HomeMy WebLinkAbout6.2 Garb&RecylSvsRateAdjust
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CITY OF DUBLIN
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: February 13, 1995
SUBJECT: Public Hearing: 1995 Garbage CollectionlDisposall And Recycling Services
Rate Adjustment ,
~ (prepared by: Paul S. Rankin, Assistant Citr Manager)
EXHIBITS ATTACHED: 1. Staff Report From January 23, 1995 Meeting (Item 8.3) Preliminary
Report On Garbage Rate Increase
2. 1993 Agreement For Provisional Charges Related To Closure Post
Closure Expenses At The Altamont Landfill
3. Resolution Extending The Term Of A Provisional Agreement Related
To Closure Post Closure Expenses At The Altamont Landfill
4. Historical Comparison Of Dublin GarbagelRecycling Service Rates
5. Tri- Valley Commercial I Drop Box Service Rate Comparison
6. Tri- Valley Residential Service Rate Comparison
7. Resolution Amending The Schedule of Service Rates Allowed To Be
Collected Under the Solid Waste Franchise Agreement
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RECOMMENDATI~.
2.
3.
Open the Public Hearing and receive the Staff Report and any public
comments.
Close the Public Hearing and deliberate.
Adopt the Resolutions.
FINANCIAL STATEMENT:
The proposed adjustments vary depending on the type and frequency of
service. Due to the delay in adopting the rate change after January 1, 1995, a
surcharge is proposed for the remainder of 1995. This is estimated to allow
the Company the ability by December 31, 1995, to receive total revenues in
accordance with the Joint Refuse Rate Review Committee Recommendation.
DESCRIPTION:
At the January 23, 1995 City Council Meeting the City Council received a report outlining the
recommendation of the Alameda County Joint Refuse Rate Review Committee (JRRRC).(EXHIBIT 1)
The report identified that the current revenue structure is projected to provide inadequate revenue in
1995. This is based upon a review of a request by the Company for a rate adjustment. The JRRRC
recommendation did reduce the total amount requested by the Company. Approximately 60% of the
need for increased revenue was attributable to the Company request to modify the method used to
calculate their return on investment. The JRRRC Report recommended that Dublin adjust rates to
generate an additional $417,800 in 1995.
ALLOCATION OF REVENUE :QEFICIENCY BY LINE OF BUSINESS
In response to the Company request for additional revenue, it is necessary for the City to determine the
adjustments required to produce an additional $417,800 in revenue in 1995. As contained in Exhibit 1
the JRRRC has calculated the total City of Dublin 1995 revenue deficiency at $417,800. This represents a
17.4% increase in Company revenues for the City of Dublin operations. The percentage impact on
individual rates will fluctuate as discussed later in this report. The proposed allocation is based upon
historical data and the actual results may differ due to changes in service or frequency. For example, if a
large number of customers currently subscribing to two can service were to change to one can service the
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ITEMNO.AL-
J COPIES TO: Dan Borges, General Manager LDD
J Mary Evans, Controller Waste Mgt Alameda CO
CITY CLERK
FilE ~
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amount of projected revenue will be reduced. These fluctuations are most common in the Commercial
and Drop Box lines of business.
A large percentage of the revenue deficiency (49%) is related to Landfill Operations. Staff has
recommended allocating this portion of the total increase on the basis of tonnage. The composition of the
1994 Tonnage was as follows:
CITY OF DUBLIN
1994 Tonnage By Line Of Business / Activity
Residential
5,543 Tons
23.1 %
Special Clean-Ups
1,618 Tons
6.7%
Commercial
9,366 Tons
39.0%
Drop Box
7,505 Tons
31.2%
TOTAL
24,032 Tons
100%
These percentages were used to allocate a total of $205,400 of the revenue deficiency associated with
additional Landfill Profits and Landfill expenses. This includes surcharges by other regulatory agencies
such as the Alameda County Business License assessed by Alameda County on the Landfill operator.
The second factor used to allocate the revenue deficiency was an estimate of the operating cost by line of
business. For example, Residential services including the Special Clean-ups account for approximately
38.9% of the Company Operating Expenses (excluding landfill costs). This methodology was used to
allocate the remaining $212,400 of the Revenue Deficiency.
The following Chart identifies target for new revenues in 1995, to be generated by each line of business
plus the Residential Special Clean-up activity.
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Commercial Drop Box Residential Clean-Ups TOTAL
Landfill $ 80,106 $ 64,085 $ 47,447 $ 13,762 $205,400
Other Expenses 77p314 52,462 76p262 6,362 212p400
TOTAL $157,420 $116,547 $123,709 $ 20,124 $417,800
Based upon 1994 subscription levels Staff has calculated the rate adjustments required to approximate
these revenue targets.
RETROACTIVE SURCHARGES
The JRRRC identified a revenue deficiency expected to occur if the City did not alter its rates from those
established in 1994. Any delay with the implementation of adjusted rates results in fewer months in
which the Company can achieve its targeted revenue requirement.
The City pays the Company for the "Basic Residential Garbage Service", which includes the first can of
service at single family residences. The bill for services from January through June is not due until May.
Therefore, the City will have an opportunity to pay the full proportionate share of the increase for Basic
Service for the entire 12 months of 1995. A retroactive surcharge will not be required for this class of
service.
For other services the Company bills the customer directly. In the case of additional cans for residential
customers, the bill covering JanuarylFebruary/& March has already been issued. Commercial and Drop
Box Customers are billed in arrears. In the event that the new rate schedule for these services were made
effective February 1, 1995, the Company will have 11 months of billing remaining in 1995 to generate the
targeted revenue. .
In order to address this situation Staff has structured the 1995 Rate Resolution(EXHIBIT 7) to contain
two columns for all service categories except the Basic Residential Services. One column is the Base Rate
which will be charged. The second column is a retroactive surcharge which is added to the Base Rate.
The surcharge column will not be applicable after December 31, 1995. The following summarizes the
surcharges applied by service type.
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1995 Surcharge Factors To Reflect Implementation Of Rate Increase After January 1, 1995
Basic Residential
Residential Additional Cans
Commercial
Drop Box
New Rate Effective
January 1, 1995
April 1, 1995
February 1, 1995
February 1, 1995
Surcharge Rate Applicable
From New Rate Effective Date
To December 31, 1995
None
$ 0.43 per month per can
$ 0.50 per cubic yard / per month
$ 0.14 per cubic yard
The surcharge is necessary in order to have a rate structure which will generate the targeted revenues by
December 31,1995.
RESIDENTIAL RATE COMPONENTS
The components which make up the residential rates paid to the Company fall into three categories: 1)
Residential Recycling; 2) Special Clean-Ups; and 3) Garbage Collection and Disposal. The rates are
structured with the intent of spreading the costs for Recycling and Special Clean-ups evenly over the
customer base. The philosophy has been that each household has the opportunity to use these services
and/or benefits from having them available. The Garbage CollectionlDisposal has been priced on a
uniform basis, with each incremental can costing the same amount. In 1994, approximately 56% of
Residential Customers subscribed to one can service and 41% had two can service. The following
displays the proposed adjustment in the individual components of the allowed residential rates.
1 Can CollectionlDisposal
4 Special Clean-ups
Curbside Recycling
Total Monthly Basic
1994
Rate
$ 5.95
1.31
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$ 8.63
Proposed 1995
Base Amount
$ 7.25
1.62
U!L
$10.27
Retroactive
Surcharge
None
None
None
TOTAL 1995
RATE
$ 7.25
1.62
...l...4(l
$10.27
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Cost Of Each Additional Can
$ 5.95
$ 7.25
$ 0.43
$ 7.68
For the residential customers with one can service this is approximately a 19.0% increase. The increase
in rates charged for two can service is approximately 23.1 %.
COMMERCIAL RATES
The Commercial Bin Service Rates are comprised of two components. One is a cubic yard rate which
reflects the size of the container. The second factor is a frequency charge for each pick-up beyond once
per week. Consistent with previous rate adjustments the Frequency factor was set at 25% of the cubic
yard rate or $7.25 per additional pick-up per month. This component encourages customers to select the
most cost effective level of service. For example, a business having a 2 yard dumpster serviced twice each
week pays $7.25 per month more than a business having a 4 yard bin only serviced once each week.
In 1994, the monthly cubic yard rate was $25.40 plus a frequency factor of $6.45. The proposed 1995
Base Monthly Rate is $28.95 plus a Frequency Factor of $7.25. In addition, a Retroactive Surcharge of
$0.50 per yard is applicable for services billed through December 1995. This brings the base monthly
cubic yard rate to $29.45 per month. The proposed 1995 rate including the surcharge represents
approximately a 15.9% increase over the 1994 rate.
DROP BOX RATES
The adjustment to Drop Box Rates was based upon the service levels subscribed to in 1994. In addition
to periodic debris box rentals, this category also serves some businesses and apartment complexes which
maintain compactors. The cost of the service must be spread over a very small base due to the fact that
most of these types of bins are only serviced when they are full. This results in more tonnage per cubic
yard than a regular commercial bin.
The servicing of Drop Box accounts also involves different methods. Commercial accounts are collected
by a front end loader. The truck can service many accounts according to an established schedule prior to
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traveling to the landfill. The servicing of Drop Box accounts requires the truck to transport a single bin
to the landfill and then return the container to the customer.
The 1994 Drop Box Rate was based upon a rate of $8.05 per yard for loose debris and $ 16.10 for
compacted material. The proposed 1995 Base Rate is $9.75 per cubic yard plus a Retroactive Surcharge
of $0.14 per yard for billings through December 1995. The 1995 rate including the surcharge represents
a 22.9% increase over the 1994 rate.
COMMERCIAL CAN SERVICE
A limited number of businesses receive service on an individual can basis. Thc proposed incrcase is
based upon the same amount that residential customers experienced for the garbage collection and
disposal component($1.30 per month). These accounts are allowed to utilize cans of different sizes and
the increase was allocated based upon container size and rounded up to the nearest 5 cents.
32 Gallon
40 Gallon
45 Gallon
48 Gallon
1994 Rate
$ 7.45
9.35
10.50
10.70
Proposed 1995
Rate
$ 8.75
10.80
12.15
13.00
HANDY HAULER SERVICE
The proposed adjustment to the Handy Hauler Service is based upon cost changes to the Drop Box ...
Service rates. This has been a popular service and it allows for the one week rental and disposal of a 4
cubic yard bin. This eliminates the need of the homeowner to haul the waste and it is typically used for
small clean-up projects. The following is a comparison of the proposed rate:
4 Yard Disposal
Bin Placement
TOTAL 1 Wk Rental
1994
$ 32.20
12.80
$45.00
1995 Base
$39.00
13.50
$52.50
The 1995 rate represents a 16.7% increase over the 1994 rate.
ALTAMONT CLOSURE POST CLOSURE AGREEMENT
As discussed in Exhibit 1, the City has an undefmed potential financial liability for costs incurred with
the closure of the Altamont Landfill. As part of the 1993 rate adjustment the Company executed an
agreement obligating them to negotiate with the City or its representative a Franchise Agreement
modification (EXHIBIT 2). The process was undertaken with representatives of the JRRRC in an
attempt to produce a Master Agreement, which could be considered by each of the respective agencies.
Beginning in 1993, the Company allocated $1.66 per ton to a special escrow account. This was an
estimate of the funds required to pay for costs related to tonnage placed prior to 1993 as well as
additional deposits made to the landfill. The negotiations were to include: discussion of the scope of
improvements; liabilities for changes in cost; methods to assure that the monies would be protected;
responsibility for historic tonnage; and defining the obligation of each agency.
Despite an extension to March 1994 these efforts have not been concluded. The Company has recently
expended significant resources in terms of commissioning special studies related to attempts to support
their requests made in the rate application. Staff has received a verbal comment from Company officials
that they intend to resume negotiations in the near future.
Staff has drafted an amendment allowing the current provisions to remain in place through the City's
current franchise term.(SEE EXHIBIT 3) The Company will be retaining funds in an escrow account
until a franchise amendment is presented and approved by all parties. Staff would recommend that the
Company be advised that the City Council encourages the Company to immediately pursue final
discussions related to this issue prior to the date allowed by this extension.
Staff has suggested in the past that this obligation would be an appropriate use for any excess funds in
the City Balancing account. Without a readily available source of funding to reduce the Closure Post
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Closure obligation future rate payers will bear the burden of financing these costs. Staff believes that to
the extent that this can be avoided, benefits will accrue to both residents and commercial businesses.
Without this source of funds future rates will need to be es~alated to cover both the obligation itself and
the interest charges incurred by making the payments over time. The potential to utilize the Balancing
Account will allow the City to continue to maintain competitive rates in the future.
RATE COMPARISONS
At the City Council Meeting of January 23, 1995, Staff was requested to prepare historical rate
comparisons for the City of Dublin. EXHIBIT 4 displays a historical comparison of City of Dublin rates
for the most common levels of service.
In general it is noted that Residential Rates have been escalating more rapidly than Commercial rates.
