TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
Integrated Waste Management Service Rates Fiscal Year 2025-26.
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RECOMMENDATION
Adopt Resolution No. 2025-020, establishing the integrated waste management service rates for Fiscal Year 2025-26, effective July 1, 2025, and authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
The proposed rates ensure full cost recovery for landfill disposal, green waste processing, collection services, utility billing, and the City’s compliance with unfunded State-mandated recycling and diversion programs.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
• Public Service Excellence through Internal and External Partnerships
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BACKGROUND
On May 16, 2017, the City Council approved an Amended and Restated Agreement with USA Waste of California, Inc. (DBA Waste Management) for the provision of integrated waste management services, including refuse and recycling. The agreement has a fifteen-year term, commencing on January 1, 2018, and expiring at the close of business on December 31, 2033. By mutual agreement, the contract may be extended for an additional five years, for a total possible term of twenty years.
The agreement allows for annual rate adjustments based on the Water, Sewer, and Trash (WST) Index. These adjustments apply to landfill disposal and collection services. Organics processing charges are treated as a direct pass-through based on rates established by Waste Management’s third-party processor. In accordance with Proposition 218, the City conducted a public hearing on June 6, 2023, and approved a five-year schedule of potential rate adjustments. Although a 5% annual increase was originally projected, only the actual WST Index-based adjustment is applied each year.
ISSUES/ANALYSIS
Annual Adjustment
For the 12-month period from December 2024 through December 2025, the WST Index increased by 4.99%. However, per the franchise agreement, annual increases to the service portion of the rate are capped at 4%. Accordingly, a 4% increase has been applied to all applicable service components of the commercial/industrial, compactor, and residential collection rates, as well as to applicable ancillary service fees. These changes are detailed in the updated rate schedule (Exhibit A).
While the service portion is capped, the overall increase in residential rates reflects the inclusion of actual pass-through tipping fees and estimated disposal tonnages, consistent with the terms of the agreement and the City’s cost recovery objectives as better described below.
Landfill & Organics Tipping Fee Increases
The following adjustments reflect costs associated with landfill disposal and green waste / organics processing fees for Fiscal Year 2025-26:
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Commercial / Industrial Disposal (per ton) |
$53.86 to $55.83 (3.7% increase) |
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Residential Disposal (per ton) |
$46.00 to $47.66 (3.6% increase) |
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Green Waste/ Organics Processing (per ton) |
$99.20 to $108.33 (9.2% increase) |
These increases are based on the updated rates established by Riverside County for landfill disposal and by Viramontes Express / South Valley Compost Facility for green waste and organics processing. The organics processing fee is a direct pass-through to customers and reflects the actual cost charged by the processor.
Residential Service Rates
The following changes are proposed for residential service rates, effective July 1, 2025. The rates are summarized in the table below.
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Single-Family Rate (3-Cart, 96-Gallon) |
$36.97 to $38.82 (5% increase) |
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Senior Citizen Rate (3-Cart, 96- or 64-Gallon) |
$32.45 to $34.06 (5% increase) |
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Low Volume Generator Rate (3-Cart, 64-Gallon) |
$32.45 to $34.06 (5% increase) |
As noted above, the percent increases reflect both the capped 4% service component adjustment and the pass-through of tipping fees, which are based on historical disposal and processing tonnages. Please refer to Exhibit B, Residential Rate Components.
Cost Recovery and Compliance Mechanisms
To ensure comprehensive cost recovery and continued compliance with unfunded state mandated programs, the City utilizes the following rate-based mechanisms:
• Recycling Administration Fee - This fee supports the City’s administrative and compliance obligations for state-mandated diversion programs, including AB 939, AB 341, AB 1826, and SB 1383.
• Franchise Fee - This fee provides General Fund support for franchise oversight and offsets public impacts related to refuse collection, such as roadway wear, regulatory administration, public safety, and legal and regulatory compliance.
• Billing Fee - The billing fee offsets City costs associated with billing operations, including customer service, account maintenance, and coordination with utility providers.
Together, these rate components enable the City to sustainably operate its waste collection and recycling programs while fulfilling all regulatory, financial, and operational obligations
Therefore, it is staff’s recommendation that the City Council adopt Resolution No. 2025-020, establishing the integrated waste management service fees for Fiscal Year 2025-26, effective July 1, 2025, and authorize the City Manager to execute all necessary documents on behalf of the City. These fees are designed to fully recover contractual costs associated with refuse, recycling, and organics services, as outlined in the franchise agreement.
Attachments: Resolution 2025-020
Exhibit A - Schedule of Rates
Exhibit B - Residential Rate Components