Beverly Hills city council this week agreed to raise the refuse charge paid by multifamily customers to take care of solid waste collection and alley maintenance. Beginning in January 2022, multifamily rates will rise every year to double by 2025. The alley maintenance charge will rise by 170%. These rate hikes will culminate in a per-apartment charge of $66 per month which can be passed-through to tenants if the lease allows. It’s a steep hike that has multifamily customers shouldering the biggest burden.
As we explained last month in our post, Solid Waste Services Rates are Rising and You May Pay, the rate increases adopted this week is the first rate hike in many years. Driving it is China’s refusal to continue to import waste and that has upended the economics of recyclables processing. But the city’s reliance on hauler Athens has also put us in a bind: Athens wanted more to service city customers and there was no second bidder.
The current rate structure for solid waste collection and alley maintenance (collectively called ‘refuse’) totals $58.38 bimonthly (which is how the city bills it). That breaks down to about $30 per month per unit for most condo and rent-stabilized multifamily customers.
Since 1992 the Beverly Hills rent stabilization ordinance has allowed landlords to pass the cost of refuse through to tenants. Most landlords absorb the city’s charge for refuse. However with the cost approved to rise steeply, we can expect more landlords to pass-through that charge.
Multifamily households that pay the surcharge will see $29.19 (the bimonthly charge divided by two) added to the base rent. It is a per-dwelling unit charge regardless of the size of the unit or the number of units. The landlord must provide the utility bill to document the surcharge. (Please get in touch with Renters Alliance if you pay more or do not see the utility bill for documentation.)
A Bad Deal for Multifamily Customers
The current rate schedule represents the city’s effort to step-up rates annually to gradually phase-in significantly higher rates. But there’s more to the story, namely that solid waste rates will rise much more aggressively for multifamily customers than for single-family customers. That fact seems to have escaped the notice of the Courier and the Weekly. (Renters Alliance is always get your best source for multifamily news!)
The city has always presented the proposed rate schedule in dollar terms while discussing the rise in city costs in percentages. But presenting the new rates in dollars greatly understates the magnitude of the increase. This chart shows how much more quickly solid waste rates rise for multifamily customers compared to single-family customers.
Where multifamily rates double over five years, single-family rates rise by 60%. That’s not even two-thirds the magnitude of the multifamily increase over the period. During this period consumer prices (and paychecks) will probably rise by no more than 15%. Alley maintenance will rise fastest of all — up more than 170% over the next five years.
As we explained in our Open Letter to City Council, the alley maintenance fee is already disproportionately burdensome for multifamily customers because like the solid waste rates it is paid per dwelling unit. The average multifamily property is about 8 units and that customer today pays eight times as much for maintaining the alley as does the single-family homeowner across the alley.
The magnitude of the alley maintenance increase — rising nearly threefold over five years — serves to shift more of the alley burden to multifamily customers. And the disparity yawns widest for large-lot homeowners compared to multifamily customers because they pay the same per-dwelling unit alley maintenance fee as is charged to a studio apartment…even if they have a greater length of alley to maintain.
What Did City Council Do?
Though city council was somewhat divided on the (revised) proposed rate schedule, it passed 4-1. Mayor Friedman, Councilmember Gold and Lili Bosse were ready to approve it. After all, city council and the Public Works Commission have been discussing the proposed rates for about a year. Nobody in those meetings questioned why the multifamily customer rate for solid waste was rising so quickly.
Councilmember John Mirisch, though, said he was opposed in principle to the rate hike and he refused to support it. “I think we should be cutting all rates by 5%.” But three votes is all it takes for the new solid waste rate schedule to pass and pass it did.
Vice-mayor Wunderluch supported the new rate schedule but with a caveat: he wants city council to revisit the disparity between single-family and multifamily rates prior to the next rate change (sometime after 2025). That’s all we were asking for in our open letter to city council.
A Few Multifamily Customers Get a Big Break
We weren’t the only ones to sound an alarm about the rising refuse charge at the November city council meeting. A landlord with a 16-unit property at 209 South Hamilton raised a concern too. His problem with his curbside waste collection was that pickup was once per week, just like single-family customers without alley service, but that he, like 72 other multifamily landlords with curbside pickup, was paying much more than single-family customers for the same service.
That’s because the way the city charges for curbside collection (as opposed to alley collection) is different for single-family customers: they pay per square foot of lot whereas multifamily customers pay per dwelling unit. A landlord with more units on a single lot will see the virtue in paying the single-family square-foot rate for curbside service.
And what a difference it makes when solid waste collection is billed by lot area. Public Works department staff report notes, “Applying the single-family regular rate per square foot to these 73 customers will result in rates lower than the proposed MFR [multifamily] dwelling unit rates…approximately 44% lower.” That’s a solid waste rate cut by nearly half.
But the staff report in highlighting the average rate greatly understates the magnitude of the rate cut that customers like 209 South Hamilton Drive will enjoy. Today that landlord pays $585.92 every other month for solid waste collection for 16 units. Under the previous proposed rate schedule, using multifamily rates, it would have risen to $672 after the first year’s increase and then in year five top out at $1163.04. That’s a doubling of the solid waste rate over five years.
Under the revised proposed rate increase — the one approved by city council this week — the landlord at 209 South Hamilton gets a big break. The current solid waste charge of $585.92 bimonthly decreases to $130.23 the first year — a 78% rate cut. After five years the savings is even greater: where the property’s solid waste charge would have been $1,163.04 under the multifamily rate, the bill tops out at only $189.31 bimonthly in 2025. Here’s how that compares.
Again that’s the difference between paying a per-dwelling-unit solid waste bill at the multifamily rate as originally proposed versus paying a bill that is calculated by lot area using the single-family formula. Here’s how that math works for 209 South Hamilton:
Take the area of the 40×130 foot lot (5,200 square feet) and add to that the building area (6,204 square feet in two stories) to produce multiplier of 11,404. Multiply that by the single-family rate which is $.01142 (or 1.142 cents) to arrive at $130.24 bimonthly for solid waste after the first year’s rate increase.
This landlord and 72 other curbside multifamily customers will get a big dividend in year one and into the future because each successive annual rate increase is now calculated on a reduced base. Due to compounding the rising rate is much more moderate as the chart’s line shows.
To conclude, on one side we have multifamily landlords with curbside collection that get a big rate cut like 209 South Hamilton. On the other side we have single-family customers that benefit from an alley maintenance fee structure that overwhelmingly favors single-family over multifamily customers.
That leaves the rest of multifamily dwellers bracing for our landlord to pass on this steep rate hike through a new refuse surcharge. Here I am, stuck in the middle with you. City council will give final approval to the new rate schedule at its January 12th meeting.