HomeMy WebLinkAboutMINUTES - 01252011 - D.1RECOMMENDATION(S):
1. ACCEPT report from NewPoint Group in Exhibit A regarding their review of the Base
Year Rate Application submitted by Garaventa Enterprises;
2. APPROVE residential and commercial solid waste & recycling collection rate increase of
13.88% for customers in the unincorporated areas served by Garaventa Enterprises
(Contractor) under the County’s Franchise Agreement with Garaventa Enterprises
("Franchise Agreement");
3. APPROVE and AUTHORIZE the Chair of Board of Supervisors to execute Amendment
No. 2 to the Franchise Agreement, to add the Ironhouse Unincorporated Area described in
Exhibit B;
4. APPROVE and AUTHORIZE the Chair of the Board of Supervisors to execute a third
amendment to the Franchise Agreement that extends the term of the Franchise Agreement
by a total of 10 years and specifies that the franchise fee will be 7% upon implementation of
3-cart residential recycling collection services, pursuant to the terms of this board order and
in a form approved by County Counsel;
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 01/25/2011 APPROVED AS RECOMMENDED OTHER
Clerks Notes:See addendum
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Gayle B. Uilkema, District II
Supervisor
Mary N. Piepho, District III
Supervisor
Karen Mitchoff, District IV
Supervisor
Federal D. Glover, District V
Supervisor
Contact: Lorna Thomson,
925-335-1231
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the
Board of Supervisors on the date shown.
ATTESTED: January 25, 2011
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
D. 1
To:Board of Supervisors
From:Catherine Kutsuris, Conservation & Development Director
Date:January 25, 2011
Contra
Costa
County
Subject:Rate Increase, New Services and Franchise Agreement Extension for Solid Waste Collection in the
Unincorporated Areas Served by Garaventa Enterprises
5. APPROVE rate increase of 2% for commercial and light industrial customers to take
effect upon implementation of franchise fee increase in conjunction with recommended
3-cart residential rate structure;
6. REQUIRE the Contractor to implement 3-cart residential recycling collection services on
or about September 1, 2011;
7. APPROVE recommended 3-cart residential rate structure for customers served by the
Contractor under the County's Franchise Agreement which would become effective upon
the implementation of 3-cart residential recycling collection services on or about September
1, 2011;
RECOMMENDATION(S): (CONT'D)
Service Level (Cart
Size)*
Monthly Rate
(Maximum)
20 Gallon $25.00
32 Gallon $31.20
64 Gallon $36.20
95 Gallon $43.05
* Minimum cart sizes specified, actual cart sizes provided to customers may be larger.
8. REQUIRE the Contractor to provide the Director of Conservation and Development (DCD) with monthly reports, beginning
August 1, 2011, reflecting the distribution of residential customers by service level in sufficient detail to allow the Director to
determine whether or not it is appropriate to request submittal of an additional base year rate application;
9. DIRECT staff, in consultation with the Contractor, to identify potential recommended revisions to the Rate Setting Process and
Methodology Manual and any associated changes potentially needed to related terms in the County's Franchise Agreement in order
to report back to the Board on or around March 22, 2011;
10. DIRECT staff to consult with the Contractor and study the possible outcomes of including regulation of construction and
demolition debris in the Franchise Agreement and report findings to the Board in twelve months; and
11. DIRECT staff to request direction from the Board of Supervisors regarding each County solid waste and recycling collection
Franchise Agreement three years before the applicable agreement expires.
FISCAL IMPACT: No impact to the County General Fund. The costs for DCD staff time and related consulting services
pertaining to these matters would be covered by existing solid waste franchise fees. The additional franchise fee revenue to be
derived from the recommended 2% fee increase would help offset the cost of services related to administering the Franchise
Agreement.
BACKGROUND:
The County has a solid waste Franchise Agreement with Garaventa Enterprises (Contractor) for service to the
following unincorporated areas:
• Bay Point - portion (remainder of Bay Point falls within the area served under the County’s Franchise with Allied Waste)
• Bethel Island (contingent upon Amendment No. 2 taking effect incorporating the Ironhouse Unincorporated Area)
• Brentwood, unincorporated
• Concord, unincorporated
• Discovery Bay
• Knightsen
• Oakley, unincorporated
The County’s service area includes portions of Supervisorial Districts III, IV and V. Byron Sanitary District
administers its own solid waste collection franchise agreements and regulates the residential rates for the
areas within its boundaries.
On October 7, 2009, the Board of Supervisors authorized the filing of a Base Year Rate Application two
years early at the Contractor's request, due to extenuating circumstances in the economy cited by the
Contractor and directed the Conservation and Development Director to concurrently evaluate the
restructuring of residential collection services and identify associated rate change recommendations
consistent with the approach used for similar restructuring of residential collection services and rates recently
approved by the Board in other areas of the unincorporated County.
NewPoint Group Review of Garaventa Enterprises Rate Application
The County entered into an agreement with NewPoint Group to review the Base Year Rate Change
The County entered into an agreement with NewPoint Group to review the Base Year Rate Change
Application submitted by the Contractor. The result of NewPoint Group’s review is contained in their report
dated January 10, 2011, which is attached as EXHIBIT A. NewPoint Group conducted their review consistent
with the applicable provisions of the Rate Setting Manual approved by the County for use in the service area
and the recommendations resulting from this review are detailed in the report.
The Base Year Rate setting process normally occurs every four years. This process requires that a detailed
rate change application be submitted by the Contractor along with the most recent financial audit and
supplemental financial and operational information. Using the detailed financial data provided, NewPoint
Group reviews several cost categories to determine the appropriate rate adjustment. The major cost
categories include:
• Direct Labor Costs
• Tipping Fees
• Corporate and Local General and Administrative Costs
• Household Hazardous Waste Program Costs
• Trucking and Equipment
• Allowable Profit
• County’s Franchise Fee
Between Base Years, the Contractor is permitted to request Interim Year Rate Adjustments. The Interim Year
Rate Review is less rigorous than that carried out in a Base Year. The Interim Year adjustments are calculated
based on a weighted increase in controlled and uncontrolled costs, including tipping fees, regulatory charges
and Consumer Price Index adjustments. Special extraordinary cost increases are also taken into account. The
Contactor is not required to submit audited financial data with the interim year rate application.
History of Solid Waste Collection Rate Increases
Below is a brief summary of rate increases approved by the County over the past several years in the service
area:
2003: Base Year Rate Application
Average residential & commercial rate increase of 7.66% and residential rates were standardized.
2004: Interim Year Rate Application
Average commercial rate increase of 11.79% (actual increases ranged between 2% - 25% depending on the level of
service) and commercial rates were standardized.
2005: Interim Year Rate Application
Residential and commercial increase of 3.89%
2006: Interim Year Rate Application
Residential and commercial increase of 2.69%
2007: Base Year Rate Application
Residential and commercial increase of 6.44% (including Special Extraordinary Costs increase allowance of 1.55%
for fuel)
Proposed 2011 Solid Waste Collection Rate Increase
The Contractor has proposed to increase residential and commercial rates in their unincorporated service
area. The Base Year Application submitted by the Contractor requested a rate increase of 21.10%. The
NewPoint Group made specific adjustments to costs reflected in the application and, thus, recommends a
13.88% rate increase. The adjustments reflect the reductions in the amount of revenue required to cover
allowable costs, profit levels and pass through costs. These adjustments are consistent with the Board's
discretion under the Franchise Agreement and with the guidance in the Rate Setting Manual.
discretion under the Franchise Agreement and with the guidance in the Rate Setting Manual.
The table below summarizes the existing and recommended residential solid waste collection rates.
Recommended Base Year Rates for 2011
Service
Level
Existing
Rates
Recommended Base Year Rates
(13.88% Increase)
20 Gallon $23.34 $26.58
32 Gallon $28.85 $32.85
64 Gallon n/a n/a
96 Gallon*$31.85 $35.85
* Currently, customers who select the 96-gallon cart are provided with
company-provided containers and pay a flat rental charge of $3.00 per month (included
in rate shown). The 13.88% is not applied toward the $3.00 cart rental charge.
The recommended 13.88% increase would also apply to commercial and light industrial customers served by
the Contractor under the County’s Franchise Agreement.
Franchise Agreement Amendment No. 2
On February 1, 2010, Ironhouse Sanitary District transferred to the City of Oakley the authority to franchise
for solid waste and recycling collection for the area in the city. Ironhouse Sanitary District now wants to
relinquish its right to provide solid waste collection and disposal services in the unincorporated area of
Contra Costa County within its borders ("Ironhouse Unincorporated Area"). County and Ironhouse propose to
accomplish this by entering into an agreement to terminate their existing Memorandum of Understanding as
well as amending the County's Franchise Agreement with Garaventa Enterprises to include this additional
area. Amendment No. 2 has been executed by the Contractor (see Exhibit B).
Franchise Agreement Amendment No. 3
Staff recommends extending the term of the Franchise Agreement by 10 years to accommodate longer
amortization period for necessary capital investment to enhance the residential recycling services. A
minimum of six years would be needed to allow for the 10 year depreciation period assumed in the 3-cart
rates proposed for Board approval. The additional four years being recommended is intended to serve as an
incentive for the Contractor to proceed with implementing the 3-cart services in 2011. The term would be
extended by amending the Franchise Agreement as recommended in #4 above. Although this new
amendment is intended to take effect upon execution, the 10 year extension would be revocable by the
County if Contractor fails to implement the enhanced residential recycling services as required. The
Contractor is expected to implement the enhanced 3-cart recycling services on or about September 1, 2011
(date contingent upon receipt of carts by contractor). Contractor is expected to order sufficient quantity of
carts to serve the intended residential customers as directed by the County DCD. The Contractor is expected
to place order for residential carts following Board consideration of potential recommended revisions to the
Rate Setting Process and Methodology Manual on or around March 22, 2011 (as recommended in #9 above).
The County has not increased the franchise fee percentage since initially established at 5% about 10 years
ago. Staff is now recommending a 2% franchise fee increase, from 5% to 7%, for services provided by the
County related to administering the Franchise Agreement.
Recommended 3-Cart Services & Rate Structure
The Contractor will provide 95-gallon wheeled carts for customers to place their yard debris in to replace
current use of customer supplied bags or containers. Yard debris will continue to be collected curbside for
recycling on a bi-weekly schedule. The Contractor will provide customers with 95-gallon wheeled carts for
customers to place their mixed recyclables (including bottles, can and paper) for curbside collection to
replace the two existing 14 gallon recycling crates. The recycling collection schedule will be changed from
weekly to bi-weekly upon implementation of 3-cart services and rates. Contractor will provide all customers
with wheeled garbage carts in some cases replacing customer owned cans. Customers will be asked to select
the size of their garbage carts and customers which do not elect to choose their cart size will receive the
the size of their garbage carts and customers which do not elect to choose their cart size will receive the
following cart sizes by default:
20-gallon can and 32-gallon can customers will be provided with wheeled carts roughly equivalent in
capacity to their existing cans
96-gallon wheeled cart customers will be provided with 64-gallon wheeled carts
There are approximately 75 rural accounts (including a mobile home park which is treated as one account) located in the Marsh
Creek Road area which will not be provided with wheeled carts for their yard debris or recyclables due to the exceptional cost of
servicing that area with three separate trucks. These customers would be provided with special bags for recycling and yard waste
collection that will be serviced by the garbage truck and then sorted for recycling processing at the transfer station.
Staff worked with the Contractor to determine a rate structure that would be most likely to support the
necessary revenue requirement for the Contractor to provide residences with these new services. The
Contractor did not agree with the NewPoint Group recommendation because it used a cost model based on
the audited financial statements, which included the City of Oakley. The Contractor provided a proposed rate
structure using a cost model based on their assumptions of the costs for service to the unincorporated area
only. County staff did not agree with the Contractor's proposal because is was based on cost assumptions that
have not been subject to an independent audit. For comparison purposes, the following table includes the
current rates, the rates with the 13.88% increase, the 3-cart rates prepared by NewPoint Group, and the 3-cart
rates prepared by the Contractor.
Service
Level
Current
Rates
Base
Year
Rate
Increase
of
13.88%
NewPoint
Group
3-Cart
Rates
From
Final
Report
Garaventa
3-Cart
Rates
20
Gallon
$23.34 $26.58 $ 24.95 $ 27.24
32
Gallon
$28.85 $32.85 $ 30.20 $ 31.95
64
Gallon
$ 35.95 $ 37.40
96
Gallon
$31.85*$35.85*$ 40.45 $ 45.00
* Currently, customers who select the 96-gallon cart are provided with company-provided
containers and pay a flat rental charge of $3.00 per month (included in rate shown). This $3.00
per month rental charge would no longer be allowed upon implementation of the 3-cart rate
structure.
The 3-cart residential rates in Recommendation #8 above differ from the rates proposed by NewPoint Group
and the rates proposed by the Contractor. The recommended rates are estimated to generate revenue from
residential customers that are midway between the revenue requirement calculated by NewPoint Group and
the revenue requirement calculated by the Contractor.
Tracking & Reporting of Residential Customer Accounts and Revenue
Staff will work with the Contractor to ensure that actual residential customer revenue is tracked (including
monthly breakdown of customers by cart size and community) so that the data can be used to calculate the
actual revenue generated by Board approved rate structure. If approved rate structure is determined to
generate excessive residential revenue, County staff would formally request that the Contractor submit a rate
application.
Review of the Rate Setting Manual
The Contractor has suggested changes to the Rate Setting Manual. County staff has reviewed some of these
changes and agrees that any changes should make the application process more transparent and easier for the
Contractor to complete in an accurate manner.
Among potential changes will likely be a delineation of the proposed method for Contractor to segregate cost
information for regulated and non-regulated operations. Section 7 of the County's Franchise Agreement
requires the Contractor to obtain the County’s written approval of its method of segregating its financial
records between County-regulated and non-County regulated operations. The separation of the former
Ironhouse Service Area between Oakley and the County increases the signficance of adhering to the
Franchise Agreement's requirements. This would predominately relate to subsets of the franchise area where
Contractor provides service to County and non-County customers (e.g. Pittsburg/Oakley areas regulated by
cities).
County staff is prepared to complete this review with the Contractor with the understanding that the Rate
Setting Manual is the County's document, which does not require approval or agreement by the Contractor.
County staff will report to the Board identifying which suggestions would be inconsistent with existing policy
and what if any additional implications such changes would have on the Franchise Agreement. County staff
will also consider any other minor administrative changes that do not have implications to rate payers.
County staff will report to the Board on this matter on or about March 22.
Conduct Construction and Demolition Debris Recovery Study
The Contractor believes it would be mutually beneficial if the County considered construction and demolition
(C&D) debris to be part of the waste stream which the company has the exclusive right to collect. Staff is
recommending that we have a study conducted in order to help determine if granting the Contractor exclusive
privilege and duty to collect C&D debris would likely result in greater diversion and convenience, lower costs
and more types of C&D materials collected for recycling. Staff estimates this study would cost no more than
$25,000. The Contractor would be consulted prior to finalizing a potential scope of work for the C&D study
and a draft would be provided for the Contractor's review prior to beginning work on the study. Staff
anticipates reporting back to the Board with any relevant findings and recommendations within twelve
months.
Direction from Board of Supervisors Three Years Prior to Expiration
In order to seek direction from the Board regarding whether or not to extend solid waste and recycling
collection franchise agreements, staff proposes to return to the Board of Supervisors for direction three years
prior to all franchise agreement termination dates. This timeframe should allow adequate time to conduct a
Request for Proposal process if that were the desire of the Board, including soliciting and selecting a
contractor as well as then completing negotiations with selected contractor.
CONSEQUENCE OF NEGATIVE ACTION:
CHILDREN'S IMPACT STATEMENT:
CLERK'S ADDENDUM
By unanimous vote, APPROVED replacing the published Board Order with a new Board Order with revised recommendations
as amended to insert the sentence "The additional franchise fee revenue to be derived from the recommended 2% fee increase
would help offset cost of services related to administering the franchise agreement." as the final sentence in the Fiscal Impact
section.
ACCEPTED report from NewPoint Group regarding their review of the Base Year Rate Application submitted by Garaventa
Enterprises; APPROVED residential and commercial solid waste & recycling collection rate increase of 13.88% for customers
in the unincorporated areas served by Garaventa Enterprises (Contractor) under the County’s Franchise Agreement with
Garaventa Enterprises ("Franchise Agreement"); APPROVED and AUTHORIZED the Chair of Board of Supervisors to
execute Amendment No. 2 to the Franchise Agreement, to add the Ironhouse Unincorporated Area described in Exhibit B;
APPROVED and AUTHORIZED the Chair of the Board of Supervisors to execute a third amendment to the Franchise
Agreement that extends the term of the Franchise Agreement by a total of 10 years, pursuant to the terms of this board order
and in a form approved by County Counsel.
ATTACHMENTS Report Amendment 2
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FINAL DRAFT REPORT
Review of Garaventa Enterprises
2010 Solid Waste Rate Application
and New Three-Cart System for 2011
January 6, 2011
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This report is printed on recycled paper.This report is printed on recycled paper.
FINAL DRAFT REPORT
Review of Garaventa Enterprises
2010 Solid Waste Rate Application
and New Three-Cart System for 2011
January 6, 2011
January 6, 2011
Ms. Deidra Dingman
Conservation Programs Manager
Contra Costa County
Department of Conservation & Development
651 Pine Street, 4th Floor – North Wing
Martinez, California 94553
Regarding: FINAL DRAFT REPORT – Review of Garaventa Enterprises 2010 Solid Waste
Rate Application and New Three-Cart System for 2011
Dear Ms. Dingman:
NewPoint Group is pleased to present to Contra Costa County (County) our draft report titled,
“Review of Garaventa Enterprises Solid Waste Rate Application and New Three-Cart System for 2011.”
This final draft report presents results of our review of Garaventa Enterprises 2010 Base Year Rate
Application (Application). Our review includes both an evaluation of the 2010 Application, and an
assessment of the impact of transitioning to a new three-cart residential collection system in 2011.
Our review was conducted in accordance with procedures specified in the County’s Rate Setting
Manual (Manual).
This report documents the following components of our rate review:
Necessary adjustments to the 2010 Application submitted by Garaventa
A description of the residential collection system before, and after, the proposed new three-
cart system would be operational in 2011
Potential increases in diversion levels from the new 2011 three-cart system
New 2011 refuse, curbside recycling, and yardwaste rates, rate structures, and frequency
distribution (subscription level) assumptions
A survey of comparative rates of neighboring jurisdictions and within the unincorporated County
An implementation timeline for the new 2011 three-cart system
A summary of a recent customer satisfaction survey of Garaventa services.
Garavanta’s transition to a new three-cart residential collection system in 2011 represents a shift in
how refuse, curbside recyclables, and yardwaste is accumulated and collected in the County. Garaventa
will be challenged to effectively implement the new three-cart system. While there are customer
benefits with the expanded three-cart capacity, the reality is that the new three-cart system also
increases Garaventa’s overall costs.
Ms. Deidra Dingman
January 6, 2011 Page 2
This report recommends a new 2011, residential collection rate and rate structure. The proposed
2011 rates are competitive and allow Garaventa to earn a reasonable financial return. These rates are
fair to the County and Garaventa in light of the capital investment in new carts, and the associated
risks, that Garaventa Enterprises, is undertaking.
The County must carefully weigh the potential overall benefits and costs of this 2011 solid waste
system change as it involves a shift in the types of containers Garaventa uses for residential collection
service. County policy makers must evaluate whether the mostly qualitative residential customer benefits
(e.g., increased storage capacity, more container size choices, new carts, and ease of commingling “single
stream” recycling), and some County-related benefits (e.g., enhanced street appearance and an increase
in overall County diversion levels), are sufficient to offset the incremental County costs of new carts.
Should the County policy makers approve the new three-cart system for 2011, following implementation,
the County and Garaventa should expect a transitional period of at least a year, or more, characterized
by some degree of residential service level instability and increased residential customer inquiries and
demands. Finally, County areas served by Garaventa are undergoing a major shift this year, as the City of
Oakley will assume franchise responsibilities for the areas formerly falling under the Ironhouse Sanitary
District’s jurisdiction. The County should be aware that, following this transition, the revenue and cost
structure of the remaining unincorporated areas may change (e.g., for the next base year).
* * * * *
If you have any questions concerning this final draft report, please contact me at (916) 442-0189,
or Mr. Erik Nylund at (916) 442-2456. Thank you for the opportunity to serve Contra Costa County.
Very truly yours,
James A. Gibson, Ph.D.
Director
Table of Contents
Section
Executive Summary ........................................................................ ES-1
Page
1. Introduction and Background of Rate Review .............................. 1-1
A. Background of Review ................................................................................ 1-2
B. Scope of Rate Review ................................................................................. 1-2
C. Regulation of Residential and Commercial Sectors ..................................... 1-4
D. Overview of Rate Application and Rate Request ......................................... 1-4
E. Garaventa Enterprises and Related Companies ........................................... 1-6
F. Rate History ............................................................................................... 1-8
2. Baseline Residential Refuse, Recycling,
and Yardwaste Collection Services ................................................ 2-1
A. Current Refuse Collection Services ............................................................. 2-1
B. Current Curbside Recycling Collection Services ......................................... 2-3
C. Current Yardwaste Collection Services........................................................ 2-7
D. Historical County Diversion Levels ............................................................ 2-8
E. Customer Satisfaction with Refuse, Recycling, and Yardwaste Collection ...... 2-9
3. Proposed Residential Refuse, Recycling,
and Yardwaste Services ................................................................... 3-1
A. Proposed Refuse Collection Services ........................................................... 3-1
B. Proposed Single Stream Cart- Based Curbside Recycling Services ............... 3-2
C. Proposed Yardwaste Program ..................................................................... 3-5
D. Potential for Increases in Diversion ............................................................ 3-6
E. New System Cart Setout ............................................................................ 3-6
F. Projected System Efficiencies ...................................................................... 3-6
4. Review of Rate Application for 2010 ............................................... 4-1
A. Rate Setting Requirements in Franchise Agreement and
Rate Setting Manual ................................................................................... 4-1
B. Factors Influencing 2010 Rate Review ........................................................ 4-1
C. NewPoint Group Rate Application Adjustments ........................................ 4-4
D. Components of Residential Rate ................................................................ 4-8
Table of Contents
ii Review of Garaventa Enterprises Solid Waste Rate Application
Section
5. Recommended Rate Change for 2010 .................................................................... 5-1
Page
A. Residential Rate Change for 2010 .......................................................................................... 5-1
B. Comparison of Rates and Services to Other Neighboring Jurisdictions .................................. 5-2
6. Recommended Residential Three-Cart System Rate Change for 2011 ............... 6-1
A. Assumptions Used for Recommended 2011 Three-Cart System
Rate Structure and Rates........................................................................................................ 6-1
B. Recommended 2010 Rate Structure and Rates Under New Residential
Three-Cart System ................................................................................................................ 6-3
C. Recommended Education and Outreach ............................................................................... 6-6
D. Other County Requested Analyses ......................................................................................... 6-6
E. Franchise Agreement Factors ................................................................................................. 6-6
7. Implementation Schedule ......................................................................................... 7-1
A. Three-Cart System Implementation Timeline ....................................................................... 7-1
B. Rate Setting Timeline for 2012 through 2015 ....................................................................... 7-2
Appendix
A. Rate Application .......................................................................................................... A-1
Page
B. Audited Financial Statements.................................................................................... B-1
C. Customer Satisfaction Survey Results .......................................................................C-1
D. Adjusted Base Year Model ....................................................................................... D-1
E. Comparative Refuse Collection Rates ..................................................................... E-1
F. Comparative Jurisdiction Franchise Extension Terms and Conditions ................ F-1
Executive Summary
Executive Summary
This report represents NewPoint Group’s review of Garaventa Enterprises (Garaventa’s)
2010 Base Year Rate Application and our assessment of a proposed new three-cart
residential collection system for 2011. This executive summary is organized as follows:
A. Rate Review Background
B. 2010 Rate Review Results and Rate Recommendations
C. 2011 Three-Cart Residential System Rate Review Results and Recommendations.
A. Rate Review Background
1. Garaventa Rate Application
Garaventa submitted its 2010 Base Year Rate Application (Application) on
December 9, 2009, requesting an effective 21.10 percent
NewPoint Group, Inc. (NewPoint Group) was retained by Contra Costa County
(County) to conduct an independent review of Garaventa’s Application. For the review,
we used guidelines provided in the County’s Rate Setting Process and Methodology
Manual for Residential Solid Waste Charges (Manual). The 1998 Manual provides
official framework for how the County reviews rate applications.
rate increase. After our initial
review of the Application, we adjusted the Application for some minor mathematical
errors and Garaventa’s effective rate increase equaled 20.93 percent.
Garaventa subsidiary companies, and the unincorporated communities (County
areas) they serve, are shown in Table ES-1, on the next page.
2. Garaventa Customer Satisfaction and Collection System Efforts
We summarize (in Appendix C) results of a recent customer satisfaction survey
conducted by Garaventa for County services areas. In general, Garaventa’s County
customers are very satisfied with the refuse, recycling, and yardwaste collection services
provided by Garaventa. County customers had a 90 percent satisfaction rating for
refuse, recycling, and yardwaste collection services.
Garaventa Enterprises, recently invested approximately $15 million in the Mt.
Diablo Recycling Center (MDRC), located in Pittsburg, California. This state-of-the-
art materials recovery facility (MRF) processes all Garaventa recyclables. Garaventa
Enterprises constructed this facility using the most current and advanced sorting
equipment and capabilities. Currently, Garaventa uses this MRF to process County
area recyclables, both collected in crates at the curb, and from commercial businesses.
Executive Summary
ES-2 Review of Garaventa Enterprises Solid Waste Rate Application
Table ES-1
Contra Costa County
Garaventa Service Areas and Companies
Service Area Company Providing Service
1. Bay Point Pittsburg Disposal and Debris Box
Service, Inc.
2. Brentwood Brentwood Disposal Services, Inc.
3. Byron Sanitary
District areas
Brentwood Disposal Services, Inc.
4. Discovery Bay Discovery Bay Disposal, Inc.
5. Oakley areas Oakley Disposal Service, Inc.
6. North Concord Minor – served by Concord
Disposal Service
All Areas Delta Debris Box Service Inc.
