The URL can be used to link to this page

Home My WebLink About6.3 Garbage Rate Increase 600 3) CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: January 14, 1990 SUBJECT: Public Hearing: Garbage Rate Increase VJ(Prepared by: Paul S. Rankin, Assistant City Manager) EXHIBITS ATTACHED: 1 . JRRRC Review of 1991 Rate Application History of City of Dublin Garbage Rates. � 3. Resolution Amending the Schedule of Service Rates for Solid Waste Collection 4. Letter of Agreement for Use of Special Garbage Rate Surcharge RECOMMENDATION: Open Public Hearing, Receive Staff Report, Receive Public Testimony, Close Public Hearing, Adopt Resolution and Authorize the Mayor to Execute the Letter of Agreement FINANCIAL STATEMENT: Under the proposed adjustment, single can service would increase to $8.55 per month. DESCRIPTION: At the regular meeting on December 10, 1990, the City Council discussed the findings of the Joint Refuse Rate Review Committee (JRRRC) apalysis of the 1991 Oakland Scavenger Company rate application. In accordance with State Law, a public hearing date was set for January 14, 1991 . BACKGROUND Rate Review Process Several agencies in Alameda County are serviced by Oakland Scavenger Company (OSC) . In order to evaluate rate requests, the agencies formed the JRRRC through a Joint Powers Agreement. The Committee utilizes the services of a professional accounting firm to analyze the rate application. Based on the findings of the study, the Committee then recommends rate adjustments to the member agencies. The recommended rate adjustment is the same for all members. The rate setting process established by the JRRRC allows the rates and allocated expenses to be balanced when reviewed over multiple years. In order to achieve this balance, any excess revenues are tracked in a separate account. These funds can then be used to offset the need for future rate increases. If the Company does not receive adequate revenue in the rates to cover all expenses plus an allocation for a return on investment, then a deficit would exist in this special account. Consideration of future rate applications would identify how rate adjustments would eliminate the deficit. This type of balancing is important, given that many of the calculations are based only on estimates. For example, the 1991 rate application is based on estimated 1990 expenditures and projections for 1991 . Several external factors could affect the final totals. For example, a delay in the implementation of estimated fees would provide more revenue than is ---------------------------------------------------------------------- COPIES TO: D. David MacDonald, OSC Dan Borgess, LDD ITEM NO. Mary Evans, LDD �� r3/O --tea necessary. Likewise, if unanticipated new fees were implemented mid year, the rates would be inadequate. The use of this "balancing account" can be observed when reviewing the history of rates in the City of Dublin (Exhibit 2) . As shown, prior to January 1 , 1990, the City did not have any rate increase. This was because the company had excess earnings. As stated in this report, there currently exists a deficit which will need to be eliminated with future rate increases. Franchise Structure/Obligations The City of Dublin has a franchise agreement with OSC. OSC is a company which is now owned by Waste Management Inc. (WMI) , an international firm which provides a range of services. The local garbage service is provided by Livermore-Dublin Disposal (LDD) , this firm is operated as a separate division of OSC. The City's franchise agreement includes provisions for OSC to request an adjustment to its rates. The collection rates must be authorized by the City Council. Section 3.1 includes the following provisions: ". . .The Collection Rates shall be no less than the Company's fully allocated costs of providing collection and disposal services and facilities required by this agreement, plus a reasonable return on investment. " The agreement also specifically references the JRRRC and the ability to jointly review rate applications. 1991 OSC RATE APPLICATION Increased OSC Costs The increased costs experienced by OSC have been thoroughly reviewed.by the JRRRC. The Committee recommended excluding costs which they determined are not the responsibility of the ratepayer. Also, some areas required additional technical review and the consideration of the costs associated with them have been deferred to future rate applications. The following summarizes the primary areas of increased costs impacting the amount OSC has requested in this rate application: Lawsuit: OSC's settlement of a civil rights lawsuit included a payment of $8 million. The Company requested reimbursement for this expense in 1991 . The JRRRC did not concur with this request and the Consultant was directed to adjust the Company's estimated expenses accordingly. The JRRRC based its decision on input from specialized legal counsel. The Company may be submitting additional information on defense costs which would be considered in a future rate application. Dumping Fees: The disposal costs have increased due to additional tipping fees levied by State and Regional agencies. In addition, the Company is experiencing added costs to prepare landfill areas for closure in accordance with environmental laws and regulations. The individual components impacting these costs are also discussed later in this report. Earthquake Costs: Some of the Company's facilities were damaged in the 1989 Loma Prieta earthquake. This forced OSC to relocate certain facilities to temporary quarters. The Company has also experienced higher truck maintenance costs for repairs which must be performed off-site. 2 Collection Wages & Salaries: This category actually contributed towards a reduction in the estimated expenses. The Company has reduced crew sized and negotiated rate increases below what had been projected in the 1989 JRRRC review. Increased Tipping Fees Impact on Garbage Rates Several regulatory agencies have the authority to levy tipping fees. These are fees collected at the landfill based upon the tonnage which is disposed of in the landfill. These fees are paid by OSC to the agencies which impose them. As such, they are a cost of disposal which must be considered in determining rates. It is important to note that these fees have been increasing. The Consultant estimates that they will account for 15. 6% of the average customer bill. The estimated fees affecting garbage collected from Dublin are as shown below for calendar year 1991: PROJECTED TIPPING FEES Eastin Tax (A State Mandated Fee which $ 0.500 addresses post closure landfill issues) AB939 (State Mandated Fee which funds $ 0.875 estimated operations and programs of the State average Integrated Waste Management Board. Fee is $0.75 beginning 7/1/90 and increases to $1. 00 7/1/91) . Local Enforcement Agency (LEA) Inspection Fee $ 0. 0734 (Alameda County Health Department is responsible for enforcement of State Laws at the landfill, issuance of landfill permits, and conducting weekly inspections. ) Alameda County Facilities Management Fee $ 1. 00 estimated (Alameda County Waste Management 1/1/91 Authority Operations and Programs) Alameda County Household Hazardous Waste (HHW) $ 1.32 Fund (Alameda County has proposed the operation of permanent collection facilities with service beginning 7/1/91) Subtotal - Without Measure D Surcharge $ 3.7684 Alameda County Measure D - Recycling Initiative $ 6. 00 (This is a surcharge approved in the November 1990 County Election, which may be a tax. ) Total Tipping Fees Per Ton $ 9.7684 If Measure D is Valid The City of Dublin has initiated a legal action to determine the validity of Measure D. Therefore, the projected tipping fees have been shown both including and excluding Measure D. It is important to note that when changes occur mid-year, the rates must be adjusted to collect for the time that fees were not included in the rates. For example, the HHW fee was implemented in October of 1990 and was not 3 considered as part of the rate setting process for that year. Likewise, the Alameda County Waste Management Authority also increased fees. Effective July 1 , 1990, the fee was increased from 21 .0 cents per ton to 54.6 cents per ton. The JRRRC is estimating this fee may equal $1 .00 per ton beginning January 1 , 1991 . The mid-year changes mean that the rates must be sufficient to provide OSC with revenue for tipping fee charges which were not anticipated in the prior year rate application, as well as the costs for the upcoming year. Due to the fact that tipping fees comprise a significant portion of the rates, OSC is working to identify these costs on the quarterly bills. It is important that the consumers are aware that a portion of the costs are associated with regulatory surcharges, which are not directly controlled by either the City Council or the Company. JRRRC Recommended Rate Increase Adjustments Based on input from the JRRRC members and the Consultant's review of OSC records, several adjustments were made to the estimated revenue required by the Company. These adjustments are outlined on page 7 of the JRRRC report. The following figures summarize the impact of these adjustments: ($0001s) 1990 1991 OSC Adjusted Revenue Requirement $ 85,582 $103,929 Consultant's Adjusted Revenue Requirement $ 84, 336 $ 92,820 Approximately 72% of the net adjustments made by the Consultant were attributable to the disallowance of the lawsuit settlement cost discussed earlier. The recommended rate adjustment is based upon making all of the adjustments identified in the JRRRC report, including eliminating the settlement cost of the lawsuit. OSC had requested a 16% increase in their rate application. This application was submitted prior to the results of Measure D on the November ballot. Also, the Company was not anticipating any increase to the fee levied by the Alameda County Waste Management Authority (ACWMA) . The JRRRC took its action with the benefit of knowing the outcome of the election and additional information on the Waste Management Authority operations. The JRRRC Consultant estimated that the cost of Measure D would be attributable to a 13% increase in rates. Also, the ACWMA has offered to provide certain planning services to the members of the Authority. Cities are required by State Law to develop detailed plans for the reduction of waste placed in the landfill. The Authority has offered to fund the preparation of these plans through a joint effort. The JRRRC projected that this may result in an increase in the Authority tipping