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HomeMy WebLinkAboutItem 6.7 OakScavengerGarbRates ,. . . .. --1 !!1 CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: January 11, 1993 EXHIBITS Consideration of 1993 Oakland Scavenger Company Garbage Rates ~(prepared by: Paul S. Rankin, Assistant City Manager) ATTACHED: 1. / Memorandum Dated January 4, 1993 from Assistant City Manager Regarding Detailed Analysis of 1993 Oakland Scavenger Rate Application with Recommended City of Dublin Adjustments 2.~Resolution Approving Agreement for Provisional Charges for the Closure and Post Closure )Maintenance of Altamont Sanitary Landfill. 3. ~Comparison of proposed 1993 City of Dublin Garbage Rates to Current Rates 4. / Comparison of Selected Garbage Rates Throughout the Bay Area 5. / Resolution Amending the Schedule of Garbage Rates 6. / Resolution Approving Amendment to Franchise Agreement to Provide for Collection of Administrative Fee SUBJECT: RECOMMENDATION~. . 2. 3. 4. Open Public Hearing Receive Staff Report and Public Testimony Close Public Hearing and Deliberate Adopt Resolutions FINANCIAL STATEMENT: The proposed rate adjustments vary depending on the type and frequency of service. Overall, the proposed adjustments are projected to decrease revenue to Oakland Scavenger Company. The proposed schedules and resolutions include the addition of a 2% fee to fund City administrative costs associated with waste management activities. DESCRIPTION: On an annual basis, the City Council has reviewed garbage rates through a process jointly undertaken by the Joint Refuse Rate Review Committee. Exhibit 1 provides a detailed analysis of the most recent JRRRC report, along with recommendations for the City of Dublin. LANDFILL CLOSURE/POST CLOSURE (CPC) - PROVISIONAL AGREEMEtn' As described in Exhibit 1, the Company has requested that operating costs allow for charges associated with the Closure and Post Closure expenses of the Altamont Landfill. It is anticipated that a final resolution of this matter will require further negotiations. In order to proceed with the process, the JRRRC Consultants have developed an agreement for a provisional increase in the rates. The agreement will basically provide a set aside of a portion of the Company revenues. These revenues will be dedicated for CPC expenses. The agreement explicitly describes how these funds are to be handled during the negotiations and prior to the execution of a final CPC agreement. The cost is projected at $1.66 per ton and it is estimated that Dublin Rate payers will contribute $41,955 in 1993. The actual amount will be adjusted at year end, based upon the total amount of waste delivered to the landfill from City of Dublin accounts. ---------------------------------------------------------------------- ITEM NO. COPIES TO: Dan Borges, LDD Division President D. David MacDonald, OSC CITY CLERK FILE CE2IaW . . ." t.. It is anticipated that a subcommittee of the JRRRC will negotiate a model final agreement for consideration by the affected agencies. It is anticipated that this model agreement will be presented to the City Council for its consideration in conjunction with the review of the 1994 Rate Application. CPC Recommendation: Staff recommends that the City Council adopt the Resolution identified as Exhibit 2, which will authorize the Mayor to execute the agreement on behalf of the City of Dublin. COMPARISON OF 1992 DUBLIN GARBAGE RATES 'l'O PROPOSED 1993 RATES Exhibit 1 discusses the methodology utilized to develop the proposed rate schedule. For comparison purposes, Staff has prepared Exhibit 3, which compares all of the current garbage rates to the proposed rates. The following summarizes the general types of changes: Residential: Minimal increases occur for Super Recycler and 1 can customers (25 cents per month and 10 cents 'per month respectively.) The increase represents additional costs for recycling and special clean-up components. The amount of the increase is mitigated by a decrease in the uniform disposal component. Multi-can subscribers will recei ve a decrease which will vary depending on the number of cans used. Commercial: All subscriber levels receive a rate decrease. amount of decrease fluctuates based upon the size of container frequency. The disposal component has been reduced, while frequency factor for pick-ups beyond once per week was increased $5.55 per month to $6.05 per month. The excess rate for waste the container water level was frozen at $6.40 per cubic yard. The and the from over Commercial Can Service: A minimal number of commercial customers have individual cans. No change is proposed in this rate. Handv Hauler: The rate was increased by 50 cents to reflect the change in the frequency factor for commercial type services. Drop Box: A minimal change was made to these charges to reflect the increase in the frequency factor component. As noted above, the change amounted to 50 cents. The rate per cubic yard will be priced at 15% greater than the cubic yard rate for the more efficient commercial service. All miscellaneous charges with this type of service remain unchanged. In reviewing the proposed rates, it is important to be aware that the changes are based upon projections. The actual results may vary depending upon changes in subscribership and economic factors. These changes do not account for the need to increase rates for Multi-Family Commercial service at the time of implementation of the Multi-Family Recycling program. This item will be presented at a future meeting. As discussed in Exhibit 1, the City is projected to have surplus revenues in the Balancing Account. The application of these funds will be addressed with the 1994 Rate Application. COMPARISON TO OTHER JURISDICTIONS One measure of the cost effectiveness of the City of Dublin garbage rate structure is comparison of rates in other communities. Exhibit 4 contains this type of comparison. The survey is compiled from data collected by the Central Contra Costa Sanitary District. For residential comparison purposes, Staff looked at those agencies offering standard 32 gallon service. It is important to note that the City of Dublin rates are based -2- . . .,. "' upon backyard collection, which is typically less efficient and more expensive than curbside. As shown in Exhibit 4, the $8.00 per month proposed Dublin Single Can Rate for garbage collection and recycling is more than half of the average rate charged in other jurisdictions. The commercial service comparison shows a similar level of cost savings for Dublin ratepayers. This comparison supports the conclusion that the proposed rates are reasonable. Exhibit 4 has excluded those agencies utilizing automated collection (i.e. San Ramon and Pleasanton). Typically, the container offered is much larger than a standard can. Although the capital cost of automated service is higher when compared to the collection system used by Oakland Scavenger COmpany, there are significant operational cost savings with an automated system. Proposed Rate Schedule Based upon the information discussed above, Staff has prepared a revised Rate Resolution (Exhibit 5). This resolution will implement the proposed rates effective for all service rendered after January 1, 1993. FRANCHISE AMENDMENT 'l'O IMPLEMENT ADMINISTRATIVE FEE As previously discussed with the City Council, due to State Mandates, the Staff time required to administer waste management programs has increased significantly in recent years. In Fiscal Year 1992/93, the City was able to fund a portion of the Staff time required with Measure D Funds. These monies could not be expended for general activities and were required to be used only on recycling or source reduction activities. In order to develop a long term revenue source, Staff has recommended the collection of a 2% fee in addition to the current Franchise Fees. Of the cities currently serviced by the Company, the City of Dublin collects the lowest amount in fees. If the City Council were to increase the amount by 2%, the City would still be the second lowest. In order to provide for this revenue source, Staff has prepared a resolution approving an amendment to the current Franchise Agreement. The amendment identifies in general terms the proposed use of these fees. It is proposed that they would be collected and paid by the Company in the same manner as franchise fees. The actual expenditure of these funds will be subject to City Council approval during the City Budget process. Staff recommends that the City Council adopt the resolution authorizing the execution of the Franchise Amendment. RECOMMENDATION Staff recommends that the City Council conduct a publiC hearing, deliberate, and adopt the resolutions. PSR/lss a:lllRates.doc.agenda#11 -3- J . " . '. TO: City Council FROM: Paul S. Rankin, Assistant City Manager RE: Detailed Analysis of 1993 Oakland Scavenger Company (OSC) Garbage Rate/Application with Recommended City of Dublin Adjustments EXHIBITS: A: Executive Summary - 1993 Rate Review of Oakland Scavenger Co. (December 10, 1992) Prepared by Hilton Farnkopf & Hobson [Note: The Complete Report is available for review in the Office of the City Clerk] B: Letter dated May 6, 1992 from Dan Borges, Livermore Dublin Disposal regarding use of three man crews. C: Oakland Scavenger Historical Tonnage for Altamont Landfill D: Excerpt from 1993 JRRRC Rate Review regarding Return on Equity. (ROE) DATE: January 4, 1993 PURPOSE The purpose of this memorandum is to discuss significant findings and issues in the 1993 Oakland Scavenger Rate Application Review. This memorandum provides much of the detailed analysis which is intended as background material for the City council Public Hearing on January 11, 1993. JOINT REFUSE RATE REVIEW COMMITTEE City of Dublin Staff, as members of the Joint Refuse Rate Review Committee (JRRRC), have completed a review of the 1993 Oakland Scavenger Company (Company) rate application. The Committee issued a report prepared by Hilton Farnkopf & Hobson (HFH), which details the findings of the review (Exhibit A). BACKGROUND The previous 1992 Rate Adjustments were based upon a new methodology. The JRRRC recommended that expenses and revenues be allocated on a jurisdictional basis. In addition, there were monies owed to the Company in the "Balancing Account." This account was used to track differences between revenues collected and allowed expenses. For several years the account had a surplus, which eliminated the necessity for rate adjustments. As of 1991, the amount owed to the Company was projected at $16.691 million. The report presented last year included a methodology for distributing the amount owed between member jurisdictions. The Company requested repayment within 3 years. Due to the fact that the City of Dublin was projected in 1992 to generate revenues in excess of expenses, the City Council was able to enact a rate decrease last year. The adopted rate scbedules attempted to reduce total ~:~l{~t~[~ r~.J i. , ," . '\. revenues collected by 4.7%. The City also established a goal to offset the full amount owed to the balancing account in one year. RESULTS - PRIOR YEAR RATE ADJUSTMENTS The following summarizes the projected results of the 1992 rate adjustments, adopted last January. Since these figures are based upon estimates, the exact outcome will not be known until next year. Total BalancinQ Account - The final Balancing Account as of December 31, 1992 was larger than projected in last year's report. The amount owed to the Company, as adjusted by HF&H, was $17.753 million. city of Dublin Share of BalancinQ Account - The 1991 report projected that the City of Dublin share would be $131,000. Due to a higher balance to be distributed, the City'S share