INFRASTRUCTURE & FRANCHISE

Transcription

1 CITY COUNCIL COMMITTEE INFRASTRUCTURE & FRANCHISE ROLL CALL PUBLIC COMMENT PERIOD Laura Hoffmeister, Chair Dan Helix, Committee Member 5:30 p.m., Thursday, June 14, 2012 Garden Conference Room 1950 Parkside Drive, Concord - A G E N D A - 1. CONSIDERATION Of Request by Concord Disposal Service for a Rate Increase Associated with the Existing Franchise Agreement for the Provision of Solid Waste Services, report by Joan Ryan, Housing Manager. 2. ADJOURNMENT In accordance with the Americans with Disabilities Act and California Law, it is the policy of the City of Concord to offer its public programs, services and meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require a copy of a public hearing notice, or an agenda and/or agenda packet in an appropriate alternative format; or if you require other accommodation, please contact the ADA Coordinator at (925) , at least five days in advance of the meeting. Advance notification within this guideline will enable the City to make reasonable arrangements to ensure accessibility. Distribution: City Council Valerie Barone, Interim City Manager Kay Winer, Interim Assistant City Manager Mark Coon, Interim City Attorney Victoria Walker, Direct of Community & Economic Development Joan Ryan, Housing Manager John Montagh, Redevelopment and Housing Manager Press

2 AGENDA ITEM NO. REPORT TO COUNCIL COMMITTEE ON INFRASTRUCTURE & FRANCHISE TO HONORABLE COMMITTEE MEMBERS: DATE: June 14, 2012 SUBJECT: COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICES FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES Report in Brief Garbage and recycling services are provided to Concord residences and businesses through a franchise agreement with Concord Disposal Services (CDS), a local family-owned business. The City s Solid Waste Franchise Agreement allows CDS to request an adjustment to residential rates through a rate setting process. Mr. Clark Colvis, the Chief Financial Officer for CDS, submitted a draft Base Year Rate Change Application last September (Attachment 1). The September Base Year Rate Change Application (Application) was revised by CDS on November 18, 2011 and again on April 10, 2012 (Attachment 2). Staff coordinated with the R3 Consulting Group, Inc. to commence the Application review steps required in the City s Rate Setting Process and Methodology Manual for Residential Solid Waste Fees. R3 Consulting Group, Inc. completed a draft report reviewing the Application in mid-may 2012 (Attachment 3). Staff requests the Committee to provide feedback and direction on the proposed rate increase and other potential deal points as part of the negotiation of the 12 th Amendment to the City s Franchise Agreement. Staff has scheduled a follow-up Committee meeting for June 27, if necessary, to obtain a recommendation on the rate application request to forward to the City Council for review and approval, scheduled for the Council meeting on July 10, Background The City entered into its Agreement to extend the existing Franchise Agreement (Agreement) with CDS on July 14, 1980 to provide solid waste disposal services for the City of Concord. Since then, the City and CDS have amended the Agreement 11 times, most recently on February 7, On December 14, 2009, the City Council adopted a 10 th Amendment to the Agreement including a rate increase for weekly residential service that became effective on January 1, The Agreement also included a modification of the annual franchise fee transitioning from a flat fee to a percent of gross revenues calculation (currently 7.07 percent). Customer service enhancements including the establishment of programs for the disposal of sharps (needles) and pharmaceuticals, the collection and removal of small household batteries, and provision of one additional residential clean-up day (for a total of 3) per year were also negotiated and included in the Amendment. Finally, the Amendment

3 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 2 of 12 provided that CDS has the option of submitting another Base Year Application in 2010, should CDS want further rate increases, rather than the scheduled interim year adjustments. On May 24, 2011, the City Council authorized approval of a contract with R3 Consulting Group, Inc. (R3) to conduct a solid waste residential Base-Year Rate Adjustment Application Review of rates. Pursuant to the Rate Setting Process and Methodology Manual for Residential Solid Waste Fees, the City retains a consultant to evaluate and review the rate increase request and the cost is split with CDS. A specialized consultant is needed to assist in the involved process of residential rate reviews. As a part of their scope of work, R3 conducted a survey of garbage rates in other Central County service areas. On July 13, 2011, Mr. Joseph Garaventa, Chief Executive Officer of CDS, submitted a letter requesting that the City amend the current Agreement to adopt a new 15 year term that would renew automatically each year. CDS indicated they were requesting the term change in order to create more financial flexibility for the company as it adjusts to new State mandates that require significant capital investment by CDS. On September 14, 2011, the City received a letter request (Attachment 1) from CDS with their Draft Base Year Rate Application, indicating that they are experiencing cost increases associated with providing residential solid waste and recycling services that were not anticipated in the prior (10 th ) Amendment. These were attributed to tipping fees and franchise fee increases, both of which increased beyond the Consumer Price Index (CPI). CDS agreed that the Application to modify the term of the Agreement (requested July 13, 2011), would be processed initially, followed by the Base Year Rate Application. On November 18, 2011, R3 received a revised application requesting a 10.19% increase, justified by CDS based on an increase of 23% in workers compensation premiums resulting in a substantial increase in direct labor costs. On February 7, 2012, the City Council adopted an 11 th Amendment to the Agreement changing the term which was set to expire in the year 2021, to include a 15-year contract term that renews automatically annually. The 11 th Amendment included a one-time $50,000 community benefit payment from CDS to the City which was allocated on March 6, 2012 toward the City s 2012 Downtown Concert and Event Series for this summer. At the March 6 Council meeting, CDS agreed to address an increase in the City s franchise fee and potential additional community benefits, during the next rate setting meetings. On April 12, 2012, R3 received an amended Application (Revision 2) requesting an 11.32% increase (Attachment 2), whereby CDS noted increases to both workers compensation and fuel costs. After CDS supplied the complete financial data needed to evaluate the Application on April 20, City staff met with CDS on May 15, 2012, to review R3 s analysis of the Application and to discuss additional potential deal points related to garbage and recycling services with respect to the City s franchise fee, community benefit payments, and the provision of customer service enhancements, and subsequently scheduled a June 14 meeting date with the Infrastructure and Franchise Committee to Page 2 of 12

4 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 3 of 12 provide feedback on the Rate Application review (12 th Amendment). Based on relative agreement on general points, staff tentatively set a date of July 10 and/or July 24, 2012 for the City Council s review of the request for a Base-Year Rate Application Review. Discussion This staff report includes a short discussion of the City s Franchise Agreement and the methodology used to regulate residential rates and it also addresses the following topics: existing and proposed rates, the Refuse Rate Index and Base Year Reviews, date of the rate change, the franchise fee, community benefit payment, customer service enhancements, waste diversion/recycling rates, potential changes to the rate setting manual and updating of the format for the City s Franchise Agreement. The City s Franchise Agreement allows the City to set a new residential fee rate to address revenue shortfalls by the service provider. The City regulates residential rates by using the City s Rate Setting Process and Methodology Manual for Residential Solid Waste Fees (Manual), dated January 12, The Manual, adopted by the City Council in 1993, and updated in 1997, 2006, 2007 and 2010, provides the structural framework to review an Application and to determine CDS s revenue requirements. As prescribed in the Manual, detailed base-year reviews occur every four years. During each of the interim years between base years, rate adjustments are based on 70 percent of the Consumer Price Index (CPI). It is important to note that the Manual prohibits the collection of past shortfalls in new rates. Rather, the new rates address the future balance between costs and revenue. The City reviews all of CDS s revenues, costs and profits when it sets residential rates. CDS provides solid waste collection services to three service sectors: residential, commercial, and industrial. The City sets a rate structure for the residential sector based on the specified revenue requirements for CDS. Rates are set to cover allowable costs and allow a reasonable profit to the provider. The City does not explicitly regulate commercial (which typically includes apartment complexes of 4 or more units) and industrial rates. However, the City reviews all CDS revenues and costs when it sets residential rates. This can indirectly influence commercial and industrial rates. In Concord, residential rates have been historically subsidized by commercial rates. The City and CDS have acknowledged that a residential subsidy by the commercial sector averaged about 17% between 2004 and 2008, while the industrial, or drop box, sector essentially breaks even. This subsidy has grown to approximately 37% in This means that CDS profits from the commercial sector cover an effective 37% shortfall in residential costs plus targeted profits. Page 3 of 12

