HomeMy WebLinkAboutMINUTES - 09171996 - D12 D.12
THE BOARD OF SUPERVISORS OF
CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on September 17, 1996, by the following vote:
AYES: (See below for vote)
NOES:
ABSENT:
ABSTAIN:
SUBJECT: Bay View Refuse and Recycling Services, Inc.
The Board considered the approval of a Franchise Agreement with Bay View Refuse
and Recycling Services, Inc. and the County for the provision of solid waste and recycling
services in the Kensington area or, alternatively, a Memorandum of Understanding with
Kensington Police Protection and Community Services District for provision of such services
by Bay View Refuse and Recycling Services, Inc.
Val Aleexeff, Growth Management and Economic Development Agency, presented an
oral report and the staffs recommendations.
Supervisor Rogers requested clarification of Option 1 on the proposed staff
recommendations, and offered comment on the profit figures.
Supervisor Bishop noted that the parties were close to an agreement, and moved the
County's intent to approve the Memorandum of Understanding subject to the Kensington
Community Service District (KCSD) approving a new Franchise Agreement satisfactory to the
County.
The following persons then addressed the Board:
David Fike, Kensington Community Service District, P.O. Box 218, Kensington;
Joan Gallegos, 239 Cambridge, Kensington;
Gloria Morrison, 112 Windsor Avenue, Kensington;
Mark Armstrong, Attorney representing Bay View Refuse and Recycling Services,Inc.,
P.O. Box 218, Danville.
All persons desiring to speak having been heard, the Board took the following action:
Supervisor Rogers seconded the motion as proposed by Supervisor Bishop. The vote
on the motion was as follows:
AYES: Supervisors Rogers and Bishop
NOES: Supervisors DeSaulnier, Torlakson and Smith
ABSENT/ABSTAIN: None
The motion failed to carry.
Supervisor Rogers moved a substitute motion that the Supervisors approve Option 1 of
the staffs recommendations contingent upon the approval of the KCSD Board, and request a
report back on October 1, 1996.
Discussion followed, and the motion died for lack of a second.
1
a . �z
Supervisor Torlakson requested staff outline issues proposed in Option 1 for an
agreement, and noted there were possibly three remaining issues for resolution. Mr. Aleexeff
responded to his request.
Supervisor Torlakson contended Option 3' provided the means for final resolution
within 30 days, and if after input from KCSD, the matter was still not resolved, suggested the
Board conclude the issue in a time certain.
Supervisor DeSaulnier advised that if Supervisor Torlakson's comments were a motion,
he would second it.
Supervisor Torlakson moved that the Board accept Option 3.
On the request of Supervisor Rogers for further definition, Supervisor Torlakson
clarified that Option 1 would become effective in 30 days unless a viable MOU was offered
to the Board. The Board of Supervisors would not revisit the subject unless KCSD brought
an agreement that was very close to Option 1, and that agreement would then be considered.
Further discussion followed on issues including differences regarding other landfill
agreements, the base rates for service, and how long the rates would be in effect with regard
to this agreement.
Victor Westman, County Counsel, explained what role the County could assume in
determining the Franchise Agreement.
Supervisor DeSaulnier expressed his hope that the issues could be amicably agreed
upon in the partnership between KCSD and Bay View Refuse and Recycling, Inc. with help
from the staff.
The vote on the motion was as follows:
AYES: Supervisors DeSaulnier, Torlakson and Smith
NOES: Supervisors Rogers and Bishop
ABSENT/ABSTAIN: None
IT IS BY THE BOARD ORDERED that the Franchise Agreement between Bay View
Refuse and Recycling, Inc., and the County for the collection of solid waste in the Kensington
area is APPROVED; and it is FURTHER ORDERED that the Franchise Agreement is to
become effective within 30 days if a substitute agreement is not presented to the Board for
their consideration during that time.
hereby►eerMy that this fa a true aed oonllEt copy al
an aWon take and entered on mo mkwra a1 tlia
I N I of Sups seta =.�
ATTEMD-PHI BA CHELOR,Clerk othe board
of Supervisors and ou Adminlatra
By �Depuq
c.c. County Administrator
GMEDA, Director
Community Development Department
County Counsel
1 Supervisor Torlakson advised the Clerk that his motion was
to accept Option 1 (not Option 3) and that he had incorrectly
referenced the Option number to his motion.
2
TO: BOARD OF SUPERVISORS Contra
FROM: HARVEY BRAGDON Costa
DIRECTOR OF COMMUNITY DEVELOPMENT , Courty
DATE: SEPTEMBER 17, 1996
SUBJECT: Consider approval of a Franchise Agreement with Bay View Refuse and
Recycling Services, Inc. and the County for the provision of solid waste and
recycling services in the Kensington area or, alternatively a Memorandum of
Understanding with Kensington Police Protection and Community Services
District for provision of such services by Bay View Refuse and Recycling Services, Inc.
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND-AND JUSTIFICATION
RECOMMENDATIONS:
Approve the Franchise Agreement between Bay View Refuse and Recycling Inc. and the
County for the collection of solid waste in the Kensington area,
or State intent to approve the MOU subject to KCSD approving a new Franchise
Agreement which is satisfactory to the County
or Continue to October 1 for status report and possible decision
FINANCIAL IMPACT
The agreements all include a provision for franchise fees that will help to pay for solid
waste administration and recycling programs that the County will be providing in the
unincorporated area.
CONTINUED ON ATTACHMENT: X YES SIGNATURE: Fd�
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
"CTION OF BOARD ON APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS
UNANIMOUS (ABSENT I HEREBY CERTIFY THAT THIS IS A TRUE AND
AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND
ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD
UPERVISORS ON THE DATE SHOWN.
Contact: Val Alexeeff(510)646- 0
cc: Community Devel ent Department(CDD) ATTESTED
County Coun PHIL CHELOR, CLERK OF THE
BOARD O UPERVISORS AND
COUNTY AD TRATOR
BY: , DEP
V
F1:kns91296.bo
Board Order
Hearing on approval of a Franchise Agreement
Bay View Refuse & Recycling Services, Inc. and the County
September 17, 1996
- Page 2 -
BACKGROUND REASONS FOR RECOMMENDATIONS
This matter was considered by the Board of Supervisors at the September 10, 1996
meeting. The Board requested that this matter be brought back before the Board on
September 17. At that meeting the Board directed staff to meet with the accountants
representing the Kensington Community Services District (Arnstein) and Bay View Refuse
(Butler) to identify the outstanding financial issues and requested that staff report back at
the Board meeting on September 17. Staff is scheduled to meet with the above mentioned
accountants on Monday, September 16. Staff intends to provide an oral report on these
financial issues at the Board meeting due to the time constraints.
Attached is a Summary prepared by staff which outlines the financial issues identified in
the reports developed by the above mentioned accountants. Also attached are reports by
Arnstein, dated September 4, 1996, and Butler, dated August 30, 1996.
The Board Order and attachments from the September 10, 1996 Board meeting regarding
this matter are also attached.
vvdd
RMF1:kns91296.bo
D, 12-
KENSINGTON POLICE PROTECTION
AND COMMUNITY SERVICES DISTRICT
September 12, 1996 BY FACSIMILE: ORIGIN'AaBii
K EIVE®
Chair Jeff Smith
Contra Costa County Board of Supervisors 1 3 Rg9
651 Pine Street, Room 106 LS%ETP
Martinez, California 94553
CLERK BOARD 0F
CONTRA COSTA C{ ..w
Subject: Kensington Franchise Agreement with Bay View Refuse Services,Inc.
Dear Chair Smith:
At the meeting on Tuesday, I confirmed that the District Board had, in an effort to preserve the
District's longstanding relationship with Mr. Figone, agreed to a rate schedule based on
$17.90/month for a single can. Your Board, on Supervisor Torlakson's motion, directed County
staff to review the District's rate analysis and report back to the full Board next Tuesday. You
suggested that I contact Supervisor Torlakson to discuss his apparent concern that the rate of
$17.90 (earlier agreed to by Mr. Figone) is insufficient. Mr. Torlakson has not returned my calls
and Mr. Alexeeff's schedule is apparently so occupied that he can't meet until next Monday, one
day before your Board meeting.
Under these circumstances, I cannot see what purpose a meeting will service. The status of our
negotiations should be clear: Mr. Figone has a contract with 12 years to run with a current
maximum single can rate of$16.25. We have received a rate study which suggests $17.17 is a
reasonable rate. We and Mr. Figone agreed to a rate of$17.90, conditioned on resolving some
important, but not very complicated, issues of contract language. You have our financial
consultant's report and, if Mr. Alexeeff has any questions about it, he can forward them to our
General Manager by fax or phone.
More fundamentally,the District Board has never acknowledged the authority of the County to
mediate, arbitrate or kibitz on the rates for garbage service in Kensington, much less to browbeat
us because those rates are not high enough(in your opinion) for the company which signed a
contract with us granting us the authority to set those rates.
We remain as willing, indeed eager, as ever to work with the County on the MOU. We also remain
adamant that the County oversteps its legitimate government role and exceed its legal power,when
it intermeddles in rate matters, as you have been doing for the past several months.
Veruly ours —�
AVID FIKE, President
Board of Directors
cc: Board of Supervisors
Board of Directors, Kensington Police Protection
and Community Services District
Mr. Val Alexeeff
Bay View Refuse Services, Inc.
217 Arlington Avenue Kensington, California 94707-1401 (510) 526-4141
09/23/96 15,40 '0415 541 9366 HANSON BRIDGETT
► 001
LAW OFFICES
ffiNSC)N, BRIDGETT, MARCUS, VLAHOS & RuDY
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SAN FRANCISCO, CALIFORNIA 94105-2173
(415)777-3200
Telefacaimile (415) 541-9388
FACS)MUM TRANSMISSION COVER SHEET
DATE: ,fie.ntember 23-19
L6 ORIGINAL BY ALIH: SWlember 23, 199G
TO: Ph&Batchelor RECEIVER'S PAX2371
FROM:
FROM: Rr�v�. McDeg:t
SUBJECT: Public Records Act Request
MESSAGE: TOTAL PAGES:-L
cc: (via,Facsimile)
Valentin Alexeef (510) 335-1299
Lillian FWU (510) 646-1078
THE INFORMATION CONTAINED IN THIS FACSDME MESSAGE IS PROTECTED BY THE ATTORNEY-CLIENT AND/OR THE
ATTORNEY/WORK PRODUCT PRIVILEGES. IT IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL NAMED BELOW,
AND THE PRIVILEGES ARE NOT WAIVED BY VIRTUE OF TICS HAVING BEEN SENT BY FACSDO-E. IF THE PERSON
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TO US AT THE ABOVE ADDRESS VIA THE U.S. POSTAL SERVICE. THANK YOU.
PLEASE IMMEDIATELY CALL LYNN DUNCAN AT (415) 995-5110 IF You DO NOT RECEIVE ALL OF THE
TRAONTSMITTED PAGES.
FILE NO.; 11521.7
7699.1
09,,23%96 15:40 $415 541 9366 HANSON BRIDGETT l 2002
1
LAW OFFICES
HxrYS02N-, Bn.1: )OPSrT, Ml' P-Q-TTS,VLAHOS & RUTDY, Lep
333 MARKET STREET, SUITE 23QO
SAN FRANCISCO, CALIFORNIA 94105-2173
(41*) 777.3200
RAYMOND L. HANSON IRET.J -ARTHUR T ORIDGE r•T (RET) FACSIMILE l41$1 $pl•9��SCS
GERAI.p D. MARCUS JOMN J. VLAHOS
51014D RUDY WILLIAM J. BUSH
RONALDC. PETERSON RICHARD N. RAPOi'ORT 0r a0UN4EL
DAVID J. MILLER LAURENCE W, Kcz° ;GNICK
JACK P. wpNG
RAY C SCH DOUGLAS H. BART'
>N DANIEL W. BAKER
JCRROLDC.. SCHAEFER JAMES D. HOLDEN
PAUL A. GORDON MICHAEL A, OUNC'ICON R015ERT E. Simms
WILLIAM D. TAYLOR FRED B. WML JOHN W. BROAD
TEO C. KRUMLAND CRAIG J. CANNIYZ•>
STEVEN V. SCHNIER THEODORE A. Hr-L'.MAN SARAH D. MOTT
KEVIN M. O'DONNBLL STEPHEN L. TABEF
JOAN L. CASSMAN STEPHCN a. PECK.