The approach to rates in recent years has attempted to allocate costs where possible to the services
generating the service cost. In the case of the Drop Box category rates have also escalated to address the
equitable allocation of rate increases. An attempt has been made to recognize that the service should be
priced relative to more efficient services offered. For example, the cost to service a Commercial Bin is
less than servicing a Drop Box.
Overall, the cost increases experienced by the City of Dublin are not unusual compared to other agencies.
The cost of landfill construction and regulatory costs have been impacting rates considerably over the
past 5 years. This is especially the case if you consider the fact that the City has provided the Company
with adequate revenue each year. Some agencies have had deficits and now they are attempting to catch
up for artificially low rates in prior years. The JRRRC report projected that as of December 31,19945 '.
of the 9 agencies remaining in the JRRRC have deficits in their Balancing Account and the Company is
owed over $12.375 million. The City of Dublin has a positive balance as the City Council policy in prior
years has been to establish rates at a level adequate to meet allowed operating costs.
A comparison of Tri-Valley Commercial! Drop Box Rates is included in EXHIBIT 5. The commercial
rates are very competitive compared to surrounding agencies. This is the case even when the 1995
Retroactive Surcharge is included. In the comparison of Drop Box Rates between the cities of Dublin,
Livermore, Pleasanton and San Ramon, only the City of Livermore has a lower rates than the proposed
Dublin rate. One factor which may influence the cost is the proximity to the landf1ll. For Dublin
customers a longer hauling distance is required to service the container than the City of Livermore. The
proposed Dublin rate structure remains very competitive if compared to the survey average. For
example, the City of Dublin rate for a 20 yard Drop Box would be over 37% less than the average rate
charged by the three agencies in the survey ($197.80 vs. $316.30 respectively).
The direct comparison of Residential Rates becomes more complex due to the differing pricing and
service levels. EXHIBIT 6 shows a comparison of both one and two can customers in the adjoining cities.
On a strictly cost basis the City of Dublin has rates which are less than the average of the other three
cities. The City of Dublin has higher rates than surrounding cities when, you factor in the capacity
provided and compare this to the total rate charged. This analysis has not factored in the capacity
obtained from Special Clean-ups or the curbside Recycling program. The difference is also impacted
significantly by those agencies offering Green Waste Services and Automated Collection. In some cases
the agency has not structured rates to acknowledge the difference in capacity which is being provided.
For example, the City of Pleasanton charges the customer the same rate whether they select a garbage
container with a 60 gallon capacity or a 90 gallon capacity. The City of Dublin rate structure is designed
to recognize that there is an additional cost in providing larger capacities.
RECOMMENDATION
It is recommended that the City Council conduct a public hearing on the proposed adjustments which
will respond to the Company request for increased revenue as modified by the recommendations of the
Joint Refuse Rate Review Committee. After receiving the Staff Report and public testimony it is
recommended that the City Council adopt the resolution adjusting service rates (EXHIBIT 7) and adopt
the resolution modifying the agreement for Closure Post Closure Expenses (EXHIBIT 3).
CITY OF DUBLIN
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: January 23,1995
SUBJECT:
PRELIMINARY REPORT ON GARBAGE RATE INCREASE
()~ 0 ~ REQUESTED BY WASTE MANAGEMENT OF ALAMEDA COUNTY
~ (prepared by: Paul S. Rankin, Assistant City Manager)
EXllIlJITS ATTACllEU: 1.
Selected Pllges From Joint Refuse Rate Review Committee (JlU{RC)
of Alameda County ~ }"inal Recommendations dated December 7,
1994
2.
Summary of 1995 Projectcd Revenue Deficiency By Line Item
3.
Executive SUlllmaries of Report Prepared By Consultants
Representing Wllste Management of Alameda County Regarding
Operating Ratio Recommendations
4.
Letter datcd December 5,1994 requcsting adjustmcnt to the Curbsidc
Recycling Program Rates.
RECOMMENUAT7jjtlON: Receive Staff Report and direct Staff to prepare documents necessary for II
Public Hearing on February 13, 1995, to eonsider adjustments to the Solid
. Waste Collection Rate Schedules.
FINANCIAL STATEMENT: Impact on rates will vary dcpending on the type of servicc (i.e.
residential, conunercilll, drop box) and the size of containcr and frequency of service. The JRRRC
recomlllcndation is based upon an indepcndent Consultant review. The recommcndation is to is to
provide an additional revenuc totaling $417,800 in 1995. This is projccted to increase total revenues
collected frolll Uublin rlltepllyers f."OIIl $2,336,200 in 1994 to $2,754,100 in 1995. A 17.9'Yo incrcase in
total revellues.
DESCRIPTION: At the City Council mceting of October 10, 1994 the City formally refcrred
the t 995 Rate Adjustmcnt request from Waste Management of Alameda County (WMAC) to the Joint
Refuse Rate Review Committee (JIUU{C). This Committee has Staff representatives from scveral
Alnmeda County Agencies serviced by WMAC. The agencies jointly retain a Consultant to review the
rate application and to develop recommendations. The 1995 Rnte Application reprcsents the first review
conducted for the JRRRC by Dcloitte Touche Tohmatsu International (D&T). The Executive Summary
and Recolllmendation scctions of the rcport are nttached as EXHIBIT 1.
The process used by WMAC in presenting rate requests is to project 1994 revenuc and expenses and then
project expensc requirements for the following two years. Given that the City of Dublin Agreement with
WMAC expires in March of 1996 this report focuses on the 1995 results. A two year rate adjustment is
not recommended at this time. The Rcport identifies the projected Revenue Deficiency bascd upon the
reconlll\ended allowable costs for 1995. The Garbage Company currently opcrates in the City of Dublin
pursuant to a franchise agreement adopted in 1986. In the Franchise Agreement Section 3.1 "Service
Rates" states:
" ...The Collection rutes shall be no less than the Company's fully allocated costs of providing the
eollection and disposal services and facilities required by this agreement, plus a reasonable return
(In investment."
Therefore, the JRRRC review considers the allocation and appropriateness of allocated costs as well as a
recomlllendation on the appropriate return on investment (profit). The City Council must approve all
rate adjustments.
AMOUNT OF AllmTIONAL IH<:VENIJE REOUIREll IN 1995 ~ "Revenue Deficiency"
The projected 1994 Revenue was estimated to be $2,336,200. The initial Company Rate Application
relll1ested nn additional $441,3t10 in annual revenue from Dublin operations above the estimated
EXHIBIT .1
revenucs for 1994. Due to landfill taxes imposcd by Alameda County after the submittal of the Company
Rate Applieation, this rcvenue deficit was increased by the Company to $458,600.
llnsed uJlon thc review by the Consultants (D&T) and the JRRRC recommendation for allowed profit,
the lllllount of increased revenues requested by the Company were reduced. The report calculated that
the City of Dublin ratepayers would need to generate an lldditional $417,800 in revenue in 1995. This
amount is referred to llS the Revenue Deficiency. This remains It considernble increase llS it reprcsents II
17.9'1., increllse in total company revenues from the City of Dublin operations. It should be stated that
the percentage increase in revenue required is going to vary among the agencies serviced by WMAC.
Factors contributing to these diffcrences include:
. Some agencies hnd revenue bases which in the past did not generate their fully allocated costs. These
agencies owe the company for their past deficits.
. The size of the operation will impact the percentage of additional revenue required. For example the
estimatcd 1995 Revenue Requiremcnt for the City of Oakland are projected to be $53,104,500, while
the estimated Revenue Hequirement for the City of Dublin are projected to only be $2,754,100.
. Some jurisdictions are serviced through the Davis Street Transfer Station, while the City of Dublin is
a direct haul to the Altamont Landfill.
Exhibit 2 summarizes the total $417,80tl Revenue Deficiency by line item. A more detailed explanlltion of
the most significant factors is presented in the following section. The explanation focuses on those areas
which account for more than 5% of the Revenue Deficiency. In some eases the minor increases not
discussed are offset by savings on other line items.
KI~Y FACTORS AFFECTING WMAC REQUEST FOR INCREASED REVENUES
ClulIlue In Profit Cnlculation Mcthodolol:Y
Approximately 60% of the increased revenue is attributable to a change in the methodology used to
calculate the Company's retul'll on investment (profit). In the past several years the Company has
expressed at JIUU{C meetings thnt they did not believe that the Committee was utilizing the correct
methodology to account for the Company profit. The Company made a major effort to present
additionlll information to the Committee with their 1995 Rate Application. The Company presented
rcports prelJllI"ed by Arthur Anderson nnd the consulting firm of Barakat & Chamberlin in order to
provide a hllsis for further discussions over thc mcthodology used.(EXHIBlT 3)
In 1994, the JRRRC implemented II methodology which provided the Company with profit based upon a
rntio of prewtax operating expenses (i.e. if a ratio of 90% were used and the company had pre~tax
expenses of $1t1t1million, the allowed profit would equal $10 million). The allowed rntio included in the
1994 rates was adopted by the City Council at 93.25%. This was estimated by the Consultants to be
equivalent to a 4.3% after tax profit.
In the 1995 Rate Application, the Company requested that the profit levels granted for its Landfill
operations be treated differently than profit levels granted for the Collection operations. Among the
reasons cited by the Company were the following: Landfill Operations require significant capitalasscts,
wherells Collection relies lllore intensely on labor; the two types of operations have different risk factors
for the (lperatorj and the Company has made significant capital expansions to operate the Altamont
Landfill. The Executive SUlIlmary of their presentation is attached as EXHIBIT 3.
COml)llllywide Landfill Profit Calculntion
As shown on pages 16~18 of the JRRRC Report (EXHllllT 1) the Company requested profit calculatcd
lit an operating ratio of 71.5%. The Company proposed that regulatory fee as well, as interest would be
treated as pass through cost. The JIU{RC Recommendation is to apply the "Weighted Average Cost of
Capital" to the landfill asset base. The end result of this process was to reduce the total Landfillllrofit
requested COlllpanywide by approximately $1.5 million. The revised methodology was derived by the
Consultants to address the Company's concel'll that the iutensive eapital investment required to operate n
laudfill was not recognized. A major change of the revised methodology reconllnended by the JRlU{C, is
that interest cxpense for the landfill is not allowed as a scparate line item. The Company's Landfill Profit
is calcullltcd to be adequate to offset this expense.
Conlllanywidc Calculation of Collcction I)rofit
The Company requested that the Collection Profit be based upon a 86.7% pre-tax and pre-interest
operating ratio. Bascd upon the Consultant's review of other jurisdictions the JRRRC recommcnded
that the Operating Ratio be established at 89% for collection operations. This resulted in a reduction to
the Complmywide collection rcvenue of $1.1 million for 1995.
Financial Impact of Reviscd Profit Methodology on Huhlin Revenue UeQuircment
As mentioned earlier the change in Ilrofit calculation methodology aceounts for the majority of the
increased revenue requested by the Company. The following summarizes the differences bctween what
the Company requested in their original application with the recommendation made by D&T and the
JlUmc.
CITY OF DUBLIN
AS SUBMITTED
BY WMAC
D&T REPORT
RECOMMENDATION
PROJECTED REVENUE DEFICIENCY
$ 441,300
$ 417,800
DlSl)OSAL I)ROFlT
DlSI)OSAL INTEREST EXPENSE
NET DlSl)OSAL
$ 135,700
$ 60,300
$ 196,000
$ 205,100
($ 39.600)
$ 165,5t10
COLLECTION PROFIT
$ 1115.900
$ 87.100
GRAND TOTAL Interest/l)rofit
$ 301,900
$252,600
The Committee recommendation reduces the Company's profit request by 19.5%. It is Staffs
understanding that several of the JIU{RC membcr agcncies have accepted the D&T methodology in the
clllculntion of their 1995 rates.
Collection Labor Costs
Labor costs ineluding salaries and benefits account for approximately 12.7% of the identified Revenue
deficiency. This is projected to add an additional $53,200 in operational costs for 1995. WMAC Staff
have indicntcd that the Company projections include 3% wage growth and approximately 10% increase
in health, welfare and pension obligations. The actual change in labor related expenses from I)rojected
1994 to Estimated 1995 is approximately 6.6%. (1994 ~$806,600 vs. 1995-$859,800)
Disposnl Costs
The cost of disposal exclusive of profit is determined to account for approximately $39,900 of the total
revenue deficiency. Among the elements affecting this line item were surcharges levied by Alameda
County. The County imposed a $0.075 per ton fee for the conditional use permit associated with the
landfill. In addition, the County imposed a $0.95 per ton business license tax. These types of increases
are considered pass through costs and are not directly controllable by the Company. The Company has
also experienced iilcreases in the cost calculated to cover Closure/l}ost Closure expenses. The 1995
expense estimate assumes that the amount required will increase from $1.66 per ton to $2.68 pcr ton. In
the event that the Company is successful in achieving additional import of wastes from other jurisdictions
the cost associated with landfill operations may decrease in the future.
Projected Impact of Changes In Service Levels
Revenues from operations are being negativcly impacted in 1994 by chnngcs in service levels. Thc
Consultant Report refers to this as "Serviee Migration." The Company eontinues to incur its fixed eosts
despite the incremental loss of revenue caused by customers selecting smaller containers and/or service
on a less frequent basis. The Company projects that this accounts for $36,300 of the total Revenue
Deficieney for the Dublin operations.
