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File Number: 11 -333 ordinance is in effect. The ordinance includes a provision that will increase the fee charged for paper or reusable bags to a minimum of 25 cents on or after January 1, 2015, if the ordinance has not achieved the intended goal of substantially reducing the environmental impact of single -use bags. Mandatory Recycling Ordinance In 2010, the City prepared a High Diversion Plan to serve as a guide for the City to achieve a 75% diversion goal and beyond. The plan identifies mandatory commercial recycling as a primary means of achieving additional new diversion. San Leandro has made significant progress in reducing the amount of solid waste disposal from single - family residential sources but has faced challenges in reducing disposal from the commercial and multifamily sector. According to the City's High Diversion Plan, more than 3,000 additional tons per year can be captured by implementing a mandatory recycling ordinance. The Mandatory Recycling Ordinance requires businesses to have sufficient recycling service. Businesses may have to reduce their solid waste service in order to avoid the cost increases caused by adding on recycling. Since recycling services are offered at a 20% discount, businesses could see cost savings from reducing solid waste service and adding on recycling service, but may be challenged by determining appropriate service levels and by ensuring that employees effectively sort recyclables from solid waste. Multifamily units will continue to pay a per unit recycling fee regardless of any possible changes in their service levels. Multifamily property owners are not required to ensure that tenants sort recyclables from solid waste. The draft ordinance is more stringent than the state law because it clarifies which materials should be recycled and it sets a performance threshold stipulating that businesses and multifamily properties must obtain adequate recycling service. The state law only requires businesses and multifamily properties to have a basic level of recycling which could translate into the smallest container available. According to ACI customer data, approximately 25% of front end loader bin customers (-400) would be subject to Phase 1. This includes City sites (with free service) and customers who already have recycling service. If staff assumes that the affected customers will save 10% by reducing garbage service and adding on recycling service, preliminary estimates suggest a $200,000 loss in ACI revenues or a $20,000 annual loss in the City's franchise fee revenues. Losses in franchise fees from the Oro Loma L -3 area would be less than $20,000, but are impossible to project at this time. Additional losses may be realized if industrial debris box customers migrate from solid waste to recycling services, but it is difficult to estimate the potential loss because industrial debris box customers have variable service schedules, may not necessarily generate the recyclable materials covered under the ordinance, and may use no -cost outlets for managing cardboard, metal, and office paper. Debris Box customers comprise 25% or $300,000 in annual franchise fee revenues for the City. In addition to a loss in revenues, ACI may have added costs associated with providing additional bins and recycling service. Per the franchise agreement, ACI may request a rate increase if the costs related to the implementation of the ordinance increase their overall costs by more than 10 %. The Mandatory Recycling Ordinance draft language contains an opt -out provision enabling jurisdictions to exclude its service area from Phase 1 and /or Phase 2. The City can choose City of San Leandro Page 4 Printed on 11/15/2011