ALLAN D. JERGE$EN KIM T SCHOKNECJ,T
ROBERT L. 4U:6KY BONNIE KATHLEEN GIBBON
HOWARD W A$MCRAFT JOEL S. SOLOMAN
ROPY J. CAMPBELL JACQUELYN J. GAF'MAN
DAVID W. VAER MADELINE CHUN
LORA J. 1'MIELBAR LINDA E. KLAMIA
PAUL PP.JANE WOODSIDEI� SUSAN 0. O'NINLL PETER L. OMYTRY14 September 23, 1996
PATRICK M.,GLENN DAVID G. LONGINO"TF
PAMELA 5. KAUPMANN DIANE MARIE O'MFLLEY
JEFFREY M. CHU MICMACL N. CONNF RAN
MATTHEW J. DULKA JONATMAN S. STO1 WCM
WILLIAM A. HICKEY LEE ANN M. LA YMANC£
STEVEN J. LEVIN£ LYNN TRACY NC'KLP ND
PETER L WAT N ANDREW A. oIPOLI N1 VIA FACSIMILE AND REGULAR MAIL
DEBRA L. WATANUkI JAMES q. NAP'O LI
MARtE B. CURRY PATRICK 1', MIYAKi -
MABEL NG ANN K. MYLC'.S
DANA B. W ALJ .G� L. TMOMI'SON, IV - PnLIC RECQRDS AC7' )�F,t�U" I
LAURA L. HAUGLISA K LISA M. YOOLCY -"---�—�
MICHAEL B. M..NAUFMTON AMY t:.'VMOWN
MEREDITH E Rr.OWN PHILIP C. FAGONE -
SANDRA I.. A&PpAPORT LISA K. PUNTILLO
BETTINA L. MOORC JVNL M 05M1MA
ERIC V. TAO ALLISON M. WOODlLL I RECEIVED
GL£KDA N. LARDOCK
Mr. Philip Batchelor I SEP 2 3 N6
Clerk of the Board of Supervisors I
and County Administrator
651 Pine Street ��� ,,CLERK BOARD OF SUPERVISORS
Martinez, CA 94553 � I CONTRA COSTA CO.
Dear Mr. Batchelor: i
I hereby request a copy of the following public records, pursuant to the California Public Records
Act, Government Code Section 6250 et SeMc.: -
•'�1. ,,Minutes of the Board of Supervisors meetings held on September 17, 1996; September
10, 1996; August 13, 1996 and June 25-;'1996.
?. Minutes of meetings of the "Ad Hoc Solid Wash Committee" of the Board of Supervisors
held from April 1, 1996 to the date of this letter.
t3. The Resolution or other formal evidence of the Board of Supervisors action on September
170 1996, authorizing execution of a franchise agreement between the County and Bay
View Refuse and Recycling Services, Inc., for collection of solid waste in Kensington.
4� The franchise agreement between the County and Bay View Refuse and Recycling
Services, Inc., approved by the Board of Supervisors on September 17, 1996.
5. All memoranda, reports and other communications submitted by County staff to the Board
of Supervisors or the Ad Floc Solid Waste Committee between April 1, 1996 and the date
of this letter relating to the collection of solid waste in Kensington, including records
relating to the franchise agreement with Bay View Refuse and Recycling Services, Inc.,
and the draft Memorandum of Understanding between the County and the Kensington
Police Protection and Cvmmunity Services District.
328871.1
09-23/96 15:41 $415 541 9366 HANSON BRIDGETT 1.9003
Mr. Philip Batchelor
September 23, 1996
Page 2
6 All correspondence recaived by the County from, or sent by the County to, officers,
employees and agents of Bay View Refuse and Recycling Services, Inc., including Lewis
Figone, Mark Armstrong and Edwin Buter, between April 1, 1996 and the date of this
letter.
7. All internal memoranda, reports and other documents prepared by County staff between
April 1, 1996 and the date of this letter related to collection of solid waste in Kensington,
401 the franchise agreemern with Bay View Refuse and Recycling Services, Inc., and the draft
MOU with the Kensington Police Protection and Community Services District.
S. In addition, I would like to have copies made of the portions of the audio tape recordings
and video tape recorduigs of the meetings of the Board of Supervisors and the Ad Hoc
Solid Waste Committee listed above, during which matters related to solid waste
collection in Kensingtori were discussed.
J'- As used in the foregoing request, the term "public records" has the meaning assigned in
Government Code Section 6252(d) and (e).
We will pay the County's customary charge for photocopying the documents requested in Items 1
through 7 above, and for making duplicate video or audio tapes of the portions of the meetings
described in Item 8.
Many of the records requested herein are in your custody as Clerk of the Board of Supervisors.
Others are in the custody of the Community Development Department and the County Counsel's
Office. I am sending a copy of this letter to Mr. Val Alexeef and Ms. Lillian Fujii so that they
can assist you in preparing copies of the documents in the CDD and County Counsel's office,
respectively.
If you have any questions abort any of the items requested, please contact me at (415) 995-5010.
Once the copied materials are available, please call me so that we can make arrangements to pay
the cost of duplication and pick up the copies. If the photocopying of Items 1 through 7 can be
done more quickly than the duplication of the audio and video tapes (Item 8), please let me know
soon as the photocopied materials are ready, rather than delaying until all items requested have
Uee duplicated.
Thank you or your prompt attention to this request.
Very truly yours,
RAYFI-OL-
E. EVITT
REM/ld
cc: Mr. Valentin Alexeef
Nis. Lillian Fujii, Depaty County Counsel
38871.1
RIVED . :y
w'
SEP 17 19%
ARD OF PE RS
STATUS REPORT REGARDING DISAGREEMENTS/DI ---CO' �--F
OF OPINION REGARDING BASE RATE IN KENSINGTON
On Tuesday, September 10, the County Board of Supervisors directed staff to hold a
meeting with accountant's representing the Kensington Community Services District
(KCSD) and Bay View Refuse Service, Inc. The purpose was for staff to gain an
understanding and form possible recommendations regarding the outstanding financial
issues and report this information back to the Board on Tuesday, September 17.
The following were persons were present for a meeting held on Monday, September 16:
David Anton, KCSD Board Member; James Arrnstein, Financial Consultant (representing
I<-CSD); Ed Butler, Accountant (representing Bay View); Deidra Dingman, Planner -
County Community Development Department and Charles Zahn, Assistant Director -
County Community Development Department.
The purpose of this meeting was to gain an understanding of the outstanding differences
of opinions between James Amstein (representing KCSD) and Ed Butler (representing
Bay View) as well as possible solutions.
Arnstein and Butler agree on the 12% profit margin and 5% franchise fee, calculated as
percentages of Bay View's income. Income varies dependant on the collection rate and
therefore until agreement about the rate is reached the amount of income is unknown.
Arnstein recommended decreases to the annual income projected for ten line items of
Operating Expenses listed (totaling $73,568.00) in Bay View's "Statement of Income"
which results in a decreased recommended collection rate. There are twenty line items
of Bay View's "Statement of Income" which Arnstein did not recommend adjustments
to.
After discussion agreement seemed possible on some of the various items, however
disagreements remained regarding the largest items. See Exhibit A for additional details
regarding the line items in dispute.
. . ...STAFF RECOMMENDATION
Therefore, because of the outstanding disagreements, staff recommends the following three
options:
O12tion 1
1. APPROVE the MOU with the KCSD (dated August 30, 1996 S&included in the Board
packet), contingent on the following:
a. KCSD enters into a Franchise Agreement with Bay View, acceptable to the
County, and
b. KCSD and Bay View agree on an Interim Rate of $18.50 (weekly single can
service) - no mini-can service required earlier than 1997 and all other rates as
specified in attached "Exhibit B", and
Il.0370
C. KCSD must acknowledge that this Interim Rate ($18.50) provides only a 996 0
profit to Bay View, and
d. KCSD and Bay_ View agree to establish a new rate as of January 1, 1998 which
should provide a 12% profit (based on actual costs of new services for the period
of January 1 , 1997 through August 30, 1997 in addition to cost of living); the
new rate set for January 1998 must include the following components:
1. equipment rental costs to be based on Rental Fair Market Value (following
an industry standard), and
ii. depreciation schedule of 6 years consistent with the replacement schedule
(5-6 years) used historically by Bay View (6 year depreciation is
recommended by Barakat & Chamberlin Rate Setting Methodology used
by the County &_ City of Richmond), and
iii. purchase and operation of a new Recycling Truck and Waste Collection
Truck by mid-1997; and
2. DIRECT County Counsel to prepare necessary agreements/MOU consistent with the
above (upon approval by the Board) and schedule for final approval/signatures by the
Board within 30 days.
EXHIBIT A
Arnstein's report identified the following outstanding differences regarding the Operating
Expenses to be used to calculate the Base Rate are:
OPERATING EXPENSE ITEM (listed KCSD RECOMMENDED DECREASE
in order of decreasing magnitude): TO EXPENSE AMOUNT REPORTED
BY BAY VIEW (ANNUAL):
1. DEPRECIATION $ 20,378.00
2. INSURANCE $ 13,128.00
3. DEBRIS BOX OPERATIONS $ 12,591.00
4. ADDITIONAL CLEAN-UP COST $ 9,484.00
5. EQUIPMENT RENTAL $ 6,210.00
6. FRANCHISE FEE (5%) $ 4,557.00
7. LEGAL FEES $ 4,400.00
8. FUEL $ 1,475.00
9. TELEPHONE $ 1,095.00
10. COMMUNICATION $ 270.00
TOTAL REDUCTION: $ 73,568.00
Following discussion at the meeting on Monday, September 16, 1996 it appeared that of this
total, approximately four specific items remained in contention totaling $48,663.00
(comprised of Depreciation, Debris Box Operations, Additional Clean-up Cost and Equipment
Rental).
Below are staff's recommendations regarding the specific items.
1. Depreciation = $20,378.00
Staff recommends a standard depreciation schedule of 6 years and therefore this
adjustment is not necessary.
2. Insurance = $13,128.00
Although both parties were agreeable to the concept of entering into a combined
insurance policy which would likely result in cost savings, however Bay View's insurance
agent explained that his insurance carrier will not provide a combined policy for 2
S%�tion 2
Approve the Franchise Agreement between Bay View Refuse and Recycling Inc. and the County
for collection of solid waste in the Kensington area, to become effective immediately.
Option 3
Approve the Franchise Agreement between Bay View Refuse and Recycling Inc. and the County
for collection of solid waste in the Kensington area, to become effective in 30 days (to allow
time for possible resolution if parties appear to be close but just not close enough).
Exhibit B
MONTHLY MAXIMUM RESIDENTIAL AND COMMERCIAL RATES IN KENSINGTON
* Residential Rates:
30 gallons cans Monthly Fee
1 can once a week $18.50
2 cans once a week $34. 15
3 cans once a week $46.90
40 gallon cans Monthly Fee
1 can once a week $43.15
45 gallon cans Monthly Fee
1 can once a week $46. 15
* Commercial Rates:
30 gallon can once a week $19.90
Material other than can use (bulk rate)
Dry $20.00/cubic yard
Wet $21 .00/cubic yard
* If cans are more than 100 feet from the curbside, Bay View may
at its discretion add a distance charge of $.50 per can to the
monthly rate.
* These rates shall stay in effect through December 31 , 1997.
Increased costs for additional requested services (plus 12%) ,
pass-through costs, if any, or other cost changes subject to
rate adjustment, as set forth in the Agreement and incurred
prior to that time, will be recoverable in a rate adjustment
effective on January 1 , 1998.
* These new rates are based in part on a franchise fee to County
of 3% and to District of 2% of gross revenues from commercial
_ and residential billings and a County household hazardous
waste program fee of approximately $4,000.
* Rates Effective September 1 , 1996
KENSINGTON POLICE PROTECTION CONTRACTOR
AND COMMUNITY SERVICES DISTRICT BAY VIEW REFUSE AND RECYCLING
SERVICES, INC. a California Cc
By: PRESIDENT, BOARD OF DIRECTORS By: LEWIS FIGONE, PRESIDENT
Date Date
nmmrcm
1
companies with different shareholders (Bay View&_Bay Cities). Staff recommends that
separate policies be issued and therefore this adjustment is not necessary.
3. Debris Box Operations = $12,591.00
Staff recommends that an industry standard (fair market value - cite appropriate
authority) be used and therefore this adjustment is not necessary.
4. Additional Clean-up Cost = $9,484.00
Staff recommends that this cost be based on the cost of providing the new services, not
be based on historical costs of providing the clean-up services.
5. Equipment Rental = $6.210.00
Staff recommends that an industry standard (fair market value - cite appropriate
authority) be used and therefore this adjustment is not necessary.
6. Franchise Fee = $4,557.00
As discussed earlier all agree on the percentage (5%) but the dollar amount differs due
to disagreement regarding the rate/income. Staff agrees with the 5% franchise fee.
