HomeMy WebLinkAboutItem 8.2 Garbage Svc & Proposed Rate Increase (2) CITY OF DUBLIN
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: December 10, 1990
SUBJECT: Garbage Service and Proposed Rate Increase
Pol(Prepared by: Paul S. Rankin, Assistant City Manager
EXHIBITS ATTACHED: Exhibit 1 : Joint Refuse Rate Review Committee
Review of Oakland Scavenger Company's
1991 Rate Application
Exhibit 2: Historical Comparison of Garbage
Rates 1986-1990
Exhibit 3: Alternative Refuse Rate Structures
Exhibit 4: Proposed Options for 1991 Residential
Garbage Rate Adjustment
Exhibit 5: Proposed Commercial Garbage Rate
Adjustment
Exhibit 6: Agreement to Submit A Joint Application
for Non-Discretionary Household
Hazardous Waste Grants
RECOMMENDATION':°" ' " 1 :" "` "Rece'ive'`"and -review Report-`On' 1991'
'Scavenger Rate Application and -set a public: ``°
hearing for January 14, 1991 to consider an
increase in the garbage rates.
2. Review current residential garbage service levels
and options for changes. Provide Staff with
direction to negotiate any desired changes.
3. Receive report on Alternative Rate Structures and
provide Staff with direction on the application
of the 1991 rate increase to different levels of
garbage service.
4. Review status of current Household Hazardous Waste
Collection surcharge and provide Staff with
direction on the use of surcharge funds once
current obligations are met. Possible uses
include: a) offset recycling program costs; b) to
reduce the impact of future rate increases; c) use
towards special clean-ups for residential
customers.
5. Ratify the agreement for a Joint Application for
HHW Grant Funds.
FINANCIAL STATEMENT: If the current level of service is maintained, a
30% increase in garbage rates is required.
Options are presented for spreading this cost over
the different service levels.
DESCRIPTION:
Joint Refuse Rate Review Committee (JRRRC)
The City of Dublin is a member of the JRRRC. This Committee was formed
through a Joint Powers Agreement to provide rate review assistance to
agencies serviced by Oakland Scavenger Company (OSC) . The joint effort
allows the agencies to review rate applications in a cost effective manner.
OSC is the company which holds the franchise for the City of Dublin. This
company is owned by Waste Management Inc. (WMI) , which is a large
international firm providing a range of services. Our local service is
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COPIES TO:
Dave McDonald, OSC
Mary Evans, LDD Controller
Dan Borgess, LDD General Manager
ITEM NO. 9.
provided by Livermore-Dublin Disposal (LDD) which is operated as a division
within the OSC structure. The City has a separate agreement with LDD to
provide the curbside recycling program, which is not included as part of
this rate review process.
The JRRRC has utilized the services of a specialized accounting consultant
(Hilton, Frankopf & Hobson) to review the OSC rate application. The
Company provided a rate application covering the years 1991 through 1993.
The estimated projections for the later years may require additional
adjustment as time progresses. The Consultant reviewed both expenses and
revenues to determine whether the rate increase is accurate (Exhibit 1 ) .
The scope of their review is outlined on page 3 of the Consultant's report.
For purposes of recommending a rate adjustment, the total operations of OSC
are reviewed as a single company. Based on a review and discussion of the
Consultant's findings, the JRRRC makes a recommendation of the increase to
be implemented. This is then presented to each City Council for their
action.
The City's franchise agreement includes provisions for OSC to request an
adjustment to its rates. The collection rates must be authorized by the
City Council. Section 3.1 includes the following provisions:
". . .The Collection Rates shall be no less than the Company's fully
allocated costs of providing collection . and.. disposal services and
facilities required by this agreement, plus-: .a reasonable return on
investment. "
The agreement also specifically ref erences•••_the.-igRRRC--and,: -the
jointly review rate applications.
Cost'Estimates Presented Bv- OSC
The JRRRC has found that operational costs experienced by OSC have
increased at a significant rate. The projected costs have also exceeded
the estimates made previously as part of the rate review process in 1989.
The following shows how the Company's estimated expenses have changed:
Estimated. Expenses Estimated Expenses
1990 1991
1989 Projection $82.9 million $89.1 million
1990 Projection $85.4 million $103.8 million
% Change Projections
(1990 vs. 1989) +3% +16.5%
The major cost factors are outlined beginning on page 4 of the Consultant's
Report. These projections are as presented in the Company's rate
application and prior to any adjustments.
The following summarizes the primary areas of increased costs impacting the
amount OSC has requested in this rate application:
Lawsuit: OSC's settlement of a civil rights lawsuit included a payment of
$8 million. The Company requested reimbursement for this expense in 1991 .
The JRRRC did not concur with this request and the Consultant was directed
to adjust the Company's estimated expenses accordingly. The JRRRC based
its decision on input from specialized legal counsel. The Company may be
submitting additional information on defense costs which would be
considered in a future rate application.
Dumping Fees: The disposal costs have increased due to additional tipping
fees levied by State and Regional agencies. In addition, the Company is
experiencing added costs to prepare landfill areas for closure in
accordance with environmental laws and regulations. The individual
components impacting these costs are discussed more fully on page 5 of the
report.
Earthquake Costs: Some of the Company's facilities were damaged in the
1989 Loma Prieta earthquake. This forced OSC to relocate certain
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facilities to temporary quarters. The Company has also experienced higher
truck maintenance costs for repairs which must be performed off-site.
Collection Wages & Salaries: This category actually contributed towards a
reduction in the estimated expenses. The Company has reduced crew sizes
and negotiated rate increases below what had been projected. in the 1989
JRRRC review.
Adiustments
Based on input from the JRRRC members and the Consultant's review of OSC
records, several adjustments were made to the estimated revenue required by
the Company. These adjustments are outlined on page 7 of the report. The
following figures summarize the impact of these adjustments:
($0001s)
OSC Adjusted Revenue Requirement 85,582 103,929
Consultant's Adjusted Revenue Requirement 84,336 92,820
Approximately 72% of the net adjustments made by the Consultant were
attributable to the disallowance of the lawsuit settlement cost discussed
above.
JRRRC Policy Issues
The -Consultant's. report .(beginning: at page.: 8) - identifies-five`=.policy ,areas
which were discussed by .the Rate .Review Committee. .. The most significant in
terms of, impact on rates : .s: the.:=lawsuit:, settlement•^which";.°has :al ready .°been!
discussed. -However, two °areas, will potentially ;need- to. be --considered , -in
future rate applications.
The Company included a request for $655, 000 in costs associated with the
expansion of Durham Road Landfill. The JRRRC requested that the Consultant
delete this amount from the revenue requirement. The Committee took this
action based upon the preliminary nature of the cost figures. It is also
not certain when the new area would be placed into service. The Committee
recommended that the expansion cost be reimbursed only after the expansion
is complete and waste is being disposed of in the new area. Typically,
these costs would be amortized over the life of the new landfill area.
The second area which will require further review is the issue of Landfill
Closure and Post-closure costs. This was the first year that OSC has
requested these costs in their rate application. The estimated expenses
were prepared by OSC engineers and spread over the remaining life of the
landfills. The OSC proposal included costs associated with both the Durham
Road facility and the current fill area at the Altamont facility. The
costs presented were also only those attributable to franchised operations.
For example, if 50% of the garbage disposed of in the Altamont is from
franchised services provided by agencies participating in the JRRRC, the
Company is only requesting that 50% of the costs paid by the ratepayers.
The Company did not provide detailed information on the proposed
improvements.
The recommendation of the Consultant was to eliminate these costs from the
current rate application. Due to the technical nature of the improvements,
it has been recommended that the JRRRC have an independent engineering firm
provide a detailed response on the proposed improvements. The purpose
would be to verify that the extent of the work is reasonable and necessary,
prior to any reimbursement by the ratepayers. The issue may also require
additional legal analysis of the obligation of the ratepayers to pay
closure and post-closure costs. A large portion of these costs are
associated with improvements required by agencies such as the Environmental
Protection Agency (EPA) and the Regional Water Quality Control Board.
Staff would need to present additional information at a later date on the
cost of the independent review proposed by the JRRRC.
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Rate Adjustment Required for Company Operations
OSC's presentation to the JRRRC requested a 16% increase for 1991 followed
by 11-12% increases in the two years following. The Company recognized
that the 1991 proposed increase would not be sufficient to fully compensate
the company for its expenses incurred by the end of 1991 . The JRRRC
typically reviews rate applications based on a multi-year period. For
example, prior to 1990 there had not been a rate increase because the
Company expenses were being covered by excess revenues collected in prior
years and growth in the customer base. In the case of an operating
deficit, the Company anticipates that future rate adjustments will recover
the costs.
As presented on page 4 of the Consultant's report, the analysis indicates
that total revenue for 1990 will be $10.5 million less than the amount
required. If no rate adjustment is provided in 1991 , it is estimated that
the Company's expenses would exceed revenue by a cumulative amount of $21 .5
million.
The implementation of a 16% rate increase is projected to generate an
additional $13.1 million in revenue. This reduces the unfunded expenses to
$8.4 million. This deficit is also impacted by potential changes, to the
agencies serviced by OSC.
The. Southern'Division (Fremont, Newark'• -and•, Union4.,C-ity) have,,extended-the ir
OSC franchise agreements to January 15, 1992. _'It is possible that these .
'"'.agencies :k•could decide to franchise ° services :,with,:°another.,company.-. �:,,,S;taf;f.r,. , �,
representatives from, - the affected agencies•-c,indicated- a.r-,-willingness,•.„_to~-_,.^°°Y•
negotiate an agreement with the JRRRC to repay an undetermined share of the
deficit in the event that they are not serviced by OSC in 1992. The
Consultant did calculate the increase required to fully compensate the
Company for their costs at the end of 1991 . This would require an increase
of 28% over the current rates. The tipping fee increases discussed below
would need to be added to this figure. The details of the calculation are
shown on page 13 of the Report.
Impact of Tipping Fee Costs
In the November General Election, the voters of Alameda County approved
Measure D, a County Charter Amendment. This measure increased the tipping
fee at all landfills in Alameda County by $6.00 per ton. The purpose of
the fee is to provide for specified recycling programs. The Consultant has
calculated the additional cost of this fee to be approximately equal to a
13 percent increase. The JRRRC has recommended that this increase be
implemented to assure that revenues are available to cover this expense.
The second area impacted by tipping fee charges is the anticipated increase
in the fee levied by the Alameda County Waste Management Authority.
Effective July 1 , 1990, the Authority increased the fee levied to 54.6
cents per ton. In Fiscal Year 1985-86, the fee levied by the Authority was
only 5 cents per ton. The 1990-91 increase funded expanded Authority
budget activities, including the preparation of baseline data required for
AB939 plans.
The Authority has indicated a willingness to also fund local plans through
a joint effort. The JRRRC estimated that the Authority would raise the
tipping fee to $1 .00 effective January 1 , 1991 . This is only an estimate,
and a formal indication has not been received from the Authority. The
Consultant estimated that an increase to $1 .00 would correlate
approximately to a 1% increase in rates. In order to avoid underfunding
the Company in 1991 , the JRRRC included this adjustment in their
recommendation.
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Cumulative Impact of Rate Adjustments Recommended by JRRRC
In order to address the impact of the tipping fees and the OSC's operating
expenses, the JRRRC has recommended a 30% rate increase. As described in
the sections above, this increase is impacted by the following components:
Garbage Co. Increased Expenses 16%
Measure D - County Recycling 13%
Alameda County Waste Management Authority 1%
Total 30%
As noted previously, this increase will not allow the Company to fully
recover their expenses by the end of 1991 . In addition, any additional
regulatory costs which are the responsibility of the rate payer will impact
future rates. The final recommendations of the JRRRC are identified on
page 16 of the Consultant's report.
Staff recommends that the City Council set a Public Hearing for January 14,
1991 to consider increasing the current garbage rates.
Breakdown of Regulatory Fees
The. Consultant has supplied: a breakdown of regulatory fees paid for
-di•sposal, in. Alameda, County._�.(Page : 1.4._. Exhibit. 7)... . The...report-....analyzed,•.the ,
total - fees--on a .company-wide bas-is.- Thet, total --estimated.- fee's prior-.to any
increase initiated by the Waste.. Management Authority is $9.961 per ton.
This �includes' the=• .$6..00 ,.per.;�ton•.°Measure':D fee. .--It .. should:- be ..noted:.:that' .
:'this accounts for approximately.1.5% •of the total average customer-
this County fee is increased to $1 .00 per ton, the regulatory fees will
account for an estimated 15. 6% of the average customer bill.
