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• • <br /> ATTACHMENT K <br /> CONTRACTOR'S COMPENSATION AND RATE SETTING PROCESS <br /> i. Route Vehicles - Costs shall be allocated to each Member Agency based on its <br /> proportional share of the Rate Year One (2011) annual route hours. <br /> ii. Collection Containers - Costs shall be allocated to each Member Agency based <br /> on its proportional share of the number of Containers in service in 2011. <br /> iii. Other - Costs shall be allocated to each Member Agency based on its <br /> proportional share of Rate Year One (2011) annual route hours. <br /> h. Allocated Indirect Costs Excluding Depreciation and Interest: <br /> i. General and Administration — Indirect General and Administration Costs <br /> (excluding depreciation and interest) shall be allocated to each Member Agency <br /> based on its proportional share of Rate Year One (2011) customer accounts <br /> serviced. <br /> ii. Vehicle Maintenance - Indirect Vehicle Maintenance Costs (excluding <br /> depreciation and interest) shall be allocated to each Member Agency based on its <br /> proportional share of Rate Year One (2011) annual route hours. <br /> iii. Container Maintenance - Container Maintenance Costs (excluding depreciation <br /> and interest) shall be allocated to each Member Agency based on its proportional <br /> share of Rate Year One (2011) Containers in service. <br /> iv. Operations — Indirect Operations Costs (excluding depreciation and interest) shall <br /> be allocated to each Member Agency based on its proportional share of Rate <br /> Year One (2011) annual route hours. <br /> i. Implementation - Implementation Costs (excluding depreciation and interest) shall be <br /> allocated to each Member Agency based on its proportional share of Rate Year One <br /> (2011) annual route hours. <br /> j. Allocated Indirect Depreciation. The Allocated Indirect Depreciation Expenses shall be <br /> allocated in the manner described in subsection h.iv above. <br /> k. Total Annual Cost of Operations. The Rate Year One (2011) Total Annual Cost of <br /> Operations for each Member Agency shall equal the sum of the projected costs listed <br /> above in subsections a through j. <br /> 2. PROFIT <br /> Profit shall be calculated for each Member Agency using a ninety and one -half percent <br /> (90.5 %) Operating Ratio and the Total Annual Cost of Operations for each Member <br /> Agency per subsection k above. [The calculation is: (k = 0.905) — k = profit]. <br /> 3. CONTRACTOR'S PASS - THROUGH COSTS <br /> a. Regulatory Agency Fees. Regulatory Agency Fees shall be allocated based on <br /> Rate Year One (2011) annual route hours. Agency fees required by Article 10 of <br /> the Agreement shall not be included in this calculation, as they will be calculated <br /> later in the process. <br /> b. Direct Interest Expense. The Direct Interest Expense shall be allocated based on <br /> the ratio of each Agency's depreciation expense to the total depreciation expense. <br /> c. Implementation Cost Interest Expense. The Implementation Interest Expenses <br /> shall be allocated in the manner described in subsection 1.i. <br /> Collection Services Franchise Agreement with Recology San Mateo County Attachment K <br /> City of Redwood City Contractor's Compensation and Rate Setting Process <br /> Page 23 of 26 <br />