7. Legal Fees = $4,400.00
Butler would likely_ agree to Arnstein's reduction if there is a provision for covering
"exceptional legal fees" such as those incurred over the past 6+ months and through
signing of agreements due to use of legal counsel during active negotiations, KCSD
agreed to this concept and was willing to discuss how this could be achieved. Staff
recommends acceptance of the agreement between the parties.
8. Fuel = $1 ,475.00
Butler indicated that this smaller adjustment would not have a significant effect and
therefore was willing to agree to adjustment recommended by Arnstein. Staff
recommends acceptance of the agreement between the parties.
9. Telephone = $1 ,095.00
Butler indicated that this smaller adjustment would not have a significant effect and
therefore was willing to agree to adjustment recommended by Arnstein. Staff
recommends acceptance of the agreement between the parties.
10. Communiciations = $ 270.00
Butler indicated that this smaller adjustment would not have a significant effect and
therefore was willing to agree to adjustment recommended by Arnstein. Staff
recommends acceptance of the agreement between the parties.
SEPTEMBER 17, 1996
VA/DD
DD l O:KCSDRATE.WPD
KENSINGTON SERVICE INFORMATION
• Yearly 4 month billing cycles : bills sent out in January, May
and September for next 4 months service beginning with billing
x: month.
d�
s Containers: residential and commercial customers provide their
own cans for the weekly solid waste collection service . 3
five-gallon buckets provided by Bay View for each residential
parcel for weekly recycling service (customers charged at cost
=° for any replacement buckets) . Recyclable materials are as
follows: (a) aluminum cans, (b) glass containers, (c)
newsprint, (d) PET bottles, (e) clear HDPE bottles,. (f)
colored HDPE bottles, (g) steel and tin-plated cans, (h)
y' cardboard, (i) polystyrene, (j) plastic film, (k) yardwaste,
and (1) paper (includes magazines) .
• Special job pick ups (e.g. , old refrigerators) may be
scheduled for a separate charge.
• At District direction, Bay View will provide notice of
scheduled pick ups of reusable materials (e.g. , old clothes,
toys) in coordination with organizations like Good Will
Industries and Urban Ore.
• Pick up locations: backyard weekly service for cans; frontyard
weekly recycling service.
• Green waste pick ups effective January 1, 1997 : frontyard
scheduled green waste pick ups; 4 pick ups annually on
customer's regular garbage day; each pick up bundled, tied or
placed in boxes or trash containers (no yardage limit, no
plastic bags) .
• General pick up effective January 1, 1997 : 1 frontyard pick up
annually on a customers regular garbage day; 1 % yards
bundled, tied or bagged of general waste (no green waste) ;
each resident must place material in front of home at curb.
CONTRA COSTA COUNTY
CLERK OF THE BOARD
TO: V. J. Westman DATE: October 11, 1996
County Counsel
FROM: Jeanne Maglio, Chief Clerk
SUBJECT: Kensington Area Franchise Agreement with
Bay View Refuse and Recycling Services, Inc.
The attached letter from the Law Offices of Gagen, McCoy,
McMahon, & Armstrong regarding the subject franchise agreement is
being referred to you for review.
Please advise if further Board action is required on this
communication.
jm
Attachment
cc: Board Members
County Administrator
Director, GMEDA
Director, Community Development
J
LAW OFFICES OF
GAGEN, MCCOY, MCMAHON & ARMSTRONG
WILLIAM E. GAGEN, JR. A PROFESSIONAL CORPORATION DANVILLE OFFICE
GREGORY L. MCCOY
279 FRONT STREET
PATRICK J. MCMAHON
P. O. BOX 218
MARK L. AF�MSTRONG DANVILLE, CALIFORNIA 94526-0218
LINN K. COOMBS
TELEPHONE: (SIO) 837-0585
STEPHEN W. THOMAS
FAX: (510) 838-5985
CHARLES A. KOSS
MICHAEL J. MARKOWITZ
NAPA OFFICE
MICHAEL W CARTER
RICHARD G. RAINES 1001 SECOND STREET, SUITE 315
VICTOR J. CONTI NAPA, CALIFORNIA 94559-3017
BARBARA DUVAL JEWELL October 8, 1996 TELEPHONE: (707) 224-8396
FAX: (707) 224-5817
ROBERT M. FANUCCI
ALLAN C. MOORS RECEIVE®
ALLANPATRICIA. E. ORECURCiV LEASE REPLY TO:
STEPHEN Y. BUEHL
ALEXANDER L. SCHMID
DANIEL A. MULLER - Danville
�/• ' Olow
Chair Jeff Smith CLERK 8 AR OOF3UPERVISORS=
CONTRA COSTA CO.
c/o Clerk of the Board of Supervisors
651 Pine Street, Room 106
Martinez, CA 94553
Re: Kensington Area Franchise Agreement
with Bay View Refuse and Recycling Services, Inc.
Dear Chair Smith:
As you are aware, the County franchise agreement with Bay View
Refuse and Recycling Services, Inc. will be effective October 17,
1996 . Bay View followed up on its commitment to work in good faith
with District officials to try to resolve our differences,
notwithstanding Board approval of a County franchise agreement .
Attached are copies of correspondence from Mr. Figone to District
officials to that effect . The letter dated September 24 , 1996 to
Jim Bray outlines specific proposals to reach agreement on a
District franchise agreement . Such a new franchise agreement
should avoid future confrontations and uncertainties. Mr. Figone's
note to Jim Bray dated September 25, 1996 sets forth dates that he
would be available to meet before October 17th.
Bay View has received no formal response to these letters . The
only formal action taken by the Board of Directors for the District
was to vote to file a lawsuit challenging the decision by the Board
of Supervisors to approve the County franchise agreement . In our
view, that is not a good faith response.
Also for your information enclosed is a copy of correspondence and
attachments provided to our customers along with the September
bills . Bay View has tried to keep its customers apprised of its
regulatory situation. Based on customer responses to date to the
letters, Bay View is confident that the Board' s judgment about the
consensus opinion of our customers on a County franchise agreement
is correct . Enclosed are copies of letters from our customers
which in Bay View' s opinion represents the prevailing sentiment in
Kensington. Kensington ratepayers want Bay View to continue as the
service provider. Maintaining that long term service relationship
is far more important that which agency regulates Bay View.
Chair Jeff Smith
October 8, 1996
Page 2
Criticisms from District officials and a few others
notwithstanding, Lewis Figone and I know that the Board majority
acted with the best interests of Kensington ratepayers in mind when
it approved the County franchise agreement with Bay View.
Ultimately, it is the ratepayers who suffer if the conflicts and
regulatory uncertainties between the District and Bay View were to
continue. Under the particular circumstances here, a County
franchise agreement makes the most sense at this time.
Very my yo rs,
Mark L. Ar strong
MLA:kh
Attachments
CC : Lewis Figone (w/attachments)
Jim Bray (w/attachments)
Val Alexeeff (w/attachments)
Mary Fleming (w/attachments)
Lillian Fujii (w/attachments)
F:\CLMLA\28117\SMITH3.LTR
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SAY; VIEW
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SQptember 24, 1996
Sita Bray, 'Qeneral Manager
Kensington Police Protection
and community Services District:
247 AxIington Avenue
Kenaington, CA 94707
Dear Jim:
I knot you disagree, but 1 thank approval by the Board of
supervisors of the county Franchise Agreemet►t: rtaquested by gay View
provides an appartunity for nay view �d District officials to now
sit down and finally resolve our differences. I want to conf:L= in
writing what i said to David Pike and you on Tuesday and what Mark
Armstrong said at the Sos►rd of Supervisors meetiAg: Bay View is
willing to continue to Work with the District to reaalve our
differences and conte up with a District Franchise Agreement:
satisfactory to the District and Bay view, which can be approved in
conjuactibn with a Memorandum of Uhderstanditig with the County. My
door is appn.
Ata we discussed on Tuesday, I will authorize Ed Butler to be
available to meet with James Arnstain to resolve the ramaitring
differences on operating expensers, as they are described in the
status report: prepared by Diedra Dingman. it the operating
expenses identified by Mr. Butler are not conaiatant with Jzduotry .
standards; and accepted accounting xinciplee, Mr. Axnst.ein should
be prepared to fully justify a different approach. Mr. Mrnstein
has acknowledged that his lack of familiarity with our business
op erationd and the rationale behind theta may have lad to some of
his recomendatione and conclusions. As we discussed 'Tuesday, I
will make myve:lf available to Mr. Arnaatein to give him whatever
information and aVlanetion he needs on the maxuier in which our
business conducts its operations and the reagotg why.
In my judgement, the remaining differences between Mx. Arnstein and
mr. Butler are substantially Lased on Mr. Arnstein•s lank of
familiarity with our operations in Kensington and' our successful
track record over the yearn. I have operated safely and provided
high quality moxvico in this hard to serve area for decades. I am
not inclined to change tried and true pa riormbnce standards that
have proven succeseful for Bay View and our customers over the
0
Jim Bray
September 24, 1996
page 2
years, based solely on the untested ideas at a financial consultant
or elected officials. with all due respect, they are not in the
business and they are not ultimately responsible for the saf6ty of
our opexetion and the satisfsction of our customers. I am. If
District representatives reasonably keep this in mind, then I
believe the outstanding issuce on operating expanses can be
resolved and we can axrive at a rate that provides Say View with
the accuptable 12V pretax return over oasts.
The $19.90 single can rate first proposed by gay View provided
reimbursement for some of the attorney's fees and accountant's fees
that Bay View has incurred over the pant year an a result of our
disputes with the District. we have Lout money over the last six
months of operation in part due to those expense*. Nonetheless, I
am willing to accept Mr. ArnetainIx proposed reduction of
pxofeg ffional, fees, as accepted operating expenses, with the
suggested inclusion of a provision in the franchise agreement
covering "exceptional fees" in the future (see. Item 7 to 8xhibit A
to the staff report prepared by Diedra Dingman) . However, in all
Candor, if the District files a lawsuit challenging the County
Franchise Agreement, I will not be no inclined. In that event, you
should know that Bay View will insist, that in any new franchise
agreement with the District, the rates reflect such fees as
operating expenses and/or that the District reimburse say View its
portion of the; new franchise fee for a period of yearn.
In order to reach a final, accommodation with the District, Bay View
is prepared to modify the last draft of the District Franchise
Agreement to provide as follows:
x. Effective September 1, 1996 through April 30, 1997:
ea Residential Rates:
1p SAIJ XI Cans Monthly. Pee
1 can once u geek $1L$.25.
2 Cana once a week $34.13
3 cans once a week $46.90
40.- sal. a cane Monthly Fee
1 can once a week $43.15
gallon cane f!S] WAY Fe&
1 can once a week $46.15
If cans are more than 100 traveling feet from the curbside, Bay
view may at its discretion add a distance charge of $.50 per can
to the monthly rate.
T �
1 ,
j Jim Bray
september 24, 1996
page 3
• Commercial Ratan,
30 gallon can oncd a week $19.90
Material other than can use (bulk rate)
Ary $20.00/cubic yard
1 Net $31.00/cubic yard
Effective May 1, 3997 through December 31; 1997, the single can
residential rate will be increased by $.25 (i.e., $16.50 single Can
! rate) .
3. The District will conduct a rate review eomtaeneing September
1, 1997 to establish now rates effective. January 1, 1998.
'those new rates will be based on review of operati" expenses
plus A sat profit margin from January 1, 1997 through August
30, 1997, utilizing the accepted methodology described below.
Any adjustments in rates to reflect a mini-can rate or higher
multi-can rates mut not result in a decrease in overall
revenue to. Hay view. such adjustments are intended to
encourage customere to use fewer or smaller cava and dispose
of less solid waste. They should not be considered as part of
a rate review. Any such adjustments should only be made after
a rate review and overall, revenue is established based on
actual customer demand (e.g., see County Franchise Agreement) .
3. Thereafter, ratas will be adjusted Consistent with the local
consumer priea Wax on an annual basis. $very five years,
the District steall conduct at rate review in September
consistent with the accepted methodology described below in
order to confirm the rates reflect operating expenses plus a
12% profit margin or to matte an appropriate adjustment in
rates to reflect such a profit mars a.
During the five year period, rates may be adjusted to reflect
now pans-throughs, such an higher fees, costs of new or
modified programs requested by the District or the County,
such as increased recyaliuy ox diversion' services, and
reductions in coats to reflect programs eliminated by the
District or County (Hay view to receive new operAting expenses
plus ist) .