In addition to the fees previously discussed, the State has increased fees
levied. AB939 included a fee of 75 cents per ton on July 1 , 1990, and
increasing to $1 .00 per ton on July 1 , 1991 . Also, Alameda County has
implemented a $1 .32 per ton fee to develop a Household Hazardous Waste
Program. The program includes the development of permanent collection
sites and it is to operated by the Alameda County Health Care Agency. This
increase was implemented October 1 , 1990. In their initial proposal, the
County indicated a program start-up date of July 1 , 1991 .
The changes in regulatory fees have made it difficult to accurately project
OSC expenses from year to year. This is especially true when one considers
the impact of changes made mid-year. Staff has indicated to the Waste
Management Authority Executive Director a need to forecast long term
tipping fee changes. Although the same control cannot be exerted over
State fees imposed, it is important that the city work with local agencies
whenever possible.
The JRRRC has also recommended that OSC identify the approximate portion of
the customer's bill associated with regulatory fees. This is viewed as an
important part of an educational process. The JRRRC believes that the
consumer must be informed that a substantial portion of the customer bill
is not within the control of the City or the Garbage Company provider.
Current Dublin Garbage Service
The current residential service provided by Livermore Dublin Disposal is
considered "backyard" service. Customers do not need to place their
garbage can at the curb. However, the cans must be accessible to the
collector. Included in the residential garbage rates are two special
residential pick-ups. These allow the customer to place large
accumulations at the curb on specified Saturdays. The City offers two
additional clean-ups which are paid for from a special fund. This fund
represents excess revenues generated by OSC during a period prior to the
City's assumption of the franchise agreement. The funds are accounted for
separately and interest is accrued to the remaining balance. The cost of
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these special clean-ups is currently $8,400 and it is anticipated that this
fund will be depleted by the end of 1991 .
The City has a separate agreement with LDD for the provision of the
Residential curbside recycling program. This service is not included in
the franchise and the Company has assumed all market risk. Increases in
the cost of this program are linked to changes in the consumer price index.
The Contractor is also required in the agreement to coordinate increases
with changes in the regular garbage rate. Since this program has only been
in place for a few months, no increase is being considered at this time.
The final component of the local garbage service is a surcharge for the
Household Hazardous Waste Collection conducted May 5, 1990. This surcharge
is discussed in more detail in a later section of this report. A summary
of all current costs for residential service is shown below:
Monthly Charges
Garbage Collection/Disposal - First Can $ 5.70
Surcharge for Recycling 1 .25
Surcharge for HHW .20
Subtotal $ 7.15
Cost for Each Additional Can $ 3.95
The.... .Dublin:: Residential,�.:...Customer;;as-base:::.Sis,.: currently,, comprised of,; 4.;.9.6.1: :.,
customers.,.':, LDD:°-estimates:.that 414_-vcustomers.-do,..note-.currently •subscribe;•for
regular service. The following breakdown identifies the residential
customers by level of service:
1 can 2 cans 3 cans 4-6 cans
Number of Customers 2,054 2,591 282 34
Percentage of Customers 41% 52% 6% 1%
As shown above, a majority of the City's customers (59%) have more than one
can service.
Attached as Exhibit 2 is a historical comparison of garbage rates in the
City of Dublin. In 1986, when the City assumed the franchise from DSRSD,
the City Council reduced the rates. Since that time, a 16% increase was
imposed January 1 , 1990, and rate changes were made in July of 1990 to
enact the curbside recycling and a Household Hazardous Waste one-time
collection.
Service Level Options
Given the significant rate increase proposed by the JRRRC, Staff has had
preliminary discussions with LDD regarding potential changes to the service
which would reduce rates. In 1989, Staff presented a similar analysis for
City Council review. At the December 21 , 1989 meeting, the City Council
voted to maintain the backyard service and directed Staff to prepare
documents necessary to implement an across the board rate increase pursuant
to the 1989 recommendations of the JRRRC.
The two options Staff has investigated involve curbside service for garbage
collection. Residents are currently participating in a curbside recycling
program. If garbage cans were also placed at the curb, certain cost
reductions could be achieved.
Two basic options would exist for curbside service. One involves allowing
the customer to use their own garbage cans. The company would also need to
make modifications to their trucks to implement this service. Costs are
reduced since the number of personnel can be reduced. In addition, there
is a time savings resulting from the customer placing the can at the curb.
Preliminary indications are that this service change may reduce the rates
by approximately 10 percent. The disadvantages presented by this option
are:
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1 . Appearance from cans being left at the curb after collection day.
2. Due to the high winds, problems with cans and lids blowing away.
3. Difficulty for some persons to physically place their garbage
containers at the curb.
The second option is to implement an automated curbside collection. This
type of service involves the use of special containers which are placed at
the curb. The collection truck has a mechanical arm which grabs the can
and empties its contents. Similar to the option presented above, the
Company would achieve certain labor savings; however, the Company would
also incur capital costs for vehicles and the special containers. LDD
estimates that this type of system may provide savings of 4%.
The disadvantage of aesthetics from cans left at the curb would remain with
this option; however, the automated system may improve other disadvantages
presented by customer provided cans. The automated containers have wheels
and attached lids which would weigh them down. This would reduce problems
with heavy winds. Also, the wheels make it convenient to move the can to
and from the curb. LDD representatives indicated that they felt this
service could be provided to all areas of the City.
Staff has also discussed with LDD representatives the . availability of
:. different,. size,..cans in„.: am >:
._automated._sys°tem:. _ Jnt- �.:other <agencies which ..have.
” implemented 'this "system; they• •haves.. typically�_---provided a.- 90-.--gallon-.
container. This usually results in a cost increase for the single can
customer. .. There is ' also..-,some question.--,as_:to:,;the message - -which ' this-,
"provides to the consumer." - The City has —implemented, a recycling- program,
and, consistent with State Law, is encouraging a reduction in the amount
of garbage placed in the landfill. Providing a larger container may
confuse the public. LDD has advised that a 64 gallon can is available and
recently a 32 gallon automated can became available. If implemented, these
options would allow the cost of the program to be based on the service
level received.
In order to implement any change in the service level, Staff would need
additional time to negotiate the appropriate contract amendments with OSC.
Also, time would be necessary to investigate the cost differentials since
the projections noted are only rough estimates. The Company
representatives anticipate the need for a 3-6 month period if a contract is
signed, to actually implement a service change. This time is required to
obtain any capital items necessary and prepare public information.
Staff would request that the City Council review the service options
discussed and provide direction as to whether any change in service levels
should be pursued in 1991 . If a change is desired, Staff would request a
formal proposal from the Company, which would be presented at a future City
Council meeting.
Alternative Refuse Rate Structures
The JRRRC commissioned a survey of alternative rate structures. The report
is dated December 3, 1990 and is attached as Exhibit 3. The purpose of the
survey was to analyze options available as a method to assist in achieving
the landfill diversion goals established by AB939.
The area of Residential Rates shows that most agencies are pricing service
based upon the amount of garbage collected. This attempts to encourage
recycling and the level of service a customer selects (i.e. one can vs. two
cans) . This also recognizes that a significant portion of the cost of
service is now associated with the cost of disposal. In the past, a larger
portion of the cost was associated with the labor and expense associated
with collecting the garbage.
The current City of Dublin rate structure provides a lower rate for
additional garbage containers. The basic charge for collection and
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disposal of a single can is $5.70 (excluding Recycling and HHW) . Each
additional can currently costs $3.95 (44% less than the 1st can) . The
Alternative Rate Structure Report suggests that the City Council may wish
to consider changing the rates to reduce the differential. This will be
discussed in more detail later in this report.
The report also identifies that the greatest opportunity to adjust service
levels typically comes in conjunction with a composting or yard waste
program. For many residential customers, yard debris is a significant
portion of their garbage. Until an alternative is available, it is not
possible for them to reduce their service. As part of the city's planning
efforts required by AB939, the plan will be addressing composting and what
role it can play in reducing garbage placed in the landfill.
The final area of residential service addressed by the report is the use of
a "mini-can" rate. Typically, this is smaller than the standard 32 gallon
container and it is implemented as an incentive for those who are actively
recycling and composting a majority of their waste generated. It may be
appropriate to consider implementation of a mini-can at a future date when
other recycling and/or composting opportunities are available.
The second portion of the Alternative Rate Structure Report involves
alternatives with commercial rates. This . area is more complicated and , w
there.•is. much less data currently available_-: . The city already charges the.
3. :same rat-e :•per.. cubic yard:: :: Several-..of.,the.% alternatives :identify ed<::augg.es:t _.
the development:: of. differing.:fees at the.::aandfill The ;.area of_ ..commercial
rates., and the impacts of AB939. will need_ to .be. studied .further._ Staff. will.. .:
take "the "comments made in- this.• report- -,into- consideration as �the: city
prepares. its Source Reduction and Recycling Element. - . .
Implementation of 1991 Rate Increase
As has been discussed, the JRRRC has recommended a 30% rate increase for
1991 . OSC rounds the rates to the nearest nickel and Staff has worked with
the Garbage Company representatives to identify alternative methods of
spreading the costs. In order to implement the rate change, the City
Council will need to conduct a public hearing at the January 14, 1991
meeting. Staff needs additional input on the preferred method of adjusting
the rates in order to place publication notices as required by State Law.
The options available are shown on Exhibit 4. Option A identifies the
impact of a 30% across the board rate increase. As was discussed in the
Alternative Rate Structure Report, this results in a significant cost
differential between the first can collected at $7.40 and each additional
can at $5.15. The Report suggested that it may be appropriate to adjust
rates over time in a manner which will create a uniform per can rate.
Options B and C in Exhibit 4o identify the impact of loading only 25% and
20% respectively on the first can. This closes the per can cost
differential between different service levels. The basic garbage
collection and disposal costs would be as follows:
Monthly Cost Monthly Cost
1st can Each Additional Can
Option B 25% on first can $7. 10 $6.30
Option C 20% on first can $6.85 $6.70
As described earlier in the report, 52% of the City's customers have two
can service. By shifting more of the costs to the additional can, a larger
burden will be experienced by these customers.
Option D is presented as an illustration of an adjustment to the rate
structure which would penalize those who require more than a single can.
Under this scenario, the first can cost would be $6.55 and each additional
can would be $7. 15. Staff would not recommend this option since there are
currently limited opportunities to reduce single family service to one can.
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Staff would recommend that the City Council implement a rate adjustment
which begins to equalize the differential between different service level.
If the City Council concurs, Staff would request direction on the selection
of either Option B (25% on first can) or Option C (20% on first can) .
Based on the City Council's preference, Staff will prepare appropriate
documents for consideration at the next meeting.
Exhibit 5 identifies the impact of an across the board rate increase for
commercial bin service. This cost identifies the cost of the actual
garbage collection and disposal excluding the container rental rate. Also,
the cost to an individual business would depend upon the number of times
the bin was scheduled to be serviced during a week.
Staff proposes to include the modified commercial rates in the Proposed
Rate Resolution, which will be presented at the January 14, 1990 meeting.
It is proposed that the increased rates will be effective for the quarter
beginning January 1 , 1991 .
Household Hazardous Waste (HHW) Surcharge
On May 5, 1990, the City conducted a HHW collection day sponsored in
conjunction with the cities of Livermore and Pleasanton. The cost to each
agency. was comprised of. -two elements. The set-up charges of approximately
, $26,760-,were shared ._equally. The remaining costs were .shared -.on the basis..-,.., .
of participation; by residents from< .each city.
.a.. Y.. _ - .,. .. ..
__;The .. City. ..of.-.Dublin.,s.. share ..of_ the...cost was $22,659.......__The .collection.. and,.....
disposal' was'- handled° by Chemical-Waste Management, -Inc.. (CWMI) which-
subsidiary ,
within Waste 'Management 'Inc The ..CityIs local'. garbage company
is also a WMI subsidiary. Due to the corporate relationship, Livermore
Dublin Disposal agreed to recover the HHW collection cost by the City
adding a surcharge to the current garbage rate. The original intent was to
recover the cost over a one year period.
The rate adjustment was effective July 1 , 1990. Single family customers
were charged 20 cents per month. Multifamily customers with bin service
were charged an additional 15 cents per cubic yard.
The following analysis identifies the estimated time required to repay the
entire collection cost:
City of Dublin Total Cost: $ 22,659
Estimated Quarterly Revenue from HHW Surcharge $ 4, 161
Number of Quarters Required to Recover Cost 5.45
quarters
If Surcharge Remains In Place Through Entire 1991
Estimated Excess Revenue Generated $ 2, 307
HHW Grant Reimbursement
Staff is also pursuing a State grant which would provide a reimbursement
for a portion of the costs of the May 5, 1990 collection. The State
collects tipping fees at all disposal sites throughout the State. A
portion of these funds are available for reimbursement of collection events
conducted in 1989-90. The deadline for submitting the application was
November 30, 1990. The final announcement of grant distributions are
anticipated by March of 1991 .
