SCWMA Solid Waste 101 Training and Presentation

R3 was engaged by Zero Waste Sonoma (ZW Sonoma, formerly known as Sonoma County Waste Management Authority), to provide a Comprehensive Guide and Training for ZW Sonoma staff, Member Agency staff, and Board members. R3’s primary objective was to present ZW Sonoma and its 9 Member Agencies with the information needed to effectively manage their solid waste contracts and navigate the complex solid waste system as it evolves in Sonoma County. This included addressing the potential shift of recyclable material processing capacity and the ongoing arrangements surrounding the organic waste processing facilitated by ZW Sonoma.

R3 developed Comprehensive Guide that describes current solid waste contracts, their terms and conditions, the entities and relationships, and any other unique solid waste system nuances of which Member Agencies should be aware. Intended for long-term use, the guide is a “living document” that can be adapted and updated by ZW Sonoma staff and Member Agencies. The Guide consisted of a reader-friendly informational package with illustrative charts, figures, and tables regarding the solid waste systems in place in Sonoma County.

To develop this Guide, R3 performed the following tasks:

  • Presented the information about the County’s existing solid waste system and analysis of each Member Agency’s individual systems, including legislative updates, customer rate benchmarks, and mechanisms for effectively managing a contract;
  • Provided summaries of the above information for quick and accessible comparison amongst Member Agencies;
  • Provided ZW Sonoma and Member Agencies with a timeline to achieve important diversion milestones and described key activities and their responsible parties in the solid waste industry; and
  • Described applicable solid waste opportunities and innovations that may be available to Member Agencies and ZW Sonoma in the future.

R3 also facilitated two Solid Waste 101 Training Sessions for Sonoma County decision makers that presented the information provided in the Comprehensive Guide in an interactive format and included round-table discussions to address questions and provide solutions for Member Agencies.

As a result of R3’s work, Zero Waste Sonoma gained the following benefits:

  • Presentation of comprehensive information about the history of solid waste in Sonoma County, important solid waste specific legislative updates, customer rate benchmark, and mechanisms for effectively managing a contract;
  • Easy-to-read format enabling immediate utilization by each Member Agency; and
  • An updatable resource for decision makers in Sonoma County to gain a thorough understanding of the current waste management system, the contractual relationships involved both broadly and for their Member Agencies, and how the system may change in the future.

In 2017, R3 was engaged to conduct a comprehensive Rate Methodology Review on behalf of the Marin Franchisors’ Group (Group), which is made up of the cities of San Rafael and Larkspur, the Town of Ross, the County of Marin, and the Las Gallinas Valley Sanitary District.

R3’s primary objectives were to streamline and simplify the Group’s rate-setting methodology in order to address recycling commodities fluctuations and complete a meet-and-confer negotiation process to resolve $1.15 million in accumulated losses from the processing and sale of recyclable materials since the recycling market crash.  R3 worked with the Group and franchised hauler, Marin Sanitary Service (MSS), to revise the existing rate methodology to meet the following primary goals:

  1. Establish a resolution for over $1 million in losses in the Recycling Reserve Fund carried by the company since the recycling market crash;
  2. Develop a new model for handling recycling costs and revenues to replace the Recycling Reserve Fund that would add greater certainty for rate-setting in the future; and
  3. Revise the overall methodology for setting rates to achieve goals of streamlining, simplification, rate stability and recognition of the value of recycling and composting.
  4. Establish performance metrics and tracking to better understand qualitative outcomes of MSS’ operations and outreach; and
  5. Revise and institute formal succession planning and assignment language and documentation.

In parallel with the Rate Methodology Review, R3 also conducted a rate survey of the surrounding jurisdictions, and was engaged by the Group to review MSS’s 2018 Rate Application and 2019 Cost-Based Rate Application.

Due to the anticipated new methodology, the Group and MSS had planned to complete a complex cost-based rate adjustment for 2018 rates so that the new streamlined rate setting methodology could take effect for 2019 rates. However, it was determined that results of the review would not be available in time, so the Group and MSS agreed to revert to the index-based rate adjustment process for 2018 rates in order to stay on schedule for the 2018 rate adoption process. The Group retained R3 to conduct a detailed review of MSS’s 2018 rate application to review the basis of MSS’s projections, and to recommend adjustments in keeping with the terms and conditions of the Agreements. Based on the detailed rate review, R3 determined that a rate increase of 5.57% was appropriate to compensate MSS for its projected 2018 expenses – a significant decrease to MSS’ proposed rate increase.

In 2018, R3 reviewed MSS’s cost-based rate application for a 2019 rate adjustment, and determined that an overall rate increase of 9.56% was appropriate to compensate MSS for its projected 2019 expenses including the treatment of prior recycling losses or future recyclables processing costs and consideration of negotiated outcomes of the meet and confer process, with varying increases for each Group Agency, which vary slightly depending on the amounts and types of franchise and other fees set by each agency.

As a result of our assistance, the Group gained the following benefits:

  • Stable and predictable rates for the next 5 years, and a firm basis for rate control in future years;
  • Significant saving on consultant costs and staff time to conduct the of the annual rate adjustment process (anticipated annual 70-80% reduction in time and costs);
  • Improved accuracy and transparency of the rate adjustment process;
  • New performance metrics for outreach and education as well as regular operations, billing, and customer service; and
  • A revised rate-setting methodology designed to address rate fluctuations, while maintaining an emphasis on responsible solid waste management, good value to customers, and reduction of waste to landfill, including:

On behalf of the Zero Waste Sonoma (ZW Sonoma, formerly known as Sonoma County Waste Management Authority), R3 was initially engaged to compile a Request for Information (RFI) for future compost facilities that might be sited in the County of Sonoma (County) which was used to aid ZW Sonoma in developing a strategic action plan to provide for organics capacity throughout the region, simultaneous with the procurement of solid waste services for several jurisdictions within the County.