fee from $0.546 per ton to $1 .00 per ton. The Consultant estimated that this would result in a 1% increase in rates. The JRRRC has recommended a 30% rate increase effective January 1 , 1991 . This increase included the estimated cost of imposing the Measure D surcharge and estimated increases to be levied by the ACWMA. The Committee recommendation excludes funding of four items requested by OSC in their 1991 rate application: o Landfill closure and post-closure costs o Costs of expansion of Durham Road Landfill o Management Incentive Payment o The $8 million settlement of a class action employment discrimination lawsuit 4 Impacts on Future Rates OSC requested a 16% increase excluding consideration of Measure D and Authority tipping fee increases. The Company projected that they would require 11-12% increases in 1992 and 1993. The projections for these later years are preliminary estimates. If OSC only receives a 16% increase in 1991 , it is estimated that $8.4 million of- unfunded expenses would exist at the end of 1991 . These costs will need to be recovered through future rate increases as noted in their estimate of a 12 % increase in each of the following two years. Any action on future rates would be subsequent to a detailed review by the JRRRC. The current request by OSC generates less revenue than is needed to cover the Company's fully allocated costs and return on equity. Typically, the rate application is viewed over a multi-year period. The Company anticipates that future rate adjustments will recover any deficit. The JRRRC consultant calculated that the Company alone would require a 28% increase in 1991 in order to fully collect its expenses. The 28% increase does not include the "surcharge" authorized by Measure D or the projected 1% increase attributable to changes in the tipping fee levied by the Alameda County Waste Management Authority. The following breakdown identifies the total increase required for 1991 if all of the estimated OSC costs were to be met by January 1 , 1992: Without Including Measure D Surcharge Measure D Surcharge Company Operating Costs 28% 28% Alameda County Waste Management Authority Tipping Fee Increase 1% 1% Measure D 13% Total Increase 29% 42% There are also specific areas which may add to the size of future rate increases: o Landfill Closure/Post Closure: The JRRRC recommends that an independent consultant review OSC's plans. The intent is to determine whether the proposed improvements are reasonable and whether they are the responsibility of the ratepayer. A number of regulatory agencies impose requirements for landfill improvements. The Company has also provided the JRRRC with an outline of projects anticipated in the next 5 years. Additional technical and policy review is required before a determination can be made as to the impact on rates. o Lawsuit Defense Costs: Although the JRRRC deleted settlement costs from the rate application, the Company requested consideration of defense costs as an allowable expense. Due to time constraints and a lack of data, this issue could not be considered as part of the 1991 application. The Committee may consider and make a final determination on these expenses as part of a future application. o Altamont Adjustment for Non-Franchised Assets: An accounting adjustment was made by the JRRRC to reflect that a portion of the equipment used at the Altamont is used for operations, which are external to this rate process. OSC claimed that a previous agreement excluded equipment from this calculation. Due to time constraints OSC and the Committee agreed to leave this issue open and to resolve it prior to the next rate application. 5 These cost impacts will need further review. The limited discussion at this time is to identify that there are unresolved issues, which may impact rates in future years. Staff Proposed Modifications Due to Measure D Litigation As mentioned earlier, the legality of the "Measure D surcharge is currently the subject of litigation. Due to this development, Staff has revised the recommended City of Dublin rate adjustment. Staff recommends that the City Council approve a rate increase of 29%. The basis of this recommendation is the Consultant's finding that in order to make OSC whole by the end of 1991, the Company is owed 28%. An additional 1% is the cost of the estimated tipping fee increase to be imposed by the Alameda County Waste Management Authority. In the event that the courts uphold the collection of the Measure D surcharge, the City Council would need to consider imposing the 13% increase at a later date. In the event that the City prevails and Measure D is not implemented, the City of Dublin will need to consider its 1991 rate increase in relation to action taken by other members of the JRRRC. Staff reviewed the proposals being considered by other members of the JRRRC. A majority of the agencies are anticipating action by their elected officials the week of January 14, 1990. Staff has been informed that most agencies are recommending a minimum of a 30% increase. If all agencies increase rates by 30% and Measure D is not implemented, it is likely that the 13% will be considered excess revenues and applied to OSC's operating deficit and/or a future rate increase. Since the City of Dublin will be contributing 1% less than the other agencies, it may be necessary for the City to consider this differential when the 1992 rate application is considered. The proposed 29% increase is supported by the Consultants estimate of OSC costs and provides nearly the same rate increase as is being considered by the other members of the JRRRC. This will provide consistency among rate increases experienced by the members of the JRRRC. City Staff Proposed Residential Rate Increase At the City Council meeting on December 10, 1990, the City Council discussed alternative rate structures and service levels. The City Council directed Staff to prepare a report for this public hearing which would maintain current service levels, which provide for backyard service. The City Council reviewed a report which suggested that consideration be given to revising the rate structure in a manner which would make the cost more equal on a per can basis. Currently, the cost of collection and disposal of the first can is $5.70 and each additional can is $3.95. Given that a larger portion of the cost of service is attributable to landfill and disposal costs, a substantially discounted rate for additional cans may not be appropriate. Staff had recommended that this transition could occur over time. The way this is achieved is to levy a smaller increase on one- can customers. This results in larger increases to multi-can customers in order to generate the required revenue. The City Council concurred with a phased approach and, pursuant to City Council direction, Staff has prepared a rate resolution which results in a 25% increase on the first can. In calculating rates, OSC rounds to the nearest nickel. The column identifying the percentage increase is affected by the fixed surcharges. The following chart shows the proposed .29% rate increase for single family residential service: 6 PROPOSED 1991 RESIDENTIAL GARBAGE RATE ADJUSTMENT SINGLE FAMILY SERVICE 25% on 1st % Current Can Collection Increase Garbage Collection/Disposal $5.70 $7.10 25% Surcharge for Recycling 1 .25 1 .25 Surcharge for HHW -.20 .20 Total Single Can $7.15 $8.55 Two Can Service Garbage Collection/Disposal $ 9.65 $13.30 38% Surcharge for Recycling 1 .25 1 .25 Surcharge for HHW .20 .20 Total Two Cans $11 .10 $14.75 Three Can Service Garbage Collection/Disposal $13.60 $19.50 43% Surcharge for Recycling 1 .25 1 .25 Surcharge for HHW .20 .20 Total Three Cans $15.05 $20.95 Each Additional Can Garbage Collection/Disposal $ 3.95 $ 6.20 57% As noted in the chart, all customers pay a flat surcharge for residential recycling. This service is not included as part of the franchise and future increases are based on changes in the Consumer Price Index. The surcharge for Household Hazardous Waste collection is discussed separately in this report. The proposed rate structure would continue to cost the additional can at 14.5% less than the first can ($6.20 vs, $7.10) . In order to avoid even larger increases to multi-can customers, this rate difference can be addressed with future rate increase proposals. The proposed rate structure improves vastly on the current structure, which has the additional can priced at 44.3% less than the first can. Commercial Bin Service The City of Dublin rate structure for commercial bin service is already based on an equal rate per cubic yard. The rate established by resolution only includes the cost of disposal and excludes the Container Rental Rate. The following chart identifies the application of the 29% increase. PROPOSED COMMERCIAL GARBAGE RATE ADJUSTMENT Excludes Container Rental Rate COMMERCIAL RATES Current Proposed Rate- Non-Residential Cost per Cubic Yard $ 4.80 $ 6.20 Multi-Family Residential Cost per Cubic Yard Garbage Collection/Disposal $ 4.80 $ 6.20 Surcharge for HHW . 