(for debris box service)
The County requested that we examine a new
three-cart residential collection system that
Garaventa may implement in 2011 should the
County approve this new program. As part of this
new system, County ratepayers would receive a new
refuse collection cart (32-, 64-, or 96-gallon), a new
96-gallon recycling cart (for bi-weekly service), and
a 96-gallon yardwaste cart (for bi-weekly service).
Garaventa would process materials collected from
the single stream 96-gallon recycling cart using the
new MRF’s full sorting capabilities.
3. Prior Rate Changes
The County approved the last rate increase
in mid-2008. Recent County rate increases,
for Garaventa-served County areas, have been
as follows:
2009: 0.00 percent
2008: 6.71 percent
2007: 6.44 percent
2006: 2.69 percent
2005: 3.89 percent.
On average, residential rates have increased 3.9
percent per year, since 2005. During this same
five-year period, the San Francisco-Oakland-San
Jose Consumer Price Index (CPI) increased by an
average of 2.2 percent per year.
Garaventa has recently faced a financial challenge
with declining collection revenues, increasing
operating costs (e.g., labor and tipping fees), and
poor recycling markets. As a result, Garaventa
companies servicing the County showed a modest
net income (before income taxes) of $145,390 in
its 2008 audited financial statements.1
4. Garaventa Rate Regulation
Garaventa provides collection services to the
residential, commercial, and light industrial sectors.
The County regulates rates of the residential and
commercial sectors using adopted Manual guidelines.
In “base years,” the County examines all revenues,
costs, and profits of Garaventa’s County regulated
activities. The County and Garaventa historically
have not attempted to disaggregate costs, by sector, as
Garaventa’s operations costs are highly co-mingled.
Historically, the County has general applied rate
changes to residential rates at the same level as
commercial rates. In some years (e.g., 2004), the
County approved an increase for commercial rates
which was different from the residential rate increase.
5. Survey of Comparative Rates
We compared current County rates to rates of
the following eleven (11) jurisdictions:
1. City of Antioch
2. City of Clayton
3. City of Concord
4. City of Lafayette
5. City of Martinez
1 This financial statement result does not reflect any adjustments
for rate setting purposes.
ES-3
Table ES-2
Comparison of Contra Costa County Garaventa-Served Area Residential Rates
With Eleven (11) Comparative Jurisdictions
(May, 2010)
Size
(gallons)
Contra Costa County Rate
(Per Customer, Per Month)
Average Rate of Eleven (11) Jurisdictions
(Per Customer, Per Month)
Percent
Difference
20 (mini) $23.34 $19.26 +21%
32 28.85 22.43 +29%
96 31.11 54.62 -43%
6. City of Moraga
7. City of Orinda
8. City of Pleasant Hill
9. City of Walnut Creek
10. Contra Costa County (CCCWA areas)
11. Town of Danville.2
Table ES-2, above, shows how current
Garaventa County area residential rates compare
to the eleven (11) jurisdictions. On a “nominal”
comparison basis, Garaventa County area
residential rates for the smaller container sizes are
well above average, and the Garaventa County
area’s residential rate for the 96-gallon container
size is substantially below average.
Most Garaventa County area customers
subscribe to the 96-gallon residential service level.
As a result, most Garaventa County area residential
revenues come from the 96-gallon customer.
Garaventa thus can price its 96-gallon container
rate lower than these comparative jurisdictions and
still cover its residential revenue requirements.
In contrast, for the comparative jurisdictions,
most residential revenues are generated from the
smaller container sizes. Many of these comparative
jurisdictions price their 96-gallon cart rate high to
encourage customers to shift to smaller container
2 The County has used these eleven (11) jurisdictions for rate
comparisions since the Manual was adopted.
sizes. This rate structure difference results in
significantly fewer comparative customers at the
96-gallon service level than for the County. As an
example, seven (7) of the eleven (11) comparative
jurisdictions had just five (5) percent, or less, of
their residential customers with 96-gallon service.
Most current County bin and debris box rates
are relatively close to the average of the eleven (11)
comparative jurisdictions. Common bin and debris
box percentage rate comparisons are shown below:
Bin Service
2 yard/1 per week, -1%
3 yard/1 per week, -7%
Debris Box Service
20 yard debris box (per pull), -15%.
In general, we caution the County’s use of
comparative rates as a basis for setting rates as
rates of other different jurisdictions have unique:
Cross-subsidies between sectors
Franchise fees and other services
(contained within the rates)
Legacy rate setting practices
Levels of residential, commercial,
and industrial business
Profitability levels
Rate structure objectives
(e.g., reward waste reduction)
Executive Summary
ES-4 Review of Garaventa Enterprises Solid Waste Rate Application
Frequency distributions by cart size
Rate setting methods
Service levels (e.g., bi-weekly versus
weekly yardwaste or recycling collection)
Transfer station and landfill tipping fees
(based on the proximity to these facilities).
B. 2010 Rate Review Results
and Rate Recommendations
1. Projected 2010 Revenue
Requirement Shortfall
For 2010, we estimated an approximate
$1,270,000 revenue shortfall. We determined the
following five (5) factors caused this shortfall:
Labor cost increases associated with wage
and benefit increases tied to union labor
agreements (46.51%
Combined transfer station and landfill
“tipping fee” increases from $65 per ton
in 2008, to $72.25 per ton in 2010
(
of shortfall)
19.78%
Trucking and equipment cost increases
associated with (1) increasing wages and
benefits for mechanics and shop laborers,
(2) fuel and oil cost increases, and (3)
property lease cost increases (
of shortfall). This cost category
includes the costs of refuse consolidation,
transportation, and landfill disposal
14.86%
County franchise fee increases3
(
of
shortfall). This cost category includes the
costs of all truck and equipment
depreciation, repair and maintenance,
parts, fuel, and storage
17.56%
Depreciation and other operating cost
increases (
of shortfall)
1.29%
3 As franchise fees are calculated based on a percentage of
gross revenues, franchise fees increase as other costs increase.
of shortfall).
2. NewPoint Group Review Adjustments
Our rate setting adjustments decreased the
shortfall requested in Garaventa’s Application by
approximately $0.6 million, from $1.9 million
to $1.3 million. We made adjustments to the
following categories (with the percentage of our
adjustment shown in parenthesis):
Decrease in corporate and local general and
administrative costs (59 percent reduction)
Decrease in tipping fees (16 percent reduction)
Decrease in operating profits
(9 percent reduction)
Increase in residential revenues
(7 percent reduction)
Decrease in franchise fees (5 percent reduction)
Decrease in trucking and equipment costs
(10 percent reduction)
Increase in direct labor (11 percent increase)
Decrease in depreciation and other
operating cost (2 percent reduction)
Increase in Recycled material sales
(2 percent reduction)
Decrease in County administrative fee
(1 percent reduction).
3. Rate Options for 2010
Based on our review, we determined that a
rate increase of 13.88 percent is needed to cover
the revenue shortfall for 2010. A 13.88 rate increase
if applied across all rates would fully cover the
approximately $1,270,000 2010 revenue shortfall.
We show the residential rate structure before,
and after, this 13.88 percent rate increase in
Table ES-3, on the next page. A 13.88 percent
residential rate increase would result in 2010
residential rates that range from $3.04 to $4.00 per
customer, per month. The most common 96-gallon
rate (96 percent of customers) would increase from
$31.85 to $35.85 per customer, per month.
ES-5
Table ES-3
Contra Costa County
Garaventa-Served Areas
Residential Solid Waste Collection Rates
With A 13.88 Percent Rate Increase
(Per Customer, Per Month)
Service Level Current 2009 Rate
(Per Customer, Per Month)
Recommended 2010 Rate
(Per Customer, Per Month)
Rate Increase
(Per Customer, Per Month)
County Areas (Other Than Byron Areas)
20-gallon can $23.34 $26.58 $3.24
32-gallon can $28.85 $32.85 $4.00
96-gallon cart $31.85 $35.85 $4.00
Byron Areas
20-gallon can $21.88 $24.92 $3.04
32-gallon can $26.00 $29.61 $3.61
96-gallon cart $29.00 $32.61 $3.61
Table ES-4
Contra Costa County
Garaventa-Served Areas
Estimated 2010 Revenues and Expenses, by Sector
(As a Percent of Total Revenues and Expenses)4
Description Residential Commercial Total
Revenues 65% 35% 100%
Expenses 65% 35% 100%
We analyzed residential and commercial
revenues and costs for this base year. These data
are shown in Table ES-4, above.
C. 2011 Three-Cart Residential
System Rate Review Results
and Rate Recommendations
For 2011, we evaluated impacts of an entirely
new residential solid waste rate structure in
conjunction with a new three-cart collection
4 These revenue and cost percentage figures reflect the pooling
of all unincorporated County revenues and costs (i.e., are fully
inclusive of the franchise areas of the City of Oakley areas
which ultimately will be part of a new City of Oakley franchise
in the near term). These figures presume that unincorporated
County areas (both non-City of Oakley and City of Oakley)
have a similar distribution of revenues and costs.
system. The proposed residential three-cart
collection system will include:
Refuse collection – customer choice of a
20-gallon mini-can (company provided),
32-gallon cart (company provided),
64-gallon cart (company provided), or
96-gallon cart (company provided)
Curbside recycling collection – a 96-gallon
cart (bi-weekly service)
Yardwaste collection – a 96-gallon cart
(bi-weekly service).
In contrast to the current two 14-gallon
crate system, customers will place all curbside
recyclables commingled into a 96-gallon cart
(called a “single stream” system) provided by the
company. In contrast to the current customer-
provided can and bag system, the customer will
place all yardwaste materials into a 96-gallon cart
provided by the company.
The single stream curbside recyclable materials
will be processed at the new state-of-the-art
Materials Recovery Facility (MRF) sort line at
the Pittsburg Recycling and Transfer Center
(Pittsburg California).
Executive Summary
ES-6 Review of Garaventa Enterprises Solid Waste Rate Application
Overall, there are benefits and costs of the new
collection system. County diversion is expected
to increase with the new system. Garaventa anticipates
that there will be an eighteen (18) percent increase in
curbside recyclables tonnage, and a twenty-five (25)
percent increase in yardwaste tonnage.
In evaluating the rate impacts of this new
system, we carefully considered of a number of
important factors, including the:
Price elasticity of different rate structures –
This factor refers to how customers respond
to different rate structure scenarios, namely
the percentage change in quantity demanded
as a result of the percentage change in price
Customer transition period – This factor
refers to how long it takes before
customers come into equilibrium on their
cart selections. There likely will be a
period of up to one year during which
customers continue to shift service levels5
Determination of initial customer refuse
cart size preferences – This factor refers
to the customers’ initial selection of cart
preferences. Garaventa plans to query
residential customers, in a three-month
period prior to placing its final cart orders
(October through December 2010).
Based on our review, the new proposed rate
structure, and rates, fully reflect new cart capital
outlays totaling over $2.1 million, including the
purchase of nearly 40,000 new carts for total County
area-wide refuse, curbside recycling, and yardwaste
services. Rate assumptions included the Company’s
proposed ten (10) year amortization period, a 5.0
percent interest rate on the purchase of the carts,
and allowed cart costs (with profit) in the rate base.
The amortization period proposed by Garaventa
would extend nearly six years beyond the term of
Garaventa’s current franchise granted by the County.
5 Garaventa agrees to allow customers to shift service levels
without restriction as opposed to requiring customers to
commit to a service level over some set period of time.
Table ES-6
Contra Costa County
Assumed Residential Customer
Frequency Distribution
(Year 2011)
Service Level Percent of Customers
20-gallon mini-can 1%
32-gallon cart 34%
64-gallon cart 40%
96-gallon cart 25%6
Total 100%
There are some risks associated with the
transition to the three-cart system, including:
Customers could, on average, select smaller
refuse cart sizes than assumed in the customer
preference frequency distribution
There would be no “balancing account,”
or another similar mechanism to true-up
projected revenues, and/or costs, with
actual revenues and costs through 2011
There could be revenue fluctuations and
cash flow instability to the company
throughout the year, as customers decide
on their service levels and migrate to their
preferred cart sizes.
Our assumed short-term frequency distribution
(of the number of customers by rate category) is
shown in Table ES-6, above. Our assumptions
were based on:
Over 96 percent of current customers have
96-gallon refuse service and we believe that
some customers will, at least initially, want
to retain their existing refuse cart capacity
6 We believe that this is a conservative estimate for the
company, and that it could take longer for County customers
to transition from 96-gallon service to a smaller cart size (i.e.,
the first year result could show a larger number of customers
subscribed to the 96-gallon carts). To the degree that it does
take longer for customers to migrate to lower container sizes,
the company would benefit from a profitability standpoint.
ES-7
Consideration of actual frequency
distribution data for other jurisdictions
in the area following implementation
of a three-cart system (City of Rio Vista,
City of Concord).7
Under the assumption that the County approved
a 13.88 percent rate increase in 2010, in Table ES-7,
on the next page, we show that the 2011 residential
7 There is a large amount of uncertainty in determining the
frequency distribution. We cannot represent that our assumed
frequency distribution will be the actual frequency distribution
at the end of 2011. Our assumed frequency distribution is an
average, used for revenue generation estimation purposes,
relevant only for 2011. The County and Garaventa should
carefully reevaluate both the rate structure, and frequency
distribution assumptions, at the end of 2011. At that time,
with more stability in customer behavior, and actual operating
data under the new automated system, customer frequency
distributions (number of customers by rate category) should
begin to stabilize.
rate changes would range from -$2.65 per customer,
per month, to +$4.60 per customer, per month.
The most common 96-gallon residential rate would
increase from $35.85 per customer, per month, to
$40.45 per customer, per month, a 12.8 percent
increase for an estimated 25 percent of County
customers. The remaining estimated 48 percent
of County customers would have a rate decrease.
Executive Summary
ES-8 Review of Garaventa Enterprises Solid Waste Rate Application
Table ES-7
Contra Costa County
Residential Rate Structure Before and After 13.88
Recommended Rate Increase for 2011 Three-Cart Residential System
(Calendar Year 2011)
Service Level
Proposed 2010 Rate
(Per Customer, Per Month)8
[With A 13.88 Percent Rate Increase]
Recommended 2011 Rate
(Per Customer, Per Month)
Rate Change
(Per Customer, Per Month)
20-gallon mini-can $26.58 $24.95 -$1.63
32-gallon cart $32.85 $30.20 -$2.65
64-gallon cart N/A $35.95 N/A
96-gallon cart $35.85 $40.45 +$4.60
8 From Table ES-5, shown for County Areas other than Byron.
Section 1
Introduction and Background of Rate Review
1. Introduction and
Background of Rate Review
On December 8, 2009, Garaventa Enterprises (Garaventa) submitted a 2010 Base Year
Rate Change Application (Application) to Contra Costa County (County). Garaventa can
submit a Base Year Rate Application every four (4) years in accordance with the County’s
1998 Rate Setting Process and Methodology Manual for Residential Solid Waste Charges (Manual).
Garaventa submitted this 2010 Application at a time of unprecedented downturn in
the economy. The recent recession caused customers to purchase fewer goods and
consequently dispose of less refuse. As customers generated less refuse, they decreased
their refuse collection service levels. Garaventa revenues have, in turn, recently declined.
A refuse collection company’s costs of operation are largely fixed (e.g., trucks,
facilities, overhead). Even though Garaventa revenues have declined, Garaventa costs
have not decreased at the same rate. The result is that Garaventa profits recently have
fallen below the target profit level specified in the Manual.
The Application comes as a time when Garaventa Enterprises has expended
significant resources to finance and construct a new Materials Recovery Facility (MRF)
sort line at the Pittsburg, California location. Mt. Diablo Recycling processes County
recyclables using this MRF sort line.
The Application is submitted at a time of minimal inflation, as measured by the
San Francisco-Oakland-San Jose Consumer Price Index (CPI). The annual percentage
change in this CPI in 2009 ranged from just 0.10 percent to 2.61 percent.1
Under these complex and mostly unfavorable conditions, in the Application
Garaventa has requested a 21.10 percent rate increase for 2010. This large requested
rate increase is unprecedented over the past approximately twelve (12) years since the
County adopted the Manual.
On April 12, 2010, the County retained NewPoint Group to review and analyze the
Application. This report documents results of our rate review. The remainder of this
introductory section is organized as follows:
A. Background of Review
B. Scope of Rate Review
C. Regulation of Residential and Commercial Sectors
D. Overview of Rate Application and Rate Request
E. Garaventa Enterprises and Related Companies
F. Rate History.
1 Based on year 2009 changes in the San Francisco-Oakland-San Jose Consumer Price Index (CPI) as follows:
February 2008 to February 2009 (+1.16 percent), April 2008 to April 2009 (+0.80 percent), June 2008 to June
2009 (+0.23 percent), August 2008 to August 2009 (+0.17 percent), October 2008 to October 2009 (+0.10
percent), December 2008 to December 2009 (+2.61 percent).
1. Introduction and Background of Rate Review
1-2 Review of Garaventa Enterprises Solid Waste Rate Application
A. Background of Review
Garaventa has an exclusive franchise with the County
to collect, and remove for disposal and recycling, all
residential and commercial, and light industrial solid
waste, including recyclable materials. Garaventa has
a twenty-year franchise with the County, beginning
with an effective date of May 9, 1995, and ending
May 8, 2015. The County has jurisdiction to regulate
collection, removal, and disposal of all solid waste,
and the recycling of all materials.
Garaventa provides service to the following
six (6) geographic areas located within
unincorporated Contra Costa County:
1. Bay Point (part of Bay Point)
2. Brentwood
3. Byron Sanitary District areas
4. Discovery Bay
5. Oakley areas
6. North Concord – unincorporated areas
Exhibit 1-1, on the next page, shows the refuse
collection service areas located within
unincorporated Contra Costa County.
Garaventa has five (5) subsidiary companies that
perform the actual collection activities for the first five
(5) service areas, noted above. These companies are:
Brentwood Disposal Services, Inc.
(Brentwood, Byron, Knightsen, other
rural County areas)
Delta Debris Box Service, Inc.
Discovery Bay Disposal, Inc.
(Discovery Bay area)
Oakley Disposal Service, Inc.
(Ironhouse Sanitary District area)
Pittsburg Disposal and Debris Box
Service, Inc. (Bay Point area).
Concord Disposal Service (CDS) performs the
refuse collection for the small North Concord area.
A total of approximately 30 County customers are
serviced by CDS in this area. CDS rates are subject
to rate review by the City of Concord and, as a
result, the revenues and costs for this small area
have not been included in this County rate review.
North Concord area rates are set equal to City of
Concord rates. Throughout this report, we use
“Garaventa” to refer to the five (5) companies that
actually provide the collection service.
B. Scope of Rate Review
For this base year rate review, we followed
requirements contained in the County’s Rate Setting
Process and Methodology Manual for Residential
Solid Waste Charges, September 28, 1998 (Manual).
Our review included the following ten (10) tasks:
1. Conduct periodic project status meetings
with the County
2. Conduct a detailed review of Garaventa’s
Application and Garaventa financial statements
3. Conduct onsite visits and meet with
Garaventa management and staff to review
the Application, our data requests, and
obtain supporting documentation between
April and July, 2010
4. Meet with Garaventa during August 2010
to discuss preliminary rate review findings
and provide an opportunity for Garaventa
to provide additional information or
comments on findings
5. Assess current Garaventa operating practices
6. Evaluate changes to Garaventa costs and
operations related to potential implementation
of a new residential three-cart system
7. Analyze trends in Garaventa revenues and costs
8. Compile rate surveys of comparative jurisdictions
9. Compile franchise extension terms granted
for comparative jurisdictions
10. Develop a report, and present findings
to the Board of Supervisors.
1-3
Exhibit 1-1
Map of Contra Costa County Refuse Collection Service Areas
1. Introduction and Background of Rate Review
1-4 Review of Garaventa Enterprises Solid Waste Rate Application
In addition to the information provided in this
report, we have supporting workpapers documenting
results of our review. We also developed an extensive
spreadsheet model which we used to generate our
adjustments to the Application.
C. Regulation of Residential
and Commercial Sectors
The County and Garaventa use the Rate Setting
Process and Methodology Manual for Residential
Solid Waste Charges to set solid waste collection
rates. This Manual was developed in 1998.
The Manual provides a formal structure for
establishing solid waste collection rates. The
Manual provides rate change policies, provides
application forms, specifies reporting formats,
and identifies required supporting documents.
The Manual specifies procedures for requesting,
reviewing, and adopting rate changes.
“Base year” rates are established every four (4)
years. In each of the “interim years” between base
years, rate changes follow a more streamlined process.
Interim adjustments are set based on a composite
index, consisting of the change in consumer price
index (CPI), change in regulatory and tipping fees,
and an adjustment for the County’s franchise fee.
The County regulates rates for refuse, curbside
recycling, and yardwaste collection. Residential rates
are set to cover allowable costs and a reasonable
profit to the hauler for providing residential refuse,
curbside recycling, and yardwaste collection services.
The County conducted its last Base Year rate
review in 2007. In accordance with the Rate
Manual, the next Base Year review normally
would occur in 2011. Under the normal schedule,
the County would allow Garaventa Enterprises to
submit an Interim Year rate application.
However, on July 3, 2009, Garaventa Enterprises
submitted a letter to the County requesting that the
County allow Garaventa to submit a Base Year rate
application. Garaventa indicated that an Interim
Year rate application (tied to the CPI) would be
insufficient to provide adequate revenues “given the
changes that have occurred in the local economy.”
This letter also indicated a preference to consider a
new residential service restructuring, including
automated refuse collection, single stream recycling,
and yard waste container pickup. Garaventa
requested the County to consider a franchise
extension so that the cost of new wheeled carts
could be reasonably amortized.
The County Board of Supervisors agreed to allow
Garaventa to submit a Base Year application. The
Board also agreed to consider the new programs
and franchise extension request from Garaventa.
D. Overview of Rate Application
and Rate Request
Garaventa submitted their Application on
December 8, 2009. We include a copy of their
Application in Appendix A. In the Application,
Garaventa requested an increase to refuse
collection rates of 22.10 percent. Current and
requested residential rates are shown in Table
1-1, on the following page.
As shown in Table 1-1, current County rates
are regionalized (i.e., the same) for the following
areas: Bay Point, Brentwood, Discovery Bay, and
a portion of Oakley (County areas outside of the
Ironhouse Sanitary District). Current County
rates are slightly below the regionalized rate for
the Byron area and Oakley area (within the
Ironhouse Sanitary District).
We provide the total number of residential
customers for each County area in Table 1-2,
on page 1-6. Over one-half of the customers are
currently within the Ironhouse Sanitary District
service area. Another one-quarter are in the
Discovery Bay service area.
1-5
Table I-1
Contra Costa County
Garaventa-Served Areas
Current and Garaventa Requested Residential Solid Waste Collection Rates
(Per customer, Per month)2
Service Area/Container Size3
Current 2009 Rate
per Customer,
per Month
Requested Rate Change
per Customer,
per Month
2010 Garaventa Requested
Rate per Customer,
per Month
1. Bay Point Area (Served by Pittsburg
Disposal & Debris Box Service, Inc.)
20-gallon customer-provided can $23.34 $4.91 $28.25
32-gallon customer-provided can $28.85 $6.10 $34.95
96-gallon toter $31.85 $6.10 $37.95
2. Brentwood Area (Served by Brentwood
Disposal Service, Inc.)
20-gallon customer-provided can $23.34 $4.91 $28.25
32-gallon customer-provided can $28.85 $6.10 $34.95
96-gallon toter $31.85 $6.10 $37.95
3. Byron Area (Served by Brentwood
Disposal Service, Inc.)
20-gallon customer-provided can $21.88 $4.62 $26.50
32-gallon customer-provided can $26.00 $5.50 $31.50
96-gallon toter $29.00 $5.50 $34.50
4. Discovery Bay Area (Served by Discovery
Bay Disposal Service, Inc.)
20-gallon customer-provided can $23.34 $4.91 $28.25
32-gallon customer-provided can $28.85 $6.10 $34.95
96-gallon toter $31.85 $6.10 $37.95
5. Oakley Area (Within Ironhouse Sanitary
District, Served by Oakley Disposal
Service, Inc.)
20-gallon customer-provided can $23.11 $4.89 $28.00
32-gallon customer-provided can $28.11 $5.94 $34.05
96-gallon toter $31.11 $5.94 $37.05
6. Oakley Area (County areas, Served by
Oakley Disposal Service, Inc.)
20-gallon customer-provided can $23.34 $4.91 $28.25
32-gallon customer-provided can $28.85 $6.10 $34.95
96-gallon toter $31.85 $6.10 $37.95
2 Includes most of the rate categories in the residential rate structure. Some rates (e.g., extra can service) are not shown in this table.
3 The 96-gallon toter rates include a $3 per month toter rental charge.
1. Introduction and Background of Rate Review
1-6 Review of Garaventa Enterprises Solid Waste Rate Application
Table I-2
County Residential Customers
By Garaventa Service Area
(Projected 2010)
Area Customers
Bay Point 2,348
Brentwood 892
Byron 139
Discovery Bay 4,448
Oakley (County, outside Ironhouse) 106
Oakley (Ironhouse Sanitary District) 9,505
Total 17,438
Table I-3
Financial Statement Profit Levels For Each
Garaventa Enterprises-Related Company Providing
Collection Services to Contra Costa County
(Calendar Year Ended December 31, 2008)
Company Profit/(Loss)
Brentwood Disposal Service, Inc. ($176,774)
Delta Debris Box Service, Inc. (190,722)
Discovery Bay Disposal, Inc. 230,413
Oakley Disposal Service, Inc. 60,847
Pittsburg Disposal and Debris Box
Service, Inc.4
221,626
Total $145,390
Garaventa provided calendar year ended
December 31, 2008, audited financial statements
for the following five (5) companies:
Brentwood Disposal Service, Inc.
Delta Debris Box Service, Inc.
Discovery Bay Disposal, Inc.
Oakley Disposal Service, Inc.
Pittsburg Disposal and Debris
Box Service, Inc.
Appendix B includes these audited financial
statements.
4 Not audited, but represents the County’s allocated portion of
the total Pittsburg Disposal & Debris Box Service, Inc. business.
From an audited financial statement perspective,
2008 was not highly profitable for Garaventa.5 For
calendar year 2008, Table 1-3, left, shows profit
levels (before income taxes) reported by Garaventa
on its 2008 audited financial statements. The
$145,390 in profit represents a 98 percent
operating ratio based on costs of approximately
$9.2 million, well above the 90 percent target
operating ratio (i.e., at a lower profit level).
