HomeMy WebLinkAbout09/21/1993, 3 - SOLID WASTE COLLECTION RATE ADJUSTMENT MEE
IIIN�Ip�I�III�I�� IIQI�I city of San LUIS OBISPO September epte mber er 21,1993
alcmd COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: John Moss, Acting Utilities Director
PREPARED BY: Cyndi Butterfield, Solid Waste Coordinator
SUBJECT: Solid Waste Collection Rate Adjustment
CAO RECOMMENDATION: By motion, adopt the resolution which increases garbage
franchise service rates by 3.18% effective the first billing
period after October 1. 1993.
DISCUSSION
In January 1993, the County Board of Supervisors approved a 14.5% landfill tipping fee increase
which raised the cost per ton to "tip garbage from municipal trucks from $21.45 to $24.55.
Although the original request was for $26.45, the County Auditor recommended the 14.5%
increase of $3.10 per ton which was subsequently approved by the Board of Supervisors.
In March 1993, San Luis Garbage Co. (Garbage Co.) presented the Utilities Department with
a request for a rate increase to cover the boost in landfill tipping fees. Based on a review of the
limited information provided at that time, staff determined that the request was not justified and
the request was denied. The Garbage Co. then provided staff with additional financial
information and a second request. This request was also for the 3.18% rate increase which
reflects only the landfill tipping fee increase.
The staff recommendation to approve this rate increase is based on a review of financial
information provided by San Luis Garbage Co. using the current rate setting methodology, and
the fact that the landfill tipping fee increase represents real costs to the hauler which have been
validated in the County Auditors report and approved by the Board of Supervisors. This level
of review is considered by staff as a "pass through" of real landfill costs and, as such, is
recommended so that San Luis Garbage Co. can recover these verifiable landfill disposal costs
in a timely fashion.. The resolution and the rates reflecting the recommended increase are
included as Attachment A. A breakdown of how the $24.55 tipping fee is allocated is included
as Attachment B.
This rate review has pointed out the need for potentially significant modifications to the solid
waste franchise and the current rate setting method. Therefore, although staff recommends the
pass through for the current request, increases in addition to this basic recovery of verifiable
costs, and future requests, are recommended to be delayed until modifications are in place.
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city of san Luis oBispo
COUNCIL AGENDA REPORT
Garbage Rates
Page Z
Solid Waste Disposal Rate Review Objectives
Staff concludes that the current solid waste rate setting method should be reviewed for
compliance with the City's adopted rate review objectives which should accomplish the
following:
Comply with legal requirements
Ensure revenue adequacy to fully meet system operating and capital needs
Encourage conservation
Provide equity and fairness between classes of customers
Be easy to understand by our customers and easy to administer
Provide for ongoing review in order to facilitate rate stability
Additional goals include:
Achieving and maintain rate stability
Brealdng out and identifying all program costs
Separating the costs of recycling from solid waste disposal costs
A rate setting method that reflects City rate setting objectives
Since the current rate setting method was developed 15 years ago, the job of the City has
changed from a simple low cost waste collection and disposal system to a complex integrated
system of highly regulated waste disposal,waste diversion and recycling programs. The costs
of these services have increased dramatically. Staff is no longer confident that the current
rate setting method accomplishes the City's rate review objectives, reflects todays conditions
or is capable of ensuring the best.interests of City residents and business operators.
Within the next 5 years, the City will be expanding solid waste and recycling programs.
Anticipated cost increases will include financing for the construction of the landfill
expansion and for the closure of the existing landfill. Federal laws impose extensive landfill
construction, maintenance and closure procedures designed to protect air and ground water
quality from landfill pollution. Landfill tipping fees will also increase to cover the costs of
regional recycling programs and facilities.
Rate Review Proposal
Staff has identified the need for a comprehensive evaluation the solid waste franchise and
of the method of rate setting as they relate to current economic conditions and expanding
solid waste and recycling programs and services. Staff proposes to address these issues in
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COUNCIL AGENDA REPORT
Garbage Rates
Page 3
two steps. First, staff proposes to return to Council within the next month with a request
for proposals to seek professional financial consultation to:
Evaluate the existing franchise and current operations and to
Provide recommendations on potential rate setting modifications which would adhere
more closely to the City's rate setting objectives and reflect current economic
conditions and program demands.
Second, based on the results of this financial review, staff proposes to return to Council in
spring 1994 with recommendations for appropriate changes to the solid waste franchise.
Potential changes include modification and clarification of the rate setting method, inclusion
of AB 939 definitions, plans and programs, and provisions for improving the volume based
rate system. A discussion of the volume based rate system and potential alternatives for its
modification are included as attachment C.