If there are Unacted cha<rigels ata operating expenees such
that the accepted profit margin is not achievable, at: Say
views request Che District will conduct a general rate review
other than at the five year mark.
dint Bray
September 24, 1996
Page ;
4. There must be agzeement between Mr. sutler and Mr. Arnsteia on
all outstanding issues regarding operating exponses and the
mothoaology for their calculation. The methodology must be
not forth as part of the Ustrict Franchise Agreement and
identify. the accepted vianner in which operations are
conducted. A specific methodology for future nate review =9t
be established, premised on a rate that reflects operating
exponeeis plus 19# pretax profit. she parties must agree an
the lovel of profit reflected in the interim+ rates using the
accepted methodology. Only with ouch 'an agroament on
methodology will future rate review dinputee realistically be
avoided.
XrL a 9enerOL1 rate review, operating expenaes will in most
inattanees be based an actual cantos presently or earlier
occurred. In soma situations new expenses will soon be
incurred (e,g., pending truck purchase or new service) . such
future expenses =at be consistent with the approved
methodology (industry standards and/or generally accepted
accounting principles) . tf so, they should be identified as
operating expenses in a future cost plus rate review. The
approved methodology in the agreement should .so provide.
s. With a *percentages of costs" rate setting approach, District
officials have expressed some concern that theoretically the
operator has an incentive to keep coats high so 'a$ to increa0a
profits. may View would never do that. However, to address
that concern Bay view will agree to a contract provision that
provides that if, as part of the five year rate review and at
the District's request, county Staff deterring by substantial
evidence that Renaington's rates are higher then rates that
represent the mid-range for cw*arable services (e.g. ,
distance to the landfill, front or backyard service,
commercial banes, topography, number of cleanups, weight factor
for cleanups) in Contra Costa county, than the District may
set Bay View's rates at that identified mid-range. Such a .
provision in an effective incentive to maintain reasonable
operating expenses.
The approaches described above in paragraphs 2, 3, 4 and 5
gives the District ongoing rate review authority as District
officials have requested. It represents a significant change ,
in Bay view4s earlier proposals. Hopefully, the rate review
,methodology will reduce the chanced for a rate disputa. in
the event of such a dispute, the franehiso agreement should
include an arbitration pxoca44.
Jim Bray
Setptambar 34, 1996
page S
6. The District's attornay identified "Contract: Is■ues That ,
Kensington Watts To Discuss With Bay Vieve in the document you
provided to County staff and Bay view at our 1*ueaday meeting.
We are prepared to respond favorably to the Diattict on most
of those issues.
As to Item 1, add the following sentence at the eend of
Paragraph 6 of the Diatrict. Franchise Agreement: "This
exception does apply to a pereon who donates recyclable or
reusable materials to charities or other.non-profit entities
and to a person who authorizes their gardener and/or
eontractor to haul away green waste and/or construction debris
as an ancillary part of their service.-
An to Item a, disposal of recyclablea, para raph 17 provides
that Say View. will `"make a good faith effort to sell all
disposable assets acquired in furtherance .of the program for
their fair market: value." Every once in a while there may be
no market For particular recyclables, or for other reasons a
load of recyclables will 'someblme's be rejected.. Therefore, a
blanket prohibition againat landfill disposal of recyclable$
is not workable. The County addreaded this ioauea by
including the following provision in Section 3,7 of the County
Franchise Agreement: %At the written request of Contractor,
the community Daval.opm=t Department Director may delete a
material from recycling if the Director determines that there
is no marker to accept the material (see County ordinance
Article 518-10.8 fox applicable ex tions and findings) ."
Say View proposes to include 4 similar provision in the
District Franchise Agreetnent-to address Item s.
As to Item 3, landfill selection for waste disposal, it would
seem that the rate review check on comparable rates would be
sufficient to provide an economic incentive to keep costs at
e a reasonably low level. That new rate review cheek provision
( appropriately addresses Item 3, in our view.
c
As to Item s, with the new rate review provisions it would
seem appropriate to eliminate the specific provision
address ng percentage increases or decreases in landfill
disposal expenses.
An to Item 5, currant pass-through examp3,ea can be expressly
listed. of course, every potential future pace-through cannot
be identified.
An to Item 6, Day View will provide additional containers for
more zecycling if such costs are recovered either directly
from the individual customers or as operating expenses through
the rates.
dim gray
September 24, 1996
gage 6
As to Item 7, ohAnging the limit for gQnerdl clsanups to three
yaxde is acceptable. As to both green waste and general
aleanups, limits are not typically enfoareed by Bay Visa. If
a customer takes extreme advantage of that :situation, Say View
reserves the right to not pick up the materials under such
circumstances. The rranchise: Agreement should so provide.
" to item S, the draft language on assignment seems
reasonable as drafted.
As to *tem 9, under the proposed new rate review provision
truck tires will be considered like any other operating
expense. That should addresa the Districtla concern_
I know that some District official* believe I reckzested the County
to approve * franchise agreement with say View because there wax a
dispute between Say View and the District on rates; I granted a
higher rate then the current rate and District olfiCials didn't
want-a higher rete. If that were true, why would I agree in a
county Franchiee Agreement to keep rates the sauce until Se tember
of next year? In fact, Y requested the county to exercise its
authority and approve a franchise agreement with Day View. berause
the last year hast convinced me that may views current franchise
a►xrangecment with the District seriously threatens our ability to
continue to affeataveely serve our customers. Even if the rate
review we requested last year was completed, the spectre of further
time-consuming and distracting coafrontations remained under the
current franchise arrangement. Under the current a=&Ugement,
District officials sees► to think they have the authority to micro-
manage our business and change our business operations. such
involvement would adversely affect out ability to properly serve
our customers. Therefore, if say view is to once again franchise
directly with the District, as fax as I am concerned the franchise
agreement must be structured so as to minimife the future potential
for such confrontations.
In makingtha propona►lss is this letter, I am trying to address this
underlying objective to avoid future confrontations and still
reamonably respond to comments and concerns expressed by District
representatives. %f you want to review these probosals further,
then 8d Butler, Murk Armatrong and I are ready to meet. Ed Butler
and I are ready to meet with Mr. Arnateitx and you regarding
Operating expenses issues.
Sincerely,
Lewis rigone, President
VA WE*
CITY-COUNTY--GOVERNMENT CONTRACTORS
P.Q.BOX 277-EL CERRITC,CALIFORNIA 04530--PHONE 237-4614
1 LEWIS FIGONE,PRESIDENT
Imc.
September 25, 1996
Jim,
With reference to the time we have left to negotiate
an agreement, October 17, 1996. 1 will be available on the
following dates: September 26 through September 30, 1996.
I have had a trip planned since last year, and will be
leaving on October 11, 1996. I ~rill also be available
any day in October to the 11th, except October 91 1996.
cc Mark Armatrong Sincerely,
Levis Figone
IRA ���� erry—COLINTY—GOViRNMENTOONTRn : ,s
REFUSE
P.O.BOX 277—F-L CERRITO,CALIFORNIA 94530—PHONE 237-4814
SERVICE, LEwM riaoM PaEsloENr
INC,
September 23, 1996
Dear valued Customer:
As you may have read in the paper, my company and the Kensington
Police Protection and community Services District, which has
regulated my business starting in 1981, have been having serious
confrontations for more than a year. I still don't understand it.
I have provided garbage service to Kensington for 52 years. This
. .has never happened before. Enclosed for your information are the
results of a questionnaire survey we mailed to our customers on May
1, 1996. In ad'ditl1on, we enclose information regarding rates
and types of service in other West Contra Costa communities.
Described below is. tbe current rate in the city of Albany.
Through surveys, telephone calls, letters and word of mouth over
the years, I get the strong sense that our customers like what Say
View and its employees provide to Kensington. For example,
enclosed is a copy of the results of our last customer survey. It
seems our customers like the quality of our service. Our customers
like our recycling programs. we will do even more. Starting
January 1, 1997 we will be adding some more items that can be
recycled. in addition, we will also change our cleanups next year
to allow for more green waste cleanups and add one additional
cleanup.
Our customers seem to think our rates are ,reasonable. Of course,
rates have gone up over the years. When I first started working on
the truck in Kensington in 1944, my father charged 75 cents a can
per month. • Our rates were the lowest then and they stili are the
lowest in Contra Costa county and nearby Alameda County for the
services we provide. In E1- Cerrito, backyard service will no
longer be provided and thg rate is $16.73. In Albany, the rate is
$22.04 for single- can- service and green waste vith no special
cleanups. In Richmond, the rate is $20.18 and E1 Sobranta $23.08
with one cleanup.
Our rates are low even though Kensington does not have the kind of
commercial base that is an important income source for other
odmpanies in Contra Costa. Also, Kensington is a hard to serve
area with its narrow, tree-lined and steep streets and its hillside,
lots. Our customers like the fact that their cane are picked up in
the backyard by our employees. The trend toward unsightly, front
yard service using more mechanised equipment and fewer employees is
not right for Kensington.
l Valued Customer
September 23, 1996
Page 2
we will need to increase our rates a few dollars a month at some
point. We are replacing our two daily trucks. Their safe, full
service life in hilly Kensington is five or six years. We will be
doing more cleanups. other costs and fees we are charged are going
up. I assure you that any new rates will continue to be among the
lowest in the County for the services provided.
Because Kensington is an unincorporated community, the County has
ultimate authority to regulate garbage and recycling collection
services in Kensington. The Board of Supervisors recently approved
a new long term franchise agreement with our company. I asked the
County for a franchise agreement because I knew continued
confroutations with District officials would ultimately impact our
coitpany's ability to provide the level of service our customers
have come to expect. Say View is a small Company. It only serves
Kensington. We can't be involved in a series of unnecessary, time
consuming and costly disputes with public officials and still serve
our customers well.
Under the County franchise agreement, we will work with a Local
Advisory Committee comprised of five -Kensington residents,
Including at least two District officials if they want to be
Included. The committee vill provide recommendations to County
officials on rates, services and other matters. I am confident the
new regulatory arrangement will work well for both our company and
our customers.
Kensington District officials and their attorney have threatened to
sue Bay View and the County because of this new franchise
agreement. In such a lawsuit they will likely ask a Judge to take
away our license to serve Kensington. Bay view is responsible to
defend such a lawsuit.
We are not experienced in these kinds of political and legal
disputes. I am not a politician or a lawyer. I collect waste and
recyclables for a living. I just want to provide good- service at
reasonable rates to our .valued customers, just like I have done for
more than half. a century. I can't do that with District officials
trying to run my business instead of reasonably regulating it. A
lawsuit over garbage service doesn't serve the interests of
Kensington residents.
Some District officials seem intent on driving Bay View out of
-Kensington, one way or the other. I am confident that is not
what our customers want. I aro also confident our customers won't
tell a difference under a County franchise. You will get quality
service, recycling and cleanups at very reasonable rates.
" Valued Customer
September 23, 1996
Page 3
When we sent out the survey last -Spring we informed you County
Officials might take over regukation of our service. We x111
continue to keep. you ipformed of any new developments in 'our
disputes with the District. In the meantime, if you have any
questions or comments, please lei us know by calling our office at
237-4614, or Writing me at P.O. Box 277, E1 Cerrito, CA 94530.
Enclosed is the final tabulation of a survey mailed May 1,1996 and
rates in other West Contra Costs areae.
Thank you for allowing my family and sae to be of service to
Rensirtirton all these years,
very truly yours.
BAY VIEW REFUSE AND
RECYCLING SERVICES, INC.
Lewis Fiaone
President
+ei
-;" PAGE 2 `
n.
PAGE 1
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At Y;LEN RLi'tTstt ssttvZCB
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•r: wa.cnba t �.'.
t 2. Ilow is our caurtssv in dealing t '
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4..
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performing with rspard to u"Coilent C]000d ( air tDpoor .•,
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w 4. now do you [sal about the
' y►aius you receivefor the c3BxcelientQP004
` amount we charge? cawRentat
S. eaiisetoFsa now is their s�•.
A courtesy and servicer air Mpoor
r .
Comments t =
if you have marked any its ta 'paarm please give us a call or indicate
�. your phone number an the goeationnairw and we shall call you in an �•
at:tatapt to solve any problems you are havi"O. ,
Thank You very muchr
'
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,rtecaTY—COUNTY—GOVEaNMENT CONTf�AOTortS
'
REFUSE = P.O.BOX 911-�EL CEMITO,CALIFORNIA 04030—PI40N1:431-4614
SERVICEt LEWIS FI(iaNE,PRESIDENT
INC.
Kensinat n 1996 Survey Final Tabulation
may 1. 1996 to September 13, 1996
Second annual billing, May through August 1946
Number of Billings 2075
Number of payments received bhrough September 13, 1996 2056
Delinquent AccounUs 19
Number of survey anevers 1428
Results
-Service; g 800 p 551 F 47 p 6
780 506 30 8
ci3Sii:3CfilinU 515 G 547 p 231 P 54
411 663 234 p 42
656 c 424 F 40 p 13
All Original returns vitb dates received and addresses are available
for confirmation.