The Application includes all revenues and
expenses of the Ironhouse Sanitary District service
area. At the time of this writing, oversight of this
franchise was being transferred from the Ironhouse
Sanitary District to the City of Oakley.6 The City of
Oakley also was finalizing terms of a new franchise
agreement. Terms of the new franchise required
Oakley Disposal Services to implement a new cart-
based residential collection system. This new cart-
based system includes a refuse cart (with 32-, 64-,
and 96-gallon options, weekly), a 96-gallon recycling
cart (bi-weekly service), and a 96-gallon yardwaste
cart (bi-weekly service). The services begin in
October, 2010. Even with this change in franchise
oversight, Garaventa agreed that our rate review
scope should fully include the revenues, and costs, of
the Ironhouse Sanitary District service area.
E. Garaventa Enterprises and
Related Companies
As background for this review, in Exhibit 1-2
on the next page, we show the relationship of
Garaventa to its related companies. Garaventa
5 Profit levels shown on Garaventa audited financial statements
do not reflect the County’s treatment of allowable costs, pass-
through costs, and non-allowable costs. As part of the County’s
rate setting process, the County makes rate setting adjustments
to Garaventa revenues and costs in order to set rates charged to
County customers. After incorporating County rate setting
adjustments, Garaventa “rate setting” profit levels are typically
higher than “audited financial statement” profit levels.
6 Effective February 1, 2010, the City of Oakley withdrew from
the Regional Agency (a Joint Powers Agreement) which had
included Contra Costa County, the City of Oakley, and the
Ironhouse Sanitary District.
1-7
Exhibit 1-2
Related Parties to Garaventa Enterprises and Transactions Flow Diagram
1 Not a related party to Garaventa, but rather now owned by Waste Connections. CCWS also takes a small amount of refuse to Vasco Road Landfill,
also not a related party to Garaventa, but rather owned by Republic Services (current tipping fee of $31.78 per ton). CCWS takes a small amount
of organic materials to Northern Recycling (also not a related party to Garaventa) in Zamora, California (current tipping fee of $18.00 per ton).
2 Includes depreciation; interest; direct labor for repair and maintenance (welders and mechanics); parts; fuel and oil; and overhead.
1. Introduction and Background of Rate Review
1-8 Review of Garaventa Enterprises Solid Waste Rate Application
companies servicing the County have related-party
transactions with the following five (5) companies:
Parent Company
1. Garaventa Enterprises
Transfer Station and Transportation
2. Contra Costa Waste Services (CCWS)
Recyclables Processing
3. Mt. Diablo Recycling
Trucking Company
4. SEG Trucking
Property Leasing Company
5. Candy Properties.
Refuse collected by Garaventa is taken to the
Contra Costa Waste Transfer Station in
Pittsburg, California. Refuse is consolidated and
transported by CCWS to Potrero Hills Landfill
in Solano, County, a landfill owned and operated
by Waste Connections. Waste Connections is
not a related party company to Garaventa.
Recyclables collected by Garaventa are taken
to the Materials Recovery Facility (MRF) for
processing. The MRF is operated by Mt. Diablo
Recycling. This MRF is collocated in Pittsburg,
California with the Contra Costa Waste
Transfer Station.
Yardwaste collected by Garaventa is taken to the
Contra Costa Waste Transfer Station. Yardwaste
is consolidated and transported by CCWS to
Potrero Hills Landfill in Solano, County, where
it is composted by Waste Connections.
SEG Trucking leases trucks and equipment to
Garaventa companies serving the County. Candy
Properties leases office, storage, and yard space to
Garaventa companies serving the County.
We reviewed transactions between Garaventa
companies serving the County, and these related
entities, for reasonableness and consistency with
County rate setting practices and treatment.
Table 1-4
Contra Costa County
Garaventa-Served Areas
Residential Solid Waste Collection
Rate Changes (1993 to 2009)
Year Rate Year Type Approved Rate Change
1. 1999 Interim None
2. 2000 Interim7 +7.7 to 8.5%
(new green waste program)
3. 2001 Interim None
4. 20028 Base +7.66%
(implemented in 2003)
5. 2003 Interim None
6. 2004 Interim +0.00% residential
+11.79% commercial
7. 2005 Interim9 +3.89%
8. 2006 Interim10 +2.69%
9. 2007 Base11 +6.44%
10. 2008 Interim12 +6.71%
11. 2009 Interim None
F. Rate History
Every four years, the County conducts a Base
Year rate review of Garaventa solid waste
collection services. Since the County developed
the Manual in 1998, the County has conducted
two base year rate reviews in 2002 and 2007.13
This 2010 base year review represents the third
base year review. Interim years, which occur in
each of the three years between base years, follow
a simplified approach.14
Rate changes since the Manual’s inception are
shown in Table 1-4, above. Garaventa requested,
7 Effective July, 2000.
8 Approved by the Board on December 17, 2002, and
implemented in 2003. Rates were regionalized at that time.
There was no interim application submitted in 2003.
9 Approved by the Board on April 12, 2005.
10 Approved by the Board in April, 2006.
11 Approved by the Board in May, 2007.
12 Approved by the Board on April 5, 2008.
13 The 2001 base year review was initiated in 2001 and
completed in February 2002.
14 Garaventa has the option to submit an interim year rate application.
1-9
and the County approved, rate changes in seven (7)
years of the eleven (11) years since the County
adopted the Manual in 1998. There was no rate
change implemented in 1999, 2001, 2002,
and 2009.
Residential rates have increased 3.2 percent per
year, on an average compounded basis, since
1998. During this same eleven-year period, the
Consumer Price Index (CPI) increased by 2.7
percent per year, on an average compounded
basis. On a program adjusted basis (removing
the 2000 rate increase for a new green waste
program), residential rates have increased 2.5
percent per year compared to the 2.7 percent
per year average for the CPI.
1. Introduction and Background of Rate Review
1-10 Review of Garaventa Enterprises Solid Waste Rate Application
[This page intentionally left blank.]
Section 2
Baseline Residential Refuse, Recycling, and
Yardwaste Collection Services
2. Baseline Residential Refuse,
Recycling, and Yardwaste
Collection Services
This section describes the current residential collection system in use for the
County. The collection system includes the containers, trucks, equipment, and
facilities used by Garaventa to collect and handle County residential refuse, recycling,
and yardwaste.
Container types, collection trucks, and material processing methods are described for
refuse, recycling, and yardwaste services. Garaventa currently uses a mix of automated
side-loader trucks and semi-automated front-loader trucks for refuse; manual, side-
loader trucks for curbside recycling collection; and a mix of semi-automated trucks and
rear-loader trucks for yardwaste collection.
The section identifies current refuse, recycling, and yardwaste operating metrics for
the County. Recyclable materials accepted in the County’s current two crate system
are identified. Existing and historical recycling tonnages, and County diversion levels,
also are presented.
This section provides baseline data for the County to use to measure implementation
progress should it adopt the proposed three-cart collection system, including single
stream recycling. An understanding of the current collection system is necessary so
planned changes to the system can be clearly identified, and future potential efficiencies
and cost-savings tracked and quantified. This section also identifies some of the potential
operational issues associated with the current system.
This section is organized as follows:
A. Current Refuse Collection Services
B. Current Curbside Recycling Collection Services
C. Current Yardwaste Collection Services
D. Historical County Diversion Levels
E. Customer Satisfaction with Refuse, Recycling, and Yardwaste Collection.
A. Current Refuse Collection Services
The County’s current residential refuse collection system design began in the early
1990s. Over the years, Garaventa has taken an operations approach that maximized
the longevity of system assets by focusing on ongoing regular maintenance and repair
of containers, trucks, and equipment.
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-2 Review of Garaventa Enterprises Solid Waste Rate Application
Picture 2-1
Current Residential Customer Setout
with Customer-provided Can
Picture 2-2
Current Residential Customer Setout
with 96-gallon Cart
1. Refuse Containers
For refuse, County customers can either
(1) provide their own 20-gallon mini can,
(2) provide their own single can1, or (3) rent
a 96-gallon wheeled cart. Refuse collection is
weekly. Picture 2-1, above, shows a sample
setout with a customer-provided container.
A sample setout for 96-gallon wheeled cart
service is shown in Picture 2-2, above.
1 Garaventa will accept up to 40 gallons of refuse in the can.
Picture 2-3
Automated Side Loader Truck
Picture 2-4
Cart Being Lifted by Arm of Side Loader Truck
2. Refuse Collection Vehicles
Garaventa collects refuse with some automated
side loaders and some three-axel, front loader,
“semi-automated” trucks. Automated trucks allow
the driver to use an arm located on the side of the
truck to lift the carts. The driver does not have to
exit the vehicle, but rather operates the arm via a
joystick located inside the truck. An example of an
automated side loader truck serving the Oakley
area is shown in Picture 2-3, above. A picture of
the cart being lifted by the arm is shown in
Picture 2-4, above.
2-3
For the semi-automated service, the driver
exits the truck, places a refuse can, or wheels a
refuse cart, onto a “tipper” which is mounted to
the side of a larger bin located at the front of the
truck. The driver then engages the tipper which
lifts the can or cart to deposit the material into
this larger bin. When full, the forward bin is
raised over the front of the truck cab where the
refuse is tipped into the truck body.
Automated refuse collection trucks pick up an
average up to 600 households per day. Current semi-
automated refuse collection trucks pick up, on
average, approximately 300 to 450 households per
day. For refuse, Garaventa indicates that they have
virtually a 100 percent setout rate (i.e., the number of
customers putting their container out on a given day).
Trucks have a capacity of approximately 30 cubic
yards per truck. Trucks make on average between one
and two trips, per route, per day to unload collected
refuse at the Contra Costa Waste and Transfer
facility, located in nearby Pittsburg, California.
3. Refuse Disposal
Collection trucks empty refuse on the tipping
floor at the Contra Costa Waste and Transfer
facility. Refuse is consolidated into transfer trailers
and hauled to Potrero Hills Landfill in Solano
County. Contra Costa Waste Service (CCWS),
the operator of the Contra Costa Waste and
Transfer facility, has a disposal agreement with
Waste Connections, Inc., the owner/operator of
Potrero Hills Landfill.
Residential refuse tonnage and the number of
residential accounts are shown in Figure 2-1, on the
next page. While the number of County accounts
has been increasing since 2004, disposal tonnage has
declined materially. In 2009, Garaventa collected
25,968 tons of residential refuse. In 2008, each
County residential account generated approximately
1.5 tons of refuse per year. This compares with over
1.8 tons of refuse per year in 2004.
B. Current Curbside Recycling
Collection Services
Garaventa County area customers are currently
provided two, 14-gallon crates for recycling. The
system was implemented in the late 1980s following
passage of Assembly Bill 939 (AB 939). Formerly,
the two-crate recycling program required County
customers to sort recyclable materials into fiber and
other materials. With the construction of the Mt.
Diablo Recycling Center, and the ability to process
single stream recyclables now, County customers do
not need to sort recyclable containers into fiber and
other materials. County customers can combine
their recyclables into each of the two containers.
The two crate system does have some obvious
limitations. The standard 28 gallon capacity may
be limiting for some larger recyclers. Customers
must manually lift the crates and carry them to the
curb. On rainy days, fiber materials can get water
logged making the crates difficult to lift. Also
materials can blow away from the crate on windy
days. Surplus recyclables (beyond the 28 gallon
capacity) may be placed in the refuse container.
Garaventa has had ongoing difficulty with theft
of recyclables from curbside crates. Materials in
crates are easily viewed and accessed.
1. Recycling Crates
County customers are provided two, 14-gallon
crates, a blue and a white one. Since implementation,
the blue crate has been used for fiber materials
(cardboard, newspaper, magazines, and mixed paper),
and the white crate has been used for commingled
plastic, metal, and glass containers and materials.
Recently this color-based separating was eliminated.
Garaventa also will accept additional bags of
recyclables, or bundles of tied cardboard, if they
are set out next to the two crates. Blue and white
crates are shown in Pictures 2-1 and 2-2.
Recycling services are weekly.
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-4 Review of Garaventa Enterprises Solid Waste Rate Application
2. Recyclable Materials Accepted
Specific materials allowed in the recycling
crates include:
Fiber Materials
Boxes and packages
Carbonless paper
Cardboard
Catalogs
Chipboard (cereal boxes, shoeboxes)
Construction paper
Copy paper
Coupons
Envelopes with metal clasps
Envelopes with plastic windows
Junk mail
Loose newspaper
Magazines
Manila folders
Newspaper inserts
Paper (colored)
Paper (office)
Paper (white)
Paper bags
Paper packaging (with remnant tape)
Pizza boxes (clean)
Shredded paper (in a plastic bag)
Telephone books.
Figure 2-1
Residential Tonnage and Residential Accounts (2004 to 2009)2
2 Residential tonnage includes both refuse and yardwaste. Year 2003 data were not available.
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-5
Other Materials
5-gallon buckets
Aluminum cans
Aluminum foil (clean)
Aluminum pie plates
Colored plastics-HDPE #2
Detergent bottles
Egg cartons (non-Styrofoam™)
Food cans (clean)
Glass bottles
Glass jars
Laundry baskets
Milk jugs
Milk/juice cartons
Narrow neck plastic bottles (#1 & #2)
Paper towel and towel paper tubes
Pet food cans
Plastic bags
Plastic food containers (clean)
Plastic milk/water jugs-HDPE #2
Plastic plant pots
Plastic toys (such as tricycles)
Plastics #1-#7 (California redemption)
Plastics #1-#7 (non-California redemption)
Salad dressing bottles (rinsed)
Shampoo and bleach bottles
Soft covered books
Soft drink bottles-PET #1
Steel cans
Tin cans
Tubs and containers (yogurt, margarine)
Water jugs.
Unacceptable materials, or materials that
cannot be included in the recycling crates,
include the following:
Aerosol cans
Appliances
Batteries
Car parts
CDs or DVDs
Ceramics
Chains
Diapers
Drinking glasses
Electronics
Fabrics
Facial tissue
Food
Garden hoses
Green waste
Hazardous waste
Light bulbs
Liquid
Metal
Paper towels
Plates
Rocks
Ropes
Shoes
Styrofoam™
Toilet paper
Videotapes
Wire
Window glass
Wood.
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-6 Review of Garaventa Enterprises Solid Waste Rate Application
3. Recycling Collection Vehicles
Garaventa collects recyclables either using
front loader trucks or smaller side loader trucks.
The front loader operations have been described
in prior sections. Garaventa also collects
recyclables manually using two-axle, side loader
trucks. The driver exits the truck and picks up
each crate and empties the material into a three-
bin system located on the right side of the truck.
The driver operates a control that automatically
raises and tips the material from the bins into the
body of the truck. The side loader trucks have
separate compartments in the truck body to store
the recyclables.
Drivers currently view recyclable materials in
the crates for potential contaminants. If a load is
contaminated, the driver will provide a yellow tag to
the customers informing them of the contaminated
load and also may leave the load. This enforcement
mechanism is however seldom required with the
current system as most customers understand and
follow the crate system requirements.
4. Recycled Materials Processing
Curbside recyclables are taken to Garaventa’s
Mt. Diablo Recycling Facility, collocated with
the Contra Costa Waste and Transfer facility, in
Pittsburg, California. Garaventa sells recyclables
to Mt. Diablo Paper Stock, a related company.3
Mt. Diablo Paper Stock sorts and prepares
materials for transport to a processor or end user.
The MDRC includes a 90,000 square foot
building; a large open floor staging area; and an
advanced, computer driven, materials sort line.
Garaventa Enterprises constructed the MDRC using
the most current and advanced sorting equipment
and capabilities. Features of the new MDRC include:
An education center and facility
viewing area
3 Mt. Diablo Paper Stock also is a certified recycling center.
An expansive tipping floor to maximize
the efficiency of loading the in-feed
conveyer (the location where materials
enter the sort line)
A continuous re-run feature which allows for
materials to run through the sort line multiple
times to maximize sorting and minimize
residuals which must be disposed of
A large Harris brand baler (a reputable
and well-known manufacturer)
Extensive capabilities for storing
baled recyclables
Ten (10) pre-sort stations to fully remove
refuse before separation of recyclables
Twenty-three (23) total stations on the
sort line.
Mt. Diablo Recycling brokers aluminum and
plastic materials through Recycle Zone in Fairfield,
California. Mt. Diablo Recycling ships paper
products, via a broker, to China. Mt. Diablo Recycling
delivers glass materials to Strategic Materials, a
processor located in San Leandro, California.
Materials are emptied from the recycling truck
to the tipping floor of a Mt. Diablo Recycling
Center (see Picture 2-3, on the next page). Once
tipped, a loader pushes the material to the in-feed
conveyer. Materials are moved up the conveyor
an elevated pre-sort station where non-recyclable
materials are removed (Picture 2-4, on the next
page). Following a series of mechanical and
manual sorting efforts along the sort line, materials
are baled with the baler located in the warehouse
(see output in Picture 2-5, on the next page).
5. Recycling Tonnage
County curbside recycling tonnage has been
declining. Between 2006 and 2008, curbside
recycling tonnage averaged 3,045 tons per year.
However, tonnage declined over this three-year
period, by thirteen (13) percent from 3,267 tons
in 2006 to 2,828 tons in 2008.
2-7
Picture 2-3
Tipping Floor of the Mt. Diablo Recycling Center
(with Sort Line in Background)
Picture 2-4
Sorting Stations at the Mt. Diablo Recycling Center
C. Current Yardwaste
Collection Services
Garaventa collects yardwaste bi-weekly in
customer-provided containers. Garaventa uses
manual collection methods with both front
loader and rear loader trucks. Yardwaste
collection operations require drivers to regularly
lift heavy containers (cans and bags), resulting in
more frequent lifting-related injuries. The
current yardwaste program began in 2000.
Picture 2-5
Curbside Containers After Baling
At Mt. Diablo Recycling Center
1. Yardwaste Containers
Garaventa County area customers provide their
own containers, or bags, which are collected at
the curb. Customers can either place two (2), 32-
gallon containers or five (5) bags (each bag with a
maximum of 32-gallons of materials) at the curb.
Customers cannot rent a toter from Garaventa for
yardwaste, but must provide their own containers.
This service is bi-weekly. This represents a current
maximum set out quantity of 160 gallons every
other week, or 80 gallons per week.
2. Yardwaste Materials Accepted
Specific materials allowed in the yardwaste
containers include:
Brush
Cactus
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-8 Review of Garaventa Enterprises Solid Waste Rate Application
Flower and flower cuttings
Grass
Garden trimmings
Hay
House plants
Leaves
Pruning
Shrubbery
Straw
Tree trimmings
Tree twigs and branches (6" or less in
diameter and 3' or less in length, must be
in containers)
Weeds
Wood chips
Yard debris.
Unacceptable materials, or materials that
cannot be included in the yardwaste containers,
include the following:
Fruit
Hazardous waste
Inorganic materials (or recycling materials
like plastics, cardboard, paper, etc.)
Large tree trunks and stumps (greater than
6 inches in diameter or more than 3 feet
in length)
Plastic bags
Pet waste
Rocks and concrete
Sod and dirt
Solid waste
Wood or treated lumber.
3. Yardwaste Collection Vehicles
Garaventa currently removes yardwaste using a
three-axel, front loader or rear loader truck. As
for refuse, for the front loader, the driver exits the
vehicle and either uses the front tipper (for cans)
or manually dumps the material into the larger
front bin located at the front of the truck.
For the rear loader, the driver exits the truck,
picks up the cans/bags, and deposits the yardwaste
into the open hopper located at the rear end of
the truck. The driver operates a control that
automatically compacts and pushes the yardwaste
into the body of the truck using a hydraulic system.
4. Yardwaste Processing
The County’s yardwaste material is taken to
the Contra Costa Waste and Transfer facility
where it is consolidated and prepared for
transport via transfer trailers to Potrero Hills
Landfill. At Potrero Hills Landfill the yardwaste
material is composted.
Recently reported yardwaste tonnage has been
declining. Garaventa collected 2,074 yardwaste
tons in 2006, 1,826 yardwaste tons in 2007,
1,654 tons in 2008, and 1,738 yardwaste tons in
2009. From 2006 to 2009, yardwaste tonnage
decreased sixteen (16) percent.
In Table 2-1, on the next page, we summarize
truck types and collection methods for each
service type.
D. Historical County Diversion Levels
The County and Garaventa have continuously
worked together to meet AB 939 diversion goals.
Recent diversion levels are shown in Figure 2-2,
on page 2-10. Between 2001 and 2004, the
County was slightly below the 50 percent AB 939
goal. In 2005 and 2006, the County exceeded the
50 percent AB 939 goal. In 2007 and 2008, the
County easily met the new CalRecycle pounds
disposed per day goal requirement (equivalent to
the 50 percent diversion objective), on both a per
resident, and per employee, basis.
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-9
Table 2-1
Contra Costa County
Trucks Used by Garaventa Companies
Service Type Truck Type Capacity Method
Refuse Front Loader (3-Axle) 30-35 cubic yards Driver exits; moves cart to front of truck; operates small
tipping device in front of truck to lift cart into bin; once full
front bin is lifted over the top of the truck and contents
deposited into body
Side Loader – Automated
(3-Axle)
31 cubic yards Driver remains in truck; uses joystick to operate arm on side
of vehicle; grabs and picks up carts; empties contents into
truck body
Recycling Side Loader (2-Axle) 15-20 cubic yards Driver exits; manually empties contents of crate into bins on
side of vehicle
Front Loader (3-Axle) 30-35 cubic yards Driver exits; moves cart to front of truck; operates small
tipping device in front of truck to lift cart into bin; once
full front bin is lifted over the top of the truck and contents
deposited into body
Yardwaste Front Loader (3-Axle) 30-35 cubic yards Driver exits; moves cart to front of truck; operates small
tipping device in front of truck to lift cart into bin; once
full front bin is lifted over the top of the truck and contents
deposited into body
Rear Loader (3-Axle) 30 cubic yards Driver exits; manually empties container into open rear
compartment; once full material is compacted into truck body
In 2006, Garaventa collected 3,267 tons of
material from the residential curbside recycling
program. This is the equivalent of a 1.2 percent
contribution to the 2006 diversion rate of 54
percent. In 2006, Garaventa collected 2,074 tons
of material from the residential yardwaste program.
This is the equivalent of a 0.7 percent contribution
to the 2006 diversion rate of 54 percent.
In general, the level of diversion from residential
curbside recycling and yardwaste is relatively
small. However, it is a contributing factor, and is
important particularly when the County is seeking
to enhance all sources of diversion.
E. Customer Satisfaction with
Refuse, Recycling, and
Yardwaste Collection
County residential customers are very satisfied
with refuse, recycling, and yardwaste services. In
the 2009 customer satisfaction survey of 284
households, nearly 100 percent of customers
responding rated garbage service either excellent,
good, or average and 90 percent rated garbage
service either excellent or good. Satisfaction ratings
for recycling and yardwaste collection services
were below refuse collection, but customers were
still very satisfied with these services. A total of
approximately 86 percent of residents surveyed
rated recycling services excellent, good, or average,
and approximately 83 percent of residents
surveyed rated yardwaste services excellent, good,
or average. We summarize results of the 2009
customer satisfaction survey in Appendix C.
2. Baseline Residential Refuse, Recycling, and Yardwaste Collection Services
2-10 Review of Garaventa Enterprises Solid Waste Rate Application
Figure 2-2
Diversion Levels (2001 to 2008)
a The annual per capita disposal rate, per resident, was 3.2 pounds per day (PPD), below the 3.9 PPD target. The annual per capita disposal rate,
per employee, was 18.4 pounds per day (PPD), below the 21.6 PPD target.
b The annual per capita disposal rate, per resident, was 3.1 pounds per day (PPD), below the 3.9 PPD target. The annual per capita disposal rate,
per employee, was 18.0 pounds per day (PPD), below the 21.6 PPD target.
Section 3
Proposed Residential Refuse, Recycling,
and Yardwaste Services
3. Proposed Residential
Refuse, Recycling, and
Yardwaste Services
This section describes the proposed new three-cart system. Should the County and
Garaventa agree to terms of the new system, Garaventa will offer the County resident the
choice of three refuse cart sizes. Garaventa will introduce a new 96-gallon cart for curbside
recycling collection, collected bi-weekly. Garaventa will provide every other week, cart-
based, yardwaste collection. As with the previous section, this section is organized by the
three types of residential services: refuse, recycling, and yardwaste services.
With the new three-cart program, the County will increase its diversion rates from
the curbside recycling stream and the additional cart-based yardwaste capacity.
Diversion estimates are provided in this section.
Garaventa Enterprises has constructed a new state-of-the-art Materials Recovery Facility
(MRF) run by Mt. Diablo Recycling in Pittsburg, California. Garaventa will use this MRF to
process the County’s single stream recyclables. Use of this facility is discussed in this section.
Finally, we provide a discussion of whether or not there will be efficiencies for the
new three-cart program. This section is organized as follows:
A. Proposed Refuse Collection Services
B. Proposed Single Stream Cart-Based Curbside Recycling Services
C. Proposed Yardwaste Program
D. Potential for Increases in Diversion
E. New System Cart Setout
F. Projected System Efficiencies.
A. Proposed Refuse Collection Services
Garaventa will distribute new refuse carts to all County residential customers
beginning in 2011. Garaventa will collect these new carts using a mix of front loader
and side loader trucks similar to the mix of front and side loader trucks currently used.
1. Refuse Carts
Garaventa will purchase and provide County residential customers new wheeled
containers (referred to as carts or toters) for refuse. Customers will select one refuse
cart from the following four (4) sizes:
20-gallon
32-gallon
64-gallon
96-gallon.
3. Proposed Residential Refuse, Recycling, and Yardwaste Services
3-2 Review of Garaventa Enterprises Solid Waste Rate Application
There will no longer be a separate toter rental charge.1
New cart costs will be reflected in rates charged.
Most County customers (96 percent) currently
rent 96-gallon refuse toters from Garaventa so they are
familiar with using a rolled cart for refuse collection.
The County will use a tiered rate structure to provide
a rate incentive for customers to “downsize” from the
current 96-gallon service level to smaller cart sizes.
