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File Number: 19-198 <br />multifamily sites in compliance with state and county recycling mandates. The incremental cost of <br />the new route is approximately $600,000. <br />China’s National Sword Policy <br />At the beginning of 2018, China enacted a policy that imposes stringent quality specifications on <br />processed recyclable materials. The “National Sword” policy significantly impacts US exports of <br />materials from curbside recycling programs. Approximately 70% of the material collected by ACI <br />in curbside programs is mixed paper and cardboard. Prior to 2018, ACI was marketing mixed <br />paper at approximately $135 per ton. Starting in 2018, the value dropped to less than $20 per ton <br />and, in some cases, ACI paid up to $20 per ton to market the material. In addition, disruptions in <br />shipping container availability to export materials led to stockpiling materials at its facility. <br />In March 2018, ACI submitted a written request to the City to landfill recyclable materials as a last <br />resort if it could not market the material and reached storage capacity at its facility. Since that <br />time, no recyclable materials have been landfilled and ACI has been able to identify other <br />overseas markets for the materials. As a consequence of the ongoing volatility in the recycling <br />markets, ACI changed the sorting process at its facility to yield cleaner loads of paper, cardboard <br />and plastic. The additional processing and increased residue (destined for landfill) increased its <br />overall operational costs. Markets remain uncertain for the future as other countries (Indonesia, <br />Malaysia, Thailand, and Vietnam) establish their own load requirements and material bans. <br />Rate Adjustment Methodology <br />In addition to the 7.89% rate adjustment request, ACI also seeks to modify the annual rate <br />adjustment method so it more accurately captures the cost of operations and takes into account <br />the unanticipated costs associated with changes in law and increased operational requirements. <br />The existing annual rate adjustment process (RRI) does not accurately reflect ACI’s true vehicle <br />replacement costs and increases in recycling and organics processing costs. It was established <br />prior to any state or local recycling mandates. Public Works staff and ACI will discuss a new rate <br />adjustment process, and present the proposed methodology to the City Council for consideration <br />before February 1, 2020. <br />Previous Actions <br />·Resolution No. 2000-8 approving a Franchise Agreement for Solid Waste Recyclables, <br />and Green Waste Services between the City of San Leandro and Alameda County <br />Industries, Inc. <br />·Resolution No. 2009-117 authorizing the City Manager to execute Amendment 10 to the <br />Franchise Agreement. <br />·Resolution No. 2015-010 approving Amendment 11 to the Franchise Agreement. <br />·Resolution No. 2015-095 authorizing the City Manager to execute Amendment 12 to the <br />Franchise Agreement. <br />Applicable General Plan Policies <br />·Action 27.01-A: Source Reduction and Recycling Programs <br />·Action 27.01-C: Commercial and Multi-Family Residential Programs <br />Page 3 City of San Leandro Printed on 6/12/2019 <br />254