5 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 4 of 12 Recent residential rate increases over the last seven years are shown below. The last time residential rates were increased with the Tenth Amendment, which was effective in January Historical Residential Rate Increases Year Rate Increase % % % % % % % Year 2012 has had no increases to date, but current request would be implemented in August Base-Year Rate Review Results and Recommendations The City s consultant, R3, utilized the guidelines in the Manual to review the 2012 Base-Year Rate Review Application and prepared a draft report (Attachment 3). The draft report provides background information, discussion of the Manual, significant historical issues, analysis of projected cost, rate review results, and recommendations. R3 noted that for the year 2010, CDS showed a net loss before income taxes on their audited financial statements of $188,814. The work tasks that R3 has performed include verifying the completeness of the Application, preparation of a detailed rate review including: actual and projected revenues for CDS, actual revenue levels achieved, determination of profit levels, determination of the components of the requested increase in residential rates, and preparation of a market survey of similar jurisdictions for residential and commercial rates. The allowable profit is specified in the rate manual thorough the use of a targeted operating ratio range. The manual requires that the rates be set to allow the service provider an operating ratio of between 88% and 92% which equates to a profit of between 8.7% and 13.64% Per the Manual, the following costs are reviewed: direct labor, tipping fees, corporate overhead, office salaries, other general and administrative costs, trucking charges, regulatory fees, and franchise fees. Of these costs, those that are identified as an unusual increase (or decrease) are further investigated. The R3 analysis has determined based on the results of their review, that CDS is projected to have a 2012 net shortfall of approximately $1,165,632 for calendar year CDS is asking for an percent increase in residential rates in order to cover the net shortfall, based on the following four factors: Direct labor cost increases of 5.1% associated with workers compensation premium increases (of 23%) for base year 2012 and salary and benefit increases associated with collective bargaining agreements (4%); Tipping fees are projected to decrease due to a decrease in projected tonnage for 2012; Page 4 of 12

6 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 5 of 12 Trucking charges are expected to increase 3.33% due to increase in fuel costs; and City franchise fee is projected to increase 29.87% due to the increased percentage in and the projected increase in revenues. The 10 th Amendment shifted the City s franchise fee from a flat fee of $1,250,000 to a fee based on a percentage of gross revenues, established as 8.24% for FY 12/13. Current rates, effective January 1, 2010, are indicated below for each level of service and include the weekly pick-up of a 64-gallon cart for single-stream recycling and a 96-gallon cart for yard waste. The proposed residential rate increase of 11.32%, will meet the revenue requirements of CDS and are presented in the table below: Service Level (Single Family) 2012 Base Year Proposed Rate Increase 10 th Amendment adopted 12/14/2009 Current Rates 12 th Amendment (Sept. 2012) Proposed Rates # of Accounts 96-gallon refuse cart $38.00 $ , gallon refuse cart $31.00 $ , gallon refuse cart $23.00 $ , gallon refuse cart 1 $18.81 $20.95 Phasing out 32-gallon (senior) cart; $19.34 $ ,310 no new subscriptions allowed 1 (Condo) 96-gallon refuse cart $37.00 $ gallon refuse cart $30.00 $ gallon refuse cart $22.00 $ Total units 27,772 Current rate is increased by 11.32% and rounded to the nearest $ The 20-gallon and 32 gallon senior carts are no longer available to new customers. Rate Increase Recommendation Staff recommends a residential rate increase of 11.32% consistent with the CDS request, based upon the increases in a variety of cost components that comprise the rates. These include a combination of increases in labor, workers compensation insurance, fuel costs, and franchise fees. This is balanced with the relative cost comparisons of rates within other local jurisdictions (Attachment 3). In addition, staff considered the results from the City s last mail survey (2011) which found that 86% of respondents recognized garbage service as either good or excellent, the highest rating for any City service. Further, the rate increase is supported by the Rate Setting Manual based upon the projected net shortfall for CDS for base year Page 5 of 12

7 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 6 of 12 Comparison of Residential Rates Attachment 3 includes a comparison of residential rates taken from the R3 report (Appendix 4). The R3 report finds that Concord s proposed rates will still be 15% and 29% below average among the local (Central County) jurisdictions examined for the 64-gallon and 96-gallon service accounts, representing 64% of all accounts. The 32-gallon service is only slightly above average (3.8%). Refuse Rate Index and Base Year Reviews During staff s recent joint meeting with CDS, both parties discussed the potential benefits to expand the length of time between Base Year Rate Application Reviews from four to six years, with the understanding that an effective index tool should be used to calculate potential increases for interim year adjustments. The current Agreement provides for rate increases during interim years of up to 70 percent of the change in the San Francisco-Oakland-San Jose Metropolitan Area Consumer Price Index (CPI) - (All Items) for controlled and uncontrolled costs. This rate increase allowance of 70% of the CPI was modified from 100% of the CPI during the Eighth Amendment which became effective in January For future interim year rate adjustments, R3 has recommended the use of a Refuse Rate Index (RRI) to more appropriately reflect the changes to the costs. The RRI is typically broken down into the following categories: labor, diesel fuel, vehicle replacement, vehicle maintenance, other (local or regional CPI) and disposal costs. Most of these indices are published by the Bureau of Labor Statistics (BLS), and would be measured based on a specific date each year. If in a particular year, the RRI proved to be a negative number, no rate adjustment would occur. However, the reduction would be used in calculating the next year adjustment. For example if the rates were at $100 in year one and we had an RRI of -1% for year two and a positive of 3% for year 3 then the calculation would be as follows. Year 1 actual rate: $100; Year 2 actual rate: $100; Year 2 calculated rate: $99 (100 x 99%); Year 3 actual rate: $ ($99 x 103%) The benefit of using the RRI, rather than the CPI, for rate indexing is that the RRI is more tailored toward costs in specific areas of the country and more specifically focused toward the waste collection industry. Use of the RRI during interim years would be more reflective of the actual costs and would reduce the need for a large increase during Base Rate Years, when the CPI has not been reflective of actual costs during the Interim Years. This would also allow the frequency of expensive Base Year Reviews to be expanded, thereby reducing the associated number of labor hours by City staff, the consultant and CDS for these reviews. Use of RRI for Indexing Staff recommends the use of an RRI index during interim years to more accurately assess the increases in the garbage service sector. The R3 report recommends parameters for the RRI including date of indices, development of weightings and specific published indices. Page 6 of 12

8 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 7 of 12 Base Year reviews Staff recommends that the length of time between costly Base Year Reviews be expanded from the current four (4) years to every six (6) years. Effective Date of Rate Change The rate change process is anticipated to conclude during the July Council deliberations. If that occurs, rate increases would become effective in mid-august (30 days after adoption of rates). CDS would send out notifications within their August billing statements of the rate increase. Billings occur on the 15 th of each month for the subsequent 30 days, and therefore although new rates would become effective in mid-august, they would first be reflected on September billing statements. Franchise Fee The original Agreement to Extend the Franchise Agreement (1980) provided for the franchise fee to be computed as 5% of the total annual fees collected (residential and commercial), pursuant to the contract. In August 1990, the franchise fee increased to 6.4% of revenues from residential customers and remained at 5% on all other garbage collection revenues. The 8th Amendment modified the fee back to a flat fee for the period from July 1, 2006 to June 30, 2010, where the fee was designated as $1,250,000. The 9th Amendment did not address the franchise fee. In 2009, the 10th Amendment to the Franchise Agreement shifted franchise fees from an annual flat fee of $1,250,000 to a percent of gross revenues calculation. The flat rate franchise fee remained in effect up to June 30, For the fiscal year period beginning July 1, 2010 and ending on June 30, 2011, the franchise fee was calculated based on a percentage of gross revenues, as shown in the Historical Franchise Fees table below. As the fee percentage increases over time, the Concord franchise fee would gradually become more comparable to the fees collected in other cities and counties (Attachment 4). Staff projects that the FY 2012/13 franchise fee would be approximately $2,132,040 and the FY 2013/14 franchise fee is estimated at approximately $2,434,770. Historical Franchise Fees Fiscal Year Franchise Fee Fee Percentage (per 11 th Amendment to Franchise Agreement) 2008/09 $1,250, /10 $1,250, % 2010/11 $1,525, % 2011/12 $1,810, % 2012/ % 2013/ % 1. Projected for current fiscal year, based on first three quarters only of $1,357, Page 7 of 12

9 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 8 of 12 The current Agreement does not address the franchise fee beyond June 30, Because the 11 th Amendment to the Franchise Agreement approved a 15-year agreement with provisions for automatically renewing each year (an evergreen agreement), an examination of franchise fees beyond June 2014 is appropriate at this time. Staff recommends the following approach toward maintaining franchise fees into the future: Retain Currently Scheduled Franchise Fee Increases Retain the currently scheduled franchise fees (percentage of gross revenue) for Fiscal Years 12/13 (8.24%) and 13/14 (9.41%). For Fiscal Year 14/15 and beyond, the franchise fee would be increased, based on the Consumer Price Index, and reassessed during each Base Year Rate review (every 6 years). The franchise fees of other agencies are included for comparison as Appendix 4 to Attachment 3, but range from 2% to 21%, with 10% appearing to be the most common among those surveyed. CPI Index Each September 1 (beginning in FY 14/15), the CPI would be used to index the Franchise Fee. The 12-month % change for April would be used, based on CPI-U, (all items), for the Oakland-Fremont-Hayward Metropolitan Statistical Area (MSA). A cap to the rate increase of 2.5% is proposed. Staff would notify CDS of the increased percentage rate for the upcoming fiscal year. Adjustments to the City s franchise fees beyond CPI adjustments, would be examined and negotiated during Base Rate Year reviews, consistent with the current practice, with a review of the franchise fees of local jurisdictions to determine if the City s fees remain comparable/competitive. Community Benefit Payment In February 2012, CDS indicated that they would provide the City with a one-time community benefit donation of $50,000 as part of the negotiation of the 11th Amendment to the City s Franchise Agreement. The community benefit donation was received from CDS in May 2012 and the funds were allocated toward the Downtown Music in the Park events. CDS noted at the time of the donation of funds in February that the funds would be outside of the rate structure and not passed-thru to rate payers. Attachment 5 includes as a comparison, a description of the various types of fees/payments that have been received in some adjacent jurisdictions, including a community benefit payment. It should be noted that some of these payments or fees are actually pass-thru payments that get calculated into the customer rates. Other Cities have obtained an administrative payment that is used to pay staff time for coordination and administration of franchise, garbage and recycling issues. Administrative payments have been used to provide funding to jurisdictions toward the cost of AB939 programs (State mandatory recycling laws) and Climate Action Plan initiatives. Council members may have some interest in considering an annual community benefit payment as part of the Agreement. However, consideration needs to be discussed as to whether that would occur within (pass-thru) or outside of the rate structure. As an example, the impact of a $50,000 community Page 8 of 12