UNRESOLVED CLOSURE POST CLOSURE (CPC) COSTS
In 1992, the JRRRC undertook an in depth Study of requests by the Company to be reimbursed for
Closure and Post Closure Costs associated with the Altamont Landfill. In aecordance with several
legislative ncts the Company is required to elose the landfill according to very specific plnns. These are
intended to assure that environmental eompliance is met and it has added significantly to the lllndfill
costs. For example, the Company has constructed the equivlllent of a water trentmcnt ph'"t which Clm
eventually proccss up to 75,000 gallons per day. This is necessury to I{eep liquids from leuching into the
groundwnter. The post closure nspect refers to thc (lbligation the Company hus to monitor lInd mllintain
the landfill for 30 yeurs after its closure. Although the site closure is several yellrs away the Compuny
must have in place u financial plan to recover these costs.
The outcome of the 1992 study was an interim agreement between the City and the C(lmpllny. Because
the discussions involve costs associated with waste placed at the landfill between 1980 and 1992 there are
numerous legal and policy issues which must be addressed. The Agreement assumed thnt the Company
and the JRRRC would negotiate a Master Agreement which could be considered by the City Council. In
conjunction with the 1994 rate application an extension of the Agreement was granted to March of 1994.
At this time the issues eontinue to be unresolved and it appears that an additional extension will he
required.
BALANCING ACCOUNT
In the past the Company has performed its operations with a "Balancing Account." The concept was a
means to eontrol any differences from the projections. If expenses were higher than anticipated the
ratepayers would owe an additional amount to the Company. If the opposite has occurred and revenues
exceed cd expenses, the excess monies are held in the Balancing Account for the benefit of the ratepayers.
In the case of the City of Dublin, the City Council has sought in prior years to establish rates at a level
which would allow the Company to recover its expenses. The City's shure of the Bal:mcing Accouut is
estimnted to total $267,Otltl. This represents funds eontributed by Dublin ratepayers in excess of the
allowed cost of services.
Due to the fllct that u potential liability exists for historicul CPC costs, Stuff has becn cllutious in
recommending the llpplicution of the Balllncing Account to offset current operations. The llpplication of
the Balancing Account as a subsidy for current operations would also increase revenue re1luirements in
future years. Given the sigllifieant amount of the 1995 revenue deficiency, ShIff will be rcviewing the
options available and present them as part of the I'ublic Hearing on the Rate Adjustment.
RECYCLING RATE AD.JUSTMENT
The City currently receives all reeycling services under separate agreements. These agreements allow the
Company to request llnnual adjustments based upon the change in the Consumer Price Index(CPI). The
current cost of the Single Family Recycling Program is $1.37 per household per month. Under the tel'ms
of the Agreement this would increase to $1.40 per household per month due to the annual change in the
CPI. This request is contained in EXHIBIT 4.
The source of funding for the current Residentilll Reeycling Progrum comes from two sources llS shown
below:
1994 Curbside Recyeling Serviee
Inerement Paid As Part of Basic Garbage Serviee On Property Tax $ 0.85
City Measure I> Subsidy Jl.Sl
TOTAL MONTHLY CHARGE $1.37
Based upon the adopted 1994/95 Budget the City would be able to pay the entire 1995 rate adjustment
with Measure D funds. These funds are collected by the Alameda County Recyeling Board and they must
he used for Recycling related services and progrums. Since the curbside recycling prognnll is pllid for
directly by the City this approach will not impact the amounts paid directly by the customer.
RECOMMI~NDA nON
Staff recommends that the City Council receive this report and direct Staff to prcpnre the necessllry
documents to consider a rate adjustment at a Public Hearing seheduled for February 13, 1995. Staffwill
nced to prepare schedules allocating the Projected t 995 Revenue Deficieney llmong the various chlsscs of
service (Residential, Commercial, and Drop Box).
,
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Deloitte &
Touche llP
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Deloitte Touche
Tohmatsu
International
The Joint Refuse Rate Review
C0l111nittee (JRRRC) of
Ala111eda County
Final Recommendations
December 7, 7994
SELECTED PAGES ONLY
Ji:~
~. printed on i1eO'Jded Pape,
EXHIBIT 1
~~~ Re.fort ,/,-'!>/,S
]RRRC of Alameda County
. The Joint Refuse Rate Review C'mmittee
ORRRC) of Alameda County
Agenda
I I. Executive Summary
II. Background
III. Objectives
IV. Scope of Review
V. Summary of Rate Application
VI. Rate Recommendations
by Deloitte & Touche LLP
VII. Proposed Profit Methodology
VIII. Balancing Account
IX. Rate Summary
X. 1996 Rate Implementation
Deloitte &
Touche LLP
~~- ^
~
.. .. ...--~ ~ ... -.. -- -. -.. -. - - - - -.. -.. -..
Exewtive Suml1lClry
~RRRC of Alameda County
Deloitte &: Touche LLP was engaged by the Joint Refuse Rate Review Committee ORRRC) of
Alameda County in July 199-1 to assist in the review of Waste "Management of Alameda County's
(W1-fAC) 1995/1996 Rate Applications
The principle objective of the review was to recommend rates for WMAC's collection and
disposal operations that are fair and equitable to both member jurisdictions and WMAC. In
support of these objectives we:
...
Evaluated WMAC's profit request
...
Evaluated WMAC's expense projection and capital requirements
...
Analyzed revenue and service level projections
...
Evaluated the allocation methodology and revenue requirements to insure they
reflected the unique circumstances of each jurisdiction
...
Verified Balancing Account projections
...
Analyzed franchised and non.franchised expense allocation and operation
activity
Deloitte &
Touche LLP
o
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Executive Summary
]RRRC of Alameda County
.
.
WMAC's 1995/1996 Rate Application contains several changes from previously submitted rate
applications. The most significant changes were:
... Elimination of the Balandng Account and payback of current balances at 15.5% interest
... Incorporation of closure/post-closure costs (epe)
... Inclusion of a new methodology for the calculation of profit for landfill and collection
operations
... Increase in the interest rate charged to member jurisdictions
... The inclusion of capital investments and corresponding revenues to support a MRF facility at
Davis Street
These changes have the effect of significantly increasing the total profit and interest returns to
WMAC
SF".~!!.pm
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Touche UP
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Executive Sll1111naT}'
]RRRC of Alameda County
Based on our review ofWMAC's 1995/1996 Rate Application we have made the following
recommendations
SF,..JH.rtll
1)
Reduce landfill profit and interest request 20O,'b for 1995 and 10% for 1996 based
on a return on capital methodology -
Reduce collections profit and interest request by 19% for 1995 and 26% for
1996 based on a survey of Northern California jurisdictions
Allow management and S&D fees as historically calculated by WMAC
Elimination of costs and revenues for the proposed MRF
Adjustment of the proposed vehicle fuel cost escalator to 3%
No adjustment in operating ratio based on performance standards
Payback of the current Balancing Account within three years at an interest rate
of 5.76% in the first year, and 9.5% the remaining two years, unless longer
terms are mutually agreed to by the Company and individual jurisdictions
Allowance for increases in landfill fees levied throughout the County of
Alameda
2)
3)
4)
5)
6)
7)
8)
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]RRRC of Alameda County
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ExeOltive Summary
..., -..
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Based on our recommendations rate, increases for 1995 and 1996 are compared below:
T"BLE 1 I
1995 Summary of Projected Rate Increases
WMAC Request
\I>lA.C Request
wI Balancing AC"COl,int
Rl'payrnent
19.2'll>
Z3A%
N/A
33.5%
4.1%
13.7'10
15.1)1(,
"li/A
:;fA
10.4%
4.4%
7.71)\,
14.3%
(7.0%)
5.7%
9.9%
(5.6%)
17.9%
D&.T Recomm~n.diJliOn
Alameda
.~Ib'ny
Emeryville
Oakl.nd
Piedmon[
C~5tro V.3l1ey
Hay",.ard
Oro Lorna
Dublin
16.0%
9.0%
12.5%
17.5%
(5.5%)
9.5%
11.9%
(6.5%)
19.0%
D&T Recomme:ndation
wi Balancing Account
Repayment
8.3%
11.4%
(0.7%)
23.7%
1.6%
5.7%
11.0%
(2U%)
6.5%
1996 Summary of Projected Rate Increases
Alamed.3.
Albany
Emetyvllle
Oakl.nd
f'itdmont
C.",o V,lIey
H.;I.yward
Oro Lorna
Dublin
WMAC Request
3.0%
3.5%
2.0%
3.5%
3.0%
4.5%
4.0%'
4.5%
2.5%
W~l~C Request
wi Balancing Accoun~
Repayment
2.~%
1.8%
KIA
1.7%
1.9%
4.0%
3.6%
1'11'\
1'11"
2.5%
2.1%
l.S%
2.2%
1.8%
3.6%
3.3%
3.8%
2.4%
D&:T Rfcommendation
Note (l)~ Assumes Balandng Account paid back over 3 reats
S"ote (2); Increases for jurIsdictions with positi....e Balancing AccounU ,",'~:~ not calculated by W~1.-\C
Note (3): D&T rate in.crease calculation Is based on r~is.ed Balancing .-\C':ount projections
SF't-4..)jl.prtJ
DS::T Rccommend3rion
wi Balancing Account
Rep~yment
4.5%
2.0%
10.3%
2.0%
1.7%
3.6%
3.3%
30.5%
13.4%
Deloitte &
Touche UP
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jRRRC of Alameda County
SP94.DS.pm
.
The Joint Refuse Rate Review Committee
GRRRC) of Alameda County
Agenda
I.
II.
III.
IV,
Executive Summary
Background
Objecti\'Cs
Scope of Review
Summary of Hate Application
Rate Recommendations
by Deloitte &: Touche LLP
V.
VI.
VII.
VIII.
IX.
X,
Proposed Profit Methodology
Balancing Account
Rate Summary
1996 Rate Implementation
Deloitte &
Touche UP
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]RRRC of Alame.Ounty
.
Rate Recommendations
Deloitte & Touche's draft recommendations include the adjustment of WMAC revenues and costs
in the following areas:
1. Landfill Operating Ratio/Profit Request
2. Collection Operating Ratio/Profit Request
3. Interest Expense on Altamont Landfill Operations
4. Interest Expense on Collection Operations
5. Depreciation on proposed Material Recovery Facility (MRF)
6. proposed MRF Costs and Revenues
7. Vehicle Fuel Cost Escalator (1996)
8. Balancing Account
9. Health and Welfare Costs
10. Altamont Surcharges
11. Additional Allocations
12, Management Fees (no adjustment)
13. Performance Measures (no adjustment)
l5
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Touche UP
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SF9<I.."S.l'm
]RRRC of Alameda County
Rate Recommendations
Recommended Adjustments
1. Landfill Operating Ratio/Profit Request
W}vfAC Application: WMAC has requested a 71.5% O.R. for Altamont Landfill operating costs,
State & Locally Mandated Landfill Fees and Interest would be treated as pass-
through costs,
WMAC based this request on:
... A comparison with Keller Canyon Landfill, assuming a
similar risk profile,
... The elimination of the Balancing Account in future Rate
Applications.
... The large capital investment at Altamont Landfill to meet
Subtitle D regulations.
... WMAC believes that the previously allowed O,R. of 91.6% is
not fair and equitable.
10
Deloitte &
Touche LLP
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SF 'jI~ ~~~ ~I'T\
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1-
r:-:-
RRRC of Alam
Recommended Adjustments
D&T Recommendation:
Rationale for
Recommendations:
SF '4,J'~.~1ft
]RRRC of Alameda County
.---
1.__.
~
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;-:-
r- r:-:-
Rate Recommendations
Apply the industry average Weighted Average Cost of Capital (WACC)
(18.6% before tax) to the landfill's net asset base,
... Interest coverage is included in WACC return.
... CPC costs and State and Locally mandated fees are treated as
pass-through expenses,
Keller Canyon is a single operation and the unique circumstances
around Keller Canyon do not allow direct comparison to the Altamont
Landfill
The risk profile at Altamont Landfill is substantially less than that at
Keller Canyon Landfill, and therefore does not justify the same returns
and risk premium:
... Operating ratio is inappropriate to regulate an asset intensive
operation. Keller Canyon was not intended to be regulated on an
overall operating ratio basis.
... No permitting risk today at Altamont for ]RRRC volume.
... Volume risk at Altamont is lower than Keller Canyon.
_ Franchise life at Altamont extends 8 years versus 25 years at Keller Canyon
- Only 1 to 2 year volume risk
... Profitability should be tied to Altamont's asset base, not Keller
Canyon's.