SURVEY ACCOUNTS '
view
REFUSE � CIFY-0OUNTY-(i0Y£nNM&NTCONTNACTOn6 PAGE 3
P.O.1 ox ITT--ML MMITO,CAUFOMA 04110-PROW£237-48I4
SERVICE,r t.twls FIaoNF,rnEslat:t,1T
J` INC.
Kensington 1995 percentage of AaiXr Surveys
bate May 1r, 1996 bo September 13, 1996
. 9G Returns - 68.9296 •. .
Results
Answered/
-service_ E 56.98% G 39.25% 1F 3.35% .42%
% Answered/ 58.91% 38.2296 2.27% .60%
-Courtesy (3 F F
% Answered/ 39.23% 40.61% 17.15% 4.01%
--Recycling E G g' p
% Anevered/ 34.44% 49.11% 17.33% 3.1296
-Cost____..__ S ti F F
% Answered/ 64.22% 31-81% 3.0096 .97%
-Collectors 13 0 F p
All 'Original returns with dates received and addressesare_availa.bie
for confirmation.
PERCENTAGE RESULTS
.......
1t..�-e CONTRA COSTA C ONTY GARDAv_. _.AYES
(Rates subject to ohange)
CITY SINGLE CAN RATE X50 CAN RATE CLEAN-OPS BACKYARD
OR
CURBSIDE?
1. E1 Sobrante $23.08 $46.16 1 plus 1 on Backyard
call only
2. San Pablo $19.60 $42.76 2 on call Backyard
only
3. Richmond . $20.18 $42.14 1 plus 1 on Backyard
call only
4. Hercules $21 .16 $39.26 1 plus 1 on Backyard
cull only
5. Pinola $21.08 $39.33 1 plus 1 on Backyard
call only
El Cerrito $16.73 $33.46 2 Backyard
Kensington $16.25 $27.50 4 Backyard
Distance Charges:
Items 1-5s An additional $1.50 petu month for vans more than 100 feet
from the- street.
E1 Cerritos An additional $2.00 per month for cans more than 50 feet
from the street.
Central CQ{ Iza Costa:. Fox backyard: service there ie an additional
charge of $6.00 per month.
Kensingtons No distance charges.
Kensingtons Changes in our free clean ups, perhaps 3 or 4 green waste
only and one additional pickup on an an call basis, will
help meet •atate and county recycling diversion goals for
the year 2000 of 50:.
Y
w� It
G*
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250 Colgate Ave
Kensington, CA 94708
4 October 1996
County Supervisor Jim Rogers
100 37th. Street
Richmond CA 94805
RE: Bay View Refuse Service
Dear Supervisor Rogers:
As long time Kensington residents, we want you to know that we
are very satisfied with the. aervice provided by Bay View Refuse
Service , Inc. , and we feel that their rates have always been
extremely fair. We are pleased that the County has approved a
franchise agreement with Bay View, and we strongly disapprove of
the Kensington Police Protection and Community Services Die- .
triet's action in this matter.
We urge you to do whatever you can to ensure that Bay View is not
injured by irresponsible actions on the part of the Services
District.
Thanks very much for your help.
Sincerely,
. Peter Elliott
et H. Elliott
cc: Bay View Refuse Service, Inc.
y
88 Kensington Road
Kensington, Ca 94707
October 2, 1996
Mr. Lewis Figone
Bay View Refuse Co.
P.O. Box 277
El Cerrito, Ca 94530
Dear Mr. Figone,
Thank you for your informative letter of September 23, 1996.
We are appalled-to learn of the problems you are experiencing with
the Kensingon Community Service District. We certainly are not in
agreement with their action.
Please be advised that we are completely satisfied with the
excellent service you provide and feel that your charges are more than
fair.
We thank you for the exceptional service you are providing and
apologize for the ap?arent harassment you have been experiencing with
our local `officials '.
Sincerely yours,
cc: Kensington Community Service District
James Bray, General Manager
Vernon L. Strempke
October 1, 1996
Mr. Lewin Figone, President
Bayview Refuse and Recycling Services, Inc.
P.O. Boz 277
Bl Cerrito, CA 94530
Dear Mr. Figone:
Thanks for your letter of September 23, 1996. I
write in appreciation for th.e services provided by your
service men and drivers.
We have experienced as residents of Kensington since
1967 only the most satisfactory service. Your workers are
Courteous, friendly, caring and tidy in their "pick-ups".
We also appreciate the economical rates.
We support. you in fulfilling the County franchise
agreement and the opportunity to do sol
Best wishes !
S157erely, .
ti
15 Edwin Drive Kensington, CA 94.707 94707-1021 (510) 527-6178 Fox (510) 527-9988
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Collection of Solid Waste/Recyclables in Kensington
Outstanding Financial Issues between Bay View Refuse and the
Kensington Community Services District
I. INTRODUCTIONBACKGROUND
The main outstanding financial issue between Bay View Refuse ("Hauler") and the Kensington
Community Services District ("District") is the base rate which should be set for solid waste
collection service. Attached is a table created in June which includes various solid waste
collection rates charged in the County (including Kensington) provided for comparison
purposes.
A solid waste collection base rate is comprised of components that can be generally
characterized as follows:
OPERATIONAL COSTS
DISPOSAL COSTS
GOVERNMENTAL FEES
The base rate controversy between the Hauler and the District centers around the "operational
costs"versus revenues. The "disposal costs" and "governmental fees" will be considered as fixed
costs and these costs or increases to these costs should be considered as pass-through costs and
should not be absorbed by the Hauler or be a part of the disagreement.
II. FRAMEWORK FOR DISCUSSION
A. OPERATIONAL COSTS
Operational costs (expenses) are composed of the following general categories:
1. Employees
a. Wages - employees
b. Wages - Figone
C. Benefits
Summary: Kensington/Sohd Waste Collection
September 12, 1996
Page 1
2. Office Expenses
a. Legal
b. Rent
C. Office supplies
d. Communications
e. Insurance
f. Accounting
3. Transport/Equipment Expenses
a. Truck Rental
b. Fuel
C. Depreciation of Equipment
d. License
e. Repairs
f. Maintenance
g. Tires
B. PROFIT/OPERATING MARGIN
It is standard practice to allow the Hauler to make a profit (operating margin). It is our
understanding that the Hauler and District have indicated that they agreed to a 12% net profit
(before taxes).
C. ACTIVITIES/TYPE OF SERVICE
In determining a base rate a key factor is the type of service that is offered by the Hauler.
Currently the hauler provides the following basic service (30-gallon can):
1. backyard collection of solid waste - WEEI(LY
2. curbside collection of recyclables - WEEKLY
3. general waste clean-ups - FOUR TIMES PER YEAR
It is important to note that the Kensington area is unique as compared to many other County
areas because it is almost all residential and is characterized as hard to serve due to the narrow
streets and hills in the area. Another item to note which does affect rates is that there are
almost no commercial customers in the Kensington area unlike other areas in the County where
the commercial customers/rates have served to help offset rates charged to the residential
customers.
Summary: Kensington/Solid Waste Collection
September 12, 1996
Page 2
1►. '
If the type of services offered by the Hauler changes it is fair to anticipate that there will be a
change in operational costs and therefore a change to the base rate. As a general principle
therefore if the service is increased it would be fair to anticipate that the Hauler would request
an increase in the base rate to cover the increased operational costs.
A couple of changes to the service (activities) have been proposed/discussed. The Hauler has
proposed a rate of $19.90 to the District which would include the following as a part of the
basic service (30-gallon can):
1. backyard solid waste pick-up - WEEKLY
2. curbside recycling pick-up - WEEI(LY
3. front yard green waste pick-up (unlimited quantities) - FOUR TIMES PER YEAR
4. front yard general waste pick-up - ONE TIME PER YEAR
The Hauler has proposed under a County Franchise Agreement at the current rate of $16.25
(until next June) to offer the following as a part of the basic service (30-gallon can):
1. backyard solid waste pick-up - WEEI(LY
2. curbside recycling pick-up - WEEI(LY
3. front yard green waste pick-up (unlimited quantities) - THREE TIMES PER YEAR
4. front yard general waste pick-up - ONE TIME PER YEAR
III. BASE RATE - THE MAIN AREA OF CONCERN
A. MONTHLY BASE RATES (WEEKLY PICK-UP OF 30-GALLON CAN)
EXISTING ' PROPOSED ARNSTEIN BUTLER
RATE IRATE RATE RATE
$ 16.25 $19.90 $ 17.17 $19.67
Accountants representing the District (Amstein Consulting) and Hauler (Edwin A. Butler have
developed reports regarding the rates. Attached are copies of the reports developed by these
accountants.
B. POINTS OF DISAGREEMENT BETWEEN ACCOUNTANTS
Specific areas discussed in communications between accountants representing the District and
Hauler identify specific issues related to Bay View's projected income statement. These issues
are important because they represent points of disagreement about the financial basis for
Summary: Kensington/Sohd Waste Collection
September 12, 1996
Page 3
y
8,
calculating the base rate. Arnstein (for the District) developed a draft report, dated August .
1996, regarding specific issues related to the income statement and recommended a rate of
$17.17 which was provided to the Hauler for comment. Butler (for the Hauler) developed a
report, dated August 30, 1996, in response to the specific issues raised in Arnstein's report and
identified a rate of $19.67 (which includes Arnstein's recommended rate plus add-backs for
disputed adjustments made to Depreciation, Equipment Rental, Additional Clean-Up, Debris
Box Operations and Insurance). Arnstein then developed a final report, dated September 4,
1996, after reviewing Butler's report.
The following represents the specific disputes related to Bay View's projected income statement
as identified in the most recent report by Arnstein (the District's accountant) which has
recommended a rate of $17.17 versus the $19.90 requested by Bay View:
1. Income - Regular
2. Communications
3. Depreciation
4. Equipment Rental
5. Additional Clean-up Cost
6. Debris-box Operational Cost
7. Franchise Fee
8. Fuel
9. . Insurance
10. Legal Fees
11. Repairs and Maintenance
12. Tires
13. Telephone
14. Net Income Before Tax
IV. PROCESS TO IDENTIFY/RESOLVE CONFLICTS
As directed by the Board, staff will be meeting with the accountants representing the District
and Hauler to discuss these outstanding conflicts and attempt to identify possible methods to
isolate these differences as it relates to the base rate. This meeting is scheduled for Monday,
September 16. Staff will report the results of this meeting orally at the Board meeting on
Tuesday, September 17.
VNdd
DD 10:KNSGN.RTE
Summary: Kensington/Solid Waste Collection
September 12, 1996
Page 4
i
$EP-11-96 TUE 01 :22 PM KENSINGTON 510;26 1028 P. 02
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.Ar1lSteat2 Cozllqultttxg
Financial Consulting Services i member of the Allied Consulting N-!twori:
Ove EmhareAdero(A- Mr,Supe 711 2834 Yosenutc Aveaue
San Franciwo,Califorain 94111.3607 ALunrda.California 94501
Tdephonc:(415)981-3020 %Whoae:(510)805.5659
FacsutWe:(415)981.9990 Facsimitc:(5 t 0)865-92 SO
September 4, 1996
Mr. James M. Bray
General Manager
Kensington Police protection
and Community,Service District
217 Arlington Avenue
Kensington, CA 94707
Dear Mr. Bray:
As you requested, Arnstein Consulting("AC" )'performed certain analyses in connection
with the Kensington Community Services District's("KCSD"') rate negotiations with 13ay View
Refuse Service;Inc. ("BV"} Specifically, we.were askod to assist with an analysis of BV's
financial and opeirating data pertaining to its operations in the City of Kensington. This analysis
was to be performed in order to establish a "baseline"revenue amount for BV .sufficient enough
to provide for the recovery of reasonable costs and profit. Our analyses have included the
following procedures:
Met with KCSD Board to discuss the background and history of events related to the
project. Reviewed existing documents in the possession of the District, including
internal reports, analyses, notes, BV's rate requests,historical financial statements and
federal tax returns.
We requested and received from BV the Company's compiled financial statements for its
Kensington operations for the four month period ended April 30, 1996• We analyzod the
infortuatibn gathered in the steps described above and directed to BV a written set of
questions pertaining to BV's operations and financial information.
• On August 5, 1996, we mot with Mr. Lewis Figone, President of BV, Mr. Edwin Butler,
BV's Certified Public Accountant, and Mr. Jim Bray of KCSD at BV's offices to review
BV's written responses to our questions and to discuss other issues related to BV's
operations and financial information.
SEP-11-96 TUE 01 :23 PM KENSINGTON
510 �Yb a�nFc
r
• Generated a draft preliminary report dated August 8, 1996 containing our findings and
delivered this draft report to you. We understand that this draft report was distributed to
KCSD Board members for review.