15 .15 Total $ 4.95 $ 6.35 Compacted Material Per Cubic Yard $ 9.60 $12.40 7 Multi-family units subscribing to commercial bin service also pay the surcharge for Household Hazardous Waste collection. LDD is currently working on a proposal to implement a multi-family recycling program. It is anticipated that the cost of this program will need to be recovered through a surcharge similar to the single family service. The details of this program will need to be presented after receipt of the formal proposal from the Company. Surcharge for HHW/Special Services Effective July 1 , 1990. the City Council imposed a surcharge to recover the cost of a Household Hazardous Waste Collection Day. The surcharge was levied at $0.20 per single family customer and $0.15 per cubic yard for multi-family customers. Subsequent to the HHW collection by the City, Alameda County announced plans to develop a permanent collection program. The County plans on operating these facilities by July 1 , 1991 . The County program is funded through a $1 .32 per ton tipping fee levied at the landfill. Given that the County has this proposal underway, it should not be necessary to collect funds for future City sponsored collections. The total cost of the HHW collection was $22,659. It is estimated that the unpaid balance remaining as of January 1 , 1991 , was $14,337. It is difficult to project exactly when the total cost will be recovered, and it is unlikely that this will correspond exactly with a billing quarter. Also, the City has applied for reimbursement through a State grant, which would reduce the obligation owed by the ratepayers. Staff has recommended that the City and OSC execute a "Letter of Agreement" (Exhibit 4) , which defines how the special surcharges can be used. The City is to have direct control in applying any excess funds to programs which benefit the ratepayer. The agreement also identifies that any grant reimbursement shall be used to reduce the amount owed for the HHW collection. The Agreement explicitly provides for OSC to deduct the cost of residential clean-ups which are not paid for from the special clean-up fund. Currently, the City has four special Saturday clean-ups for residential customers. The cost associated with two of the events are included in the rate base. The two additional collections are paid for by a special fund established when the City assumed responsibility for the franchise in 1986. The fund consisted of excess revenues collected from Dublin ratepayers due to a delay in implementation of a proposed rate increase. The beginning balance was $78, 040 and an additional $12,826 in interest earnings have been added to the balance since 1986. The City negotiated a flat rate for the clean-ups paid for by this fund. Since 1989, this cost has been $8, 400 per clean-up, or $16,800 per year. Current projections estimate that this fund will require an additional $400 to conduct the two clean-ups currently scheduled in 1991 . The Letter of Agreement would allow the Company to utilize excess surcharge funds to fully recover the clean-up costs. The City Council will need to consider alternatives to the method of paying for the two additional clean-ups in 1992. This would require a rate adjustment or consideration of a reduction in the number of times the program is offered. Staff recommends that the City Council authorize the Mayor to execute the "Letter of Agreement for Use of Special Garbage Rate Surcharge" . Conclusion In accordance with State Law, notice of this public hearing has been published. Staff has prepared a Resolution which will implement the rate increases as described in the report. It is recommended that the City Council conduct a public hearing, adopt the Resolution, and authorize the Mayor to execute the "Letter of Agreement. " a: 1-14Garb.agenda 8 JOINT REFUSE RATE REVIEW CONIlYTME REVIEW OF OAKLAND SCAVENGER COMPANY'S 1991 RATE APPLICATION November 19, 1990 E X IBM T �. ® HILTON FARNKOPF&HOBSON Advisory Services to Municipal Management 39350 Civic Center Drive,Suite 380 Fremont,California 94538 Telephone:41 5/797-0654 Fax:41 5/797.0615 November 19, 1990 Joint Refuse Rate Review Committee c/o Mr. Paul Causey, Chairman Oro Loma Sanitary District 2600 Grant Avenue San Lorenzo, CA 94580 REVIEW OF OAIUAND SCAVENGER COMPANY'S 1991 RATE APPLICATION Dear Members: This report documents our review of Oakland Scavenger Company's (OSC) rate application dated September, 1990, for the years 1991 through 1993 on behalf of the Joint Refuse Rate Review Committee (JRRRC). This letter pre- sents a summary of major issues which affect the collection and disposal rates and the rate review process. Last year the JRRRC was frustrated by the lack of time to consider significant issues like the civil rights lawsuit settlement. Mr. Paul Causey obtained an agreement from OSC to submit significant issues in the rate application to the JRRRC in July. However, many of the current issues were not disclosed until September. For example, OSC did not discuss their request for management incentives prior to the September 10, 1990 JRRRC meeting. In addition, the JRRRC's request for a five-year capital plan was received on October 31, 1990. This rate application included several other complex issues. Two examples are OSC's request for significant landfill. closure and post-closure costs and for costs of expanding the Durham Road Landfill. The JRRRC should study these issues in the context of OSC's five-year capital plan. In addition, it should assess the ratepayers' liability for these costs, the basis of estimating these costs, and the method of paying for these costs. Recent legislation is also having a significant impact on OSC's costs and operations. The Alameda County Facilities Management Fee, Household Hazardous Waste Fee, Health Care Services Fee, the AB 939 Fee and the Eastin Tax all impose a fee per ton of waste disposed of in the landfills. The Alameda County Measure D Initiative will more than double these fees. AdEL HILTON FARNKOPF&H013SON November 19, 1990 Joint Refuse Rate Review Committee Page 2 Appropriate capital costs associated with local, state, and federal regulations are more difficult to determine. OSC translates these regulations into capital projects. But the current review process does not provide significant incen- tives to control these costs. Although we did not find evidence that the OSC was not controlling capital costs in the course of our review, it is beyond the scope of our review to assess the cost-effectiveness of the engineering approaches proposed by OSC. Finally, the results of negotiations between the cities of Fremont, Newark, and Union City and OSC will not be known prior to the setting of rates next year. . The potential absence of the Tri-Cities from the JRRRC could reduce the number of ratepayers who would bear the cost of operations. Despite our concerns about the issues outlined above, we believe that OSC's request for a 16% increase is reasonable. In addition, an increase of an addi- tional 13% is necessary for the Alameda County D fees and an additional 1% is necessary for the increase in the Alameda County Facilities Management Fee. The total recommended increase is, therefore, 30%. We make no recommendation regarding rate increases in future years. Further, we believe that procedural changes that are responsive to the issues .. identified above should be made prior to the next rate review. These changes should be thoroughly documented and incorporated into the rate review pro- cedures manual. We appreciate having the opportunity to be of continued service to the member agencies of the JRRRC. Sincerely, 6 6�_-rwa/117s;0 11— L. Scott Hobson Partner Attachment - Report REVIEW OF OAKLAND SCAVENGER COMPANY'S 1991 RATE APPLICATION TABLE OF CONTENTS SECTION DESCRIPTION PAGE I BACKGROUND 1 Rate Review Process Revisions 1 September, 1990 Revised Projections 1 I I SCOPE OF REVIEW 3 III OBSERVATIONS AND FINDINGS 4 Cost Factors Leading to OSC's Increase 4 OSC Originated Adjustments 6 Hilton Farnkopf & Hobson Originated Adjustments 6 Policy Issues 8 IV SUMMARY OF RECOMMENDATIONS 16 V RATE IMPACT OF RECONEWENDATIONS 1.7 SECTION I-BACKGROUND Last year, the JRRRC member agencies raised their collection rates by 16%. This was the first rate increase in over six years. The primary reason for the long period of stable rates was the availability of excess revenues from prior years. These revenues were used to offset the need for increased revenues from current operations. These excess revenues were completely used during 1989. RATE REVIE W PROCESS REVISIONS At the conclusion of the last rate review, the JRRRC wished to make changes in the rate review process that would improve its ability to consider philosoph- ical rate issues in a timely manner. Mr. Paul Causey, Chairman of the JRRRC, was directed to meet with Mr. Dave MacDonald to discuss these changes. Mr. MacDonald agreed that in order to provide the JRRRC adequate time to consider unusual items or philosophical changes to the rate application, OSC would identify and submit those items to the JRRRC by July 15 but no later than July 31 each year. The Company submitted its initial rate application on July 27, 1990. Due to uncertainties regarding the negotiations of new franchise agreements with the Southern Division jurisdictions, the rate application did not include cost information for the Southern Division. This initial application also did not include a request for management incentives, costs for the Durham Road Landfill expansion, costs for closure and post-closure maintenance for the Durham Road Landfill, or a five-year capital plan. OSC's September 10, 1990 rate application was still incomplete with regard to the Southern Division costs. The final costs were received by September 12. The requested five-year capital plan was received on October 31, 1990. SEPTEMBER, 19M QED PROJECTIONS OSC's September, 1989 application contained projections for the years 1.989 through 1991. OSC's current rate application presents actual results for 1989 and revised projections for the period 1990-91. This current projected revenue requirement for the period 1990-1991 reflects an increase of 10% from the 1.989 projections, as shown in Exhibit 1. Exhibit 1 1989 Projected 1990 Projected Revenue Revenue Increase/ % Year Requirement Requirement (Decrease) Chanffe 1990 $ 82.9 $ 85.4 $ 2.5 3% 1991 $ 891 $103.8 941 7 16% Total $172.0 $189.2 $17.2 10% Section III of this report explains the factors leading to the increase in pro- jected expenses between the two years. 2 SECTION H- SCOPE OF REVIEW Our review was conducted in accordance with the September 18, 1990 contract with the JRRRC and the Rate Review Procedures Manual dated April 6, 1986. Our procedures included: • Reviewing the rate application for mathematical accuracy and compli- ance with the rate review procedures. • Agreeing the rate application to OSC's audited 1989 financial state- ments. • Reviewing the revenue and expense projections contained in the appli- cation for reasonableness in terms of OSC's prior experience and our knowledge of industry experience. • Calculating the approved profit, based on a 17% return on franchised equity. • Calculating the cumulative excess/deficit income from operations for the period ending December 31, 1989. • Recalculating representative rates resulting from the required revenue increase and comparing these to rates in other Bay Area communities. The scope of our review did not comprise an audit of OSC's financial state- ments. Such an audit is performed by the firm of Armanino, Jones and Lombardi. Our review was based on OSC's September, 1990 projection of the results of operations for the three years ending December 31, 1993. The actual results of operations will usually differ from projections, because events and circum- stances frequently do not occur as expected, and the difference may be signifi- cant. 3 SECTION III - OBSERVATIONS AND FINDINGS Our observations and findings are organized into four categories. • First, an overview of the factors included in OSC's rate application lead- ing to the increase in rates in 1991; • Second, a summary of the adjustments made by OSC to the rate applica- tion subsequent to its filing; • Third, a description of the adjustments which we identified in the course of our review to correct errors made by OSC; and • Fourth, a discussion of policy issues regarding whether certain costs that have been incurred by OSC are appropriate to include for rate pur- poses. COST FACTORS LEADING TO OSC's INCREASE OSC's 10% increase to the projected 1990 through 1991 revenue requirement results from six major factors, as shown in Exhibit 2: Exhibit 2 ($ Millions) 1990 1991 1989 Projections, as adjusted 82.9 89.1 Cost Factors 1. Lawsuit - 8.0 2. Dumping Fees 3.7 6.2 3. Wages and Salaries (1.5) (2.3) 4. Other Operating Expenses 1.1 0.9 5. Earthquake-related costs 0.8 0.6 6. Various Other 1.6 1_3 1990 Projections 85.4 103.8 1. Lawsuit Settlement: In 1989, OSC originally requested reimbursement for an $8 million settlement of a civil rights lawsuit. It was excluded by the JRRRC from the rates pend- ing a review by the JRRRC's legal consultants. OSC has again requested reimbursement of this item in 1991. (See further discussion of this item on page 9.) 