10 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 9 of 12 benefit pass-thru payment, spread between 27,772 (residential) customers, would increase rates approximately $0.15/month. This would further increase rates beyond the 11.32% currently requested to between 11.8% %, depending on the level of service. Staff requests the Committee s direction on this issue. Customer Service Enhancements CDS provides approximately $725,277 per year in free services to the City in the form of monthly debris box usage and pickups from the City s parks, offices, facilities and the corporation yard. Residential customers currently receive the following additional services in addition to their weekly garbage, recycling and green waste pick-up: Current additional services - three (3) free on-call pick up days per year (maximum of 12 (32gal.) bags of trash); - curbside oil pick up, free of charge; - on-call bulky item pick up (for a fee); - curbside collection of small household batteries, free of charge; - sharps (needles) drop-off location, free of charge; and - pharmaceuticals drop-off location, free of charge. Additional potential service enhancements that could be considered in the new Amendment include the following: - free curbside collection of compact fluorescent (CFL) bulb recycling; - free curbside pick-up of e-waste (currently extra cost); - Curbside pick-up of tires (currently extra cost); - Handy Hauler ~ 6 Cubic Yards (currently extra cost); - Debris box ~ 20 Cubic Yards. (currently extra cost); - Pick up of illegally dumped items throughout City; - Multi-family complexes receiving additional special pickups; and/or - Addition of ten solar trash/recycling compactor (Attachment 6) units at Todos Santos Plaza. Customer Service Enhancements The following service enhancement is recommended to be included in the new Amendment to the Agreement: Waste Diversion/Recycling Rates Curbside collection of compact fluorescent (CFL) bulbs to reduce the potential for the eventual release of mercury into the air and/or water (Attachment 7). CDS and the City must respond to a number of State mandates which are geared toward a new State goal to achieve 75% recycling of waste by the year This goal is intended to reduce the solid waste stream headed for landfills Statewide, thereby extending the life of those landfills. Diversion of Page 9 of 12

11 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 10 of 12 recyclables in Concord occurs through the Mt. Diablo Recycling Center. The City has had a steady increase in diversion rates since 2005, at which time the City s diversion rate was 46%. By 2010, the City s rate had grown to 69%. City residents have made great strides in recycling during the last five years, given that the 1997 diversion rate was only 25%. The latest State recycling mandate, which becomes effective on July 1, 2012, requires mandatory recycling for commercial businesses and multi-family developments with 5 or more units. CDS has initiated outreach to businesses and the City has supported those efforts through notifications via the City s website, City News, and E-News. CDS is contacting property managers of businesses and property managers of apartment complexes to schedule site visits and waste audits to determine appropriate solutions for those businesses currently not recycling. The City will be coordinating with CDS to monitor progress and increases in commercial recycling. Rate Setting Manual During the rate review process, R3 identified that a few changes to the Manual that are desirable. One change, discussed earlier, is expanding the frequency between Base Year Rate Reviews. The second is the ability to review all costs that comprise the rate structure. Currently, the Manual only allows the full examination of unusual increases. The Manual defines an unusual increase in costs as being one that is greater than the change in the Bay Area CPI, which cannot otherwise be adequately attributed to changes in the number of customers serviced or tons of waste collected. A broader investigation of cost increases will provide a better understanding of the rates overall and allow a fuller understanding of total rate make-up. Manual changes - Staff recommends two amendments to the Manual used by the City and CDS to set rates: (1) That Base Rate Application reviews be conducted every 6 years rather than every 4 years, for the reasons described earlier on page 6. (2) All increases in costs associated with rates should be investigated. The current City rate setting Manual restricts the City s review to only those costs that are identified as experiencing an unusual increase or decrease. Staff recommends the manual be amended such that all costs be examined during a Base Rate Application review. If these changes are approved, the Manual will be modified this year for use during the next Base Rate Application, scheduled for submittal in March Franchise Agreement Format The original Agreement was adopted in Since that time an Agreement extension and at least 11 Amendments have occurred. It is the desire of both the City and CDS to recompile the provisions of all previous Agreements so that the next adopted Agreement will reflect all current Page 10 of 12

12 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 11 of 12 provisions in one updated document. Staff recommends that this update occur after the adoption of the 12 th Amendment (proposed rate increase and associated provisions discussed above) by the City Council. The City Attorney s office, working with CDS s attorney, has begun this effort, preparing a revised and modernized agreement that captures all the current provisions, and is consistent with the City s current formatting practices. Staff plans to provide the document for Council review and approval in the fall. No new provisions or changes to terms of the contract are anticipated. Fiscal Impact The fee increase proposal before the Committee would impact residential customers, which have not experienced a rate increase in two and a half years. Residential rates are proposed to increase by 11.32%. Depending on the direction of the Committee, additional fiscal benefits could also result through revisions to the City s franchise fee, addition of an annual Community Benefit Payment, and/or additional service enhancements. Public Contact Public notice has been supplied by advertising in the Contra Costa Times and posting of the agenda. A copy of this report has been mailed to Concord Disposal Service and the R3 Consulting Group, Inc. Recommendation for Action The Committee is requested to review the draft executive summary of the R3 Rate Review report (Attachment 3) and this staff report and provide direction on the recommended residential rate increase as part of the proposed 12 th Amendment to the City s Franchise Agreement with CDS. Staff requests the Committee provide feedback on key policy issues associated with the 12 th Amendment to the Agreement including staff s recommendations to: 1) Increase of 11.32% to the residential rates; 2) Modification from use of a CPI to the RRI for Indexing during interim years; 3) Expanding length of time between Base Years from 4 years to the proposed 6 years; 4) Continuing the franchise fee based on the CPI with a cap of 2.5% per year starting in FY 14/15; 5) Providing additional free service through the pick-up of CFL bulbs; and 6) Modifications to the Manual regarding frequency of review and examination of all costs. Staff requests the Committee provide further discussion and feedback on the additional following items, on which staff has provided information but no recommendation at this time: Community Benefit Payment Discussion of the form this would take, including this as either a pass-thru or outside of the rate structure of CDS. Page 11 of 12

13 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 12 of 12 Franchise Agreement Consolidation of Amendments and updating of the agreement format, anticipated for return to the Council in the fall for review. Staff requests that the Committee direct staff to return with further information for the Committee s review on June 27 or recommend that this item move forward for City Council consideration on July 10, Prepared by: Joan Ryan, AICP Senior Planner-Housing Joan.ryan@ci.concord.ca.us Reviewed by: Valerie Barone Interim City Manager valerie.barone@ci.concord.ca.us Reviewed by: Victoria Walker Community & Economic Development Director victoria.walker@ci.concord.ca.us Reviewed by: Mark Boehme Special Counsel Mark.Boehme@ci.concord.ca.us Attachment 1 - Letter dated September 14, 2011, accompanying a draft Base Year Rate Change Application, requesting a 9.69% increase in residential rates. Attachment 2 - Amendment to the Base Year Rate Change Application, requesting an % increase in residential rates (April 10, 2012). Attachment 3 - R3 Report on 2012 Base-Year Rate Review and Assessment of Concord Disposal Services including Results of Rate Survey among local jurisdictions (Appendix 4). Attachment 4 Summary of Franchise Fees for local jurisdictions Attachment 5 - Summary of benefits for local jurisdictions Attachment 6 Background information on solar powered trash/recycling compactor units Attachment 7 Benefits of recycling of compact fluorescent bulbs Page 12 of 12

14

15

16 Attachment 2 City of Concord Revision 2 Base Year Rate Change Application (DRAFT) Summary Rate Change 1. Percent Residential Rate Change Requested 11.32% Rate Schedule Adjusted New Rate Schedule Current Rate Rate Adjustments* Rate 2. Legacy 32 Gal Container Senior 32 Gal Container Gal Container Gal Container (0.01) Gal Container Legacy 32 Gal Container - Condo Senior 32 Gal Container - Condo Gal Container - Condo Gal Container - Condo (0.01) Gal Container - Condo *Values rounded to nearest: 0.05 Certification To the best of my knowledge, the data and information in this application is complete, accurant, and consistent with the instructions provided by the City of Concord. Name: Title: Signature: Date:

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69 Franchise Fees and Other Associated Fees of Local Jurisdictions Attachment #4 12. Associated Fees Jurisdiction Street Franchise AB 939 Vehicle Impact City Admin Sweeping Other ACWMA Alameda 10% $350,000 Closed landfill: $175,000/IMM $670,000/Park: $53000 Albany 10% 1% 2.58% Castro Valley SD 10% Dublin 16% 2% Emeryville 21% Fremont 10% Hayward 13% 2.5% Livermore 10% $ 383,000 11% $ 441,000 Newark 10% Oakland Flat Fee Oro Loma SD L1& L2 (1) 10% (3) Oro Loma SD L3 (1) 12% (3) Piedmont 6% San Leandro 10% Union City 20% $8,333 $13,006 $8,333 Storm water: 11.7% Union City 20%.33 per SFD/MFD Pleasanton San Mateo County Daly City yes Closed landfill maintanance fee Granada Sanitary District 2% Montara Sanitary District 2% Pacifica 11% $ 30, Reclamation of Fairmonr Park fee $75,000 San Bruno 10% 1% Quarterly Billing: $40,800 Woodside 7.7% Marin County Belvedere 10% Fairfax - flat 10% 5% Larkspur - Flat 10% Mill Valley - Flat 20% $135,000/yr. Novato - SFD $45,000/ yr Ross 10% San Anselmo 10% (SFD/MFD/ Comm) 2% Debris Box 43,600/yr San Rafael - flat 10% yes - unsure amt. Sausalito - East of HWY 10112% Sausalito - West of HWY 101

70 Almonte Sanitary District 2% Las Gallinas Valley SD $25,000/ yr Santa Clara Cupertino 12% Environmental Waste Management Programs Fee (17%), $0.50 HHW collection fee for residents Gilroy 5% 4% City Fee $110,000 Los Altos 15% $800,000/yr SW Admin Fee Milpitas 12% $206,055/year Morgan Hill 15.50% Mountain View 20% Monte Sereno 15% Saratoga 10% County of Santa Clara 15% 3% Sonoma County Petaluma Santa Rosa Contra Costa County San Ramon 14% Antioch Clayton Martinez Oakley 13.22% Rate Revenue Monthly fee determined each rate period ($12,500/month for first rate period) $0? Procurement Expenses $400,000 $500,000 Annual Service $100,000/year Contribution Pittsburg 12% Community Benefit Fee: $500,000 in 2011 to increase yearly with CPI Pleasant Hill 1.4% HHW Central Contra Costa Solid Waste Authority Danville 10% 3% 3% Lafayette 10% 3% 9% 3% Moraga 12% 3% 3% Orinda 12.2% 3% 3% Walnut Creek 10% 3% 9% 3% County of Contra Costa 7% 3% 3% West Contra Costa Integrated Waste Management Authority Hercules IRRF El Cerritto 10% IRRF Pinole IRRF Richmond 5% IRRF

71 San Pablo $10,000 IRRF, HHW $.32/35gallon can Unicorporated WCC County IRRF

72 Summary Sheet Attachment 5 Comparison of Fees and Services San Francisco Belmont Burlingame East Palo Alto Emeryville Foster City Hayward Menlo Park Fees Paid Directly to City Franchise Fee $ 539,412 $ 588,541 $ 353,848 $ 668,010 $ 259,001 $ 3,723,975 $ 1,065,924 Franchise Extension Fee $ 25,000 Impound Account/Balancing Account $ 11,798,284 $ 67,606 City Fees/Administrative Fees $ 52,500 Recycling Fees/Program Fees $ 413,440 $ 147,135 $ 200,000 $ 39,516 $ 52,715 Vehicle License Fees $ 587,478 Vehicle Impact Fees $ 134,852 Disposal Facility Tax Route License/Permit Fees $ 79,927 Performance and Billing Review $ 35,000 Administrative Enforcement Contribution $ 150,000 Street Sweeping $ 323,648 $ 75,000 $ 232,536 $ 87,555 $ 688,025 Public Education $ 10,000 $ 20,000 Measure D Fees $ 30,116 $ 452,992 Rate Stabilization Fee $ 53,940 Landfill Closure Fees $ 205,990 Consultant Fees (Rates/Recycling) Total Fees Paid Directly to City $ 12,465,689 $ 1,465,292 $ 1,084,272 $ 786,384 $ 918,126 $ 386,072 $ 4,884,992 $ 1,171,139 Free Services Received by City City Litter Can and Recycling Collection $ 7,579,386 $ 65,739 $ 3,420 $ 85,000 $ 7,421 $ 290,000 $ 40,119 City Sponsored and Non-Profit Events $ 2,938 $ 9,018 $ 4,791 $ 20,000 $ 2,751 $ 50,000 $ 3,826 City Collection Services $ 1,506,133 $ 67,624 $ 45,097 $ 119,919 $ 15,000 $ 38,776 $ 17,662 DPW Collection & Disposal $ 8,670,253 Holiday Tree Collection $ 313,971 $ 15,000 $ 11,154 Clean Team Event/Neighborhood Cleanup $ 176,491 $ 43,588 Free Disposal $ 119,768 $ 27,984 $ 4,000 $ 40,388 $ 80,000 $ 164,516 Battery Collection $ 227,449 $ 22,500 $ 5,000 Compost Give-a-Ways $ 47,471 $ 600 $ 2,000 CFL Collection $ 10,000 Sharps Program $ 233,933 Free Collection for Public Schools $ 2,000 Total Free Services Received by City $ 18,755,087 $ 114,150 $ 239,622 $ 156,114 $ 174,100 $ 89,336 $ 438,154 $ 226,123 Total Value of Payments & Services $ 31,220,776 $ 1,579,442 $ 1,323,894 $ 942,498 $ 1,092,226 $ 475,408 $ 5,323,146 $ 1,397,262 Gross Revenue From Collection Operations $ 219,515,497 $ 5,394,156 $ 8,686,950 $ 4,639,960 $ 3,181,000 $ 5,548,318 $ 27,521,000 $ 9,630,852 Fee and Service % 14.22% 29.28% 15.24% 20.31% 34.34% 8.57% 19.34% 14.51% Fee and Service % Using Total Value, Net of Recycling Contractor Fees as Base 1 of 2

73 Summary Sheet Attachment 5 Comparison of Fees and Services San Francisco Fees Paid Directly to City Franchise Fee Franchise Extension Fee Impound Account/Balancing Account $ 11,798,284 City Fees/Administrative Fees Recycling Fees/Program Fees Vehicle License Fees $ 587,478 Vehicle Impact Fees Disposal Facility Tax Route License/Permit Fees $ 79,927 Performance and Billing Review Administrative Enforcement Contribution Street Sweeping Public Education Measure D Fees Rate Stabilization Fee Landfill Closure Fees Consultant Fees (Rates/Recycling) Total Fees Paid Directly to City $ 12,465,689 Free Services Received by City City Litter Can and Recycling Collection $ 7,579,386 City Sponsored and Non-Profit Events City Collection Services $ 1,506,133 DPW Collection & Disposal $ 8,670,253 Holiday Tree Collection $ 313,971 Clean Team Event/Neighborhood Cleanup $ 176,491 Free Disposal Battery Collection $ 227,449 Compost Give-a-Ways $ 47,471 CFL Collection Sharps Program $ 233,933 Free Collection for Public Schools Total Free Services Received by City $ 18,755,087 Total Value of Payments & Services $ 31,220,776 Gross Revenue From Collection Operations $ 219,515,497 Fee and Service % 14.22% Fee and Service % Using Total Value, Net of Recycling Contractor Fees as Base Oakland Redwood City San Carlos San Jose San Mateo Concord $ 4,779,816 $ 2,073,636 $ 556,164 $ 558,148 $1,525,351 $ 17,413,816 $ 39,876 $ 6,707,657 $ 6,800,000 $ 63,804 $ 52,260 $ 862,371 $ $ 80,000 1,274,579 $ 2,485,964 $ 61,556 $ 101,596 $ 320,000 $ 813,444 $ 61,422 $ 30,348,211 $ 2,177,316 $ 771,576 $ 9,193,621 $ 2,553,963 $ 1,525,351 $ 46,717 $ 2,187 $ 405,060 $ 40,683 $ 50,000 $ 7,324 $ 2,591 $ 13,070 $ 580,000 $ 62,619 $ 41,465 $ 214,906 $ 89,231 $ 10,636 $ 600,000 $ 206,380 $ 51,412 $ 152,616 $ 5,000 $ 2,000 $ 1,326,231 $ 323,040 $ 97,655 $ 415,696 $ 421,275 $725,277 $ 31,674,442 $ 2,500,356 $ 869,231 $ 9,609,317 $ 2,975,238 $ 2,250,628 $ 80,886,000 $ 15,951,066 $ 6,333,212 $ 99,887,184 $ 16,506,640 $27,328, % 15.68% 13.72% 9.62% 18.02% 8.24% 30.75% 2 of 2