was actually $144,000. pro;ected 1992 City of Dublin BalancinQ Account - As previouslY noted, the City Council established rates at a level which was projected to eliminate the deficit in the Balancing Account over 1 year. HF&H estimate that this goal will be surpassed and that the account will actually have a surplus credit balance of $212,000, which will be available to offset future rate increases. Pro;ected 1992 Revenue Compared to Prior Year - The previous rate adjustment was targeted to reduce total revenue to the Company by 4.7%. HF&H project that the revenue will actually be reduced by 4.5%, which is very close to the targeted amount. Although the total reduction for Company revenues was close to the target, it should be noted that the adjustments to rates differed by category from projections. The totals were reached due to changes in business (i.e. additional customers in the commercial sector). The following is an excerpt from Table 4-5 of the HF&H report which compares the projected revenue changes to what actually happened: City of Dublin Projected 1992 Revenue Changes Target Reduction of 1992 Rate Ad;ustment Estimated Actual Reduction Residential Commercial Drop Box -4.7% -4.7% Rates Increased* - 4.4% - 1.8% -12.1% Total Change in Company Revenue -4.7% - 4.5% *As noted, the Drop Box Rates established for 1992 were increased. The amount of increase varied by container size and ranged from 3.1% to 8.8%. The reason why the Company experienced a substantial decline in this line of business probably reflects the economy (i.e. less building/construction activity.) -2- . . OUTSTANDING ITEMS FROM PREVIOUS REVIEW In 1991, the JRRRC conducted a Management and Operations audit of OSC. This review found that staffing levels had increased, especially for the accounting and maintenance functions. It was suggested that additional analysis be conducted. Further, the report questioned the necessity of 3- man crews, which are less efficient and more costly. The Committee also excluded from previous rate requests by OSC the inclusion of monies to cover Closure and Post Closure (CPC) expenses at the Altamont Landfill. In 1992, the JRRRC undertook further study of the Accounting and Maintenance Division Staffing. The report is being prepared by R. W. Beck & Associates and has not been issued. The 1993 JRRRC report proposes that any findings of the Beck Report may result in retroactive adjustments to OSC expenses. The report will also audit billing systems and compare them to the subscription level. The final report is anticipated to be issued in the next few months. During the last rate review, the City Council requested that Staff evaluate the use of a 3-man crew by OSC in the City of Dublin. Attached as Exhibit B is a letter analyzing the Company's projected expense for the current 3-man crew. The conclusion reached by OSC is that the current size of the residential routes dictate the use of one 3-man crew. They have noted that as growth occurs, it may be beneficial in the future to add an additional 2- man route. Staff recommends that the City Council accept this response at this time; however, the Company must be encouraged to utilize the most efficient staffing level as soon as the number of accounts warrants a change. staff believes that information from the pending R. W. Beck report may also be beneficial in further analyzing the efficiency of the number of accounts per crew member. Closure/Post Closure (CPC) costs are a complex issue which will be discussed in greater detail in the following section. During 1992, the JRRRC undertook a study utilizing a team of three specialized consultants: HF&H (Rates and Financial AnalysiS), Hanson Bridgett, et. al. (Legal AnalysiS) and SCS Engineers (Technical Analysis). The purpose of the study was to assess the request by OSC for CPC expenses through the rates. The final report has not been completed; although it is anticipated that the ultimate settlement of the issue will be the subject of future negotiations with the Company. LANDFILL CLOSURE POST CLOSURE (CPC ) BACKGROUND Closure Post Closure expenses discussed in this report relate specifically to the Altamont Landfill. As part of the most recent application, the Company requested the following amounts associated with CPC expenses: 1992 1993 $ 935,000 $ 1,550,000 Previous actions by the JRRRC have denied the inclusion of CPC expenses in prior years. In the event that the City's rate payers have an obligation for these costs, the JRRRC felt it was prudent to begin reserving funds for -3- . . this purpose. Therefore, HF&H have included Dublin's proportionate amount of the 1993 expense request in the projected expenses. Closure/Post Closure requirements are mandated by both state and Federal environmental protection laws. The closure requirements dictate how each cell is compacted and covered. In addition these regulations impact the type of lining provided before garbage is placed in the landfill. This is important to protect ground water from contamination created by decaying waste. The decaying waste also generates methane gas which must be handled in an approved manner. The landfill operator must have an approved plan for closure of the landfill. The post closure requirements obligate the operator to monitor and maintain the site for a period of 30 years, or until they can demonstrate to regulatory agencies that leachate and/or gases are not being produced or will not contaminate the environment. The types of systems to meet these requirements are technical in nature and do impact the cost of landfill disposal. Further, there are optional means by which the landfill operator can show financial responsibility for performing all work identified in their approved CPC plans. PROPOSED AGREEMENT FOR PROVISIONAL CHARGES As noted above, the Consultants have included the 1993 CPC expenses requested by the Company in the estimated 1993 Company expenses. This represents approximately 1.77% of the projected revenue for the City of Dublin. The amount is calculated based upon a $1.66 per ton figure. The total value estimated to be paid in 1993 by Dublin ratepayers is $41,955. Due to the fact that there are several outstanding issues, the JRRRC is recommending that this portion of the rates be subject to a provisional agreement. The agreement allows OSC to expense on a per ton basis $1.66 for each ton disposed of in 1993. The provisional agreement is subject to the Company's negotiation of an amendment to the City of Dublin franchise agreement, which will more clearly define the extent and method of CPC expenses to be collected by the Company. It is anticipated that this document will be presented before the next rate adjustment. At this time, the total obligation of the ratepayers is undetermined; therefore, Staff has proceeded cautiously in making recommendations on extensive reductions to the current rate structure. In order to reach final resolution, the JRRRC has also recommended that a subcommittee negotiate a model agreement which can be used by each of the member agencies. This appears to be the best opportunity to reach a final decision on this issue and have a complete understanding of the implications to the ratepayers. staff has prepared a resolution approving the "Provisional Charges Agreement." The actual impact has been incorporated into the proposed rate structure discussed later in this report. -4- . . PROJECTED OAKLAND SCAVENGER COMPANY EXPENSES As determined by the HF&H Report (Exhibit A, Table 1-4), the total revenue required by the Company for City of Dublin services in 1993 is projected at $2,081,000. At the City Council meeting of December 14, 1992, the City Council conceptually considered the collection of a 2% Administrative Fee in addition to the current Franchise Fees. The purpose of this fee is to recover the City's administrative cost of administering solid waste programs. This includes administration of the mandated Source Reduction Recycling Element, as well as general programs. The cost of JRRRC operations is currently paid for through the rates. This surcharge will increase the projected expenses of the Company as follows: Dublin Revenue Requirement Stated in JRRRC Report Additional Expense of a 2% Administrative Fee Total Adjusted Revenue Requirement $2,081,000 41.620 $2,122,620 In order to collect the additional fee it will be necessary for the City Council to adopt an amendment to the Franchise Agreement with Oakland Scavenger Company. PROJECTED OAKLAND SCAVENGER COMPANY REVENtJ]; The projected revenue to be received by the Company has also been broken down by jurisdiction. The Consultants project that the revenue generated by Dublin ratepayers will total $2,357,000. Although this amount is $234,380 greater than the expenses, these estimates may fluctuate considerably from the actual results. The following factors could affect the final outcome: . Final negotiation of costs associated with Closure and Post Closure activities. . Economic conditions which tend to impact the commercial and drop box sectors. . Pending legal ruling on Measure D. . Increased plans for recycling in the commercial sector, which may result in less revenue due to changes in subscription levels. . Fluctuations in the tonnage handled. Some of these impacts result from the scale of economy in handling additional increments. For example, successful recycling programs will reduce the amount of waste placed in the landfill. At the same time, the Company continues to incur certain operational costs to provide even a minimum level of service. This has been observed in recent years with the operation of the Altamont Landfill. The Company currently accepts imported waste from the City and County of San Francisco. The members of the JRRRC only pay a proportionate share of the Altamont Landfill expenses based upon the amount of waste from the jurisdictions. In 1992, the JRRRC Franchised Waste is anticipated to represent a larger portion of the total waste. This is depicted in Exhibit C which shows historical tonnage. As the cities assume larger portions of the overhead costs, revenue to the company will need to increase. -5- , ~ ., staff recommends that adjustments be made in a conservative manner, the current estimated excess of $234,380 will allow for the city council to consider rate adjustments which will reduce the total projected revenue for 1993. SURPLUS BALANCING ACCOUNT In addition to the projected excess revenue, HF&H also project a surplus balance of $212,000 in the Balancing Account (Exhibit A: Table 1-5). This amount reflects estimates of excess revenues collected in previous years. Based upon direction from the city council at the meeting on December 14, 1992, this surplus will be addressed in the 1994 Rate Application. These monies may be used to offset future rate increases or to balance changes in the actuals vs. estimates. PROPOSED RATE ADJUSTMENTS At a city Council meeting on December 14, 1992, staff was provided with general direction on the methodology for residential rates. The following summarizes the proposed adjustment and methodology for each of the rate categories. RESIDENTIAL RATES Description: All single family residences. In addition, some of the multi- family townhouse developments have individual service. The base service level includes curbside recycling and four special clean-ups. Total number of customers = 4,305 subscription Level: Non-standard container size 20 gallon 40 gallon 45 gallon 85 customers 37 customers 259 customers standard container (32 gallon) 1 can customer 2 can customer 3 can customer 4 can customer 5 can customer 2,339 customers 2,372 customers 192 customers 20 customers 1 customer Methodology: cost of Curbside Recycling ($1.34 per month) and special Clean-Ups ($1.06 per month) is paid equally by each subscriber on the first can. Disposal cost is uniform for each additional can. super Recycler (20 gallon container) reflects a 20% discount in the uniform disposal component. Proposed 1993 Rates: Recycling and clean-up components increased while the uniform disposal costs decreased by 12.5%. The following reflects the proposed rate for selected service levels: -6- r . . 