17
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Rate Reco/llmendations
Recommended Adjustments (continued)
... Little or no quantitative or qualitati\'e evaluation of risk provided
for the comparison to Altamont
... Information used in W1v[AC's evaluation of Keller Canyon was
unregulated and unapproved by Keller regulators
... Arthur Andersen's evaluation is insufficient to determine the
WACC appropriate to the Altamont landfill
... Our WACC approach is conceptually similar to the approach used
to regulate Keller Canyon
As a basis for return, industry average return is more appropriate than
\N}.1X's
The Company never responded to questions on risk analysis
specific to WM.-\C's operations so we had no basis for an
adjustment
Rate Request Impact:
1995 -
1996 -
$1.5 million (including interest effect) reduction in revenue
$770,000 (including interest effect) reduction in revenue
For further discussion of our analysis and methodology refer to
tIle Landfill Profit Methodology
~F 9~ ~:~ ~'l1
18
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Touche UP
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]RRRC of Alameda County
RecommendajUstments
2. Collection Operating Ratio Profit Request
Rate Recommendations
.
WMAC Application: WMAC has requested an pretax 88% O.R. for collection operations (pre-
interest and tax O,R. of 86,7%). Interest expense franchise fees, disposal cost
and surcharges would be treated as a pass through expense.
WMAC based this request on:
.... A comparison with other jurisdictions in Northern
California.
.... The elimination of the Balancing Account in future rate
years.
19
Deloitte &
Touche UP
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SF'0311.pm
]RRRC of Alameda County
Recommended Adjustments
D&T Recommendation:
Rate Recommendations
Rationale for
Recommendation:
An 89% pre.interest, pre-tax O.R. for collection operations
.... Interest tax expense would be paid by WNlAC from the profit
allowance.
Based on a survey of comparable Northern California jurisdictions (as well
as industry practice and local considerations) an 89% pre-tax, pre-interest
O.R. provides a fair and equitable profit for WNlAC
TA8U,: 6 Jurisdiction Operallng Operating
Ratlo EBT RalloElIlT
-
City of EI Cerrito 86.5% 86.1% I
City of Rkhmond 87.6% 86.5%
South Valley O&R 89.8% 88.0%
Vac.i;lville 90.5% 90.5%
City of San Franrnco Sunse' Scavenger 9 J.()% 90.4%
City of Vallejo 94.()% 86.1%
Pleasan' Hill 83.9% 83.8%
San Pablo 87.4% 86.1%
Gall 83A% 81.6%
Lodi 87.8% 78.9%
II Weighted Average 90.4% 88.8% I
WMACRequest 88.0% 86.7%
.... The ]RRRC should implement performance standards to reward cost
reductions to WMAC in conjunction with future rate reviews.
cO
Deloitte &
Touche UP
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SF~.J)' r!'il
......
]RRRC of Alameda County
Recommende.justments
.
. ~:\.~~; >
Rate Request Impact:
1995 -
S 1.1 million reduction in allowed expense
(including interest effect)
S 1. 7 million reduction in allowed expense
(including interest effect)
1996 -
For further discussion of Ollr analysis and methodology refer to
the Collection Profit Methodology section
21
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jRRRC of Alameda County
Rate Recommendations
3. Interest Expense on Altamont Landfill Operations
WMAC Application: WMAC has requested that a 9.5% Interest Rate be applied to all funding
requirements for WMAC's operations,
WMAC based this request on:
.... The current rate is too low and should be increased to
competitive market rates.
.... The 9.5% Interest Rate is based on an average lease rate with
collateralized borrowing.
SF9-4.HS.~!'I\
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Touche UP
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jRRRC of Alameda County
.
Rate Recommendations
.
D&T Recommendation: Interest coverage is included in WMAC return on the landfill
operation.
Rationale for
Recommendation:
.... The recommended profit methodology (18.6% WACC on assets)
is sufficient to cover WMAC's interest and tax payments, and still
provide an adequate profit allowance.
.... WMAC/WMX's internal financing is extremely complex; the
Company could not adequately support their financial
projections:
_ Interest did not incorporate the impact of a rate increase,
_ Interest expenses needed to be revised through the review
process.
.... Does not require WMAC to support an interest rate of 9.5% when
Company's overall cost of debt is 6.4%.
.... Simplifies the Rate Review process.
Rate Request Impact:
1995 -
1996 -
$3.0 MM reduction in allowed expenses
$3.0 MM reduction in allowed expenses
23
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Touche UP
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Sf'14.HIl..pm
jRRRC of Alameda County
Rate Recommendations
Recommended Adjustments
4. Interest Expense on Collection Operations
WMAC Application: WMAC has requested that a 9.5% Interest Rate be applied
to all funds in the Advance Account.
WMAC based this request:
.... The current rate is too low and should be increased to
competitive market rates.
.... The 9,5% Interest Rate is based on an average lease rate with
collateralized borrowing.
H
Deloitte &
Touche LLP
o
~"'.J)3.plll
,\",";' ~,.,."
, :
-,,-,.
jRRRC of Alameda County
Recommen~e.justments
D&T Recommendation:
Rationale for
Recommendation:
Rate Request Impact:
$F'Mj~ll.rm
jRRRC of Alameda County
l\UI.(:." l\Cl,.VI,f.",:t;.,IULU,"V'&.,J
.
Interest coverage is included in the Deloitte & Touche LLP
recommended O.R.
....
The recommended profit methodology (89% O.R. pre-interest,
pre-tax) is sufficient to cover WMAC's interest and tax
payments and still provide an adequate profit allowance.
.... WMAC/WMX's internal financing is extremely complex; the
Company could not adequate support their internal financing
system:
_ Interest did not incorporate the impact of a rate increase
.... Does not require WMAC to support an interest rate of 9.5%
when Company's overall cost of debt is 6.4%.
.... Simplifies the Rate Review process,
.... The WMAC/WMX internal financing mechanism is a non-
r~gulatory issue and should not be covered in rates.
1995
1996
$660,000 reduction in allowed expense
$1.1 million reduction in allowed expense
Deloitte &
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Rate Recommendatiolls
Recommended Adjustments
5. Depreciation on Proposed Material Recovery Facility (MRF)
WMAC Application:
SF'H"~J""F"'"
WMAC included depreciation expense in 1995 on the
proposed MRF.
WMAC based this request on:
.... Intention was to include the depreciation expense in
1996, not 1995,
26
Deloitte &
Touche UP
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\ .^".
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]RRRC of Alameda County
.l\U~t:: l\c:-("u"U'I.r;ftu:U"'''V'~'''
RecommendeAustments .
D&T Recommendation: Remove depreciation expense associated with the proposed MRF from
the 1995 Rate Application,
Rational for
Recommendation:
... The depreciation expense was inadvertently included in the 1995
Rate Application.
Rate Request Impact:
1995 -
1996 -
$F94.J~~.pm
]RRRC of Alameda County
Recommended Adjustments
6. Proposed MRF Costs and Revenues
WMAC Application:
S~94"]:l~.pm
$125,000 reduction in allowed expenses
No rate impact assuming disallowance at the present time
17
Deloitte &
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Rate RecommendatiollS
WMAC has proposed the construction of a MRF at the
Davis Street Facility. The MRF would cost an estimated
$2.5 million and be in service in 1996,
WNfAC based this request on:
... The MRF would assist the ]RRRC in meeting the
requirements of AB 939 mandatory recycling goals,
... Current facility does not meet WMAC's health and
safety goals.
... Work is affected by inclement weather.
... Note: WMAC did not fully include the projected
expenses for the MRF in the 1996 Rate Application,
28
Deloitte &
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JRRRC of Alameda County
Rate Recommendations
. .
Recommended Adjustments
D&T Recommendation: Disallow current expense projections for this year's rate application.
Perform a cost and benefits analysis of the proposed MRF to evaluate
the appropriateness of WMAC's/JRRRC's proposed investment.
Rationale for
Recommenda tion:
)lo- The MRF facility, as proposed, will add an additional expense, net
of landfill reductions of $800,000 in 1996.
- WMAC estimates the MRF program will result in the diversion
of 69,000 tons/year from Altamont.
- Based on WMAC projections of 450 tons/day, the MRF has an
estimated capacity 117,000 to 140,000 tons/year.
~ WMAC has projected $2.5 million in capital expenditures and
$2,5 million in annual operating costs to support the MRF.
)lo- The Rate Application does not contain $260,000 in expenses
required to support the MRF. These expenses would represent an
increase above the current Rate Application.
Rate Request Impact:
Dependent on outcome of proposed cost and benefits analysis.
1995 -
1996 -
No rate impact
5520,000 reduction in allowed expenses
29
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JRRRC of Alameda County
Rate RecommendatiollS
Recommended Adjustments
7. Vehicle Fuel Cost Escalator (1996)
WMAC Application:
WMAC has requested a 15% increase associated with the
price of fuel in its 1995 Rate Request.
WMAC based this request on:
)lo- The volatility of fuel prices, and the lack of a Balancing
Account, necessitates that WMAC take a conservative
approach to estimating this cost.
30
Deloitte &
Touche LLP
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SF9~_Hll.pm
]RRRC of Alameda County
.
Recommended Adjustments
D&T Recommendation:
Rationale for
Recommendation:
5f'OJ8.j11T1
]RRRC of Alameda County
Reco11l11le1lded Adjustments
Rate Request Impact:
5~9~,)J! .m
Rate Recommendations
.
Use 3.0% as the inflator for costs.
Proposed refuse collection methodology provides return to
compensate for fuel price risk.
.... This is consistent with the general expense inflator used by
WMAC in its rate application.
....
.... The use of a 3% inflator has been accepted by WMAC
(November IS, 1994 letter).
.... The 3% inflator is consistent with a survey of projected
inflators for 1996 (Table 7).
TAB1.E 7 I
Inflation Projection (1994-1996)
Updated July 8, 1994
Projected
1996
UClA Business ForeclSl for California 2.80
Vali.e line Investment Survey 3040
Fortune 3.30
Year Average 3.17
31
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Rate Recommendatiol1s
.... The inflator is not out of line with other proxies for fuel cost
increase projections.
1.7% projected annual growth 1992-2010 published by the
Depaftment of Energy
4,67% projected increase for 1996 national average for industrial!
retail prices published by the Wharton Econometrics Forecasting
Associates
1995 -
1996 -
No rate impact
$240,000 reduction in allowed expenses
~:
Deloitte &
Touche LLP
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';.r :-, '.
]RRRC of Alameda County
J{ULe .l\f::l.U"t1flr;:;llUWLf,VIJJ
Recommende.ustments
8. Interest Rate on Balancing Account
.
WMAC Application:
WMAC has requested a 15,5% interest rate be
applied to the outstanding funds in the Balancing
Account.
WMAC based this request on:
... WMX's WACC is 15.5% and WMAC expects this type
of return on the Balancing Account.
... The Balancing Account is not an asset which is
included in the operating ratio calculation.
... Risk associated with the Balancing Account not being
paid off.
33
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SF 94,JJa.rr:l
jRRRC of Alameda County
Rate Recommendations
Recommended Adjustments
D&T Recommendation:
The jurisdictions should commit to repayment of the Balancing
Account within 3 years unless the jurisdictions and WMAC can agree
to a longer repayment period. The interest rate for 1995 should be set
at the historical rate of 5.76%. For years 2 and 3 the interest rate
should be set at the prime rate + 1% (9.5% as of 12/1/94).
Rational for
Recommendation:
... In its 1994 rate application the company accepted the 5.76% rate
for Balancing Account and accruals made in the 1994 fiscal year.
Since the Balancing Account's historical rate setting method
moved repayment of account balances into the next fiscal year,
an increase in rates for 1995 has the effect of charging the
jurisdictions a rate higher than that requested and agreed to for
1994 balances and accruals. The 5.76% interest rate is consistent
with WMAC's request for the treatment of 1994 balances and
accruals.
... 15.5% interest represents a change in past practice.
... Prime rate plus 1% is appropriate for the risk associated with
payment of Balancing Account.
...
The 15.5% WACC is a greater return than that allowed
on WMAC's initial investment (e,g" 91.6% O.R,). Deloitte &
Touche LLP
34 0
SF'.U}t,rM
JRRRC of AlaIneda County
.:' ,: ..~'
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Recommended Adjustments
Rational for ...
Recommendation:
Rate Request Impact:
~9-i.Ba.pm
JRRRC of Alanleda County
Rate Recommendations
.
The 15,5% WACC is excessive in comparison to the
original intent of the interest to be applied to the
Balancing Account.
... jRRRC Members have acknowledged and accepted
their share of Balancing Account and are planning
payment terms in the current Rate Application.
... If jurisdictions would like repayment periods longer
than 3 years, WMAC must agree to it.
Dependent on the time period over which the Balancing Account is
paid off.
35
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Deloitte &
Touche LLP
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Rate Recommendations
Recommended Adjustments
9. Health and Welfare Expenses
D&T Recommendation:
Rationale for
Recommendation:
Rate Request Impact:
SF'U."S.pm
Increase employee health and welfare costs by
$241,000
to In reviewing health and welfare expenses, WMAC
discovered an omission of expenses in the amount
of $241,000.
... These expenses are a reasonable cost of business for
WMAC.
1995 - $241,000
1996 - No impact
36
Deloitte &
Touche LLP
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,.. i
]RRRC of Alameda County
Recommendetljustments
10. Altamont Landfill Surcharge
D&T Recommendation:
Rationale for
Recommendation:
Rate Request Impact:
Rate Recommendations
.
