Resolution Approving a Solid Waste-Recycling Hauler Rate Increase 11-2013.pdf

8/14/2019 Resolution Approving a Solid Waste-Recycling Hauler Rate Increase 11-2013.pdf

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To:From:Submitted by:Subject:

CITY OF CARMEL-BY-THE-SEACouncil Report

November 5, 2103Honorable ayor and Members of the City CouncilJason Stilwell, City AdministratorSharon Friedrichsen, Public Services DirectorConsideration of a Resolution Approving a Solid Waste/Recycling HaulerRate Increase

Recommendation{s : Adopt the resolution approving a solid waste and recycling hauling rateincrease of 2.50 percent for services provided by Carmel MarinaCorporation (Waste Management, Inc.), effective January 6, 2014.

Executive Summary: The City has granted an exclusive franchise agreement to the CarmelMarina Corporation (also known as Waste Management) for the regularlyscheduled collection, hauling, recycling and disposal of garbage, recyclematerials and yard waste within the City's jurisdict ion. Per Section 6 ofthe franchise agreement, the hauler is allowed to request an increase inthe rates chargeable to customers based upon inflation (the cost-of-livingadjustment or COLA . Pass through rate adjustments to cover theincreased cost of landfill tipping fees, or dump fees, are also allowable.On September 26, 2013, the City received a letter from WasteManagement requesting a rate adjustment of 3.08 percent, modified onOctober 31, 2013 to reflect a proposed rate adjustment of 2.84 percent.The proposed rate adjustment consists of two items:

Disposal rate pass through increase of 1.15 percent; and Cost-of-living adjustment of 1.69 percent.

Analysis/Discussion: On June 21, 2013, the onterey Regional Waste Management Districtapproved a rate increase of 3.50 per ton for solid waste disposal,resulting in a 7.25 percent increase in disposal, or landfill tipping fee,effective on January 1, 2014. As part of the proposed rate adjustment,Waste Management would pass through 1.15 percent of this increase toCarmel customers, based upon a formula contained within the franchiseagreement. In addition, Waste Management is proposing a COLA of 1.69

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Fiscal Impact:

percent, which includes the inclusion of the franchise fee factor (seeattachment).In addition, the franchise agreement allows for rate increases the as longas several conditions are met:

Hauler gives written notice to City 30 days prior to proposed rateincrease v- letter received 9/26/13 ; hauler to notice customers60 days prior to effective date of agreed upon increase (pending)

Hauler has not increased rates twelve months prior to proposedeffect date of increase v- disposal pass through in August 2012,no cost-of-living adjustment in 2012)

Financial statement provided to City (v- received 10/29/13 Amount of proposed COLA does not exceed the lesser of ten

percent of existing rate or of Consumer Price Index for the SanFrancisco-Oakland-Bay Area for twelve month prior to date ofwritten notice less operating expense attributable to dump fees(v)

City staff has determined the percent of disposal increase to be 1.03percent, using different assumptions, including omitting the cost of thesale of goods as a disposal or dump fee cost from the calculation. Inaddition, staff uti lized the formula contained within the franchiseagreement to determine the price increase to be 1.50 percent, for a totalincrease of 2.50 percent (see attachment).While staff recommends Council approve the proposed rate increase of2.50 percent, Council ha s several other alternatives for considerationincluding:

1. Allow for the percent disposal rate increase including thefranchise fee factor only us ing either (A) City calculation or B)WM calculation.

2. Remove the franchise fee factor from the disposa l rate increaseusing either (A) City calculation or B) WM calculation.

3. Remove the franchise fee factor from the COLA either (A) Citycalculation or B) WM calculation.4. Deny the entire rate increase.

The proposed rate adjustment will impact the month charge residentialand commercial customers pay for services. The amount of revenue theCity receives through the franchise fee agreement is also impacted andwould increase if any of the proposed rate increases are enacted. Shoulda rate increase be approved, staff recommends that the fees become

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effective on January 5 2104 to allow for 60 day noticing from theNovember 5 2013 adoption date.

Budgeted yes/no) Funding Source general fund grant, state)N/A N/A

Previous CouncilAction/Decision History:

Attachment:

Reviewed by:

The City Council approved a .77 percent disposal fee pass through onAugust 7 2012 and denied a 5.08 percent cost-of-living adjustment.

WM Carmel Rate Increase CalculationCity Staff Carmel Rate Increase CalculationMatrix of OptionsResolution

City Administrator i t y Attorney D Administrative Services DAsst . City Admin. D Dir of CPB D Dir of Public Svcs DPublic Safety Dir D Library Dir D Other DCity Engineer D


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Carmel Rate Increase Calculations Effective 1/1/141 Disposal Rate Increase

CurrentEffective Jan 1, 2014Change%ChangeGarbage & Green Waste Collection RevenueDisposal Fees for Garbage & Green WasteCost of Goods SoldGarbage & Green Waste Disposal % of Total Collection Revenue

Proposed Increase for DisposalI roposed Increase for Disposal with Franchise Fee Factor 1.112. Cost-of-Living Adjustment From CPI Table)