4 2. Dumping Fees: Landfill and transfer station expenses are higher than previously projected by $3.7 million in 1990 and $6.2 million in 1991. These increases'are composed of the following significant components, partially offset by other reductions: Tonnage Surcharges The creation of the Alameda County Household Hazardous Waste fee ($1.32 " per ton), and the increase of the Alameda County Facilities Management fee (of$0.336 per ton to $0.546 per ton) increased dumping fees by $0.6 million in 1990 and $3.0 million in 1991. Closing Costs OSC has included for the first time the amortized costs of closure and post-clo- sure maintenance of the Durham Road ($1.4 million per year starting in June 1990) and the Altamont ($0.4 million per year starting in January 1991) land- fills. (See further discussion of this item on page 9.) Wages and Payroll Costs OSC has projected that landfill wages and payroll costs will be higher than previously projected by $0.5 million in 1990 and $1.0 million in 1991. These increases represent additional supervisory manpower that OSC says is neces- sary to comply with new landfill regulations, to enhance safety, and to control litter. Truck Expense OSC has projected increases of$0.4 million in 1990 and $0.6 million in 1991 over previous projections due to higher volumes of waste being transferred, resulting in higher maintenance and operating costs for transfer vehicles. Public Revenues Public dumping at the landfills decreased in 1990 for the first time due to dump fee increases and decreased volumes disposed of by private haulers. OSC estimates that public revenues will be $0.6 million less than previously projected. Revenues projected for 1991 are expected to be $2.9 million higher due to planned price increases at Davis Street and Durham Road. Other Operating Expenses OSC estimates that other operating costs will be higher than projected by $1.1 million in 1990 and $2.3 million in 1991. These increases are due to legislative requirements regarding water monitoring (the Clean Air and Water Act) and gas monitoring, higher building maintenance costs, road projects mandated by the County, and the Durham Road Landfill expansion. 5 i 3. Earthquake Costs: Damage caused by the October 17, 1991 Loma Prieta earthquake forced OSC to relocate the Peralta Street Building operation (including the Northern Division and truck maintenance facilities). OSC is building a replacement maintenance yard on 98th Avenue that is scheduled to be completed in 1991. The impacts associated with the relocation include: moving costs, a new tele- phone system, rent expense, higher truck maintenance (that must be per- formed off-site), building repairs, and higher depreciation expense on the new facility at 98th Avenue. 4. Collection Wages and Salaries: OSC continues to reduce its residential routes from three men to two men. In addition, OSC negotiated lower wage increases than projected in the prior rate application. According to OSC, these factors have resulted in savings of $1.5 million in 1990 and $2.3 million in 1991. 5. Other Operating Expenses: OSC discovered fuel tank leakage in the Southern Division yard and was required to remove the tanks, clean the soil, and build an evaporating tank for water used to wash trucks, totaling $500,000. Soil monitoring is required to continue in 1991. In addition, OSC had an increase of$200,000 in 1990 in damage claims caused by increased accidents. Further, OSC began an aggressive effort to paint and repair roll-off and commercial bins. This effort is expected to cost approximately $200,000 in 1990 and 1991. OSC ORIGINATED ADJUSTMENTS Subsequent to the submission of the September 12, 1990 rate application, OSC requested an increase of expenses in 1990, 1991, and 1992 totaling $143,000 per year. This request was made because of the accidental omission of deprecia- tion for improvements at the Altamont Gas Recovery Plant. We concur with this adjustment. We have summarized the effects of this adjustments on the OSC projections in Exhibit 3. HILTON FARNKOPF &HOBSON ORIGINATED ADJUSTMENTS OSC was able to support their revenue and expense projections with the excep- tion of the items described below and summarized in Exhibit 3. 6 Exhibit 3 ($000's) 1990 1991 September 1990 Projected Revenue Requirement 851439 103,786 OSC October Adjustments 1. Depreciation 143 143 OSC Adjusted Projections 85,582 103,929 HF&H Adjustments 1. Oakland Street Cleaning Fees (ref. pg. 7) - (316) 2. Engineering Salaries (ref. pg. 7) (100) (111) 3. Miscellaneous Income (ref. pg. 8) (194) (205) 4. Landfill Surcharges (ref. pg. 8) (128) 168 5. Interest (ref. pg. 8) - (162) 6. Additional Franchise Fees and Corporate Expenses (ref. pg. 8) - 201 7. Altamont Adjustment (ref. pg. 8) (160) (268) 8. Litigation Settlement (ref. pg. 9) - (8,000) 9. Landfill Expansion (ref. pg. 10) - (655) 10. Landfill Closure and Post-Closure Costs (ref. pg. 11) 664) 1761) Adjusted Revenue Requirement 84,336 92,820 Oakland Street Cleaning Fees OSC collects street cleaning fees on behalf of the City of Oakland through its garbage billings. An expense, offset by an equivalent revenue is recorded in OSC's accounting records. OSC erroneously escalated the expense and not the revenue in the rate application. We have decreased Oakland Street Cleaning expense by $316,000 in 1991 to correct this error. Engineering Salaries OSC landfill engineers spend a portion of their time working on projects for other non-franchised Waste Management Inc. subsidiaries. Their time is billed to the subsidiary at 185% of the engineers' labor costs. Based on year-to- clate billings to other subsidiaries, we believe that OSC underestimated the total billings and, therefore, overstated the franchised portion of the engi- neers' salaries. We have reduced this expense by $100,000 in 1990 and $111,000 in. 1991. Miscellaneous Income In comparing prior year annual "clean up" revenue to current projections, we discovered that OSC had erroneously omitted revenues for several projects yet to be performed in 1990. This error also carried over to future year projec- tions. We increased miscellaneous income by $194,000 in 1990 and $205,000 in 1991 to reflect "clean-up" projects. Landfill Surcharges OSC calculated the landfill surcharges incorrectly in the final rate applica- tion. The impact of the error was to overstate the expense by $128,000 in 1990 and understate the expense by $168,000 in 1991. We have adjusted OSC's rate application accordingly. Interest In reviewing interest expense, we discovered that OSC had escalated interest - expense using an inflation factor. We reduced 1991 interest expense by $162,000 to correct this error. . -- Franchise Fees and Corporate Expenses OSC projected collection revenues assuming a 0.3% to 1.4% growth rate. Based on past trends, we believe collection revenues will grow at approxi- mately 2% per year. As revenues increase, corporate overhead expenses and franchise fees increase. We have increased these expenses by $201,000 to reflect the esti- mated 2% growth. POLICY ISSUES The following seven key policy issues have arisen during the course of the review. 1. Altamont Adjustment Since the importation of waste from San Francisco, the JRRRC has reduced the franchised equity by an amount estimated to reflect the non-franchised operation's equity in the Altamont Landfill. To date, the adjustment was cal- culated on the basis of the non-franchised portion of the net asset value of land, buildings and other land improvements. Equipment was not included originally, because San Francisco contributed two tippers. Over time, as new landfill equipment was purchased, it was charged to a - "common" account. The depreciation on that equipment was allocated to franchised expense on the basis of relative tonnage. However, the non-fran- chised equity adjustment never reflected an adjustment for the non-fran- 8 chised equity adjustment never reflected an adjustment for the non-fran- chised portion of "common" assets. (Mr. MacDonald stated that at the time the San Francisco agreement was negotiated, OSC and the JRRRC had agreed that the adjustment would be _ limited to land, buildings and other land improvements. We reviewed the Price Waterhouse report provided by Mr. MacDonald and talked with Mr. Doug Eads, former Committee member from the City of Fremont, and Mr. Ernest Mortensen, the Price Waterhouse partner responsible for the review at that time. Based on our review and discussions, we found. no evidence of such an agreement. Mr. Mortensen stated that the "agreement" between OSC and the JRRRC was with respect to the methodology that was used, not specifically to the accounts used in the calculation. He further recalled that the equip- ment account was not included originally due to the minor balance involved.) Then in December 1989, Contra Costa County began to import trash to the Altamont Landfill. With the Contra Costa County waste and recent asset additions, we reviewed the Altamont adjustment more closely and determined that the adjustment is significant. For this reason, we have adjusted non- franchised equity for the non-franchised share of the net asset value of all common assets. The net result is a decrease in pre-tax profit of$160,000 in 1990 and $268,000 in 1991. 