1 Standard 32 Gallon Can Each Additional Can Super Recycler (20 Gallon Can) Current Rate $7.90 6.30 6.65 PropOsed $8.00 5.60 6.90 Impact of Proposed 1993 Rates: A reduction of $20,000 in revenue to the Company. COMMERCIAL Description: This refers to the serv1C1ng of bins which are owned and maintained by the garbage company. This service is typically found at apartments, stores, and other retail outlets. The trucks servicing commercial accounts empty bins fr~m several locations before traveling to the landfill. Subscription Level: The level of service and number of accounts tends to fluctuate significantly. Recent statistics showed approximately 628 bins in service. They range in size from 1 cubic yard to 7 cubic yards and are serviced between one and five times per week depending on the customers needs. Methodology: The 1992 rates developed a formula which applied a monthly cubic yard rate plus a frequency factor. The cubic yard rate was $27.70/month plus $5.55 Frequency Factor for each collection beyond once per week. (Frequency Factor : 20% of Monthly Cubic Yard Component) For example, monthly costs 1 yard bin serviced 2 times/wk : 2 x $27.70 + $5.55 : $60.95 As noted, the frequency factor was set at 20% of the monthly cubic yard rate. This factor is intended to recognize the efficiency of having a bin serviced fewer times per week. For example, a two yard bin serviced once per week is less than a one yard bin serviced twice per week. Proposed 1993 Rate: The proposed rate schedule contains a 15% reduction in the monthly cubic yard disposal rate to $24.10. It is recommended that the frequency factor be increased to 25% of the cubic yard rate or $6.05. The following categories currently represent 63% of the bins in service. For comparison purposes the current and proposed rates are shown: 3 Cubic Yard Current PrOpOsed 1/week $ 83. 1 0 $ 72.30 2/week 171.75 150.65 3/week 260.40 229.00 4/week 349.05 307.35 5/week 437.70 385.70 -7- . . 4 Cubic Yard 1/week $110.80 $ 96.40 2/week 227.15 198.85 3/week 343.50 301.30 4/week 459.85 403.75 5/week 576.20 506.20 Estimated Change in Revenue: The new rates are estimated to reduce COmpany revenue by approximately $155,000. It is important to note that multi-family projects will receive a rate increase once the proposed recycling program is implemented. It is anticipated that this will be per unit fee and will require separate action by the City Council. DROP BOX SERVICE Description: Drop Box Service represents the least efficient of the services offered. The removal must be handled one account at a time. These services can also be very unstable in terms of total revenue to the Company. Methodology: In 1992 the methodology used was to establish the cost at the same amount per cubic yard as commercial service. (Note: the Commercial Rates shown above were for monthly service) Drop Box Rates apply to each time the bin is serviced. In addition, the frequency factor was added to the cubic yard disposal cost to recognize the inefficiency of this service. Proposed 1993 Rates: For 1993 Staff is not recommending any change to the disposal rate. Therefore, disposal of waste under this classification will be priced 15% higher than the cubic yard rate for regular commercial service. In addition, it is recommended that the frequency factor be increased to $6.05. The freezing of disposal rates for drop box services will continue to encourage customers when possible to utilize the most efficient level of service. No change is recommended for the Miscellaneous Drop Box charges. The Handy Hauler Rate is proposed to increase by 50 cents to reflect the change in the frequency factor. Commercial Can Service A small number of commercial customers have individual can service. No change has been proposed in these rates. These customers do not receive recycling and clean-up services. The rate remains more than the residential disposal rate to recognize inefficiencies in servicing these accounts. TOTAL REVENUE REDUCTION As stated previously, the current rates are projected to exceed expenses even after being adjusted to provide a 2% administrative fee. The following details the estimated impact of the proposed rates: -8- . . Estimated Excess Revenues (Adjusted by 2%) Reduced Residential Revenue Reduced Commercial Revenue Projected Surplus $234,380 (20,000) (155.000) $ 59,380 The surplus revenues will be available in the event that the projections differ significantly from what actually occurs. PROFIT 'l'O COMPANY In conjunction with the review of the Rate Application, the JRRRC also makes a recommendation on the profit to be allowed to the Company. The amount of profit is calculated on a Return on Equity (ROE) basis. This means that the allowed percentage is applied to the total Company equity. In 1992 the Company was allowed a 10% ROE. This translated into a pre-tax profit of 5.7%. The 1992 ROE was recommended based upon a review of available data for other companies in the industry. The JRRRC also considered the general decline in the economy, as well as the fact that the Company was operating in an environment which guarantees a profit regardless of the other factors. The range of reasonable ROE found in the 1992 survey was 10% to 16%. The 1992 profit of 10% was at the bottom of the range. In 1993 a similar survey was conducted, which showed a decline in the typical range to between 7% and 13%. This decline reflects industry-wide trends towards lower profits and also depicts the continued downturn in the economy. Based upon the review by the JRRRC, the recommended ROE is at 9.5% which is near the middle of the range. The Committee also considered the efforts by the Company to make improvements which included implementation of a customer service system and submittal of a complete rate application. This will produce a pre-tax profit of 6.4% of revenues and a post-tax profit of 4.0% of revenues. FUTURE PROFIT CALCULATIONS The JRRRC Report also addresses the potential need to evaluate how future profit calculations are made. The use of a Return on Equity (ROE) procedure was implemented when Oakland Scavenger Company was an independent corporation. In December of 1986, the Company was purchased by Waste Management Inc. (WMI). This impacted the treatment of Company Equity. Exhibit D is an excerpt from the rate report which describes the impact of ROE after the Waste Management Inc. purchase. Basically, all profit is added to the Company's equity base since it no longer pays dividends or has shareholder buyouts. If this process continues, the Equity base will continue to increase which will automatically provide more revenue to the Company. In the future, the Consultant has identified optional methods to address this issue. One method which is typically used in the industry is an -9- . . "Operating Ratio." For example, a formula would allow a 95% pre-tax operating ratio would grant the operator 5% in profit. This issue requires further study and the JRRRC may recommend a change with the 1994 Rate Application. The methodology needs to be established in a manner which continues to give the Company an incentive to operate in an efficient manner. FINAL RECOMMENDATIONS The JRRRC Report includes 12 recommendations which are described on pages 6 and 7 of Exhibit A. The items having the greatest significance to Dublin ratepayers have been discussed above. Although it is not identified in the JRRRC Report, the Committee has recommended working towards a process which will allow for a mu1ti-year rate adjustment. Oakland Scavenger Company is receptive to this concept. In addition, the Company has requested the development of performance criteria upon which its profit will be based. The outcome of this effort will most likely include a discussion of the methodology used to determine profit as mentioned above. It should also be noted that consistent with the 1992 Rate Review Process, the budget for JRRRC expenses is considered as an operating expense by the Company. This results in the full cost being borne by the ratepayers. The 1993 Budget is $265,000 which will provide support for review of the rate application. In addition monies are budgeted for assistance in negotiating a final Closure/Post Closure agreement. These costs will be apportioned to member jurisdictions based upon their participation. (For example, the City of Livermore does not use the Altamont Landfill and, therefore, will not be involved in the Closure/Post Closure negotiations.) staff has prepared the necessary resolutions and agreements for review at the January 11, 1993 public Hearing by the City Council. a:'11Garbm.doc.agenda#'1 -10- - . . .', ~ : ~ -:F \~ ': . rj - . I }. . ~~j:? f'\ r'- ;', .... ( . .J' \ . . -., ~ ", :-~ . .' ~ >.: t.. ')( e ~ u -\- ~ " E... s~ IV' ~ A..\cr ~~c.e(tY I REPORT 1993 RATE REVIEW OF OAKLAND SCAVENGER COMPANY December 10, 1992 This report is printed on recycled paper and is printed on both sides to reduce waste. . ~..g r:"':"':>-~i.:;;71J-=[' A l._ \ l' ;;,t"~t . ~ ! w':;, [,'" i:; <I:',f. ' ~f~~ ~~l.h HILTON FARNKOPF & HOBSON . . SECTION I .. EXECUTIVE SUMMARY Backl!'round At the conclusion of our review ofaSe's 1992 rate application, we determined the necessary rate adjustment for each jurisdiction in order to meet either the 1992 rev- enue requirement (current year operations) or the 1992 revenue requirement plus the 1991 balancing account (eliminate balancing account). For comparison pur-' poses, we have summarized in Table 1-1 the recommended adjustment alternatives and the rate adjustments approved by jurisdiction and by service type. In addition to the significant changes associated with the new jurisdictional rate application, the Committee also wrestled with other significant issues during 1992 - the results of the management and operations review, and the analysis of asc's request for reimbursement oflandfill closure and post-closure (CPC) costs. First, based on one of our recommendations in last year's management and opera- tions review, the Committee retained the engineering firm ofR. W. Beck and Co. to perform a route audit and a review of the reasonableness of OSC's decentralization of the accounting and maintenance functions. The Beck report is not anticipated to be completed prior to the issuance of this report. Also, HF&H, SCS Engineers, and Hanson, Bridgett, et al., were retained by the Committee to review OSC's request for reimbursement of estimated landfill CPC costs. Such a request was first made in the 1991 rate application. That request, as well as a similar request made in the 1992 rate application, was disallowed pending a detailed legal, engineering, and accounting review. Although a final report is not expected to be delivered at the date of this report, we anticipate that the ultimate settlement of this issue will be the subject of future negotiations with OSC. Scone of Review Last year, the 1992 rate review was performed on a jurisdictional basis, the first significant change in the rate review methodology since 1982, when the balancing account concept was implemented. OSC's 1993 rate application, dated July 15, 1992, was the second application submitted on a jurisdictional basis. Our review of the 1993 rate application was conducted in accordance with our June 18, 1991, contract with the