. The previous hauler, the Ratto Group, unsuccessfully pushed for the county to accept a 67 percent increase in 2017 before selling its assets to Recology, which inherited a long list of deferred upgrades.
West Marin saw two smaller rate increases, in April 2018 and January 2019, both outlined in the original consent agreement. Now, rates are anticipated to level off.
“This adjustment is reflective of our operating costs,” said Fred Stemmler, the general manager for the company’s Sonoma and Marin chapter. “I think this is the correction we needed to move forward with business as usual.”
Starting this month, the majority of West Marin customers with the most popular 32-gallon trash bin will now pay $41.99 per month; businesses, which typically have a 1.5-cubic-yard bin collected every week, will pay $319.46.
Residents to the north—in Marshall, Tomales and Dillon Beach—and in Nicasio already had slightly higher rates; the 30 percent increase for those towns amounts to $53.80 for a 32-gallon bin and $239.79 per week for businesses.
Muir Beach residents also will see slightly different trash bills with the same percentage increase: $53.49 and $407.53, respectively.
Bolinas and Stinson Beach hold separate agreements with Recology and were not affected by the recent hike; Recology representatives expect that rates for both those service areas will likely catch up over the next several years.
District Four Supervisor Dennis Rodoni spoke at last Tuesday’s hearing.
“It is a large increase, and after looking into the reason for it, it does make sense,” he said. “We have to do this: it is a difficult area to service. I don’t know how many competitors we would get to look at it if we opened up the contract again, and it’s almost certain that the [rates] would be higher at the end of the day. I am thankful for Recology for sticking with us, although I plan to hold them accountable now that they are starting to get the amount of revenue that they need.”
There are three components to the increase. The first, accounting for a 23.78 percent increase, is cost-based. The rates that Recology inherited from the Ratto Group were artificially low and did not recover the overall cost for hauling waste, according to a contractor hired by the county to verify the requested increase.
“Because of the artificially low pricing, corners were cut,” Mr. Stemmler said. “The longer I’ve been here, the more I’ve found corners that were just completely lopped. We had no safety compliance, no environmental compliance and wild liberties were taken as far as hiring practices. So Recology has standardized that, brought up to speed anything that it should so we can pass an audit and any sort of compliance requirements.”
Recology originally proposed to lift rates based on the cost-based methodology by 26 percent, but a county consultant brought that down slightly after an analysis. Recology also hoped to level all the rates on the coast, from Dillon Beach to Muir Beach, which the Ratto Group had divided into different service zones, but the consultant advised the county to consider that change down the line.
A portion of the cost-based increase will go toward additional trash collection routes throughout West Marin. With the smaller, single-compartment trucks necessary to navigate the difficult rural terrain, drivers were sometimes mixing waste and recycling to avoid taking a second trip—a faulty practice Recology inherited from Ratto.
After auditing itself in 2018, Recology added routes, which required additional hires, to prevent this practice.
The third additional element of the approved rate change—for a total of 30 percent—was 3.1 percent calculated through the refuse rate index, which accounts for increased costs of labor, fuel, vehicle maintenance and replacement.
Recology has made a fair number of changes on this front. The company immediately took 30 percent of its inherited fleet off the road because those vehicles were non-compliant; it plans to replace another $21 million worth of trucks over the next five years in order to meet emission requirements set by the California Air Resources Board.
This year, Recology will have to replace 22 different vehicles, from collection trucks to cart trucks, at an average cost of $200,000.
The final aspect of the rate hike was retroactive. Per the 2017 consent agreement, the cost-based adjustment was meant to take effect in July 2019. The county agreed to an additional 3.4 percent increase to account for the revenue that would have been collected over the past six months. (The delay was primarily due to scheduling conflicts, Mr. Stemmler said, including ones arising from the PG&E power shut-off last fall.)
The Ratto Group had not increased rates since 2015, even to account for inflation.
In 2018, Recology first lifted rates by 12.1 percent, based on a consumer price index calculation and to meet a regulatory compliance fee; last January, rates went up by 6.11 percent based on the refuse rate index.
Mr. Stemmler told the Light this week that there will be small, annual increases from now on but that he does not anticipate another significant rate increase for West Marin anytime soon; the next possible time the company could opt to conduct a cost-based review is 2023.
At last Tuesday’s hearing, representatives from the Environmental Action Committee of West Marin and the Marin Surfrider Foundation pressed Mr. Stemmler to determine if the latest increase would account for any necessary changes under S.B. 1383, which codified the California Air Resources Board’s Short-Lived Climate Pollutants Reduction Strategy, which outlines a goal of 75 reduction in statewide disposal of organic waste.
Mr. Stemmler said the company was prepared to accommodate any state-mandated changes with current infrastructure and under the new rate structure; based on a preliminary analysis, he said 117 customers in West Marin might need additional collections.
One change to meet new state requirements is the replacement of all bins by December 2021. Recology plans to recycle the hard plastic of the old bins; the new bins will have fresh colors and labeling that will meet the new standards.