Arroyo Grande council adopts 4.92% solid-waste rate adjustment, rejects majority protest

Arroyo Grande City Council on Jan. 14 adopted a 4.92% adjustment to the city—s integrated solid-waste collection rates, effective Jan. 15, 2025, after a public hearing and a finding that no majority protest had been received.

The increase, presented by Nicole Valentine, Arroyo Grande—s director of administrative services, follows a county-coordinated review by consultant R3 and South County Sanitary Service—s application under the City of San Luis Obispo—s rate-setting methodology. Valentine told the council the recommended adjustment —will provide key benefits to the city in terms of rate predictability and stability— and that the technical recommendation from R3 set the adjustment at 4.92%.

The change will affect residential monthly billing; for example, the 32-gallon regular monthly charge shown in the staff materials increases from $27.33 to $28.67 (an increase of $1.34) under the 4.92% adjustment. The new methodology also includes updated depreciation schedules for trucks, an updated profit allowance, allowance for extraordinary adjustments, a cap on CPI adjustments, and regional service enhancements such as a customer assistance program, free bulky-waste collection and an annual cart-exchange program.

At the public hearing, resident Gary Schmidt of Sunrise Terrace said he was not opposing the rate request but urged the city to address what he described as failures in franchise service delivery and to correct inequities created by the franchise agreement. —I—m not here to oppose the rate request, but I am here to ask that the franchise agreement and how it affects us as citizens—the services that we require, and the costs that are, directed to us, unfairly in my view, be addressed in a fair and open manner,— Schmidt told the council.

Council discussion focused on the change to how corporate overhead is treated in the methodology. Council member Marbella pressed the provider on what corporate overhead covers and whether removing prior limits could allow overhead to grow unchecked. A representative from the provider explained corporate overhead covers administrative functions such as accounting, human resources and legal; council members were later told the methodology imposes a percentage cap on that allowance (discussed in the hearing as 4%). After that clarification, Marbella said she felt —a little better about this.— Council member Guthrie said he was satisfied the adjustment represented the best deal available.

The city clerk reported two written protests had been received by the close of the hearing; a successful majority protest under Proposition 218 would have required 4,404 written protests. Because the protest threshold was not met, the council proceeded to adopt the resolution establishing the new rates and found the action exempt from the California Environmental Quality Act (CEQA).

The council approved the action by roll-call vote: Council member Guthrie, Mayor Pro Tem Seacrest, Council member Low, Council member Marbella and Mayor Ray Russom all voted yes (5-0).

Planning materials presented to the council estimate the annual cost to the city for the cart-exchange enhancement at $11,445 and assume roughly 50% customer take-up for planning purposes; staff said that estimate is conservative and that the contract terms assign costs above the assumed level to the provider rather than shifting that overrun directly to customers.

The new methodology and rate schedule were developed collaboratively with neighboring agencies in San Luis Obispo County and with consultant review. Staff said the methodology aims to reduce the frequency of full cost-based adjustments, improve predictability and add customer-facing services.

Votes at a glance: - Adopted resolution establishing integrated solid-waste collection rates (4.92% increase), effective Jan. 15, 2025; CEQA exemption declared; vote 5-0.

What happens next: The new residential rates will be implemented on bills following the Jan. 15, 2025 effective date and the city will work with South County Sanitary Service on implementation of the listed service enhancements and on monitoring contract performance, per the staff report.