Aug '2013Aug'2012Change%ChangeGarbage Collection RevenueAll costs except disposalCost-of-Living % of Collection Revenue

COLA Adjustment per Agreement @75%leoL with Franchise Fee Factor 1 1113 Fair Rate of Return

Total Increase (A)+(B)+(C)

48.2551 .75

3.507.25%

2.009,033256,075

31.47514.31%

1.04%1.15%1 (A)

246.07241 .174.90

2.03%2,009,0331 ,721.483

85.69%1.52%1.69%1 (B)0.00%1 C)2.84% A B C


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Carmel Rate Increase Calculations Effective 1 6 14D. I RSPOSa ate ncrease

CurrentEffective Jan 1, 2014Change

ChangeAll Collection RevenueDisposal FeesGarbage Disposal % of Total Collection Revenue

Proposed Increase for DisposalTotal Proposed Increase for Disposal with Franchise Fee Factor of 1.112. Cost-of-Livina Adiustment /From CPI Table)

Aug'2013Aug 2012Change

ChangeCOLA Adjustment per Agreement @75%

All Collection RevenueDisposal Fees

Revenue minus dump fee minus waste wheeler rental revenueAdjusted income multiplied by percent increaseDollar increase divided by revenue mutplied by 1.11 franchise fee factor

Total Rate Increase

48.2551.753.50

7.25%2,009,033

256,07512.75%0.92%1.03%

246.07241.17

4.902.03%1.52%

2,009,033256,075

1,752,95826,722.851.3%

1.111.5%2.5%

(A)

Percent Request

Adjusted IncomeDollar increase

Adjusted percentage increase (B)Total rate Increase (A+B)


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atrix ofRate Options

esidential Current Rate WMDispasal WM WM City Disposal WMCOLA City API WM WM City No Ratew/FF+COLA DF COLA D COLA, w/FF+ Only Only Dispasoi+F Disposal Disposal Increase

no FF NOFF Adjusted F Only/City OnlyPercentage Disposoi+FIncrease F

Proposed Proposed Proposed Proposed Proposed ProposedProposed Rate Rate Proposed Proposed Rote Rate Rote Rote Proposed

[email protected] @2.68 @2.56 [email protected] [email protected] @1.50 @1.15 @1.04 @.92 Rote @035 gal cart 25.45 26.17 26.13 26.10 26.09 25.84 26.09 25.74 25.71 25.68 25.4564 gal cart 40.23 41.37 41.31 41.26 41.24 40.84 41.24 40.69 40.65 40.60 40.2396 gal cart 51.00 52.45 52.37 52.31 52.28 51.78 52.28 51.59 51.53 51.47 51.00ommercial Current Rote 2.84 2.68% 2.56% 2.50% 1.52% 1.50% 1.15% 1.04% 0.92% 035 gal cart 26.27 27.02 26.97 26.94 26.93 26.67 26.93 26.57 26.54 26.51 26.2764 gal cart 50.60 52.04 51.96 51.90 51.87 51.37 51.87 51.18 51.13 51.07 50.6096 gal cart 62.41 64.18 64 .08 64.01 63.97 63.36 63.97 63.13 63.06 62.98 62.411 yard bin 144.11 148.20 147.97 147.80 147.71 146.30 147.71 145.77 145.61 145.44 144.112 yard bin 211.76 217.77 217.44 217.18 217 .05 214.98 217.05 214.20 213.96 213.71 211 .763 yard bin 299.82 308.33 307.86 307.50 307.32 304.38 307.32 303.27 302.94 302.58 299.824 yard bin 398 .90 410.23 409.59 409.11 408.87 404.96 408.87 403.49 403.05 402.57 398.90

oll Off Current Rate 2.84 2.68% 2.56% 2.50% 1.52% 1.50% 1.15 1.04% 0.92% 015 yard roll off 377.63 388.35 387.75 387.30 387.07 383 .37 387 .07 381.97 381.56 381.10 377.6320 yard roll off 415.15 426 .94 426.28 425.78 425.53 421.46 425.53 419.92 419.47 418.97 415.1530 yard roll off 515.86 530.51 529.69 529.07 528.76 523.70 528.76 521.79 521.22 520.61 515.86


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oll ff urrent Rate Proposed Rate Variance15 yard rolloff 377.63 388.35 10.7220 yard rolloff 415.15 426.94 11.7930 yard rolloff 515.86 530.51 14.65Section Two. Waste Management sha provide written notice of the amount andeffective date of the approved rate increase to all customers no less than 60 days prior to theeffective date of the rate increase.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THESEA this 5

1h day of ovember 2013, by the following roll call vote:AYES: COUNCIL MEMBERS:NOES: COUNCIL MEMBERS:ABSENT: COUNCIL MEMBERS:ABSTAIN: COUNCIL MEMBERS:

ATTEST:

Daryl A. Betancur, CMCDeputy City Clerk

SIGNED:

Jason Burnett, MAYOR

Resolution Approving a Solid Waste-Recycling Hauler Rate Increase 11-2013.pdf

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Transcript of Resolution Approving a Solid Waste-Recycling Hauler Rate Increase 11-2013.pdf