Increase pass-through fees at the Altamont landfill for cost
increases associated with increase surcharges levied by
Alameda County,
... Alameda County has imposed a $0.075/ton fee for
conditional use permitting at the Altamont landfill.
... Alameda County has imposed a $0.95/ton business
license fee at the Altamont landfill.
1995 - $520,000 in allowed expenses
1996 - $520,000 in allowed expenses
~'k.)J8.rm
I.
]RRRC of Alameda County
Recommended Adjustments
11. Additional Allocations
D&T Recommendation:
Rationale for
Recommendation:
Sf'~.Htlrrn
37
Deloitte &
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Rate ReCOllll1lelldatiolls
Allocate an expense pool between members of the ]RRRC
to compensate for differences in interest returns to WMAC
arising from differences in historical levels of rate funding,
Individual jurisdictions have unique histories of rate
adoption; this has led to significant variances in the
interest expenses charged to individual cities.
The operating ratio on an EBlT basis treats interest returns
to the Company as a function of expenses and does not
reflect the short term variances jurisdictions presently face.
By allocating a pool of expenses between jurisdictions over
the next several periods, variances in those short term
charges can be corrected.
As jurisdictions move away from the previous rate setting
methodology, these variances in interest returns will
diminish, and the allocations will not need to be
considered.
38
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]RRRC of Alameda County
Recommende.ustments
11. Additional Allocations
Rate Request Impact:
~F904.J'8.pm
]RRRC of Alameda County
Recommended Adjustments
12. Management Fees
WMAC Application:
SF~4J}8.pm
Kate KecommenaarlOn:;
.
The allocation was made based on current advance account
and cash flow projections provided by WMAC, and is
consistent with their current method of interest cost
calculation. This charge represents no additional expense
allowed to WMAC, only an allocation between
jurisdictions.
Varies by jurisdiction - refer to Collect Interest Net of Allocation
Expense line in Appendices 3 and 4.
39
Deloitte &
Touche LLP
o
Rate Recommendations
WMAC has requested a 2% of Management/S&D Fee to
cover corporate support and administrative services.
WMAC based this request on:
... Consistent with prior Rate Applications in Alameda
County.
... A 1989 study by Arthur Anderson & Company
allocating an equitable portion of corporate expenses
to Oakland Scavenger Company (WMAC's
predecessor) .
40
Deloitte &
Touche LLP
o
....-:,... .."
.,
JRRRC of Alameda County
.
Recommended Adjustments
D&T Recommendation:
Rationale for
Recommendation:
Rate Request Impact:
Sf'!l~.J)8.i'rn
JRRRC of Alameda County
Recommended Adjustments
13. Performance Measures
WMAC Application:
S~"O)S~""
Rate Recommendations
.
Allow 2% management and S&D fees
~
Based on a review of a new study by Arthur Andersen based on
1993 actuals, the expense projections appear reasonable.
1995 - No effect
1996 - No effect
41
Deloitte &
Touche LLP
o
Rate Recommelld.1tiolls
mfAC did not provide information to Deloitte & Touche
LLP regarding the Performance Standards that were
"proposed/adopted" in 1993 or 1994.
WMAC based this request on:
~ WMAC contends that "they never received any
indication that these standards were ever adopted",
therefore, WMAC chose not to respond to a request to
provide data and documentation supporting their
efforts to achieve these standards.
4c
Deloitte &
Touche LLP
o
r- r-
]RRRC of Alame.Unty
Recommended Adjustments
D&T Recommendation:
Rationale for
Rate Request Impact:
5FI,IU~8.rm
.
Rate Recommendations
Do not adjust operating ratio based on the company's performance
at this time. The final policy decision on profit adjustment should
be made by jurisdictions.
... The )RRRC subcommittee on Performance Standards
recommends no adjustment at this time.
... Develop revised performance standards.
~ Better linkage to key business issues (cost control, volume
reductions, AB939 compliance)
- Create incentive based standards, rather than punitive
1995 -
1996 -
No effect
No effect
~3
Deloitte &
Touche UP
o
.
.
COMPARISON OF WMAC PROJECTED
1995 REVENUE DEFICIENCY
BY LINE ITEM FOR DUBLIN OPERATIONS
Dublin
COll1parison of Total Projected Rate Increases for 1995 (000)
WMAC Rate Application Recommendations
As a % of % Contribution
Total Costs To Rate Increase Dublin
Projected Revenue Deficiency
Sources of cost and profit Changes
Disposal profit
Collection profit
Interest expense-disposal only
Labor related -collection
Disposal costs wlo interest, profit
Service migration-1994
Franchise fees
Other operating expense
General and administrative .
Office expense
Trucking expense
Other income
OIlier equipment
Service migration-1995
Collection Interest net of Allocation
Total
441.3
135.7
105.9
60.3
44.2
37.7
36.3
21.6
13.4
9.8
7.1
5.3
(0.0)
(4.3)
(5.8)
(26.1 )
441.3
417.8
30.7%
24.0%
13.7%
10.0%
8.5%
8.2%
4.9%
3.0%
2.2%
1.6%
1.2%
(0.0%)
(1.0%)
(1.3%)
(5.9%)
100.0%
5.8%
4.5%
2.6%
1.9%
1.6%
1.6%
0.9%
0,6%
0.4%
0.3%
0.2%
(0.0%)
(0.2%)
(0.2%)
(1.1 %)
18.9%
205.1
87.1
(39.6)
53.2
39.9
36.3
19.5
13.4
9.8
7.1
5.3
(0.0)
(4.3)
(5.8)
(9.4)
417.8
49.1 %
20.8%
(9.5%)
12.7%
9.5%
8.7%
4.7%
3.2%
2.4%
1.7%
1.3%
(0.0% )
(1.0%)
(1.4%)
(2.2%)
100.0%
8.8%
3.7%
(1.7%)
2.3%
1.7%
1.6%
0.8%
0.6%
0.4%
0.3%
0.2%
(0.0% )
(0.2%)
(0.2%)
(0.4%)
17.9%
. EXHIBIT i
~* ~04"'"t 'T1.3J,s
.
."
, BARAKAT o CHAMBERLIN
- Position Paper-
WASTE MANAGEMENT OF ALAMEDA COUNTY
OI>ERATING RATIO RECOMMENDATIONS
. Prepared by:
Paul Eisenhardt, Cindy Kline, Derek Han~l
BARAKAT & CHAMBERLIN, INC."
August 3, 1994
EXECUTIVE SUMMARY ONLY
p9<<I2169\pIoNaaJQ)
EXHIBIT....3'L _ J
s-t...<<- . Re.to f'T 'f"S'f' '$;"
.
.
WASTE MANAGEMENT OF ALAMEDA COUNTY
OPERATING RATIO RECOMMENDATIONS
EXECUTIVE SUMMARY
Purpose of this Paper
In preparing for its 1995 rate application to the Joint Refuse Rate Review Committee
(JRRRC), Waste Management of Alameda County (WMAC) requested that Barakat &
Chamberlin, Inc. review the history of rate setting by the JRRRC and make
recommendations as to appropriate operating ratios which might be used to establish
WMAC profitability in the future. The purpose of this paper is to describe the recent
history of rate setting by the JRRRC, and to present our opinions with respect to
operating ratios which are fair and appropriate for use in regulating WMAC.
History of Rate Setting
Until 1992, the profit received by WMAC for its operations in the JRRRC
jurisdictions was based upon a negotiated after-tax return on equity. In late 1991, the
JRRRC determined it would establish a range of potential profitability for WMAC and
then set WMAC's allowed profitability within that range based upon its
"performance" against a set of previously undefined standards. For 1992, the
JRRRC set the range of return on equity at 10% to 16%. Based on its evaluation of
WMAC's performance, the JRRRC set the allowed return at 10%. For 1993, the
JRRRC determined the appropriate range of return on equity was 7% to 13%. The
JRRRC determined WMAC had improved its performance and therefore allowed
WMAC a return more toward the middle of the range (9.5%), though the fact the
range had been lowered had the effect of reducing WMAC's profitability.
For the 1994 rate application, "the Committee accepted [Hilton Farnkopf & Hobson's]
recommendation to change the basis upon which the allowed profit is calculated from
a return on equity to a pre-tax operating ratio." (Hilton Farnkopf & Hobson, 1994
Rate Review of Oakland Scavenger Company, p. 4) The stated purpose of this was
twofold:
. To allow greater comparability to the returns allowed by other regulating
entities; and
· To avoid several issues associated with the calculation of the allowed profit on ..
a return on equity basis, including the escalating equity balance
.
.
For 1994, "the [JRRRC] determined that, based on the use of a balancing account,
which guarantees the allowed profit, and the Committee's assessment of WMAC'.s
performance during the past year, WMAC be allowed a pre-tax operating ratio of
91.6% on expenses net of revenue based fees, which is equivalent to a 93.25% pre-
tax operating ratio on all expenses....... n (Hilton Famkopf & Hobson, 1994 Rate
Review, pg.5). WMAC has protested the way in which the change from a return on
equity approach to an operating ratio approach has been implemented, and has
requested that Barakat & Chamberlin include in this paper its recommendation as to
appropriate operating ratios which could be used for establishing future WMAC
profitability.
Approach
While we recognize the. use of an operating ratio is a common methodology for rate
. setting in the waste collection business, we also believe the use of operating ratios
should be treated carefully, particularly when the regulated business has different
operations.
We believe there are fundamental differences between the waste collection and
transfer operations and the disposal operations at Altamont Landfill which justify very
different returns for these businesses.' In setting rates and in choosing an operating
ratio for 1994, we do not feel the JRRRC appropriately accounted for the different
nature of these operations.
Reasons for using separate operating ratios for the collection/transfer operations and
the disposal operations include:
. Differences in asset intensity and labor intensity between collection/transfer
operations and disposal operations
. Differences in risks between types of operations
. Significant capital expansions at Altamont Landfill
. Greater ability to compare profitability to other regulated solid waste
operations -- i.e., industry practice
Key Issues
There are key issues which need to be considered in developing appropriate operating
ratios for the WMAC operations. These include:
. WMAC history of capital expenditures (particularly at Altamont Landfill)
11
.
.
. Relationship of equity growth to capital requirements
. Balancing Account treatment (complete elimination or use for uncontrollable
circumstances)
. Risk allocation between JRRRC members and WMAC
The JRRRC and its members should be prepared to acknowledge that elimination of
the balancing account, as proposed in the JRRRC's June 6, 1994 letter to WMAC,
will shift significant cost management risk to WMAC. Any such change in risk
allocation should be accompanied by a correspOnding increase in financial return to
WMAC.
It should also be recognized that the operating ratios presented inherently assume that
appropriate interest rates are being charged and earned by WMAC. The current
interest of 5.76% is too low by any comparative measure of market interest rates.
The rate should be .increased to 9.5 % for all interest rates except for the balancing
account where the usage of a weighted average cost of capital is the appropriate rate
as discussed in this position paper.
Landfill Operating Ratio
Based upon our analysis of the regulatory practices used by other communities in
. California and our knowledge of the solid waste industry, we believe an operating
ratio of 71.5% would be appropriate for establishing WMAC landfill profitability.
This ratio would be based on treating interest and regulatory expenses (as well as state
and locally mandated fees) as pass-through expenses, i.e., recovered in rates but not
eligible for determining profit. We believe this ratio is consistent with the
profitability allowed at the Keller Canyon Landfill, which is comparable to the
Altamont Landfill in its size and in its modern environmental compliance, ~d is
supported by the profitability allowed to regulated private operators of publicly owned
landfills.
We also believe the exclusion of interest, state and locally ~andated fees, and revenue
based fees for the purposes of profit calculation enhance the comparability of
WMAC's proposal with the JRRRC recommendation and make this proposal
supportable by industry standards, consistent with .other recommendations by Deloitte
& Touche, and consistent with providing a fair return to WMAC.
iii
.
.
Collection Operating Ratio
We believe an operating ratio of 88 % is appropriate for the collection and transfer
operations of Waste Management of Alameda County. Consistent with the emerging
industry trend, the operating ratio which we recommend is based on a pass-through of
disposal costs (no additional profit other than that received directly for landfill
operations), and revenue based fees and surcharges.
Our recommendation of 88 % is based on the operating ratios allowed by other
communities in the greater Bay Area, and the treatment of disposal costs which we
. are recommending. We do not believe the intercompany relationship of the landfill
and collection/transfer operations should automatically prevent WMAC from earning a
profit on disposal costs. However, for this particular case, we believe an 88 %
operating ratio for collection/transfer operations combined with the 71.5 % operating
ratio on landfill operations provides for a reasonable composite return.
Performance Evaluation Criteria
We recognize the JRRRC's interest in using allowed profitability as a way to reward
or penalize WMAC performance. We believe for a fair process to be established and
then utilized, WMAC and the JRRRC must agree to a set of standards and the method
for evaluating WMAC's performance, as well as the relationship of that performance
to profitability, prior to the beginning of the evaluated year in question. For the
process to be run otherwise has the effect of ex post facto rule making which is
inherently unfair.
iv
.
.