• Received written questions from certain KCSD Board members pertaining to the August
8, 1996 draft preliminary report,performed further analysis related to these queries, and
communicated our findings to the respective KCSD Board members.
• On August 17, 1996, a copy of AC's August 8. 1996 draft preliminary report was made
available to BV for comments and a response.
• On September 3, 1996, meived a copy of a letter dated August 30, 1996 from Edwin A.
Butler,.BVs CPA to Mark Armstrong, Esq., of Gagen, McCoy, McMahon and
Armstrong,responding to the findings contained in AC's August 8, 1996 draft
prelitxtimary report.
• Scheduled a meeting for September S, 1996 at T3V's offices to discuss outstanding issues
related,to establishing a baseline revenue aimount for BV.
Based on the above steps, we completed our initial analysis and are able to communicate
our preliminary findings, which are presented below:
Exhibit; l attached presents a comparison of BV's historical and projected statement of
operations, Selected highlights of this data are presented below:
Pagc 2
SEP-11-96 TUE 01 :24 PM KENSINGTON
510 52Ez 1029 P. 04
t
Bayview Refuse Service, Inc. - Kensington Operations
Compiled Compiled Compiled Compiled BV Proposed
- 12 months 12 months 12 months 4 months 12 months
12/31/93 12/31194 12/31'95 4/30.196. 199X
Regular $523,202 $546,274 $568,521 $195,015 $719.061
Income
Recycling 38,322t 21,320 46,104 7,743 23,229
Income
Other 21,685 20,673 6,375 2,668 39,757
Income
Total Income ` 583,210 588,267 621,000 205,426 782,047
Total 477,567 464,624 549,016 206,015 681,536
Operating
Expenses
Net Income $105,643 $123,643 71,984 (589) $100,511
Before Tax
As a Pct. of 18.1% 21.0% 11.6% (0.29%) 12.85%
Total Income
BV's regular income(residential and cotnmercial accounts) comprise the bulk of BV's
revenue stream: During the period 1993 through 1995, BV's regular income increased at a
compound average annual growth rate of 4.24%. BV's regular income for the 4- tnonth period
ended April 30, 1996 equalled $195,015. If annualized, BV might expect to collect $585,045
for the 12-monih period ending 12R U96 given current the current rate structure. This isa, 2.90/
increase from BV's reported 1995 regular income figure.
According to the compiled financial statements, BV experienced a pre-tax profit margin
as a percentage'of total income of 18.1%.21.0%,and 11.59%in the fiscal years 1993, 1994 and
1995, respectively. BV reports that it generated a pre-tax loss of$589.00 during the 4-month
period ended April 30, 1996, and requires an additional $134,066 in revenue in order to generate
a pre-taX profit of$100,511. or 12.85% of total income during the next 12 months of operation
Given that there have not bwn major changes iii $V's operations during the period
covered in the above analysis, and that BV's customer base has been relatively stable over this
time. the drastic reversal in BV's reported results are primarily related to BV modifying its
accounting and reporting procedures. Lower prices beinil realized in the recyclable mitterials
Page I
SEP-11-96 TUE 01 :24 PM KENSINGTON
market in 1996 has also played a minor role in reducing revenues for the BV Kensington
operation.
Beginning with its 1995 financial statements, BV has been more aggressive in tracking
all revenue and expenses by operation(Kensington v. non-Kensington). Beginning with the
1995 Financial statements, BV began being allocated a rent, or a usage charge, from its affiliated
entities, United Refuse Service, Inc., and Bay Cities Refuse Services, Inc., (OC) for the use of
shared facilities and.equipment,such as the operating yard, the office,and trucks used on
wtlimited pick-up days, Prior to FYE 1995, oosts were generally segregated between $V and
BC, but BV was less careful than it is now when identifying costs by operation.
The change in$V's accounting and reporting procedures appears to be partly a response
to a more rigorous review of BV's Kensington operation by KCSQ. Also, we were told that
BC's govornmentlmilitary base contracting business has deciined due to recent base closings. As
a result; BVIVBC's owner appears to be more aggressive in recovering operating costs from BV's
residential and cotntnereial operations in Kensington.
In 1995, 13V's charges from affiliated companies included $17,551.00 for rent of the
office and yard facility, and $11,800.00 for rent of BC trucks used on unlimited pick-up days.
Mr. Figone's stated owner's salary of$80,000 per year can also be considered to be a payment to
an affiliate. Cothbincd, these payments total over$109,000 in payments to BV's o-wrier or
companies controlled by BV's owner before the $71,984 of pre-tax profit reported by BV's
Kensington operation for the FYE 12131195. In 1995, BV's Kensington operation's pre-tax
profit, stated owners salary and charges by affiliates combined total approximately S 181,335, or
29.2% of total income.
8V has requested certain rate increases for varying types of service. Based on our
analysis, we have adjusted BV's rate request to allow for an estimated 12%profit margin as a
perecntage of total revenue. A summary of current rates, BV's rate request, and our
recommended rate schedule is presented below:
Page 4
SEP-11-96 TUE 01 :25 PM KENSINGTON ___- 510 _5_2.6__ 1026 P. 06
BV Dollar Reconunend- Dollar
Requested tncrease,per ed Ratc. Increase per
Current Rate Rate Unit : BV based on Unit : Rec'd
vs. Current Analysis vs. Current
30 gallon $16.25 per $19.90 per $3.65 per $17.17 per $0.92 per
1 can\week month month month month month
30 gallon $27.50 per $34.15 per $6.65 per 529.18 per $1.68 per
2 cane%weeh trtonth month month month month
30 gallon $34.00 per $46.90 per 57.96 per Sa 1.00 per $2.00 per
3 cans\week imonth month month month month
40 gallon .$36.60 pot $43.15 per $6.55 per $38.26 per 51.66 per
I can\week month month month month month
45 gallon $39.75 per WAS per $6.40 per $41.37 per S1.62 per
1 can\wctk :month month month month month
Commercial $16.25 per 519.90 per $3.65 per S 17.17 per 50.92 per
30 gallon month month month month month
1 canlweek
Commercial $16.50 per $20.00 per $3.50 per $17.39 per $0,89 per
- Dry Refuse cu. yd. cu. yd. cu. yd. cu. yd. eu. yd.
Commercial $17,00 per $21.00 per $4.00 per S18.01 per $1.01 per
- Wet Refuse cu, yd. cu. yd. cu. yd, cu. yd. cu. yd.
The above data,presented in percentage increase format, is presented below:
Page 5
SIEP-11-96 TUE 01 :26 PM KENSINGTUn
BV Requested Rate Recommended Rate
Percentage increase Percentage Increase
30 gallon 22.46%
1 can!week
30 gallon 24.18% 6.12%
2 cans%week
30 gallon 20.26% 5.12%
3 canslweek
40 gallon 17.90% 4.53%
1 cats\week
45 gallon 16,10% 4.07 %
1 can'%week
Commercial 30 gallon 22.46% 5.68%
1 caniweek
Commercial VIM 5.37%
- Dry Refuse
Conunercial 23.53% 5.95%
- Wet Refuse
The above rate schedule was derived by in the following manner:
• We requested BV to provide us with a projected 12-month income statenacnt, in a similar
format'as BV's historical 12-month and i4iterim period income statements, assuming(1 )
no rate increase, and(2) with the requested rate increase factored into projected revenue.
• We then analyzed each line item pertaining to projected revenue and expenses to
ascertain their reasonableness. This analysis included reviewing historical revenue and
cost figures, recent trends,and assumptions regarding future operations and conditions.
• Based on the above analysis, we commented on andlor adjusted certain revenue and cosi
line items to amounts we feel to be appropriate to be allowed in the rate calculation.
After adjusting these items, we applied an across-the-board adjustment factor(25.300/0
to BV's requested rate increases by service type in order arrive at a projected Regular
Pagc 6
SEP-11-96 TUE 01 :26 PM KENSINGTON 510 526 1028 P. 08
Income figure of$627.912. This tigure, given out adjustments, would provide for a
projected net income before taxes figure of$82,930, or 12.00% of total revenue,
The adjustincnts to BV's projected income statement is presented on the attached
worksheet labeled Exhibit 2. The explanations of the adjustments and comments presented
below correspond to the note numbers on the worksheet.
Note 1. Income-Regular. Projected income from Regular residential and commercial refuse
collection and disposal was decreased by$91,171 to$627,890 from BV's projected Regular
income(wi(h requested rate increase)of$719,061. As explained above,this decrease was a
result of applying an adjustment factor of 25.30%(after adjusting certain other expense line
items) to BV's requested rate increase, by service typo, in order to arrive at a pre-tax profit
margin of 12.00%of projected revenues. Exhibit 3 attached provides the full spreadsheet model
used to arrive-at the recommended rate structure., BV projects that,if granted its rate increases,
projected annual revenue may increase by 5134,066 beyond projected revenues with no rate
increase. After our recommended adjustment, 8V's projected annual revenue may increase by
$42,895 over its projected annual revenue with no rate increase.
Note 2. Recycling income. BV's projected current 12-month recycling revenue figure of
523,229 was arrived at by annualizing BV's 4-month 1996 recycling revenue of$7,743. BV's
records indicate that recycling revenue was$46,104 in 1995. However, in 1994, BV reports that
its recycling revenue was only 521,320. These swings in revenue are most likely caused by
volatile commodity prices in the recycled materials market. BV's current methodology of
annualizing 4-month of 1996 recycling revenue is favorable to BV, since it reflects current soft
pricing in the market.
Note 3. Communications. Projected annual costs for communications (primarily on-board
radio service for trucks) was decreased by $270.00 after reviewing BV's 4-month
communication cost figures, which BV then annualized to arrive at projected 12-month figures.
It Nvas determined in discussions with BV that BV's 4-month communication cost figure actually
covered six months of costs. An adjustment was made accordingly to the arutual cost projection
for this item.
Note 4, Depreciation. Projected annual depreciation expense was reduced by $20,378,00.
from $53,053 proposed by BV to a recommended amount of$32,675.00, The amount
recommended equals the annual depreciation expense projected by BV for fiscal year 1996. We
were informed by BV that the additional $20,378.00 of projected depreciation expense
represents the amortized cost of a new truck to be purchased in the third or fourth quarter of
1996 We take issue with this proposed addition for the following reasons:
(1) included in BV's depreciation schedule in its interim financial statements for the four
months ended April 30, 1996, there is a note indicating replacement of a garbage truck in
1998 (1101 1996) for a cost of 5120,000.
Page 7
SEP-11-96 TUE 01 :27 PM KENSINGTON _ a --
(2) When we inquired as to the nature of the proposed truck purchase, we were informed
by Mr. Figone that tie was uncertain as to whether the new truck would be a garbage;
truck Ora recycling truck.
(31 We note that BV purchased its garbage truck in August 1992 and its recycling truck
in 1990, indicating that both trucks have some remaining operating life left.
(4) We noted that while BV added the incremental depreciation cost of 520,378.00 for a
new truck to its total depreciation cost, it did not subtract the annual depreciation costs of
the truck(s)the new truck it is to replace. The current annual depreciation cost of the
recycling truck is$9,475 per year and the current annual depreciation cost of the garbage
truck is $17,236 per year.
Due to the combination of these obsen•ations, we fool it is prudent to not allow the
depreciation costs�of this new truck purchase in dotertnining rates for 1997 unless BV can fully
justify the necessity and timing of such an expenditure. Furthermore, if such an expenditure is
justified, BV needs to recalculate its total depreciation cost to allow for the retirement of one
truck. Finally, it tnay be possible to build into the rate adjustment process a provision which
writeuiplates occasional expenditures for major capital equipment and in associated.adjustment
of rates in addition to a inflation indexed rate adjustment.
Note 5. Aumptug Fees. To arrive at BV's projected current 12-month dumping charge, 8V
annualized its 4-roonth 1996 dump charge figures. Mr. Figone indicated that since September,
1995, Bay View Lias been using the Richmond landfill to droop Kensington refuse, at a rate of
$36.00 per ton. Mr. Figone said that BV intends to continue using Richmond landfill for the
foreseeable future'. Given this assumption, we have not adjusted BV's projected dumping
charges.
There is a question as to how long the Richmond (andfill will stay open. If it closes soon, Mr.
Figone could be looking at paying,according to him(1) $63.00 per ton at nearby transfer
station, (2) $34.00 per ton at Potrero Hills Landfill in Solano County or(3) $45.00 per ton at
Mann County's dump in Novato. Hauling to either Potrero Hills or Marin would entail
additional mileage on the Kensington trucks.