The grant application proposes that any grant funds received be distributed
between the agencies based on each agency's cost. Attached as Exhibit 6 is
an Agreement identifying how the grant funds would be shared. This
document is consistent with the cost sharing in the joint agreement to
hire Chemical Waste Management, which was previously approved by the City
Council. In order to meet the grant deadline, the agreement was executed
by Staff. The State representative had strongly urged the cities to submit
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a joint application. The Agreement defines the City of Livermore as the
Lead Agency. Pursuant to the Agreement, the City will receive 14% of any
grant funds issued to the City of Livermore.
Staff estimates that if the Grant application is approved, the City of
Dublin's share of the proceeds may be approximately $2,000. This will be
transferred to the Garbage Company to reduce the balance owed by the
surcharge. This will increase the excess funds collected for the Household
Hazardous Waste Surcharge at the end of 1991 . The exact amount of the
excess will not be known until 1991 .
Need to Consider Flexibility with Surcharge
The use of a surcharge requires some flexibility to provide a balance
between the revenues collected and the expenditures.
In order to provide consistency with the rates, Staff recommends that the
surcharge be collected for the entire year; however, it is recommended that
the surcharge be designated as a charge for "Special Services." A separate
letter agreement with the Garbage Company would designate that the use of
any additional funds collected beyond the cost of the HHW,would be used for
services designated by the City. Possible uses for the surplus funds
include: a) offset recycling program costs; .b) use to reduce the amount of
future rate increases; c)_ apply toward .future residential clean-up which.
;,.a-re-not. funded. The. :final,,.application- of excess, funds. would be. approved:1-by._
the City Council once the amount -of : funds. is:..known.•
Staff would recommend-that the City -Council direct- Staff to -discuss with
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LDD. representatives the potential, uses-. for, any excess surcharges and -to
present a proposal at the next meeting. It is also requested that the City
Council ratify the Joint Application for Grant Funds executed by City
Staff.
Staff and representatives of OSC will be present to respond to any
additional questions.
a:@1210jrr.doc.agenda
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JOINT REFUSE RATE REVIEW COM TTEE
REVIEW OF
OAHIAND SCAVENGER COMPANY'S
1991 RATE APPLICATION
November 19, 1990
EXHIBIT
HILTON FARNKOPF&HOBSON
Advisory Services to
Municipal Management
39350 Civic Center Drive,Suite 380
Fremont, California 94538
Telephone:415/797-0654
Fax:415/797.0615
November 19, 1990
Joint Refuse Rate Review Committee
c/o Mr. Paul Causey, Chairman
Oro Loma Sanitary District
2600 Grant Avenue
San Lorenzo, CA 94580
REVIEW OF OAKLAND SCAVENGER COMPANY'S
1991 RAZ'E APPLICATION
Dear Members:
This report documents our review of Oakland Scavenger Company's (OSC)
rate application dated September, 1990, for the years 1991 through 1993 on
behalf of the Joint Refuse Rate Review Committee (JRRRC). This letter pre-
sents a summary of major issues which affect the collection and disposal
rates and the rate review process.
Last year the JRRRC was frustrated by the lack of time to consider significant
issues like the civil rights lawsuit settlement. Mr. Paul Causey obtained an
agreement from OSC to submit significant issues in the rate application to the
JRRRC in July. However, many of the current issues were not disclosed until
September. For example, OSC did not discuss their request for management
incentives prior to the September 10, 1990 JRRRC meeting. In addition, the
JRRRC's request for a five-year capital plan was received on October 31, 1990.
This rate application included several other complex issues. Two examples
are OSC's request for significant landfill closure and post-closure costs and
for costs of expanding the Durham Road Landfill. The JRRRC should study
these issues in the context of OSC's five-year capital plan. In addition, it
should assess the ratepayers' liability for these costs, the basis of estimating
these costs, and the method of paying for these costs.
Recent legislation is also having a significant impact on OSC's costs and
operations. The Alameda County Facilities Management Fee, Household
Hazardous Waste Fee, Health Care Services Fee, the AB 939 Fee and the
Fastin Tax all impose a fee per ton of waste disposed of in the landfills. The
Alameda County Measure D Initiative will more than double these fees.
N F RNK PF&HOBSON
_ HILTON A O
November 19, 1990
_ . Joint Refuse Rate Review Committee
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Appropriate capital costs associated with local, state, and federal regulations
are more difficult to determine. OSC translates these regulations into capital
projects. But the current review process does not provide significant incen-
tives to control these costs. Although we did not find evidence that the OSC
was not controlling capital costs in the course of our review, it is beyond the
scope of our review to assess the cost-effectiveness of the engineering
approaches proposed by OSC.
Finally, the results of negotiations between the cities of Fremont, Newark, and
Union City and OSC will not be known prior to the setting of rates next year.
The potential absence of the Tri-Cities from the JRRRC could reduce the
number of ratepayers who would bear the cost of operations.
Despite our concerns about the issues outlined above, we believe that OSC's
request for a 16% increase is reasonable. In addition, an increase of an addi-
tional 13% is necessary for the Alameda County D fees and an additional 1% is
necessary for the increase in the Alameda County Facilities Management
Fee. The total recommended increase is, therefore, 30%.
We make no recommendation regarding rate increases in future years.
Further, we believe that procedural changes that are responsive to the issues
. identified above should be made prior to the next rate review. These changes
should be thoroughly documented and incorporated into the rate review pro-
cedures manual.
We appreciate having the opportunity to be of continued service to the member
agencies of the JRRRC.
Sincerely,
L. Scott Hobson
Partner
Attachment -
Report
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REVIEW OF OAKLAND SCAVENGER COMPANY'S
1991 RATE APPLICATION
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
I BACKGROUND 1
Rate Review Process Revisions 1
September, 1990 Revised Projections 1
I I SCOPE OF REVIEW 3
III OBSERVATIONS AND FINDINGS 4
Cost Factors Leading to OSC's Increase 4
OSC Originated Adjustments 6
Hilton Farnkopf & Hobson Originated Adjustments 6
Policy Issues 8
IV SUMMARY OF RECOIINIENDATIONS 16
V RATE IMPACT OF RECONEWENDATIONS 17
SECTION I-BACKGROUND
Last year, the JRRRC member agencies raised their collection rates by 1.6%.
This was the first rate increase in over six years. The primary reason for the
long period of stable rates was the availability of excess revenues from prior
years. These revenues were used to offset the need for increased revenues
from current operations. These excess revenues were completely used during
1989.
RATE REVIEW PROCESS REVISIONS
At the conclusion of the last rate review, the JRRRC wished to make changes
in the rate review process that would improve its ability to consider philosoph-
ical rate issues in a timely manner. Mr. Paul Causey, Chairman of the
JRRRC, was directed to meet with Mr. Dave MacDonald to discuss these
changes.
Mr. MacDonald agreed that in order to provide the JRRRC adequate time to
consider unusual items or philosophical changes to the rate application, OSC
would identify and submit those items to the JRRRC by July 15 but no later
than July 31 each year.
The Company submitted its initial rate application on July 27, 1990. Due to
uncertainties regarding the negotiations of new franchise agreements with
the Southern Division jurisdictions, the rate application did not include cost
information for the Southern Division. This initial application also did not
include a request for management incentives, costs for the Durham Road
Landfill expansion, costs for closure and post-closure maintenance for the
Durham Road Landfill, or a five-year capital plan.
OSC's September 10, 1990 rate application was still incomplete with regard to
the Southern Division costs. The final costs were received by September 12.
The requested five-year capital plan was received on October 31, 1990.
SEPTEMBER, 1990 REVISED PROJEC7JONS
OSC's September, 1989 application contained projections for the years 1989
through 1991. OSC's current rate application presents actual results for 1989
and revised projections for the period 1990-91. This current projected revenue
requirement for the period 1990-1991 reflects an increase of 10% from the 1989
projections, as shown in Exhibit 1.
t ..
Exhibit 1
1989 Projected 1990 Projected
Revenue Revenue Increase/ %
Year Requirement Requirement (Decrease) ChanLye
1990 $ 82.9 $ 85.4 $ 2.5 3%
1991 $ 891 $103.8 $14.7 16%
Total $172.0 $189.2 $17.2 10%
Section III of this report explains the factors leading to the increase in pro-
jected expenses between the two years.
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SECTION H- SCOPE OF REVIEW
Our review was conducted in accordance with the September 18, 1990 contract
with the JRRRC and the Rate Review Procedures Manual dated April 6, 1986.
Our procedures included:
• Reviewing the rate application for mathematical accuracy and compli-
ance with the rate review procedures.
• Agreeing the rate application to OSC's audited 1989 financial state-
ments.
Reviewing the revenue and expense projections contained in the appli-
cation for reasonableness in terms of OSC's prior experience and our
knowledge of industry experience.
• Calculating the approved profit, based on a 17% return on franchised
equity.
• Calculating the cumulative excess/deficit income from operations for
the period ending December 31, 1989.
• Recalculating representative rates resulting from the required revenue
increase and comparing these to rates in other Bay Area communities.
The scope of our review did not comprise an audit of OSC's financial state-
ments. Such an audit is performed by the firm of Armanino, Jones and
Lombardi.
Our review was based on OSC's September, 1990 projection of the results of
operations for the three years ending December 31, 1993. The actual results of
operations will usually differ from projections, because events and circum-
stances frequently do not occur as expected, and the difference may be signifi-
cant.
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SECTION III- OBSERVATIONS AND FINDINGS
Our observations and findings are organized into four categories.
• First, an overview of the factors included in OSC's rate application lead-
ing to the increase in rates in 1991;
• Second, a summary of the adjustments made by OSC to the rate applica-
tion subsequent to its filing;
• Third, a description of the adjustments which we identified in the
course of our review to correct errors made by OSC; and
• Fourth, a discussion of policy issues regarding whether certain costs
that have been incurred by OSC are appropriate to include for rate pur-
poses.
COST FACTORS LEADING TO OSC's INCREASE
OSC's 10% increase to the projected 1990 through 1991 revenue requirement
results from six major factors, as shown in Exhibit 2:
Exhibit 2
($ Millions)
1990 1991
1989 Projections, as adjusted 82.9 89.1.
Cost Factors
1. Lawsuit - 8.0
2. Dumping Fees 3.7 6.2
3. Wages and Salaries (1.5) (2.3)
4. Other Operating Expenses 1.1 0.9
5. Earthquake-related costs 0.8 0.6
6. Various Other 1.6 1_3
1990 Projections 85.4 103.8
1. Lawsuit Settlement:
In 1989, OSC originally requested reimbursement for an $8 million settlement
of a civil rights lawsuit. It was excluded by the JRRRC from the rates pend-
ing a review by the JRRRC's legal consultants. OSC has again requested
reimbursement of this item in 1991. (See further discussion of this item on
page 9.)
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2. Dumping Fees:
Landfill and transfer station expenses are higher than previously projected by
$3.7 million in 1990 and $6.2 million in 1991. These increases'are composed of
the following significant components, partially offset by other reductions:
Tonnage Surcharges
The creation of the Alameda County Household Hazardous Waste fee ($1.32
per ton), and the increase of the Alameda County Facilities Management fee
(of$0.336 per ton to $0.546 per ton) increased dumping fees by $0.6 million in
1990 and $3.0 million in 1991.
Closing Costs
OSC has included for the first time the amortized costs of closure and post-clo-
sure maintenance of the Durham Road ($1.4 million per year starting in June
1990) and the Altamont ($0.4 million per year starting in January 1991) land-
fills. (See further discussion of this item on page 9.)
Wages and Payroll Costs
OSC has projected that landfill wages and payroll costs will be higher than
previously projected by $0.5 million in 1990 and $1.0 million in 1991. These
increases represent additional supervisory manpower that OSC says is neces-
sary to comply with new landfill regulations, to enhance safety, and to control
litter.
Truck Expense
OSC has projected increases of$0.4 million in 1990 and $0.6 million in 1991
over previous projections due to higher volumes of waste being transferred,
resulting in higher maintenance and operating costs for transfer vehicles.
Public Revenues
Public dumping at the landfills decreased in 1990 for the first time due to
dump fee increases and decreased volumes disposed of by private haulers.
OSC estimates that public revenues will be $0.6 million less than previously
projected. Revenues projected for 1991 are expected to be $2.9 million higher
due to planned price increases at Davis Street and Durham Road.
