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Managing Tomorrow’s Resources Today 590 Ygnacio Valley Road, Suite 105 Northern California Walnut Creek, California 94596 www.hfh-consultants.com Telephone: 925/977-6950 MEMORANDUM Date: December 19, 2024 To: Terence Kyaw, Public Works Director CC: Eleonor Ignacio, Senior Assistant City Attorney, Redwood City From: Rick Simonson, Senior Vice President, HF&H Subject: Solid Waste Franchise Fee Study This technical memorandum reports the results of our analysis to determine whether the City of Redwood City (City) can substantiate the costs associated with the City’s fees assessed by the City on its franchised solid waste hauler, Recology, pursuant to their franchise agreement. The analysis provides a range of values associated with the reasonable charges that the City could impose for its costs of service, benefits conferred or privileges granted, and the use of government property. This analysis is provided in further detail below. BACKGROUND The City is a member of the South Bayside Waste Management Authority Joint Powers Authority (SBWMA). Under the SBWMA Joint Powers Authority Agreement, each member agency approves solid waste rates for its own residential and commercial customers. Each of the eleven SBWMA member agencies has a franchise agreement (Agreement) with Recology of San Mateo County (Recology) for residential and commercial solid waste, recycling, and organics collections. The Agreement runs from January 1, 2021, through December 31, 2035. Recology provides service to approximately 19,656 accounts in the City. Each member of the SBWMA has specific rates that will apply to their respective service areas. Rates are developed to cover costs for the following components: •Recology's compensation to collect and deliver materials to the Shoreway Environmental Center (SEC). •Tipping (disposal and processing) fees at the SEC. •City fees paid by Recology to compensate the City for its costs to provide solid waste services and manage the Agreement, the City’s costs associated with specific benefits conferred or privileges granted, and/or the reasonable value of City property used by Recology to provide solid waste services. The City currently assesses three City Fees (Fees) to Recology, as defined by Attachment M of the Agreement: •A Franchise Fee based on 13% of gross revenues billed. •An Assembly Bill (AB) 939 Fee which charges 0.40% of gross revenues billed. •An Administrative Fee which charges 0.25% of gross revenues billed. ATTY/RESO.0003/CC RESO 2025 SOLID WASTE COLLECTION RATES & ADOPTING FRANCHISE FEE STUDY - EXHIBIT B REV: 01-14-25 MI Page 1 of 11 EXHIBIT B