2. Refuse Collection Vehicles
With the fully cart-based refuse collection
system, where possible, Garaventa will utilize side
loaders to collect the refuse. With side loader
vehicles, the driver does not exit the truck and
physically pick up or roll the container to the
tipper. Instead, the truck has a hydraulic arm
(called a gripper) that is used to grab the cart from
the curb, tip the cart into the truck, and return
the empty cart to the curb. The driver operates the
hydraulic arm using a joystick control inside the
cab next to the driver’s seat. An example of an
automated side-loader truck used by Garaventa is
shown in Exhibit 3-1, on the next page.
Garaventa is considering alternative fuels for its
automated trucks. Garaventa’s current fuel vendor
has the capacity to deliver biodiesel fuel. Garaventa
is developing a pilot program for biodiesel use.
There are two forms of biodiesel, B5 and B20.2
Garaventa is evaluating among other factors, the
fuel costs, truck efficiencies (mpg), and truck
performance/break down potential, before electing
to fully incorporate this fuel source. Garaventa also
has indicated it is researching low-sulfur diesel fuel.
3. Refuse Disposal
Garaventa will continue to take refuse trucks
to the Contra Costa Waste Transfer Station in
1 Current 96-gallon refuse carts are available to customers at a
cost of $3.00 per customer, per month.
2 Based on the portion of the fuel that is biodiesel. For
example B20 is made up of twenty percent biodiesel.
Pittsburg, California. Garaventa will continue to
empty truck contents on the tipping floor,
consolidate refuse into transfer trailers, and haul
the material to Potrero Hills Landfill in Solano
County for landfilling.
B. Proposed Single Stream Cart-Based
Curbside Recycling Services
For curbside recycling collection, Garaventa will
replace the current two-crate system with a single
wheeled 96-gallon cart (bi-weekly service).3 County
customers will place all recyclable materials together
into the cart.
County customers currently do not have to sort their
recyclables by material type into either crate. Instead,
County customers combine their recyclables into either
crate. Thus, the current program is effectively a single
stream program. Formerly, County customers sorted
specific materials into the two crates (referred to as a
“dual stream” or source separated program).
County customers will have the convenience of using
a wheeled cart. Customers no longer will manually
pick up and carry recycling crates to the curb.
1. Recycling Carts
Garaventa will purchase and provide County
residential customers new 96-gallon wheeled
containers (referred to as carts or toters) for recycling.
The new 96-gallon cart (bi-weekly service) exceeds
the current capacity of the two 14-gallon crate system
(weekly service) by 20 gallons per week.4 With this
greater recycling capacity, customers can divert
recyclable materials that may have previously been
disposed of in refuse containers.
3 For those who request alternative recycling capacity,
Garaventa will provide an additional 64-gallon cart for $3.00
per customer, per month.
4 Garaventa also will pickup recyclable materials placed in
bags next to the crates or cardboard that is tied and bundled.
We are not certain as to how many customers exceed the
current 28-gallon capacity.
3-3
Exhibit 3-1
Automated Side Loader Truck
3. Proposed Residential Refuse, Recycling, and Yardwaste Services
3-4 Review of Garaventa Enterprises Solid Waste Rate Application
2. Recycling Materials Accepted
Garaventa will continue to collect all of the
recyclable materials currently allowed in the crate
recycling containers. We summarize the list of
allowable recyclable materials on page 2-4.
3. Recycling Collection Vehicles
Garaventa will collect single stream recyclables
with three-axel front loader “semi-automated”
trucks. The driver will exit the truck and wheel
the recycling cart onto a tipper in the front of the
truck. The driver will use the tipper to raise and
empty the contents of the cart into a larger bin
mounted to arms located at the front of the
truck. In this way, the driver can view the
recyclables for contaminants as the material is
tipped.5 When full, the front bin will be raised
over the front of the truck cab where recyclables
will be tipped into the truck.
In the future, Garaventa may want to use
automated side loaders for recycling collection.
Over time, Garaventa may transition to these
side loaders, but initially, Garaventa and the
County will like the option to continue to view
the material as it is tipped so that contamination
may be monitored. With an automated side
loader, it is more difficult to identify
contamination levels as the carts are directly
tipped into the truck. In the future, should
Garaventa move toward automated side loader
trucks for recyclables collection, Garaventa
should consider placing cameras to view cart
contents as they are tipped into the automated
side loader.
5 Viewing the recyclable materials both prior to tipping, and
during the tipping process, will allow Garaventa drivers to
tag the customers cart if there is contamination, noting the
contamination issue. With repeat offenders, Garaventa
drivers also may leave the full recycling cart uncollected, and
place a tag on the cart noting the contamination problem.
4. Materials Recovery Facility Sort Line
At the MRF, recycling trucks will empty single
stream materials on a tipping floor. A loader
pushes the materials into a hopper. An inclined
conveyor takes the materials from the hopper up
to an elevated pre-sort area where laborers
(sorters) manually remove refuse, large items
(primarily cardboard), and potentially glass
bottles, and deposit these items into up to four
bunkers located below the sort line. Materials
pass through a series of three consecutive separate
screens designed to remove old cardboard, old
newspaper, and glass.
Following the screenings, remaining materials
pass through an eddy current separator, and
potentially a magnetic separator, where non-
ferrous metals are sorted from remaining plastic
materials (into aluminum cans and separately
scrap metals). Finally, plastics and fines pass
through a manual sorting area where laborers
(sorters) pick out and separate them into various
plastic types (type #1 PET, #2 HDPE, and other
plastics). To maximize diversion from the
recyclable stream, materials remaining at the end
of the sort line, called “residuals,” are returned
through the sort line throughout the day as a
“continuous sort.” There is a large baler used to
continuously bale recyclable materials.
In addition to the County, Garaventa uses the
MRF sort line to process recyclables from the
following other jurisdictions:
City of Concord
City of Pittsburg
City of Rio Vista
City of Vallejo (residuals from
Recology Vallejo’s sort line).
The County’s single stream curbside program
material is weighed when it enters the facility
(i.e., inbound). Materials are then combined with
materials from other jurisdictions prior to
3-5
entering the MRF sort line. The County receives
credit for its proportionate share of the outbound
recyclables sent to processors/end users.
5. Single Stream Recycling
Program Tonnages
One benefit of transitioning from the County’s
existing two crate program to a single stream
program is the potential for increased recycling
tonnage. Garaventa projects curbside recycling
tonnage will increase by approximately 18 percent.
We believe this expected increase is reasonable as
a result of the combination of (1) the additional
20 gallons of recycling capacity in the 96-gallon
cart, and (2) the new tiered rate structure which
provides an incentive in the form of a lower rate
for those customers that recycle more.
Other jurisdictions have had relatively large
increases in recyclables collected following the
transition to a single stream cart-based program.
The cities of Concord, Fremont, San Leandro,
and Livermore increased curbside recyclable
volumes by 15 to 45 percent following a shift
from dual to single stream. The cities of Antioch,
Benicia, Clayton, Martinez, and Pleasant Hill
had a 35 to 40 percent increase in the recycled
material collected. Following implementation of
single stream recycling, most recycling programs
“eventually settle into a 30 percent increase after
an initial surge in recycling tonnage.”6
We believe the 18 percent estimate for the
County may be conservative in light of the above
comparative jurisdiction estimates. However,
these other jurisdiction metrics followed shifts to
entirely new single stream programs, whereas the
County already effectively has a single stream
program in place (i.e., even though the County
uses two crates).
6 Source: Jerry Powell, editor of Resource Recycling.
6. Single Stream Residual Rates
Residuals from a residential single stream
recycling program vary between 10 percent and
40 percent of the collected tonnage. For example,
the City of Los Angeles’ residual rate went from
10 percent (dual stream) to 25 percent (single
stream). In a study of 70 single stream facilities
nationwide, the Government Advisory Associate
found residue averaged 16.6 percent for single
stream programs compared with 6.6 percent for
dual stream systems.
We expect that with continuous education, the
County will be able to minimize its residuals to
some extent. However, the County should expect
residuals to range from 10 to 20 percent of the
single stream residential curbside recycling tonnage.
C. Proposed Yardwaste Program
In the new system, Garaventa will provide a 96-
gallon cart to each County resident for yardwaste
service. Garaventa will collect yardwaste using
semi-automated front loader trucks.
a. Yardwaste Containers
For yardwaste, customers will be provided one
96-gallon wheeled cart. For approximately one-
half of these customers, Garaventa will use the
existing 96-gallon toters currently used for refuse
collection (i.e., those in good condition). For the
additional one-half of the customers, Garaventa
will purchase new 96-gallon toters. Yardwaste
toters will be green in color. The County will
transition from green refuse toters to green
yardwaste toters.
b. Yardwaste Collection Vehicles
Garaventa will collect residential yardwaste
using three-axle semi-automated front loaders.
Garaventa will continue to utilize the front
loaders currently used for yardwaste collection.
3. Proposed Residential Refuse, Recycling, and Yardwaste Services
3-6 Review of Garaventa Enterprises Solid Waste Rate Application
c. Yardwaste Processing
Garaventa will continue to take the County’s
yardwaste to the Contra Costa Recycling Center
and Transfer Station where Garaventa will
consolidate the material and prepare it for
transport via transfer trailers to Potrero Hills
Landfill. At Potrero Hills Landfill the material
will continue to be composted.
Garaventa expects a 25 percent increase in
yardwaste tonnage following a shift from
customer provided containers to a 96-gallon
wheeled cart. We believe this is a reasonable
tonnage increase expectation for this new service.
D. Potential for Increases
in Diversion
With an expected 18 percent increase in
curbside recyclables and a 25 percent increase in
yardwaste, the County will divert an additional
936 tons. This change to expand diversion
capacity also enhances the County’s source
reduction and recycling programs, a contributing
factor considered by CalRecycle in assessing
jurisdictional compliance with AB 939.
E. New System Cart Setout
Customers will place their carts at the curb. A
sample of three-cart setout (refuse, recycling, and
yardwaste) is shown in Exhibit 3-2, on the next
page. The three cart sizes shown are 32-gallon,
96-gallon, and 96-gallon (left to right).
Garaventa will continue to provide all refuse
service weekly, and recycling and yardwaste services
every other week. Carts will be colored blue
(refuse), brown (recycling), and green (yardwaste).
F. Projected System Efficiencies
With the new three-cart system, NewPoint
Group does not expect much efficiency savings
(in terms of route, driver, or truck usage
reductions). There may be some slight savings in
terms of avoided disposal costs, but we expect
these savings will be minor.
In similar jurisdictions, when a hauler has
transitioned to a new cart-based recycling
program from a crate-based program, the
increased materials setout levels, and overall
increased participation, by the residential
customers, actually increase the time on route.
For yardwaste collection, while the drivers may
be able to more efficiently collect the 96-gallon
toters (as opposed to collecting customer
provided cans or bags), this efficiency savings
likely will be offset by increased yardwaste
volumes and customer participation levels.
With the three-cart system, NewPoint Group
expects a shift in tonnage from refuse to recycling
and yardwaste. As shown in Exhibit 3-3, on page
3-8, the reduction in refuse collection of 468
tons from 35,900 to 35,432 represents fifty (50)
percent of the expected increase in diverted
material of 936 tons (i.e., recycling tonnage
increase of 511 and yardwaste tonnage increase of
425 tons). The remaining 50 percent of diverted
material is expected from material not currently
placed in the refuse container.
3-7
Exhibit 3-2
Sample Three Cart Setout
3. Proposed Residential Refuse, Recycling, and Yardwaste Services
3-8 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit 3-3
Contra Costa County
Garaventa-Served Areas
Tonnage Before and After Proposed System Change
Section 4
Review of Rate Application for 2010
4. Review of Rate
Application for 2010
This section provides results of our rate review of Garaventa’s Application for 2010.
We identify cost, revenue, and profit factors influencing this year’s review. We also
delineate the various cost components that make up the residential rate.
For purposes of this review, we determined the revenue requirement shortfall to
Garaventa for 2010. This section is organized as follows:
A. Rate Setting Requirements in Franchise Agreement and Rate Setting Manual
B. Factors Influencing 2010 Rate Review
C. NewPoint Group Rate Application Adjustments
D. Components of Residential Rate.
A. Rate Setting Requirements in Franchise Agreement
and Rate Setting Manual
Exhibit 4-1, on the following page shows six (6) rate setting policies included in the
County’s rate regulation of Garaventa. The second column of this exhibit identifies
the policy and the third column identifies how we treated the policy for rate setting
purposes in this review. All of these key policies were followed for this 2010 review.
B. Factors Influencing 2010 Rate Review
Between 2008 and 2010, we projected that total Garaventa costs will increase by
approximately 10.6 percent. During this same period, total Garaventa revenues will
decrease by approximately 2.8 percent (prior to any rate changes). This 13.47 percent
difference between Garaventa total costs, and Garaventa total revenues, leads to an
approximately $1,270,000 shortfall for 2010.
1. Costs
We analyzed year-to-year changes in costs and compared these changes with
changes in the San Francisco-Oakland-San Jose Consumer Price Index (CPI). We
requested explanations from Garaventa for changes in cost categories that exceeded
the change in the CPI. The five (5) cost categories, whose change in cost exceeded
the CPI, included trucking charges, direct labor costs, tipping fees, franchise fees,
and general and administrative costs.
In Table 4-1, on page 4-3, we show that five (5) cost factors contributed to the
revenue requirement shortfall for 2010. Each of these cost factors is described below.
4. Review of Rate Application for 2010
4-2 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit 4-1
Key Rate Setting Policies and Their Treatment in 2010 Garaventa Base Year Rate Review
Rate Setting Area Special Rate Setting Policy Treatment in 2010 Projection Year
1. Franchise Fees Set equal to five (5) percent of gross residential,
commercial, and recycling revenues.
Adjusted to equal $521,754 based on the five (5) percent
of gross revenues requirement.
2. General and
administrative costs
Allowed up to a cap of 13.2 percent of
total costs for corporate, regional, and local
general and administrative costs, subject to
reexamination in the base year.
Allowed up to a cap of 12.8 percent of total costs for
corporate, regional, and local general and administrative
costs, based on updated industry averages (for both
publicly traded and privately held companies).
3. Office Rent Allowed with profit (requires three
comparable lease rates for office space).
Allowed with profit (checked comparable lease rates of
office space).
4. Profit Allowed to fluctuate between an operating
ratio (OR) of eighty-eight (88) and ninety-
two (92) percent. Adjusted to a ninety (90)
percent OR in base years.
Reset to a ninety (90) percent operating ratio.
5. Tipping Fees Allowed a set amount per ton in the
calculation of profit (the amount is
established by County policy).
Allowed with profit at $45.00 per ton. Amounts over
$45.00 per ton were considered a pass-through expense.
6. Trucking Charges A pass-through lease cost (requires three
comparable lease rates for trucking charges).
No comparable lease rates were available. Reviewed
trucking charges in detail and made cost adjustments
before allowing trucking leases in rate base.
4-3
Table 4-1
Contra Costa County
Garaventa-Served Areas
Components of Revenue Requirement Shortfall
(Calendar Year 2010)
Factor Percent of
Total Shortfall
Direct Labor Costs 46.51
Tipping Fees 19.78
Trucking Charges 14.86
Franchise Fees 17.56
Depreciation and Other Operating Costs 1.29
Total 100.00
a. Direct Labor Costs
Direct labor cost increases include (1) wage and
benefit increases tied to union labor agreements.
Wage rates are projected to increase by
approximately 4.0 percent each year between 2008
to 2010.1 Additionally, the union agreement
requires health and welfare benefit increases of
11 percent in 2009 and 10 percent in 2010.
b. Tipping Fees
This cost category includes the costs of refuse
and yardwaste consolidation, transportation, and
disposal or composting. Combined transfer station
and landfill “tipping fees” are projected to increase
from $65.00 per ton in 2008, to $72.25 per ton in
2010.2 In general, this increase in tipping fees is
necessary to offset reductions in disposal volumes.
Both the transfer station and landfill operations
have large “fixed costs” of operation which are
now spread over declining tonnages (due in part to
the poor health of the economy), so the tipping
fee rate must be increased to offset this declining
1 In accordance with the Agreement between the Teamsters
Local 315 and Garaventa Enterprises Inc. for the period of
February 29, 2008 through February 28, 2014.
2 The tipping fee charged to all customers at the Contra Costa
Waste and Transfer Station as of March 1, 2009, was $72.25
per ton. This tipping fee included a $3.60 per ton facility
enhancement component largely designed to cover additional
costs of the Materials Recovery Facility (MRF) sort line.
tonnage. This proposed tipping fee rate represents
the same rate charged to self-haul customers, and
is competitive with rates of other similar transfer
stations in the area.
c. Trucking Charges
Trucking and equipment cost increases include
(1) increasing wages and benefits for mechanics
and shop laborers, (2) fuel and oil cost increases,
and (3) property lease cost increases.
d. Franchise Fees
The County charges a franchise fee to Garaventa
for the refuse collection franchise. With other
increases to the revenue requirement, the franchise
fee is expected to increase proportionately. We
project an increase in franchise fees paid to the
County of $137,492, or from $384,262 in 2008
to $521,754 in 2010.
e. Depreciation and
Other Operating Costs
These costs include depreciation of furniture and
office equipment used by Garaventa to support
County business. For 2010, we project minor
increases from 2008 levels in this minor cost category.
2. Revenues
We project changes in residential and
commercial revenues to be mixed for 2010. We
project residential revenues to increase by
$281,713 from 2008 levels (5 percent) and
commercial revenues to decrease by $523,368
from 2008 levels (14 percent). We project
recycling revenues to decrease $25,316, or 64
percent from 2008 levels. The net impact is an
decrease in total revenues from 2008 levels of
$266,971 (2.8 percent).3
3 We project this revenue decline even with the 6.5 percent
rate increase approved by the County in mid-2008.
4. Review of Rate Application for 2010
4-4 Review of Garaventa Enterprises Solid Waste Rate Application
Figure 4-1
Contra Costa County
Garaventa-Served Areas
Projected Percentage of Residential Revenues by Service Level
(Calendar Year 2010)
On the residential revenue side, Figure 4-1,
above, shows the projected 2010 distribution of
residential revenues, by service level. Nearly 96
percent of residential revenues are derived from the
96-gallon customer. The remaining 4 percent of
revenues come from the various other service levels.
3. Profits
Allowable profits are measured by the operating
ratio (OR). The operating ratio is defined as
allowable expenses divided by the sum of allowable
expenses plus allowable profits.
Prior to any rate change, we projected that the
operating ratio (OR) to Garaventa would be
approximately 100 percent for 2010. In accordance
with the Manual requirements, because Garaventa
would operate outside of the 88 and 92 percent OR
range, we reset the 2010 OR to 90 percent. We
projected a 90 percent OR would provide 2010
operating profits, to Garaventa, of $558,432.
Garaventa has reported a modest net income
on its audited financial statements (as shown in
Appendix B). For 2008, Garaventa audited financial
statement shows a combined net profit (for the five
companies), before interest and taxes, of $145,390 on
its audited financial statements. As audited financial
statements do not reflect the impact of County
rate setting adjustments, these results only provide
us with estimates of Garaventa allowed profits.
C. NewPoint Group Rate
Application Adjustments
NewPoint Group made several adjustments to
Garaventa’s 2010 Application. Detailed adjustment
calculations are contained in our supporting work
papers. NewPoint Group made adjustments to the
Application in the following areas (organized as
they are presented in the Application)4:
4 We characterize these adjustments as either minor (less than or
equal to $100,000), moderate (greater than $100,000 and less
than or equal to $500,000), or major (greater than $500,000).
4-5
Allowable Costs
1. Direct Labor Costs
2. Tipping Fees
3. Corporate and Local General and
Administrative Costs
4. Depreciation and Other Operating Costs
Allowable Profits
5. Allowable Operating Profit
Pass Through Costs
6. County Administrative Fee
7. Trucking and Equipment Costs
8. Franchise Fees
Revenues
9. Residential Revenues
10. Recycled Materials Sales.
Our adjustments are fully reflected in the
$1,270,247 shortfall described in the prior
subsection. Without these adjustments, based
on Garaventa’s first application submission, the
2010 shortfall would have been approximately
$1.9 million.
1. Direct Labor Costs
(Minor Adjustment)
NewPoint Group confirmed that direct labor
costs included the wages for all Garaventa drivers
(full-time and part-time), cart delivery personnel,
utility support personnel, floaters, and supervisors.
We confirmed that direct labor costs reflected the
current requirements for Garaventa to serve its
collection routes within the County (including
costs for refuse, recycling, and yardwaste routes).
NewPoint Group developed a direct labor cost
model that included the 11 full-time, and 35 part-
time (these part-time employees spend time on other
business), Garaventa employees required to serve the
County. This model included estimated 2010 costs,
by employee, for (1) regular pay, (2) overtime pay,
(3) vacation pay, (4) holiday pay, (5) sick pay, and
(6) benefits (including health and welfare, pension,
payroll taxes, and workers compensation).
NewPoint Group based direct labor costs on
annualized year-to-date 2009 direct labor costs,
and adjusted for expected 2010 hourly rates and
benefits contained within the Agreement between
Teamsters Local 315 and Garaventa Enterprises for
the period of 2/29/08 to 2/28/14.
2. Tipping Fees
(Moderate Adjustment)
For 2010, Garaventa included a tipping fee
rate of $75.00 per ton, of which Garaventa
projected $50.00, per ton, allowed with profit,
and $25.00, per ton, as a pass-through cost.
NewPoint Group allowed tipping fees (with
profit) of $45.00 per ton, consistent with the
Manual requirement, and allowed $27.25, per
ton, as a pass-through cost.
NewPoint Group recommends that the
County continue to use a $45.00, per ton, cap
(on tipping fees allowed with profit) based on the
fact that $41.33 of the $72.25, per ton, tipping
fee is a pass-through cost to Potrero Hills Landfill
(and this amount already contains a profit to the
landfill company). The $45.00, per ton, with
profit cap easily covers the Contra Costa Waste
and Transfer (CCWS) $30.92, per ton, amount
for consolidation and transportation services.
Garaventa projected that refuse and yardwaste
tonnage, combined, would decrease from 39,472
in 2008 to 37,600 in 2010. Garaventa projected
this two-year decline in disposal tonnage to come
from the commercial sector primarily (a 25 percent
reduction). Garaventa projected residential refuse
tons to increase by 2.1 percent and residential
greenwaste tons to increase by 2.8 percent.
Garaventa projected commercial refuse tons to
remain flat between 2008 and 2010.
4. Review of Rate Application for 2010
4-6 Review of Garaventa Enterprises Solid Waste Rate Application
Table 4-2
General and Administrative Costs as a Percentage of Total Costs
For Other Northern California Companies and Publicly Traded Companies
Description Weighted Average General and Administrative Costs
as a Percentage of Total Costs Years Number of
Data Points
Northern California Refuse
Collection Companies 12.8 Percent 2004 to 2010 38
Publicly-Traded Companies
(Refuse Collection) 11.4 Percent 1993 to 2009 132
NewPoint Group agrees with the total combined
refuse and yardwaste tonnage projection of 37,600
tons for 2010. NewPoint Group believes refuse
tonnage of 37,600 is consistent with annualized
year to data 2009 data and represents a reasonable
projection for 2010 based on the following factors:
Residential sector growth levels are
consistent with modest historical
inflation levels
Commercial refuse tons are relatively flat
historically (not many significant shifts)
For all refuse collection companies, the
commercial sector has experienced a dramatic
downward trend in refuse tonnage collected
There does not appear to be any near-term
improvement expected in the construction
and the housing market, which could keep
tonnage generated from these areas low.
3. Corporate and Local General
and Administrative Costs
(Moderate Adjustment)
Garaventa requested general and administrative
(G&A) costs equal to $1,638,557 for 2010. This
request is equivalent to an approximately 16.6
percent of total expenses (i.e., expenses after our
other recommended adjustments).
At the time the County developed the Manual
in 1998, the County placed a cap on corporate
and local general and administrative costs. This
cap level was 13.2 percent of total costs (see page
1-16 of the Manual). At that time, the County
indicated that it “should continue to examine
these [G&A] costs in base years. The County also
left open that it should review the cap on G&A
during base years to “assure that this cap reflects
industry averages.”
NewPoint Group reviewed the cap on local
general and administrative costs for this base year.
In Table 4-2, above, we provide comparative G&A
data similar to that originally indentified in Table I-
1 of the Manual. For seven (7) years between 2004
and 2010, for similar refuse collection companies
operating in Northern California, we found general
and administrative costs as a percent of total costs
averaged 12.8 percent. We also show in Table 4-2
that general and administrative costs as a percent of
total costs averaged 11.4 percent for publicly-traded
companies over the 1993 to 2009 period.
NewPoint Group adjusted Garaventa local
general and administrative costs based on using a
12.8 percent cap. We believe this is a reasonable
cap on Garaventa local general and administrative
costs at this time based on the current economic
conditions. We also believe the cap is reasonable
because the local general and administrative cost
category does not reflect accounting for Garaventa
general and administrative costs which also are
included in the lease rates charged by SEG
Trucking (including in the trucking and equipment
line item of the Application). Actual Garaventa
general and administrative costs are consequently
higher than shown in the local general and
administrative cost category of the Application.
4-7
4. Depreciation and Other Operating Costs
(Minor Adjustment)
To determine allowed depreciation and other
operating costs for 2010, NewPoint Group
reviewed Garaventa general ledger reports showing
depreciation for both furniture and fixtures, as
well as customer repairs. We found differences
between amounts shown on the Application for
2009, and actual 2009 depreciation shown on the
general ledger. We allowed Garaventa inflation on
the 2009 general ledger depreciation amount.
5. Allowable Operating Profit
(Minor Adjustment)
Based on the changes to allowable operating
costs discussed above, we reduced allowable
Garaventa operating profits, as calculated based
on a 90 percent operating ratio, by $56,704.
With this reduction, NewPoint Group projects
Garaventa operating profits of $558,432 for 2010.
6. County Administrative Fee
(Minor Adjustment)
The application included the County
administrative fee of $118,587 for 2010.
NewPoint Group reviewed Garaventa provided
County administrative fee bills. We found a
difference of $3,361 between the amount shown
on the Application for 2010, and the actual
amount shown on the County administrative fee
bill. We allowed the actual amount.
7. Trucking and Equipment Costs
(Minor Adjustment)
SEG Trucking, a related party to Garaventa,
leases all trucks and equipment to Garaventa.
SEG Trucking costs include:
Direct labor (mechanics, bin and box repair
personnel, and wash and paint personnel)
Depreciation
Fuel and oil
Insurance
Licenses
Rent (from a related party, Candy Properties)
Repair and maintenance
Taxes
Tires
Interest (trucks and baler)
Overhead (office salaries, accounting,
security, legal, pension plan, others).
SEG Trucking allocates trucking charges
to Garaventa by using a lease rate, which is
developed for each vehicle type. SEG Trucking
prepares a detailed model to “build up” its lease
rates, by vehicle type. SEG Trucking allocates
its total costs to all Garaventa related companies
using these same lease rates. NewPoint Group
made our adjustments to this detailed SEG
Trucking cost allocation model.
For the 2010 projection, NewPoint Group used
SEG Trucking lease rates we approved as part of a
rate review in another jurisdiction (i.e., City of
Concord). For this rate review we conducted a
detailed assessment of expenses, and prepared a
comprehensive model of SEG expenses, which are
included in the SEG Trucking lease rates. We are
comfortable that the SEG Trucking lease rates (we
approved for the City of Concord) can be applied
to the County.
8. Franchise Fees (Minor Adjustment)
The application included franchise fees of
$551,266 for 2010. This represents five (5)
percent of projected gross revenues. With our
adjustments, NewPoint Group used franchise
fees of $521,754 (equal to five (5) percent of the
projected revenue requirement of $10,435,207).
4. Review of Rate Application for 2010
4-8 Review of Garaventa Enterprises Solid Waste Rate Application
Figure 4-2
Contra Costa County
Garaventa-Served Areas
Components of Proposed Residential 96-Gallon Rate
Calendar Year (2010)
9. Residential Revenues
(Minor Adjustment)
NewPoint Group increased residential revenues
by $46,840 to match the 2010 projection
provided in Garaventa’s income statement
(estimated based on year-to-date information).
10. Recycled Materials Sales
(Minor Adjustment)
To project 2010 recycled materials sales,
NewPoint Group multiplied estimated 2010
recycled materials tonnage of 2,840, by the
$5.00, per ton, payment rate paid by Mt. Diablo
Recycling to Garaventa for all County recycled
materials. Based on these assumptions, we project
recycled materials sales of $14,200 for 2010.
D. Components of Residential Rate
Several cost components are included in all rates
for residential refuse collection service. Using the 96-
gallon residential rate as an example, the pie charge
in Figure 4-2, above, shows the major components
of the 96-gallon residential rate, and the relative
costs of each component. For example, tipping fee
costs are twenty-six (26) percent of the 96-gallon
residential rate. Categories of costs are consolidated
into six (6) categories as described below:
Direct Labor includes the salaries, wages,
and benefits of all refuse, recycling, and
yardwaste collection drivers and helpers.
Profit is any revenue that exceeds total
expenses (i.e., allowable costs plus pass-
through costs).
Trucking and Equipment Costs includes
costs to lease and operate trucks. Lease costs
include truck and equipment repair and
maintenance, fuel, licenses, and depreciation.
4-9
County Franchise Fees are proposed to
be set at $521,754 for 2010. The County
uses some of these funds to help develop
solid waste programs and to comply with
State waste reduction requirements.
General and Administrative Costs
includes accounting, office space rental,
utilities, office supplies, office equipment
deprecation, legal services, insurance, and
postage for Garaventa. These costs are
identified as “Corporate and Local General
and Administrative Costs,” “Depreciation
and Other Operating Costs,” and “County
Administrative Fees.”
Tipping Fees include all charges for
disposal of solid waste at a transfer station
or landfill. Tipping fees are identified as
either allowed with profit, or as a pass-
through cost.
While amounts shown in Figure 4-2 are for
the 96-gallon rate, other residential rates can be
divided into the various cost components with the
same relative costs shown for the 96-gallon rate.
4. Review of Rate Application for 2010
4-10 Review of Garaventa Enterprises Solid Waste Rate Application
[This page intentionally left blank.]
Section 5
Recommended Rate Change for 2010
5. Recommended Rate
Change for 2010
In the previous section, we provide findings from the review of Garaventa’s 2010
Application. In Exhibit D-1 in Appendix D, we show that the review findings
decrease the 2010 revenue requirement by $0.65 million. In this section we provide
our recommendations for a rate change. We translate the revenue requirement into the
impact on County rates. We also compare proposed new unincorporated County rates
with those charged in other similar jurisdictions.
This section is organized as follows:
A. Residential Rate Change for 2010
B. Comparison of Rates and Services to Other Neighboring Jurisdictions.
A. Residential Rate Change for 2010
As summarized in the adjusted base year model (Exhibit D-1), the total projected
net shortfall for this 2010 base year is $1,270,247 (line 24). We project 2010 revenues,
prior to a rate change, of $9,150,760 [($5,919,725 (residential) + $3,231,035
(commercial)]. Garaventa rates would need to be increased by 13.88 percent
($1,270,247/$9,150,760) to provide Garaventa with the target 90 percent operating
ratio for 2010. This assumes a uniform application of the rate increase across all sectors.
Residential rates with a 13.88 percent increase, for the most common County rates
charged, are summarized in Table 5-1, below.
Table 5-1
Contra Costa County
Garaventa-Served Areas
Residential Solid Waste Collection Rates
With A 13.88 Percent Rate Increase
(Per Customer, Per Month)
Container Size 2009 Rate Adjustment (of 13.88%) 2010 Rate
County Areas (Other Than Byron Areas)
20-Gallon $23.34 $3.24 $26.58
32-Gallon $28.85 $4.00 $32.85
96-Gallon $31.85 $4.00 $35.85
Byron Areas
20-Gallon $21.88 $3.04 $24.92
32-Gallon $26.00 $3.61 $29.61
96-Gallon $29.00 $3.61 $32.61
5. Recommended Rate Change for 2010
5-2 Review of Garaventa Enterprises Solid Waste Rate Application
Table 5-2
Contra Costa County
Garaventa-Served Areas
Estimated 2010
Revenues and Expenses, by Sector
(As a Percent of Total Revenues and Expenses)1
Description Residential Commercial Total
Revenues 65% 35% 100%
Expenses 65% 35% 100%
As shown in Table 5-2, left, based on our analysis
of revenues and expenses, by sector, we project
that, for 2010, Garaventa residential revenues will
represent 65 percent of total revenues and Garaventa
residential expenses will represent 65 percent of
total expenses. Alternatively, Garaventa commercial
revenues will represent 35 percent of total revenues,
and Garaventa commercial expenses will represent
35 percent of total expenses.
B. Comparison of Rates
and Services to Other
Neighboring Jurisdictions
Current 2010 unincorporated County rates
were compared with survey data from eleven (11)
other jurisdictions. Results of the survey are
summarized in Appendix E. Tables E-1 through
E-3 show how current 2010 County residential
and commercial rates compare to the average of
eleven (11) areas surveyed.
1 Based on a sector analysis of over eight (80) percent of
Garaventa expenses and all of Graventa revenues. These
revenue and cost percentage figures reflect the pooling of all
unincorporated County revenues and costs (i.e., are fully
inclusive of the franchise areas of the City of Oakley areas
which ultimately will be part of a new City of Oakley franchise
in the near term). These figures presume that unincorporated
County areas (both non-City of Oakley and City of Oakley)
have a similar distribution of revenues and costs.
Rates for the 96-gallon residential service are
approximately 43 percent below the average of
these other areas. Other residential rates for
smaller can sizes are between 21and 29 percent
greater than the average.
The fact that the 96-gallon rate is significantly
above the average is due to the fact that most of
the other jurisdictions surveyed have a variable
can rate structure designed to encourage waste
reduction practices and recycling through the use
of the smaller cart service levels. For these
jurisdictions, very few customers have the 96-
gallon customers (e.g., less than 5 percent of
customers). For the County, virtually all
residential customers subscribe to 96-gallon
service (96 percent).
While rate comparisons are commonly used
in public forums to determine whether a
jurisdiction’s rates are reasonable, we caution the
use of these comparisons to set rates. There are a
number of other caveats to using these rate
comparisons, which are identified at the bottom
of page E-1 of this report.
County bin rates are between approximately
1 and 7 percent below the averages of the eleven
comparable jurisdictions (Exhibit E-2). County
rates for 20-yard debris box service are 15 percent
below the average of the eleven comparable
jurisdictions (Exhibit E-3).
Section 6
Recommended Residential Three-Cart
System Rate Change for 2011
6. Recommended Residential
Three-Cart System Rate
Change for 2011
This section summarizes results of our assessment of County rates under a new
residential three-cart system for 2011. We provide the rationale for a recommended
residential rate structure and assumed frequency distribution. We compare the
residential rate structure, rates, and assumed frequency distribution with the current
rate structure, rates, and frequency distribution for the County.
There are two important variables that we considered when projecting Garaventa
revenues for the new three-cart system. The first was the rate structure, or the rate
charged per customer. The second was the number of customers in each rate category,
or the frequency distribution
Our recommended rate structure, and assumed frequency distribution, are based
on our best estimates of how customers will respond to the new three-cart system,
and associated rate structure, between implementation in early 2011 and 2012. Our
recommendations are meant to capture our best estimate for customer behavior during
this period of potential instability and uncertainty.
. These two factors are used to estimate residential
revenues and were the focus of our analysis.
We provide this analysis based on the entire Garaventa-served County area
converting to a residential three-cart system. We understand that the City of Oakley
areas already are committed to a residential three-cart system and that the City of
Oakley will implement a new residential rate structure later this year. We did not
assess differences in our recommended rates, provided in this section, with those rates
which may have been agreed to between Garaventa and the City of Oakley.
The remainder of this section is organized as follows:
A. Assumptions Used for Recommended 2011 Three-Cart System Rate Structure and Rates
B. Recommended 2011 Rate Structure and Rates Under New Residential Three-Cart System
C. Recommended Education and Outreach
D. Other Requested County Analyses
E. Franchise Agreement Factors.
A. Assumptions Used for Recommended 2011
Three-Cart System Rate Structure and Rates
While we reviewed and analyzed the new costs associated with the three-cart
residential system, we found that the primary focus of our review became what rate
structure to recommend, and frequency distribution to assume, for the new three-cart
6. Recommended Residential Three-Cart System Rate Change for 2011
6-2 Review of Garaventa Enterprises Solid Waste Rate Application
system. Projecting the rate structure, and
frequency distribution, is not an exact science, and
we performed a range of sensitivity analyses with
these variables. We considered several alternative
rate structure/frequency distribution scenarios,
and their impacts on Garaventa revenues, before
finalizing our recommendations.
We carefully considered of a number of
factors, including the:
Price elasticity of different rate structures –
This factor refers to how customers respond
to different rate structure scenarios
Customer transition period – There likely
will be a period of up to one year during
which customers continue to shift service
levels.1 For example, as some customers
gain experience with the new system and
realize they have greater overall capacity
than they do now, they may downsize
from a larger to smaller refuse cart
Determination of initial customer refuse cart
size preferences – Garaventa plans to survey
residential customers, in a three-month
period prior to placing its cart order
(October through December 2010). It is
unlikely that the survey response rate will
exceed about 50 percent of customers.2 With
96 percent of existing customers currently
using 96-gallon refuse carts, it is challenging
to accurately determine which cart size
customers will initially select. We used
existing customer frequency distribution
experience in other County areas and other
Garaventa Enterprises served areas following
their implementation of three-cart systems.
Based on our review, the new rate structure
fully reflects the following:
Weekly refuse collection
Bi-weekly recycling collection
1 Garaventa agrees to allow customers to shift service levels
without restriction as opposed to requiring customers to
commit to a service level over some set period of time.
2 Garaventa Enterprises did a similar mail survey for the City of
Rio Vista and received a 40 percent response rate.
Bi-weekly yardwaste collection
New capital outlays totaling over $2.1
million, including the purchase of over
40.000 new carts for refuse, curbside
recycling, and yardwaste services
An interest rate of 5.0 percent on the
purchase of new carts
A depreciation period of ten (10) years for
new cart purchases3
Treatment of the new cart costs as an
allowable cost (with profit)
No significant change in disposal costs
associated with the new system (refuse
volumes are at a low point now, and much
of the diverted material is offset by
increases in yardwaste which has no net
disposal cost savings)
County preferences to retain a legacy
mini-can rate (i.e., a Garaventa-provided
20-gallon can service)
A reduction in cost from using bag service
for recycling and yardwaste collection for
customers on Marsh Creek and Deer
Valley ($68,122)
A savings of $7,215 for reduced on-call service
New bag costs for hard-to-serve customers
of $8,124
Personal property taxes on new toters of $22,975
Additional costs for labor rate increase in
2011 (a 6 percent increase) of $122,814.
Based on our assessment of new costs associated
with the residential three-cart system, we estimate
new costs of approximately $437,318 for the new
service. This new required revenue must come
from the residential sector which benefits from
the service (not the commercial sector). Based
on projected residential revenues of $6,886.416
(with the 13.88 percent residential rate increase
3 This would require an extension of the current franchise
agreement term by six (6) years. The current franchise
agreement expires in mid-2015 (approximately four (4) years
from the 2011 three-cart system implementation).
6-3
recommended in Section 5), residential rates will
need to increase by an additional 8.80 percent
in 2011 to cover the new three-cart system costs.
The resulting total combined effective two-year
residential rate increase is 22.68 percent.
B. Recommended 2011 Rate
Structure and Rates Under New
Residential Three-Cart System
NewPoint Group’s recommended rate
structure is shown in Table 6-1, right. Our
recommended rate structure incorporates rates
for 20-, 32-, 64-, and 96-gallon services levels.
The recommended rate structure is consistent
with a goal to encourage customers to generate less
refuse, but does not have large differences between
the lowest and highest rate that force customers to
choose the lowest refuse service level. Though other
neighboring jurisdictions employ more extreme
variable can rate structures (e.g., where the 64-
gallon rate is twice the 32-gallon rate), we did not
use this type a rate structure. Such a new rate
structure would result in too great a rate shock to
many County customers. Also, when customers are
forced, through the economics of the rate structure,
toward the smallest possible refuse service level,
there is the possibility of illegal dumping, already a
County concern. Some customers also may place
extra refuse into their recycling and yardwaste carts
to avoid paying a higher rate.
Within the recommended rate structure,
there are similar rate differences (i.e., a degree
of linearity). For example, the 64-gallon rate is
$5.75 per month greater than the 32-gallon rate;
and the 96-gallon rate is $4.50
per month greater
than the 64-gallon rate. The relatively similar
differences between the rates can allow customers
to choose the service level that corresponds to
their need.
Table 6-1
Contra Costa County
Garaventa-Served Areas
Recommended Residential Rate Structure with
New Three-Cart System4
(Year 2011)
Service NPG Recommended
(per customer, per month)
20-gallon mini-can $24.95
32-gallon cart $30.20
64-gallon cart $35.95
96-gallon cart $40.45
Table 6-2
Contra Costa County
Garaventa-Served Areas
Residential Rates as a Percentage
of the 32-Gallon Residential Rate
Before and After Three-Cart System Change
Service Level Before System
Change5
After System
Change6
32-gallon 100% 100%
64-gallon N/A 119%
96-gallon 109% 134%
Table 6-2, above, shows the differences
between rates, as a percentage of the 32-gallon
rate, before and after the three-cart system
change. After the system change, the spread
between the 96-gallon and 32-gallon rate under
the new system is much larger than the current
spread. This larger difference was not based on a
decision to penalize the 96-gallon customer
more, under the new rate structure, but rather on
the need to generate sufficient revenues from the
rate structure to cover the revenue requirement.
4 With ten (10) year cart amortization.
5 With a 32-gallon rate of $32.85 per customer, per month.
6 With a 32-gallon rate of $30.20 per customer, per month.
6. Recommended Residential Three-Cart System Rate Change for 2011
6-4 Review of Garaventa Enterprises Solid Waste Rate Application
Table 6-3
Contra Costa County
Garaventa-Served Areas
Assumed Residential Customer
Frequency Distribution
(Year 2011)
Service Percent of Customers
20-gallon mini-can 1%
32-gallon cart 34%
64-gallon cart 40%
96-gallon cart 25%
Total 100%
Our assumed frequency distribution is shown
in Table 6-3, above. This frequency distribution
is based on the following factors:
Over 96 percent of current customers have
96-gallon refuse service and we believe
that about half of these customers will,
at least initially, want to retain their refuse
cart capacity
Consideration of actual frequency
distribution data for other jurisdictions,
in the area, following implementation of a
three-cart system (e.g., City of Rio Vista,
and City of Concord).
We would recommend the County and
Garaventa to carefully reevaluate both the rate
structure, and frequency distribution assumptions
after a one year period (i.e., at the end of 2011).
At that time, with more stability in customer
behavior, and actual data, the assumptions for the
frequency distribution could be very different
from the current recommendation.
It is important to note that the company has
some risks associated with the transition to the
three-cart system, including:
Accepting that customers could, on
average, select smaller refuse cart sizes than
assumed in the frequency distribution
Forgoing a “balancing account,” or
another similar mechanism to true up
projected revenues, and/or costs, with
actual revenues and costs through 2011
Absorbing revenue and cash flow instability.
As customers decide on a service level and
migrate to different cart sizes, revenues
likely could fluctuate during the period
from early- to mid-2011.
In Table 6-4, on the next page, we compare the
recommended residential three-cart system rate
structure with the proposed 2010 rate structure
discussed in Section 5. For the 32-gallon service,
recommended three-cart system rates are 8.07
percent below our recommended 2010 rates
(identified in Section 5). The recommended
96-gallon service rate is 12.83 percent above our
recommended 2010 rate.
As shown in Table 6-5, on the next page, an
estimated 65 percent of current customers will
see some rate increase in 2011. These customers
will see an increase of $4.60 per customer, per
month. Alternatively, 35 percent will see a rate
decrease, ranging from $1.63 to $5.65 per
customer per month.
One of the benefits of the new system is the
additional capacity customers will have with three
new carts. We compared the rate per gallon of
estimated capacity before, and after, the three-cart
residential system is implemented. In Table 6-6,
on the next page, we show that the current rate,
per gallon of total capacity (refuse, curbside
recycling, and yardwaste), is between $0.23 and
$0.33. With the recommended rates, and capacity
of the new three-cart system, the rate per gallon
of total capacity falls significantly to between
$0.21 and $0.24, as shown in Table 6-7, on page
6-7. All categories of County customers ultimately
benefit from a lower rate per gallon of capacity.
6-5
Table 6-4
Contra Costa County
Garaventa-Served Areas
Recommended Changes to Residential Rate Structure
(Year 2011)
Service Level 2010 Recommended Rate
(With 13.88 Percent Increase)
2011 Recommended
Three-Cart System Rate
Absolute
Difference
Percent
Difference
20-gallon mini-can $26.58 $24.95 -$1.63 -6.13%
32-gallon cart $32.85 $30.20 -$2.65 -8.07%
64-gallon cart N/A $35.95 N/A N/A
96-gallon cart $35.85 $40.45 +$4.60 +12.83%
Table 6-5
Contra Costa County
Garaventa-Served Areas
Percentage of Customers with Rate Increase and Rate Decrease
(Year 2011)
Service
Level
Current 2009
Frequency
Distribution
NPG
Assumed
2010
Recommended
Rate (With 13.88
Percent Increase)
2011
Recommended
Rate
Estimated
Percent Current
Customers with
Rate Increase
Amount
of Rate
Increase
Estimated
Percent Current
Customers with
Rate Decrease
Amount
of Rate
Decrease
20-gallon
mini-can 1% 1% $26.58 $24.95 0% N/A 1% -$1.63
32-gallon cart 3% 34% $32.85 $30.20 0% N/A 34%
-$2.65
to
-$5.65
64-gallon cart 0% 40% N/A $35.95 40% $0.10 N/A N/A
96-gallon cart 96% 25% $35.85 $40.45 25% $4.60 N/A N/A
Total 100% 100% 65% 35%
Table 6-6
Contra Costa County
Garaventa-Served Areas
Weekly Rate per Gallon Of Refuse, Curbside Recycling,
and Yardwaste Capacity With Current System
(Year 2010)
Service Level
Rate Per
Customer,
Per Month
Refuse
Cart/Can
Capacity
(gallons)
Curbside
Recycling Crates
Capacity7
(gallons)
Yardwaste
Can Capacity8
(gallons)
Total Estimated
Capacity
(gallons)
Rate Per Customer,
Per Month,
Per Gallon
of Capacity
20-gallon mini-can $26.58 20 28 32-80 80 $0.33
32-gallon can $32.85 40 28 32-80 100 $0.33
96-gallon cart $35.85 96 28 32-80 156 $0.23
7 Equal to two 14-gallon crates.
8 This is an assumed average level of service at two 32-gallon customer provided cans, provided every other week, or 32 gallons per week;
or at five bags (each bag with a maximum of 32 gallons of materials), provided every other week, or 80 gallons per week.
6. Recommended Residential Three-Cart System Rate Change for 2011
6-6 Review of Garaventa Enterprises Solid Waste Rate Application
C. Recommended Education
and Outreach
Three-cart automated collection service is a
significant shift in how services are provided.
Jurisdictions that have been successful with
implementing new three-cart automated
collection services have actively addressed
customer/stakeholder concerns throughout the
planning process and have worked hard to
educate customers prior to implementation.
Education is critical, both at the initial roll-out
and on an ongoing basis. Exhibit 6-1, on page
6-7, lists various techniques used by these
jurisdictions to obtain customer feedback and
educate customers prior to implementation.
We highly recommend that the County and
Garaventa work together to use some of these
outreach methods prior to implementation of
three-cart service. We recommend that the
County work with Garaventa to ensure outreach
materials and approach used is consistent with
the County’s practice in other franchise hauler
areas, and Garaventa prepare draft outreach
materials and submit to the County for review,
input, and approval.
D. Other County
Requested Analyses
The analyses for the three-cart system,
provided in the above subsection, assume a
ten (10) year amortization schedule for the new
cart purchases. A ten (10) year amortization
timeframe would exceed the remaining term
of the franchise by approximately six (6) years.
The current franchise between the County and
Garaventa expires on May 8, 2015.
E. Franchise Agreement Factors
At the time the County received the
Application from Garaventa Enterprises, the
company also requested that the County consider
an extension of the franchise agreement. The
current twenty-year agreement expires on May 8,
2015. There are many factors that the County
will want to consider when evaluating a franchise
extension. Many of these factors are described in
Appendix F. The County is in the process of
considering Garaventa’s request for an extension.
As identified in Exhibit F-1, many
jurisdictions negotiate new terms and conditions
as part of an extension. From our perspective, we
recommend that the County negotiate some new
terms and conditions that have a measureable
ratepayer benefit. A franchise extension has
tremendous value to the company, and we would
expect that the company would be motivated to
provide some ratepayer benefits in conjunction
with a franchise extension.
Now might be an appropriate time to enter
into these franchise discussions as Garaventa has
proposed new residential three-cart services for
2011, which come at a significant cost to County
ratepayers. If the franchise did expire in 2015, we
would not recommend that Garaventa invest in
new carts for 2011 due to the limited four (4)
year period available to amortize this major
capital outlay.
6-7
Table 6-7
Contra Costa County
Garaventa-Served Areas
Recommended Weekly Rate per Gallon Of Refuse, Curbside Recycling,
and Yardwaste Capacity With New Three-Cart System
(Year 2011)
Service Level
Recommended
Rate Per Customer,
Per Month
Refuse
Cart
Capacity
(gallons)
Curbside
Recycling Cart
Capacity
(gallons)
Yardwaste
Cart Capacity
(gallons)9
Total
Capacity
(gallons)
Rate Per Customer,
Per Month,
Per Gallon
of Capacity
20-gallon mini-can $24.95 20 48 48 116 $0.22
32-gallon cart $30.20 32 48 48 128 $0.24
64-gallon cart $35.95 64 48 48 160 $0.22
96-gallon cart $40.45 96 48 48 192 $0.21
Exhibit 6-1
Recommendations for New Three-Cart Collection System Outreach and Education
Recommendations
1. Provide adequate communications channels to address ongoing questions regarding transition to the three-cart system
2. Develop customer handouts, brochures, or fliers
3. Provide newspaper advertisements
4. Prepare direct mailer to survey customers on refuse cart size preferences
5. Develop new website information (e.g., answers to frequently asked questions)
6. Consider radio and TV public service announcements
7. Consider developing a separate hotline that is staffed 12 hours per day for the first several weeks of the program to assist with
customer questions and concerns
8. Provide status in a newsletter
9. Display sample cart set out in various public settings (e.g., malls)
9 This is an assumed average level of service at one 96-gallon cart provided every other week, or 48 gallons per week.
6. Recommended Residential Three-Cart System Rate Change for 2011
6-8 Review of Garaventa Enterprises Solid Waste Rate Application
Garaventa has offered quality service to
County customers (as evidenced by the customer
satisfaction survey results). Garaventa rates are
mixed in terms of how they compare with
neighboring jurisdictions, however, taken on an
overall basis (for all sectors and service levels),
rates do not appear unreasonable. These two
factors suggest that a franchise extension is
definitely worth considering with Garaventa.
The average franchise extension we observe in
the waste management industry is approximately
eight (8) years.
Were the County to decide not to extend the
franchise, the County would need to begin a
Request for Proposal (RFP) process for a new
franchisee at least two years in advance of the
expiration, or in 2013. This timeframe is required
to effectively develop the RFP, receive bids, select
a franchisee, and allow the franchisee transition
time. An RFP process does carry significant costs
to procure assistance with an RFP, and for County
staff time to assist with the process.
Section 7
Implementation Schedule
7. Implementation Schedule
This section describes the timing for implementation of the new three-cart
automated/semi-automated system, and the timing of upcoming rate setting. There
are some logistics to work out with an entirely new three-cart system in terms of order
and delivery of the three carts for each residential customer, rerouting, and adjusting
the truck fleet as needed to serve the County areas. This section is organized as follows:
A. Three-Cart System Implementation Timeline
B. Rate Setting Timeline for 2012 Through 2015.
A. Three-Cart System Implementation Timeline
Implementation of the new automated system will occur over an approximately six
month, phase-in period. This time period will allow time to order and distribute new
refuse and recycling carts.1 Table 7-1, below, shows the expected steps and approximate
timing for automation implementation.
Table 7-1
Contra Costa County
Garaventa-Served Areas
Residential Three-Cart Implementation Timing
Milestone Expected Timing
1. Board of Supervisors meeting to review report and
consider/approve rate
By January 2011
2. Garaventa Enterprises implements new interim rate March 2011
3. Garaventa Enterprises conducts ongoing outreach
and education, under the County’s supervision
and direction, to inform customers of planned
service changes
March 2011 to July 2011
4. Garaventa Enterprises places order for new carts
and/or trucks
March 2011
5. Garaventa Enterprises receives new carts and/or trucks August 2011
6. Garaventa Enterprises delivers carts to residential
customers and begins to charge customers the
new rate2
August 2011 to December 2011
(target completion date by October 2011,
completed no later than December 31, 2011)
1 Garaventa will use half of the existing 96-gallon refuse toters for yardwaste.
2 Garaventa Enterprises will begin to charge County customers the new rate beginning with the date that the
customer receives new carts.
7. Implementation Schedule
7-2 Review of Garaventa Enterprises Solid Waste Rate Application
The timeline presented in Table 7-1 is relatively
aggressive in light of the numerous factors
involved in implementing the new system. Delays
in cart orders could delay the entire schedule.
Garaventa also could have logistics issues in terms
of procuring, storing, inventorying, and delivering
carts in a timely manner by the target date of
October 2011. Garaventa could end up with a
longer phase-in period as it implements only
portions of the County at a time.
There is the possibility that Garaventa could
implement the three-cart service for a portion of
the County only, but not the entire County,
effectively delaying the implementation period
well beyond that shown in Table 7-1. While
unlikely, Garaventa also could run into too many
problems and fail to implement the new three-
cart system at all.
B. Rate Setting Timeline
for 2012 through 2015
There is significant uncertainty associated with
the proposed year 2011 rate structure frequency
distribution assumptions. It is possible that
Garaventa could require an interim year rate
increase for 2012 (and this increase also could be
for extraordinary circumstances as defined by the
Manual on page IV-1). Such a rate increase may be
necessary due to the uncertainty as to how much
revenue the new rate structure will generate. The
County, and ratepayers, should be informed that,
in conjunction along with a 2011 rate change,
a 2012 rate change also is a possibility.
As with any interim year, Garaventa has the
option of applying for an interim year rate increase
for calendar year 2012. The interim year rate change
application is normally due to the County three
months in advance of the eventual implementation
date. For a January 1, 2012, implementation,
Garaventa would normally submit its interim year
application by September 30, 2011. Garaventa
also will have the option of submitting an interim
year rate application for January 1, 2013, and
January 1, 2014, implementation.
Given that 2011 is effectively a base year (with
the new tiered residential rate structure likely
implemented in mid 2011), the next base year will
be 2015. The Rate Setting Manual requires Garaventa
to submit its 2015 base year application by June 30,
2014, for a January 1, 2015, rate implementation.
Appendix A
Rate Application
Appendix A
Rate Application
This appendix includes the 2010 Base Year Rate Application (Application). In its
Application, Garaventa Enterprises requested a 21.10 percent increase. The Application
included the following contents:
Cover letter
Six (6) page application, with:
Financial information
Cost summary for year 2009 (2 pages)
Single family residential summary
Operating information
Summary with requested rate change
Income statements (unaudited) for years ended December 31, 2006, 2007, and 2008
Garaventa’s annualized Statement of Operations for the year ended December
31, 2009
Garaventa’s projected Statement of Operations for the year ended December 31, 2010.
The Application, as submitted, was consistent with the requirements of the County’s
Rate Manual. We verified that the calculations contained in the Application were
accurate and that the Application was complete.
In the course of performing our review, and to assess data provided in the Application,
we submitted various data requests to Garaventa. During our review, we obtained and
reviewed the following information and documents:
Amortization schedules (cart and truck purchases)
County debris box usage records (free services to County)
Customer counts
Depreciation schedules
Disposal rate adjustment records
Employee payroll records
Fixed asset schedules
General ledger transactions reports
Health and welfare and workers compensation records
Household hazardous waste reports
Lease agreements
Route maps
Tonnage reports (refuse, recycling, and yardwaste)
Truck and equipment lease schedules
Union labor agreements (Teamsters Local 315).
Appendix A. Rate Application
A-2 Review of Garaventa Enterprises Solid Waste Rate Application
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GaraventaEnterprises4080MALLARDDRIVESP.O.BOX5397CONCORD,CALIFORNIA94520(925)689-8390December8,2009Ms.DeidraDingmanContraCostaCountyCommunityDevelopmentDepartment651PineStreet4thFloor—NorthWingMartinez,CA94553RE:RateApplicationDearMs.Dingman:EnclosedistheBaseYearRateApplicationforGaraventaEnterprisesfranchisedareasforunincorporatedContraCostaCountyandIronhouseSanitaryDistrict.TheBaseYearRateApplicationissupportedbyAuditedFinancialStatementsofthoseoperationsforthecalendaryear2008,currentestimatedresultsofcalendaryear2009basedonninemonthsofoperations,andprojected2010results.OurresultingcalculationshowsachangeinthecurrentResidentialandCommercialratesof21.10%.Ameetingwithyou,yourstaff,consultants,BoardcommitteeandIronhouseSanitaryDistrictrepresentativesshouldbescheduledatyourearliestconvenience.Ifyouhaveanyquestions,pleasecallusat(925)689-8390.Sincerely,ClarkColvisCFOCc:EricNylund(w/enclosures)V
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ContraCostaCountyBaseYearRateChangeAppIicatonSingleFamilyResidentialSummarySectionX--SingleFamilyResidentialRevenueProjectedIBaseYear2010SingleFamilyResidentialrevenue(withoutRateChangeinBaseYear)____________________________________CurrentProjected_____________Rate/MonthAccountsTotalOakleyCan/Toter(Ironhouse)T9$28.119138$3,082,430Oakleyextracanwithtoter(Ironhouse)TA$6.880$-Oakleyminican(Ironhouse)T2$23.11100$27,732Oakley40galloncan(Ironhouse)T4$28.11267$90,064OakleyCan/Toter(County)T9$28.85102$35,312Oakleyextracanwithtoter(County)TA$7.120$-OakleyminiCan(County)T2$23.34(0$-Oakley40galloncan(County)T4$28.854$1,385Brentwood(outofCity)Can/ToterT9$28.85853$295,309Brentwood(outofCity)extracanwithtoterTA$7.121$85Brentwood(outofCity)minicanT2$23.346$1,680Brentwood(outofCity)32galloncanT3$28.8532$11,078BryontoterT9$26.00129$40,248ByronextracanwithtoterTA$6.480$-ByronminicanT2$21.882$525Byron32galloncanT3$26.008$2,496DiscoveryBayCan/ToterT9$28.854359$1,509,086DiscoveryBayMiniCanT2$23.3446$12,884DiscoveryBayextracanwithtoterTA$7.124$342DiscoveryBay32galloncanT3$28.8539$13,502Baypoint(PDS)Can/ToterT9$28.852073$717,673Baypoint(PDS)MiniCanT2$23.3458$16,245Baypoint(PDS)extracanwithtoterTA$7.122$171Baypoint(PDS)32galloncanT3$28.85215$74,43360.TotalBaseYearSingleFamilyResidential117,438.001$5,932,680.00IIVear:2009Page4of6
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ConfraCostaCounty,BaseYearRateChangeApplicationUnincorporatedArea:Al!Areas78.RateChangeRequested21.10%I--AbbreviatedRateScheduleIncreasedCurrentRateRateNewAdjustmentsRateOakleyCan/Toter(lronhouse)Oakleyextracanwithtoter(lronhouse)Oakleyminican(Ironhouse)Oakley40galloncan(Ironhouse)OakleyCan/Toter(County)Oakleyextracanwithtoter(County)Oakleyminican(County)Oakley40galloncan(County)Brentwood(outofCity)Can/ToterBrentwood(outofCity)extracanwithtoterBrentwood(outofCity)minicanBrentwood(outofCity)32galloncanBryontoterByronextracanwithtoterByronminicanByron32galloncanDiscoveryBayCan/ToterDiscoveryBayMiniCanDiscoveryBayextracanwithtoterDiscoveryBay32galloncanBaypoint(PDS)Can/ToterBaypoint(PDS)MiniCanBaypoint(PDS)extracanwithtoterBaypoint(PDS)32galloncan79.Multiunitresidential$28.11$34.04$0.01$34.056.888.330.028.3523.1127.990.0128.0028.1134.040.0134.0528.8534.940.0134.957.128.62(0.02)8.6023.3428.26(0.01)28.2528.8534.940.0134.9528.8534.940.0134.957.128.62(0.02)8.6023.3428.26(0.01)28.2528.8534.940.0134.9526.0031.490.0131.506.487.857.8521.68265026.5026.0031.490.0131.5028.8534.94.0.0134.9523.3428.26(0.01)28.257.128.62(0.02)8.6028.8534.940.0134.9528.8534.940.0134.9523.3428.28(0.01)28.257.128.62(0.028.6028.8534.940.0134.95(a)Calculatedratesareroundeduptothenearest$0.05Rateincreaseof21.10%Uwillbeappliedtoallratesineachstructurewitheachrateroundedupordowntothenearest$0.05Tothebestofmyknowledge,thedataandinformationinthisapplicationiscomplete,accurate,andconsistentwiththeinstructionsprovidedbyContraCostaCounty.Name:ClarkColyisTitle:CFOSignature:Date:FiscalYear:2009Page6of6
GaraventaEnterprisesRateApplicationIncomeStatementForyearended1231-2006CServices-ResidentialInCiServices-ResidentialOut0Services-ConiiierciallnCitServices-CommercialOutOfServices-DebrisBoxesServices-DumpFees-GarbageCustomerRefundsServices-ResidentialRecSales-RecyclingSERVICES-RESIDENTIALREQTotalRevenuesOakleyBrentwoodDeltaPittsbargTotalAdjustmentDIsposalServiceDiscowryBayDebrIsTotals-CompaniesDisposalServiceAdforToServiceDisposalDisposalBoxService4,16,17,19(BaypolntiCompaniesAppacationAppticatlon2,517,31714,7991,324,4793,856,595-3,856,5951,087,5724,924,16731,324301,999333,324734,2481,067,572(1,067,572)-900,84953,276212,2541,166,380-1,166,380868,5392,034,91962,450281,257343,708524,831868,539(868,539)-2,096,4872,096,4872,098,4872,096,48733,7923727.12460,95343981,391-61,3913,545,733651,3681,563,8582,096,4877,857,4481,259,5189,116,9649,116,964386,818370,006503,7282,389,15159,136115,131290,8582.4256,30612,5547322,1052,40923,33017,7871,9652,0955,514863,98639,2129.07771,78810,95345626,932181.09955726,512481,099Services-DumpFees-GarbageCustomerRefundsSales-RecyclingTotalRevenuesCostofoperationsDirectLaborLabor-Wages437,404130,320159,121156,664883,509155,3641,038,8731,038,873PayrollTaxes36,26310,90313.46112,57873.20412,78585,99085.990Labor-Health&Welfare85,45425.71332,22025,699169,08525,334194,420194,420Labor-WortcmensComp70,88221,15724,42526,589143,05323,458166,511166,511Labor-Pension48,39512,44619,39317,14197,37413.365110.740110,740Totaldirectlabor678.397200,539248,620238.6701,366,227230,3071.S96,5331,596,533DumpingCosts1,062,100178,257384,495701,7922,326,645193,4272.520.0722,520,072FranchiseFees‘172,07932,73877.734282,55052,729335,279-335,279CountyMminFees(HHWIees)56,2168,63728,59793,4508,964102,414102.414DepreciationandOtherOperatingCostsRepairs-Customer19,2332,22011,50658833,5462,23135,77735,777Depreciation-Fumiture&F1,3461,3461731,5191,51920,5792.22011,50658834,8922,40337,29537,295,/Truckingcosts:Equipment,Maintenance,&Repair1,128,599275,6422.664,7932,664,793GeneralandAdministrativeCostsAdministrativesalaries398,861915,494915,494PayrultTaxes17,9274158341,583PensionPlanExpense3,8319,7349734Accounting28,70675,25075,250Advertising3,34411,231(11,231)-Alarm456476476Amortizalion-Organization---BankCharges!ci-cardprocfees42026,93426,934CollectionsFees(30)2121Contributions1,818(1,818)-Publiceducation11,23111,231Dues&Subscriptions3751831,9571,957Flowers--Freight-Delivery---Ibm-Rental2,5808,8441,2961,29614.01679714,81314,813lnterst-Oeposits397397397(397)-Janitorial2,7972,7972,7972,797LeaseOutsideEquipment3.8402.04016,20022,08091522,99522,995Legal4,2784,2784064,6834,683Licenses-Permits22022010230230LoanFees----MedicalExpenses5811631142871,1441291.2731.273Miscellaneous664:34949OfficesSupplies&Expense9,9351,9082.75114214,7361,62416,36016,360Printing&Postage17,4852,87611,2687631,7263,22434,95034,950Promotional----Rent-Office48,66715,85511.33081,432157,2344,004161,288161,288Repairs&MaintenanceGene1081081,5351.6431,643SalesPromotion---Sponsorships2,5002,5005003,000(3,000)-Taxes-Other8250252518211192192Taxes-PersonalProperty38383638Telephone4,5825613945,5373705,9075,907Travel&Entertainment-Ma1,0526901.7422251.967(1,967)-Utilities1,1409402,0803502,4302,430Totalgeneral&administrative553,742116.791172,710441,7071,284,95074,5611,359,5111,352,328Netincome(loss)fromoperations(125,979)(274,631)270,189210,00279,581421,486501,06851,5082,3716573,46227820237191,400
GaraventaEnterprisesRatePppIicat1onIncomeStatementForyearended12-31-2007venuesServices-ResidentialInCiServices-ResidentialOut0Services-CommercialInCitServices-CommercialOutOfServices-DumpingFees-PubtCustomerRefundsServices-DebrisBoxesSales-RecyclingTotalRevenuesOakleyBreniweodDiscoveryBayDellaDisposalDisposalDisposalDebrisServiceServiceServiceSosServicePltlsburgTolals-CompaniesDisposalService4,16,1719IBaypoint)4,284,0393524021,273,652354003l,96l,0129,0148.254.511TotalAdjustmentAUtotToCompaniesApplicebonApplication4,284,0391,120,0821,273,652516,4991,961,40129,421_____________9,185,09231,270307,60465,447296,3452,834,144“‘799990,39657,65817,5023,944,4991,418,624217,808767,679162,4961,961.4011.961.4011111,502406700,6761,647,935930,5821,120,0825,404,120(1,120,082)-516,4991,790,151(516,499)-1,961,40129.4219,185,092186,375977,975159,9211,137,8981,137,89615,26181,29013,13494,42494,42428,398196.40429,928225,422225.42222,854112,05013,965126,015126,01518,179104,711118,077118,077271,0661,471,519230,3131,701.8331,701,833590,0002,245,094193,8632,439,9572,439,957329,54857,987387,535387,53585,7062.01187,71787,717379,796532,89019.48919,45972672620,18520,185112,5986,2352.03224,2372,3612.849,810CostofOperationSDirectLaborLabor-Wages469,652140,085161,662PayrotlTaxes39,24911,73115,049Labor-Neatth&Welfare98,60030,80137,695l.abor-WorirmensComp53,36816,08019,748Labor-Pension52,91314,27119.348Totaldirectlabor713,783212,968273,702DumpingCosts1,079,336184,580392,148FranchiseFees-196,02744,53668,985CountyAdminFees(HHWfees)56,2161,91027.580DeprecialioncodOtherOperatingCostsRepairs-Customer11,2521,4524,739Depreciation-Furniture&F46811,7201,4524,739Truckingcosts:Rertt-Eqotpmerit1,177,439291,369Generalendadministrativecosts:Administrativesalaries305,10058,496PayrollTaxes17,0132,446PensionPlanExpense3,792758Accounting28,36122,720Advertising4,226234Alarm707AmortizationBankCharges421,—CotleclionsFees(Contributions250PublicEducationDues&Subscriptions189455FlowersFreight-DeliveryIbm-Rental2,5808,644Insurance4,897lnterst-DepositsJanitorial2,700Laundry&uniforms.402LeaseOutsideEquipment5,6804,480Legal35930LegalSettlementUcenses-Permits220MedicalExpenses556318Miscellaneous18OfficesSupplies&Expense5,557312422Postage32,6383,29017,331Printing18,2211,7308,145PromotionalRent-Office49.38515,85511,330Repairs&MaintenanceGene1,064Sponsorships2,5003,500Taxes-OtherTaxes-PersonalProperly9740Telephone4,044552527Travel&Entertainment941100Travel&Entertainment-MeaUtilities1,140Totalgeneral&administrative492,866124,410Netincome(loss)fromoperations273,326.22(158,608.41)316490.68‘:;295,40813,0262,8138,7254,44041,1852.649,81017,4422,01746825817,9102.2752,381,493268,317771,60238,94438,7202,2629,39567184,0433,32311,2628007078741,606225043964418814,0167824,8977631032.70060238,2409244193222091,32256182066,29176653,6293,44328,2342,036158,0024,038‘1,0641066,000688-171385,1233271,04136-1492,1223231,280,40961,4181,2961,2961032005,56020.52041837013881,432810,546610,54640,98240,98210,06610,06687,36687,36612,062(12,052)-79479441,60841,608689(689)-12,06212,06283283214,79814,7965,6605,660103(103)-2,7002,70060260237,16437,1644524522292291,3781.378224224-7,0587,05857,07257,07230,270-30,270162,039162,0391,1701,1706,688(6,688)-17-171381385,4505,4501,077(1,077)-149(149)-2,4452,4451,341,8261,333,1.2k,,556,226,94564,934.48-/982192.074471,05896,328.71-441,831.61-114,39733/‘V’(:CC’r/
FranchiseFeesCountyAdminFees(t-IHWfees)Rent-EquipmentGeneralandAdministrativeCostsAdministrativesalariesTaxes-PayrollPensionAccountingAdvertisingMarmBankcharges&crcardfeesCollectionFees‘-.ContributionsPubliceducationIBMRental,Software&RepaDues&SubscriptionsEmployeefunctionsFuel&OilInterestExpenseInsuranceJanitorialLandscapeandmaintenanceLaundry&lintfomisLegalLicensesMedicalExpenseMiscellaneousOfficeSupplies&ExpenseOutsideServicesPostagePrintingLease.-OutsideEquipmentRent-OfficeRepairs-GeneralSalesPromotionSponsorshipsSuppliesTaxes-OtherTaxes-personalpropertyTelephoneTravel&EntertainmentUtilitiesPayrollDepositChargesTotalGeneral&AdmInistrativeIncome(Loss)FromOperationsArusflnentforToAppacalionApplication111576990,91025475887984133,3211,682,7412,561,691i0,;5980910,968384,262116,9293072,931823,37242,19741,19794,771(10,300)-52828,45815(208)-10,30010,30014,7132,3961,6432,700401142,2282081,116S9,17253,03446,3171,597151,092901(9,434)91271,9521,834(1,789)-1,4711,443,757158,651C0OakleyBrentweodDiscoveryBayDeltaAudftedPittsburgTotalDisposalDisposalDieposalDebrisFleendalDisposalServicsAlServiceServiceServiceBoxServiceStatements(Saypoint)Companies2,977,59850,4351,498,49836,293295,465-1,071,03864,428207,83064,755309,6354,526,530-4,526,5301,111,4805,638,011331,757779,7231,111,480(1,111,480)-1,3.43,296-1,343,296689,8982,033,194374,390315,508689,898(689,898)1,721,2081,721,2081,721,2081,721,20814,372/___________22,421___________36,7942,72339,51739,5174,164,05641719,9631,728,7491,721,2088,333,9761,097,9549.431,9309,431,930-0If..-f--‘?7,(978YL/÷--,-/GaravenaEnterpnsesRateAppkcationpIncomeStaternentiAudittie-outi-1—FortheYearEnded12-31-2008RevenuesServices-ResidentialServices-ResidentialOutServices-CommercialServices-CommercialOutServices-DebrisBoxesServices-ResidentialRecyclingSales-PaperStock___________________________________________________________________TotalRevenues___________________________________________________________________________CostofoperationsOperatingexpenses--Labor-Wages450,063136,636185,242177,164949,105166,6641,115,769Labor-PsyroilTaxes37,12410,97614,86814,29277,26113,65090,910Labor-Health&Wetfare99,32134,47045,68930,595210,07444,683254,758Labor-WorkersCompensationins.35.90011,15014,29014,70576,04511,93987,984Labor-Pension51,60913,78922,96118,352106,71026,610133,321TotalLaborCosts‘674,018207,020283,050255,1071,419,195-263,5461,682,741DumpingCost1,153,959180,510400,704651,5972,386,770174,9212,561,691DepreciationandOtherOperatingCosts--Repairs-Customers3,3025085,5059,31584410,159Depreciation
616_________________________________6161938093,9185085,505-9,931‘1.03710,968206,98034,84986,527328,35655,905384,26269,02813,41030,833113,272‘3657116,9291,321,076339,083507,556585,8022,753,5183194133,072,931---v..,CCr’L(•)323,96856,589110,777296,451787,78535,5823,372/18,6082,3995,98113,18140,1692,02842,1974,3938181,9973,39110,59959911,19736,48525,08520,0729,75591,3973,374.0594,7744,3411,6331,1922,6289,79450610,300510510185281,72018239425,77728,07338628,4581515-15-2082082,5808,8.441,2961,29614,01669714,7131771,4551,6327642,3967867888571,6432,7002,7002,700202202199401142,130142,13098142,2282002008208390613232851,059571,116-667,1467523288,2369379,17231,0923,44515,15643550,1292,90553,03428,4923,11912,14417643,9312,38646,3171,5611,561361,59752,21815,97013,43465,588147,2093,883151,0927907901119018,0008,0001,4.349,4349992550252512521271,901351,936171,9521,515130764,7201131,834-1,3351501,4883031,7891,1401,1403311,471874.228119,983183,628419,5201,397,33957849-1455,187-j;l(L.tt’—fc-129,875(161,970)261,779(190,818)(74,406)221426’147,220---°96-2(4/:’,-f:J../’-
Garaventa Entc
Rate Appflcatk
Annuaflzed Sta...of Operations
For the Year Ended 12-31-2009
-4 Thrnuh 6-30-09 I 4 Quarter ended 9-30-02
Oakley Breniwend Olenasery Bay Delta Pittebura Total Oakley llrentwoad Discovery Boy Delta Plttobarg Total Proluoted AuItm.nt
Diupoeci Stipend Otipond Deliria Dl.posat Service NI Stipend Oloposal Disposal Debrte Disposal Service All or faa To
ServIce Service Service Box Service (Baypoirrt)Companies Service Service Service eon Service (Beypolot)Corspeniec Aenualized Appllcstlon Application
Revenues
Services-Residential In 1620,526 22131 747,257 -2,389913 835095 10727 385,561 1,231383 4,626,395 1,151,125 5,979520Services-Residential Out 18,914 152,136 401993 573,045 10,148 77,466 202,685 290,289 1,151125 (1,151,125)
Servlces-Commerclalln 571,268 37,705 116,522 -725,514 285,624 16,425 55636 357,865 1,444,532 662,137 2,106669
Services -Commercial Out 26,092 148,863 155,664 327,819 15,957 79,040 73,787 168,765 662,137 (682,137)
Serviceo-Debris Boxes 800,139 600,139 269,185 269,185 I,I38,510 1,138,510
Services -Residential Recycling ------Salon -Papas Stock ----Total Revenues 2235,819 358,636 863,779 800,139 551,657 4,616,430 1,l47,025 183,857 441,197 269,165 276,472 2,317,536 8,224,699 9,224,599
Cost of operations
Direct Labor
Labor-Wages 225,296 73,272 99,437 65,866 84,979 54-8,848 129,572 39,818 62,839 33,672 42,489 306,189 1,185,227 1,185,227Labor-Payroll Taxes 16,556 6,187 8,252 5,818 8,951 45,566 9,746 2982 4,708 2,538 3,475 23,451 92,488 92,458Labor-Health &Welfare 51,718 16,332 24,498 16,332 24,760 133,640 28,561 8,186 12,249 8,166 12,380 69,542 272,724 212,724
Labor -Workers Compensatioe Ins.21,266 6,547 9,511 6,227 6,080 49,632 12,078 3,570 5,844 3,163 3,040 27,698 105,024 105 024Labor-Pension 30,918 7,512 12,814 10,484 14,449 78,177 16,125 3,669 8,161 4,982 7,224 38,162 152,501 152501TotalDirectLabor347,757 109,850 154,512 104,527 137,218 853,883 196,104 58,205 91,601 52,521 68,609 467,040 1,787,944 1,187,944
Dumping Cost 632,318 92,303 212,144 272,078 101,006 1,309,848 326,809 45,220 115,096 134,669 71,790 693,565 2,697,017 2,697,017
Depreciation end Other Opereang Costs
Repairs-Customers 3,413 2,242 70 58 5,762 8,826 717 3,728 818 14,088 33,959 33,959
DeprecIation 253
______________________________
87 340 974
_________________________________
475 1,449 3,238 3,238
3,666 2,242 70 -145 6,122 9,800 717 3j28
____________
1,293 15,537 37,197 37,197
Trucking Costs
-Equipment,Maintenance,8 Repair 731,781 237,575 383,678 320,044 201,266 1,954,346 365,891 118,787 161,639 180,022 100,634 927,173 3,706,692 3,708,992
Franchise FeeS 108,409 18,632 45,484 27,377 199,882 58,511 9,135 22,027 13,564 103,237 406,356 408,358
CountyAdminFees(HHWfeas)31,524 1,474 15,824 2,992 51,814 18,972 1,910 8,336 4,187 33,387 118,667 118,587
General and Administrative Costs
-Administrative salaries 197,773 35,924 91,480 124,214 19,334 468,785 99,062 16,010 45,502 62,137 14,935 239,646 948,077 948.077
Taxes -Payroll 13,836 2,029 6,248 6,0l6 1,357 29,486 5,475 667 2,345 1,854 785 10,926 51,337 51,337
Penoico Plan Expanse 3,581 876 1,866 1,599 353 5,078 1,505 241 786 344 236 3,115 14,307 14,307
Accounting 17,813 9,005 5,996 1,582 34,396 7,219 10,330 9,688 5,000 2,362 34,599 l03,595 103,595
Advertising l1,099 5,342 7,527 4,843 1,349 30,160 7,864 650 650 1,063 370 10,618 51,395 (5l,395)-
Alarm 264 11 275 132 9 141 658 556
Bankcherges 3,597 665 1,840 4,921 600 11,623 1,586 266 933 1,665 478 4,927 21,417 21,477
Colleclisn Fees ------Contdbrrtiuns-Ctrartloble
-
-187 167 334 (334)-
Public education 51,395 51,395
IBM Rental,Softwere&Repair 1,290 4,422 648 648 415 7,423 645 2,211 324 324 316 3,822 15,067 15,067
Dues &Subucilptions 420 400 73 893 95 95 1,083 (1,083)-
Non deductable dues ----Educatisnltralelng -----Employee functions 148 49 49 14 260 305 305 871 elI
Fuel nod oil ----Insurance 6,008 635 6,644 11,692 l,426 5,965 6,648 2,181 27,912 62,468 62,468
Janitorial 1,925 195 2,120 675 165 830 3,779 3,779
Lawvtry&Unitomis 202 26 230 413 413 1,057 1,057
Lease -Otituide Equipment 450 (42)408 353 353 1,114 1,114
Legal 26,362 -26,382 472 472 27,326 (25,263)2,043
Licenses 120 125 9 254 -254 254
Medical Expense 472 124 163 45 803 90 54 82 226 1,255 1,255
Oft,ce Supplies 8 Expense 903 8 312 225 1,449 831 35 55 25 323 1,269 3,988 3,586
Ositside Services ---Parking ---Postage 20,621 2,307 8,011 215 3,890 35,044 4,765 742 1,895 59 1,530 9,292 53,828 53,628
Printing and reproduction 14,078 4,201 7,821 294 4,930 31,324 3,973 706 4,417 30 1,828 10,755 52,533 52,833
Rent-Office 28,466 8,100 8,523 19,538 2,411 67,351 14,244 4,050 4,410 8,475 1,851 33,030 133,418 133,418
Repairs -General 589 101 690 46 34 80 850 960
Sponsorship 2,020 135 2,155 2,500 445 2,945 8,045-(6,045)-
Taxes-Other -551 85 25 25 30 716 1,432 1,432
Telsphone 1,805 190 1,994 2,769 379 3,168 8,331 8,331
Travel 8 Entertainment 80 -80 116 116 313 (313)-
Travel 8 Entertainment-Meals 801 288 79 82 97 1,121 259 255 96 600 2,328 (2,328)-
Utilities 367
______________________________
179 546
____________________________________________
179 179 904 904
Total General &Adiliinistrative 354,729 73,418 140,824 182,899 38,117 769,987 166.750 39,769 78,996 98,221 28,981 400,717 1,571,420 1,534,035
Total Enpensas 2,210,152 535.493 932,516 659.547 508,124 5,045,862 1,142,836 273.743 499,626 435,432 289,036 2,640,675 10,327,213 10,289,827
Income (Loss)From Operations 25,637 (176,657)(68,735)1259.408)49,734 1429,432.10)4,18597 190,08807)158,42855)1156,247.23)112,565.95)(323,13564)(1,102,513)(1,065,128)
GaraventaEnterprises4RateApplicationProjectedStatementofOperationsFortheYearEnded12-31-20103274,16243,8101510,423--4,828,3954,828,3951,151,1255,979,52038,749306,138--806,2381,151,1251,151,125(1,151,125)1,142,81672,172229,544--1,444,5321,444,532662,1372,106,66954,732301,203--306,202662,137662,137(662,137)1,159,099-1,159,0991,159,0991,159,0994.510,458723,3241,739,9671.159,0991,112,4409,245,2899,245,2899,245,289CostofoperationsDirestLaborLabor-Wages539,018165,641Labor-PayrotTaxes45,81714,079Labor-Health&Welfare126,90036,257Labor-WorkersCompensationIns54,59316,138Labor-Pension65,14614.824___________________________________________________________TotalDirectLabor831,473246,940_________________________________________________1,307,238180,880460,38421,8013,8047,790-1,75235,14735.1472,278---1,0743.3523.352____________24,0793,8047.790-2,82638.49938,499____________GeneralandAdministrativeCostsAdministrativesalaries409,75374,462188,871257,24750,926981,25998I259Taxes-Payroll25,6533,48111,3219,6503,03053,13453,134PensionPlanExpense6,8271.1993,5612,36685414,80814,808Accounting33,38030,70326,26010,3506,528107,221107,221Advertising27,8076,8759.1377,2132,16253,19453,194(53,194)Alarm546---29575575Bankcharges7,0051.2393,8358.5391,61022,22822,228CollectionFees-------Contributions-Charitable----346346346(346)Publiceducation-----53194lBMRental,Softwale&Repair2,6709,1541,3411,3411,08815,59415,594Dues&Subscriptions435611--751,1211,121(1,121)Nondeductabledues-------Education/training-------Employeefunctions153515163215902902Fuelandoil-------Insurance48,4055,90424.69727,5219,031115,557115,557Janitorial3.390---5223,9113E11’Laundry&Uniforms---1,064291,0941,094Lease-OutsideEquipment1,197---(44)1.1531,153Legal27,326----27.32627,326(25,283)Licenses124--12910263263MedicalExpense674-1282792171.2981,298OfficeSuppties&Expense2,654El437529014.1264,126OutsideServices-------Parking-------Postage31,2073,92312,2143467,81555,50555,595Printingandreprodsction22,7955,81117,2393678,47254,68354,683Rent-Office58,97016.76718,25737,7656,328138,088138,088Repairs-General705---175880880Sponsorship7,266---1,0618,3278.327(8,327)Taxes-Other1,1411765252631,4631,483Telephone7,641---9828,6220,622Travel&Entertainment83---241324324(324)Travel&Enterlainment-Meala1,15882682642792,4092,409(2,409)Utilities380---555935935____________TotalGeneral&Administrative729,344161,262317,483364977103,300-1,676,3661,676,366____________TotalExpenses4.454,125V1,017,00’1,941.189V”1.765,2tL,1,065,58(10,256,0*.10,301,662.X____________Income(Loss)FromOperations56,334(293,681)(201,221)(609,182)46859(1,010,712)(1,056,373),)___________VRevenuesServices-ResidentialinServices-ResidentialOutServices-CommercralInServices-CommercialOutServices-ResidentialRecyclingSales-PaperStockTotalRevenuesOakleyBreetweedOteseveryBayDellaPtttwborgTotalPromotedMjupfrnnntDisposalDisposalDebrisDisposalServloeAltorforToServtseServiseSarytewBenSeetsetllaypeinllCempaniesAenoalbodAppffeattenApøoallen260,58032,14954,38626,41624,889388,419DumpingCostDepredationandOtherOperatingCostsRepairs-CustomersDepreciation140,075176,7541,282,0681,282.068-1,282,0681190615,024121,iX.j21,796.36.25754,968308767308,757308,76714,29713,741125,185125,185125,18520,12929.187154175154,l75154,175222,664289.674_______(,j,991,991)>‘(99l,991))(538.676287,1622,774,3392,E2O,000j’2,820,000TrackingCostsEquipment,Maintenance,&Ropair1,267,092381,924645,096FranchiseFeesCountyAdminFees(HHWfees)225,43036,90269,4685,29389,51832,500638,964316,7883,249,8643,249,86454.506406,35611,326118,587406,356118,58735,1473,35238,4993,249,864406,300118,587981,25953,13414,808107,22157522,22853,19415,594902115,5573,9111,0941,1532,0432631,2984,12655,50554.683138,0888801,4838,6229351,638.557E3.853).£1,010,565)-:
Appendix B
Audited Financial Statements
Appendix B
Audited Financial Statements
This appendix includes calendar year ended December 31, 2008, audited financial
statements prepared for the following five (5) companies:
Brentwood Disposal Service, Inc.