R3 was subsequently engaged by ZW Sonoma to assist in the procurement of an organics material processing facility in the county. R3’s project goals were to:

  • Provide the highest level of service to ZW Sonoma’s residents and businesses at the best cost; and
  • Ensure long-term sustainability and successful operations of organics processing facilities utilized by ZW Sonoma.

R3 compiled, drafted, and issued the RFP package for ZW Sonoma, and provided technical assistance to the proposal evaluation team by assisting in the proposal scoring and analysis of the County’s long-   and short-term options. Through our analysis of 11 submitted proposals, R3 gained insight on the processing costs for organics, including commercial source-separated food waste, mixed green and food waste, biosolids, and manure. Based on the analysis, R3 recommended the award of one contract to Renewable Sonoma for the construction and operation of an organics processing facility to provide organics processing throughout the Sonoma County region.

In addition to assisting with procurement tasks, R3 also provided ZW Sonoma with a valuable financial analysis of the impacts of the various proposals submitted based on location, County fees, waste delivery requirements, flow control and available programs.

Plastic Bales

Zero Waste Plan & Community Engagement

The City of Menlo Park (City) engaged R3 (with subconsultants Abbe & Associates and Cascadia Consulting Group) to assist in the creation of a comprehensive Zero Waste Plan (Plan). Motivation to create a Zero Waste Plan stemmed from implementation of the City’s Climate Action Plan, which named zero waste as a key strategy for reaching the community’s goal of reducing greenhouse gas emissions by 27% by the year 2020 from 2005 levels.

R3 developed a comprehensive Plan that provided a guide to residential, commercial, and City programs, and included cost estimates for the proposed Zero Waste programs to be incorporated into the rate structure. R3 also prepared an economic analysis and implementation plan, highlighting the Zero Waste Plan steps for 5-, 10-, and 20-year milestones, as identified by the City.

In an effort to engage the community in the important decisions coming before the City Council, R3 also designed a robust Community Engagement Process to allow residents and businesses to learn about the Zero Waste draft policy and draft rate structure, ask questions, and provide input before they went on to the City Council. This included designing an outreach strategy, providing content to be presented in the City’s specific marketing format, facilitating two public workshops, and presenting at community engagement meetings.

The City successfully adopted R3’s Plan and approved solid waste rate funding of $300,000 annually for Plan implementation services, which R3 is currently providing.

Rate Restructure Analysis & Revision

R3 was tasked by the City to develop a revised rate structure to calculate rates based on cost-of-service information provided by the City’s franchised hauler (Recology). R3 facilitated a transparent rate setting process, producing rates which aligned to cost-of-service and supported the City’s Zero Waste goals by preserving incentives to divert solid waste from landfill, including financial incentives for waste reduction.

The rate structure developed by R3 achieved several objectives, including:

  • Development of an incremental methodology to move rates towards a cost-of-service rate model that aligned rates more closely with the fixed and variable costs of providing solid waste collection, transfer, processing, diversion and disposal services;
  • Preservation of incentives to divert solid waste from landfill, including financial incentives for waste reduction;
  • Avoidance of higher-than-necessary rate impacts to small-quantity waste generators, resulting from aligning rates with the cost-of-service by keeping certain rates flat, rather than reducing them; and
  • Ease of future implementation during rate-setting processes, including the ability to conduct annual indexed adjustments (not subject to Prop 218) as well as the potential for City administration of the rate setting process (or, at least, minimum consultant involvement).

One innovative aspect of the methodology is the calculation of rates based on a set annual contractor compensation amount – which is adjusted annually based on indexes and other straightforward factors – and current subscription levels for solid waste container sizes and frequency. This approach has the effect of adjusting for customer account “migration” in collection container subscription levels (reduced volume and/or frequency) on an annual basis, and also allows for rate adjustments that are specific to each container size, and not a universal percentage increase to all container sizes. This is important because over time, universal application of increases has the effect of widening the gap between the rates for larger vs. smaller subscription levels, which creates a positive feedback loop of further migration yielding greater rate increases, further widening of the rate gap, and so on.

Another key aspect of this methodology is that it provides a means of calculating rates for services related to each of the primary solid waste streams (generally including recycling, organics, and garbage/trash). Calculating rates for each of these three service areas is important, as it demonstrates to policy makers and ratepayers that there are costs for providing diversion services (recycling and organics) and that those costs are generally comparable to landfill services (garbage/trash). Even if adopted rates are still set in keeping with current convention (i.e. based on landfill container size), setting rates based on the costs of providing diversion services establishes a logical and defensible approach to rate setting, and also provides the basis for setting rates for recycling and organics service in the future.

On-Call Solid Waste Support

R3 is currently providing on-site staff support.

Tasks include the following:

  • Updating the City’s Solid Waste and C&D ordinances to require recycling and organics collection to increase diversion and meet the requirements of AB 341, AB 1826, and SB 1383;
  • Developing a Reusable Foodware ordinance;
  • Managing the City’s contract with Recology;
  • Helping the City develop, implement, and enforce a program for their zero waste building and occupancy requirements;
  • Providing on-site work one day per week;
  • Conducting a bimonthly call with City Staff and R3 Staff, for the term of this agreement;
  • Active tracking of permit applicants in the process;
  • Active management of auditors and audit requirements;
  • Reviewing and evaluating policy options for updating the City’s construction and demolition ordinance culminating in a final policy memorandum;
  • Providing support for 2020 rate setting, based on the rate structure already developed by R3 for the City; and
  • Other as-needed assistance.