Other Operating Expenses
OSC estimates that other operating costs will be higher than projected by $1.1
million in 1990 and $2.3 million in 1991. These increases are due to legislative
requirements regarding water monitoring (the Clean Air and Water Act) and
gas monitoring, higher building maintenance costs, road projects mandated
by the County, and the Durham Road Landfill expansion.
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3. Earthquake Costs:
Damage caused by the October 17, 199Q Loma Prieta earthquake forced OSC to
relocate the Peralta Street Building operation (including the Northern
Division and truck maintenance facilities). OSC is building a replacement
maintenance yard on 98th Avenue that is scheduled to be completed in 1991.
The impacts associated with the relocation include: moving costs, a new tele-
phone system, rent expense, higher truck maintenance (that must be per-
. formed off-site), building repairs, and higher depreciation expense on the new
facility at 98th Avenue.
4. Collection Wages and Salaries:
OSC continues to reduce its residential routes from three men to two men. In
addition, OSC negotiated lower wage increases than projected in the prior rate
application. According to OSC, these factors have resulted in savings of$1.5
million in 1990 and $2.3 million in 1991.
5. Other Operating Expenses:
OSC discovered fuel tank leakage in the Southern Division yard and was
required to remove the tanks, clean the soil, and build an evaporating tank for
water used to wash trucks, totaling $500,000. Soil monitoring is required to
continue in 1991.
In addition, OSC had an increase of$200,000 in 1990 in damage claims caused
by increased accidents.
Further, OSC began an aggressive effort to paint and repair roll-off and
commercial bins. This effort is expected to cost approximately $200,000 in 1990
and 1991.
OSC ORIGINATED ADJUSTMENTS
Subsequent to the submission of the September 12, 1990 rate application, OSC
requested an increase of expenses in 1990, 1991, and 1992 totaling $143,000 per
year. This request was made because of the accidental omission of deprecia-
tion for improvements at the Altamont Gas Recovery Plant. We concur with
this adjustment.
We have summarized the effects of this adjustments on the OSC projections in
Exhibit 3.
HILTON FARNKOPF &HOBSON ORIGINATED ADJUS
I NTS
OSC was able to support their revenue and expense projections with the excep-
tion of the items described below and summarized in Exhibit 3.
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Exhibit 3
($000's)
19W 1991
September 1990 Projected
Revenue Requirement 85,439 103,786
OSC October Adjustments
1. Depreciation 143 143
OSC Adjusted Projections 85,582 103,929
HIS'&H Adjustments
1. Oakland, Street Cleaning Fees (ref, pg. 7) - (316)
2. Engineering Salaries (ref, pg. 7) (100) (1_11)
3. Miscellaneous Income (ref. pg. 8) (194) (205)
4. Landfill Surcharges (ref. pg. 8) (128) 168
5. Interest (ref. pg. 8) - (162)
6. Additional Franchise Fees and
Corporate Expenses (ref. pg. 8) - 201
7. Altamont Adjustment (ref. pg. 8) (160) (268)
8. Litigation Settlement (ref. pg. 9) - (8,000)
9. Landfill Expansion (ref. pg. 10) - (655)
10. Landfill Closure and Post-Closure Costs
(ref. pg. 11) 664) 1761)
Adjusted Revenue Requirement 84,336 92,820
Oakland Street Cleaning Fees
OSC collects street cleaning fees on behalf of the City of Oakland through its
garbage billings. An expense, offset by an equivalent revenue is recorded in
OSC's accounting records. OSC erroneously escalated the expense and not
the revenue in the rate application. We have decreased Oakland Street
Cleaning expense by $316,000 in 1991 to correct this error.
Engineering Salaries
OSC landfill engineers spend a portion of their time working on projects for
other non-franchised Waste Management Inc. subsidiaries. Their time is
billed to the subsidiary at 185% of the engineers' labor costs. Based on year-to-
date billings to other subsidiaries, we believe that OSC underestimated the
total billings and, therefore, overstated the franchised portion of the engi-
neers' salaries. We have reduced this expense by $100,000 in 1990 and $111,000
in 1991.
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Miscellaneous Income
In comparing prior year annual "clean up" revenue to current projections,
we discovered that OSC had erroneously omitted revenues for several projects
yet to be performed in 1990. This error also carried over to future year projec-
tions. We increased miscellaneous income by$194,000 in 1990 and $205,000 in
1991 to reflect "clean-up" projects.
Landfill Surcharges
OSC calculated the landfill surcharges incorrectly in the final rate applica-
tion. The impact of the error was to overstate the expense by $128,000 in 1990
and understate the expense by $168,000 in 1991. We have adjusted OSC's rate
application accordingly.
- Interest
In reviewing interest expense, we discovered that OSC had escalated interest
expense using an inflation factor. We reduced 1991 interest expense by
$162,000 to correct this error.
Franchise Fees and Corporate Expenses
OSC projected collection revenues assuming a 0.3% to 1.4% growth rate.
_. Based on past trends, we believe collection revenues will grow at approxi-
mately 2% per year.
As revenues increase, corporate overhead expenses and franchise fees
increase. We have increased these expenses by $201,000 to reflect the esti-
mated 2% growth.
- POLICY ISSUES
The following seven key policy issues have arisen during the course of the
review.
1. Altamont Adjustment
Since the importation of waste from San Francisco, the JRRRC has reduced
the franchised equity by an amount estimated to reflect the non-franchised
operation's equity in the Altamont Landfill. To date, the adjustment was cal-
culated on the basis of the non-franchised portion of the net asset value of
land, buildings and other land improvements. Equipment was not included
originally, because San Francisco contributed two tippers.
Over time, as new landfill equipment was purchased, it was charged to. a
"common" account. The depreciation on that equipment was allocated to
' franchised expense on the basis of relative tonnage. However, the non-fran-
chised equity adjustment never reflected an adjustment for the non-fran-
� . 8
chised equity adjustment never reflected an adjustment for the non-fran-
chised portion of "common" assets.
(Mr. MacDonald stated that at the time the San Francisco agreement was
negotiated, OSC and the JRRRC had agreed that the adjustment would be
limited to land, buildings and other land improvements. We reviewed the
Price Waterhouse report provided by Mr. MacDonald and talked with Mr.
Doug Eads, former Committee member from the City of Fremont, and Mr.
Ernest Mortensen, the Price Waterhouse partner responsible for the review at
that time. Based on our review and discussions, we found no evidence of such
an agreement. Mr. Mortensen stated that the "agreement" between OSC and
the JRRRC was with respect to the methodology that was used, not specifically
to the accounts used in the calculation. He further recalled that the equip-
ment account was not included originally due to the minor balance involved.)
Then in December 1989, Contra Costa County began to import trash to the
Altamont Landfill. With the Contra Costa County waste and recent asset
additions, we reviewed the Altamont adjustment more closely and determined
that the adjustment is significant. For this reason, we have adjusted non-
franchised equity for the non-franchised share of the net asset value of all
common assets. The net result is a decrease in pre-tax profit of$160,000 in
1990 and $268,000 in 1991.
2. Settlement of Employment Discrimination Litigation:
In January 1975, a group of OSC employees filed a suit in federal court alleg-
ing that the Company's hiring and promotional practices discriminated on
the basis of race and national origin, in violation of Title VII of the Civil
Rights Act of 1964 and the Civil Rights Act of 1866.
The case was dismissed on summary judgment motion in 1981. The plaintiffs
appealed and, in 1982, the Ninth Circuit Court of Appeals reversed, remand-
ing the case to the District Court for trial. Thereafter, the U.S. Supreme Court
denied OSC's petition for review.
After a three month trial, the U.S. District Court Judge ruled in December
. . 1987 in favor of the plaintiffs on claims relating to the Teamster bargaining
unit and management positions. The court excluded mechanics, landfill
employees and administrative employees from the class for which relief was
granted. The court also found that the Company's refusal to allow minority
employees to purchase stock was not a violation of Title VII.
Rather than proceed with the damages phase of the trial, OSC entered into a
"Stipulation of Settlement and Consent Decree" with the plaintiffs in
September 1989, which called for payment by OSC of$8 million in damages for
backpay and emotional distress claims. No punitive damages were involved.
OSC has asserted that "after a letter agreement outlining the terms of settle-
ment was executed, some of the standards upon which the trial court's deci-
sion was made, including allocation of the burden of proof, were overruled in
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three U.S. Supreme Court cases". Nonetheless, the "Stipulation of Settlement
and Consent Decree" was signed and judgment entered after these Supreme
Court cases had been decided.
OSC requested that rates be increased to cover this $8 million in last year's
rate application. In our November 21, 1989 report, we stated:
"We believe that there is reason to question whether or not the cost
of this settlement should be included as a reasonable and neces-
sary cost associated with OSC's provision of services to the
ratepayers. In addition, this settlement was only just brought to
light in OSC's rate application in late September 1989, and only a
verbal presentation was provided to the JRRRC prior to October 31,
1989. Therefore, since there has been inadequate time for the
JRRRC to obtain a legal evaluation of the issue, we recommend
that the JRRRC review the matter prior to the next rate applica-
tion and incorporate, if appropriate, its findings in the next rate
adjustment."
In May 1990, the JRRRC engaged the law firm of Hanson, Bridgett, Marcus,
Vlahos & Rudy to advise it on this matter. Their written report was submitted
in July 1990, and the JRRRC received supplementary briefing from the attor-
neys at its September 10 meeting. We understand that the JRRRC members
do not intend to recommend that individual jurisdictions increase their rates
to cover any of the $8 million settlement cost. We concur in that decision.
In addition, in a letter dated October 5, 1990, the JRRRC requested that OSC
provide a detailed listing of expenses, if any, for legal fees, etc., associated
with this case which have already been paid by the ratepayers. In a letter
dated October 22, 1990, Mr. MacDonald stated that OSC felt that "defense costs
are rate allowable" and that "it is unreasonable for the Committee to request
this information from inception to date this late in the process".
OSC did provide by facsimile on October 24, 1990, listings of legal costs for 1989
and year-to-date 1990. Due to the timing of the receipt of the information and
the fact that the information was incomplete, we have not performed a
detailed analysis of the information provided.
3. Durham Road Landfill Expansion:
OSC included costs for the expansion of the Durham Road Landfill into an
existing PG&E utility trench in 1991. Final approval for moving the power
poles and filling the trench has not been received.
We believe that the JRRRC should remove the costs of the Durham Road
Landfill expansion ($655,000 in 1991) from the current rate application in light
of the uncertainty regarding the feasibility, cost and timing of the expansion.
Additionally, the cost of the expansion should be reimbursed only after the
expansion is complete and waste is being disposed of at the site.
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In addition, OSC is proceeding with plans to expand the landfill into an
adjoining 92 acre parcel. We have recently learned from OSC that the Army
Corps of Engineers has some concerns that impact the size of the expansion
site and that the Regional Water Quality Board has changed certain design
requirements that have increased the site development costs from $16 million
to $35 million.
(Note that OSC included the cost of the PG&E utility trench expansion at
Durham Road as an expense in 1991 because the expected life of the expansion
is approximately one year. Expenses associated with expansion at Altamont
beyond the current fill area and at Durham Road into the adjoining 92 acre
site are currently being capitalized. These costs will be amortized over the life
of the expansion area by OSC because the expected life of the expansion area
exceeds one year. This accounting method is appropriate for rate purposes.)
4. Landfill Closure and Post-closure Costs:
This year is the first year that OSC has requested reimbursement of estimated
closure and post-closure costs at the Altamont landfill. (Some funds were
previously deposited into a trust fund by OSC for closure of the Durham Road
landfill.) The costs, estimated by OSC engineers, are spread over the remain-
ing life of the landfills.
The OSC application anticipates obtaining approval to expand the Durham
Road Landfill, thereby extending the life an additional ten years, for a total of
11 years. The amortized closure and post-closure costs are approximately
$1,327,000 per year. On September 14, 1990, the Cities of Fremont, Newark
and Union City sent a letter to the JRRRC requesting that the JRRRC not
include the requested Durham Road closure and post-closure costs this year,
pending an engineering and legal review of the estimates.
OSC plans to close the current fill area at the Altamont landfill and move into
a new fill area at the end of the current area's useful life - currently estimated
at nine years. The franchise portion's amortized cost of closure and post-clo-
sure maintenance of the current area is estimated to be approximately
$434,000.
OSC has not provided detailed support for these closure and post-closure esti-
mates. Also, they have not provided a detailed explanation of their position
regarding what portion of these estimated costs the current ratepayers should
bear; how the monies are to be collected, maintained, and disbursed; and,
what responsibilities OSC and the ratepayers have for closure and post-clo-
sure maintenance of the landfills.