It is possible that BV might be able to negotiate a lower tip fee than$36.00 per tem at a
competing landfill. if BV was successful in doing so,By would reap a substantial benefit which
would not necessarily be passed along to the ratepayer.
Note 6. Equipment rental, We adjusted 13V's projected equipment rental cost down by
$6,210.00, from$8,850 to $2,640.00. We were informed by BV that the$8,850.00 annual cost
projected by BV reflects an annualized $37.00 par hour charge by Bay Cities Refuse Services,
(tie:., (''8C"), (BV's affiliated company) to BV for the use of 2 to 3 of BC's trucks during four
annual unlimited pick-up days in Kensington($ days per week for each pick-up). We feel this
level of charge is not appropriate for the follohing reason:
Page 8
SEP-11-96 TIDE 01 :28 PM KENSINGTON 210 526 1028
When asked how the $37.00 per hour charge was detcrtnined, we were told that it is the
current rate charged by Herm and that BV cross-checked the rate with Concord Disposal
Service.for the current market-rate for garbage truck rentals. We feel that having BC
charge 8V the"retail" rental charge of$37.00 per hour is not Appropriate. If BV thinks
it is an appropriate c;hargc to include in the rate,then wo recommend that KCSD rent the
trucks directly from Hertz or Concord Disposal and charge 8V for their use.
We think a more appropriate method to compensate BC for the use of its trucks by BV
is to charge BV for the additional wear and tear, or a per diem depreciation charge, on its trucks
caused by the additional pick-ups in Kensington. We calculated the 52,640.00 per annum
equipment rental ciarge as follows: Assuming that BC's trucks are comparable to BV's garbage
truck in terms of age and original cost,BV depreciates its garbage truck at a tate of$17,236.00
per year. Assuming the trucks normally operate 5 days per week, 52 woeks per year, that
cgoates to 260 operating days per year, and approximately$66.00 per cporating day of
depreciation expense. if BV uses 2 BC trucks five days per week, four times per year, that
equals 40 truck- days of use,at$66.00 per day,equals$2,640.00,This amount may be adjusted
to include costs for fuel,insurance,parts,and repair and maintenance.
Note 7, Addltional Clean-up Cost. We reduced BV's projected cast for an additional
(fifth) clean-up by.$9,464.00, from$22,464.00 to $13,000,00, The reduction is a result of
calculating BV's cost as follows: Labor estimates equals four additional employees at 40 hours
each at $30.00 per hour, equalling$4,800.00 in labor costs. Historical tip fees associated with
additional clean-ups average approximately 57,379.00. Rental charges for two truci:s over five
days at $66.00 per day equals$660.00. The total of these figures equals S 12,839.00, say
$13,000.00 for the additional pick-up. A study done by BV for a general clean-up conducted
during August, 1996 indicated total costs. including the$37.00 per hour truck charge, of
$13.145.25, further substantiating that the cost of the additional clean-up is approximately
S13,000.00
Note S. Debris-box Operational Cost. BV now includes its Kensington debris-box
operations, which is serviced by a BC truck, in its Kensington operations financial statements.
BV estimates its annual Kensington debris-box operation generates an average of$31,753.00 in
revenue per year;and the cost of its debris-box operation is$31,641.00 per year, However,
included in BV*ostimated cost of its debris-box operation is the$37.00 per hour rental charge
for the BC truck, Reducing this to $8.25 per hour(566.00 per day divided by 8 hours)reduces
BV's estimate of:cost per debris-box trip front$186.89 to $62.37 per trip and results in an
estimated total annual cost of the debris-box operation to approximately$19,050.00 instead of
$31.75;1.00. This figure may be adjusted to allow for coverage of fuel costs and prorated
insurance and maintenance costs.
Note 9. Vranchise Fee. The Franchise fee at 5.00% of total revenues is automatically
calculated by the worksheet and results in a reduction of$4,558.00 in projected annual costs.
Page 9
SEP-11-96 TUE 01 :28 PM KENSINGTON •���„ --
Note 10. Fuel. In proieoting its annual fuel costs, BV to-ok its four-months actual
furl costs, annualized them. and inflated its 29.0% for price increases. We do not believe this is
an appropriate methodology. Instead, we took BV's actual fuel costs through the first 6 months
of 1996,calculated a monthly average which equaled$837.00 per month, and multiplied that
average by 12 months to arrive at an average projected annual fuel cost of approximately
$10,000 per year. This equates to a reduction of 51,475 from BV's projected fuel cost of
$11.475.00.
Note 11. Insurance. We reduced BV's estimated annual insurance cost by $13,128.00, down
from $25,12$.00 to $12,000.00. In 1995,BV's insurance cost was S 11,273.00. The reason for
the increase in annual premium to over$25,000.00, according to Mr. Figone, is that previously,
BV and BC shared its insurance coverage. However, since the recent negotiations with KCSD,
Mr. Figone decided to get a separate insurance policy for BV and for BC in order to avoid
KCSD looking into the financial records of BC. The minimum policy premium is 525,000.00
per operation, according to Mr. Figone. This approach of obtaining two separate insurance
policies for BV and BC is potentially costing the Kensington ratepayers over S 13,000.00 per
year. We feel that a more reasonable approach to the issue is for Mr. Trigone to obtain a policy
that covers both.eompanies,and agree upon a simple allocation policy(e.g. total policy cost
multiplied by the fraction of BV trucks divided by total of BV and BC trucks).
Note 12. Legal Fees. We reduced BV's estimate of annual legal fees associated to BV's
Kensington operations by 54,400.00,down from $5,400.00 to $4,000.00. This adjusted estimate
reflects Mr. Butlers verbal indication of what normalized legal fees should be, as well as
historical legal fees experienced by BV of$1,221.00 in 1994 and$4,529.00 in 1995,
Note 13. Rent. Mr. Figone assesses BV a rental charge for its use of the yard and office
facility in Richmond. The land and building is owned by United Refuse Service, Inc., which, in
turn, is 95% owned by BC, and 5% owned by BV. We were told that there is no mortgage on
the property.
This rental charge is a new cost and line item on the BV incontc statement beginning its 1995.
Prior to 1995, Mr. Figone operated the companies(BV and BC)on a combined basis and did not
allocate this "charge". Mr. Figone calculated the yard and office facility rental charge to BV of
517,550.00 as follows:
• BV's estimate of property value equals 51,300,000. According to BV, this was
the appraisal value of the property in 1994 when Mr. figone bought out his
brother Clyde's share of the property.
• Annual rental charge for the entire BV1BC facility was calculated at S 117,000.00
per year. This would be the annual rental amount required to produce a 9.00%
annual return on the value of the assets. Mr. Figone used this rate after asking his
commercial real estate broker for comparable rates.
Page t0
SEP-11-96 TUE 01 :29 PM KENSINGTON _ S1Q X26 126 � • +�
• BV is first allocated 15.79% of the $117,000.00 per annum rent charge, or
S 18,474.00 per year. The allocation figure of 15.79%rcpresenc the percentage of
BV truck stalls at the BV/BC yard and office facility(3) to total truck stalls at the.
facility(19). Then, the rental charge amount is reduced by 5.001/,o, to account for
BVs 5.00%ownership in United Refuse. The resulting yard and office rental
charge equals $17,550.00 per year or$1,462.25 per month. This amount includes
usago of utilities(except telephone).
It is not uncommon for affiliated companies to charge and be charged for usage of shared
property. BV's cost allocation methodology seems reasonable. A price check on three market
comparable rental:rates in the area would be useful. We did ask this of 8V in our
correspondence,but received only verbal reports on the issue. At this juncture we are not
recommending art adjustment of this amount pending fiuther analysis.
Note 14, Parts-Trucks. We adjusted$V's projected truck parts expense down by
$15,000.00 and added 513,000.00 of expense to BV's tire expense line item. This was done after
discovering that QV'a projection had included tire expense in the pans-trucks line item when it
should have been-re-categorized as tire expense. The two adjustments net one another out and
have no impact on the resulting rate.
Because of the dramatic rise in projected path and tire expenses, we inquired into the projected
casts for truck pacts and tires at our visit with BV. We reviewed original invoices related to
truck parts and tiles over the period of January through Juno 1996, Since BV now segregates all
of its expenses from BC,the expenditures were easy to track, Mr. Figone's response to our
inquiries as to rising costs were twofold. Part of the answer,according to Mr. I~igonc, is that,
prior to 1996, BV's and BC's financial books were not entirely sep egated so parts and tiro
purchases were being charged primarily to BC. According to Mr. Figone, since January, 1996,
pans, repair and maintenance and tires have been tracked in separate accounts.
Mr. Figone cited an additional reason as to why ceftin truck related costs are increasing oil the
books of BV. BC used to have several government contracts for refuse collection and disposal,
including Harni[ton APB,Moffet Field, and other military stations, which have since closed.
With the loss of cevenues, BV and BC have to be more diligent in recovering operating costs
from their residchtiaitcommercial operations.
We were also told that Kensington's hilly terrain is tough on truck tires, brakes, and
transmissions. We interviewed BV'31BCs mechanic who indicated that Kensington trucks roti
through tires every 4 - 6 months.
Truck repair and part costs are very difficult to estimate given the limited 1996 historical data
we analyzed on'these items. Unfortunately, information on these items going back prier to
January 1996 is unreliable. White the physical invoices so far in 1996 appeared to bear these
part and tare costs out, there is a possibility that they are"front-loadod" in the beginning of the
,year and thus might bear further scrutiny.
Page 11
SEP-11-96 TUE 01 :X0 PM KENSINGTON _. 5&Q 52b
Note 1S. Tires. Ste Note 14,
Note 16. Telephone. We adjusted BV's projected annual telephone expense down by
51.095.00, from$1,899.00 to 5804.00 after discovering that BV's annualized four-month costs
through April 30, 1996 included cellular phone charges unrelated to the Kensington operation.
Note 17. New Income Before Tax. We adjusted revenues so that net income before tax,
as a percentage oftotal revenue, equalled 12.00%(See Note D. In BV's projected income
statement, net income before tax equalled 12.85% of total revenue.
Note 18. Wages-Office, This was an item broken-out in BV's forecast which normally is
contained within the Wages and Benefits line item on$V's compiled financial statements. This
cost is essentially the wage and benefits cost of Kim(last name not available), Mr. Figone's
assistant, who provides all of the administrative support functions such as handling phone
inquiries, billing and collection, accounting, etc., for AV's Kensington operation.
After you have had a chance to review this report, l am available to answer any questions
you may have. I look forward to speaking to you again regarding this important matter soon.
