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HomeMy WebLinkAboutItem 6.1 MandatoryGarbSvsMuniCd (2) . . CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: January 25, 1993 SUBJECT: Repeal of provisions in Municipal Code for ~andatory Garbage Service (Public Hearing) repared br: Paul S. Rankin, Assistant City Manager) 1. ~raft Recycling/Clean-up Assessment j::alcula tion 2. ~proposed Ordinance 3. /.Entire Chapter 5.32 of Dublin Municipal Code ~ (Solid Waste Management) Highlightinq Changes to be Enacted by Proposed Ordinance EXHIBITS ATTACHED: RECOMMENDATION: (LtY 1. \ 2 . 3. 4. 5. Open Public Hearing. Receive staff presentation and comments from the public.. Close Public Hearing. Deliberate.. Waive the Reading and Introduce the Ordinance. FINANCIAL STATEMENT: It is anticipated that future increases to residential garbage rates will be required. This will be caused by two factors: Garbage company added expenses for uncollectible accounts and reduced subscribership. The exact amount of the increase is undetermined at this time. The city will also receive less revenue from Franchise Fees and Administrative Fees if there is reduced subscribership. DESCRIPTION: At the regular city council meeting on January 11, 1993, Staff was directed to return to the City Council with an ordinance which would repeal the Mandatory Garbage program. The city Council also directed Staff to plan for implementation of a program to collect fees for the curbside recycling program and city-wide Quarterly Garbage Service on the property tax bill.. PROPERTY TAX COLLECTION The City cannot enact property tax levies until fiscal year 1993-94. Typically, the City council must adopt the assessment no later than August. At this time, Staff has not fully evaluated the cost of the assessment; therefore, additional information will be presented to the City Council at a future meeting. Once the collection for these services is on the property tax, the City Council will also need to amend the garbage collection rate schedule. The reduction will reduce the amount billed by Livermore DUblin Disposal (LDD) to recognize that portions of the base service level which will be collected on the property tax bill. In order to explain the concept. of property tax collection of certain garbage service fees, Staff has prepared a draft assessment calculation (Exhibit 1). In the Draft Document, it is anticipated that the annual assessment to be charged would be in the neighborhood of $33.00 per year. As noted, this calculation is only an estimate and the City would need to calculate the actual proposed assessments at a later date. In addition, the City will need to negotiate with the Garbage Company contract amendments which will specify how these payments will be made, and how they are treated for rate setting purposes. PROPOSED REPEAL OF MANDATORY GARBAGE ORDINANCE It is important for the City Council to proceed in a timely fashion with consideration of an amendment in order for the Garbage Company to understand its obligation to continue provision of service to all households. In addition, the Company would like to avoid customer ---------------------------------------------- CITY CLERK FILE~ n'B11 NO. ~ ..1 COPIES TO: Dan Borges, LDD . . confusion in the event that a customer wants to discontinue service at this time. Based upon direction from the City council, staff has prepared an Ordinance which would repeal the provision for Mandatory Garbage Service (Exhibit 2). In order to depict how these changes will impact the Municipal Code, staff has prepared Exhibit 2. This identifies the changes to Chapter 32 of the Municipal Code if those sections. dealing with mandatory service are repealed. staff has retained the definitions of "owner". and "Tenant.. in section 5.32..040. Also, section 5.32.061 was retained as it continues to be desirable to prohibit public dumping. Once the revision is enacted by the City, the Company will utilize the practice of discontinuing service when an account becomes delinquent. Delinquent amounts may also be pursued by the Garbage Company through a Collection Company. In the event that any amounts are determined by the Company to be "uncollectible," they will be written off as an operating expense pursuant to the franchise agreement. In essence, this cost will be paid for by the ratepayers. The City is cont~actually obligated to establish rates in the following manner: .....the Company shall have the right to charge and collect the Collection Rates authorized by the City from tenants, occupants, and owners of each dwelling until and establishment served. The Collection Rates shall be no less than the Company's fully allocated costs of providing the collection and disposal services and facilities required by this agreement plus a reasonable return on investment." (Section 3.1 Franchise Agreement with Oakland Scavenger Company dated March 10, 1986.) The extent to which the Company will experience bad debt write-offs and the exact impact on rates is unknown at this time. IMPACT ON FUTURE RATES As previously noted, the repeal of Mandatory Garbage will impact future rate adjustments. When the Mandatory Program was implemented on February 28, 1992, Livermore Dublin Disposal (LDD) reported that 308 households were not subscribing to the service. In December of 1992, the Company reported that only 85 customers had subscribed to the minimum Super Recycler service. This means that a majority of those who did not previously have service were now receiving at least the standard collection of one 32- gallon can. The following identifies