The Market Required Return on Equity
and Weighted Av~rag'e Cost 'of Capital:
Waste Management of Alameda County_
Prepared for
Waste Management of AlaITleda County
, Arthur Andersen Economic Consulting
. August, 1994
.
.
I. EXECUTIVE SUMMARY
Arthur Andersen Economic Consulting (AAEC) was asked by Waste Management of
Alameda County (WMAC) to estimate a fair rate of return in setting rates for WMAC.
The overriding principle of economic regulation is .that the regulated entity should
receive reimbursement for the costs it reasonably incurred providing its services,
including taxes and depreciation, plus a fair return on the capital invested to provide
the services. .
The principle of a regulatory bargain or compact in regulatory economics refers to the
obligation of regulators to balance the interests of both utility ratepayers and investors
in their ratemaking decisions. A utility is given the opportunity to provide service
without competition and, while not assured of recovering its costs or earning a fair rate
of return, it should have the opportunity to do so. In exchange for the lack of
. competition provided by its exclusive franchise, the company foregoes the opportunity
to earn high returns and must ensure that rates are reasonable and service reliable.
While companies such as WMAC, enjoy varying degrees of protection from competition
in the provision of waste hauling and disposal services in some areas (granted through
franchise or contract), they must compete with all other compani~s in the open markets
for the factors of production - labor, materials and capital. Since regulated entities
compete in th~ securities markets with other issuers, they must pay the market rate of
interest on debt capital and the market return on equity capital in order to be able to
attract financing.
Market Return on Equity
The market return on equity capital for a pUblicly traded company can be estimated
using approaches that have been well developed in the finance literature and that have
been extensively applied in rate setting cases of. economically regulated compani~s. If
WMAC were an indepengent company with publicly traded securities, data on the
trading of its securities would provide a benchmark by which to calculate its cost of
capital. Since shares of WMAC are not traded, this 'data does not exist. We can,
however, use market data of its parent, WMX. It is standard regulatory policy to use
the cost of capital of the parent when the parent and subsidiary face similar risks.
.
.
2
We have used the Capital Asset Pricing Model (CAPM) to estimate the cost of equity
capital, and the Discount Cash Flow (DC F) or Dividend Growth Model to verify the
results of the CAPM analysis. The CAPM model expresses the required rate of return
for a firm in terms of a risk-free rate plus a premium for risk. The DCF model provides
a useful check on the CAPM cost of capital estimate. The DCF model is based on the
observation that a share of a company's stock should be worth the present value of the
company's future stream of dividends discounted at its market-required return on
equity.
The advantages of the DCF model are its intuitive appeal and the fact that parameters
required to estimate the market-required return are available. The disadvantages of
the model are the assumption of a constant growth rate and the tendency of the DCF
model to underestimate the required rate of return when firms have valuable growth
opportunities.
Weighted Average Cost of Capital
We estimated the weighted-average cost of capital for WMAC, taking into account the
.
current capital structure of the company and the market-required equity return derived
from the CAPM analysis.
Conclusions
Based on our analysis, we find that the cost of equity capital for WMX Technologies
(WMX) is the appropriate benchmark to use to estimate the cost of equity capital for
WMAC; that the cost of equity capital for WMAC is approximately 17.3 percent today;
and that the weighted average cost of capital for WMAC, inclusive of tax effects, is 15.5
percent today. This weighted-average cost of capital of 15.5 percent is the appropriate
cost to use in setting rates through 1995 -- a fair rate of return.
ARTHUR ANDERSEN & Co., SC
Arthur Auderseo Ecouomic Coosultiug
AGREEMENT FOR PROVISIONAL CHARGES
FOR THE CLOSURE AND POST-CLOSURE MAINTENANCE
OF ALTAMONT SANITARY LANDFILL
I
\.
THIS AGREEMENT is made and entered into as of this
("city") and oakland Scavenger company, a California corporation
11th day of January
, 1993 between the city of Dublin
("OSC") .
THE PARTIES AGREE AS FOLLOWS:
1. RECITALS
This Agreement is entered into in light of the
I
I,
following facts and circumstances:
A.
March 10, 1986
city and esc entered into an Agreement dated.
(the "Franchise Agreement") pursuant to which
..
city granted OSC a franchise to collect and dispose of refuse
from within city, and ose undertook to collect and dispose of all
refuse in accordance with law.
B. Refuse collected by ose from within city is
disposed of at the Altamont Sanitary Landfill ("Altamont")
operated by osc and located in eastern Alameda county.
e. ese has disposed and now disposes at Altamont
refuse from other communities besides city, located both within
and outside of Alameda County. oSC states that the Alameda
County communities whose refuse is now disposed of at Altamont
are, including city, the city of Alameda, the city of Albany,
castro Valley Sanitary District, the city of Dublin, the city of '
1
76863.5
E'XHIBIT ^
, \
Emeryville, the city of Hayward, the city of Oakland, Oro Lorna
Sanitary District, and the city of piedmont.
D. Each of these nine agencies is a member of the
Alameda County Joint Refuse Rate Review Committee ("committee").
pursuant to the Franchise Agreement, and to parallel provisions
in the franchise agreements of the other member agencies, the
committee evaluates annual applications from OSC for adjustments
to the rates which it is authorized to charge to residents and
businesses in the member agencies' jurisdictions who receive
refuse collection service from OSC. city considers the
committee's report and recommendation and periodically takes
action to adjust rates which asc may charge residents and
businesses ("ratepayers") in city.
E. asc is required by California law, including
regulations of the California Integrated Waste Management Board
("CIWMB"), 14 california code of Regulations Sections 17760-
17796, 18250-18277; and the State Water Resources Control Board,
23 California code of Regulations Sections 2580-81, to develop,
have approved, and then implement plans for the closure of
Altamont and for its long term post-closure monitoring and
maintenance. The CIWMB regulations also require osc to comply
with one or more methods of demonstrating financial
responsibility for its closure and post-closure responsibilities
(14 California Code of Regulations Sections 18280-18297).
2
76863.5
F. ase contends that proper accrual for the costs of
closure and compensation for compliance with state law are
necessary and proper expenses relating to operation of Altamont.
G. asc has requested the committee to recommend to
its member agencies that asc be authorized to increase rates
charged to ratepayers to cover the costs of complying with these
closure/post-closure requirements at Altamont. City states that
the Committee has, through engineering and financial consultants,
evaluated the feasibiiity and adequacy of asc's closure and post-
closure plans, and the reasonableness of ase estimates of the
costs thereof. It has also investigated a methodology by which
the closure/post-closure expenses which would be paid for by
ratepayers of Committee member agencies, including city, can be
.
limited to their fair share based on their proportionate usage of
Altamont. These investigations are substantially completed, but
the Committee's findings as to these items have not been
translated into definitive agreements between the member agencies
and asc. Moreover, there are issues associated with city's
desire to insure that revenues paid by its ratepayers to ase
intended to cover closure/post-closure expenses are in fact
utilized for those purposes, and these issues are related to the
method of financial assurance which asc intends to utilize and
have approved by CIWMB. It is expected that the discussion and
definitive resolution of these issues between city and ase and
between other Committee member agencies and ase will require at
least 10 months.
3
76863.5
H. city wishes to approve, on a provisional and non-
precedential basis, an increase in the rates which osc may
charge, the additional revenues from which would be dedicated to
closure/post-closure expenses. The purpose of this Agreement is
! .
i
to specify the issues which are to be further negotiated between
the parties and the handling of funds generated by the
provisional rate increase during the negotiations prior to
execution of a definitive agreement.
2. NEGOTIATION OF AMENDMENT TO FRANCHISE AGREEMENT.
(a) city and asc agree to seek to negotiate in good
faith an amendment to the Franchise Agreement (the "Amendment
Agreement") that will address the following issues and such other
matters as the parties may agree upon:
(1) The method by which asc will demonstrate the
availability of financial resources to conduct closure and post-
closure maintenance activities under Chapter 5, Article 3.5 of
Title 14 of the California Code of Regulations with regard to
Altamont, including, without limitation, the type and terms of
financial assurance that QSe will provide;
(2) The method by which ase will seek to allocate
closure and post-closure maintenance costs among all cities and
other users (both within and outside Alameda county) who use or
have used Altamont;
(3) The portion of the closure and post-closure
maintenance expenses for Altamont to be borne by ratepayers of
eity;
4
76863.5
(4) The amount, if any, that OSC may collect from
ratepayers of city for the specific purposes of providing the
required financial assurance described in Paragraph 2(a) (1) above
and funding for the closure and post-closure expenses, and the
period over which such amount would be collected; and
(5) The method by which the provisional charges
that are collected on an interim basis pursuant to Paragraph 3
below will be applied to payment of closure and post-closure
maintenance expenses and for other purposes as described in
paragraph 4(c) below.
(b) city may appoint the Committee as its
representative in the negotiations contemplated by this
paragraph 2. Upon receiving written notice of such appointment,
..
OSC shall recognize and deal with the committee as the city's
representative. Notwithstanding such appointment, however, the
Amendment Agreement will not become effective unless and until it
has been approved by city directly and signed by an authorized
officer of city.
(c) city and osc will commence such negotiations
promptly following execution of this agreement, and will seek to
execute a definitive agreement amending the Franchise Agreement
with respect to the matters described above no later than
November 1, 1993 (the "Designated Amendment completion Date.")
(d) By agreeing to enter into such negotiations, city
does not explicitly or implicitly agree or acknowledge that it or
the ratepayers in city are in any way responsible for closure or
5
76863.5
"" I
post-closure maintenance expenses at Altamont or for providing
funds for such expenses. By agreeing to enter into such
negotiations, OSC does not implicitly or explicitly agree that
city or its ratepayers are not liable in full for such expenses
or for providing funds.
3. PROVISIONAL CHARGES.
(a) city will authorize osc to charge ratepayers in
city provisional charges in ,the amounts set forth in Schedule A
attached hereto (the "Provisional Charges") for periods
commencing on or after January 1 , 1993, and ending on or
prior to the Designated Amendment Completion Date or on. such
other date as may be specified in the Amendment Agreement. city
agrees to take whatever steps are necessary to amend its rate
..
schedule to include the provisional Charges. The schedule of
Provisional Charges has been designed to yield OSC with an amount
of approximatelY One Dollar and sixty-Six cents ($1.66)/ton of
refuse collected from ratepayers in city during the term of this
Agreement. The preceding amount has been selected by city
without reference to the amount of rate increase, if any, that
may ultimately be agreed upon by the parties. OSC may collect
the Provisional Charges in addition to the charges that it is
otherwise permitted to collect under the Franchise Agreement. The
amounts collected as Provisional Charges shall be held separately
and used by OSC only in accordance with the provisions of this
agreement.
6
76863.5
..
(b) asc agrees and acknowledges that city's
authorization of the collection of the provisional Charges at
this time is for a limited purpose. asc further acknowledges
that city's authorization of such collections is not an express
or implied admission or agreement of city that its ratepayers are
responsible for closure or post-closure maintenance expenses or
must contribute to such expenses. The city acknowledges that
asc's agreement to collection of the Provisional Charges as
provided for in this Agreement is not an express or implied
admission or agreement by asc that the city and its ratepayers
are not liable in full for closure or post-closure maintenance
expenses and contribution for such expenses.
4. ESCROW ACCOUNT.
(a) ase shall establish and maintain throughout the
period required by this Agreement a separate interest bearing
account with Union Bank or with such other bank as may be
approved in writing by eity in its discretion (the "Bank") into
which shall be deposited all Provisional Charges collected by ase
(the "Escrow Account"). All funds and other property rights held
in the EscroW Account, including earnings thereon, are referred
to hereinafter as the "Escrow Funds." The Escrow Account shall
be a passbook savings account or a time deposit with the Bank
with a maturity not later than twelve (12) months from the date
of deposit. asc shall seek to secure the highest available
interest offered by the Bank on the Escrow Account within the
confines of the preceding sentence. All Provisional charges
7
76863.5
.
f'
collected in a month shall be deposited in the Escrow Account not
later than ten (10) days following the end of the month. No
later than the time the Escrow Account is opened, ase will secure
the agreement of the Bank that said account may not be amended,
terminated or modified without the written agreement of eity.
ase shall provide a copy of this Agreement to the Bank. eity
shall not be subject to any claim or liability to ase or any
other person as a result of its approval or disapproval of any
bank with which ase seeks to establish the Escrow Account.
(b) Escrow Funds, and any part thereof, may be
withdrawn or disbursed from the Escrow Account only upon the
joint signatures and at the joint direction of an authorized
representative of each of city and Qse. Until changed by written
notice from the naming party to the other, the authorized
representative of each shall be the individual holding the
position named in paragraph 5(d) hereof.
(c) All Escrow Funds shall be the property of asc, but
shall be used only for payment of closure and post-closure
maintenance expenses for Altamont as specified in the Amendment
Agreement, if any. If no Amendment Agreement is entered into
between city and asc by the Designated Amendment completion Date,
or if such agreement does not expressly deal with the disposition
of the Escrow Funds, said funds shall be disposed of as follows:
(1) If at the time the Escrow Funds are to be
distributed asc has established a trust for performance of
closure and post-closure maintenance obligations at Altamont
8
76863.5
pursuant to the rules and regulations of the CIWMB, the Escrow
Funds shall be distributed to said trust promptly following the
Designated Amendment completion Date. Any cash, funds or
property so contributed shall be considered to have been paid
toward satisfaction of any amounts theretofore or thereafter
required to be contributed by city's ratepayers for closure and
post-closure expenses, to the extent of the Escrow Funds so
distributed.