2. Settlement of Employment Discrimination Litigation: In January 1975, a group of OSC employees filed a suit in federal court alleg- ing that the Company's hiring and promotional practices discriminated on the basis of race and national origin, in violation of Title VII of the Civil Rights Act of 1964 and the Civil Rights Act of 1866. The case was dismissed on summary judgment motion in 1981. The plaintiffs appealed and, in 1982, the Ninth Circuit Court of Appeals reversed, remand- ing the case to the District Court for trial. Thereafter, the U.S. Supreme Court denied OSC's petition for review. After a three month trial, the U.S. District Court Judge ruled in December 1987 in favor of the plaintiffs on claims relating to the Teamster bargaining unit and management positions. The court excluded mechanics, landfill employees and administrative employees from the class for which relief was granted. The court also found that the Company's refusal to allow minority employees to purchase stock was not a violation of Title VII. Rather than proceed with the damages phase of the trial, OSC entered into a "Stipulation of Settlement and Consent Decree" with the plaintiffs in September 1989, which called for payment by OSC of$8 million in damages for backpay and emotional distress claims. No punitive damages were involved. OSC has asserted that "after a letter agreement outlining the terms of settle- ment was executed, some of the standards upon which the trial court's deci- sion was made, including allocation of the burden of proof, were overruled in 9 three U.S. Supreme Court cases". Nonetheless, the "Stipulation of Settlement and Consent Decree" was signed and judgment entered after these Supreme Court cases had been decided. OSC requested that rates be increased to cover this $8 million in last year's rate application. In our November 21, 1989 report, we stated: "We believe that there is reason to question whether or not the cost of this settlement should be included as a reasonable and neces- sary cost associated with OSC's provision of services to the ratepayers. In addition, this settlement was only just brought to light in OSC's rate application in late September 1989, and only a verbal presentation was provided -to the JRRRC prior to October 31, 1989. Therefore, since there has been inadequate time for the JRRRC to obtain a legal evaluation of the issue, we recommend that the JRRRC review the matter prior to the next rate applica- tion and incorporate, if appropriate, its findings in the next rate adjustment." In May 1990, the JRRRC engaged the law firm of Hanson, Bridgett, Marcus, Vlahos & Rudy to advise it on this matter. Their written report was submitted in July 1990, and the JRRRC received supplementary briefing from the attor- neys at its September 10 meeting. We understand that the JRRRC members do not intend to recommend that individual jurisdictions increase their rates to cover any of the $8 million settlement cost. We concur in that decision. In addition, in a letter dated October 5, 1990, the JRRRC requested that-OSC provide a detailed listing of expenses, if any, for legal fees, etc., associated with this case which have already been paid by the ratepayers. In a letter dated October 22, 1990, Mr. MacDonald stated that OSC felt that "defense costs are rate allowable" and that "it is unreasonable for the Committee to request this information from inception to date this late in the process". OSC did provide by facsimile on October 24, 1990, listings of legal costs for 1989 and year-to-date 1990. Due to the timing of the receipt of the information and the fact that the information was incomplete, we have not performed a detailed analysis of the information provided. 3. Durham Road Landfill Expansion: OSC included costs for the expansion of the Durham Road Landfill into an existing PG&E utility trench in 1991. Final approval for moving the power poles and filling the trench has not been received. We believe that the JRRRC should remove the costs of the Durham Road Landfill expansion ($655,000 in 1991) from the current rate application in light of the uncertainty regarding the feasibility, cost and timing of the expansion. Additionally, the cost of the expansion should be reimbursed only after the expansion is complete and waste is being disposed of at the site. 10 In addition, OSC is proceeding with plans to expand the landfill into an adjoining 92 acre parcel. We have recently learned from OSC that the Army Corps of Engineers has some concerns that impact the size of the expansion site and that the Regional Water Quality Board has changed certain design requirements that have increased the site development costs from $16 million to $35 million. (Note that OSC included the cost of the PG&E utility trench expansion at Durham Road as an expense in 1991 because the expected life of the expansion is approximately one year. Expenses associated with expansion at Altamont beyond the current fill area and at Durham Road into the adjoining 92 acre site are currently being capitalized. These costs will be amortized over the life of the expansion area by OSC because the expected life of the expansion area exceeds one year. This accounting method is appropriate for rate purposes.) 4. Landfill Closure and Post-closure Costs: This year is the first year that OSC has requested reimbursement of estimated closure and post-closure costs at the Altamont landfill. (Some funds were previously deposited into a trust fund by OSC for closure of the Durham Road landfill.) The costs, estimated by OSC engineers, are spread over the remain- ing life of the landfills. The OSC application anticipates obtaining approval to expand the Durham Road Landfill, thereby extending the life an additional ten years, for a total of 11 years. The amortized closure and post-closure costs are approximately $1,327,000 per year. On September 14, 1990, the Cities of Fremont, Newark and Union City sent a letter to the JRRRC requesting that the JRRRC not include the requested Durham Road closure and post-closure costs this year, pending an engineering and legal review of the estimates. OSC plans to close the current fill area at the Altamont landfill and move into a new fill area at the end of the current area's useful life - currently estimated at nine years. The franchise portion's amortized cost of closure and post-clo- sure maintenance of the current area is estimated to be approximately $434,000. OSC has not provided detailed support for these closure and post-closure esti- mates. Also, they have not provided a detailed explanation of their position regarding what portion of these estimated costs the current ratepayers should bear; how the monies are to be collected, maintained, and disbursed; and, what responsibilities OSC and the ratepayers have for closure and post-clo- sure maintenance of the landfills. We believe that due to the significance of these issues, a review of the cost estimates by a qualified independent engineering firm and a detailed response by OSC to the issues raised above would be appropriate prior to reimbursement by the ratepayers. We have excluded landfill closure and post-closure costs in 1990 and 1991. (This recommendation and approach is similar to one made by 11 Price Waterhouse several years ago for a review of OSC's operations by an independent engineering firm. The review, performed by SCS Engineers, resulted in several recommendations for reducing OSC's costs of operations.) 5. Management Incentives: In September, OSC submitted with its rate application a request for two man- agement incentives - one related to certain labor savings ($799,000) and the other related to an automated remittance processing system ($413,000). In a letter dated October 5, 1990, the JRRRC informed OSC that since it had not submitted the request and adequate justification with the July application, it would not consider the management incentives this year. The JRRRC sub- sequently clarified their response in a meeting on October 26, 1990. Further, the JRRRC determined that the automated remittance processing system did not qualify as a management incentive because it did not represent an innovative change in OSC's operations. The JRRRC felt that this change is to be anticipated in the normal course of business. We have omitted, therefore, the management incentives from the calculation of the revenue requirement. 6. Alternative Rate Adjustments: In his presentation of the rate application to the JRRRC on September 10, 1990, Mr. Dave MacDonald stated that OSC was seeking a 16% rate increase January 1, 1991, followed by increases of 11-12% in the next two years. In doing so, OSC realized that the 1991 increase would not be sufficient to fully compensate it by the end of 1991. This is true even after the adjustments explained above, as shown in Exhibit 4 and Attachment 1. Exhibit 4 $Millions 1990 1991.. Projected Revenue 80.2 81.8 Projected Expenses (Adjusted) 77.0 83.7 Allowed Earnings (Pre-tax) 7.3 8.9 Additional Franchise Fees & Corp. Expenses 0.0 0.2 Cumulative Deficit 6.4 10.5 Total Revenue Requirement 90.7 103.3 Profit/(Loss) (Before Rate Increase) (10.5) (21.5) Rate Increase $ 13.1 ova 16% Remaining Deficit (8.4) 12 The Southern Division jurisdictions (Fremont, Newark, and Union City) have signed an extension of their current franchise agreements with OSC through January 15, 1992. They are currently negotiating with OSC for a new agree- ment. If those negotiations do not result in an agreement between the Cities and OSC, then the collection and disposal franchise will be put out for bid. It is possible that these jurisdictions will not participate in the rate review pro- cess in the future. Therefore, the payment, if any, by these cities of a portion of the $8.4 million deficit that remains at December 31, 1991 will require a spe- cial agreement. At a JRRRC meeting on October 26, the Tri-Cities representa- tives indicated a willingness to negotiate such an agreement with the JRRRC in the event they withdraw. However, if the JRRRC wished to raise rates suf- ficient to fully compensate OSC for the deficit by the end of 1991, collection rates would have to be increased by 28%, as shown in Exhibit 5 and Attachment 2. Exhibit 5 $Millions 1990 1991 Projected Revenue 80.2 81.8 Projected Expenses (Adjusted) 77.0 83.7 Allowed Earnings (Pre-tax) 7.3 8.9 Additional Franchise Fees & Corp. Expenses 0.0 1.3 Cumulative Deficit 6.4 10.5 Total Revenue Requirement 90.7 104.4 Profit/(Loss) (Before Rate Increase) (10.5) (22.6) Rate Increase (Decrease) $ 22.9 % 28% Remaining Surplus 0.3 The Alameda County Measure D Initiative was passed by the voters on November 6. It will add a surcharge of$6 per ton to the landfill costs to pro- vide for County recycling programs. This surcharge will increase the required rate increase from 16% to 29%, as shown in Exhibit 6 and Attachment 3. 