Delta Debris Box Service, Inc.
Discovery Bay Disposal, Inc.
Oakley Disposal Service, Inc.
Pittsburg Disposal & Debris Box Service, Inc.
These financial statements were prepared by Blanding, Boyer, and Rockwell, LLP,
a certified public accounting firm located in Walnut Creek, California.
NewPoint Group reconciled the calendar year 2008 audit with the 2008 revenues
and expenses provided in Garaventa’s 2010 Application. In Table B-1, below, we
show the net income/loss (before income taxes), as identified in the audited financial
statements of each company serving the County.
Table B-1
Net Income Before Taxes
For Garaventa Companies Serving Contra Costa County
(Calendar Year 2008)
Company Revenues Net income/loss
(before income taxes)
Audit page
reference
Brentwood Disposal Service, Inc. $719,963 -$176,774 3
Delta Debris Box Service, Inc. 1,721,209 -$190,722 3
Discovery Bay Disposal, Inc. 1,728,750 $230,413 3
Oakley Disposal Service, Inc. 4,164,058 $60,847 3
Pittsburg Disposal & Debris Box
Service, Inc. (BayPoint area only) 1,097,954 $221,626 Unaudited1
Total $9,431,934 $145,390
1 See income statement/audit tie-out for the year ended December 31, 2008 (provided as part of the
Application in Appnndix A). The Pittsburg Disposal & Debris Box Service portion is shown as a column in this
schedule. Audited financial statements for the entire Pittsburg Disposal & Debris Box Service business are
provided in this Appendix B.
Appendix B. Audited Financial Statements
B-2 Review of Garaventa Enterprises Solid Waste Rate Application
[This page intentionally left blank.]
BRENTWOODDISPOSALSERVICE,INC.TABLEOFCONTENTSIndependentAuditQr’sReportIFinancialStatementsBalancesheet2Statementofoperationsandaccumulateddeficit3Statementofcashflows.4Notestofinancialstatements5
PUDIC___________—L(-IiiCLI’0INDEPENDENTAUDITOR’SREPORTBoardofDirectorsBrentwoodDisposalService,Inc.Concord,CaliforniaWehaveauditedtheaccompanyingbalancesheetofSrentwoodDisposalService,Inc.(aCaliforniaScorporation),asofDecember31,20GB,andtherelatedstatementsofoperationsandaccumulateddeficitandcashflowsfortheyearthenended.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Curresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmeri:ca.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditprovidesareasonablebasisforouropinion.Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofBrentwoodDisposalService,Inc.asofDecember31,2008andtheresultsofitsoperationsariditscashflowsfortheyearthenendedinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.ESLU’BBRLLPWalnutCreek,CaliforniaAugust24,2009U—1—:‘,t.’—:k:.—rçCaIr-_r-nC—3E•Jt2,D_ri2.Fz.;.;:$SanFrancisco’WalnutCreek
BRENTWOODDISPOSALSERVICE,INC.BALANCESHEETDECEMBER31,2008(Seenotestofinancialstatements)ASSETSCURRENTASSETSCashAccountsreceivablePrepaidexpensesTotalcurrentliabilitiesDUEFROMRELATEDPARTYTotalcurrentassetsS131,013744,970900176,9373,512$180,449UADILITIESANDSTOCKHOLDERDEFICITCURRENTLIABILITIESAccountspayableandaccruedliabilitiesDeterredrevenuesTotalcurrentliabilitiesDUETORELATEDPARTYTotalliabBitiesSTOCKHOLDERDEFICITCommonstockAccumulateddeficitTotalstockholderdeficitTotalliabilitiesandstockholderdeficit$90,6702,25892,9281,519,3531,612,2811,000-(l,432,83L(1,431,832180449-2-
BRENTWQODDiSPOSALSERVICE,.INC.STATEMENTOFOPERATIONSANDACCUMULATEDDEFICITFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatements)CREVENUESCommercialrefusecollectionservicesResidentialrefusecollectionservicesTotalrevenuesOPERATINGEXPENSESEquipmentrentalLaborandrelatedWastedisposalFranchisefeesRepairsandmaintenanceTotaloperatingexpensesGROSSLOSSGENERALANDADMINISTRATIVEAdministrativesalariesandrelatedOfficeandadministrationProfessionalfeesTotalgeneralandadministrativeLOSSFROMOPERATIONSINTERESTEXPENSELOSSBEFOREINCOMETAXESPROViSIONFORINCOMETAXESNETLOSSACCUMULATEDDEFICITBeginningofyearEndofyear$374J363345,90071.9,963—7339,083207,021193,92034,849513—775,388(55,423)61,09235,17425085121351(175774)(27,480)(204,254)2.400(206,654)(1,225,176)$(1.432,832)C-3-
BRENTWOODDISPOSALSERVICE,INC.STATEMENTOFCASHFLOWSFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatements)CASHFLOWSFROMOPERATINGACTIVITIESNetlOSSAdjustmentstoreconcilenetlosstonetcashprovidedbyoperatingactivities(Increase)decreaseinAccountsreceivableDuefromrelatedpartyIncrease(decrease)inAccountspayableandaccruedliabilitiesDeferredrevenuesDuetorelatedpartyNetcashprovidedbyoperatingactivities131,951CASHPLOWSFROMFINANCINGACTIvmESBankoverdraft0137)NETCHANGEINCASHCASH1311814BeginningofyearEndofyearSUPPLEMENTARYCASHFLOWINFORMATION-253S131,067Interestpaidincometaxespaid-4-$27,455$1,6001-$(206,654)(1,836)(312)65,320(328)281,761-
BRENTWOODDISPOSALSERVICE,INC.NOTESTOFINANCIALSTATEMENTSSUMMARYOFOPERATIONSBrentwoodDisposalService,Inc.(Company)isprimarilyengagedinthesolidwastecollectionandrecyclingbusines&TheCompanyprovidesservicesunderexclusiveagreementstounincorporatedareasofEasternContraCostaCountyincludingthetownsofByronandKnightsen,alllocatedinCalifornia.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESBasisofpresentation—TheaccompanyingfinancialstatementsarepresentedontheaccrualbasisofaccountinginaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Generally,revenuesarerecognizedwhentheybecomebothmeasurableandavailable1andexpensesarerecognizedwhenanobligationisincurred.liceofestimates—Presentationoffinancialstatements,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,reuiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsanddisclosuresinthefinancialstatements.Consequently,actualresultscoulddifferfromtheseestimates.Cash—Forthepurposesofthestatementofcashflows,cashincludesamountsonhandCandamountsondepositatfinancialinstitutions,TheCompanyoccasionallywillhaveamountsondepositatfinancialinstitutionsthatexceedfederallyinsuredlimits.TheCompanybelievesthereisnosignificantriskwithrespecttothesedeposits.Accountsreceivable—Accountsreceivablearestatedattheamountmanagementexpectstocollectfromoutstandingbalances.TheCompanycloselymonitorsoutstandingreceivablesandchargesoffanybalancesthataredeterminedtobeuncollectible.TheCompanyconsidersitsaccountsfullycollectibleatDecember31.2008.Revenues—Revenuesconsistprimarilyofbillingsforthecollection,recyclinganddisposalofsolidwastefromadiversifiedbaseofcustomersincludingresidential,commercialandindustrial.Residentialcustomersmakepaymentsinadvanceforcollectionservices.RevenuesfromthosereceiptsaredeferredandrecognizedastheservicesareperformedLAdvertisingandpromotion—Advertisingandpromotioncoatsareexpensedasincurred.INCOME.TAXESTheCompanyhaselectedtobetaxedundertheprovisionsofSubchapterSoftheInternalRevenueCode.Accordingly,thefinancialstatementsdonotincludeaprovisionforfederalincometaxes.Underthiselection,theCompany’staxableincomeorlosswillbereportableonthestockholdertspersonalincometaxreturn.Statefranchisetaxesareassessedatarateof‘1.5%oftaxableincome.Accordingly,aprovisionforstatefranchisetaxesisincludedintheaccompanyingfinancialstatements,-5-
BRENTWOODDISPOSALSERVICE,INC.NOTESTOFINANC1ALSTATEMENTSRETIREMENTPLANSTheCompanymakescontributionstoacollectivelybargained,multiemployardefinedbenefitpensionplan.ContributionsaredeterminedinaccordancewiththeprovisionsofthenegotiatedlaborcontractortermsoftheplanTheplan’sadministratorsrionotprovidesufficientinformationtoenabletheCompanytodetermineitsshare,ifany,ofplanassetsorunfundedvestedbenefits.RetirementplanexpansefortheyearendedDecember31,2008forthedefinedbenefitpensionplanis$13,789TheCompanyalsohasa401(k)profitsharingplanforthebenefitofitseligibleemployees.Nonunionemployeeswhohavereachedagetwentyandone-halfyearsandhavecompletedoneyearofservicemaybeginelectivedeferrals.TheCompany’scontributiontotheplan,asdeterminedbytheBoardofDirectors,isdiscretionarybutcannotexceedcertainmaximumdefinedlimitations,InordertobeeligibletoreceiveanallocationoftheCompany’scontribution,theemployeemusthavecompletedatleast500hoursofserviceduringtheplanyearandbeanemployeeonthelastdayoftheplanyear.RetirementplanexpensefortheyearendedDecemberSI2008is$816.RETIREEHEALTHCAREBENEFITSInadditiontoprovidingpensionbenefits,theCompanyalsoprovidescertainhealthcarebenefitsforretiredemployeescoveredbytheunionagreement.ThecurrentagreementrequirestheCompanytopay$258permonthformedicalinsurancepremiumsfornon-Medicareeligibleretireesandtheirnon-Medicareeligiblespousesand$25permonthforMedicareeligibleretireesandtheirMedicareeligiblespousesforthedurationofthecontract.SubstantiallyalloftheCompany’semployeesmaybecomeeligibleforthosebenefitsiftheyreachnormalretirementagewhileworkingfortheCompany.Thisandsimilarbenefitsareprovidedforactiveemployees.TheCompanyfundsthebenefitcostonapay-as--you-gobasis,accordingly,therearenoplanassets.Theeffectofthehealthcarecosttrendisnotapplicablebecausethebenefitamountisafixedsumindependentofhealthcarecostchanges,TheCompanyrecognizesthecostofprovidingthesebenefitsbyexpensingtheannualinsurancepremiums.For2008,therearenoeligibleretirees;therefore,thecostofprovidingthosebenefitsfortheyearendedDecember31,2008is$0.FRANCHISEAGREEMENTSTheCompanyenteredintoafranchiseagreementwiththeByronSanitaryDistricttoprovidegarbageservicesinthedistrict,Thefranchisefeeisbasedon5%ofgrosscoilectionsforservicesinthedistrict.TheagreementexpiresinAugust2010.TotalfeesfortheyearendedDecember31,2008are$5,730.-6-
BRENTWOODDISPOSALSERVICE,INC.flNOTESTOFINANCIALSTATEMENTSFRANCHISEAGREEMENTS(‘continued)TheCompanyalsoenteredintoafranchiseagreementWithContraCostaCountyinMay1995toproviderefusecollectionservicestotheunincorporatedareasofContraCostaCountyadjacenttotheByronSanitaryDistrict.Theagreementprovidesforpaymentstothecountyof5%ofgrosscollectionsforservices.TheagreementexpiresinMay2015.TotalfeesfortheyearendedDecember31,2008are$29119,RELATEDPARTYTRANSACTIONSTheCompanyhasengagedrelatedpartiestoprovideequipment,servicesandfacilitiesforitscollectionservices.Additionally,interestisaccruedonbalancesadvancedfromarelatedparty.TherelatedpartyactivftyisasfollowsfortheyearendedDecember31,2008.Equipmentrental$339,083Refusepreparationandtransferservice180,510Interestexpense21,480Facilitiesandofficespacerental15,970Accountingservices13,860Computerrental8,844$565747TheCompanyleasesequipment,computersandofficespacefromrelatedpartiesundervariousoperatingleases.TheleaseagreementsexpireatvariousdatesthroughMarch201‘1andrequiremonthlypaymentsof$23,676.TheamountofexpenserecognizedundertheseleaseagreementsfortheyearendedDecember31,2008is$363,897.MinimumfutureleasepaymentsundertheseleaseagreementsasofDecember31,2008areasfollows.2009$2787142010267,914201164.7671611.396MALLARE1FINANCIALGROUPTheCompanymaintainsadepositoryrelationshipwith.MallardFinancialGroup(Mallard),arelatedentity.TheCompany’sshareholderisthesoleownerofMallardandhaspersonayguaranteedallrelatedpartyassetsandliabilitiesoftheentity.ThebalanceduetoMallard,presentedasduetorelatedparty,asofDecember31,2008is31,519,353.-7-
BRENTWOODDISPOSALSERVICE,INC.NOTESTOFINANCIALSTATEMENTSCOMMITMENTSANDCONTINGENCIESGuarantees—Uneofcredit—TheCompanyguaranteesalineofcreditonbehalfofentitiesrelatedthroughcommonownership.TheCompany’sassetsarecross-collateralizedwiththeassetsoftheserelatedentitiestosecurethebalancesowedtothebank.Thetotalamountoutstandingonthelineofcreditis$5,000,000atDecember31,2008.Lettersofcredit—TheCompany,aswellasrelatedaffiliates,guaranteeslettersofcreditwithBankofAmerica.ThelettersofcreditaresecuredbytheassetsoftheCompany,aswellasrelatedaffiliates,Theamountavailableunderthelettersofcreditis$36,505,283atDecember312008.NoamountshavebeendrawnagainstthelettersofcreditasofDecember31,2008.Contingentliabilities—Intheordinarycourseofconductingitsbusiness,theCompanymaybeinvolvedinlawsuitsandadministrativeproceedings.Someoftheseproceedingsi-nayresultinfines,penaltiesorjudgmentsbeingassessedagainsttheCompanythat,fromtimetotime,mayhaveanimpactonearnings.Itistheopinionofmanagementthattheaforementionedproceedings,individuallyorintheaggregate)willnothaveamateriallyadverseeffectontheCompanflfinancialpositioftCollectivebargainingagreement—AsignificantportionoftheCompany’semployeesaresubjecttoacollectivebargainingagreementwithTeamstersLocal315,whichwillexpireFebruary28,2014.Environmentalrisk—TherefuseandrecyclingindustriesinwhichtheCompanyoperatesaresubjecttoacertainlevelofenvironmentalrisk.SuchenvironmentalliabilitiescouldhaveamaterialeffectonthefinancialpositionoftheCompanyanditsaffiliates.However,itisnotpossibletoreasonablyestimatetheamountofanyobligationforenvironmentalrernediationthatwouldbematerialtotheCompanyanditsaffiliatesatDecember1,200&Accordingly,theCompanyhasnotaccruedanyliabilityforenvironmentalcontingencies.CONCENTRATIONOFRISKTheCompany’srevenuesarederivedprimarilyfromcustomersintheSanFranciscoBayArea.Assuch,theCompany’srevenueandoperationscanbenegativelyimpactedbytheSanFranciscoBayAreaeconomy.-8-
CDISCOVERYBAYDISPOSAL,INC.CFINANCIALSTATEMENTSFORTHEYEARENDEDDECEMBER31,2008WITHINDEPENDENTAUDITOR’SREPORTC
DELTADEBRiSBOXSERVICE,INC.TABLEOFCONTENTSIndependentAuditor’sReport1FinancialStatementsB&ancesheet2Statementofoperationsandretainedearnings3Statementofcashflows4Notestofinanc[atstatements5
ptCe-rEBlad-irtaLIcINDEPENDENTAUDITOR’SREPORTBoardofDirectorsDeltaDebrisBoxService,Inc.Concord,CaliforniaWehaveauditedtheaccompanyingbalancesheetofDeltaDebrisBoxService,Inc.(aCaliforniaScorporation),asofDecember31,2008,andtherelatedstatementsofoperatbrisandretainedearningsandcashflowsfortheyearthenended.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.An.auditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.WebelievethatourauditprovidesareasonablebasisforouropinionInouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespectsthefinancialpositionofDeltaDebrisBoxService,Inc.asofDecember31,2005andtheresultsofitsoperationsanditscashflowsfortheyearthenendedinconformitywithaccountingprinciplesgeneraHyacceptedintheUnitedStatesofAmerica.EB.LLPBBRLLPWalnutCreek,CaliforniaAugust24,2009lG;GH—.Car.cr;F!r.i:Nay:-.qr-I.’j’-:rCec.O’dbr-Aa4.‘-1’?ThISt‘a,:::,t:cuaCam•SirFnmr,ieenWalnutCreek
DELTADEBRISBOXSERVICE,INC.BALANCESHEETDECEMBER31,2008(Seenotestofinancialstatements)ASSETSCURRENTASSETSCash$419,983Accounisreceivable159,213Prepaidexpenses17817Totalcurrentassets597,0t3DUEFROMRELATEDPARTY2,703,506Totalassets$3,300,519LIABILITIESANDSTOCKHOLDEREQUITYCURRENTLIABILITIESAccountspayableandaccruedliabilities$S4090DUETORELATEDPARTY46,028Totalliabilities—130,118STOCKHOLDEREQUITYCommonstock1,000Retainedearnings3,169,401Totalstockho’derequity3,170,401Totalliabilitiesandstockho’derequityS3,300,519-2-
-3-313,02472,98523,6609)755-419,424(190122)‘54,674(135848)-773(136,621)3306,022fl3,169,401C$1721,209Zr651,597585,802255r1081,492507228,702DELTADEBRISBOXSERVICE,INC.STATEMENTOFOPERATIONSANDRETAINEDEARNINGSFORTHEYEARENDEDDECEMBER31,2006(Seenotestofinancialstatements)REVENUESRefusecollectionservicesOPERATINGEXPENSESWastedisposalEquipmentrentalLaborandrelatedTotaloperatingexpensesGROSSPROFITGENERALANDADMINISTRATIVEAdministrationsalariesandrelatedOfficeandadministrationAdvertisingandpromotionProfessionalteesTotalgeneralandadministrativeLOSSFROMOPERATIONSOTHERINCOMEInterestincomeLOSSBEFOREINCOMETAXESPROVISIONFORINCOMETAXESNETLOSSRETAINEDEARNINGSBeginningofyearEndofyearCC
DELTADEBRISBOXSERVICE,INC.STATEMENTOFCASHFLOWSFORTHEYEARENDEODECEMBER31,2008(Seenotestofinancialstatements)CASHFLOWSFROMOPERATINGACTIVITIESNettoss$(136S21)Adjustmentstoreconcilenetlosstonetcashprovidedbyoperatingactivities(tncrease)decreaseinAccountsreceivable(23784)Prepaidexpanses(15,011)Duefromrelatedparty513,766Increase(decrease)inAccountspayableandaccruedliabihties74997Duetorelatedparty6,574NETCHANGE(NGASH419,915CASHBeginningofyear68Endofyear$419983-4-
DELTADEBRISBOXSERVICE,INC.NOTESTOFINANCIALSTATEMENTSMARYOFOPERATIONSDeltaDebrisBoxService,Inc.(Company)isprimarilyengagedinthehaulinganddisposalofrefusecollectedindebrisboxesinContra.CostaCounty,California.SUMMARYQFSIGNIFICANTACCOUNTINGPOLICIESBasisofpresentation—TheaccompanyingfinancialstatementsarepresentedontheaccrualbasisofaccountinginaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,Generally,revenuesarerecognizedwhentheybecamebothmeasurableandavailable,andexpensesarerecognizedwhenanobligationisincurred.Useofestimates—Presentationoffinancialstatements,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofArnenca,requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsanddisclosuresinthefinancialstatements.Consequently,actualresultscoulddifferfromtheseestimates.Cash—Forthepurposesofthestatementofcashflows,cashincludesamountsanhandandamountsandepositatfinancialinstitutions.TheCompanyusuallywillhaveamountsondepositatfinancialinstitutionsthatexceedfederallyinsuredlimits.TheCompanybelievesthereisnosignificantriskwithrespecttothesedeposits.Accountsreceivable—Accountsreceivablearestatedattheamountmanagementexpectstocollectfromoutstandingbalances.TheCompanycloselymonitorsoutstandingreceivablesandchargesoffanybalancesthataredeterminedtobeuncollectible.TheCompanyconsidersitsaccountsfullycollectibleatDecember31,2008.Revenues—Revenuesconsistprimarilyofbillingsforthehaulinganddisposalofrefusecollectedindebrisboxes.Advertisingandpromotion—Advertisingandpromotioncostsareexpensedasincurred.INCOMETAXESTheCompanyhaselectedtobetaxedundertheprovisionsofSubchapterSoftheInternalRevenueCode.Accordingly,thefinancialstatementsdonotincludeaprovisionforfederalincometaxes.Underthiselection,.theCompany’staxableincomeorlosswillbereportableontheshareholder’spersonalincometaxreturn.Statefranchisetaxesareassessedatarateof1½%oftaxableincome.Accordingly,aprovisionforstatefranchisetaxesisincludedintheaccompanyingfinancialstatements.C.-5
DISCOVERYBAYDISPOSAL,INC.TABLEOFCONTENTSIndependentAuditor’sReport1FinancialStatementsSalancesheet2Statementofoperationsandretainedearnings3Statementofcashflows4Ntotestofinancialstatements5
rCcrtiiicdJii-<._____‘LIIINDEPENDENTAUDITOR’SREPORTBoardofDirectorsDiscoveryBayDisposal,inc.Concord,CaliforniaWehaveaudftedtheaccompanyingbalancesheetofDiscoveryBayDisposal,Inc.(aCaliforniaScorporation),asofDecember31,2008,andtherelatedstatementsofoperationsandretainedearningsandcashflowsforth.eyearthenended,ThesefinancialstatamentsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.ThosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatementAnauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditprovidesareasonabtebasisforouropinion.Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofDiscoveryBayDisposal,Inc.asofDecember31,2008andtheresultsofitsoperationsanditscashflowsfortheyearthenendedinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.ES?.LU’SBRLLPWalnutCreek,CaliforniaAugust24,2009—1l:II.iiThiraFl:’rTtlZ2(•.C2’3Ejt3jC:,rn,ul‘SsaFranciscoWalnutCreek