We believe that due to the significance of these issues, a review of the cost
estimates by a qualified independent engineering firm and a detailed response
by OSC to the issues raised above would be appropriate prior to reimbursement
by the ratepayers. We have excluded landfill closure and post-closure costs in
1990 and 1991. (This recommendation and approach is similar to one made by
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Price Waterhouse several years ago for a review of OSC's operations by an
independent engineering firm. The review, performed by SCS Engineers,
resulted in several recommendations for reducing OSC's costs of operations.)
5. Management Incentives:
In September, OSC submitted with its rate application a request for two man-
agement incentives - one related to certain labor savings ($799,000) and the
other related to an automated remittance processing system ($413,000).
In a letter dated October 5, 1990, the JRRRC informed OSC that since it had
not submitted the request and adequate justification with the July application,
it would not consider the management incentives this year. The JRRRC sub-
sequently clarified their response in a meeting on October 26, 1990. Further,
the JRRRC determined that the automated remittance processing system did
not qualify as a management incentive because it did not represent an
innovative change in OSC's operations. The JRRRC felt that this change is to
be anticipated in the normal course of business.
We have omitted, therefore, the management incentives from the calculation
of the revenue requirement.
6. Alternative Rate Adjustments:
. - In his presentation of the rate application to the JRRRC on September 10,
1990, Mr. Dave MacDonald stated that OSC was seeping a 16% rate increase
January 1, 1991, followed by increases of 11-12% in the next two years. In
doing so, OSC realized that the 1991 increase would not be sufficient to fully
compensate it by the end of 1991. This is true even after the adjustments
explained above, as shown in Exhibit 4 and Attachment 1.
Exhibit 4
$Millions
1990 1991,
Projected Revenue 80.2 81.8
Projected Expenses (Adjusted) 77.0 83.7
Allowed Earnings (Pre-tax) 7.3 8.9
Additional Franchise Fees & Corp. Expenses 0.0 0.2
Cumulative Deficit 6.4 10.5
Total Revenue Requirement 9-0.7 103.3
Profit/(Loss) (Before Rate Increase) (10.5) (21.5)
Rate Increase
$ 13.1
% 16%
Remaining Deficit (8.4)
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The Southern Division jurisdictions (Fremont, Newark, and Union City) have
signed an extension of their current franchise agreements with OSC through
January 15, 1992. They are currently negotiating with OSC for a new agree-
ment. If those negotiations do not result in an agreement between the Cities
and OSC, then the collection and disposal franchise will be put out for bid. It
is possible that these jurisdictions will not participate in the rate review pro-
cess in the future. Therefore, the payment, if any, by these cities of a portion
of the $8.4 million deficit that remains at December 31, 1991 will require a spe-
cial agreement. At a JRRRC meeting on October 26, the Tri-Cities representa-
tives indicated a willingness to negotiate such an agreement with the JRRRC
in the event they withdraw. However, if the JRRRC wished to raise rates suf-
ficient to fully compensate OSC for the deficit by the end of 1991, collection
rates would have to be increased by 28%, as shown in Exhibit 5 and
Attachment 2.
Exhibit 5
$Millions
1990 1.991
Projected Revenue 80.2 81.8
Projected Expenses (Adjusted) 77.0 83.7
Allowed Earnings (Pre-tax) 7.3 8.9
Additional Franchise Fees & Corp. Expenses 0.0 1.3
Cumulative Deficit 6.4 10.5
Total Revenue Requirement 90.7 104.4
Profit/(Loss) (Before Rate Increase) (10.5) (22.6)
Rate Increase (Decrease)
$ 22.9
% 28%
Remaining Surplus 0.3
The Alameda County Measure D Initiative was passed by the voters on
November 6. It will add a surcharge of$6 per ton to the landfill costs to pro-
vide for County recycling programs. This surcharge will increase the
required rate increase from 16% to 29%, as shown in Exhibit 6 and
Attachment 3.
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Exhibit 6
$Millions
1991
Projected Revenue 80.2 81.8
Projected Expenses (Adjusted) 77.0 92.9
Allowed Earnings (Pre-tax) 7.3 8.9
Additional Franchise Fees & Corp. Expenses 0.0 1.4
Cumulative Deficit 6.4 10.5
Total Revenue Requirement 90. 113.7
Profit/(Loss) (Before Rate Increase) (10.5) (31.9)
Rate Increase (Decrease)
$ 23.7
% 29%
Remaining Deficit (8.2)
7. Bills:
The JRRRC members have expressed interest in showing state and local sur-
charges on tonnage disposed of at the landfills separately on the bills, as a
means of keeping the public informed of the large increases in regulatory
costs. Exhibit 7 shows these fees and our estimate of their portion of the cus-
tomers' bills.
Exhibit 7
Regulatory Fees ($ per ton): 1.991
Eastin Tax $0.500
AB 939 (avg. $35 after 7/1/90; $1.00 after 7/1/91) $0.875
LEA Inspection Fee $0.070
Alameda County Facilities Management Fee $0.546
Alameda County Hazardous Household Waste Fund Fee $1.320
City of San Leandro $0.650
Alameda County Proposition D $6.000
Total Regulatory Fees $9.961
Total 1991 Fees: Without Prop, D With Prop. D
Fee per Ton $3.961 $9.961
Total Franchised Tonnage 1,533,730 1,533,730
Total Cost of Regulatory Fees $6,075,105 $15,277,485
Revenue Requirement $92,619,092 $101,821,472
Percent of Total Customer Bills 6.6% 15.0%
14
i .
(Note that the facilities management fee may increase to $1.00 on January 1,
1991. The impact of this increase would be to increase the percentages in
Exhibit 7 to 7.3% without Proposition D and $15.6% with Proposition D.)
15
SECTION IV- SUMMARY OF R.ECONIlVL NDATIONS
We recommend the following specific actions by the JRRRC.
1. We recommend that the JRRRC accept OSC's rate filing as adjusted.
2. We recommend that the JRRRC disallow the $8 million lawsuit settle-
ment.
3. We recommend that the JRRRC exclude landfill closure and post-closure
costs from the rates until it has had sufficient time to evaluate the rea-
sonableness of the underlying engineering estimates, OSC's proposal
regarding the policies and practices for collection and handling of the
funds, and a legal review of the ratepayers' obligations regarding these
costs.
4. We recommend that OSC be directed to provide a detailed proposal of
their policies and procedures for the collection and handling of closure
and post-closure maintenance costs and support for their cost estimates.
5. We recommend that the JRRRC hire an independent consultant to eval-
uate the reasonableness of OSC's projections of closure and post-closure
costs and closure and post-closure policies and procedures.
6. We recommend that the JRRRC exclude the Durham Road Landfill
expansion costs and reimburse OSC for those costs only after the new
- area is placed in service.
7. Based on the JRRRC's direction, we have disallowed OSC's request for
management incentives.
8. Because the Alameda County Measure D Initiative passed, we recom-
mend that the JRRRC approve a rate increase of 29% effective January 1,
1991.
9. In anticipation of the Alameda County Facilities Management Fee
increasing to $1.00 per ton on January 1, 1991, we recommend that the
JRRRC approve a rate increase of an additional 1% effective January 1,
1991 (see Attachment 4).
16
SECTION V-RATE IMPACT OF RECOMAI ENDATIONS
Based on our recommendations, we have prepared the following rate impact
analysis:
Residential
Livermore/
Northern Central Southern Dublin
Current 1 Can* $7.23 $7.33 $5.92 $6.55
29% Rate Increase $9.33 $9.46 $7.64 $8.45
30% Rate Increase $9.40 $9.53 $7.70 $8.52
Commercial
Livermore/
Northern Central Southern Dublin
Current 2 Yard* $ 64.30 $64.30 $52.49 $55.13
29% Rate Increase $82.95 $82.95 $67.71 $71.12
30% Rate Increase $83.59 $83.59 $68.24 $71.67
Drop Box
Livermore/
Northern Central Southern Dublin.
Current 20 Yard* $151.99 $141.52 $114.84 $121.20
29% Rate Increase $196.07 $182.56 $148.14 $156.35
30% Rate Increase $197.59 $183.98 $149.29 $157.56
*Current Rate quoted for all service categories and all Divisions are average
rates.
These rates compare favorably to a recent Bay Area survey of rates conducted by
the Central Contra Costa Sanitary District and are included as Attachment 5.
17
ROE Calculation Attachment 1
A EQUITY CALCULATIONS 1989 1990 1991 1992 1993
1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390
2. Less N.F's Portion of Altamont -119,004 -574,693 -271,095
3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
4. Working Capital Adjustment 2,116,808 0
5. Stockholder Buyouts and Dividends
6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
7. Retained Earnings(post tax)
8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637
Reconciliation to Franchise F/S
8. N.F.'s portion of Altamont(temp dim 966,813
9. Excess Net Income -14,009
10.Cumulative Unadjusted Working Capital 0
12.Ending Equity per F/S 30,264,459
B. ALLOWED EARNINGS
1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
2. ROE Percentage(%) 17% 17% 17% 17% 17%
3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
4. Adjustments per 1990 HF&H Report
5. Prior Management Incentives
6. Current Management Incentives
7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
C. REVENUE REQUIREMENTS
1. Adjusted Allowed Earnings 4,885,284 5,669,696 6,633,544 7,761,246
2. Gross up for tax 33.64% 36.44% 37.00% 37.48%
3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820
4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726
5. Company Adjustments 143,000 8,143,000 143,000 143,000
6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000
7. Other--
8. Other-- 0 0 0
S. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546
D. EXCESS REVENUE(PRE-TAX)
1. Forecasted Revenue(2%growth) 80,199,625 81,803,618 96,790,040 104,649,391
2. Rate Increase 13,088,579 5,807,402 6,278,963
3. Adjusted Revenue 80,199,625 94,892,196 102,597,443 110,928,355
4. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546
5. Additional Franchise Fees,Corp Charges 201,134 480,952 797,983
6. Adjusted Required.Revenue 84,336,322 92,820,227 98,904,755 105,464,529
7. Excess(Deficit) -7,138,355 -4,136,697 2,071,970 3,692,688 5,463,826
8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 -8,436,137 -4,743,449 720,377
9. Rate Adjustment Required 16% 6% 6%
ROE Calculation Attachment 2
A EQUITY CALCULATIONS 1989 1990 1991 1992 1993
1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390
2. Less N.F's Portion of Altamont -119,004 -574,693 71,095
3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,1.51. 39,020,846 45,654,390
4. Working Capital Adjustment 2,116,808 0
5. Stockholder Buyouts and Dividends
6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
7. Retained Earnings(post tax)
8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637
Reconciliation to Franchise F/S
8. N.F.'s portion of Altamont(temp did 966,813
9. Excess Net Income -14,009
10.Cumulative Unadjusted Working Capital 0
12.Ending Equity per F/S 30,264,459
B. ALLOWED EARNINGS__
1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
2. ROE Percentage(%) 17% 17% 17% 17% 17%
3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
4. Adjustments per 1990 HF&H Report
5. Prior Management Incentives
6. Current Management Incentives
7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
C. REVENUE REQUIREMENTS
1. Adjusted Allowed Earnings 4,885,284 5,669,696 6,633,544 7,761,246
2. Gross up for tax 33.64% 36.44% 37.00% 37.48%
3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820
4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726
5. Company Adjustments 143,000 8,143,000 143,000 143,000
6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000
7. Other--
8. Other-- 0 0 0
8. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546
D. EXCESS REVENUE(PRE-TAX)
1. Forecasted Revenue(2%growth rate) 80,199,625 81,803,618 106,802,803 100,223,750
2. Rate Increase 22,905,013 -8,544,224 5,011,188
3. Adjusted Revenue 80,199,625 104,708,630 98,258,579 1.05,234,938
4. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546
5. Additional Franchise Fees,Corp Charges 1,262,291 11,921 182,525
6. Adjusted Required Revenue 84,336,322 93,881,383 98,435,724 104,849,070
7. Excess(Deficit) -7,138,355 -4,136,697 10,827,247 -177,145 385,867
8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 319,141 141,996 527,864
9. Rate Adjustment Required 28% -8% 5%
ROE Calculation Attachment 3
A EQUITY CALCULATIONS 1989 1990 1991 1992 1993
1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390
2. Less N.F's Portion of Altamont -119,004 -574,693 -271,095
3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
4. Working Capital Adjustment 2,116,808 0
5. Stockholder Buyouts and Dividends
6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
7. Retained Earnings(post tax)
8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637
Reconciliation to Franchise F/S
8. N.F.'s portion of Altamont(temp dim 966,813
9. Excess Net Income -14,009
10.Cumulative Unadjusted Working Capital 0
12.Ending Equity per F/S 30,264,459
B. ALLOWED EARNINGS
1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
2. ROE Percentage(%) 17% 17% 17% 17% 17%
3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
4. Adjustments per 1990 HF&H Report
5. Prior Management Incentives
6. Current Management Incentives
7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
C. REVENUE REQUIREMENTS
1. Adjusted Allowed Earnings 4,885,284 5,669,696 6,633,544 7,761,246
2. Gross up for tax 33.64% 36.44% 37.00% 37.48%
3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820
4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726
5. Company Adjustments 143,000 8,143,000 143,000 143,000
6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000
7. Other--
8. Other-46 Alameda County Initiative 9,202,380 9,386,428 10,325,070
8. Revenue Required 84,336,322 101,821,472 107,810,230 114,991,616
D. EXCESS REVENUE(PRE-TAX)
1. Forecasted Revenue(2%growth rate) 80,199,625 81,803,618 107,637,200 115,828,391
2. Rate Increase 23,723,049 5,920,046 6,370,561
3. Adjusted Revenue 80,199,625 105,526,667 113,557,246 122,198,952
4. Revenue Required 84,336,322 101,821,472 107,810,230 114,991,616
5. Additional Franchise Fees,Corp Charges 1,350,720 1,665,707 2,016,335
6. Adjusted Required Revenue 84,336,322 103,172,193 109,475,937 117,007,951
7. Excess(Deficit) -7,138,355 -4,136,697 2,354,474 4,081,309 5,191,002
8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 -8,1.53,633 -4,072,324 1,118,678
9. Rate Adjustment Required 299/o 5.5% 5.5%
ROE Calculation Attachment 4
A. EQUITY CALCULATIONS 1989 1990 1991 1992 1993
1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390
2. Less N.F's Portion of Altamont -119,004 -574,693 -271,095
3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
4. Working Capital Adjustment 2,116,808 0
5. Stockholder Buyouts and Dividends
6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
7. Retained Earnings(post tax)
8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637
Reconciliation to Franchise F/S
8. N.F.'s portion of Altamont(temp dim 966,813
9. Excess Net Income -14,009
10.Cumulative Unadjusted Working Capital 0
12.Ending Equity per FIS 30,264,459
B. ALLOWED EARNINGS
1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390
2. ROE Percentage(%) 17% 17% 17% 17% 17%
3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
4. Adjustments per 1990 HF&H Report
5. Prior Management Incentives
6. Current Management Incentives
7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246
C. REVENUE REQUIREMENTS
1. Adjusted Allowed Earnings. 4,885,284 5,669,696 6,633,544 7,761,246
2. Gross up for tax 33.64% 36.44% 37.00% 37.48%
3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820
4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726
5. Company Adjustments 143,000 8,143,000 143,000 143,000
6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000
7. Other--$6 Alameda Cnty Measure D 9,078,420 9,259,988 10,185,987
S. Other--Facilities Mgmt Fee-$1/Ton 696,313 710,240 724,444
8. Revenue Required 84,336,322 102,393,826 108,394,030 115,576,977
D. EXCESS REVENUE(PRE-TAX)
1. Forecasted Revenue(2%growth) 80,199,625 81,803,618 108,471,597 116,173,080
2. Rate Increase 24,541,085 5,423,580 5,808,654
3. Adjusted Revenue 80,199,625 106,344,703 113,895,177 121,981,734
4. Revenue Required 84,336,322 102,393,826 1.08,394,030 115,576,977
5. Additional Franchise Fees,Corp Charges 1,439,150 1,702,237 1,992,853
6. Adjusted Required Revenue 84,336,322 103,832,976 110,096,268 117,569,831.
7. Excess(Deficit) -7,138,355 -4,136,697 2,51,1,727 3,798,909 4,411,904
8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 -7,996,380 -4,197,470 214,433
9. Rate Adjustment Required 30% 5% 5%
r
Attachment 5
COMPARATIVE SCHEDULE OF REFUSE COLLECTION RATES Page 1 Of 24- e
CONTRA COSTA COUNTY COMMUNITIES
MAY 1990
PLEASANT BAN
Community DAMYILLE LArAYE7TE ORINDA NORADA PACHECO ANTIOCE CLAYTON EILL RAHOM rALMUT CRxzr CONCORD XARTINEE PITTSBURG
Effective Data of Rate. 2/1/90 2/1/90 2/1/90 2/1/90 2/1/90 2/1/90 3/30/90 111/90 6/1/89 1/1/90 5/1189 11/1/89 4/1/89
Deee,;jption of service
Residential Backyard Service:
One 32 gallon can per week 16.50 16.50 17.45 15.60 15.15 17.95 17.00 14.00 10.64 13.90 14.00 16.00 13.15
Second can rate .7.75 7.75 8.30 7.35 6.40' 9.00 9.50 6.25 - 7.60 4.90 13.50 13.15
Weekly trimming. quantity 2 Cane 2 Cans 1 Can 1 Can 1 Crn - - Varies - 2 Cans 2 Cans Unlimited -
seasonal cleanup service
Frequency per year 3 3 3 3 3 1 1 2 3 3 1 2 O
Quantity 2 Cu yda 2 Cu yda 2 Cu yd. 2 Cu yda 2 Cu yda 2 Cu yda 2 Cu yda 2 Cans 3 Cu yda 2 Cu yda 2 Cu yds Unlimited --
Multi-Apartment Service:
One 32 gallon can per week 13.65 13.65 12.50 12.50 11.30 18.80 -- 11.05 20.30 12.60 17.75 Varies 17.75
Commercial Service:
One 32 gallon can per week 16.90 18.90 18.80 18.60 15.15 14.75 17.00 11.05 20.30 18.65 17.75 16.00 17.75
Second can rate 7.45 7.45 6.25 8.25 15.15 14.75 17.00 6.25 6.00 18.65 17.75 16.00 17.75
One-yard Bin
One pick-asp weekly 71.20 71.20 71.95 71.95 89.45 83.00 83.00 87.25 76.46 60.85 --- ---
Two pick-cps weekly 121.70 121.70 126.50 126.80 145.25 163.00 163.00 133.00 130.67 112.40 --- --- ---
Rate per cubic yard
(2 pick-ups) 121.70 121.70 126.80 126.80 145.25 163.00 163.00 133.00 130.67 112.40 -- --'
2,o-yard Bin
One pick-up weekly 121.70 121.70 126.60 126.80 121.75 106.00 106.00 105.50 130.67 109.45 129.00 273.00 129.00
Two pick-ups weekly 222.70 222.70 235.50 235.50 243.60 212.0D 212.00 211.00 239.09 202.50 215.00 273.00 215.00
Rata per cubic yard
(2 pick-ups) 111.35 111.35 117.75 117.75 121.80 106.00 106.00 105.50 119.55 101.25 107.50 - 107.50
To"r-yerd Bin Three-Yd Bin
One pick-up weekly 222.70 222.70 --- -- •237.10 207.00 --- 209.50 239.09 203.60 172.00 -^ ---
Two pick-ap. weekly' 424.00 424.00 -- --- 474.10 414.00 --- 43E.75 455.25 359.90 302.00 Rata per cubic yard
(2 pick-ups) 106.00 106.00 --- --- 118.53 103.50 --- 104.69 113.51 89.97 100.67 --- �--
Percent of eomaareial customers
(Note 1) 3% 3% 22 2% ,121 H/A H/A M/A 3t H/A H/A 3% N/A
Drop Box Service:
Largest container size
(cv yd): 30 30 20 20 20 40 20 20 30 30 20 24 20
Rata per pull 371.10 371.10 255.05 255.05 260.90 225.00 234.00 246.75 396.45 339.00 240.00 290.00 240.00
Rate per c bie yard 12.37 12.37 12.75 12.75 13.04 5.63 11.70 12.34 13.26 11.30 12.00 12.08 12.00
Residential Recycling Program: C •C e
Curbside (C) or Drop-off (0) C C C C C C C --- C G
Monthly amount Charged customers .9S .95 .95 .9S N/C .85 .64 -- .95 .55 .7S N/c .80
Recyclables (Yes <Y>; No.<M>):
N...paper. Y Y Y Y T Y Y --- Y Y Y Y Y
Class Y Y Y Y Y Y Y --- Y Y Y Y Y
Aluminium Cans Y Y Y Y Y Y Y --- Y T Y Y Y
P.L.T. Bottles Y Y Y Y Y Y Y --- Y M Y Y Y
Other y
Reference to Footnotes A, B B C. 0 L H F, C, I A, H
Refuse Disposal Sit..: 'contra Costa
ontra Coate Contra Coates Contra Coate
Landfill (CBF) (CBF) (GBF) (GHF)
Transfer Station Ace Acme Acme Acme Area Aeaa Acme Acme Acme
m
Fee per ton paid by refuse
collector 52.22 52.22 52.22 52.22 45.00 45.00 4S.00 52.22 52.22 $2.22 52.22 52.22 45.00
Terrain: M H H M M M M M K K F M M
F - Flat
M - Moderately Hilly
H - Hilly .
Refuse Collector valley Waste Valley Waste Orinda- Orinda- Pleasant Pie...nt Pleasant Pleasant Valley Valley Concord Martinez Pittsburg
Management Hangement Horaga Horaga Hill Hill Hill Hill West. Waste Disposal Sanitary Disposal -
Dispoeal Disposal Bayshore Bayshore Bayshore Bayshore Menagem..t Management Service -
Disposal Disposal Disposal Disposal
Attachment 5
Page 2 of 2
COMPARATIVE SCHEDULE OF REFUSE COLLECTION RATES
OTHER BAY AREA COMHUNITIES
MAY 1990
Fuuu YusrA: LARkeraa LArJ97DE Loa ALros EmEOOa Txsz
oAU.AxD/xoRrcl.AZf: EL sae Atroe EILL CITY sAx Joe: 9A7/11990 u.aL/1190
CovunSty LITnI%ORS DIIBLI% DZ2 T%lCT tZCDMONT clatia O RICIflfOND (FLAT) (EZLL7) TILL BOAOOOX (FLAT) Wily)
CLLactiv. Data of Rstaa 1/1/f0 1/1/f0 1/1/90 1/1/90 1/i/a9 7/1/at {/1/f0 4/1/90 10/1/6f 1/1/90 1/1/90 9/13/t9 13/1/{7 10/1/69 7/1/9f 7/1/97 1)1/f0
,•-S�rf on a Se rv�ce •
R..id B:.kyard SsrVica: 3.15 ---
One ]3 q+lion can per vaek T.t2 5.70 7.20 7.40 9.00 10.37 9.65 11.73 11.17 10.20 17.65 1=•01 1,0•90. 67.39 91 6.90 SO.SS 6.11
Sarnnd can rata 4.]0 ].95 7.30 5.00 5.50 a.57 ■.4S 3.44 10.07 6.10 7.40
Neekly trimmings quantity Nona Nona Nona None Nona None 1 Cu yd 1 cu yd Nona 1 Can 1 Can Nona Nona Nona Unlimitsd Non• ".limited
Seasonal cleanup service 2 2 1 1 ] / 2 0 t 1
Frequency per rear I 4 1 0 2 2 2 altsd
Quantity Unlimited Un1lmStad Unlimited Hona 14 N yd"1}Cu rd unlimltad Unlimited 6-32 Gal ] N yds 1 Cu yds Unlimited Unlimited 3 Cu yds Hone 1 Cu yd
GM
Multi-Apartm.nt Service: -- 11.95 15.60 11.95 -^ 7.67 Not.4 10.15 ].t3
One 32 gallon can per week 7.42 5.70 4.10 6.70 9.00 10.27 9.45 11.75
Commercial Servlca: - 11.95 15.60 11.51 •9.65 7.67 Net* / I0.15 3.93
one 32 gallon can par reek 7.42 5.70 7.42 7.40 9.00 37.70 10.10 12.19 6.40 7.60 11.51 7.65 6.91 10.15 2.29
Second can rata 4.30 5.70 7.42 7.10 9.00 11.10 10.10 12.1{
1.<-Td Bln 1.3-Yd BSn
rd 151D --- 46.00 66.00 70.15 66.05 50.7E 36.01 39.00 17.67
Ona pick-up v.ekly ]1.95 29.]0 31.05 71.10 60.13 69.70 43.41 42.43 ---
Tvo pick-ups weakly 40.44 56.60 62.10 66.15 96.3E 119.90 105.66 105.64 110.00 110.00 122.{7 116.90 {7.74 Sf.t7 74.00 ] t
Rata pe cubic yard sS.93 77.23 97.76 31.93 73.00 35.34
(2 picr k-ups) 60.44 36.60 66.10 66.15 96.30 116.90 105.96 105.36 110.00 110.00
Three-Td Bin 7tfree-Te Binrnree-7d Din 7'h re rTd Bin
Ty -yard Bln 117.67 116.90 96.26 56.23 79.00 35.37
One pick-up wekly 57.94 52.20 62.29 {2.35 109.]0 112.00 107.7{ 107.7{ _-- 369.00 167.00
Two pickwpa weakly 106.10 93.60 115.06 115.25 165.60 240.00 192.]7 192.37 ]13.00 713.00 236.49 307.30 193.32 303.92 136.00 70.6E
Rata per cubic yard 10<.00 10{.00 76.16 67.73 96.36 34.49 79.00 75.33
(2 pickwp.] 33.10 46.90 57.53 S7.63 12.20 120.00 96.19 99.1{
•7m.:r-vnrd Bin 'n+ree-Td Ein
==x"in n Fiva-Td BSD r1ye-Yd Din SSz-Td Bin �,,Sr-Td eSn ySe-Te eln ^-
Ona pick-up v«k1T 107.71 96.65 116.00 116.30 191.10 15].15 153.15 - 245.00 349.00 212.12 170.20 107.31 109.67 - 70.67
To plckwp.weekly 205.{9 160.05 319.61 220.20 --- 75].10 179.94 27{.99 469.00 469.CJ 321.74 369.30 165.32 209.53 141.74
Rate per Cubic yard
(2 pick-ups) 51.37 45.01 54.96 55.05- 60.31 92.96 92.96 -- 97.sC 91.30 54.96 4,0.3t L1.7f 52.15• ]5.71
Percent of commercial customers
(Not. 1) 5% tat at N/A 42 N/A 6t 0% at 401 0% 152 1% 5% St l9t 242
Drop Box Service:
Largest container.L.. ^- _^
(cu yd)t 40 30 50 50 20 40 It 19 40 - {0 a0 50 N
Rata par pull 222.00 144.00 297.00 297.50 190.00 716.00 30].00 207.00 764.00 410.00 216.00 9)0.00 N/A
Rata per cubic yard 5.55 4.60 5.94 5.95 9.50 6.40 ^- 11.17 11.16 9.15 10.25 6.13. 16.40 N/A
Residential Recycling Program: C ___ ---
Nrbsida (C) or Drop-off (D) C -- --- C --- C C C C C C C C
Monthly amount charged customer. N/C -- -- --- .50 -- 1.75 1.75 .l] 1.75 1.75 N/C .2i -IC 1.75
Reryclablas (Yes <T>; Mo<N>]: y __
Newspapers Y -^ --- --- T -^ Y T Y T T _-- T T T ^_
Class T --- _-_ __- Y -- Y T .Y S T T T T T
Aluminium Can Y --- Y --- Y T Y T Y T
P.C.T. Bottles N -- --- --- T -^ Y L T Y T T
Other ---
Reference to Footnotes J J, K J.
L J J, N, N L, Q O, P, R O, P, A J. s. T P, R P, R J, o, T,
Refuse Disposal Sites:
Landfill Altamont Altamont N. Contra N. Contra Redwood Redwood Navby Navby Ox Newby 4.dwood Tolo Co.
Coat. San.Costa San. Sanitary Sanitary Island Island Mountain Ialang 5antlary
Transfer Station Oakland Davie BrI, Merin Res. Karin Ras.
scavenger Street San Carlos Recovery Recovery
Fee par Lon paid by refuse 14.5c
collector Not. 3 Note J Note 2 Note 2 11.20 Note 2 22.00 22.00 ]I.OD Note 1 Hot. 2 ]1.00 19.65 34.00 17.29 21./0
JOL F 7
Terrain: F F M II F M F H 701 11 F H N M M M M
F - Flat
M -Moderately Hilly
11 - IS illy vas[
Alchmond Fairfax Fairfax Brovnl Karin Karin Los Altos Los Altos Browning- Nast. Bay Cities
Refuse Collector Liv.rmore/ Livermore/ Oakland Oakland Feat B.y saniter - Garbs Carba FerrI. 5anit+r sanitar Garbage Grbage Ferris Management Refuse Man+ge.cn
Dublin Dublin scavenger Sraven9er San Mary 7 g` g` y y
Secvlce DlspO Sal D(apnsal
CITY OF DUBLIN
HISTORICAL COMPARISON OF
SELECTED GARBAGE RATES
1986 - 1990
Prior to April 1, 1986, the Dublin San Ramon Services District (DSRSD) held
the franchise for garbage service. The rates charged by DSRSD were:
Residential: Commercial/Bin Service:
1 can $ 5. 05 $4.75 per cubic yard not compacted
2 cans $ 8. 55
3 cans $12 . 05
The City of Dublin assumed the franchise role effective April 1, 1986. At
this time, the rates were reduced. The City Council lowered the franchise
fee collected and implemented a commercial rate reduction which had been
recommended to DSRSD by the Joint Rate Review Committee.
Residential: Commercial/Bin Service:
1 can $ 4 . 90 $4. 15 per cubic yard not compacted
2 cans $ 8. 30
3 cans $11.70
No change in the rates occurred until January 1, 1990. At this time, the
following rates were implemented to offset increased costs incurred by the
garbage company:
Residential: Commercial/Bin Service
1 can $ 5. 70 $4.80 per cubic yard not compacted
2 cans $ 9. 65
3 cans $13 . 60
Effective July 1, 1990, in response to State Legislation, the City Council
implemented a residential curbside recycling program. This program is
operated using the same contractor, however, the program is not a franchised
operation. The recycling program cost is. $1.25/month for single family
customers. In addition, a 20 cent surcharge was added to single family
customers to cover the cost of a Household Hazardous Waste Collection. A
surcharge of 15 cents per cubic yard was added to residential units using bin
service. The rate structure effective July 1, 1990 is as follows:
Residential: Commercial/Bin Service
1 can - Garbage Disposal $ 5.70 Non Residential $ 4 .80 per cubic yard
Recycling Surcharge 1.25 not compacted
HHW Surcharge .20
Total 1 can $ 7. 15 Residential Bin Service
2 cans Garbage Disposal $4 .80 per cubic yard
(Includes surcharges) $11. 10 not compacted
3 cans HHW Surcharge . 15 per cubic yard
(Includes surcharges) $15. 05 Total $4. 95 per cubic yard
a:histgarb.doc.psr
rEAVOIRIT
�ffi
i--
I
ALTERNATIVE
REFUSE RATE STRUCTURES
December 3, 1990
I
EXHIBIT
HILTON FARNKOPF&HOBSON
Advisory Services to
—E Municipal Management
39350 Civic Center Drive,Suite 380
Fremont,California 94538
Telephone:415/797.0654
—
Fax:415/797-0615
December 3, 1990
Joint Refuse Rate Review
Committee Members
ALTERNATIVE
REFUSE RATE STRUCTURES
Dear Committee Member:
This report presents the results of our survey of alternative refuse rate struc-
tures, which was conducted in accordance with the procedures described in our
October 5, 1990 engagement letter.
The results of our survey provide the members of the Committee with informa-
tion which may assist them in revising their current rate structure, as one
method to help in the achievement of AB 939 waste diversion goals.
We appreciate this opportunity to be of service to you and we are available should
you require assistance in the revision to your existing rate structure.
Sincerely,
f4bert D. Hilton, CMC
Managing Partner
Attachment -
As stated
t
t
ALTERNATIVE
REFUSE RATE STRUCTURES
BACKGROUND
Most Alameda County jurisdictions' rate structures make it less expensive to
throw away more material. For example, Hayward single -can residential cus-
tomers pay $7.30 per can while three can customers pay $5.63 per can. And in
Oakland, commercial rates decline from a cost of$36.05 per cubic yard for two
cubic yard customers to $30.41 per cubic yard for eight cubic yard customers.
These structures were appropriate when disposal costs were a relatively small
part of the total collection and disposal cost. As recently as 1983, the disposal por-
tion of the collection and disposal rate in Alameda County was only 16%. The
marginal cost for the extra container or yard was largely the labor cost that
declined with the volume of waste collected. In 1991, landfill disposal costs are
projected to equal more than 26% of refuse collection and disposal rates. Based
on recent projections for the Tri-City jurisdictions, the cost of disposal could. rise
to as high as 40% of the total collection and disposal rate by the mid-1990s.
The Integrated Solid Waste Management Act of 1989 (AB 939) established aggres-
sive waste diversion goals with stiff penalties for those jurisdictions that do not
comply. Jurisdictions that do not already have curbside residential recycling
programs are investigating alternative programs or implementing pilot; pro-
grams. In addition, jurisdictions will have to implement or provide incentives
for commercial recycling in order to meet the AB 939 goals.
These changing conditions require that the jurisdictions divert waste from land-
fill disposal. By amending their current rate structures, the jurisdictions may
provide an incentive to customers to reduce their volume of waste.
RESIDENTIAL RATE STRUCTURES
Basic Collection
Following are three types of rate structures for achieving the objective outlined
above. Similar rate structures have been implemented or are being investigated
by many jurisdictions around the country:
• Uniform Rates; in which ratepayers would pay the same rate per can,
despite the number of cans collected and disposed of. Several Alameda
County jurisdictions have implemented uniform rates for residential
and commercial collection services, including Alameda, Oakland and
Fremont.
Uniform rates provide incentives for recycling and waste reduction.
But, some customers who dispose of large volumes may experience sig-
nificant rate increases and object to this practice.
• Phased-In Uniform Rates; in which rates would be phased-in to a uni-
form rate structure over three years.
Advantages of phased-in uniform rates are similar to uniform rates,
but.incentives to recycle are not realized as quickly. Disadvantages are
also similar, but the degree of significant rate increases is reduced.
_ Increasing Rates; in which ratepayers would pay an increasing rate for
each can collected and disposed of..
Advantages and disadvantages of increasing rates are identical to uni-
form rates, but are realized to a higher degree.
The differences in these alternatives are not differences in effect, but differences
of degree. Each alternative encourages reduction and recycling; rewards those
currently reducing waste disposal; and, helps extend landfill capacity. Each
alternative is likely to be objected to by customers who dispose of large volumes of
waste. As the per-can rate is increased, these advantages and disadvantages
will be compounded.
Associated Effects
Even without the implementation of recycling programs, a rate structure revi-
sion alone may have some effect on the number of multi-can customers. For
example, after the City of Seattle switched from a fixed charge for unlimited ser-
vice to a uniform charge in 1981, the number of multiple-can customers dropped
from just over 80% to about 68% by 1985. In 1986 and 1987, due to large disposal
cost increases, the number of multiple can customers dropped to 39.5% by 1988.
In revising the rate structure, it is important to consider additional effects such
as:
__. Customers may reduce the volume of waste by increasing the com-
paction rate of the waste, which would not reduce disposal costs or
extend landfill capacity.
• Customers who dispose of large volumes of waste may increase the
amount of illegal disposal of waste. (This may include placing refuse in
recycling or yardwaste containers, or illegal disposal in commercial
bins.) Potential aesthetic and health problems may arise due to illegal
dumping.
• Commercial and apartment customers may request smaller containers
to a degree that exceeds the Company's resources to provide them over
the short term.
2
Related Service Level Changes
- The jurisdictions' staff expressed interest in evaluating the effects of changes in
the basic collection rate structure to encourage further waste reduction and recy-
cling.
Yardwaste Collection Rate
To provide greater incentives for composting yardwaste, jurisdictions may want
to evaluate the impact of charging separately for yardwaste collection. This
would provide an economic incentive to residents to compost yardwaste in their
backyards and still provide an alternative for those who wish to pay to have it
hauled away and composted.
In 1989, the City of Seattle established a separate rate for yardwaste collection.
They set the rate at $2.00 per month - low enough to encourage residents to sub-
scribe and yet high enough to continue to provide an incentive for backyard com-
posting. More than 62% of the residences subscribed to the service, diverting 15%
of the residential waste stream.
Valley Waste Management recently began a pilot yardwaste program in the City
of Walnut Creek. The program involves 2,000 homes. During the pilot's first
week, 17.6% of the homes set out approximately 10 tons of yardwaste for collec-
tion. Valley Waste Management hauls the yardwaste to Berkeley Recycled Wood
Products, where it pays a $30 per ton tipping fee to have the yardwaste composted.
i This represents a $22 per ton savings (excluding the additional haul costs) over
its normal tipping fee paid at the Acme Transfer Station. Mr. Ron Proto, Valley
- Waste Management's General Manager, stated that he believes that the cost
associated with separate yardwaste plus regular residential waste collection will
be more than the current cost of mixed collection. He is uncertain whether the
disposal savings would offset the increased operating costs. Thus, the cost to the
ratepayer who chooses not to compost the material himself could be higher than
the current mixed collection rate.
As noted above, the Seattle experience shows that as participation in yardwaste
` and recycling programs increase, the level of collection service subscribed to by
the residents decreases. The jurisdictions should consider the Seattle experience
as representative of the results that are possible with an integrated approach to
waste reduction and recycling.
Mini-can Service Rate
Some jurisdictions have provided mini-can service for those who produce less
than 32 gallons of waste per week. The mini-can is typically about 20 gallons.
Jurisdictions could provide the mini-can rate as a significant incentive to resi-
dents to support curbside recycling and yardwaste programs.
3
The City of Seattle began a "super-recycles" rate (or mini-can service) in 1989.
The service was priced about 20% below the single can service rate. Over 22% of
_-_ the City residents signed up for mini-can service in the first year.
These results are significantly better than the experience of Alameda County
jurisdictions that offer a similar service. Oakland Scavenger Company reports
that less than one percent of residents in Alameda, Fremont, Newark, and
Union City have subscribed to the mini-can service. The discount offered in these
cities is approximately $1.00 per month, or 15%.
The difference in results is probably attributable to the amount of advertising
done in the cities and the synergistic effects of the curbside and yardwaste pro-
grams. The City of Seattle heavily and widely advertised the mini-can service.
The Alameda County cities have not promoted the mini-can alternative. In addi-
tion, composting programs are not available in the Alameda County cities as they
are in Seattle.
The City of Seattle also offers bag tags that residents may purchase and place on
additional bags of refuse placed out for collection on those occasions where addi-
tional capacity is needed. The bag tags may be used at any level of service (mini-
can, single can, multiple can, etc.). The bag tags are priced such that the cost is
more than subscribing to an additional can and provides an incentive for cus-
tomers to keep waste to a minimum.
Oakland Scavenger Company offers a similar service to residents in Alameda
County. The company's "Bag It" program allows residents to purchase plastic
bags with the "Bag It" program name printed on it. These bags are picked up in
addition to the regular cans subscribed to by the resident.
COMIIIM RCIAL RATE STRUCTURES
Basic Collection
Much less has been done to commercial collection rate structures to provide eco-
nomic incentives to commercial establishments to participate in recycling pro-
grams. In most jurisdictions, commercial collection and disposal has been
unregulated. Businesses are free to contract with any hauler for collection ser-
vices. This is true even in some jurisdictions that have actively regulated resi-
dential service, such as San Jose and Seattle.
Where exclusive recycling franchises do not exist, recyclers have for many years
identified those businesses with high-recyclable-content waste and aggressively
competed for their recyclable collection business. This "cherry-picking"
approach means that most of the lucrative, serviceable businesses are already
participating in some sort of recycling program.
4
The target of most commercial recycling programs sponsored by municipal
agencies is to encourage smaller businesses to separate their trash for recycling.
- These businesses a r e generally interested in participating in recycling programs
only if they perceive an economic benefit in doing so.
Rate structures similar to those described above for residential collection
(uniform, phased-in uniform, and increasing rates) could provide that economic
benefit. The advantages and disadvantages are the same for commercial collec-
tion as described for residential collection. In addition, another disadvantage to
using uniform or increasing rates to influence business behavior is that many
businesses do not pay their garbage bills directly. Building owners or landlords
pay the bills, so there is not a direct relationship between higher rates and incen-
tives to participate in commercial recycling programs.
Several jurisdictions in the Bay Area have recently implemented uniform rates
for commercial collection services. The Central Contra Costa Sanitary District
and City of Walnut Creek recently approved the phase-in of uniform rates over a
_ three year period. The cities of Hayward, Oakland and Alameda charge on a
uniform basis by the cubic yard for front-end loader service. Because a detailed
analysis of customer subscription levels prior and subsequent to the change to
uniform rates has not been performed, we do not know whether these structures
have led to increased commercial recycling.
Alternative Annroaches
Based on our survey of state PUCs that regulate solid waste collection services
and other jurisdictions across the United States, we identified two other
approaches to providing commercial recycling incentives. The first, which is
applied in some jurisdictions in the State of Washington, affects the collection
rate for recyclables. The second, a variation of which is being used in jurisdic-
tions from Oregon to New York, affects the tipping fee at the landfill or recy-
clables processing facility.
-- Recyclable Collection Rate
Approximately two years ago, two private collection companies in Washington
— petitioned the State PUC for special collection rates for recyclable material in
connection with processing facilities that they had built. The PUC established a
recyclables collection rate that is approximately 80% of the regular refuse collec-
tion rate. The 20% discount is intended to represent the differential between the
cost of disposal and the net cost of processing the material at the processing facil-
ity.
A commercial establishment with one four-cubic-yard bin serviced once a week
might subscribe instead to one two-cubic-yard bin for regular refuse and one two-
_ cubic-yard bin for recyclables (corrugated cardboard, glass, white paper, etc.).
I ' The charge for the recyclable bin is 20% less than a regular bin, lowering the
business' overall monthly garbage bill.
C 5
The obvious disadvantage to this approach is its susceptivity to the recyclable
markets. If the net cost for processing a particular product falls below the land-
- fill disposal cost because the market price for that recyclable falls significantly,
then the'haulers will either stop collecting that product or will lose money at the
regulated rate. This approach is most successful in areas where landfill dis-
posal fees are relatively high.
(Specific data regarding the effectiveness of this approach was not available from
_ the Washington State PUC staff. They are currently gathering data to perform
i such an evaluation.)
Mpping Fees
Several jurisdictions use a variation of a credit to the hauler on the disposal fee
for recyclable-rich loads. This approach is very similar to the recyclable collec-
tion rate approach described above and results in essentially the same collection
rate impact.
In Eric County, New York, haulers that recycle at least fifteen percent of the
waste they collect pay $35 per ton at the landfill for all other waste disposed of.
Haulers that do not separate at least fifteen percent pay $50 per ton. This pro-
vides the haulers the incentive to separate the recyclable materials for process-
ing.
Some landfills in Oregon charge haulers a tipping fee that is based on the per-
' tentage contamination (or, conversely, percentage recyclable) of the load. For
regular mixed municipal waste, haulers are charged $16.70 per ton. Loads that
are 50% recyclable are charged $16.00 per ton. "Clean" loads, those that are 100%
recyclable, are charged $3.00 per ton. Charges for recyclables between 50% and
100% are based on a sliding scale.
FINDINGS
Based on our search of industry periodicals, discussions with staff of over a dozen
jurisdictions across the country, and discussions with other consultants involved
in the solid waste industry, we have been unable to identify a significant amount
of data upon which to draw any conclusions. Few jurisdictions have modified
their rate structures to encourage recycling and even fewer have data to identify
the impacts on residents and businesses. However, we believe that there is a
logic to the uniform rate structure approaches, that may have the impacts desired
by the Alameda jurisdictions. Based on our review, we believe that:
1. Uniform or increasing rates would provide incentives to ratepayers to
reduce their waste volume.
2. Increasing rates, or immediate adoption of uniform rates may cause sig-
nificant rate increases to some customer classes. Phase-in uniform rates
would reduce the initial percentage increase to some customer classes.
i .
f. . 6
3. There is a direct relationship between the separate collection of yardwaste
and the level of collection service subscribed to by the residents.
4. Mini-can service provides a significant incentive to reduce the amount of
waste generated, particularly when combined with curbside recycling and
yar.dwaste programs.
4
5. A bag tag system of providing temporary extra disposal capacity can be
used as an incentive for residents to subscribe to the lowest level of regular
G. collection service.
6. Few jurisdictions are currently using commercial rate structures to
encourage recycling. Many, however, are investigating this approach.
7. Several jurisdictions use separate recycling rates or tipping fees to encour-
age commercial recycling.
RECONEVIENDATION
We recommend that the jurisdictions revise their current rate structures to a
uniform structure, phased-in over a three year period.. This will reduce the
impact of the associated effects, reward ratepayers who have reduced their dis-
posal volumes and encourage others to do likewise. This change in behavior may
contribute to the jurisdictions' goal of extending landfill capacity and meeting AB
939 requirements. However, based on the lack of data regarding the impact of
rate structure changes on ratepayers' behavior, we cannot estimate what the
specific impacts will be in Alameda County jurisdictions.
RATE STRUCTURE DEVELOPMENT
The actual development of each jurisdiction's rate structure is dependent upon
the following variables, which may differ between jurisdictions:
• The timing of the implementation of the new rate structure;
• The number of customers by customer classification; and
C 0 The degree to which customers reduce their regular garbage service.
We would be pleased to assist interested jurisdictions in developing a rate model
to calculate the specific impacts of these or other variables on its rates.
PROPOSED OPTIONS FOR
1991 RESIDENTIAL GARBAGE RATE ADJUSTMENT
(Updated December 5, 1990)
SINGLE FAMILY SERVICE
Option A Option B Option C Option D
300 25% 20% 15%
One Can Service Current Across Bd on 1st can on 1st can on 1st can
Garbage Collection/Disposal $5.70 $7.40 $7. 10 $6.85 $6. 55
Surcharge for Recycling 1.25 1.25 1. 25 1.25 1. 25
Surcharge for HHW .20 . 20 . 20 . 20 . 20
Total Single Can $7. 15 $8.85 $8.55 $8. 30 $ 8 . 00
Two Can Service
Garbage Collection/Disposal $ 9. 65 $12.55 $13 .40 $13 . 55 $13 . 70
Surcharge for Recycling 1.25 1.25 1.25 1.25 1.25
Surcharge for HHW .20 .20 . 20 . 20 . 20
Total Two Cans $11. 10 $14. 00 $14.85 $15. 00 $15. 15
Three Can Service
Garbage Collection/Disposal $13. 60 $17.70 $19.70 $20.25 $20. 85
Surcharge for Recycling 1.25 1.25 1.25 1.25 1. 25
Surcharge for HHW .20 . 20 . 20 . 20 . 20 ._
Total Three Cans $15. 05 $19. 15 $21. 15 $21.70 $22 . 30
Each Additional Can
Garbage Collection/Disposal $ 3 . 95 $ 5. 15 $ 6. 30 $ 6.70 $ 7 . 15
PROPOSED
COMMERCIAL GARBAGE RATE ADJUSTMENT
Excludes Container Rental Rate
Prepared December 5, 1990
COMMERCIAL RATES Current 30o Across Board
Non-Residential
Cost per Cubic Yard $ 4 .80 $ 6. 25
Multi-Family Residential
Cost per Cubic Yard
Garbage Collection/Disposal $ 4. 80 $ 6. 25
Surcharge for HHW . 15 . 15
Total $ 4 . 95 $ 6. 40
Compacted Material
Per Cubic Yard $ 9. 60 $12 . 50
a: 12-5gar.doc.psr
C
_k
AGREEMENT TO SUBMIT A JOINT APPLICATION
FOR
NON-DISCRETIONARY HOUSEHOLD HAZARDOUS WASTE (HHW) GRANTS
BETWEEN
THE CITIES OF DUBLIN, LIVERMORE, AND PLEASANTON
WHEREAS, the Cities of Dublin, Livermore, and Pleasanton
jointly conducted a Household Hazardous Waste Collection on May 5, 1990;
and
WHEREAS, each City entered into an identical agreement with
Chemical Waste Management, Inc. , to provide services at the event; and
WHEREAS, Staff representatives from each City contributed
towards the planning and implementation ; and
WHEREAS, the participating cities jointly funded the program
through either a general fund payment or the addition of a surcharge to
the garbage rate; and
WHEREAS, the California Integrated Waste Management Board has
announced a grant program for agencies which conducted HHW •events in
Fiscal Year 1989-90; and
WHEREAS, in the interest of consolidation, the Cities of
Dublin, Livermore, and Pleasanton have agreed to submit a single grant
application; and
WHEREAS, the City of Livermore has agreed to serve as the
"Lead Agency" for the receipt and distribution of funds .
NOW, THEREFORE, the Cities of Dublin, Livermore and Pleasanton
hereby agree to submit a joint grant application, with the City of
Livermore acting as the Lead Agency. The Cities agree that the total
cost of the May 5, 1990 event was $161 , 451 .50 . Further, the Cities
agree that any grant funds received by the City of Livermore shall be
distributed to the Cities based on the agencies, percentage of the total
cost as shown below:
Amount Paid Percentage
Dublin $ 22, 659 . 00 14%
Livermore $ 78, 420 .45 49%
Pleasanton $ 60, 372 . 06 37%
C.
Ric and C. Ambrose City Manager Dublin Date
Deborah Acosta, City Manager Pleasanton Date
Ci
fee 'Horner, City Manager Livermore Date
E G