Committee. The scope of our review did not comprise an audit of asc's financial statements. Such an audit is performed by the firm of Armanino, Jones, & Lombardi. Our review was based on asc's July 15, 1992, projections of the results of opera~ tions for the three years ending December 31, 1995. The actual results of operations will usually differ from projections, because events and circumstances frequently do not occur as expected, and that difference may be significant. .., i i , -1- .'i :~ ) . . Maior Findin2's 1991 Final Balancing Account The final 1991 Balancing Account is $17,753,000, or $1,062,000 higher than previous projections. During the 1992 rate review, actual results for 1991 were known only through September. The 1991 balancing account was projected based on this partial year's actual results. The Committee agreed on a methodology to allocate this projected 1991 gross balancing acconnt (including an assumed amonnt for Measure D for each jurisdiction) based on projected 1992 expenses and deficits by jurisdiction. Each jurisdiction's gross allocation was then reduced to the extent that the jurisdiction would not request its Measure D funds. The Committee agreed that any difference between the 1991 balancing acconnt, as projected last year, and the actual 1991 balancing account would be allocated based on the approved gross balancing account allocation percentages. Based upon our'review of asc's calculation, we propose that five adjustments be made to the fmal1991 balancing acconnt as calculated by asc. These adjustments: . Correct asc's calculation of the 1991 Measure D payments made to the jurisdictions; . Correct asc's calculation of Tri-Cities' franchise fees; . Allocate additional depreciation expense to the non-franchised operations related to Contra Costa County's use of the Altamont Landfill in 1991; . Eliminate the benefit costs associated with two positions disallowed by the Committee; and, . Reduce Livermore's balancing acconnt for Measure D fnnds not collected from asc by the City. Table 1-2 summarizes all of these adjustments and shows the fina11991 balancing account of $17,753,000, allocated based on the methodology agreed upon by the Committee. OSC 1993 Rate Application Revised 1992 Balancing' Account bv Jurisdiction OSC has projected that the 1992 balancing account will be $13,199,000, or $3,875,000 lower than previous projections, due to 1992 rate adjustments and cost savings achieved by OSC. Our December 16, 1991, report projected a December 31, 1992, balancing account deficit of approximately $17.07 million, prior to any rate adjustments. In their 1993 -2- . . rate application, OSC projected a $13.20 million 1992 deficit, after incorporating the actual rate adjustments approved by each jurisdiction and revised revenue requirement projections. Table 1-3 shows the changes made by ase and summa- rizes our adjustments discussed below under "Revenue and Expense Adjustments". The reduction of $3,875,000 in the 1992 projected balancing accounts are due to: . Increased revenues from 1992 rate adjustments approved by the jurisdic- ,tions; and, . Cost savings in landfill and transfer expenses, franchise fees, interest expense, truck and other opers.ting expenses, and ,workers' compensation expense;, offset by, . Reductions in collection revenues and public revenues due to service reduc- tions and lower tonnages; and, . The inclusion of disallowed landfill epc costs by ase in its 1992 projections. 1993 Proiected Revenue Requirement bv Jurisdiction OSC requested rate adjustments by jurisdiction effective January 1, 1993, ranging from a 17% decrease to a 29% increase, that, if approved, .would reduce the combined 1993 balancing account to a deficit balance of . $7,346,000. Allocation Methodology For last year's rate application, asc developed a methodology to allocate common expenses to the jurisdictions based on a number of operating statistics. Because reporting systems were not in place in 1991 to captute a full year's operating statis- tics for some categories, estimated data was used to perform some of the allocations. During 1992, ase implemented several new systems and procedures to capture and report the required data. Projection Methodology ase projected their expenses in a manner consistent with that used in previous years. April, 1992, year-to-date expenses were obtained from the general ledger and escalated for the remainder of 1992. An escalation factor was then applied to the 1992 expenses to project 1993 expenses, and so on. Wages and wage-related expenses were escalated according to union contracts. Other expenEes were escalated based on a general inflation factor of 4%. For those expenses that were not expected to increase with inflation, oee recalculated the annual expense in a lump sum adjustment. Revenue based fees, including franchise fees and other jurisdictional surcharges, were projected using 1992 revenues multi- plied by each jurisdiction's fee percentages (see page 51). To project 1993 revenue based fees, 1992 revenues were increased for anticipated rate adjustments. -3- . . Revenues were projected based on actual results during the first four months of 1992, plus anticipated results to the end of the year. Note, however, that 1993 rev- enue projections do not include any projected rate adjustments. Return on Equity The projected 1993 post-tax. return on equity of 16% requested by asc results in a post-tax profit of $6,887,000, or 6.5% of revenues, an increase of $3,026,000 over the amount allowed in 1992 by the Committee. This is equivalent to a pre-tax profit of $10,997,000, or a pre-tax: operating ratio of 89.8%. Revenue and Expense Adjustments The proposed adjustments reduce OSC's projected 1992 expenses by $2,679,000 and projected 1993 expenses by $989,000 and reduce OBC's pro. jected 1992 and 1993 revenues by a combined $177,000. We reviewed asc's 1992 and 1993 projections for reasonableness. During the course of our review, we identified areas that we believe warrant adjustment because of one of the following reasons: . Actual revenues and expenses through September, 1992, do not ,Support asc's projection of annual expenses; . Errors were made in the calculation of the projections; or, . Allocations between franchised and non-franchised operations or among the franchised agencies were calculated improperly. Allowed Return on Equity The Committee set the allowed 1993 after. tax return on equity at 9.5%, or $2,792,000 less than requested by OSC. During each rate review, the Committee determines a reasonable rate ofretum to be allowed asc in the coming year. That determination is based on several factors, including: . The returns achieved by publicly-held solid waste management companies; . The returns achieved by private waste management companies as reported in the annual Robert Morris Associates' (RMA) survey; . The returns granted by other regulatory agencies to solid waste companies; and, . The Committee's assessment of the quality of service provided by asc to the jurisdictions' rate payers. .4. . . This year, the Committee determined that, based on the above factors, the reason- able after-tax return on beginning equity for 1993 ranged from 7% to 13%. The decline in the reasonable range from last year's 10% to 16% reflects the industry- wide trend towards lower profits. Further, the Committee determined, based on the Committee's assessment of asc's improved performance during the past year, that asc be allowed a return towards the middle of the range, or 9.5%. A 9.5% return on equity translates to a pre-tax operating ratio of93.6%, or a pre-tax profit of 6.4% of revenues and a post-tax profit of 4.0% of revenues. '1993 Overall Rate Adjustment Required The required rate adjustments by jurisdiction to eliminate the balancing account in one year range from a decrease of34.6% to an increase of62.3%. After consideration of the adjustments noted above, varying rate increases are required to reimburse ase for the cost of operations, provide a 9.5% return on equity (or 6.4% profit), and eliminate the balancing account deficit in one year. Rate adjustments for each jurisdiction will differ based on whether it is relatively more or less expensive to service its customers. Table 1.4 shows the rate adjust- ment required for 1993 operations, after adjustments to expenses and allocation of profit. Table 1-5 shows the calculation of the rate adjustment required to eliminate the deficit balancing account by December 31, 1993, for each jurisdiction. These jurisdictional rate adjustments range from a decrease of 34.6% in Livermore to a 62.3% increase in Piedmont. We recommend 'that each jurisdiction should adjust its rates (where a deficit bal. ance is present) by an amount that falls somewhere between the rate adjustment shown on line 11 of Table 1-4, and the rate adjustment shown on line 11 of Table 1- 5, depending on the number of years assumed to make up the deficit balance. (Last year, ase requested that the deficit balance be spread over three years to eliminate the deficit balances by December 31, 1994.) Note, however, that in determining the 1993 rate adjustment, there are two outstanding issues that, when resolved, will , impact each jurisdiction's future revenue requirement: ~ . ,The determination of the allowable portIon of estimated landfill closure and post-closure maintenance costs; and, . The completion of the review by R. W. Beck of the decentralization ofaSC's accounting and maintenance functions and the performance of route audits. .5- . . Recommendations Our policy and rate recommendations for the 1993 rate application are summarized below: 1. Transfer and disposal costs on residential and commercial routes that cross jurisdictional bOWldaries should be allocated based on each jurisdiction's rela- tive percentage of cans or yards collected on that route. 2. ase should: . Improve its controls at the transfer station scales to ensure that all collection vehicles are weighed and assigned to the appropriate jurisdiction; . Improve the tracking of spare vehicles used periodically on the collection routes to ensure that collected tons are assigned to the appropriate jurisdic- tion;and, ' . Improve the tracking of time to collect and dump roll-off boxes. 3. The Committee should exclude landfill CPC costs from asc's allowable expenses for 1992. However, CPC costs, as projected by OSC, should be included in the calculation of 1993 rate scenarios. The inclusion of 1993 CPC costs and the approval of the 1993 rate increase should be dependent upon asc's signing of an interim agreement regarding the handling of the CPC funds collected through the rates. 4. The Committee should disallow all costs of the proposed 77th Avenue recycling facility Wltil they have received sufficient information to approve or disapprove the fadli ty. 5. The Committee should request additional information from ase to determine whether the aakland Army Supply Depot disposal contract should be treated as part of the franchised operations. 6. The Committee should disallow all costs related to the Class 2 landfill require- ments at the Altamont Landfill that exceed what would be required for a Class 3 landfill. 7. The Committee should perform a detailed review of franchise fee payments by asc (similar to the review performed by the Committee in 1987) as part of the next rate review. 8. The Committee should reserve the right to make retroactive adjustments based on recommendations made as part of the current maintenance and accoWlting and route audit study by R. W. Beck.c -6~ . . 9. The Tri-Cities have requested that OSC assist them in developing weight-based rates for roll-off service, rather than the current volume-based rates. Other jurisdictions may wish to consider a similar change to their rate structures. 