CONCURRENCES
Utilities and Finance staff have met to discuss both the rate increase request and the need
for administrative changes to the current franchise. Finance department staff concur with
the recommended action,with the need for contracting with a financial consultant, and with
the goal of reviewing modifications to the franchise and the rate setting method in
particular.
FISCAL IMPACT
The recommended rate increase will result in a 3.18% increase in all residential and
commercial rates. Commercial rates are included as part of the attached Resolution
(attachment A). Attachment D is a proposed information letter to rate payers. This
increase would have the following effects on residential rates:
Service Increase Old Rate New Rate
Standard $.40 $13.00 $13.40
Premium $.55 $17.70 $1825
Orange bag 0 $1/bag $1/bag
Modification to the orange bag system will be evaluated and recommended in spring 1994.
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COUNCIL AGENDA REPORT
Garbage Rate
Page 4
ALTERNATIVES
No action. The requested rate increase is justified within the current rate setting methods. The
"no action" alternative is not recommended because the request is based on a real cost incurred
by the franchisee which, if not provided this year, will surface within the next request and
enlarge the impact of future increases.
Award a 9.6% increase to rates and a $2 monthly service fee to the orange bag program.
Future significant rate increases due to landfill construction and closing costs are projected by
San Luis Garbage Co. This alternative was developed based on calculations provided by San
Luis Garbage Co. using the current method of rate setting method. The objective of this
alternative is to avoid potential future double digit rate increases. Attachment E shows that a
9.6% rate increase coupled with a$2/month service charge to orange bag customers would result
in a projected 9.6% rate increase in 1994. Attachment E also includes the projected increased
costs to customers reflected by the alternatives.
Even with this alternative, a request for a double digit increase is a potential for 1994 depending
on an accurate analysis of landfill and regional recycling program costs. However, staff does
not recommend this alternative since it is calculated using the current method of rate setting and
staff is not confident that this method is adequate under current economic conditions.
Approval of 3.18% rate increase. The recommendation is based on a staff review using current
rate setting methods and on the analysis provided by the County Auditor and approved by the
Board of Supervisors. Although staff views the City's current rate setting method as inadequate,
these costs resulting in the requested increase are considered to be real and verifiable. The
addition of these costs now will reduce the amount of future rate hikes.
ATTACHMENTS:
Resolution/Rate Schedule, Attachment A
Landfill Tipping Fees, Attachment B
Brief Discussion of Volume Based Rates, Attachment C
Letter to SLO Residents, Attachment D
Alternative Rate Increases, Attachment E
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RESOLUTION NO. (1993 SERIES)
,A RESOLUTION OF THE SAN LUIS OBISPO CITY COUNCIL
ADJUSTING RATES FOR SOLID WASTE COLLECTION AND DISPOSAL
EFFECTIVE OCTOBER 1, 1993
AND SUPERSEDING RESOLUTION NO. 7021
BE IT RESOLVED by the San Luis Obispo City Council as follows:
1. Effective October 1, 1993 the rates for solid waste
collection and disposal shall be those listed on the attached rate
schedule dated October 1, 1993 and incorporated here by reference.
These rates shall be applied to all service bills issued after
October 1, 1993 .
2. Upon passage, this resolution shall supersede Resolution
No. 7021 (1991 Series) .
3. The City clerk shall furnish copies of this resolution, as
executed, to the Finance department, Public Works department and
San Luis Garbage Company.
On motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was passed and adopted this day of
1993 .
Mayor Peg Pinard
Attest:
City Clerk
Cty At o
rneyey
i ities Dire for
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ATTA MRIM A
CITY OF SAN LUIS OBISPO
RATE SCHEDULE FOR SOLID WASTE COLLECTION AND DISPOSAL
1011/93
MULTI-UNIT RESIDENTIAL DUMPSTER CONTAINERS (PER MONTH)
size of COLLECTIONS PER WEEK
container
(cubic yards) 1 2 3 4 5 6 7
1 $53.00 $78.00 $94.00 $130.00 $163.00 $183.00 $235.00
1.5 61.00 89.00 112.00 148.00 176.00 192.00 271.00
2 70.00 100.00 130.00 163.00 190.00 203.00 309.00
3 87.00 123.00 169.00 217.00 283.00 305.00 411.00
4 104.00 157.00 222.00 302.00 377.00 408.00 509.00
6 142.00 218.00 305.00 452.00 521.00 575.00 679.00
a 183.00 269.00 408.00 603.00 752.00 814.00 919.00
The rates stated above for dumpster containers shall include the monthly container rental fee.