(2) In the event that no trust fund has been
established as .described in subparagraph (1) above, the Escrow
Funds shall be released to asc promptly following the Designated
Amendment Completion Date. In that event, the aggregate amount
permitted to be collected by Qse from ratepayers for the fiscal
\
year of the Franchise Agreement that next commences after the
date of distribution shall be reduced by the amount of the
distributed Escrow Funds (inClUding interest earned), and said
reduction shall be implemented by an appropriate proportionate
reduction in the rates that would otherwise be authorized for
said period.
(d) ase shall keep accurate records with respect to
all Provisional Charges and funds held in the Escrow Account,
inclUding records with respect to earnings thereon. Monthly,
while the Escrow Account is maintained, and within thirty (30)
days following the closing of said account, osc shall render a
written accounting to city of the funds collected and held in the
9
76863.5
account and transactions in said account since the last
accounting.
(e) Except as expressly set forth in section 4(c) of
this Agreement, oSC shall have no right, power or authority to
assign, transfer, alienate, encumber, or hypothecate its interest
in the Escrow Account in any manner, nor shall its interest be
subject to claims of OSC's creditors or liable to attachment,
execution or process of law, it being the agreement of the
parties that the funds held in the Escrow Account have been
collected and can be used for only closure or post-closure
maintenance expenses for Altamont and for such other purposes as
are permitted by this agreement.
5. GENERAL.
.
(a) This agreement shall be binding on the parties
hereto, and the successors and assigns of each.
(b) Except as specifically provided herein, the
Franchise Agreement remains in full force and effect and
unmodified hereby.
(0) In the event either party commences any legal
action to enforce its rights hereunder, the prevailing party in
such action shall be entitled to recover from the other its costs
and expenses, including reasonable attorneys fees, incurred in
connection with such action.
(d) Any notice or other communication required or
permitted by this agreement to be delivered to or served on any
party to this agreement shall be deemed properly delivered to,
10
76863.5
served on, and received by the party when personallY delivered to
the party, or, in lieu of such personal service, three (3) days
after the notice or communication has been deposited in the U.S.
mail, postage prepaid, addressed to the party at the following
address:
oakland Scavenger Company
2000 Embarcadero, suite 300
oakland, CA 94606
At te n t ion: [x. t.. C '" n VI- VI" c t: -?....c:r..s a:=, i-Jr-
city of Dublin
100 Civic Plaza (P.O. Box 2340)
Dubl~n, CA 94568
Attention: City Manager
IN WITNESS WHEREOF, the parties hereto have executed this
;.
Agreement as of the date first above written.
finEST: -4~(Jl ~ r!..L
C e. LE I?K..
CITY OF~~lIN
By: ~~.
Peter W. Snyder
Its: Mayor
OAKLAND SCAVENGER COMPANY
Its:
~v:'r'
11
76863.5
,
{,
I....
Schedule A
Provisional Charges
The provisional charges shown below have been calculated by dividing the
Agency's projected 1993 franchised tons (including allocated public tons) by
the total projected 1993 franchised tons and multiplying the quotient by the
projected 1993 closure and post-closure expense included in OSC's 1993 rate
application. The result is the Agency's proportionate share of the projected
1993 closure and post-closure expense, which is equivalent to $1.66 per
projected ton of solid waste disposed in 1993. The Agency's proportionate
share of the projected 1993 closure and post-closure expense is then divided by
the projected 1993 gross collection revenues at current rates before any 1993
rate adjustment. The quotient is the estimated percentage of projected 1993
gross collection revenues that are required for 1993 closure and post-closure
expense.
The Agency's actual 1993 closure and post-closure expense will be calculated
by aac on a monthly basis by multiplying the Agency's actual tonnage for the
preceding month by $1.66 per ton. asc will deposit $1.66 per ton into the
Agency's Escrow Account referred to in Section 4 of this Agreement.
, ..
Agency: Dublin
Projected
1993
Tonnage
Proportionate
Closure and
post-Closure Expense
Projected
1993
Revenue
Closure and
post-closure Expense
As % of Revenue
25,347
$41,955
$2,357,000
1.78%
,....---" -
EXTENSION OF AGREEMENT FOR PROVISIONAL CHARGES
FOR THE CLOSURE AND POST-CLOSURE MAINTENANCE
OF ALTAMONT SANITARY LANDFILL
THIS AGREEMENT is made and entered into as of this 1st
day of November 1993 between the city of DUblin ("city") and
Waste Management of Alameda county, Inc., a California
corporation, formerly known as Oakland Scavenger Company
("WMAC") .
WHEREAS, the parties entered into an "Agreement for
Provisional Charges for the Closure and Post-Closure Maintenance
of Altamont Sanitary Landfill" dated as of January 11, 1993
("Provisional Charges Agreement"); and
WHEREAS, the Provisional Charges Agreement committed
the parties to seek to negotiate an amendment to the refuse
collection Franchise Agreement between the parties covering a
number of issues related to the f~nancing of the closure and
post-closure maintenance of the Altamont Sanitary Landfill
("Altamont"); and
WHEREAS, the Provis~onal Charges Agreement also
authorized WMAC to collect Provisional Charges (in the amount of
approximately $1.66 per Ton) during the course of these
negotiations and to deposit f~nds so collected in an interest
bearing Escrow Account; and
WHEREAS, the Provisional Charges Agreement contemplated
that negotiations would result in a definitive agreement being
concluded by November 1, 1993 and, provided for the disposition of
137153.4
Dcctlllbcr 13, 1993
the funds in the Escrow Account on that date if no agreement was
reached; and
WHEREAS, the parties have, through their
representatives, met, exchanged information, and negotiated in
good faith, but have been unable to resolve all issues. As a
result, a definitive agreement am~nding the Franchise Agreement
to address closure and post-Closure maintenance of Altamont has
not been executed; and
WHEREAS, the parties believe it is in their best
interests to allow a further, but limited, periOd of time within
which to conclude the negotiations and, if possible, execute a
definitive agreement; and
WHEREAS, the parties therefore wish to extend the term
of the Provisional Charges Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
Section 1. Extension of Provisional Charges Agreement
The parties agree to extend the term of the Provisional
Charges Agreement until March 31, 1994. To effect this
extension, the reference to "November 1, 1993" in Section 2(C) of
the Provisional Charges Agreement is amended to read "March 31,
1994.11 All references in the Provisional Charges Agreement to
the IIDesignated Amendment Completion Datell shall be understood to
mean March 31, 1994. The parties agree to continue to seek to
negotiate in good faith an amendment to the Franchise Agreement
that will address the issues listed in Section 2 of the
Provisional Charges Agreement.
137153.-4
-2-
Deeemher 13, 1993
section 2
WMAC will continue to be authorized to charge ratepayers
provisional charges in the amounts set forth in Schedule A to the
Provisional Charges Agreement through March 31, 1994, which amount
will continue to be calculated as $1.66 per Ton. WMAC shall continue
to deposit all sums so collected in the Escrow Account.
section 3
All other terms and conditions of the Provisional Charges
Agreement shall continue in full force and effect, except as amended
by section 1 hereof, and shall apply to the extended term and to the
interpretation and enforcement of this Extension Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Extension Agreement as of the date first above written.
CITY OF DUBLIN
Attest:
By:
City Clerk
Its:
INC.
Its:
,:".-..-
6>/-=:/..;' -i ""... .F~.... 'C
, ,," I
{.//
137153.4
-3-
December 13, 1993
RESOLUTION NO. -95
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
EXTENDING THE TERM OF A PROVISIONAL AGREEMENT AND AMENDING THE RATE
COLLECTED FOR CLOSURE POST CLOSURE EXPENSES ASSOCIATED WITH THE
AL T AMONT LANDFILL
WHEREAS, on January 11, 1993 the City Council adopted Resolution No. 14-93,
authorizing an agreement with Oakland Scavenger Company (now called Waste Management of Alameda
County); and
WHEREAS, on January 10, 1994 the City Council adopted Resolution No. 8-94 which
extended the negotiating period to March 31, 1994; and
WHEREAS, an amendment has been prepared which will provide a further extension
from April 1, 1994 through March 31, 1996: and
WHEREAS, the amendment also provides updated cost factors for the portion of the
provisional rate increase which will become effective January 1, 1995.
NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of
Dublin, does hereby authorize the Mayor to execute the amendment, attached hereto as Exhibit A and by
reference made a part hereof.
PASSED, APPROVED, AND ADOPTED this 13th day of February, 1995.
AYES:
NOES:
ABSENT:
Mayor
ATTEST:
City Clerk
Page 1
EXHIOIT ~
T-"' __~__~
",,-,,~";
CITY OF DUBLIN
HISTORICAL GARBAGE RATES
RESIDENTIAL (Monthly Rates)
1 Can
Customer
%
Chan~e
2 Can
Customer
%
Chan~e
July 1990
(Curbside Recycling Initiated) $ 7.15
January 1991 $ 8.55
January 1992 $ 7.90
January 1993 (1) $ 8.00 (4)
January 1994 (2) $ 8.63 (4)
January 1995 (3) $10.27 (4)
(Proposed)
$ 11.10
19.6%
$ 14.75
32.9%
<7.6>%
$14.20
<3.7>%
1.3 %
$ 13.60
<4.2>%
7.9%
$ 14.58
7.2%
19.0%
$ 17.95
23.1 %
Residential Notes:
(1) The cost to the customer was actually reduced by a City subsidy. The City provided residential
customers with a one-time $8.04 credit of Measure D funds to off-set the cost of the Curbside Recycling
Program in the first half of 1993.
(2) The cost paid by the customer was impacted by the City subsidizing the Curbside Recycling Program
Cost beginning July 1, 1994. Measure D Funds were used to pay $0.52 of the rate from July-
December.
(3) Beginning January 1, 1995 the adopted City Budget allows for the Curbside Recycling Program cost to
be subsidized at the rate of$0.55 per month.
(4) Effective July 1, 1993 the City established a program requiring mandatory residential garbage service,
with the fees collected as part of the Property Tax bill. Since these fees are collected on a fiscal year
basis the amount paid by a customer will not equal exactly 12 times the monthly rate. The fees collected
on the Property Tax Bills are established to cover delinquencies and collection costs. Any excess
monies are utilized to off-set program costs in the following year. Typically the Council will consider
the Fiscal Year Fee in June or July to allow it to be added to the County Tax Roll.
MONTHL Y COMMERCIAL RATES
1995 With
1991 1992 1993 1994 Retro
1 Yard- l/wk $ 37.90 $ 27.70 $ 24.1 0 $ 25.40 $ 29.45
1 Yard- 2/wk 75.85 60.95 54.25 57.15 66.15
2 Yard- l/wk 67.55 55.40 48.20 50.80 59.90
2 Yard- 2/wk 121.25 116.35 102.45 107.95 125.05
3 Yard- l/wk 95.15 83.10 72.30 76.20 88.35
3 Yard- 2/wk 175.75 171.75 150.65 158.75 183.95
4 Yard- l/wk 125.20 110.80 96.40 101.60 119.80
4 Yard- 2/wk 232.65 227.15 198.85 209.55 242.85
DROP BOX RATES
30 Yard $186.00
$197.55
$198.05
$241.50
$296.70
(02/08/95 12:25 PM)
EXHIBIT 4
TRI-VALLEY GARBAGE RATE COMPARISON
COMMERCIAL/DROP BOX RATES
(Prepared January 1995)
:::::~:~:~:::~:~::::::::::::::::::;;:~:~::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::\:::::::;(.. .................................. ....... .........:::::::::::::.:.:.:.:.;:::::::::::::::: .. ..................... PBQPQSED..........
_ IE::::~~:;5
Monthly Rates
1 yd - 1/Week
1 yd - 2/Week
2 yd - 1/Week
2 yd - 2/Week
3 yd - I/Week
3 yd - 2/Week
4 yd - 1/Week
4 yd - 2/Week
$33.45 $71.60 $135.93 $29.45
80.80 129.50 234.04 66.15
66.90 143.12 218.67 59.90
147.70 258.91 429.07 125.05
100.35 204.49 308.50 88.35
214.60 378.17 618.19 183.95
133.80 266.24 399.52 119.80
281.50 497.82 806.12 242.85
(Note: These categories represent 79% of all commercial accounts in the City of Dublin)
..~.::llp...ii1:::::::::::::::::::::::::::::::::::::::::::::::::::
(Assume 7 Day
Rental)
20 yd
$189.62
$292.40
$466.89
$197.80
30 yd loose
273.12
407.1 0
699.74
296.70
30 yd compacted
546.24
807.90
1399.48
593.40
Residential Drop
Box!
Handy Hauler
(4 cubic yds)
$49.73
$75.51
$75.00
$52.50
*Surcharge will be collected for all billings February 1995 through December 1995.
Finallce\ana/ys;slgarbrana
02108195/2:44 PM
EXHIBIT 5
i_
Number of Curbside
Clean-Ups:
11~G\1~tt#nersl
Monthly Cost:
Annual Cost Per Gal
of Capacity: (weekly
garbage + Green Waste
only)
1.7C~k1w;(qm~ml
Monthly Cost:
Annual Cost Per Gal
of Capacity: (weekly
garbage + Green Waste
only)
Special Conditions:
TRI-VALLEY GARBAGE RATE COMPARISON
RESIDENTIAL RATES
(Prepared January 1995)
11111111111111111111..111 ::::::::IIIIIIIIIIIIIIIIIII.lllill:lllli:::
::!III:lllllllllii:ili}tl!I!I}::ii::illillil~.jll'lllliil!!i!I!I!lil!li1ii
Includes 1995
Retroactive
Surcharge
4
2*
4
3
$9.64
$11.88
(30 gallon)
$15.70
$10.27
2.9t/gallon
9.1t/gal1on
3.0t/gal1on
7.4t/gallon
$17.99
$18.93
(60 or 90 gal.)
$18.80
(64 gallon)
$17.95*
3.8t/gallon 4.9t/gallon 2.8t/gallon 6.5t/gallon
1) Biweekly 1) Automated I) Weekly Green 1) Backyard Service
Green Waste Curbside Waste (90 gallon)
(90 gallon) 2) Curbside Recycling
2) Transfer Station 2) Automated
2) Backyard Service Curbside
3) *Plus one day
3) Curbside Recycling where garden 3) Curbside
trimmings can Recycling
be hauled by
resident to
Transfer Station
*Surcharge applies to services billed April 1995 through December 1995.
JI"""celana/y.'i.<lgarhran2.doc
0]/08195 J ]:44 PM
EXHIBIT 6
RESOLUTION NO. - 95
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
***************************
AMENDING SCHEDULE OF SERVICE RATES FOR SOLID WASTE COLLECTIONI
ESTABLISHING A MINIMUM SERVICE LEVEL FOR RESIDENTIAL CUSTOMERS
AND
DESIGNATING THE POINT OF COLLECTION FOR SINGLE FAMILY COLLECTION
WHEREAS, the City of Dublin adopted on January 10, 1994 Resolution No. 9-94 which
established garbage service rates in accordance with the 1994 Rate Application; and
WHEREAS, on June 27, 1994 the City Council adopted Resolution No. 63-94 which
made adjustments to the Multi-Family Recycling Program Fee; and
WHEREAS, a notice announcing a public hearing on the proposed 1995 rate adjustment
has been published on February 3, 1995 and February 8, 1995, as required by the Government
Code; and
WHEREAS, Oakland Scavenger Company (OSC) [now called Waste Management of
Alameda County (WMAC)] has submitted a 1995 rate application to the Joint Refuse Rate
Review Committee (JRRRC) in accordance with the franchise agreement between the City and
OSC; and
WHEREAS, the JRRRC has recommended rate adjustments based upon jurisdictional
cost of service in a report dated December 7, 1994; and
WHEREAS, the JRRRC has submitted a rationale in the 1995 report substantiating an
adjustment to the Regulated Profit Methodology; and
WHEREAS, in accordance with Section VI of an agreement dated April 24, 1990
between the City, OSC and Livermore Dublin Disposal, certain charges for curbside recycling
are allowed; and
WHEREAS, in accordance with the Curbside Recycling Agreement, beginning in January
of 1995, the Company is authorized to collect $1.40 per month per household for the curbside
recycling service; and
WHEREAS, the City Council has conducted a public hearing on the matter on February
13,1995;and
WHEREAS, the Solid Waste Ordinance and Agreement regarding Waste Collection and
Disposal require the City Council to designate a rate schedule and point of collection for single
family residences,
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does
hereby resolve as follows:
1. The Rate Schedule attached hereto, marked "Exhibit A" and by reference made a part
hereof, shall be the official rate schedule until further rescinded or amended.
EXHIBIT =r-
2. Beginning January 1, 1995, the cost for curbside recycling collection shall be $1.40
per month per residence. This charge shall be included in the base level of service for
residences as shown in Exhibit A.
3. As described above, this rate revision is based upon the recommendation of the Joint
Refuse Rate Review Committee findings in the review of Waste Management of Alameda
County's 1995 Rate Application (dated December 7, 1994).
4. The action described in number 3 above applies only to the rate application
information for 1995 and the Company shall post appropriate changes to the Balancing Account
once the final figures for 1995 are known.
5. The City Council of the City of Dublin supports the inclusion of necessary funds in
OSC's rate application to fund the operations of the JRRRC in 1995.
6. Said rates are in accordance with the City of Dublin Solid Waste Management
Ordinance and the Agreement between the City of Dublin and Oakland Scavenger Company,
7. The content of this Resolution shall supersede Resolution 63-94 adopted the 27th
day of June, 1994.
PASSED, APPROVED AND ADOPTED this th day of
AYES:
,1995.
NOES:
ABSENT:
Mayor
ATTEST:
City Clerk
PSRllss g:agenda/resos.Garb95
EXHIBIT A
CITY OF DUBLIN
RATES FOR GARBAGE COLLECTION & DISPOSAL SERVICES CONDUCTED PURSUANT TO
A FRANCHISE AGREEMENT BETWEEN THE CITY OF DUBLIN AND
OAKLAND SCAVENGER COMPANY
[Now Called Waste Management of Alameda County]
EFFECTIVE DATE
The rates shown for the collection of refuse within the City of Dublin
are effective as stated within each section of this Exhibit. All
retroactive surcharges shall cease effective January 1, 1996.
I. RESIDENTIAL SERVICE
A. Minimum Residential Collection Cost
Minimum residential service shall apply separately to each unit
within a duplex or other attached housing, which receives
individual garbage collection services. The rates shown below
shall apply to the initial can of service and include once per week
collection and disposal of the standard sized. container.
Additional services described in Section IV are also provided as
part of the minimum service. The rate shown includes $1.40 (one
dollar and forty cents) charge for weekly Curbside Recycling.
32 gallon container (Standard Container)
Monthly Cost
$ 10.27
B. Payment and Billing for Minimum Residential Service
City shall make arrangements to collect assessments on the property
tax bill for all services identified in Section A above. Further,
payment for said services shall be made to Company by City pursuant
to agreements and ordinances regulating solid waste collection.
City may subsidize the Curbside Recycling Program with Measure D
funds.
c. Addjtional Container Collection Costs
Once per week collection of each additional container beyond
service provided under "(A)" above. The Total Rates shall be
effective for all services billed from April 1, 1995 through
December 31, 1995. As of January 1, 1996, the Company shall only
be authorized to collect the amount shown in the Base Rate Column.
32 gallon container
(Standard Container)
Base Rate
$ 7.25
1995
Surcharge
$0.43
Total
$7.68
D.
Special Services
Large accumulations:
Special Pick-ups:
$9.75 per cubic yard
$12.00 minimum per pick-up
[II. DESIGNATION OF POINT OF COLLECTION
For Single Family Residential Service, the above rates shall be for
"back yard service" for regular garbage service. The term "back yard
service" shall mean the container{s} shall be on the outside of and in
close proximity to the structure being served, and at a location which
is the customer I s option. Padlocks or other devices which deny the
Collector reasonable access will reliEve said collector from
responsibility of such collection. The Curbside Residential Recycling
Program requires that containers be placed in location which can be
easily seen and readily accessible, within five feet from the curb.
-1-
ADDITIONAL SERVICES PROVIDED IN RATES
The above rates shall include four (4) annual residential cleanups.
Dates of said cleanups shall be at the discretion of the City upon
reasonable notice to the Company. The r~les regulating the special
cleanup shall be approved by the Contractor and the Director. The
Contractor shall separately account for costs associated with this
service and report information as requested by the City.
COMMERCIAL AND MULTIFAMILY BIN SERVICE
A. The following rates include collection, disposal, and bin rental at
commercial establishments and multifamily projects serviced by
centralized bins. The rates shown are for a monthly period. All
charges are based upon bins being filled no higher than water
level. The Total Rates shall be effective for all billings issued
from February 1, 1995 through December 31, 1995. As of January 1,
1996, the Company shall only be authorized to collect the rates
shown in the Base Rate Column.
Excess rate for waste which exceeds water level: $9.75 per yard.
COMMERCIAL
RATE /CUBIC YD $28.95
Frequency Factor $7.25 PROPOSED
Base Retroactive 1995 Rate
Size/#Y ARDS # TimeslWk Monthly Rate Surcharge Total Per Month
1 1 $28.95 $0.50 $29.45
1 2 $65.15 $1.00. $66. 15
1 3 $101.35 $1.50 $102.85
1 4 $137.55 $2.00 $139.55
1 5 $173.75 $2.50 $176.25
2 1 $57~90 $1.00 $58.90
2 2 $123.05 $2.00 $125.05
2 3 $188.20 $3.00 $191.20
2 4 $253.35 $4.00 $257.35
2 5 $318.50 $5.00 $323.50
3 1 $86.85 $1.50 $88.35
3 2 $180.95 $3.00 $183.95
3 3 $275.05 $4.50 $279.55
3 4 $369.15 $6.00 $375.15
3 5 $463.25 $7.50 $470.75
4 1 $115.80 $2.00 $117.80
4 2 $238.85 $4.00 $242.85
4 3 $361.90 $6.00 $367.90
4 4 $484.95 $8.00 $492.95
4 5 $608.00 $10.00 $618.00
6 1 $173.70 $3.00 $176.70
6 2 $354.65 $6.00 $360.65
6 3 $535.60 $9.00 $544.60
6 4 $716.55 $12.00 $728.55
6 5 $897.50 $15.00 $912.50
7 1 $202.65 $3.50 $206.15
7 2 $412.55 $7.00 $419.55
7 3 $622.45 $10.50 $632.95
7 4 $832.35 $14.00 $846.35
7 5 $1,042.25 $17.50 $1,059.75
-2-
B. Commercial Can Service
Commercial
basis shall
size of the
February 1,
locations subscribing to service on a per container
be charged the following monthly rates according to the
container serviced. The following rates are effective
1995:
32 Gallon container (Standard Container)
40 Gallon container (Oversized Cont~iner)
45 Gallon container (Oversized Container)
48 Gallon container (Oversized Container)
Monthly Cost
$ 8.75
$10.80
$12.15
$13.00
C. Multi-Family Recycling Service
Multi-Family Rates for Recycling are charged by the Company on the
number of units located in the complex. (The City may subsidize
this rate with Measure D Funds.)
Monthly Cost
$1. 28 per unit
I . HANDY HAULER
The following rates apply to the collection of a 4 cubic yard Handy
Hauler Collection Bin, and are effective February 1, 1995.
Total Cost for Placement, One Week
Bin Rental & Disposal of Container
filled no higher than water level
$52.50
Rental Cost beyond first week
$10.00 per week
Cost for Additional Dump
$39.00
Excess Charge for Bin Filled higher
than water level
$9.75 per yard
'I I. DROP BOX
The following rates shall be charged for drop box services rendered.
The cost shall be on a per pick-up basis and costs are based upon the
load not exceeding the water level. Certain miscellaneous charges as
noted in subsection (H) may also apply. The "Total Rates" shown shall
be effective for all billings issued from February 1, 1995 through
December 31, 1995. As of January 1, 1996, the Company shall only be
authorized to collect the rates shown in the "Base Rate" Column.
A.
6 Cubic Yard Container
(Dirt/Rock/Debris)
The pick-up cost of this
container shall be the
same as the 14 yard container
due to the weight accommodated.
Bas..e.
1995
Surcharge
$0.14/yd
Total
$136.50
$1. 96
$138.46
B.
14 Cubic Yard Container
Base = $9.75/cubic yard
$136.50
$1. 96
$138.46
C.
20 Cubic Yard Container
Base = $9.75/cubic yard
$195.00
$2.80
$197.80
D.
30 Cubic Yard Container
Base = $9.75/cubic yard
$292.50
$4.20
$296.70
E.
40 Cubic Yard container
Base = $9.75/cubic yard
$390.00
$5.60
$395.60
-3-
F.
Excess Rate Per Yard
If container loaded above water level
$9.75 per
cubic yard
G.
Compacted Rate Per Yard
For service and collection of compacted
materials, the total rate shall include
cubic yard rate.
$19.50 per
cubic yard
H. MiscelJaneous Charges
The following charges are in addition to the container charges described
above.
1. Flasher Charge $10.55 PER PLACEMENT
2. Initial Placement Charge $23.00
3. Weekly Container Rental Fee
Beyond 1st Week $11.90*
4. Daily container Rental Fee
After First Week $1.70/day*
5. Stand-by Time $77.00 per hour
6 . Relocation Fee $31.50 per request
7 . Cancellation of Automatic Collection
at End of Rental Period $41.90
*Note: This charge is waived if the following service frequency is
maintained:
Service Level
6 yard/14 yard/20 yard
30 yard
40 yard
Frequency
4 pulls/month
3 pulls/month
2 pulls/month
a:exbtaga2.doc
-4-