10. The Tri-Cities have reserved the right to make retroactive adjustments to 1991 and 1992 expenses based on a detailed review of the Durham Road Landfill and Southern Division operations, if such a review is completed in 1993. 11. Each jurisdiction should compare OSC's billing rates for its jurisdiction to its ordinance or resolution to ensure that the rate payers are being properly billed. 12. Each jurisdiction should adjust its rates based on consideration of the rate adjustments shown on Tables 1-4 and 1~5. We have summarized our recom. mendations below: a. For those jurisdictions that require a rate increase for current operations (Table 1~4, line 11), we recommend that rates be increased by an amount that falls between that on Table 1-4, line 11, and on Table 1-5, line 11. b. For those jurisdictions that requite a rate decrease for current operations, but require a rate increase to eliminate the balancing account, we recom- mend that rates be increased by an amount that falls between zero and the percentage shown on Table 1-5, line 11. c. For those jurisdictions that require a rate decrease on Table 1-4, line 11, and on Table 1-5, line 11, we urge caution to avoid causing large rate increases next year. In some cases it may not be appropriate to decrease rates, depending on the degree of the decrease indicated, and each individual juris- diction's goals and objectives for future rate adjustments. Note, however, that in determining the 1993 rate adjustment, there are two outstanding issues that, when resolved, will impact each jurisdiction's future revenue requirement: . The determination of the allowable portion of estimated landfill closure and post-closure maintenance costs; and, . The completion of the review by R. W. Beck of the decentralization of OSC's accounting and maintenance functions and the performance of route audits. -7- . . Table 1-1 1992 Recommended Rate Adjustments and Approved Rate Adjustments by Jurisdiction and Service Type Per HF&H Reoort Jurisdiction-Aoproved Adjustments Eliminate Balancing Eliminate Current Account Balancing Jurisdiction Operations Over 3 Yrs. Account &a.. pomm. ;Roll-off Alameda -2.0% 0.2% 4.5% 5.0%1 5.0%1 5.0% Albany 11.6% 21.0% 39.7% 8.9% 8.9% 8.9% Emeryville 9.1% 16.4% 30.9% 13.8% N/A2 19.6% Oakland 3 3.1% 10.4% 24.9% 4.0% 10.7% 23.5% Piedmont 15.9% 28.1% 52.6% 17.7% 17.6% 17.6% Castro Valley 10.2% 17.5% 32.1% 7.5% 20% 20% Hayward -6.2% 0.7% 14.6% 0% 0% 0% Ora Lama 2.7% 9.1% 22.0% 17.5% 22.0% 43.2% Fremont 0.0% 3.0% 8.9% 0% 0% 0% Newark -1.3% 1.8% 8.0% 0% 0% 0% Union City 9.2% 18.2% 36.3% 0%4 0% 15.7% Dublin -14.3% -12.7% -9.4% 4.7% -4.7%2 N/A5 Livermore -13.3% -11.0% -6.3% -6.0% 0% -6.0% 1 Apartment unit rate was discontinued, resulting in a net decrease for those accoWltS. 5% residen- tial increase was applied only to multiple can accounts. 2 The City implemented a uniform rate structure resulting in varying increases to the different commercial service levels. 3 Oakland lowered its rates 7.5% on January 1, 1992. Rates shown were effective April 1, 1992. 4 While no rate increase was granted, mandatory service for all residences was enforced, increasing residential revenues by a projected 6.8% in 1992. 5 Increases were made as follows: Handy Hauler, 2.5% decrease; 6 yd., 8.8% increase; 20 yd., 7.6% increase; 30 yd., 6.2% increase; 40 yd., 5.5% increase. -8- . . Table 1-2 Reconciliation Between Prior Year HF&H Projections, Current Year OSC Projections, and Current Year HF&H Projections 1991 Balancing Account ($OOO's) Proj. Last OSC OSC HF&H HF&H ~ Chane-es (1) Ein.al Adi.'s (2) EiMl Alameda 433 152 585 (113) 472 Albany 303 0 303 20 323 Emeryville 364 19 383 6 389 Oakland 7,485 849 8,334 (293) 8,041 Piedmont 308 24 332 (2) 330 Castro Valley 667 101 768 (50) 718 Hayward 2,712 3 2,715 178 2,893 Oro Lorna 1,397 236 1,633 (127) 1,506 Fremont 1,342 1 1,343 89 1,432 Newark 289 1 290 18 308 Union City 842 2 844 54 898 Dublin 131 63 194 (50) 144 Livermore 418 (1) 417 (118) 299 Total (3) 16,691 1,450 18,141 (388) 17,753 (1) See discussion of changes at page 16. (2) See discussion of adjustments at pages 17 to18. (3) Some minor differences are due to rounding. -9- . . Table 1-3 Reconciliation Between Prior Year HF&H Projections, Current Year OSC Projections, and Current Year HF&H Projections 1992 Balancing Account ($OOO's) Proj. Last OSC OSC HF&H HF&H fiat Chan~es (1) fui. Adi.'s (2) ErID.. Alameda 297 128 425 (215) 210 Albany 444 6 450 (52) 398 Emeryville 527 (348) 179 (12) 167 Oakland 8,614 188 8,802 (1,768) 7,034 Piedmont 449 (2) 447 (51) 396 Castro Valley 1,008 (605) 403 (47) 356 Hayward 1,847 (1,339) 508 147 655 Oro Lorna 1,603 (1,543) 60 (387) (327) Fremont 1,345 (39) 1,306 (252) 1,054 Newark 246 422 668 (107) 561 Union City 1,202 (599) 603 13 616 Dublin (216) 253 37 (249) (212) Livermore (292) (397) (689) (99) (788) Total (3) 17,074 (3,875) 13,199 (3,080) 10,119 (1) See discussion of changes at pages 18 to 21. (2) See discussion of adjustments in Sections V and VII. 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'-\C\ -:s (\.t.SLC.. (t..e.E'o..-t t \~ lot q~) Franchised Eouity Prior to its acquisition by Waste Management, Inc" OSC's franchised equity was periodically reduced for shareholder buyouts and the payment of dividends. Tahle 7 -2 shows the franchised equity calculation over time. (Note that ase wall acquired by Waste Management, Inc. in December, 1986.) The acquisition involved an exchange of stock and, for rate purposes, the franchised equity remained unchanged. Since that time, the franchised equity balance has grown each year by the amount of the allowed post~tax return on equity. This is because OSC, as a subsidiary of Waste Management, Inc., does not pay dividends or retire shares of stock. However, Waste Management, Inc. does pay dividends and occasionally "retires", or purchases, shares of its own stock (called treasury stock). The Co:ounittee has expressed concern over the increasing franchised equity balance and may wish to evaluate alternative methods of adjusting this balance or determining profit. (In our report dated December 16, 1992, we recommended that with the establishment of the jurisdictional rate application, the Co:ounittee considered changing from a return on equity basis to an operating ratio basis for determining allowed profit. Alternatively, the Committee could ascribe a portion of Waste Management's dividend payments and stock retirements to OSC.) Table 7-2 (.i>o-.\.,t. S~ Franchised Equity ($OOOs) Adjusted Beginning Equity for Altamont Beginning Stockholder Allowed Ending RQE Ad;ustment Eouitv J)ardahl }3uvouts. EHrmne:s. Equity 1983 20,019 (139) 19,880 (3,700) (1,274) 1,861 16,767 1984 16,767 (728) 16,039 (355) (1,674) 2,643 16,653 1985 16,653 0 16,653 227 (2,482) 2,660 17,058 1986 17,058 (60) 16,998 223 (1,098) 2,728 18,852 1987 18,852 79 18,931 (657) 2,957 21,230 1988 21,230 0 21,230 (1,555) 3,687 23,362 1989 23,362 (119) 23,243 2,117 3,951 29,311 1990 29,311 (574) 28,737 4,885 33,622 1991 33,622 (353) 33,269 5,655 38,924 1992 38,924 (217) 38,707 3,871 42,578 1993 (projected) 42,578 526 43,104 4,095 47,199 r1'"" "'1"i'1'~""'f n t~'\Jj~ ~l~ r~ V . . RESOLUTION NO. - 93 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN *************************** APPROVING AGREEMENT FOR PROVISIONAL CHARGES FOR THE CLOSURE AND POST CLOSURE MAINTENANCE OF ALTAMONT SANITARY LANDFILL WHEREAS, Oakland Scavenger Company (OSc) is responsible for the collection and disposal of waste in the City of Dublin pursuant to a franchise agreement dated March 10, 1986 (as amended); and WHEREAS, the waste collected pursuant to this agreement is placed in the Altamont Landfill; and WHEREAS, the revenues collected by OSC are established pursuant to rate schedules approved by the City Council; and WHEREAS, the Joint Refuse Rate Review (JRRRC) reviews requests by OSC for inclusion of specified expenses through the rate structure; and WHEREAS, the JRRRC provides recommendations to the elected bodies of the member jurisdictions; and WHEREAS, OSC has requested ratepayer reimbursement of certain Landfill Closure/Post Closure (CPC) expenses as part of the 1993 Rate Application; and WHEREAS, the JRRRC recommends that the final determination of CPC costs shall be the subject of further negotiations with OSC; and WHEREAS, the JRRRC anticipates the use of a subcommittee to negotiate a model Final Closure Post Closure Agreement; and WHEREAS, the City Council will have an opportunity to review and adopt the final agreement; and WHEREAS, the JRRRC has developed a "provisional Agreement" (Exhibit A) attached hereto and by reference made a part hereof; and WHEREAS, the agreement specifies the issues which are to be negotiated between the parties and the handling of CPC funds collected during the negotiations and prior to execution of a Final Agreement; and WHEREAS, the 1993 JRRRC Rate Review Report dated December 10, 1992 already incorporates the CPC for 1993 into its recommendations. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby approve the Agreement for Provisional Charges for the Closure and Post Closure Maintenance of Altamont Sanitary Landfill (Exhibit A) and the Mayor is hereby authorized to execute said agreement on behalf of the City. BE IT FURTHER RESOLVED that the City Council acknowledges that the Joint Refuse Rate Review Committee will utilize a subcommittee to negotiate a Model Agreement for the final resolution of Closure/Post Closure costs. The Model Agreement shall be submitted to the City Council for its review and approval before becoming effective. PASSED, APPROVED AND ADOPTED this 11th day of January, 1993. AYES: NOES: ABSENT: Mayor ATTEST: City Clerk ~tJ::~. 'r! Cl 1: tI tl'l.'l ['c."","" ~ n ..:.~ '.j ""~'~ .~ ~ :j ~'::! ;} k'~j (~ t~t. r'j '. tr~ ~.:, ;. :'; l " . ~. L:?HS::: 1~~~ r. a: resoalta.agenda#11 . . AGREEMENT FOR PROVISIONAL CHARGES FOR THE CLOSURE AND POST-CLOSURE MAINTENANCE OF ALTAMONT SANITARY LANDFILL THIS AGREEMENT is made and entered into as of this ("City") and Oakland scavenger company, a california corporation 11th day of January , 1993 between the city of Dublin ("OSC") . THE PARTIES AGREE AS FOLLOWS: 1. RECITALS This Agreement is entered into in light of the following facts and circumstances: A. March 10, 1986 city and asc entered into an Agreement dated (the "Franchise Agreement") pursuant to which city granted asc a franchise to collect and dispose of refuse from within city, and asc undertook to collect and dispose of all refuse in accordance with law. B. Refuse collected by asc from within city is disposed of at the Altamont Sanitary Landfill ("Altamont") operated by asc and located in eastern Alameda county. c. asc has disposed and now disposes at Altamont refuse from other communities besides city, located both within and outside of Alameda County. asc states that the Alameda County communities whose refuse is now disposed of at Altamont are, including City, the city of Alameda, the city of Albany, castro Valley sanitary District, the city of Dublin, the city of 1 E'Jt];~~B~1 A 76863.5 . . Emeryville, the city of Hayward, the city of Oakland, Oro Loma sanitary District, and the city of piedmont. D. Each of these nine agencies is a member of the Alameda county Joint Refuse Rate Review Committee ("Committee"). pursuant to the Franchise Agreement, and to parallel provisions in the franchise agreements of the other member agencies, the Committee evaluates annual applications from OSC for adjustments to the rates which it is authorized to charge to residents and businesses in the member agencies' jurisdictions who receive refuse collection service from asc. city considers the committee's report and recommendation and periodicallY takes action to adjust rates which OSC may charge residents and businesses ("ratepayers") in city. E. asc is required by california law, including regulations of the California Integrated Waste Management Board ("CIWMB"), 14 california Code of Regulations Sections 17760- 17796, 18250-18277; and the State water Resources control Board, 23 California Code of Regulations sections 2580-81, to develop, have approved, and then implement plans for the closure of Altamont and for its long term post-closure monitoring and maintenance. The CIWMB regulations also require OSC to comply with one or more methods of demonstrating financial responsibility for its closure and post-closure responsibilities (14 California Code of Regulations sections 18280-18297). 