Solid Waste Rate Increase: An Open Letter to City Council

Dear Mayor Friedman and members of the city council: Before you is a recommendation to increase solid-waste rates over five years. A new solid waste collection contract is forcing the city’s hand and we fully expect you to approve the proposed rates. However it should be noted that the rates, if approved, will force multifamily customers to shoulder even more of the burden of covering the city’s residential solid waste collection cost. Here are some observations.

The proposed schedule raises solid waste rates much more aggressively for multifamily. Multifamily customers will see rates rise 14.7% each year for the next five years. Single-family customers see a more moderate 9.8% rise each year. The higher annual percentage increase adds up! After five years at the proposed rates of increase, the multifamily customer will pay 99% more than today while single-family customers will pay only 60% more.

solid waste and alley relative rates of increase chart
The relative rates of increase for residential solid waste for multifamily and single-family customers. Multifamily customers shoulder too much of the total residential waste cost today, and will shoulder more of it each year over the next five years. The alley maintenance fee, which is paid by all residential waste customers, rises fastest of all: 173% over a 5-year period.

The alley maintenance fee is proposed to rise even faster for all residential waste customers. The alley maintenance fee is proposed to increase 22% each year for the next five years — a whopping rate increase! That is reflected in the single-family customer’s bimonthly alley bill: it rises from $21.76 today to $59.54 in 2025. That is six times faster that the rise in consumer prices over the past decade. But that’s nothing compared to the bigger alley bill paid by the multifamily customer at 204 Reeves. His bill rises by $755 between now and 2025 to bring his bimonthly alley maintenance bill to $1,190. Again these customers are paying to maintain the same alley. Because the multifamily customer pays on 20 dwelling units the 5-year rise in the alley fee (173%) bites much harder.

The cost of alley maintenance is also unfairly apportioned between multifamily and single-family customers. Here multifamily customers pay too much for alley maintenance also because each multifamily customer pays a per-dwelling unit fee no matter how many dwelling units are on a parcel. It is the same fee as paid by the single-family customer. Often they abut an alley segment of identical length (the width of a parcel) and sometimes even share the very same alley segment.

  • Take for example the average multifamily property of about 8 units. The multifamily customer pays the $21.76 alley maintenance bimonthly for each of those eight units for a bimonthly charge of $174. Across the alley a single-family customer can pay just one per-dwelling unit charge of $21.76. The multifamily customer is paying eight times as much to maintain the same alley segment.
  • Another example: the multifamily customer at 204 S. Reeves pays $21.76 per dwelling unit for alley maintenance. There are 20 units on that parcel so the alley bill totals $435.20 bimonthly. The single-family customer across the alley at 205 S. Canon pays the same $21.76 per dwelling unit but his is only a single dwelling unit. As a result these two customers share the same segment of the alley but the multifamily customer is paying twenty times more for alley maintenance.

Problems with the Process

The city did not meaningfully communicate the magnitude of the proposed solid waste and alley maintenance fee increases. Nowhere in the informative mailer is there a chart that shows how quickly solid waste rates will rise for residential customers. There are dense tables of figures although they talk about the proposed rates in terms of dollar increase rather than percentages. Why highlight annual increases of 14.7% and 9.8% for multifamily and single-family customers respectively? Why call attention to an alley fee that rises 173% over five years?

Proposed schedule of solid waste services rates as presented in the City of Beverly Hills Solid Waste Rate Analysis and Five-Year Rate Schedule (October 1, 2020). It illustrates the increase in relatively small dollar terms rather than highlight the relatively large percentage increase (14.7% each year for multifamily customers).

Indeed expressing the rate increase in dollar terms tends to downplay the magnitude of the increase. Multifamily customers will pay $36 more per unit bimonthly for solid waste pickup over the next five years than we pay today. It may not sound like much in dollars but when expressed as a percentage increase (99%) it is concerning. In contrast, the presentation of the city’s own rising for solid waste collection is always in percentage terms. Why not present the residential rate increase in the same terms?

To date the policy discussion has focused mostly on the city’s top priority: maintaining the solid waste reserve fund. Policymakers don’t want to see costs exceed revenues and thus draw-down the fund. That is understandable. However the disparate impact of the proposed rates on multifamily customers has not been talked about at all. No staff report mentions it. To their credit, two Rent Stabilization commissioners did call out the hefty rate increase (because they pay that bill) but they did not flag the discrepancy in the rates-of-increase or suggest the regressive nature of the alley maintenance fee. That’s our job!

Why Tenants Should Care

Solid waste and alley maintenance fee increases should be important to rent-stabilized tenants in Beverly Hills for a few reasons:

  • Even if we don’t pay for refuse today we could begin paying for it tomorrow. The rent stabilization ordinance allows landlords to pass-on the cost of solid waste and alley maintenance unless the original lease terms didn’t allow it.
  • Higher refuse costs will encourage landlords to pass it on whereas in the past they might have absorbed the cost (cushioned by the then-allowed 10% annual rent increase). More landlords will look to offload this business cost on to tenants.
  • Tenants paying for refuse for the first time next year may be surprised by a new $29.19 surcharge on top of the rent. Regardless of whether a tenant pays it now or later, she will certainly feel outraged when that monthly surcharge rises to $66.12 monthly in 2025. That really starts to bite!

The city hasn’t raised residential solid waste charges in nine years and so we can’t argue with higher rates. Carting costs are up and the market for recyclables is down. The city needs to cover costs. The question is how those costs are divided.

The current rate schedule reflects in our view an unfair division of residential refuse costs and the proposed rate schedule only exacerbates the inequity. We would like to have seen a fairer rate schedule be part of this discussion. Unfortunately we didn’t diagnose the problem and we tenants didn’t speak up to fix it.

Note:This post has been edited to remove a misstatement about the relative proportion of residential solid waste expense assigned to multifamily versus single-family customers. The correct ratio is 25% multifamily and 75% single-family. The ratio is important because it is a baseline assumption according to which rates are established for each residential customer category.