COMMERCIAL GARBAGE CANS (PER MONTH)
number COLLECTIONS PER WEEK
Of
cans 1 2 3 4 5 6 7
1 $11.00 $19.00 $27.00 $31.00 $33.00 $36.00 $41.00
2 13.00 27.00 36.00 40.00 43.00 47.00 55.00
3 18.00 33.00 45.00 48.00 52.00 55.00 65.00
4 21.00 38.00 53.00 57.00 62.00 67.00 79.00
5 25.00 43.00 60.00 66.00 73.00 79.00 94.00
6 28.00 48.00 67.00 75.00 84.00 93.00 108.00
7 32.00 55.00 74.00 86.00 96.00 104.00 123.00
8 35.00 60.00 82.00 94.00 106.00 118.00 137.00
9 39.00 65.00 89.00 102.00 116.00 129.00 153.00
10 42.00 70.00 97.00 113.00 128.00 14200 167.00
Maximum volume and weight per garbage can:35 gallons and 80 pounds
Additional charge per can per collection:$3.00
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Rate Schedule for Solid Waste Collection and Disposal- 10/1/93
Page 2
COMMERCIAL WASTE WHEELER CONTAINERS (PER MONTH)
number COLLECTIONS PER WEEK
Of
containers 1 2 3 4 5 6 7
1 $19.00 $27.00 $33.00 $45.00 $56.00 $63.00 $62.00
2 36.00 54.00 65.00 90.00 113.00 127.00 163.00
3 42.00 61.00 78.00 101.00 123.00 134.00 188.00
4 48.00 69.00 90.00 113.00 131.00 141.00 214.00
5 55.00 76.00 103.00 131.00 164.00 176.00 249.00
6 60.00 86.00 118.00 151.00 196.00 212.00 284.00
7 66.00 96.00 135.00 181.00 229.00 248.00 318.00
8 73.00 108.00 154.00 209.00 262.00 283.00 352.00
9 79.00 118.00 168.00 235.00 286.00 311.00 424.00
10 86.00 129.00 183.00 262.00 312.00 339.00 494.00
11 93.00 140.00 197.00 287.00 336.00 369.00 565.00
12 99.00 151.00 212.00 313.00 361.00 398.00 637.00
In addition to the collection rates stated above for waste wheeler containers,there shall be charged a
monthly rental fee for each container.
COMMERCIAL DUMPSTER CONTAINERS (PER MONTH)
size of COLLECTIONS PER WEEK
container
(cubic yards) 1 2 3 4 5 6 7
1 $39.00 $59.00 $70.00 $97.00 $123.00 $137.00 $176.00
1.5 46.00 67.00 84.00 109.00 133.00 144.00 203.00
2 53.00 74.00 97.00 122.00 142.00 153.00 231.00
3 65.00 93.00 128.00 163.00 212.00 229.00 306.00
4 79.00 118.00 167.00 226.00 263.00 305.00 363.00
6 107.00 163.00 229.00 338.00 391.00 431.00 509.00
8 137.00 202.00 305.00 452.00 565.00 611.00 689.00
The rates stated above for dumpster containers shall include the monthly container rental fee.
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Rate Schedule for Solid Waste Collection and Disposal- 10/1/93
Page 3
UNSCHEDULED EXTRA COLLECTIONS FOR
COMMERCIAL CUSTOMERS AND
MULTI-UNIT RESIDENTIAL DUMPSTER CUSTOMERS
$13.00 1 cubic yard (minimum charge)
$17.00 2 cubic yards
$25.00 3 cubic yards
$34.00 4 cubic yards
SINGLE FAMILY and MULTI-UNIT RESIDENTIAL
VOLUME-BASED RATES
ECONOMY RATE
$1.00 per special 33-gallon bag distributed by San Luis Garbage Company
(Payable when bags are issued)
STANDARD RATE
$13.40 per month for one wastewheeler container collected once each week
PREMIUM RATE
$1825 per month for up to one cubic yard(six standard garbage cans)collected once each week
Maximum volume and weight per garbage can:35 gallons and 80 pounds
SERVICE AWAY FROM THE STREET CURB
$4.00 additional per month per can or container
EXTRA COLLECTIONS ON REGULAR COLLECTION DAY WITH GARBAGE TRUCK
$1.50 per.standard garbage can or equivalent volume
(Not available for economy service customers)
LATE MAKEUP COLLECTIONS WITH GARBAGE TRUCK (phone call required)
$5.00 per trip plus$1.50 per extra garbage can or equivalent volume
(Not available for economy service customers)
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Rate Schedule for Solid Waste Collection and Disposal- 10/1/93
Page 4
EXTRA COLLECTIONS WITH PICKUP OR FLATBED TRUCK (phone call required)
$11.00 per trip plus:
$1.50 per garbage can or equivalent volume(amounts over six cans by quotation)
$10.00 per appliance
$3.00 per piece of furniture
$1.50 per mattress or boxspring
(Economy service customers must pay in advance.)
