On November 17th city council is poised to sharply increase the cost of solid waste services and alley maintenance. Every landlord pays these charges but some don’t pass the cost on to tenants. That may change: rising rates may prompt landlords to add a surcharge for refuse. As more tenants pay, we will notice just how steeply those costs will rise over the next five years. Let’s take a closer look at the proposed rate increase and see why this is a bad deal for multifamily customers.
Why Raise Solid Waste Services Rates?
Beverly Hills has not raised solid waste services rates in nine years. Rising expenses for carting and disposal, coupled with reduced revenues from recyclables, the city says, is causing the city to dip into fund reserves. The city wants to maintain a half-dollar in reserves for every dollar cost of managing solid waste.
Over the longer term the city wants residential and commercial customers pay waste rates that are proportionate to the cost of providing the service. State law requires a transparent process for raising taxes and fees, and the city has been rolling out the public discussion over the past year. There were presentations to city commissions, online town halls, and city council discussions. Read more about the proposed rate increase at the city’s website.
The solid waste rates discussion comes back to city council for final approval on November 17th. That is our last opportunity to question the proposed rates as unfair to multifamily residents. That’s what we’re doing here in this post!
Steep Rate Hike is Proposed
At the November 17th meeting Beverly Hills City Council seems likely to raise solid waste services rates and the burden will fall disproportionately on multifamily customers. We would see an increase of 15% in solid waste rates every year over the next five years. Single-family customers will see a 10% annual increase. At the conclusion of the 5-year schedule multifamily customers will pay double for solid waste services compared to today while single-family customers will pay only 60% more than today.
In dollar terms the rate for solid waste services rises from $36.62 today to $72.69 in the 2025–2026 fiscal year. That’s a 100% increase over five years. Were solid waste rates to rise according to consumer prices (CPI) then the multifamily rate would top-out only at $42.66. Nearly all of the solid waste services dollar increase comes on top of inflation.
But alley maintenance is the greater concern. Residential waste customers today pay $21.76 per dwelling unit today to keep our alleys orderly. That fee is proposed to increase to $59.54 at the conclusion of the 5-year rate schedule — a whopping rise of 174%. Adding insult to injury the alley maintenance fee is quite regressive. Multifamily customers pay a disproportionately large share of the alley maintenance expense. That’s even considering the marginally higher cost of servicing multifamily dwellings. (There is more alley dumping generally and pickup of bulky items is more frequent because multifamily households move more often.)
What does it mean to say that multifamily bears a disproportionately large burden of alley maintenance expenses? Take the 200 block of Reeves for example. Multifamily residents share the Reeves-Canon alley with single-family dwellings. On the west side there are 151 multifamily units packed into 19 residential parcels. On the east side there are only 19 single-family dwellings.
At $21.76 collected for each residential dwelling, the multifamily customers collectively pay $3,285 bimonthly today to maintain the alley which we share with single-family customers. But they pay only $410 bimonthly because they are only 19 dwelling units.
Should multifamily customers be asked to pay eight times more than single-family customers for the same alley service? That sounds regressive to us!
After five years of alley maintenance fee increases multifamily customers would pay $8,990 bimonthly to maintain the alley — that’s about $5,700 more than those customers pay today. But single-family neighbors collectively would pay only $1,130 more than today for the same alley service.
Again multifamily customers pay about 8X more than single-family for the service — a multiplier that is consistent citywide because the average unit count per multifamily parcel is 8 — and the magnitude of the disparity only increases with the aggressive rate hike.
To boil it all down: if city council agrees to the proposed rate schedule then multifamily customers will see their monthly cost for solid waste services and alley maintenance (collectively called ‘refuse’ fees) rise from $29.19 today to $66.12 in 2025. That steep 125% rise will surprise some multifamily customers as it is phased in over five years. But other multifamily customers that do not today pay for refuse will be surprised by the surcharge — and surprised by the annual increase.
The Refuse Surcharge is Allowed to be Passed-Through
Refuse fees would appear to be a cost of operating rental housing not unlike sewer fees and the property taxes that fund street services. However the city allows the landlord to pass-through to tenants the cost of refuse. In 1991 this section was added to both chapters of the rent stabilization ordinance:
REFUSE FEE SURCHARGE: A. In addition to the rent otherwise permitted by this chapter, the landlord may pass through to the tenant of an apartment unit regulated by this chapter the cost of any refuse fee imposed by the City pursuant to a resolution or ordinance of the City Council.
Note that the added surcharge is not part of the base rent. Section 4–6–8 explains the proper process:
1. Provide written notice, by registered or certified mail, to all tenants thirty (30) days in advance of the imposition of the pass through, of the provisions of this section, that the pass through is not part of the base rent, that the refuse fee may be increased by the City, and any other information required to be given by the Rent Stabilization Office. 2. Provide all tenants with a copy of the landlord’s utility bill which sets forth the appropriate refuse fee and the basis for the calculation of the pass through.
Given the proposed rise in the refuse fees we can expect more tenants to pay this surcharge once the COVID–19 emergency ends.
Can a tenant avoid paying for refuse? Only if the lease explicitly says the landlord pays for refuse (or perhaps if the lease says the landlord pays for ”all utilities”). Otherwise the pass-through is allowed by law.
However…multifamily tenants who already pay for refuse should examine how the cost is passed-through. The current refuse fees are $36.62 (trash) and $21.76 (alley maintenance) and they are billed to the landlord bimonthly. The landlord should not pass through any amount more than $29.19 monthly. The landlord must also provide both the city’s utility bill and (like a shared water meter) an accounting of how the cost is calculated.
Unhappy With the Proposed Rates?
City council will discuss the solid waste services rate schedule at its November 17th evening meeting. That is an opportunity to communicate your concern about proposed rates and how they disproportionately affect you as a current or future customer. Reach city council by email with your comments.
However modifying the proposed rate schedule is a challenge at this point. There has been a year of hearings and a flyer mailed to every resident. But tenants have not focused on the magnitude of this rate hike so none of us it as an issue or flagged the burden to be borne by multifamily customers. There were held two online town halls that attracted only a single stakeholder. Talk about an empty virtual community square! (Watch the online town halls.)
Why haven’t tenants been more engaged?
- Solid waste services rates is an obscure policy point. The financial analysis is dense with figures and footnotes. It takes time and effort to understand what it means for multifamily customers. Most tenants don’t directly pay for solid waste services anyway.
- The city has been clever to present its rising expenses in terms of percentage change while presenting rising rates in dollar amounts. So the combined rise in solid waste and alley maintenance charges amounts to seven bucks a month or just a couple of cups of coffee. But viewed in percentage change and we see these refuse charges climb steeply. Renters Alliance plugged the figures into our own spreadsheet to calculate the percentages.
- There is no clear constituency to oppose this proposed rate hike. Tenants are not motivated to get involved because most of us don’t pay for refuse today. Landlords are not motivated because they can simply pass on any added cost to tenants in the surcharge.
In none of the commission or council discussion did officials discuss how the proposed rate hike disproportionately affects multifamily customers. On November 17th we should ask, Why are tenants paying so much of the total cost of residential solid waste services?
Do you have a question about the refuse surcharge or the proposed refuse fee increases? Get in touch with Renters Alliance!