Sincerely,
am •1.�lrnstoin
1
Principa
Arnstein Consulting
Page 12
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510 426 1_02p P. 16
Exhibit 2 OW0519G 06 58 APA
gay View Refuse Sonnse,Inc
$letvTwnt 6f Income
Kensington Operations
Per Bay View ft*fuse
Proposed Rate Increase
For the Year ended Pct.of Pct.of
QMMbe�T TWW jMgW Adj &kDW2 81100C 11MO .84 120 Itl M We
INCOME
Regular 5719,061 91.95' (91,14q) 5627,812 90.aa"r. t
Extra 3,1 r7 0.41% 0 3,171 0,46%
Container rental 4,950 0.63% O 4,950 0.729'
Recycling Income 23.220 2,97% O 23,229 3.36% 2
Debris box 31.763 4.06% 0 31,753 4.601%,
Refunds Um -0.02% 0 ti 23) -0.02%
TOTAL INCOME 5782.047 100.009$ (01,149) $690.898 100.00%
OPERATING EXPENSES
Wages-Drivers 6heipers $137,16; 1T.61% 0 $137,754 19.94%
Wa ps-Office 21,396 274% 0 21,306 .3.10% 18
%yege-COLA. 3,613 0.46% 0 3,613 0.520/6
Wage benefits 34.512 4.41% 0 34,612 6.00%
Wages-L.Figone 80.000 10.23% 0 80,000 11.58%
Accounting fees 10,800 1,38% 0 10.800 1."%
Toll cf larW 63 0.01% 0 63 0.01%
cornrnunlcatioas 1,134 0.16% (270) 864 0.13% 3
Drivers safety 255 0.03% 0 266 0.04%
DWorJetion $3.053 6.78% (20.318) 32,615 4.73% 4
Dumping 110,676 14,15% 0 110.676 16.02% 5
Cq%jipmenl rental 6,860 1.13% (6,210) 2.640 0 38% 6
Additional CWn-up Cost 22,464 2.87% (9,464) 13,000 1,88% 7
Debris box operational cost 31.641 4.05% (12,691) 19.050 2.76° 6
FranoNse fee Q 5.00/0 39102 5.00% (4,557) 34,545 5.00'Y% 9
Franchise(se-Hazardous waste 4,000 0.51% 0 4,000 0.58%,
Fuel 11,475 1,47% (1.475) 10.000 1.45% 10
Laundry 393 0.05% 0 393 0.06%
Insurance 25,128 3.21% (13,128) 12,000 1.74% 11
Lwpl Fees 8,400 1.0?% (4,400) 4,000 0.58% 12
License 64 0.01.4 0 84
Miscellaneous 165 0.02% 0 165 0.02%
Rent 17.550 2.24% 0 17,550 2,54% 13
Supp0e5 1,341 0.17% 0 1.341 0.19%
Pads-trucks 25.446 3.26% (15,000) 10.446 1.51% 14
Repairs and maintontance 1,752 0.22% 0 1,752 0.26%
Postage 3,000 0.38% 0 3.000 0.43%
Taxes 19,395 2.48% 0 19,395 2.81%
Tres 6.195 0.794/4 15,000 21,19S 3.07% 15
Telephone 119-9 0.24% (1,095) W 0.129'0 16
TOTAL OPERATING EXPENSES 5681.636 67.16% (=73,668) $607,968 86.000/0
NET INCOME BEFORE TAX 100,611 1285% (11,561) 62,030 12.00% 17
Provision for income tax-3596 ALW 4.50% (6,163) ZLQ6 4.20% auto Cale
NET INCOME $65.332 6.35% (11,427) $53.905 7.809x•
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SEP-11-96 TUE 01 :33 PM KENSINGTON 310 526 1028 P. 18
08109;9e1 13:58 FAX 415 641 9366 HAN9pN HRIDGEn
ZOU1
Exhibit B
MONTHLY RUIMUH RUSIDUTIAT, AND COHMNACIAL RATES IN KENSINGTON
+ Residential Rates:
30 gA31_on cans Monthly Ege
r v vocan once a week
s,� 9 i cans once a week 4. .. �.P
(e 3 owns once n week $46.90 .4
jignthly Feo
-3 1 can once a week $43.15 -- "�'�•��
45 galloncans Fee
4/ 1 can once a week. $46.15 �---- ��'7
• commercial Rates:
a 30 gallon can once a week 6
17,0
Material other than can use (bulk rata)
as— Dry $20.00/cubic yard - IS"1
! wet $21,00/cubic yard _ rY•7�
s Xf cans are more than 100 feet from the curbside, Bay View may
at its discretion add a distance charge of $.50 per Can to the
monthly rare,
• These rater shall stay in effect through December 31, 199 ;$.
Increased costs for additional requested services (plus 12%) ,
pass-through costs, if any, or other cost changes isubjeet to
rate adjustment, as set forth in the Agreement and incurred
prior to that time, will be recoverable in a rete adjustment
effective on January 1, 1998.
e These now rates aro bayed in part on a franchise fee to County
of 3% and to District of 2% or gross revenues Brom commercial
and residential billings and a County household hazardous
waste program fee of approximately $4,000.
Ni 7 7 Z rAOCO%A n/�}f�
Post-Ir Fax Nota 7611 Ome 9M& 19'
To h� FromZvi
1
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la Farr . .. .5. . r.-. .
EDWIN A. BUTLER
Certified Public Accountant
3629-0 Clayton Road P.O.Box 1130
Concord,California 94521 Concord,CA 94522
Phone:(510)685-1400 FAX:(510)685-1495
E-mail Address:cpa4valu@ix.netcom.com
August 30, 1996
Mr. Mark L. Armstrong
Attorney at Law
Gagen, McCoy, McMahon and Armstrong
279 Front Street
Danville, California 94526-0218
Subject: Arnstein Consulting - Recommendation Letter
dated August 8. 1997
Dear Mr. Armstrong:
I have reviewed the subject letter per your request and have prepared comments and
my observations relative to Arnstein Consulting's analysis.
Overview
The existing franchise agreement with the Kensington Police Protection and
Community Service District (District) provides for the audit of Bay View Refuse Service,
Inc. (BVRS) by an independent Certified Public Accountant. The "analysis" performed
by Arnstein Consulting (AC) cannot be characterized as an audit nor can I verify that
James J. Amstein is a Certified Public Accountant. In fact, BVRS has been under no
obligation to open it's records to Arnstein Consulting. However, in the spirit of
cooperation and with a desire to move toward concluding negotiations for the new rate
base, BVRS has acquiesced to this "analysis".
Throughout AC's analysis he uses the collective "we". Does this mean AC and the
District? If so, is AC being directed by the District? Therefore, does AC lack
independence in his analysis? If so, this further supports the reason why the franchise
agreement called for an audit by an_inde independent Certified Public Accountant.
Consequently, much that follows will demonstrate AC's apparent lack of experience
with the refuse collection industry, highlight fundamental errors in methodology and
point out certain fallacies in operating theories.
Amstein Consulting (AC) has recommended an increase representing only 25.30% of
the proposed rate increase under consideration, while establishing no foundation for
the percentage. The AC recommendation raises the existing 30 gallon 1 can rate of
$16.25 per month to $17.17. On a percentage basis, the increase represents 5.66%
rather than the 22.46% requested. However, $17.17 is not comparable to the $16.25
rate because of a 5.0%franchise fee and $4,000. ($8,000. through December 31, 1997)
annual hazardous waste fee which will reduce the AC recommendation. Below, I have
scheduled the calculation to obtain comparable rates.
AC recommendation $ 17.17
Less - 5.0% franchise fee ( .86)
Less - Hazardous waste fee ( .32) ($8,000/2084)/12
Comparable recommended rate $ 15.99
As one can see, the comparable AC recommended rate of$15.99 is 26 cents Ls than
the existing rate under which Bay View Refuse Service, Inc. (BVRS) is presently
operating. All should be reminded that the compiled financial statements for the 4
months ended April 30, 1996 exhibited an operating loss of$589.
Based upon AC's EXHIBIT1, if an across-the-board rate were to be used it should be
32.0% ($42,895. divided by $134,066.). Reference the last two sentences under Note
1.
AC's recommendation is in light of BVRS providing 4 unlimited frontyard green waste
pick-ups, as well as, a fifth frontyard general waste pick-up, having a requirement for
the purchase of new equipment and incurring overall increased cost from inflation.
Note 1. Income - Regular.
AC applied an "across-the-board" adjustment factor of 25.30% to the proposed $3.65
or 22.46% rate increase. AC is recommending only 25.30 % of the proposed rate
increase. As seen above this equates to a .26 cent decline in comparable monthly rates
or actually a 1.6% effective decrease.
Additionally, there is a methodology error in AC's presentation. AC mentions that
revenues will increase $42,895. over existing revenues under the 25.30% "across-the-
board" recommendation. However, using the recommended .92 cent increase and
following through for each type of service accordingly, the recommendation produces
only $33,832. in additional revenue. This represent a $9,063. error in methodology.
See SCHEDULE A attached.
Note 2. Communications.
AC's adjustment of$270.00 annually is immaterial and not worthy of comment.
Note 3. Depreciation.
A fundamental principle of accounting is the matching of revenue with the expenses
necessary to the production of that revenue over a specific accounting period, generally
one year. Capital assets having a life of more than one year are generally capitalized
with their cost being allocated (depreciated) to future accounting periods over its useful
life. As such, depreciation is a perfectly legitimate recoverable cost. The $53,053.
represents expected depreciation expense for the year 1997 and includes the expected
purchase of new equipment under the new rate base. Without further equipment
purchases, 1998 estimated depreciation is expected to run $43,104. The 1998
purchase will be addressed in 1998.
AC cannot arbitrarily disregard the expenses associated with the projected purchase of
new equipment. AC uses depreciation of $32,675. which is between $10,339. and
$20,378. too low. Using only the additional $10,339. of depreciation would allow for
49.8 cents more in monthly rate.
Note 4. Equipment rental.
AC calculation of$66.00 per day as an equipment rental fee includes QnJy depreciation.
The more appropriate rental rate obtained from both Hertz and Concord Disposal
Service is $37.00 per hour which includes not only depreciation but also the cost of
insurance, tires, repairs and maintenance.
AC questions the possibility of Saturday additional pick-ups. After over 50 years in the
business, Mr. Figone's strong conviction is that the most efficient method is the one
presently being used. Mr. Figone is prepared to discuss the merits of the existing
operational methods with District officials.
AC's recommended adjustment of $6,210. in this area has no substantial foundation
other than an unwillingness to pay the going market rental rate.
Replacement of the $6,210. of cost here would equate to 29.9 cents more in monthly
rate.
Note 5. Additional clean-up costs.
Under the proposed new rate structure BVRS is offering 4 unlimited frontyard green
waste pick=ups, as well as, a fifth frontyard general waste pick-up. Knowing this would
j
create additional expenses for BVRS, Mr. Figone, President of BVRS, recently
performed a study to analyze the costs associated with the general clean-up (all waste,
including green waste) for the period August 5-9, 1996. A substantial majority of the
collected debris was green waste. The previous general clean-up was done 3 months
earlier. The total costs resulting from the most recent clean-up was $13,145. for the 3
months period. When reduced this represents a per unit monthly cost of $2.11. A
$2.11 per unit monthly cost converts to an annual cost of$52,782. This is substantially
higher than the monthly per unit cost used in the rate proposal of 90.0 cents which
converts to an annual cost of$22,464. Thus, BVRS disagrees with AC's adjustment of
$9,464. in this area and in particular the use of a $66.00 daily rental fee.
Replacement of the $9,464. of costs here would equate to 45.5 cents more in monthly
rate.
Note 6. Debris-box operational costs.
AC uses the $66.00 daily rental fee as a basis to reduce cost in this area by $12,591.
As previously stated, BVRS disagrees with this narrow depreciation based theory.
Replacement of the $12,591. of costs here would equate to 60.6 cents more in monthly
rate
Note 7. Franchise fee.
Effect of 5.0% franchise fee recognized.
Note 8. Fuel.
AC's adjustment of$1,475. annually is insignificant, without justification and not worthy
of comment.
Note 9. Insurance.
Insurance will be obtained as a separate company. The minimum annual rate is
estimated correctly at $25,128. This will not change because the franchise agreement
is premised on service being provided by an independent corporation in response to the
District criticisms about comingling of funds and resources.
Restoring the AC adjustment of$13,128. of insurance costs would equate to 63.2 cents
more in monthly rate.
Note 10. Legal fees.
Legal and accompanying fees are expected to decline, yet the costs of lengthy rate
review and related negotiations must be recoverable to BVRS as an unfortunate but
necessary business expense. There are no facts or professional opinions presented
that such fees have been unreasonable. Such rate review and related costs are
typically recoverable by franchise agreements. For example, the standard County
franchise agreement identifies such costs as a reasonable pass-through.
Note 11. Repairs and maintenance.
No effect. No comment.
Note 12. Tires.
No effect. No comment.
Note 13. Telephone.
Accepted.
Note 14. Net income before tax.
The targeted 12.0% as net income from operations is recognized and accepted by the
District and their consultant as reasonable.
In summary, response has been made to each of the areas adjusted by Arnstein
Consulting. Also, indication has been made as to the effect on the AC recommended
monthly rate. Where their is a non-comment does not necessarily imply agreement with
treatment by AC. Below I have schedule the add-backs as noted above.
Arnstein Consulting recommendation $ 17.17
Depreciation .50
Equipment rental .30
Additional clean-up .46
Debris box operations .61
Insurance .63
TOTAL-after add-backs $ 19.67
Mr. Figone is requesting $19.90, 23 cents over the rate after add-backs, in order to
partially recover losses BVRS has experienced since its initial rate application was
submitted this time last year.
In addition to the above items, Mr. Figone has informed me that he has never charged
BVRS for the rental of Bay Cities Refuse Service, Inc. trucks used in the transportation
of recycled materials. This has been merely an oversight at an annual cost of$2,720.
c
As seen above, Arnstein Consulting not only has made fundamental methodology
errors but appears unsupported in many of the areas of adjustment. The
recommendation of a single 30 gallon can rate of $17.17 per month is grossly
understated and would inflict extreme financial burden on BVRS.
Per your instructions, I have faxed a copy of this letter to Mr. James M. Bray at District.
Sincerely,
Edwin A. Butler, MBA, CPA, CVA
EAB:tb
cc: Lewis Figone (BVRS)
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Complete this form and place It in the box near the speakers' rostrum
before addressing the Board.
Name; r 0 1 GIky�1 J m S� phone: -7 U s $
I am speaking for myself or organiution:.�"`�
*wm of --,- atioN
CHECK ONE:
1 wish to speak on Agenda Item #—. Date
My conunwits wilt be: general Jbr_aX4 _-
i wish to speak on the subject of
I do not wish to speak but leave these oomrnents for the Board
to uormider: