AgdaPkt 2012-01-09 - Laserfiche WebLink

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7.A. - Page 2 by actual cost changes required in the current CBA agreements until the current CBAs expire or are amended. 2012 Collection Rates Adjustments to 2011 solid waste rates for rate year 2012 will cover the contractually required revenue requirement for Recology to deliver collection services effective January 1, 2012. Included within this revenue requirement are other pass-through costs (i.e., the City of Redwood City's franchise and other fees and charges billed by the SBWMA for processing and disposal of materials delivered by Recology and Redwood City staff to the Shoreway facility). Redwood City is also obligated to adjust rates to compensate for estimated lost revenue associated with customers migrating to smaller carts (e.g., 64-gallons to 32 gallons) at lower rates. The new Recology services offer fewer sizes of collection containers/service levels than those historically offered by Allied (i.e., 4 cart sizes with Recology vs. 15 with Allied) and with the transition to weekly recycling and organic material collection service, a reduction in revenue has been experienced. Specifically, the enhanced recycling and the move to weekly service now allow residents to reduce their garbage service level to a lower rate. Many customers may continue to subscribe to smaller cart sizes given the reduced rates for smaller carts and the need for less garbage volume due to the convenience of the new weekly recycling and organics collection services. ANALYSIS On September 22, 2011, the SBWMA Board approved the 2012 compensation applications for both Recology and SBR, and the final 2010 Allied Balancing Account. The SBR contract is between the SBWMA (which owns the Shoreway Environmental Center) and SBR, while the Recology Franchise Agreement is between the City of Redwood City and Recology. The Recology Franchise Agreement includes a provision (Section 11.04 C) whereby the compensation application approved annually by the SBWMA Board becomes binding between Recology and each individual SBWMA Member Agency. Specifically: "The determination of Contractor's Compensation, the estimation of Pass-through Costs, and the allocation of costs among Member Agencies contained in the final Report shall be binding on Contractor and Agency". This provision therefore requires the City of Redwood City to raise rates sufficient to generate revenue to cover its share of the total revenue requirement identified in the SBWMA report approved by the Board. If Redwood City does not set rates sufficient to cover the revenue requirement in 2012, Recology will be entitled to charge the City of Redwood City interest on the shortfall experienced in 2012.