Council approves 2.82% Recology rate increase effective July 1

The Morgan Hill City Council on May 6 adopted a resolution approving a 2.82% maximum rate increase for Recology's solid-waste franchise, to be effective July 1, 2026. Staff said the adjustment is dictated by the city's franchise agreement with Recology and reflects multiple cost drivers.

Chris Coney, the city's presenter on the item, told the council that "the overall rate increase is, proposed at 2.82%, over the previous rates." He said the largest portion of the increase — 2.13 percentage points — stems from the change in the consumer price index, with smaller additions for fuel, landfill disposal and recycling costs and state-mandated program expenses.

Mike Kelly, general manager at Recology South Valley, described services for multifamily properties and bulky-item collection programs and said the company provides multifamily service guides and can schedule debris-box drop-offs for property managers. "Basically, we drop off a debris box... allow the residents to fill that up, and then we come and get it," Kelly said.

Council members asked how the adjustment compares to neighboring franchises, whether Recology is the only provider under the current agreement and when the contract will be renegotiated. Staff said Morgan Hill's agreement runs through 2032 and that cities could pursue alternative procurement or joint approaches when the franchise expires. The resolution passed on a 4-0 vote.

The council's action updates the city's schedule of maximum allowable rates to match the formula in the franchise agreement; staff said the change preserves service levels while passing through state and market-driven cost increases.