74

75

76

77

78 CITY COUNCIL COMMITTEE INFRASTRUCTURE & FRANCHISE ROLL CALL PUBLIC COMMENT PERIOD Laura Hoffmeister, Chair Dan Helix, Committee Member 5:00 p.m., Thursday, June 14, 2012 Garden Conference Room 1950 Parkside Drive, Concord - A G E N D A - 1. CONSIDERATION Of Request by Concord Disposal Service for a Rate Increase Associated with the Existing Franchise Agreement for the Provision of Solid Waste Services, report by Joan Ryan, Housing Manager. 2. ADJOURNMENT In accordance with the Americans with Disabilities Act and California Law, it is the policy of the City of Concord to offer its public programs, services and meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require a copy of a public hearing notice, or an agenda and/or agenda packet in an appropriate alternative format; or if you require other accommodation, please contact the ADA Coordinator at (925) , at least five days in advance of the meeting. Advance notification within this guideline will enable the City to make reasonable arrangements to ensure accessibility. Distribution: City Council Valerie Barone, Interim City Manager Kay Winer, Interim Assistant City Manager Mark Coon, Interim City Attorney Victoria Walker, Direct of Community & Economic Development Joan Ryan, Housing Manager John Montagh, Redevelopment and Housing Manager Press

79 AGENDA ITEM NO. REPORT TO COUNCIL COMMITTEE ON INFRASTRUCTURE & FRANCHISE TO HONORABLE COMMITTEE MEMBERS: DATE: June 14, 2012 SUBJECT: COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICES FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES Report in Brief Garbage and recycling services are provided to Concord residences and businesses through a franchise agreement with Concord Disposal Services (CDS), a local family-owned business. The City s Solid Waste Franchise Agreement allows CDS to request an adjustment to residential rates through a rate setting process. Mr. Clark Colvis, the Chief Financial Officer for CDS, submitted a draft Base Year Rate Change Application last September (Attachment 1). The September Base Year Rate Change Application (Application) was revised by CDS on November 18, 2011 and again on April 10, 2012 (Attachment 2). Staff coordinated with the R3 Consulting Group, Inc. to commence the Application review steps required in the City s Rate Setting Process and Methodology Manual for Residential Solid Waste Fees. R3 Consulting Group, Inc. completed a draft report reviewing the Application in mid-may 2012 (Attachment 3). Staff requests the Committee to provide feedback and direction on the proposed rate increase and other potential deal points as part of the negotiation of the 12 th Amendment to the City s Franchise Agreement. Staff has scheduled a follow-up Committee meeting for June 27, if necessary, to obtain a recommendation on the rate application request to forward to the City Council for review and approval, scheduled for the Council meeting on July 10, Background The City entered into its Agreement to extend the existing Franchise Agreement (Agreement) with CDS on July 14, 1980 to provide solid waste disposal services for the City of Concord. Since then, the City and CDS have amended the Agreement 11 times, most recently on February 7, On December 14, 2009, the City Council adopted a 10 th Amendment to the Agreement including a rate increase for weekly residential service that became effective on January 1, The Agreement also included a modification of the annual franchise fee transitioning from a flat fee to a percent of gross revenues calculation (currently 7.07 percent). Customer service enhancements including the establishment of programs for the disposal of sharps (needles) and pharmaceuticals, the collection and removal of small household batteries, and provision of one additional residential clean-up day (for a total of 3) per year were also negotiated and included in the Amendment. Finally, the Amendment

80 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 2 of 12 provided that CDS has the option of submitting another Base Year Application in 2010, should CDS want further rate increases, rather than the scheduled interim year adjustments. On May 24, 2011, the City Council authorized approval of a contract with R3 Consulting Group, Inc. (R3) to conduct a solid waste residential Base-Year Rate Adjustment Application Review of rates. Pursuant to the Rate Setting Process and Methodology Manual for Residential Solid Waste Fees, the City retains a consultant to evaluate and review the rate increase request and the cost is split with CDS. A specialized consultant is needed to assist in the involved process of residential rate reviews. As a part of their scope of work, R3 conducted a survey of garbage rates in other Central County service areas. On July 13, 2011, Mr. Joseph Garaventa, Chief Executive Officer of CDS, submitted a letter requesting that the City amend the current Agreement to adopt a new 15 year term that would renew automatically each year. CDS indicated they were requesting the term change in order to create more financial flexibility for the company as it adjusts to new State mandates that require significant capital investment by CDS. On September 14, 2011, the City received a letter request (Attachment 1) from CDS with their Draft Base Year Rate Application, indicating that they are experiencing cost increases associated with providing residential solid waste and recycling services that were not anticipated in the prior (10 th ) Amendment. These were attributed to tipping fees and franchise fee increases, both of which increased beyond the Consumer Price Index (CPI). CDS agreed that the Application to modify the term of the Agreement (requested July 13, 2011), would be processed initially, followed by the Base Year Rate Application. On November 18, 2011, R3 received a revised application requesting a 10.19% increase, justified by CDS based on an increase of 23% in workers compensation premiums resulting in a substantial increase in direct labor costs. On February 7, 2012, the City Council adopted an 11 th Amendment to the Agreement changing the term which was set to expire in the year 2021, to include a 15-year contract term that renews automatically annually. The 11 th Amendment included a one-time $50,000 community benefit payment from CDS to the City which was allocated on March 6, 2012 toward the City s 2012 Downtown Concert and Event Series for this summer. At the March 6 Council meeting, CDS agreed to address an increase in the City s franchise fee and potential additional community benefits, during the next rate setting meetings. On April 12, 2012, R3 received an amended Application (Revision 2) requesting an 11.32% increase (Attachment 2), whereby CDS noted increases to both workers compensation and fuel costs. After CDS supplied the complete financial data needed to evaluate the Application on April 20, City staff met with CDS on May 15, 2012, to review R3 s analysis of the Application and to discuss additional potential deal points related to garbage and recycling services with respect to the City s franchise fee, community benefit payments, and the provision of customer service enhancements, and subsequently scheduled a June 14 meeting date with the Infrastructure and Franchise Committee to Page 2 of 12

81 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 3 of 12 provide feedback on the Rate Application review (12 th Amendment). Based on relative agreement on general points, staff tentatively set a date of July 10 and/or July 24, 2012 for the City Council s review of the request for a Base-Year Rate Application Review. Discussion This staff report includes a short discussion of the City s Franchise Agreement and the methodology used to regulate residential rates and it also addresses the following topics: existing and proposed rates, the Refuse Rate Index and Base Year Reviews, date of the rate change, the franchise fee, community benefit payment, customer service enhancements, waste diversion/recycling rates, potential changes to the rate setting manual and updating of the format for the City s Franchise Agreement. The City s Franchise Agreement allows the City to set a new residential fee rate to address revenue shortfalls by the service provider. The City regulates residential rates by using the City s Rate Setting Process and Methodology Manual for Residential Solid Waste Fees (Manual), dated January 12, The Manual, adopted by the City Council in 1993, and updated in 1997, 2006, 2007 and 2010, provides the structural framework to review an Application and to determine CDS s revenue requirements. As prescribed in the Manual, detailed base-year reviews occur every four years. During each of the interim years between base years, rate adjustments are based on 70 percent of the Consumer Price Index (CPI). It is important to note that the Manual prohibits the collection of past shortfalls in new rates. Rather, the new rates address the future balance between costs and revenue. The City reviews all of CDS s revenues, costs and profits when it sets residential rates. CDS provides solid waste collection services to three service sectors: residential, commercial, and industrial. The City sets a rate structure for the residential sector based on the specified revenue requirements for CDS. Rates are set to cover allowable costs and allow a reasonable profit to the provider. The City does not explicitly regulate commercial (which typically includes apartment complexes of 4 or more units) and industrial rates. However, the City reviews all CDS revenues and costs when it sets residential rates. This can indirectly influence commercial and industrial rates. In Concord, residential rates have been historically subsidized by commercial rates. The City and CDS have acknowledged that a residential subsidy by the commercial sector averaged about 17% between 2004 and 2008, while the industrial, or drop box, sector essentially breaks even. This subsidy has grown to approximately 37% in This means that CDS profits from the commercial sector cover an effective 37% shortfall in residential costs plus targeted profits. Page 3 of 12

82 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 4 of 12 Recent residential rate increases over the last seven years are shown below. The last time residential rates were increased with the Tenth Amendment, which was effective in January Historical Residential Rate Increases Year Rate Increase % % % % % % % Year 2012 has had no increases to date, but current request would be implemented in August Base-Year Rate Review Results and Recommendations The City s consultant, R3, utilized the guidelines in the Manual to review the 2012 Base-Year Rate Review Application and prepared a draft report (Attachment 3). The draft report provides background information, discussion of the Manual, significant historical issues, analysis of projected cost, rate review results, and recommendations. R3 noted that for the year 2010, CDS showed a net loss before income taxes on their audited financial statements of $188,814. The work tasks that R3 has performed include verifying the completeness of the Application, preparation of a detailed rate review including: actual and projected revenues for CDS, actual revenue levels achieved, determination of profit levels, determination of the components of the requested increase in residential rates, and preparation of a market survey of similar jurisdictions for residential and commercial rates. The allowable profit is specified in the rate manual thorough the use of a targeted operating ratio range. The manual requires that the rates be set to allow the service provider an operating ratio of between 88% and 92% which equates to a profit of between 8.7% and 13.64% Per the Manual, the following costs are reviewed: direct labor, tipping fees, corporate overhead, office salaries, other general and administrative costs, trucking charges, regulatory fees, and franchise fees. Of these costs, those that are identified as an unusual increase (or decrease) are further investigated. The R3 analysis has determined based on the results of their review, that CDS is projected to have a 2012 net shortfall of approximately $1,165,632 for calendar year CDS is asking for an percent increase in residential rates in order to cover the net shortfall, based on the following four factors: Direct labor cost increases of 5.1% associated with workers compensation premium increases (of 23%) for base year 2012 and salary and benefit increases associated with collective bargaining agreements (4%); Tipping fees are projected to decrease due to a decrease in projected tonnage for 2012; Page 4 of 12