the impact to the residential collection revenue if the households which obtained service as a result of the Mandatory Garbage program discontinue service upon repeal of the Ordinance. ESTIMATED IMPACT TO RESIDENTIAL GARBAGE REVENUE IF 308 ACCOUNTS DISCONTINUE SERVICE (Note: 1993 Rates Were Used) Total Super Recycler Monthly Rate Less Recycling & Clean-up Components $6.90 (2.40) Basic Disposal Component Assume Loss of 85 customers = $4.50 x 12 mo. = $54/year $4,590/year Assume Remainder are (1) 32-Gallon Can Customers: 308-85 = 223 customers Total Standard Service Monthly Rate Less Recycling & Clean-up Components Basic Disposal Component Assume 223 customers = $14,784 $8.00 (2.40) $5.60 x 12 mo. = $67.20/year . . Total Annual Reduced Disposal Revenue Total Reduction to Revenue $ 4,590 14,784 $19,374/year = $1,615/month Super Recycler Standard 32 Gallon If 5300 customers remain and this lost revenue is absorbed by remaininq customers, rates could increase bv 30 cents per month. This would also reduce city General Fund Revenue from Franchise Fees and the Administrative Fee. Based on the annual reduction shown above, the City would lose over $1,300 per year. As noted, the calculation shown above was done on a very broad basis. Small incremental savings could be incurred in the cost of disposal; however, the Company did not adjust staffing or vehicle routing to accommodate the imposition of the Mandatory Garbage program. Therefore, these fixed costs would be assumed by a smaller customer base. The extent of any rate adjustment will need to be determined in the future, once more concrete data is available. Conclusion Staff has prepared the Ordinance requested at the meeting of January 11, 1992. It is recommended that the city Council conduct a public hearing, waive the reading, and introduce the Ordinance. Amendments to agreements and consideration of assessments for Recycling and City-wide special Garbage Clean-Up will need to occur at a future city Council meeting. PSR/lss a:125Repel.doc.agenda . . EXHIBIT 1 DRAFT CALCULATION OF ASSESSMENT FOR CURBSIDE RECYCLING AND QUARTERLY SPECIAL GARBAGE PICK-UP Note: These calculations are estimates only. An actual assessment calculation will be presented at a future meeting. This scenario assumes that the Property Tax Assessment would be levied for Fiscal Year 1993=94. ASSUMPTIONS: Number of Households = 5,308 (based on January 1, 1993) Assumed Inflation Rate = 4% Curbside Recycling Rate: Actual July - December 1993 = $1.34/month Estimated January-June 1994 = $1.34 x 1.04 = $1.39/month Estimated Data Processing Charges = $1,310/year (Based on 1992 Storm Water Fee plus 4%) County Assessor Collection Fee: 1.7% Estimated Property Tax Delinquencies: 5% CALCULATION: Curbside Recyclinq 6 mo. @ $1.34 Estimated 6 mo. @ $1.39 Subtotal $ 8.04 8.34 $16.38 .28 .82 County Collection Fee (1.7%) Estimated Delinquency (5%) Estimated Total Recycling $17.48 Quarterly Special Garbaqe Pick-Up 6 mo. @ $1.06 Estimated 6 mo. @ $1.06 + 4% = $1.10 Subtotal $ 6.36 6.60 $12.96 .83 13.79 .66 .28 .23 .69 Estimated Allowed Profit to Garbage Co. @ 6.4% Subtotal City Franchise Fee @ 4.8% City Administrative Garbage Fee @ 2% County Collection Fee (1.7%) Estimated Delinquency (5%) Estimated Total Special Garbage Pick-up $15.65 $33.13 .25 Subtotal Combined Recycling/Special Pick-Up Data Processing Charges ($1310/5308 households) Total Estimated Assessment $33.38 Note: This calculation does not account for administrative costs associated with preparing the assessments or for carrying costs prior to receipt by the City of tax collections. a: 125Exb#3.agenda#11 EXHIBIT .L . . ORDINANCE - 93 ORDINANCE REPEALING PROVISIONS IN THE SOLID WASTE MANAGEMENT ORDINANCE WHICH PROVIDE FOR MANDATORY GARBAGE COLLECTION AND PROVIDING A PROCEDURE FOR COLLECTION OF DELINQUENT GARBAGE SERVICE BILLS CHAPTER 5.32 - DUBLIN MUNICIPAL CODE SECTION 1. Chapter 5.32 of the Dublin Municipal Code shall be amended as follows: A. section 5.32.080 shall be amended to read as follows: 5.32.080 Removal of Solid Waste. All solid waste created, deposited, kept, produced, or accumulated in, on, or about any dwelling, premises, lot or parcel of land, whether public or private, shall be delivered to the collector, or removed by the waste generator where permitted by sections 5.32.130 and 5.32.150, at least once each week or more often if required by the Director unless and to the extent specifically exempted in section 5.32.050. (Ord. 2-86 ~ 2 (5-203)) B. section 5.32.090 shall be amended to read as follows: 5.32.090 Payment of Solid Waste Charqes. The waste generator shall be responsible for payment of all charges for solid waste collection and disposal services furnished by the collector. (Ord. 2-86 ~ 2 (5-204)) C. Section 5.32.140 shall be amended to read as follows: section 5.32.140 Collection Rates - Desiqnation of Minimum Service Maximum rates of compensation for the collection of solid waste within the City shall be adopted by a resolution of the city Council. D. The following sections shall be repealed from Chapter 5.32 of the Solid Waste Management Ordinance: 1. . section 5.32.091 2. Section 5.32.111 3 . section 5.32.112 4. Section 5.32.113 5. Section 5.32.114 6. section 5.32.115 Minimum Subscription for Solid Waste Collection Required Failure to Initiate Service Complaint of Non-Payment Filing of written Complaint bv Collector continuation of Service Collector Entitled to Payment -1- EXHIBIT a SECTION ~ . . This Ordinance shall take effect and be in force 30 days following its adoption. 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