2 76863.5 . . ~ F. asc contends that proper accrual for the costs of closure and compensation for compliance with state law are necessary and proper expenses relating to operation of Altamont. G. OSC has requested the committee to recommend to its member agencies that OSC be authorized to increase rates charged to ratepayers to cover the costs of complying with these closure/post-closure requirements at Altamont. city states that the Committee has, through engineering and financial consultants, evaluated the feasibility and adequacy of OSC's closure and post- closure plans, and the reasonableness of OSC estimates of the costs thereof. It has also investigated a methodology by which the closure/post-closure expenses which would be paid for by ratepayers of Committee member agencies, including City, can be limited to their fair share based on their proportionate usage of Altamont. These investigations are substantially completed, but the Committee's findings as to these items have not been translated into definitive agreements between the member agencies and asc. Moreover, there are issues associated with city's desire to insure that revenues paid by its ratepayers to asc intended to cover closure/post-closure expenses are in fact utilized for those purposes, and these issues are related to the method of financial assurance which QSC intends to utilize and have approved by CIWMB. It is expected that the discussion and definitive resolution of these issues between city and OSC and between other Committee member agencies and OSC will require at least 10 months. 3 76863.5 . . H. city wishes to approve, on a provisional and non- precedential basis, an increase in the rates which OSC may charge, the additional revenues from which would be dedicated to closure/post-Closure expenses. The purpose of this Agreement is to specify the issues which are to be further negotiated between the parties and the handling of funds generated by the provisional rate increase during the negotiations prior to execution of a definitive agreement. 2. NEGOTIATIaN OF AMENDMENT TO FRANCHISE AGREEMENT. (a) city and OSC agree to seek to negotiate in good faith an amendment to the Franchise Agreement (the "Amendment Agreement") that will address the following issues and such other matters as the parties may agree upon: (1) The method by which asc will demonstrate the availability of financial resources to conduct closure and post- closure maintenance activities under Chapter 5, Article 3.5 of Title 14 of the California Code of Regulations with regard to Altamont, including, without limitation, the type and terms of financial assurance that asc will provide; (2) The method by which OSC will seek to allocate closure and post-closure maintenance costs among all cities and other users (both within and outside Alameda County) who use or have used Altamont; (3) The portion of the closure and post-closure maintenance expenses for Altamont to be borne by ratepayers of city; 4 76863.5 . . (4) The amount, if any, that osc may collect from ratepayers of city for the specific purposes of providing the required financial assurance described in Paragraph 2(a) (1) above and funding for the closure and post-closure expenses, and the period over which such amount would be collected; and (5) The method by which the provisional charges that are collected on an interim basis pursuant to paragraph 3 below will be applied to payment of closure and post-closure maintenance expenses and for other purposes as described in paragraph 4(C) below. (b) city may appoint the Committee as its representative in the negotiations contemplated by this Paragraph 2. Upon receiving written notice of such appointment, osc shall recognize and deal with the committee as the city's representative. Notwithstanding such appointment, however, the Amendment Agreement will not become effective unless and until it has been approved by city directly and signed by an authorized officer of city. (c) city and OSC will commence such negotiations promptly following execution of this agreement, and will seek to execute a definitive agreement amending the Franchise Agreement with respect to the matters described above no later than November 1, 1993 (the "Designated Amendment completion Date.") (d) By agreeing to enter into such negotiations, city does not explicitly or implicitly agree or acknowledge that it or the ratepayers in city are in any way responsible for closure or 5 76863.5 . . post-closure maintenance expenses at Altamont or for providing funds for such expenses. By agreeing to enter into such negotiations, OSC does not implicitly or explicitly agree that city or its ratepayers are not liable in full for such expenses or for providing funds. 3. PRaVISIaNAL CHARGES. (a) city will authorize asc to charge ratepayers in city provisional charges in the amounts set forth in Schedule A attached hereto (the IIprovisional Charges") for periods commencing on or after January 1 , 1993, and ending on or prior to the Designated Amendment Completion Date or on such other date as may be specified in the Amendment Agreement. city agrees to take whatever steps are necessary to amend its rate schedule to include the provisional Charges. The schedule of provisional Charges has been designed to yield asc with an amount of approximately One Dollar and Sixty-Six Cents ($1.66)/ton of refuse collected from ratepayers in City during the term of this Agreement. The preceding amount has been selected by city without reference to the amount of rate increase, if any, that may ultimately be agreed upon by the parties. OSC may collect the Provisional Charges in addition to the charges that it is otherwise permitted to collect under the Franchise Agreement. The amounts collected as provisional Charges shall be held separately and used by OSC only in accordance with the provisions of this agreement. 76863.5 6 ...., . . . (b) osc agrees and acknowledges that city's authorization of the collection of the provisional Charges at this time is for a limited purpose. asc further acknowledges that city's authorization of such collections is not an express or implied admission or agreement of city that its ratepayers are responsible for closure or post-closure maintenance expenses or must contribute to such expenses. The city acknowledges that OSC's agreement to collection of the provisional Charges as provided for in this Agreement is not an express or implied admission or agreement by asc that the city and its ratepayers are not liable in full for closure or post-closure maintenance expenses and contribution for such expenses. 4. ESCRaW ACCOUNT. (a) asc shall establish and maintain throughout the period required by this Agreement a separate interest bearing account with Union Bank or with such other bank as may be approved in writing by city in its discretion (the "Bank") into which shall be deposited all Provisional Charges collected by asc (the "Escrow Account"). All funds and other property rights held in the Escrow Account, including earnings thereon, are referred to hereinafter as the "EscroW Funds.1I The Escrow Account shall be a passbook savings account or a time deposit with the Bank with a maturity not later than twelve (12) months from the date of deposit. osc shall seek to secure the highest available interest offered by the Bank on the Escrow Account within the confines of the preceding sentence. All provisional Charges 7 76863.5 . ~ collected in a month shall be deposited in the Escrow Account not later than ten (10) days following the end of the month. No later than the time the Escrow Account is opened, OSC will secure the agreement of the Bank that said account may not be amended, terminated or modified without the written agreement of city. osc shall provide a copy of this Agreement to the Bank. city shall not be subject to any claim or liability to asc or any other person as a result of its approval or disapproval of any bank with which osc seeks to establish the Escrow Account. (b) Escrow Funds, and any part thereof, may be withdrawn or disbursed from the Escrow Account only upon the joint signatures and at the joint direction of an authorized representative of each of city and osc. until changed by written notice from the naming party to the other, the authorized representative of each shall be the individual holding the position named in paragraph 5(d) hereof. (c) All Escrow Funds shall be the property of osc, but shall be used only for payment of closure and post-closure maintenance expenses for Altamont as specified in the Amendment Agreement, if any. If no Amendment Agreement is entered into between city and OSC by the Designated Amendment Completion Date, or if such agreement does not expressly deal with the disposition of the Escrow Funds, said funds shall be disposed of as follows: (1) If at the time the Escrow Funds are to be distributed asc has established a trust for performance of closure and post-closure maintenance obligations at Altamont 8 76863.5 . . pursuant to the rules and regulations of the CIWMB, the Escrow Funds shall be distributed to said trust promptly following the Designated Amendment completion Date. Any cash, funds or property so contributed shall be considered to have been paid toward satisfaction of any amounts theretofore or thereafter required to be contributed by city's ratepayers for closure and post-closure expenses, to the extent of the Escrow Funds so distributed. (2) In the event that no trust fund has been established as described in subparagraph (1) above, the EscroW Funds shall be released to OSC promptly following the Designated Amendment completion Date. In that event, the aggregate amount permitted to be collected by asc from ratepayers for the fiscal year of the Franchise Agreement that next commences after the date of distribution shall be reduced by the amount of the distributed Escrow Funds (including interest earned), and said reduction shall be implemented by an appropriate proportionate reduction in the rates that would otherwise be authorized for said period. (d) osc shall keep accurate records with respect to all Provisional charges and funds held in the Escrow Account, including records with respect to earnings thereon. Monthly, while the Escrow Account is maintained, and within thirty (30) days following the closing of said account, aSC shall render a written accounting to city of the funds collected and held in the 9 76863.5 . . account and transactions in said account since the last accounting. (e) Except as expressly set forth in section 4(C) of this Agreement, asc shall have no right, power or authority to assign, transfer, alienate, encumber, or hypothecate its interest in the Escrow Account in any manner, nor shall its interest be subject to claims of OSC's creditors or liable to attachment, execution or process of law, it being the agreement of the parties that the funds held in the Escrow Account have been collected and can be used for only closure or post-closure maintenance expenses for Altamont and for such other purposes as are permitted by this agreement. 5. GENERAL. (a) This agreement shall be binding on the parties hereto, and the successors and assigns of each. (b) Except as specifically provided herein, the Franchise Agreement remains in full force and effect and unmodified hereby. (c) In the event either party commences any legal action to enforce its rights hereunder, the prevailing party in such action shall be entitled to recover from the other its costs and expenses, including reasonable attorneys fees, incurred in connection with such action. (d) Any notice or other communication required or permitted by this agreement to be delivered to or served on any party to this agreement shall be deemed properly delivered to, 76863.5 10 . . served on, and received by the party when personally delivered to the party, or, in lieu of such personal service, three (3) days after the notice or communication has been deposited in the U.S. mail, postage prepaid, addressed to the party at the following address: Oakland Scavenger company 2000 Embarcadero, suite 300 Oakland, CA 94606 Attention: city of Dublin 100 Civic Plaza (P.O. Box 2340) Dublln, CA 94568 Attention: City Manager IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. CITY OF DUBLIN ATrEST: By: City Clerk Peter W. Snyder Its: Mayor OAKLAND SCAVENGER CaMPANY By: Its: 76863.5 11 . . Schedule A Provisional Charges The provisional charges shown below have been calculated by dividing the Agency's projected 1993 franchised tons (including allocated public tons) by the total projected 1993 franchised tons and multiplying the quotient by the projected 1993 closure and post-closure expense included in asc's 1993 rate application. The result is the Agency's proportionate share of the projected 1993 closure and post-closure expense, which is equivalent to $1.66 per projected ton of solid waste disposed in 1993. The Agency's proportionate share of the projected 1993 closure and post-closure expense is then divided by the projected 1993 gross collection revenues at current rates before any 1993 rate adjustment. The quotient is the estimated percentage of projected 1993 gross collection revenues that are required for 1993 closure and post-closure expense. The Agency's actual 1993 closure and post-closure expense will be calculated by asc on a monthly basis by multiplying the Agency's actual tonnage for the preceding month by $1.66 per ton. asc will deposit $1.66 per ton into the Agency's Escrow Account referred to in Section 4 of this Agreement. Agency: Dublin Projected 1993 Tonnage Proportionate Closure and Post-Closure Expense Projected 1993 Revenue Closure and Post-closure Expense As % of Revenue 25,347 $41,955 $2,357,000 1.78% . . . RESOLUTION NO. - 93 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN *************************** APPROVING THIRD AMENDMENT TO FRANCHISE AGREEMENT BETWEEN THE CITY OF DUBLIN AND OAKLAND SCAVENGER COMPANY WHEREAS, Oakland Scavenger Company (OSC) collects and disposes of waste generated within the City of Dublin pursuant to a Franchise Agreement dated March 10, 1986; and WHEREAS, the agreement was previously amended on March 13, 1989 and January 13, 1992; and WHEREAS, during the past several years, State Legislation including AB 939 has increased the responsibility of cities in managing the provision of waste planning and handling; and WHEREAS, the increasing mandates have resulted in increased demands for Staff time, consultants, conducting special studies, and implementation of new programs and services; and WHEREAS, the performance of these obligations has also impacted the City financially due to the lack of a designated revenue source for these pUrposes; and WHEREAS, the Total Franchise Fees and "Other Surcharges" currently levied by other jurisdictions serviced by Oakland Scavenger Company range from 5.5% to in excess of 20%; and WHEREAS, the average fees levied by the agencies surveyed equals 12.4%; and WHEREAS, the City of Dublin currently levies only a 4.8% Franchise Fee; and WHEREAS, the collection of an additional 2% Waste Management Administrative Fee would continue to place the City of Dublin well below the average fees collected by other jurisdictions; and WHEREAS, the collection of such a fee would result in the City of Dublin having the second lowest combined fees of the 13 agencies serviced by Oakland Scavenger Company; and WHEREAS, the proposed garbage rate structure to be considered at a public hearing on January 11, 1993 will accommodate the payment by the Company of this additional fee; and , _.,J"' WHEREAS, in order to collect such a fee 'an ,amendment to the franchise agreement is required. ~CW, THEREFORP., BE IT RESOLVED that the City Council of the City of Dublin does hereby appr'::'vfi' the "Third AJtendment dated January 11, 1993 to Agreement dated March 10, 1986 between City of Dublin and Oakland Scavenger Company" (Exhibit A), attached hereto and by reference made a part her~of. i I I ,/ BE IT FURTHER RESOLVED that the Mayor is hereby authorized to execute the agreement on behalf of the City of Dubiin. PASSED, APPROVED AND ADOPTED this 11th day of January, 1993. AYES: NOES: ABSENT: Mayor ATTEST: City Clerk 1~.::','?EY~j] lj'~{' b L., '.' "'. 'd. 'j , t~ f.~~~: ~j fi j jJ:1 ~ ~. a:reso3amd.agenda#ll . . " '\ .. THIRD AMENDMENT DATED JANUARY 11, 1993 TO AGREEMENT DATED MARCH 10, 1986 BETWEEN CITY OF DUBLIN AND OAKLAND SCAVENGER COMPANY REGARDING WASTE COLLECTION AND DISPOSAL This amendment is by and between City of Dublin, hereinafter "CITY" and Oakland scavenger company, hereinafter "COMPANY." RECITALS WHEREAS, the CITY and COMPANY have entered into a franchise agreement dated March 10, 1986, hereinafter "AGREEMENT" for waste collection and disposal; and WHEREAS, the AGREEMENT is dated the 10th day of March 1986; and WHEREAS, CITY and COMPANY have executed a First Amendment to said AGREEMENT; and WHEREAS, said amendment is dated March 13, 1989 and it provides for a change in the government locations receiving services pursuant to AGREEMENT; and WHEREAS, CITY and COMPANY entered into a Second Amendment dated January 13, 1992; and WHEREAS, said second amendment provided for the COMPANY to obtain delinquent amounts collected by the CITY; and WHEREAS, in recent years state Mandates in the area of waste management have increased demands on CITY resources; and WHEREAS, the CITY is desirous of a stable revenue source to meet the obligations of the increased State Mandates; and WHEREAS, the COMPANY has indicated a willingness to provide for the collection of a 2% Administrative Fee which will be remitted to the CITY; and WHEREAS, the fee shall be collected and disbursed in a manner similar to the Franchise Fee identified in section 3.6 of AGREEMENT. NOW, THEREFORE, CITY and CaMPANY do hereby agree that the AGREEMENT Between the City of Dublin and Oakland Scavenger Company regarding Waste collection and Disposal shall be amended as follows: E}(~~~bi~ [\' A - --. . . ~ f . I. The AGREEMENT shall be amended to add Section 3.9 to the AGREEMENT to read as follows: 3.9 CITY Administrative Fee In addition to the Franchise Fee enumerated in section 3.6 of this AGREEMENT, COMPANY shall pay to the CITY two percent (2%) of the gross revenue derived by the COMPANY from Collection services provided in the CITY under this agreement. The computation of these fees shall be conducted in the same manner as Franchise Fees described in Section 3.6. The CITY shall utilize fees collected pursuant to this clause to fund administrative costs associated with management of the CITY's solid waste system. These costs may include but are not limited to: staff salaries and benefits, consultants, implementation of waste management programs and activities and other related items as deemed necessary by the CITY. For CITY: peter W. Snyder, Mayor ATTEST: Kay Keck, city Clerk For COMPANY: D. David MacDonald, Executive vice president Oakland Scavenger company A Waste Management company PSR/lss a:agmt-osc.psr#13 . . EXHIBIT 3 COMPARISON OF 1992 GARBAGE RATES TO PROPOSED 1993 RATES RESIDENTIAL RATES Current Monthly 1992 Rates Proposed Monthly 1993 Rates Super Recycler $ 6.65 $ 6.90 Standard Container (32 gallon) 1 can 2 can 3 can Each additional can $ 7.90 14.20 20.50 6.30 $ 8.00 13.60 19.20 5.60 Non Standard Container - First Can 40 gallon 45 gallon 48 gallon $ 9.50 10.45 11. 05 $ 9.60 10.50 11 .30 Each Additional Non-Standard Container 40 gallon 45 gallon 48 gallon $7.90 8.85 9.45 $7.00 7.90 8.40 Special Services Large accumulations Special pick-ups $6.30/cy $12.00 min $6.40/cy $12/00 min MONTHLY COMMERCIAL BIN RATES Current Proposed Volume of Service Frequency Monthly Rate Monthly Rate 1 Yard 1/week $ 27.70 $ 24.10 1 Yard 2/week $ 60.95 $ 54.25 1 Yard 3/week $ 94.20 $ 84.40 1 Yard 4/week $127.45 $114.55 1 Yard 5/week $160.70 $144.70 2 Yard 1/week $ 55.40 $ 48.20 2 Yard 2/week $116.35 $102.45 2 Yard 3/week $177.30 $156.70 2 Yard 4/week $238.25 $210.95 2 Yard 5/week $299.20 $265.20 3 Yard 1/week $ 83. 1 0 $ 72.30 3 Yard 2/week $171.75 $150.65 3 Yard 3/week $260.40 $229.00 3 Yard 4/week $349.05 $307.35 3 Yard 5/week $437.70 $385.70 4 Yard 1/week $110.80 $ 96.40 4 Yard 2/week $227.15 $198.85 4 Yard 3/week $343.50 $301.30 4 Yard 4/week $459.85 $403.75 4 Yard 5/week $576.20 $506.20 6 Yard 1/week $166.20 $144.60 6 Yard 2/week $337.95 $295.25 6 Yard 3/week $509.70 $445.90 6 Yard 4/week $681.45 $596.55 6 Yard 5/week $853.20 $747.20 7 Yard 1/week $193.90 $168.70 7 Yard 2/week $393.35 $343.45 7 Yard 3/week $592.80 $518.20 7 Yard 4/week $792.25 $692.95 7 Yard 5/week $991.70 $867.70 EJ{~'~H]~nr :3 . . COMMERCIAL CAN SERVICE Current Monthly 1992 Rates Proposed Monthly 1993 Rates 32 gallon container (Standard Container 40 gallon container (Oversized Container) 45 gallon container (Oversized Container) 48 gallon container (Oversized Container $ 7.10 $ 8.90 $10.00 $10.15 No change No change No change No change HANDY HAULER Current Monthly 1992 Rates Proposed Monthly 1993 Rates Total Cost for Placement, One Week Bin Rental & Disposal of Container filled no higher than water level $44.05 $44.55 Rental Cost beyond first week 9.00 No change Cost for Additional Dump 31.15 31 .65 Excess Charge for Bin Filled higher than water level 6.40/yd No change DROP BOX 14 Cubic Yard Container Current Proposed 1992 Rates 1993 Rates $95.15 $95.65 95. 15 95.65 133.55 134.05 197.55 198.05 261.55 262.05 6.40/cu.yd No change 12.80/yd No change plus 5.55 per 6.05 per pick-up pick-up 6 Cubic Yard Container Rate per Pick-up (Dirt/Rock/Debris) 20 Cubic Yard Container 30 Cubic Yard Container 40 Cubic Yard Container Excess Rate Per Yard if container loaded above water level Compacted Rate Per Yard Miscellaneous Charges The following charges are in addition to the container charges described above. Flasher Charge Initial Placement Charge Weekly Container Rental Fee Beyond First Week Stand-by Time Relocation Fee Cancellation of Automatic Collection at End of Rental Period *Note: This charge is waived if the following service frequency is maintained: $10.55/placement No change 23.00 No change 11.90* No change 1.70/day* No change 31.50 /request No change 41 .90 No change Service Level 6 yard/14 yard/20 yard 30 yard 40 yard a:chartgar.agenda#11 Frequency 4 pulls/month 3 pulls/month 2 pulls/month . .,._.._--~.~..~---'-- ----~._~---- .