83 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 5 of 12 Trucking charges are expected to increase 3.33% due to increase in fuel costs; and City franchise fee is projected to increase 29.87% due to the increased percentage in and the projected increase in revenues. The 10 th Amendment shifted the City s franchise fee from a flat fee of $1,250,000 to a fee based on a percentage of gross revenues, established as 8.24% for FY 12/13. Current rates, effective January 1, 2010, are indicated below for each level of service and include the weekly pick-up of a 64-gallon cart for single-stream recycling and a 96-gallon cart for yard waste. The proposed residential rate increase of 11.32%, will meet the revenue requirements of CDS and are presented in the table below: Service Level (Single Family) 2012 Base Year Proposed Rate Increase 10 th Amendment adopted 12/14/2009 Current Rates 12 th Amendment (Sept. 2012) Proposed Rates # of Accounts 96-gallon refuse cart $38.00 $ , gallon refuse cart $31.00 $ , gallon refuse cart $23.00 $ , gallon refuse cart 1 $18.81 $20.95 Phasing out 32-gallon (senior) cart; $19.34 $ ,310 no new subscriptions allowed 1 (Condo) 96-gallon refuse cart $37.00 $ gallon refuse cart $30.00 $ gallon refuse cart $22.00 $ Total units 27,772 Current rate is increased by 11.32% and rounded to the nearest $ The 20-gallon and 32 gallon senior carts are no longer available to new customers. Rate Increase Recommendation Staff recommends a residential rate increase of 11.32% consistent with the CDS request, based upon the increases in a variety of cost components that comprise the rates. These include a combination of increases in labor, workers compensation insurance, fuel costs, and franchise fees. This is balanced with the relative cost comparisons of rates within other local jurisdictions (Attachment 3). In addition, staff considered the results from the City s last mail survey (2011) which found that 86% of respondents recognized garbage service as either good or excellent, the highest rating for any City service. Further, the rate increase is supported by the Rate Setting Manual based upon the projected net shortfall for CDS for base year Page 5 of 12

84 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 6 of 12 Comparison of Residential Rates Attachment 3 includes a comparison of residential rates taken from the R3 report (Appendix 4). The R3 report finds that Concord s proposed rates will still be 15% and 29% below average among the local (Central County) jurisdictions examined for the 64-gallon and 96-gallon service accounts, representing 64% of all accounts. The 32-gallon service is only slightly above average (3.8%). Refuse Rate Index and Base Year Reviews During staff s recent joint meeting with CDS, both parties discussed the potential benefits to expand the length of time between Base Year Rate Application Reviews from four to six years, with the understanding that an effective index tool should be used to calculate potential increases for interim year adjustments. The current Agreement provides for rate increases during interim years of up to 70 percent of the change in the San Francisco-Oakland-San Jose Metropolitan Area Consumer Price Index (CPI) - (All Items) for controlled and uncontrolled costs. This rate increase allowance of 70% of the CPI was modified from 100% of the CPI during the Eighth Amendment which became effective in January For future interim year rate adjustments, R3 has recommended the use of a Refuse Rate Index (RRI) to more appropriately reflect the changes to the costs. The RRI is typically broken down into the following categories: labor, diesel fuel, vehicle replacement, vehicle maintenance, other (local or regional CPI) and disposal costs. Most of these indices are published by the Bureau of Labor Statistics (BLS), and would be measured based on a specific date each year. If in a particular year, the RRI proved to be a negative number, no rate adjustment would occur. However, the reduction would be used in calculating the next year adjustment. For example if the rates were at $100 in year one and we had an RRI of -1% for year two and a positive of 3% for year 3 then the calculation would be as follows. Year 1 actual rate: $100; Year 2 actual rate: $100; Year 2 calculated rate: $99 (100 x 99%); Year 3 actual rate: $ ($99 x 103%) The benefit of using the RRI, rather than the CPI, for rate indexing is that the RRI is more tailored toward costs in specific areas of the country and more specifically focused toward the waste collection industry. Use of the RRI during interim years would be more reflective of the actual costs and would reduce the need for a large increase during Base Rate Years, when the CPI has not been reflective of actual costs during the Interim Years. This would also allow the frequency of expensive Base Year Reviews to be expanded, thereby reducing the associated number of labor hours by City staff, the consultant and CDS for these reviews. Use of RRI for Indexing Staff recommends the use of an RRI index during interim years to more accurately assess the increases in the garbage service sector. The R3 report recommends parameters for the RRI including date of indices, development of weightings and specific published indices. Page 6 of 12

85 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 7 of 12 Base Year reviews Staff recommends that the length of time between costly Base Year Reviews be expanded from the current four (4) years to every six (6) years. Effective Date of Rate Change The rate change process is anticipated to conclude during the July Council deliberations. If that occurs, rate increases would become effective in mid-august (30 days after adoption of rates). CDS would send out notifications within their August billing statements of the rate increase. Billings occur on the 15 th of each month for the subsequent 30 days, and therefore although new rates would become effective in mid-august, they would first be reflected on September billing statements. Franchise Fee The original Agreement to Extend the Franchise Agreement (1980) provided for the franchise fee to be computed as 5% of the total annual fees collected (residential and commercial), pursuant to the contract. In August 1990, the franchise fee increased to 6.4% of revenues from residential customers and remained at 5% on all other garbage collection revenues. The 8th Amendment modified the fee back to a flat fee for the period from July 1, 2006 to June 30, 2010, where the fee was designated as $1,250,000. The 9th Amendment did not address the franchise fee. In 2009, the 10th Amendment to the Franchise Agreement shifted franchise fees from an annual flat fee of $1,250,000 to a percent of gross revenues calculation. The flat rate franchise fee remained in effect up to June 30, For the fiscal year period beginning July 1, 2010 and ending on June 30, 2011, the franchise fee was calculated based on a percentage of gross revenues, as shown in the Historical Franchise Fees table below. As the fee percentage increases over time, the Concord franchise fee would gradually become more comparable to the fees collected in other cities and counties (Attachment 4). Staff projects that the FY 2012/13 franchise fee would be approximately $2,132,040 and the FY 2013/14 franchise fee is estimated at approximately $2,434,770. Historical Franchise Fees Fiscal Year Franchise Fee Fee Percentage (per 11 th Amendment to Franchise Agreement) 2008/09 $1,250, /10 $1,250, % 2010/11 $1,525, % 2011/12 $1,810, % 2012/ % 2013/ % 1. Projected for current fiscal year, based on first three quarters only of $1,357, Page 7 of 12

86 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 8 of 12 The current Agreement does not address the franchise fee beyond June 30, Because the 11 th Amendment to the Franchise Agreement approved a 15-year agreement with provisions for automatically renewing each year (an evergreen agreement), an examination of franchise fees beyond June 2014 is appropriate at this time. Staff recommends the following approach toward maintaining franchise fees into the future: Retain Currently Scheduled Franchise Fee Increases Retain the currently scheduled franchise fees (percentage of gross revenue) for Fiscal Years 12/13 (8.24%) and 13/14 (9.41%). For Fiscal Year 14/15 and beyond, the franchise fee would be increased, based on the Consumer Price Index, and reassessed during each Base Year Rate review (every 6 years). The franchise fees of other agencies are included for comparison as Appendix 4 to Attachment 3, but range from 2% to 21%, with 10% appearing to be the most common among those surveyed. CPI Index Each September 1 (beginning in FY 14/15), the CPI would be used to index the Franchise Fee. The 12-month % change for April would be used, based on CPI-U, (all items), for the Oakland-Fremont-Hayward Metropolitan Statistical Area (MSA). A cap to the rate increase of 2.5% is proposed. Staff would notify CDS of the increased percentage rate for the upcoming fiscal year. Adjustments to the City s franchise fees beyond CPI adjustments, would be examined and negotiated during Base Rate Year reviews, consistent with the current practice, with a review of the franchise fees of local jurisdictions to determine if the City s fees remain comparable/competitive. Community Benefit Payment In February 2012, CDS indicated that they would provide the City with a one-time community benefit donation of $50,000 as part of the negotiation of the 11th Amendment to the City s Franchise Agreement. The community benefit donation was received from CDS in May 2012 and the funds were allocated toward the Downtown Music in the Park events. CDS noted at the time of the donation of funds in February that the funds would be outside of the rate structure and not passed-thru to rate payers. Attachment 5 includes as a comparison, a description of the various types of fees/payments that have been received in some adjacent jurisdictions, including a community benefit payment. It should be noted that some of these payments or fees are actually pass-thru payments that get calculated into the customer rates. Other Cities have obtained an administrative payment that is used to pay staff time for coordination and administration of franchise, garbage and recycling issues. Administrative payments have been used to provide funding to jurisdictions toward the cost of AB939 programs (State mandatory recycling laws) and Climate Action Plan initiatives. Council members may have some interest in considering an annual community benefit payment as part of the Agreement. However, consideration needs to be discussed as to whether that would occur within (pass-thru) or outside of the rate structure. As an example, the impact of a $50,000 community Page 8 of 12