1. 3 Exhibit 6 $Millions 1990 1.991 Projected Revenue 80.2 81.8 Projected Expenses (Adjusted) 77.0 92.9 Allowed Earnings (Pre-tax) 7.3 8.9 Additional Franchise Fees & Corp. Expenses 0.0 1.4 Cumulative Deficit 6.4 10.5 Total Revenue Requirement 90.7 1.13.7 Profit/(Loss) (Before Rate Increase) (10.5) (31.9) Rate Increase (Decrease) $ 23.7 29% Remaining Deficit (8.2) 7. Bills: The JRRRC members have expressed interest in showing state and local sur- charges on tonnage disposed of at the landfills separately on the bills, as a means of keeping the public informed of the large increases in regulatory costs. Exhibit 7 shows these fees and our estimate of their portion of the cus- tomers' bills. Exhibit 7 Regulatory Fees ($ per ton): 1991 Eastin Tax $0.500 AB 939 (avg. $35 after 7/1/90; $1.00 after 7/1191) $0.875 LEA Inspection Fee $0.070 Alameda County Facilities Management Fee $0.546 Alameda County Hazardous Household Waste Fund Fee $1.320 City of San Leandro $0.650 Alameda County Proposition D $6.000 Total Regulatory Fees $9.961 Total 1991 Fees: Without Prop. D With Prop. D Fee per Ton $3.961 $9.961 Total Franchised Tonnage 1,533,730 1,533,730 Total Cost of Regulatory Fees $6,075,105 $15,277,485 Revenue Requirement $92,619,092 $101,821,472 Percent of Total Customer Bills 6.6% 15.0% 14 (Note that the facilities management fee may increase to $1.00 on January 1, 1991. The impact of this increase would be to increase the percentages in Exhibit 7 to 7.3% without Proposition D and $15.6% with Proposition D.) 15 SECTION IV- SUMMARY OF RE,E,COMIVI NDATIONS We recommend the following specific actions by the JRRRC. 1. We recommend that the JRRRC accept OSC's rate filing as adjusted. 2. We recommend that the JRRRC disallow the $8 million lawsuit settle- ment. 3. We recommend that the JRRRC exclude landfill closure and post-closure costs from the rates until it has had sufficient time to evaluate the rea- sonableness of the underlying engineering estimates, OSC's proposal regarding the policies and practices for collection and handling of the funds, and a legal review of the ratepayers' obligations regarding these costs. 4. We recommend that OSC be directed to provide a detailed proposal of their policies and procedures for the collection and handling of closure and post-closure maintenance costs and support for their cost estimates. 5. We recommend that the JRRRC hire an independent consultant to eval- uate the reasonableness of OSC's projections of closure and post-closure costs and closure and post-closure policies and procedures. 6. We recommend that the JRRRC exclude the Durham Road Landfill expansion costs and reimburse OSC for those costs only after the new area is placed in service. 7. Based on the JRRRC's direction, we have disallowed OSC's request for management incentives. 8. Because the Alameda County Measure D Initiative passed, we recom- mend that the JRRRC approve a rate increase of 29% effective January 1, 1991. 9. In anticipation of the Alameda County Facilities Management Fee increasing to $1.00 per ton on January 1, 1991, we recommend that the JRRRC approve a rate increase of an additional 1% effective January 1, 1991 (see Attachment 4). 16 SECTION V-RATE IMPACT Or RECOMAM,NDATIONS Based on our recommendations, we have prepared the following rate impact analysis: Residential Livermore/ Northern Central Southern Dublin Current 1 Can* $7.23 $7.33 $5.92 $6.55 29% Rate Increase $9.33 $9.46 $7.64 $8.45 30% Rate Increase $9.40 $9.53 $7.70 $8.52 Commercial Livermore/ Northern Central Southern Dublin Current 2 Yard* $ 64.30 $64.30 $52.49 $55.13 29% Rate Increase $82.95 $82.95 $67.71 $71.12 30% Rate Increase $83.59 $83.59 $68.24 $71.67 Drop Box Livermore/ Northern Central Southern Dublin. Current 20 Yard* $151.99 $141.52 $114.84 $121.20 29% Rate Increase $196.07 $182.56 $148.14 $156.35 30% Rate Increase $197.59 $183.98 $149.29 $157.56 *Current Rate quoted for all service categories and all Divisions are average rates. These rates compare favorably to a recent Bay Area survey of rates conducted by the Central Contra Costa Sanitary District and are included as Attachment 5. 17 ROE Calculation Attachment 1 A. EQUITY CALCULATIONS 1989 1990 1991 1992 1993 1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390 2. Less N.F's Portion of A]tarn ont -119,004 -574,693 -271,095 3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 4. Working Capital Adjustment 2,116,808 0 5. Stockholder Buyouts and Dividends 6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 7, Retained Earnings(post tax) 8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637 Reconciliation to Franchise F/S 8. N.F.'s portion of Altamont(temp dill) 966,813 9. Excess Net Income -14,009 10.Cumulative Unadjusted Working Capital 0 12.Ending Equity per F/S 30,264,459 B. ALLOWED EARNINGS 1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 2. ROE Percentage(%) 17% 17% 17% 17% 17% 3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 4. Adjustments per 1990 HF&H Report 5. Prior Management Incentives 6. Current Management Incentives 7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 I 7,761,246 C. REVENUE REQUIREMENTS 1. Adjusted Allowed Earnings 4,885,284 5,669,696 6,633,544 7,761,246 2. Gross up for tax 33.64% 36.44% 37.00% 37.48% 3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820 4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726 5. Company Adjustments 143,000 8,143,000 143,000 143,000 6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000 7. Other-- 8. Other-- 0 0 0 8. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546 D EXCESS REVENUE(PRE.-TAX) 1. Forecasted Revenue(2%growth) 80,199,625 81,803,618 96,790,040 104,649,391 2. Rate Increase 13,088,579 5,807,402 6,278,963 3. Adjusted Revenue 80,199,625 94,892,196 102,597,443 110,928,355 4. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546 5. Additional Franchise Fees,Corp Charges 201,134 480,952 797,983 6. Adjusted Required Revenue 84,336,322 92,820,227 98,904,755 105,464,529 7. Excess(Deficit) -7,138,355 -4,136,697 2,071,970 3,692,688 5,463,826 8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 -8,436,137 -4,743,449 720,377 9. Rate Adjustment Required 16% 6% 6% ROE Calculation Attachment 2 A FRUITY CALCULATIONS 1989 1990 1991 1992 1993 1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390 2. Less N.F's Portion of Altamont -119,004 -574,693 -71,095 3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151. 39,020,846 45,654,390 4. Working Capital Adjustment 2,116,808 0 5. Stockholder Buyouts and Dividends 6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 7. Retained Earnings(post tax) 8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637 Reconciliation to Franchise F/S 8. N.F.'s portion of Altamont(temp dim 966,813 9. Excess Net Income -14,009 10.Cumulative Unadjusted Working Capital 0 12.Ending Equity per F/S 30,264,459 B. ALLOWED EARNTNGS 1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 2. ROE Percentage(%) 17% 17% 17% 17% 17% 3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 4. Adjustments per 1990 HF&H Report 5. Prior Management Incentives 6. Current Management Incentives 7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 C REVENUE REQUIREMENTS 1. Adjusted Allowed Earnings 4,885,284 5,669,696 6,633,544 7,761,246 2. Gross up for tax 33.64% 36.44% 37.00% 37.48% 3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820 4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726 5. Company Adjustments 143,000 8,143,000 143,000 143,000 6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000 7. Other-- 8. Other-- 0 0 0 8. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546 D EXCESS REVENUF.(PRE-TAX) 1. Forecasted Revenue(2%growth rate) 80,199,625 81,803,618 106,802,803 100,223,750 2. Rate Increase 22,905,013 -8,544,224 5,01.1,188 3. Adjusted Revenue 80,199,625 104,708,630 98,258,579 105,234,938 4. Revenue Required 84,336,322 92,619,092 98,423,803 104,666,546 5. Additional Franchise Fees,Corp Charges 1,262,291 11,921 182,525 6. Adjusted Required Revenue 84,336,322 93,881,383 98,435,724 104,849,070 7. Excess(Deficit) -7,138,355 -4,136,697 10,827,247 -177,145 385,867 8, Cumulative Excess(Deficit) -6,371,409 -10,508,106 319,141 141,996 527,864 9. Rate Adjustment Required 28% -8% 5°o ROE Calculation Attachment 3 A EQUITY CAhCULATIONS 1989 1990 1991 1992 1993 1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390 2. Less N.F's Portion ofAltamont -119,004 -574,693 -271,095 3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 4. Working Capital Adjustment 2,116,808 0 5. Stockholder Buyouts and Dividends 6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 7. Retained Earnings(post tax) 8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637 Reconciliation to Franchise F/S 8. N.F.'s portion of Altamont(temp dial) 966,813 9. Excess Net Income -14,009 10.Cumulative Unadjusted Working Capital 0 12.Ending Equity per F/S 30,264,459 B. ALLOWED EARNINGS 1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 2. ROE Percentage(%) 17% 17% 17% 17% 17% 3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 4. Adjustments per 1990 HF&H Report 5. Prior Management Incentives 6. Current Management Incentives 7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 C. REVENUE REQUIREMENTS 1. Adjusted Allowed Earnings 4,885,284 5,669,696 6,633,544 7,761,246 2. Gross up for tax 33.64% 36.44% 37.00% 37.48% 3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820 4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726 5. Company Adjustments 143,000 8,143,000 143,000 143,000 6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000 7. Other-- 8. Other--$6 Alameda County Initiative 9,202,380 9,386,428 10,325,070 8. Revenue Required 84,336,322 101,821,472 107,810,230 114,991,616 D. FXCFSS REVENUE(PRE,-TAX) 1. forecasted Revenue(2%growth rate) 80,199,625 81,803,618 107,637,200 115,828,391 2. Rate Increase 23,723,049 5,920,046 6,370,561 3. Adjusted Revenue 80,199,625 105,526,667 113,557,246 122,198,952 4. Revenue Required 84,336,322 101,821,472 107,810,230 114,901,616 5. Additional Franchise Fees,Corp Charges 1,350,720 1,665,707 2,016,335 6, Adjusted Required Revenue 84,336,322 103,172,193 109,475,937 117,007,951 7. Excess(Deficit) -7,138,355 -4,136,697 2,354,474 4,081,309 5,191,002 8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 -8,153,633 -4,072,324 1,148,678 9. Rate Adjustment Required 29% 5.5°% 5.5% ROE Calculation Attachment 4 A EQUITY CALCULATIONS 1989 1990 1991 1992 1993 1. Beginning Stockholders'Equity 23,362,463 29,311,655 33,622,246 39,020,846 45,654,390 2. Less NY's Portion of Altamont -119,004 -574,693 -271,095 3. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 4. Working Capital Adjustment 2,116,808 0 5. Stockholder Buyouts and Dividends 6. Allowed Earnings(post tax) 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 7. Retained Earnings(post tax) 8. Ending Equity for ROE 29,311,655 33,622,246 39,020,846 45,654,390 53,415,637 Reconciliation to Franchise F/S 8. N.F.'s portion of Altamont(temp difi) 966,813 9. Excess Net Income -14,009 10.Cumulative Unadjusted Working Capital 0 12.Ending Equity per F/S 30,264,459 B. ALLOWED EARNINGS 1. Beginning Equity for ROE 23,243,459 28,736,962 33,351,151 39,020,846 45,654,390 2. ROE Percentage(%) 17% 17% 17% 17% 17% 3. Allowed Post-tax Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 4. Adjustments per 1990 HF&H Report 5. Prior Management Incentives 6. Current Management Incentives 7. Adjusted Allowed Earnings 3,951,388 4,885,284 5,669,696 6,633,544 7,761,246 C. REVENUE REQUIREMENTS 1. Adjusted Allowed Earnings. 4,885,284 5,669,696 6,633,544 7,761,246 2. Gross up for tax 33.64% 36.44% 37.00% 37.48% 3. Pre-Tax Income 7,361,404 8,919,865 10,530,000 12,413,820 4. Forecasted Expenses 77,917,918 86,598,227 90,447,803 95,139,726 5. Company Adjustments 143,000 8,143,000 143,000 143,000 6. Adjustment per HF&H Rate Review -1,086,000 -11,042,000 -2,697,000 -3,030,000 7. Other--$6 Alameda Cnty Measure D 9,078,420 9,259,988 10,185,987 8. Other--Facilities Mgmt Fee-$1/Ton 696,313 710,240 724,444 8. Revenue Required 84,336,322 102,393,826 108,394,030 115,576,977 D. EXCESS REVENUE(PRE-TAX) 1. Forecasted Revenue(2%growth) 80,199,625 81,803,618 108,471,597 116,173,080 2. Rate Increase 24,541,085 5,423,580 5,808,654 3. Adjusted Revenue 80,199,625 106,344,703 113,895,177 121,981,734 4. Revenue Required 84,336,322 102,393,826 1.08,394,030 115,576,977 5. Additional Franchise Fees,Corp Charges 1,439,150 1,702,237 1,992,853 6. Adjusted Required Revenue 84,336,322 103,832,976 110,096,268 117,569,831. 7. Excess(Deficit) -7,138,355 -4,136,697 2,511,727 3,798,909 4,411,904 8. Cumulative Excess(Deficit) -6,371,409 -10,508,106 -7,996,380 -4,197,470 214,433 9. Rate Adjustment Required 30% 5% 5% i Attachment 5 COMPARATIVE SCHEDULE OF REFUSE COLLECTION RATES Page 1 Of 2- . CONTRA COSTA COUNTY COMMUNITIES MAY 1990 FLLAeAYT DAY Community DAN►ILLL LAIAYr7Tx ORINDA NORAOA PACRICO AHTIOC3 CLAYTOY PILL RAXOY WALNUT CRxxx CONCORD XA]lTI1Rx TITTs3DR0 Lffe etive Data of Rotas 2/1/90 2/1/90 2/1/90 2/1/90 211/90 2/1/90 3130190 1/1/90 6/1/89 1/1/90 5/1169 11/1/29 4/1/69 Deecl,ipt(on of Service Residential Backyard Service: On. 32 gallon can per week 16.50 16.50 17.45 15.60 15.15 17.95 17.00 14.00 10.64 13.90 14.00 16.00 13.15 Second can rate .7.75 7.75 8.30 7.35 8.40 9.00 9.50 6.25 - 7.80 4.90 13.50 13.15 weekly trlmming. quantity 2 Cans 2 Cana 1 Can 1 can 2 Can - - Varies - 2 Cans 2 Cana Unlimited - Seasonal cleanup service Frequency per year 3 3 3 3 3 1 1 2 3 3 1 2 0 Quantity 2 Cu yd. 2 Cu yd. 2 Cu yd. 2 Cu yd. 2 Cu yd. 2 Cu yd. 2 Cu yd. 2 Cana 3 Cu yd. 2 Cu yds 2 Cu yda Unlimited --- Multi-Apartment Service: One 32 gallon can per week 13.65 13.65 12.50 12.50 11.30 la.80 --- 11.05 20.30 12.60 17.75 Varies 17.75 Commercial Service: One 32 gallon can per week 18.90 18.90 12.80 12.60 35.15 14.75 17.00 11.05 20.30 18.65 17.75 16.00 17.75 Second can rate 7.45 7.45 8.25 6.25 15.15 14.75 17.00 6.25 6.00 18.65 17.75 16.00 17.75 Onverd BIn One pick-up weekly 71.20 71.20 71.95 71.95 29.45 63.00 '63.00 27.25 76.46 60.25 --- --' --- Two pick-ups weekly 121.70 121.70 126.80 126.a0 145.25 163.00 163.00 133.00 130.67 112.40 --- --- --- Rate par czbie yard (2 pick-ups) 121.70 121.70 126.20 126.30 145.25 163.00 163.00 133.00 130.67 112.40 --- --- --- Two-yard Al On. pick-op weakly 121.70 121.70 126.20 126.150 121.75 106.00 106.00 105.50 130.67 109.45 129.00 273.00 129.00 Two pick-ups weekly 222.70 222.70 235.50 235.50 243.60 212.00 212.00 211.00 239.09 202.50 215.00 273.00 215.00 Rata per cubic yard (2 pick-ups) 111.35 111.35 117.75 117.75 121.80 106.00 106.00 !05.50 119.55 101.25 107.50 - 107.50 Tn yard Bin Three-Yd aln On. plek-ap weekly 222.70 222.70 --- -- •237.10 2D7.00 --- 209.50 239.09 203.60 172.00 ---Two pick-ups weekly 424.00 424.00 -- --- 474.10 414.00 --- 422.75 455.25 359.90 302.00 --- �- Rate per cubic yard (2 pick-ups) 106.00 106.00 --- --- 115.53 103.50 --- 104.69 113.21 89.97 100.67 -- Percent of co-areial customers (Note 1) 31 3% 21 21 .121 N/A M/A MIA 3% H/A H/A 7t N/A Drop Box Service: largest container size (cu yd): 30 30 20 20 20 40 20 20 30 30 20 24 20 Rate per pull 371.10 371.10 255.05 255.05 260.90 225.00 234.00 246.75 392.45 339.00 240.00 290.00 240.00 Rate per cubic yard 12.37 12.37 12.75 12.75 13.04 5.63 11.70 12.34 13.23 11.30 12.00 12.08 12.00 Residential Recycling Program: Curbside (C) or Drop-off (D) C C C C C C C --- C C C C C Monthly amount charged customers .95 .95 .95 .95 N/C .85 .24 --- .95 .55 .75 N/C .90 Recyclable. (Yes <Y>; No <H>): Newap.pera Y Y Y Y T Y Y --- Y Y Y Y Y Clsaa Y Y Y Y Y Y Y --- Y Y Y Y Y Aluminlum Cana Y Y Y Y Y Y Y --- Y Y Y Y Y P.L.T. Bottles Y Y Y Y Y Y Y --- Y N Y Y Y Other y Reference to Footnotes A, e B C. D H F, C, I X. H L Refuse Disposal Sites: *Contra Costa Contra Cost. Contra Costa Contra Costa landfill (Gar) (CDF) (Car) (car) Transfer Station Acme Acme Acme Acme Acme Ae.e Aeae Acme Ana lea per ton paid by refuse collector 52.22 52.22 52.22 52.22 45.00 45.00 45.00 52.22 52.22 52.22 52.22 52.22 45.00 Terr.ln: H H H ri F H H F - rlat ri M M M M M . H - Moderately Hilly M - Hilly . Refuse Collector Valley West. Valley Mast. Orind.- Orinda- Ple....t Ple....t PI....nt PI....nt Valley Valley Concord Martinez Pittsburg Management Hangemcnt Mor.ga Morage )1111 11111 Hill Hill waste west. Dl.p...I Sanitary Disposal Disposal Disposal Bayehore 3syshore n.y.hore Bayshore Management Management Service Disposal Dlsp...1 Disposal Disposal Attachment 5 Page 2 of 2 COMPARATIVE SCHEDULE OF REFUSE COLLECTION RATES OTHER HAY AREA COMMUNITIES MAY 1990 oAT.L1"/XONTCLX it. TAI kTAi 7ATRTAR rijusPQR LAl1i8P0R cos ALTO• RVOT000 sz.T Community LZTV,%OAL DQDLIN DIDTAIcr PILDNOMT czWkrO RICDNOND CTGT) (iILLT) NILIia0AOV0i (TLAT) (silly) I.OS 2/sl IILL CITT l7N 199 11091/290 /ACR 111/90 ILL•ct1w. Data of Rat.• 1/1/70 1/1/90 111190 1/1/90 1/1/27 7/1/66 4/1170 4/1/70 10/l/a7 111/90 1/1/90 !/12/19 12/1/67 30/1/t7 7/1/s7 7/1/t7 1/1/70 ry.,-ri t1Dn .e S<rvir Aenld.ntl.l Dockyard Service: One 7x gallon can par...k 7.42 5.70 7.20 7.40 7.00 30.27 7.65 13.75 31.17 10.10 17.65 11.75 30.75 7.77 2.70 1; 15 6.11 Secord can rate 1.70 ].93 7.20 5.00 3.50 6.37 ■.45 6.41 10.0] C.10 7.20 1.01 1.10. 2.71 weekly can rate qu.nilty Nona Nona Nona None Non• Nana 1 N yd 1 N yd None I Can 1 Can Nona Nona Nona Unlimited Aon• UnlSalted Seasonal cleanup •e rvlca 2 2 1 1 2 { ] O l 3 Frequency per year 2 4 1 0 2 2 UnlSalted Unli.lt.d L-72 Cal 3 N yd! 3 N ydt Unlimited Unlimited 2 N yd! None 1 Cu 74 •d Quantity Unlimited Unlimited Unlimited None 14 N yd'ly N yd C.ns Multi-Apartment Sar'wic•: -- 7.67 Note 4 10.15 3.27 One 32 gallon can per week 7.12 3.70 6.10 6.70 9.00 10,37 7.65 11.75 11.95 15.60 11.75 10.1s 3.13 commercial Service: -- Dnn 72 gallon can par wank 7.11 3.70 7.12 7.20 9.60 14.40 10.10 13.19 11 2.10 is 7.20 11.51 7.65 6.91 Not• l 10.15 1.29 secrond tan rate 4.30 3.70 7.42 7.20 9.00 11.40 10.10 11.17 1.3-Yd Din p - .yd Din -- 90.15 [L.O5 50.76 76.01 ]7.00 17.37 von• pick-up v.•kly ]1.75 2f.70 ]l.OS 71.10 60.15 69.70 6x.11 c7.12 -- 3c.00 6[.00 No pick-upe w.<kly 60.41 36.60 61.30 [9.13 92.]0 116.90 105.8, 105.91 130.00 110.00 I1A.77 116.70 77.76 36.27 71.00 ]3.31 Rat, per cubic yard (7 pick-ups) 60.44 36.60 66.10 18.15 92.]0 I1a.90 305.3/ 105.6{ 110.00 110.00 35.78 77.9] 17.76 36.83 72.00 35.34 Three-Td Dlnmree-Td Din7firee-Td Rln Th -Td Din �vnrd D1n lit 0 Om plri-up weekly 57.74 53.10 63.29 [2.75 109.]0 112.00 307.77 107.77 139.00 369.00 =_;-,� 207.20 1f 3.52 102.78 156.00 70.61 OV pick-up. weekly 302.30 9].70 113.06 115.35 1:5.60 310.00 191.]7 193.77 ]12.00 ]12.00 Rate per Cubic yard 76.16 37.77 9/.36 $t./f 71.00 75.37 (2 pick-ups) 33.10 46.10 57.53 57.67 92.&0 110.00 16.19 11.19 101.00 101.00 ZOU r-vnrd Din wee-Yd Din Thr* -Td Din rive-Yd Dln ilve-Td Din Sir-Td Din ESr-Td Bic, Din Om pick-up weekly 30t.1t 96.25 116.00 136.20 -- 191.10 157.15 157.13 -- 21:.00 240t.o0 211.17 170.30 107,71 301.67 90•[7 Two pick-ups weekly 205.19 1950.0'5 219.:1 220.20 -- 753.]0 276.9• 37:.82 -- 167.00 {69.CJ 321.74 327.30 385.33 303.59 ill.){ Rate per cubic yard (2 pick-up.) 51.77 45.01 54.96 55.05 89.73 12.11 12.93 -- 77.eC 73.30 51.93 11.9{ 11.7{ S1.1S• --- ]5.76 Percent of eomaercl.l -at (Note 1) $1 40% Ot N/A 41 N/A It 0% 01 401 01 15t 1% SI St lit 241 Drop box service: L.rq t container •1L• (cu yd)s 40 70 50 so 20 t0 --- -- �- 00 195 40 -- 40 40' s0 N/A Rata per pull ZI2.00 111.00 297.00 797.50 170.00 ]76.00 --- -- --- 207.00 1p1,00 7/6.00 --- 430.00 316.00 670.•0 N/A Aa to per Cubic yard 5.55 4.20 5.94 5.95 7.50 6.400 --- --- --' 11.17 11.39 9.15 6.15. 1[.60 N/A AenldenGial Aeryeling Program: -- Nrbsld, (C) or 0rap-oft (D) C -- -- --- C --- C C C C C C --- C C C -- Month ly amount eh•rged eusto..rs N/C --- - --- --- .50 --- 1.75 3.75 .47 1.75 1.75 N/C .23 N/C 1.75 ReCYClablas (Yet <Ta; No<N>): Nay.paper. T --- --- --- Y --- y Y T T y y --- T Y y --- C1.a. y --- --- --- T --- T T T T T T --- T y T -_ Al..lniu. Can• T --- --- --- y --- T T T T T T --- T T T --- P.r.T. Cottle. N -- --- --- T --- T T y y T T --- T y 7 --- Other --- y T T T Y T Acfercnee to roetnotes J J, N J, L J J, M, N L, Q 0, P, R 0, P, R J. 5, T P, R P. R J. O. T. U J J. O V. N J, P. R i R.Cu• DS•po••I Site.: Tolo Co. Lndf(11 Alta.Ont Alte.ont M. Contra N. Contra Redwood Redwood Newby Newby Oz Newby -Redwood Cost. Sen.Costa San. S.Qlt•ry sanitary Island Island Mountain Island Santl.ry Tranafcr Station Oakland Davis DrI, Karin R.a. Karin Res. scavenger Street San Carlos Recovery Recovery re• per ton paid by refuse eollc<tor Not, 7 Note 7 Note 2 Not. 2 71.20 Nola 2 12.00 22.00 71.00 No[e ] MoCe 3 71.00 17.65 11.00 3].67 21./0 14.30 301 r T,rr,ln: r r N 11 r N r it 70t 11 r N M M N M N T r - rlat M - Moderately hilly 11 - hilly Richmond Fe lrfaa felrLa% D[ownlnq- N•rin Mt C1n �• Alto• I.oe Alto• Oro Ferris want• Day Cltlas w•ato Ae[use Collector LlvDublin Llv cable/ Oakland Oakland Let bay et Dublin eOUblln 3eeve ng er ..nave ngc[ 5en1 Cary Se nita[y Ce rb•ge Garbage Fe[rls San lta[y 5en1[a ry Cwr b•qe Cerbe9e Ferris Msn.gcaan[ Ae[u xanegeaent service Dl epo..l Di.p...1 CITY OF DUBLIN HISTORICAL COMPARISON OF SELECTED GARBAGE RATES 1986 - 1990 Prior to April 1, 1986, the Dublin San Ramon Services District (DSRSD) held the franchise for garbage service. The rates charged by DSRSD were: Residential: Commercial/Bin Service: 1 can $ 5. 05 $4.75 per cubic yard not compacted 2 cans $ 8. 55 3 cans $12 . 05 The City of Dublin assumed the franchise role effective April 1, 1986. At this time, the rates were reduced. The City Council lowered the franchise fee collected and implemented a commercial rate reduction which had been recommended to DSRSD by the Joint Rate Review Committee. Residential: Commercial/Bin Service: 1 can $ 4 .90 $4 . 15 per cubic yard not compacted 2 cans $ 8 . 30 3 cans $11.70 No change in the rates occurred until January 1, 1990. At this time, the following rates were implemented to offset increased costs incurred by the garbage company: Residential: Commercial/Bin Service 1 can $ 5.70 $4 . 80 per cubic yard not compacted 2 cans $ 9 . 65 3 cans $13 . 60 Effective July 1, 1990, in response to State Legislation, the City Council implemented a residential curbside recycling program. This program is operated using the same contractor, however, the program is not a franchised operation. The recycling program cost is. $1. 25/month for single family customers. In addition, a 20 cent surcharge was added to single family customers to cover the cost of a Household Hazardous Waste Collection. A surcharge of 15 cents per cubic yard was added to residential units using bin service. The rate structure effective July 1, 1990 is as follows: Residential: Commercial/Bin Service 1 can - Garbage Disposal $ 5.70 Non Residential $ 4 . 80 per cubic yard Recycling Surcharge 1.25 not compacted HHW Surcharge . 20 Total 1 can $ 7 . 15 Residential Bin Service 2 cans Garbage Disposal $4 . 80 per cubic yard (Includes surcharges) $11. 10 not compacted HHW Surcharge . 15 per cubic yard 3 cans (Includes surcharges) $15. 05 Total $4 . 95 per cubic yard a:histgarb.doc.psr EXHIBIT c;,; .. RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ******************************** AMENDING SCHEDULE OF SERVICE RATES FOR SOLID WASTE COLLECTION AND DESIGNATING THE POINT OF COLLECTION FOR SINGLE FAMILY COLLECTION WHEREAS, the City of Dublin adopted Resolution No. 47-90 in April of 1990 which established garbage service rates; and WHEREAS, a notice announcing a public hearing on the proposed rate increase has been published on January 4, 1991 and January 10, 1991 , as required by the Government Code; and WHEREAS, Oakland Scavenger Company (OSC) has submitted a 1991 rate application to the Joint Refuse Rate Review Committee (JRRRC) in accordance with the franchise agreement between the City and OSC; and WHEREAS, the Rate Application submitted by OSC included a request for certain expenses to be paid by the ratepayers; and WHEREAS, the JRRRC recommended that certain expenses be excluded from the 1991 rate application; and WHEREAS, the exclusions included costs for: Landfill Closure/Post Closure, Lawsuit Defense Costs, and an Adjustment for Non-Franchised Assets at the Altamont; and WHEREAS, the JRRRC agreed to review these exclusions in the future rate application, provided that adequate background data can be obtained to support inclusion of these expenses in the rates; and WHEREAS, included in the expenses contained in the rate application presented by OSC was an $8 million lawsuit settlement; and WHEREAS, the settlement was related to resolution of a discrimination lawsuit titled Bonilla v. Oakland Scavenger Co. ; and WHEREAS, the JRRRC reviewed this request with Legal Counsel to ascertain the responsibility of ratepayers to reimburse OSC for this settlement; and WHEREAS, the JRRRC Special Legal Counsel found that this is not an appropriate cost based upon legal precedents established in California and other states; and WHEREAS, the JRRRC recommendation excludes reimbursement for the $8 million settlement of Bonilla v. Oakland Scavenger Co. ; and WHEREAS, the JRRRC Special Legal Counsel has advised that the member agencies of the JRRRC, including the City of Dublin, are legally justified in refusing to increase solid waste collection rates to reimburse Oakland Scavenger Company for the $8 million paid by it to its minority employees in settlement of their federal civil rights action; and WHEREAS, the official recommendation by the JRRRC includes the estimated cost of a special surcharge imposed by Measure D in the November 1990 Alameda County election; and WHEREAS, the legality of the Measure D surcharge is in question and is the subject of pending litigation; and WHEREAS, the JRRRC report identifies that excluding the estimated costs of ;Measure D, OSC requires a 29% increase to meet estimated expenses in 1991, including the repayment of deficit balances from prior years; and WHEREAS, the City Council has conducted a public hearing on the matter on January 14 , 1991; 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. 'Beginning January 1, 1991, the Rate Schedule attached hereto, marked "Exhibit All and by reference, made a part hereof, shall be the official rate schedule until further rescinded or amended. 2 . As described above, this rate revision is based upon the recommendation of the Joint Refuse Rate Review Committee findings in the review of the 1991 Rate Application (dated November 19, 1990) . 3 . This rate increase does not include any reimbursement for costs attributable to Measure D (Alameda County Waste Reduction and Recycling Act of 1990) . 4 . For the reasons stated above, the City Council has determined and finds that the none of the $8 million settlement expense associated with the lawsuit (Bonilla v. Oakland Scavenger Co. ) shall be approved as an allocated cost under the franchise agreement between the City of Dublin and Oakland Scavenger Company. 5. Said rates are in accordance with the City of Dublin Solid Waste Management Ordinance and the Agreement between the City of Dublin and Oakland Scavenger Company, a subsidiary of Waste Management Inc. , regarding Waste Collection and Disposal. -2- 6 . The content of this Resolution shall supersede Resolution No. 47-90 adopted the 23rd day of April, 1990 . PASSED, APPROVED AND ADOPTED THIS 14TH DAY OF JANUARY, 1991 , BY THE FOLLOWING VOTE: AYES: NOES: ABSENT: ATTEST: Peter W. Snyder, Mayor Kay Keck, City Clerk PSR/lss a:ResGarb.agenda -3- EXHIBIT A I . RATES The monthly rates for collection of refuse within the City of Dublin as of January 1 , 1991 , are set forth as follows : Residential a. Once a week collection of one container of 32 $ 8 . 55 gallon capacity. This rate includes a $1 . 25 (one dollar and twenty-five cents) charge for curbside recycling and a $0 . 20 (twenty cents) surcharge for Household Hazardous Waste collection and Special Services . b. Once per week collection of each additional can $ 6 . 20 beyond "a" above C. Large accumulations per cubic yard $ 6. 20 d. Special pick-ups, minimum $12 . 00 Commercial (For Refuse Only - Excludes Container Rental Rate) a. Commercial rate for non-residential customers Per cubic yard (not compacted) $ 6 . 20 b. Commercial rate for Multi-family Residential $ 6 . 35 customers per cubic yard (not compacted) . This rate includes a $0 . 15 ( fifteen cents) surcharge for Household Hazardous Waste Collection and Special Services . C. Compacted material per cubic yard. $12 . 40 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' 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. III . ADDITIONAL SERVICES PROVIDED IN RATES The above rates shall include two (2 ) annual residential cleanups . Dates of said cleanups shall be at the discretion of the City upon reasonable notice to the Company. The rules regulating the special cleanup shall be approved by the Contractor and the Director. PSR/lss a:ExhibitA.agenda LETTER OF AGREEMENT FOR USE OF SPECIAL GARBAGE RATE SURCHARGE This Agreement is by and between City of Dublin (CITY) and Oakland Scavenger Company (COMPANY) , and is dated January 14 , 1991. WHEREAS, effective July 1, 1990 the City of Dublin revised Garbage Service Rates to include a surcharge; and WHEREAS, the surcharge consisted of 20 cents per month for single family customers and 15 cents per yard for multi-family customers with bin service; and WHEREAS, the surcharge was necessary to recover costs associated with a Household Hazardous Waste (HHW) Collection Day conducted May 5, 1990; and WHEREAS, current estimates project that if levied for the entire calendar year, excess funds will be generated; and WHEREAS, both CITY and COMPANY agree that flexibility in the use of excess funds is important: NOW, THEREFORE the CITY and COMPANY do agree as follows: I. The garbage rates to be established for 1991 will ' continue to include the surcharge first levied July 1, 1990. Funds collected by COMPANY shall be applied to the balance owed for the cost of the May 5, 1990 Household Hazardous Waste Collection Day, until such time as the COMPANY has fully recovered the expense for the event. II. COMPANY shall provide CITY with quarterly reports identifying the total surcharge amount collected and the amount owing for the HHW collection event. III. In the event that CITY receives a Grant Reimbursement for the HHW collection, CITY shall directly apply these proceeds to the cost of the HHW collection. COMPANY quarterly reports shall identify any funds transferred in this manner. IV. Any excess funds collected shall be used only for the purpose of providing services to the ratepayers. CITY shall have sole discretion in determining services to be provided with these funds. COMPANY shall only expend funds upon written instruction from CITY, except as provided in Section V. V. In the event that in 1991, the COMPANY has a deficit in the fund utilized to pay for the two special residential pick-ups which are not included in the rate structure, the difference may be paid for with excess surcharge funds. �..X� q VI . Nothing shall prevent the two parties from determining other uses for the excess funds, provided that the use is approved in writing by the City Council . For Oakland Scavenger Company: D. David McDonald, Date Executive Vice President For City of Dublin: Peter W. Snyder, Mayor Date a:SURCHARG.Doc.PSR