__._~ EXHIBIT 4 . COMPARISON OF SELECTED GARBAGE RATES THROUGHOUT THE BAY AREA RESIDENTIAL GARBAGE RATES & SERVICES FOR COMMUNITIES OFFERING 32 GALLON SERVICE (November 1992 Appendix A of JRRRC Report dated 12/10/92) COMMUNITY Antioch Benecia Clayton Concord Danville Hillsborough Lafayette Livermore Los Altos Los Altos Hills Martinez Moraga Oakland Orinda Pacheco Pittsburg Piedmont Pleasant Hill Redwood City Richmond Walnut Creek b = BACKYARD # OF c = CURBSIDE CLEAN-UPS c 1 c 1 c 1 c 2 c 3 b 2 b 3 b 4 b 4 b 4 b 2 b 3 b 1 b 3 b 3 c 1 b 1 c 2 b 2 b 2 b 3 AVERAGE 14 backyard (67%) 2.3 7 curbside (33%) Proposed City of Dublin b 4 COMMERCIAL SERVICE* 1 yard (23 aqencies) 1 yard bin: 1/week 1 yard bin: 2/week 4 yard (20 aaencies) 4 yard bin: 1/week 4 yard bin: 2/week Monthly Survey Averaqe $ 69.98 $123.14 $220.63 $429.12 CURBSIDE 1 CAN RECYCLING MONTHLY INCLUDED RATE yes $21.65 yes 16.05 yes 24.75 yes 20.00 yes 16.45 yes 12.45 yes 18.30 yes 9.39 yes 13.40 yes 15.40 yes 20.00 yes 19.45 no 10.89 yes 21.75 yes 15.15 yes 20.00 no 9.60 yes 17.00 yes 9.09 yes 18.22 yes 20.00 19 yes $16.62 2 no yes $8.00 Proposed Dublin $24.10 $54.25 $ 96.40 $198.85 * Note: The difference in the number of agencies surveyed is due to some agencies not offering a particular container size. a:exh4.psr#13 ~J:(~;~ ~ ~EJ ~'W ~ . . & RESOLUTION NO. - 93 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ................................ AMENDING SCHEDULE OF SERVICE RATES FOR SOLID WASTE COLLECTIONI ESTABLISHING A MINIMUM SERVICE LEVEL FOR RESIDENTIAL CUSTOMERS AND DESIGNATING THE POINT OF COLLECTION FOR SINGLE FAMILY COLLECTION WHEREAS, the city of Dublin adopted on February 10, 1992 Resolution No. 11-92 which established garbage service rates; and WHEREAS, a notice announcing a public hearing on the proposed 1993 rate adjustment has been published on January 1, 1993 and January 6, 1993, as required by the Government Code; and WHEREAS, Oakland Scavenger Company (aSC) has submitted a 1993 rate application to the Joint Refuse Rate Review committee (JRRRC) in accordance with the franchise agreement between the city and OSC; and , WHEREAS, the JRRRC has recommended rate adjustments based upon jurisdictional cost of service in a report dated December 10, 1992; and WHEREAS, the JRRRC recommended that certain expenses be excluded from the 1992 rate application; and WHEREAS, Closure; and the exclusions included costs for: Landfill Closure/Post WHEREAS, the JRRRC agreed to review these exclusions in the future rate application, provided that adequate background data can be obtained to support inclusion of these expenses in the rates; and WHEREAS, the JRRRC has reserved the right to perform further analysis on the Company expense for 83 franchised employees hired in 1990; and WHEREAS, the JRRRC has recommended that the Return on Equity be established at 9.5% for 1993; and WHEREAS, the JRRRC has submitted a rationale in the 1993 report substantiating the Return on Equity recommendation; and WHEREAS, in accordance with section VI of an agreement dated April 24, 1990 between the city, OSC, and Livermore Dublin Disposal, certain charges for curbside recycling are allowed; and WHEREAS, in accordance with the Curbside Recycling Agreement, beginning in January of 1993, the company is authorized to collect $1.34 per month per household for the curbside recycling service; and WHEREAS, the City council has conducted a public hearing on the matter on January 11, 1993; and WHEREAS, the Solid Waste ardinance and Agreement regarding Waste Collection and Disposal require the city Council to designate a rate schedule and point of collection for single family residences. NOW, THEREFORE, BE IT RESOLVED that the City council of the City of Dublin does hereby resolve as follows: 1. Beginning January 1, 1993, the Rate Schedule attached hereto, marked "Exhibit A" and by reference, made a part hereof, shall be the official rate schedule until further rescinded or amended. 2. The super Recycler service level identified in section II(A) of Exhibit A shall be the minimum service level as required by mandatory service for residential customers. -1- ""C'.' .-., '"~"= ,,,-, 5 1..'.'..... """"""""T t J~Ji~ ~H:fJ ~ tJ . . , 3. Beginning January 1, 1993, the cost for curbside recycling collection shall be $1.34 per month per residence. This charge shall be included in the base level of service for residences as shown in Exhibit A. 4. As described above, this rate revision is based upon the recommendation of the Joint Refuse Rate' Review Committee findings in the review of Oakland Scavenger Company's 1993 Rate Application (dated December 10, 1992). 5. The City Council finds that the JRRRC recommendation for a 9.5% Return on Equity is supported by information in the 1993 Review of the Rate Application Report (December 10, 1992) representing a reasonable return on investment and, as such, is incorporated into the proposed rate structure. 6. The city council of the city of Dublin supports the inclusion of necessary funds in the OSC's rate application to fund the operations of the JRRRC in 1993. 7. Said rates are in accordance with the City of Dublin Solid Waste Management Ordinance and the Agreement between the city of Dublin and Oakland Scavenger company, a subsidiary of Waste Management Inc., regarding Waste Collection and Disposal. 8. The content of this Resolution shall supersede Resolution No. 11- 92. adopted the 10th day of February, 1992. PASSED, APPROVED AND ADOPTED THIS 11TH DAY OF JANUARY, 1993, BY THE FOLLOWING VOTE: AYES: NOES: ABSENT: Peter W. Snyder, Mayor ATTEST: Kay Keck, city Clerk a:Resowast.agenda#11 -2- . EXHIBIT A CITY OF DUBLIN RATES FOR GARBAGE COLLECTION & DISPOSAL SERVICES CONDUCTED PURSUANT TO A FRANCHISE AGREEMENT BETWEEN THE CITY OF DUBLIN AND OAKLAND SCAVENGER COMPANY . . I. EFFECTIVE DATE The rates shown for the collection of refuse within the City of Dublin are effective as of January 1, 1993. II. RESIDENTIAL SERVICE A. Super Recycler Collection This is a minimum service level providing for once a week collection of a 20 gallon capacity container. This service level cannot be combined with services identified in sections (B) or (C) below. This rate includes a $1.34 (one dollar and thirty-four cents) charge for curbside recycling. Monthly Charge: $6.90 B. First Container Collection Cost for Customers not Subscribinq to Super Recycler Rate For customers not subscribing to the Super Recycler service level (as described in subsection A above), the rates shown below shall apply to the initial can of service. Once per week collection of the following sized containers shall include a $1.34 (one dollar and thirty-four cents) charge for recycling. 32 gallon container (Standard Container) 40 gallon container (Oversized Container) 45 gallon container (Oversized Container) 48 gallon container (Oversized Container) Monthly Cost $ 8.00 $ 9.60 $10.50 $11.30 C. Additional Container Collection Costs Once per week collection of each additional container beyond service provided under "(B)" above: 32 gallon container (Standard Container) 40 gallon container (Oversized Container) 45 gallon container (Oversized Container) 48 gallon container (Oversized Container) $ 5.60 $ 7.00 $ 7.90 $ 8.40 D. Special Services Large accumulations: Special Pick-ups: $6.40 per cubic yard $12.00 minimum per pick-up III. DESIGNATION OF POINT OF COLLECTION For Single Family Residential Service, the above rates shall be for "back yard service" for regular garbage service.. The term "back yard service" shall mean the container(s) shall be on the outside of and in close proximity to the structure being served, and at a location which is the customer's option. Padlocks or other devices which deny the Collector reasonable access will relieve said collector from responsibility of such collection. The Curbside Residential Recycling Program requires that containers be placed in location which can be easily seen and readily accessible, within five feet from the curb. IV. ADDITIONAL SERVICES PROVIDED IN RATES The above rates shall include four (4) annual residential cleanups. Dates of said cleanups shall be at the discretion of the City upon reasonable notice to the Company. The rules regulating the special cleanup shall be approved by the Contractor and the Director. The Contractor shall separately account for costs associated with this service and report information as requested by the City. -1- r:'" ~,. .~-~_. ,~ .. r.... .'{ . ~ ~'J~' ~J\.'~"~ C '~y if: ;>. ;'i'l;.o,!J ..,~., A ~~';4 ':~ {\.\.;.J ;:..: .,:.~~:~ ~. r- f~.."~ ~,: ~i ~~-\, ~~ ~. iJI ~:.t .~~ lJ~,'J it . . . V. COMMERCIAL AND MULTIFAMILY BIN SERVICE A. The following rates include collection, disposal, and bin rental at commercial establishments and multifamily projects serviced by centralized bins. The rates shown are for a monthly period. All charges are based upon bins being filled no higher than water level. Excess rate for waste which exceeds water level: $6.40 per yard. Volume of Service Frequencv MonthlY Rate 1 Yard l/week $ 24.10 1 Yard 2/week $ 54.25 1 Yard 3/week $ 84.40 1 Yard 4/week $114.55 1 Yard 5/week $144.70 2 Yard l/week $ 48.20 2 Yard 2/week $102.45 2 Yard 3/week $156.70 2 Yard 4/week $210.95 2 Yard 5/week $265.20 3 Yard l/week $ 72.30 3 Yard 2/week $150.65 3 Yard 3/week $229.00 3 Yard 4/week $307.35 3 Yard 5/week $385.70 4 Yard l/week $96.40 4 Yard 2/week $198.85 4 Yard 3/week $301. 30 4 Yard 4/week $403.75 4 Yard 5/week $506.20 6 Yard l/week $144.60 6 Yard 2/week $295.25 6 Yard 3/week $445.90 6 Yard 4/week $596.55 6 Yard 5/week $747.20 7 Yard l/week $168.70 7 Yard 2/week $343.45 7 Yard 3/week $518.20 7 Yard 4/week $692.95 7 Yard 5/week $867.70 B. commercial Can Service Commercial locations subscribing to service on a per container basis shall be charged the following monthly rates according to the size of the container serviced: 32 Gallon container (standard container) 40 Gallon container (Oversized container) 45 Gallon container (Oversized container) 48 Gallon container (Oversized container) Monthly Cost $ 7.10 $ 8.90 $10.00 $10.15 VI. HANDY HAULER The following rates apply to the collection of a 4 cubic yard Handy Hauler Collection Bin. Total Cost for Placement, One Week Bin Rental & Disposal of container filled no higher than water leyel $44.55 Rental Cost beyond first week $9.00 per week Cost for Additional Dump $31. 65 Excess Charge for Bin Filled higher than water level $6.40 per yard -2- . . VI~. DROP BOX The following rates shall be charged for drop box services rendered. The cost shall be on a per pick-up basis and costs are based upon the load not exceeding the water level. Certain miscellaneous charges as noted in subsection (H) may also apply. A. 6 Cubic Yard Container (Dirt/Rock/Debris) Rate per Base Pick-up The pick-up cost of this container shall be the same as the 14 yard container due to the weight accommodated. $ 95.65 B. 14 Cubic Yard Container $6.40/cubic yard plus $6.05 $ 95.65 C. 20 Cubic Yard Container $6.40/cubic yard plus $6.05 $134.05 D. 30 Cubic Yard Container $6.40/cubic yard plus $6.05 $198.05 E. 40 Cubic Yard Container $6.40/cubic yard plus $6.05 $262.05 F. Excess Rate Per Yard If container loaded above water level $6.40 per cubic yard G. Compacted Rate Per Yard For service and collection of compacted materials, the total rate shall include cubic yard rate and a charge for each pick-up. $ 12.80 per yard plus a $6.05 per pick-up H. Miscellaneous Charqes The following charges are in addition to the container charges described above. 1. Flasher Charge $1 0 . 55 PER PLACEMENT 2. Initial Placement Charge $23.00 3. Weekly Container Rental Fee Beyond 1st Week $11 .90* 4. Daily Container Rental Fee After First Week $1.70/day* 5. Stand-by Time $77.00 per hour 6. Relocation Fee $31.50 per request 7. Cancellation of Automatic Collection at End of Rental Period $41.90 *Note: This charge is waived if the following service frequency is maintained: Service Level 6 yard/14 yard/20 yard 30 yard 40 yard Freouencv 4 pulls/month 3 pulls/month 2 pulls/month a:garb-a.agenda#ll -3-