87 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 9 of 12 benefit pass-thru payment, spread between 27,772 (residential) customers, would increase rates approximately $0.15/month. This would further increase rates beyond the 11.32% currently requested to between 11.8% %, depending on the level of service. Staff requests the Committee s direction on this issue. Customer Service Enhancements CDS provides approximately $725,277 per year in free services to the City in the form of monthly debris box usage and pickups from the City s parks, offices, facilities and the corporation yard. Residential customers currently receive the following additional services in addition to their weekly garbage, recycling and green waste pick-up: Current additional services - three (3) free on-call pick up days per year (maximum of 12 (32gal.) bags of trash); - curbside oil pick up, free of charge; - on-call bulky item pick up (for a fee); - curbside collection of small household batteries, free of charge; - sharps (needles) drop-off location, free of charge; and - pharmaceuticals drop-off location, free of charge. Additional potential service enhancements that could be considered in the new Amendment include the following: - free curbside collection of compact fluorescent (CFL) bulb recycling; - free curbside pick-up of e-waste (currently extra cost); - Curbside pick-up of tires (currently extra cost); - Handy Hauler ~ 6 Cubic Yards (currently extra cost); - Debris box ~ 20 Cubic Yards. (currently extra cost); - Pick up of illegally dumped items throughout City; - Multi-family complexes receiving additional special pickups; and/or - Addition of ten solar trash/recycling compactor (Attachment 6) units at Todos Santos Plaza. Customer Service Enhancements The following service enhancement is recommended to be included in the new Amendment to the Agreement: Waste Diversion/Recycling Rates Curbside collection of compact fluorescent (CFL) bulbs to reduce the potential for the eventual release of mercury into the air and/or water (Attachment 7). CDS and the City must respond to a number of State mandates which are geared toward a new State goal to achieve 75% recycling of waste by the year This goal is intended to reduce the solid waste stream headed for landfills Statewide, thereby extending the life of those landfills. Diversion of Page 9 of 12

88 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 10 of 12 recyclables in Concord occurs through the Mt. Diablo Recycling Center. The City has had a steady increase in diversion rates since 2005, at which time the City s diversion rate was 46%. By 2010, the City s rate had grown to 69%. City residents have made great strides in recycling during the last five years, given that the 1997 diversion rate was only 25%. The latest State recycling mandate, which becomes effective on July 1, 2012, requires mandatory recycling for commercial businesses and multi-family developments with 5 or more units. CDS has initiated outreach to businesses and the City has supported those efforts through notifications via the City s website, City News, and E-News. CDS is contacting property managers of businesses and property managers of apartment complexes to schedule site visits and waste audits to determine appropriate solutions for those businesses currently not recycling. The City will be coordinating with CDS to monitor progress and increases in commercial recycling. Rate Setting Manual During the rate review process, R3 identified that a few changes to the Manual that are desirable. One change, discussed earlier, is expanding the frequency between Base Year Rate Reviews. The second is the ability to review all costs that comprise the rate structure. Currently, the Manual only allows the full examination of unusual increases. The Manual defines an unusual increase in costs as being one that is greater than the change in the Bay Area CPI, which cannot otherwise be adequately attributed to changes in the number of customers serviced or tons of waste collected. A broader investigation of cost increases will provide a better understanding of the rates overall and allow a fuller understanding of total rate make-up. Manual changes - Staff recommends two amendments to the Manual used by the City and CDS to set rates: (1) That Base Rate Application reviews be conducted every 6 years rather than every 4 years, for the reasons described earlier on page 6. (2) All increases in costs associated with rates should be investigated. The current City rate setting Manual restricts the City s review to only those costs that are identified as experiencing an unusual increase or decrease. Staff recommends the manual be amended such that all costs be examined during a Base Rate Application review. If these changes are approved, the Manual will be modified this year for use during the next Base Rate Application, scheduled for submittal in March Franchise Agreement Format The original Agreement was adopted in Since that time an Agreement extension and at least 11 Amendments have occurred. It is the desire of both the City and CDS to recompile the provisions of all previous Agreements so that the next adopted Agreement will reflect all current Page 10 of 12

89 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 11 of 12 provisions in one updated document. Staff recommends that this update occur after the adoption of the 12 th Amendment (proposed rate increase and associated provisions discussed above) by the City Council. The City Attorney s office, working with CDS s attorney, has begun this effort, preparing a revised and modernized agreement that captures all the current provisions, and is consistent with the City s current formatting practices. Staff plans to provide the document for Council review and approval in the fall. No new provisions or changes to terms of the contract are anticipated. Fiscal Impact The fee increase proposal before the Committee would impact residential customers, which have not experienced a rate increase in two and a half years. Residential rates are proposed to increase by 11.32%. Depending on the direction of the Committee, additional fiscal benefits could also result through revisions to the City s franchise fee, addition of an annual Community Benefit Payment, and/or additional service enhancements. Public Contact Public notice has been supplied by advertising in the Contra Costa Times and posting of the agenda. A copy of this report has been mailed to Concord Disposal Service and the R3 Consulting Group, Inc. Recommendation for Action The Committee is requested to review the draft executive summary of the R3 Rate Review report (Attachment 3) and this staff report and provide direction on the recommended residential rate increase as part of the proposed 12 th Amendment to the City s Franchise Agreement with CDS. Staff requests the Committee provide feedback on key policy issues associated with the 12 th Amendment to the Agreement including staff s recommendations to: 1) Increase of 11.32% to the residential rates; 2) Modification from use of a CPI to the RRI for Indexing during interim years; 3) Expanding length of time between Base Years from 4 years to the proposed 6 years; 4) Continuing the franchise fee based on the CPI with a cap of 2.5% per year starting in FY 14/15; 5) Providing additional free service through the pick-up of CFL bulbs; and 6) Modifications to the Manual regarding frequency of review and examination of all costs. Staff requests the Committee provide further discussion and feedback on the additional following items, on which staff has provided information but no recommendation at this time: Community Benefit Payment Discussion of the form this would take, including this as either a pass-thru or outside of the rate structure of CDS. Page 11 of 12

90 COMMITTEE RECOMMENDATION TO THE CITY COUNCIL FOR CONSIDERATION OF A REQUEST BY CONCORD DISPOSAL SERVICE FOR A RATE INCREASE ASSOCIATED WITH THE EXISTING FRANCHISE AGREEMENT FOR THE PROVISION OF SOLID WASTE SERVICES June 14, 2012 Page 12 of 12 Franchise Agreement Consolidation of Amendments and updating of the agreement format, anticipated for return to the Council in the fall for review. Staff requests that the Committee direct staff to return with further information for the Committee s review on June 27 or recommend that this item move forward for City Council consideration on July 10, Prepared by: Joan Ryan, AICP Senior Planner-Housing Joan.ryan@ci.concord.ca.us Reviewed by: Valerie Barone Interim City Manager valerie.barone@ci.concord.ca.us Reviewed by: Victoria Walker Community & Economic Development Director victoria.walker@ci.concord.ca.us Reviewed by: Mark Boehme Special Counsel Mark.Boehme@ci.concord.ca.us Attachment 1 - Letter dated September 14, 2011, accompanying a draft Base Year Rate Change Application, requesting a 9.69% increase in residential rates. Attachment 2 - Amendment to the Base Year Rate Change Application, requesting an % increase in residential rates (April 10, 2012). Attachment 3 - R3 Report on 2012 Base-Year Rate Review and Assessment of Concord Disposal Services including Results of Rate Survey among local jurisdictions (Appendix 4). Attachment 4 Summary of Franchise Fees for local jurisdictions Attachment 5 - Summary of benefits for local jurisdictions Attachment 6 Background information on solar powered trash/recycling compactor units Attachment 7 Benefits of recycling of compact fluorescent bulbs Page 12 of 12

91

92

93 Attachment 2 City of Concord Revision 2 Base Year Rate Change Application (DRAFT) Summary Rate Change 1. Percent Residential Rate Change Requested 11.32% Rate Schedule Adjusted New Rate Schedule Current Rate Rate Adjustments* Rate 2. Legacy 32 Gal Container Senior 32 Gal Container Gal Container Gal Container (0.01) Gal Container Legacy 32 Gal Container - Condo Senior 32 Gal Container - Condo Gal Container - Condo Gal Container - Condo (0.01) Gal Container - Condo *Values rounded to nearest: 0.05 Certification To the best of my knowledge, the data and information in this application is complete, accurant, and consistent with the instructions provided by the City of Concord. Name: Title: Signature: Date:

94

95

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

146 Franchise Fees and Other Associated Fees of Local Jurisdictions Attachment #4 12. Associated Fees Jurisdiction Street Franchise AB 939 Vehicle Impact City Admin Sweeping Other ACWMA Alameda 10% $350,000 Closed landfill: $175,000/IMM $670,000/Park: $53000 Albany 10% 1% 2.58% Castro Valley SD 10% Dublin 16% 2% Emeryville 21% Fremont 10% Hayward 13% 2.5% Livermore 10% $ 383,000 11% $ 441,000 Newark 10% Oakland Flat Fee Oro Loma SD L1& L2 (1) 10% (3) Oro Loma SD L3 (1) 12% (3) Piedmont 6% San Leandro 10% Union City 20% $8,333 $13,006 $8,333 Storm water: 11.7% Union City 20%.33 per SFD/MFD Pleasanton San Mateo County Daly City yes Closed landfill maintanance fee Granada Sanitary District 2% Montara Sanitary District 2% Pacifica 11% $ 30, Reclamation of Fairmonr Park fee $75,000 San Bruno 10% 1% Quarterly Billing: $40,800 Woodside 7.7% Marin County Belvedere 10% Fairfax - flat 10% 5% Larkspur - Flat 10% Mill Valley - Flat 20% $135,000/yr. Novato - SFD $45,000/ yr Ross 10% San Anselmo 10% (SFD/MFD/ Comm) 2% Debris Box 43,600/yr San Rafael - flat 10% yes - unsure amt. Sausalito - East of HWY 10112% Sausalito - West of HWY 101

147 Almonte Sanitary District 2% Las Gallinas Valley SD $25,000/ yr Santa Clara Cupertino 12% Environmental Waste Management Programs Fee (17%), $0.50 HHW collection fee for residents Gilroy 5% 4% City Fee $110,000 Los Altos 15% $800,000/yr SW Admin Fee Milpitas 12% $206,055/year Morgan Hill 15.50% Mountain View 20% Monte Sereno 15% Saratoga 10% County of Santa Clara 15% 3% Sonoma County Petaluma Santa Rosa Contra Costa County San Ramon 14% Antioch Clayton Martinez Oakley 13.22% Rate Revenue Monthly fee determined each rate period ($12,500/month for first rate period) $0? Procurement Expenses $400,000 $500,000 Annual Service $100,000/year Contribution Pittsburg 12% Community Benefit Fee: $500,000 in 2011 to increase yearly with CPI Pleasant Hill 1.4% HHW Central Contra Costa Solid Waste Authority Danville 10% 3% 3% Lafayette 10% 3% 9% 3% Moraga 12% 3% 3% Orinda 12.2% 3% 3% Walnut Creek 10% 3% 9% 3% County of Contra Costa 7% 3% 3% West Contra Costa Integrated Waste Management Authority Hercules IRRF El Cerritto 10% IRRF Pinole IRRF Richmond 5% IRRF

148 San Pablo $10,000 IRRF, HHW $.32/35gallon can Unicorporated WCC County IRRF

149 Summary Sheet Attachment 5 Comparison of Fees and Services San Francisco Belmont Burlingame East Palo Alto Emeryville Foster City Hayward Menlo Park Fees Paid Directly to City Franchise Fee $ 539,412 $ 588,541 $ 353,848 $ 668,010 $ 259,001 $ 3,723,975 $ 1,065,924 Franchise Extension Fee $ 25,000 Impound Account/Balancing Account $ 11,798,284 $ 67,606 City Fees/Administrative Fees $ 52,500 Recycling Fees/Program Fees $ 413,440 $ 147,135 $ 200,000 $ 39,516 $ 52,715 Vehicle License Fees $ 587,478 Vehicle Impact Fees $ 134,852 Disposal Facility Tax Route License/Permit Fees $ 79,927 Performance and Billing Review $ 35,000 Administrative Enforcement Contribution $ 150,000 Street Sweeping $ 323,648 $ 75,000 $ 232,536 $ 87,555 $ 688,025 Public Education $ 10,000 $ 20,000 Measure D Fees $ 30,116 $ 452,992 Rate Stabilization Fee $ 53,940 Landfill Closure Fees $ 205,990 Consultant Fees (Rates/Recycling) Total Fees Paid Directly to City $ 12,465,689 $ 1,465,292 $ 1,084,272 $ 786,384 $ 918,126 $ 386,072 $ 4,884,992 $ 1,171,139 Free Services Received by City City Litter Can and Recycling Collection $ 7,579,386 $ 65,739 $ 3,420 $ 85,000 $ 7,421 $ 290,000 $ 40,119 City Sponsored and Non-Profit Events $ 2,938 $ 9,018 $ 4,791 $ 20,000 $ 2,751 $ 50,000 $ 3,826 City Collection Services $ 1,506,133 $ 67,624 $ 45,097 $ 119,919 $ 15,000 $ 38,776 $ 17,662 DPW Collection & Disposal $ 8,670,253 Holiday Tree Collection $ 313,971 $ 15,000 $ 11,154 Clean Team Event/Neighborhood Cleanup $ 176,491 $ 43,588 Free Disposal $ 119,768 $ 27,984 $ 4,000 $ 40,388 $ 80,000 $ 164,516 Battery Collection $ 227,449 $ 22,500 $ 5,000 Compost Give-a-Ways $ 47,471 $ 600 $ 2,000 CFL Collection $ 10,000 Sharps Program $ 233,933 Free Collection for Public Schools $ 2,000 Total Free Services Received by City $ 18,755,087 $ 114,150 $ 239,622 $ 156,114 $ 174,100 $ 89,336 $ 438,154 $ 226,123 Total Value of Payments & Services $ 31,220,776 $ 1,579,442 $ 1,323,894 $ 942,498 $ 1,092,226 $ 475,408 $ 5,323,146 $ 1,397,262 Gross Revenue From Collection Operations $ 219,515,497 $ 5,394,156 $ 8,686,950 $ 4,639,960 $ 3,181,000 $ 5,548,318 $ 27,521,000 $ 9,630,852 Fee and Service % 14.22% 29.28% 15.24% 20.31% 34.34% 8.57% 19.34% 14.51% Fee and Service % Using Total Value, Net of Recycling Contractor Fees as Base 1 of 2

150 Summary Sheet Attachment 5 Comparison of Fees and Services San Francisco Fees Paid Directly to City Franchise Fee Franchise Extension Fee Impound Account/Balancing Account $ 11,798,284 City Fees/Administrative Fees Recycling Fees/Program Fees Vehicle License Fees $ 587,478 Vehicle Impact Fees Disposal Facility Tax Route License/Permit Fees $ 79,927 Performance and Billing Review Administrative Enforcement Contribution Street Sweeping Public Education Measure D Fees Rate Stabilization Fee Landfill Closure Fees Consultant Fees (Rates/Recycling) Total Fees Paid Directly to City $ 12,465,689 Free Services Received by City City Litter Can and Recycling Collection $ 7,579,386 City Sponsored and Non-Profit Events City Collection Services $ 1,506,133 DPW Collection & Disposal $ 8,670,253 Holiday Tree Collection $ 313,971 Clean Team Event/Neighborhood Cleanup $ 176,491 Free Disposal Battery Collection $ 227,449 Compost Give-a-Ways $ 47,471 CFL Collection Sharps Program $ 233,933 Free Collection for Public Schools Total Free Services Received by City $ 18,755,087 Total Value of Payments & Services $ 31,220,776 Gross Revenue From Collection Operations $ 219,515,497 Fee and Service % 14.22% Fee and Service % Using Total Value, Net of Recycling Contractor Fees as Base Oakland Redwood City San Carlos San Jose San Mateo Concord $ 4,779,816 $ 2,073,636 $ 556,164 $ 558,148 $1,525,351 $ 17,413,816 $ 39,876 $ 6,707,657 $ 6,800,000 $ 63,804 $ 52,260 $ 862,371 $ $ 80,000 1,274,579 $ 2,485,964 $ 61,556 $ 101,596 $ 320,000 $ 813,444 $ 61,422 $ 30,348,211 $ 2,177,316 $ 771,576 $ 9,193,621 $ 2,553,963 $ 1,525,351 $ 46,717 $ 2,187 $ 405,060 $ 40,683 $ 50,000 $ 7,324 $ 2,591 $ 13,070 $ 580,000 $ 62,619 $ 41,465 $ 214,906 $ 89,231 $ 10,636 $ 600,000 $ 206,380 $ 51,412 $ 152,616 $ 5,000 $ 2,000 $ 1,326,231 $ 323,040 $ 97,655 $ 415,696 $ 421,275 $725,277 $ 31,674,442 $ 2,500,356 $ 869,231 $ 9,609,317 $ 2,975,238 $ 2,250,628 $ 80,886,000 $ 15,951,066 $ 6,333,212 $ 99,887,184 $ 16,506,640 $27,328, % 15.68% 13.72% 9.62% 18.02% 8.24% 30.75% 2 of 2

151

152