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ATTAC@ENT B
LANDFILL TIPPING FEES
The following is the breakdown of allocations within the $24.55 per ton tipping fee at Cold
Canyon landfill.
Operations $5.70
Environmental Insurance 1.27
Environmental Compliance 3.28
Equipment Costs 1.36
State Closure Fund 5.26
State A 3 939 0.75
State Superfund 0.53
County AB 939 Planning 3.00
County New Site Fee 0.40
Other County Fees 0.74
Planning Requirements 0.58
Fed and State Taxes 0.74
Profit 0.94
$24.55
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ATfACHMM C
BRIEF DISCUSSION OF VOLUME BASED RATES
San Luis Obispo City Council pioneered the volume based rate system which was approved
in June 1990. This system provides the opportunity for residents to lower their monthly
costs by reducing the amount of garbage set out at the curb. It was designed as a
counterpart to the curbside recycling program to encourage participation in curbside
collection. The volume based program includes standard, premium and the 'orange bag"
service. Orange bag customers pay $1 a bag and are not billed for collection services.
Modifications to the volume based rate system are being considered by staff. Factors
include the need to integrate the orange bag customers on the billing system to assure
compliance with the City Municipal Code which states that all developed properties in the
City must receive collection and disposal services. Also, a standard customer service fee
would provide better revenue stability for paying the fixed costs of collection and disposal.
Long range alternatives include a volume based system in which all residential customers
pay the same monthly service fee in addition to a fee for a volume based service level. This
system would assure service to all developed properties and provide a stable revenue for
paying fixed costs with added rates reflecting volume service levels as incentives to
encourage waste reduction. With Council direction, the spring 1994 review will include
recommendations for comprehensive changes to the volume based system.
ATTACHb1ENT D
THERE'S NO "AWAY" IN THROW AWAY
Dear San Luis Obispo Resident,
Do you know where your trash goes when you throw it "away"? When we consider the
image of the whole earth, the picture taken from space, it's easy to see that all the garbage
we produce stays right here with us. When you think about it, there is no "away".
Collecting and storing garbage in landfills is becoming more expensive and complex. Why?
New federal laws, designed to protect you and your family from air and groundwater
pollution, impose extensive landfill construction, maintenance and closure procedures.
'Riese procedures are expensive. Cold Canyon landfill will soon be closing the existing
landfill and expanding into a new area.
Due to these rising costs of landfilling our waste, collection rates for the standard and
premium service levels will increase beginning October 1, 1993. Orange bag customers will
still pay $1 per bag.
There is some good news. The City of San Luis Obispo offers residents an opportunity to
reduce collection costs. Three levels of garbage collection service allow residents to reduce
their rates by reducing the amount of their garbage. The curbside recycling program
provides a way to reduce the amount that you and your family discard.
I hope that this information helps you to understand the need for increased collection and
disposal rates. Waste disposal is a rapidly changing field that demands new habits as we
reduce our waste and recycle, and new safeguards to protect our health and safety. For
information about curbside recycling, please call SLOCO Recycles at 545-9999. If you
would like more information about the volume based rate system, call San Luis Garbage
Company at 543-0875. I welcome your questions and comments, so please feel free to call
me at 781-7211.
Sincerely,
Cyndi Butterfield
Solid Waste Coordinator
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ATTACHMM E
ALTERNATIVE RATE INCREASES
PROJECTED IMPACTS ON 1994 RATES
USING CURRENT RATE SETTING METHOD
RATE INCREASE TODAY PROTECTED 1994 INCREASE
NO CHANGE 47.5%
3.18% 37.5%
9.691v PLUS 9.6%
$2/MONTH BAG BASE FEE
EFFECTS ON RESIDENTIAL RATES
% INCREASE SERVICE OLD RATE NEW RATE 1994 RATE
3.18% Standard $13.00 $13.40 $18.40
Premium $17.70 $18.25 $25.10
Orange Bag $1/bag $1/bag $1/bag
9.6% Standard $13.00 $1425 $16.95
Premium $17.70 $19.40 $23.10
Orange Bag $1/bag $1/bag $1/bag
$2/month $2/month
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