AgdaPkt 2010-02-08 - Laserfiche WebLink

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REPORT 8A Page 1 To the Honorable Mayor and City Council From the Cit Mana er February 8, 2010 SUBJECT Solid Waste Collection Rate Increase RECOMMENDATION Approve, by resolution, a 9.150/0 increase in the overall revenue requirement for Allied Waste Industries, the City's franchised waste hauler, effective February 10, 2010 and approve the implementation of a residential pull charge for residential subscribers who do not place their containers at the curb. For typical residential customers who have one 32- gallon container picked up once a week, the increase will amount to $1.76 per month. BACKGROUND Each year the franchised solid waste collection agent, Allied Waste Industries (Allied), submits a rate request application to the South Bayside Waste Management Authority (SBWMA) of which Redwood City is a member. The SBWMA is a joint powers authority consisting of 12 public agencies which comprise the contiguous Allied service area from Burlingame to East Palo Alto and which acts as a collective bargaining agent on behalf of member jurisdictions. The SBWMA engages a consultant, HF&H, to review the rate application for compliance with the rate-setting methodology contained in the franchise agreement. Allied's profit is calculated on the operating ratio method using a factor of 91 0/0. Underthis arrangement Allied is entitled to 9 cents profit for each 91 cents of operating expenses. Allied also incurs other costs, known as "pass-through costs," upon which Allied is not entitled to earn a profit. The most significant pass-through costs are the costs of disposing solid waste. Since Allied owns the landfill and earns a profit from the landfill operations, Allied is not allowed to earn a profit on these costs as doing so would allow Allied to earn profits upon profits. Consistent with past practice and the terms of the franchise agreement between Allied and the City, Allied submitted their rate application in August 2009. HF&H reviewed this rate application and after making a number of adjustments, that were agreed to by Allied, recommends that the City increase Allied's collection rates by 9.15% Analysis Of 2010 Rate Increase 3.9% Increased SBWMA transfer station disposal fees due to bonds sold to finance the transfer station improvements and new recycling facility 1.2% Higher than expected 2009 operating costs Projected Allied Waste expense increase: { 2.00 % Labor costs 3.401'0 0.78 % Fuel and Maintenance 0.30 Ok Insurance 0.32 % Corporate overhead and general administration 0.20/0 Elimination of State subsidy of curbside collection paid from "CRV" deposits 0.450/0 Increased landfill fees charged by the County of San Mateo 9.150/0