DISCOVERYBAYDISPOSAL,INC.BALANCESHEETDECEMBER31,2008(Seenotestofinancialstatements)ASSETSCURRENTASSETSCashAccountsreceivablePrepaidexpensesTotalcurrentassetsDUEFROMRELATEDPARTYTotalassets$45422760,806567535,6001,130319$1,665,919LIABILITIESANDSTOCKHOLDEREQUITYCURRENTLiABILITIESAccountspayableandaccruedliabilitiesDeterredrevenuesTotalcurrentliabilitiesDUETORELATEDPARTYTotalliabilitiesSTOCKHOLDEREQUITYCommonstockRetainedearningsTotalstockholderequityTota[liabilitiesandstockholderequity-2-4Cfl‘4’HU,J!330,666-207,23921,305225,5441,0001,436,3751437,375$1,665,919
DISCOVERYBAYDISPOSAL,INC.flSTATEMENTOFOPERATIONSANDRETAINEDEARNINGSFORTHEYEARENDEDDECEMBER31,2008(Seenotestoflnanciatstatements)REVENUESResidentialrefusecollectionservices31,520,920Commercialrefusecollectionservices—207830Totalrevenues1,728,750OPERATINGEXPENSESEquipmentrental507,558Wastedisposal431537Laborandrelated285047Franchisefees88,527Repairsandmaintenance5,505Totaloperatingexpenses—1,316,172GROSSPROFIT412578GENERALANDADMINISTRATIVEAdministrationsalariesandrelated116758Officeandadministration44143•Professionalfees20072Advertisingand:promotion_____________Totalgeneralandadministrative182165INCOMEFROMOPERATIONS230,413OTHERINCOME(EXPENSE)interestincome2125Otherexpense(203)Totalotherincome(expense)21,092INCOMEBEFOREINCOMETAXES251,505PROVISIONFORINCOMETAXES600NETINCOME250,705RETAINEDEARNINGSBeginningofyear1,185,670Endofyear$1,436,375‘2-
DtSCOVERYBAYDISPOSAL,INC.STATEMENTOFCASHFLOWSFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatements)CASHFLOWSFROMOPERATINGACTIVITIESNetincome$250,705Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities(Increase)decreaseinAccountsreceivable(7,891)Prepaidexpenses(587)Duefromrelatedparty75,898!ncrease(decrease)inBankoverdraft(1,342)Accountspayableandaccruedliabilities129,007Deferredrevenuesi6I260Duetor&atedparty—(7,843kNETCHANGEINCASH454227CASHBeginningofyearEndofyear5464,227SUPPLEMENTARYCASKFLOWINFORMATIONCashpaidforinterest$203Cashpaidforincometaxes$4736-4-
DISCOVERYBAYDISPOSAL,INC.NOTESTOFINANCIALSTATEMENTS$UMMARYOF..QPERATIONSDiscoveryBayDisposal,inc.(Company)isprimarilyengagedinthesolidwastecollectionandrecyclingbusiness.TheCompanyprovidesservicesunderanexclusiveagreementtotheareaofDiscoveryBayinEasternContraCostaCounty,California.SUMMARYOFSGNIFICANTACCOUNTINGPOLICIESBasisofpresentation—TheaccompanyingfinancialstatementsarepresentedontheaccrualbasisofaccountinginaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Generally,revenuesarerecognizedwhentheybecomebothmeasurableandavaHable,andexpensesarerecognizedwhenanobligationisincurred.Useofestimates—Presentationoffinancialstatements,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsanddisclosuresinthefinancialstatements.Consequently,actualresultscoulddifferfromtheseestimates.Cash—Forthepurposesofthestatementofcashflows,cashincludesamountsonhand(andamountsondepositatfinancialinstitutions.TheCompanyusuallywillhaveamountsondepositatfinancialinstitutionsthatexceedfederallyinsuredlimits..TheCompanybelievesthereisnosignificantriskwithrespecttothesedeposits.Accountsreceivable—Accountsreceivablearestatedattheamountmanagementexpectstocollectfromoutstandingbalances.TheCompanycloselymonitorsoutstandingreceivablesandchargesoffanybalancesthatare.determinedtobeuncollectibie.TheCompanyconsidersitsaccountsfullycollectibleatDecember31,2008.Revenues—Revenuesconsistprimarilyofbillingsforthecollection,recyclinganddisposalofsolidwastefromadiversifiedbaseofcustomersincludingresidential,commercialandindustrial.Residentialcustomersmakepaymentsinadvanceforcollectionservices.Revenuesfrom.thosereceiptsaredeferredandrecognizedastheservicesareperformed.Advertisingandpromotion—Advertisingandpromotioncostsareexpensedasincurred.INCOMETAXESTheCompanyhaselectedtobetaxedundertheprovisionsofSubchapterSoftheIntemalRevenueCode.Accordingly,thefinancialstatementsdonotincludeaprovisionforfederalincometaxes.Underthiselection,theCompany’staxableincomeorlosswillbereportableonthestockholderspersonalincometaxreturn.Statefranchisetaxesareassessedatarateofi’,c%oftaxableincome.Accordingly,aprovisionforstatefranchisetaxesisincludedintheaccompanyingfinancialstatements.(-5-
DISCOVERYBAYDISPOSAL,INC.NOTESTOFINANCIALSTATEMENTSRETIREMENTPLANSTheCompanymakescontributionstoacollectivelybargained,multiernployerdefinedbenefitpensionplan.Contributionsaredeterminedinaccordancewiththeprovisionsofthenegotiatedlaborcontractortermsoftheplan.Theplan’sadministratorsdonotprovidesufficientinformationtoenabletheCompanytodetermineusshare,ifany,ofplanassetsorunfundedvestedbenefits.RetirementplanexpensefortheyearendedDecember31,2008forthedefinedbenefitpensionplanis$22,961.TheCompanyalsohasa401(k)profitsharingplanforthebenefitofitseligibleemployees.Non-unionemployeeswhohavereachedagetwentyandone-halfyearsandhavecompletedoneyearofservicemaybeginelectivedeferrals.TheCompany’scontributiontotheplan,asdeterminedbytheBoardofDirectors,isdiscretionarybutcannotexceedcertainmaximumdefinedlimitations.lnordertobeeligibletoreceiveanallocationoftheCompany’scontribution.theemployeemusthavecompletedatleast500hoursofserviceduringtheplanyearandbeanemployeeanthelastdayoftheplanyear.RetirementplanexpensefortheyearendedDecember31,2008is$1,997.RETIREEHEALThCAREBENEFITSInadditiontoprovidingpensionbenefits,theCompanyalsoprovidescertainhealthcarebenefitsforretiredemployeescoveredbytheunionagreement.ThecurrentagreementrequirestheCompanytopay$258permonthformedicalinsurancepremiumsfornon-Medicareeligibleretireesandtheirnon-Medicareeligiblespousesand$26permonthforMedicareeligibleretireesandtheirMedicareeligiblespousesforthedurationofthecontract.SubstantiallyalloftheCompany’semployeesmaybecameeligibleforthosebenefitsiftheyreachnormalretirementagewhileworkingfortheCompany.Thisandsimilarbenefitsareprovidedforactiveemployees.TheCompanyfundsthebenefitcostonapay-as-you-gobasis,accordingly,therearenoplanassets.Theeffectofthehealthcarecosttrendisnotapplicablebecausethebenefitamountisafixedsumindependentofhealthtarecostchanges.TheCompanyrecognizesthecostofprovidingthesebenefitsbyexpensingtheannualinsurancepremiums.Far2008,therearenoeligibleretirees;therefore,thecostofprovidingthosebenefitsfortheyearended:December31,2008is$0.FRANCHISEAGREEMENTSTheCompanyenteredintoafranchiseagreementwithContraCostaCountyinMay1995toproviderefusecollectionservicestotheunincorporatedareasofContraCostaCounty.Theagreementprovidesforpaymentstothecountyof5%ofgrosscollectionsforservices.TheagreemenlexpiresinMay2015.TotalfeesfortheyearendedDecember31,2006are$86,527.-6-
DISCOVERYBAYDISPOSAL,INC.CNOTESTOFINANCIALSTATEMENTSRELATEDPARTYTRANSACTIONSTheCompanyhasengagedrelatedpartiestoprovideequipment,servicesandfacilitiesforitscollectionservices.Additionally,interestisaccruedonbalancesadvancedtoarelatedparty.TherelatedpartyactivityisasfollowsfortheyearendedDecember31,2008.ExpensesEquipmentrental$507,555Refusepreparationandtransferservice400,704Facilitiesandofficespacerental131434Accountingservices8,652Computerrental1.296$931.642RevenuesInterestincome$21295TheCompanyleasesequipment,computersandofficespacefromrelatedpartiesunderIariousCoperating[eases.TheleaseagreementsexpireatvariousdatesthroughMarch2011andrequiremonthlypaymentsof$33,291TheamountofexpenserecognizedundertheseleaseagreementsfortheyearendedDecember31,200is$522,286.MinimumfutureleasepaymentsundertheseleaseagreementsasofDecember31,2008areasfollows.20095393,6112010381,8512011-95,139$870.601MALLARD...FINANCIALGROUPTheCompanymaintainsadepositoryrelationshipwithMallardFinancialGroup(Mallard).arelatedentity.TheCompany’sshareholderisthesoleownerofMallardandhaspersonallyguaranteedallrelatedpartyassetsandliabilitiesoftheentity.ThebalanceduefromMallard,presentedasduefromrelatedparty,asofDecember31,2008is$1,130,319.(C-7-
DISCOVERYBAYDISPOSAL,INC.NOTESTOFINANCIALSTATEMENTSCOMMITMENTSANDCONTINGENCIESGuarantees—Lineofcredit—TheCompanyguaranteesalineofcreditonbehalfofentitiesrelatedthroughcommonownership.TheCompany’sassetsarecrosscolIateralizedwiththeassetsoftheserelatedentitiestosecurethebalancesowedtothebank.Thetotalamountoutstandingonthelineofcreditis$5,000,000atDecember31,2008.Lettersofcredit—TheCompany,aswellasrelatedaffiliates,guaranteeslettersofcreditwithRankofAmerica.ThelettersofcreditaresecuredbytheassetsoftheCornpanyaswellasrelatedaffiliatesTheamountavailableunderthelettersofcreditis$36,505,283atDecember31,2008.NoamountshavebeendrawnagainstthelettersofcreditasofDecember31,2006.Contingentliabilities—Intheordinarycourseofconductingitsbusiness,theCompanymaybeinvolvedinlawsuitsandadministrativeproceedings.Someoftheseproceedingsmayresultinfines,penaltiesorjudgmentsbeingassessedagainsttheCompanythat,fromtimetotime,mayhaveanimpactonearnings.Itistheopinionofmanagementthattheaforementionedproceedings,individuallyorintheaggregate,willnothave,amateriallyadverseeffectontheCompany’sfinancialposition.Gollectivebargainingagreement—AsignificantportionoftheCompany’semployeesaresubjecttoacollectivebargainingagreementwithTeamstersLocal315,whichwillexpireFebruay2B,2014.Environmentalrisk—TherefuseandrecyclingindustriesinwhichtheCompanyoperatesaresubjecttoacertainlevelofenvironmentalrisk.SuchenvironmentalliabilitiescouldhaveamaterialeffectonthefinancialpositionoftheCompanyanditsaffiliates.However,itisnotpossibletoreasonablyestimatetheamountofanyobligationforenvironmentalremediationthatwouldbematerialtotheCompanyanditsaffiliatesatDecember31,2008.Accordingly,theCompanyhasnotaccruedanyliabilityforenvironmentalcontingencies.CONCENTRATIONOFRISKTheCompany’srevenuesarederivedprimarilyfromcustomersintheSanFranciscoSayArea.Assuch,theCompany’srevenueandoperationscanbenegativelyimpactedbytheSanFranciscoBayAreaeconomy.-6-
.;(...:c:••::.S....•V.:t:t4W•ct&ttk$4rb$4tttihet4-i£11:*.9\AM(11*DELTADEBRiSBOXSERVICE,INC.izkC)FINANCIALSTATEMENTSFORTHEYEARENDEDDECEMBER31,WOSWiTHINDEPENDENTAUDITOR’SREPORTC*tsYØpV
OAKLEYDISPOSALSERVICE,INC.FINANCIALSTATEMENTSFORTHEYEARENDEDDECEMBER31,2008WITHINDEPENDENTAUDITOR’SREPORT)
OAKLEYDISPOSALSERVICE,INC.TABLEOFCONTENTSIndependentAuditor’sReportIFinancialStatementsBalancesheet2Statementofoperationsandretainedearnings3Statementofcashflows4NotestolinandatstatementsC
t4,_______f54fl-FLjJc_______sLU’INDEPENDENTAUDITOR’SREPORTBoardofDirectorsOakleyDisposalService,IncConcord,CaliforniaWehaveauditedtheaccompanyingbalancesheetofOakleyDisposalService,Inc.(aCaliforniaScorporation),asofDecember31,2008,andtherelatedstatementsofoperationsandretainedearningsandcashflowsfortheyearthenended.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudiLWeconductedourauditInaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.ThosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatementAnauditincludesexamining,onatestbasis1evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditprovidesareasonablebasisforouropinion.inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofOakleyDisposalService,Inc.asofDecember31,2008andtheresultsofitsoperationsanditscashflowsfortheyearthenendedinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.E13.LU’BORLLPWalnutCreek,CaliforniaAugust24,2009—I—E7CF:•CiirnLitt::fCI-D.fCcct.Ch.-nu-ii:L’ç’:ry.f2)S25Dtrc.r:ctnCarrn.21-SatFrsncittn-WnInuLOrcek
OAKLEYDISPOSALSERVICE,INC.BALANCESHEETDECEMBER31Z008(Seanotestofinancialstatements)ASSETSCURRENTASSETSCash$547,990Accountsreceivable315.102Totalcurrantassets863,092DUEFROMRELATEDPARTY222,366PROPERTYANDEQUIPMENT,net2,301Totalassets$1,067761LIABILITIESANDSTOCKHOLDEREQUITYCURRENTLIABILITIESAccountspayableandaccruedliabilitiesS227,145Deferredrevenues275254Totalcurrentliabilities502,399DUETORELATEDPARTY10,705Totalliabilities513,104STOCKHOLDEREQUITYcommonstock1,000Retainedearnings573,657Totalstockholderequity--4,67Totalliabilitiesandstockholderequity$1,087,761
OAKLEYDISPOSALSERVICE,INC.f-Em.STATEMENTOFOPERATIONSANDRETAINEDEARNINGSFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatei-nents)REVENUESResidentialrefusecollectionservices$3,028265Commercialrefusecollectionservices-1,135,793Totalrevenues4164,058OPERATiNGEXPENSESEquipmentrental1,321,076Wastedisposal1,222,987Laborandrelated674,017Franchisefees•2069S0•Repairsandmaintenance4,092Faciflty1,140Depreciation816Fuel200Totaloperatingexpenses3,431,108-rGROSSPROFIT732,950GENERALANDADMINISTRATIVEAdministrationsalariesandrelated346,969Professionalfees178,615Officeandadministration132,056SponsorshipsBr000Advertisingandpromotion4,341Travelandentertainment1,336Insurance786Totalgeneralandadministrative672,103tINCOMEFROMOPERATIONS60,847INTERESTINCOME6,949INCOMEBEFOREINCOMETAXES67,796PROVISIONFORINCOMETAXES800NETINCOME66,996RETAINEDEARNINGSBeginningofyear506,61-Endofyear$573,667-:3-
:OAKLEYDISPOSALSERVICE,INC.STATEMENTOFCASHFLOWSFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatements)CASHFLOWSFROMOPERATINGACTIVITIESNetincome$66,996AdjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivitiesDepreciation(Increase)decreaseinAccountsreceivable(25320)Duefromrelatedparty454,922Increase(decrease)inAccountspayabreandaccruedliabilities119655Deferredrevenues6020Duetorelatedparty(72I81Netcashprovidedbyoperatingactivities550,194CASHFLOWSFROMFINANCINGACTIViTIESNetdecreaseinbankcashoverdraft(2424)NETCHANGEINCASH547,770CASHBeginningofyear—220Endofyear$z47gOSUPPLEMENTARYCASHFLOWiNFORMATIONCashpaidforincometaxes$800C-4-
OAKLEYDISPOSALSERVICE,INC.NOTESTOFINANCIALSTATEMENTS$Li.MMARYOFOPERATIONSOakleyDisposalService,Inc.(Company)isprimarilyengagedinthesolidwastecollectionandrecyclingbusiness.TheCompanyprovidesservicesunderexclusiveagreementstotheIronj-9!isesanaary.-DisflctthatincludestheCityofOakleyandcertainareasofContraCostaCounty,alllocatedinCalifornia.$LLMMARYOFSIGNIFICANTACCOUNTINGPOLICIESBasisofpresentation—TheaccompanyingfinancialstatementsarepresentedontheaccrualbasisofaccountinginaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Generally,revenuesarerecognizedwhentheybecomebothmeasurableandavailable,andexpensesarerecognizedwhenanobga1ionisincurred.Useofestimates—Presentationoffinancialstatements,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsanddisclosuresinthefinancialstatements.Consequently,actualresultscoulddifferfromtheseestimates.Cash—Forthepurposesofthestatementofcashflows,cashincludesamountsonhandandamountsondepositatfinancialinstitutions.TheCompanyusuatlywillhaveamountsondepositatfinancialinstitutionsthatexceedfederallyinsuredlimits.TheCompanybelievesthereisnosignificantriskwithrespecttothesedeposits.Accountsreceivable—Accountsreceivablearestatedattheamountmanagementexpectstocollectfromoutstandingbalances.TheCompanycloselymonitorsoutstandingreceivablesandchargesoffanybalancesthataredeterminedtobeuncollectible.TheCompanyconsidersitsaccountsfullycollectibleatDecember31,2008.Propertyandequipment—PropertyandequipmentarecardedatcostDepreciationiscomputedusingthestraight-lineanddecliningbalancemethods,overtheestimatedusefullivesoftheassets(generally3to39years).Revenues—Revenuesconsistprimarilyofbillingsforthecollection,recyclinganddisposalofsolidwastefromadiversifiedbaseofcustomersincludingresidential,commercialandindustrial.Residentialcustomersmakepaymentsinadvanceforcollectionservices.Revenuesfromthosereceiptsaredeferredandrecognizedastheservicesareperformed.AdvertisingandpromotionAdvertisingandpromotioncostsareexpensedasincurred.PROPERTYANDEQUIPMENTPropertyandequipmentconsistofthefollowingatDecember31,2008.Furnitureandfixtures$13,010Accumulateddepreciation.(10709)$2.301-
OAKLEYDISPOSALSERVICE,INC.NOTESTOFINANCIALSTATEMENTSUCOMETAXESTheCompanyhaselectedtobetaxedundertheprovisionsofSubchapterSoftheInternalRevenueCode.Accordingly,thefinancialstatementsdonotincludeaprovisionforfederalincometaxes.Underthiselection,theCompany’staxableincomeorlosswillbereportableonthestockholder’spersonalincometaxreturn.Statefranchisetaxesareassessedatarateof11,4%oftaxableincome.Accordingly,aprovisionforstatefranchisetaxesisincludedintheaccompanyingfinancialstatements.OPRATlNGLEASETheCompanyleasesabuildingunderanoperatingtease.TheleaseagreementrunsthroughSeptember2010andrequiresmonthlypaymentsof$2,883.MinimumfutureleasepaymentsunderthisleaseagreementasofDecember31,2008areasfollows.2009S34,597201025,947CTheamountofexpenserecognizedunderthisleaseagreementfortheyearendedDecember31,2008is$34,035.RETIREMENTPLANSTheCompanymakescontributionstoacollectivelybargained,niultiemployerdefinedbenefitpensionplan.Contributionsaredeterminedinaccordancewiththepro’isionsofthenegotiatedlaborcontractortermsoftheplan.Theplan’sadministratorsdonotprovidesufficientinformationtoenabletheCompanytodetermineitsshare,ifany,ofplanassetsorunfundedvestedbenefits.RetirementplanexpensefortheyearendedDecember31,2008forthedefinedbenefitpensionplanis$51,609.TheCompanyalsohasa401(k)profitsharingplanforthebenefitofitseligibleemployees.Nonunionemployeeswhohavereachedagetwentyandone-halfyearsandhavecompletedoneyearofservicemaybeginelectivedeferrals.TheCompany’scontributiontotheplan,asdeterminedbytheBoardofDirectors,isdiscretionarybutcannotexceedcertainmaximumdefinedlimitations.InordertobeeligibletoreceiveanallocationoftheCompany’scontribution,theemployeemusthavecompletedatleast500hoursofserviceduringtheplanyearandbeanemployeeontheFastdayoftheplanyear.RetirementplanexpensefortheyearendedDecember31,2008isS4,393.-6-
OAKLEYDISPOSALSERVICE,INC.NOTESTOFINANCIALSTATEMENTSRETIREENEALTHCARESENEFITSInadditiontoprovicflngpensionbenefits,theCompanyalsoprovidescertainhealthcarebenefitsforretiredemployeescoveredbytheunionagreement-ThecurrentagreementrequirestheCompanytopay$258permonthformedicalinsurancepremiumsfornon-Medicareeligibleretireesandtheirnon-Medicareeligiblespousesand$25permonthforMedicareeligibleretireesandtheirMedicareeligiblespousesforthedurationofthecontract.SubstantiallyalloftheCompany’semployeesmaybecomeeligibleforthosebenefitsiftheyreachnormalretirementagewhileworkingfortheCompany.Thisandsimilarbenefitsareprovidedforactiveemployees.TheCompanyfundsthebenefitcostonapay-as-you-gobasis,accordingly,therearenoplanassets.Theeffectofthehealthcarecosttrendisnotapplicablebecausethebenefitamountisafixedsumindependentofhealthcarecostchanges.TheCompanyrecognizesthecostofprovidingthesebenefitsbyexpensingtheannualinsurancepremiums.For2008,therearenoeligibleretirees;therefore,thecostofprovidingthosebenefitsfortheyearendedDecember31,2008isSO.FRANCHISEAGREEMENTSTheCompanyenteredintoafranchiseagreementwithIronhouseSanitaryDistrict(District)inJune1993toproviderefusecollectionservicesintheDistrict.TheagreementprovidesforpaymentstotheDistrictof5%ofgrosscollectionsforservices.TheCompany’srighttoexclusivecontractrunsthroughMay2014,TotalfeesfortheyearendedDecember31,2008are$201928.TheCompanyalsoenteredintoafranchiseagreementwithContraCostaCountyinMay1995toproviderefusecollectionservicestoaportionoftheunincorporatedareasofContraCostaCountyadjacenttotheDistrict.Theagreementprovidesforpaymentstothecountyof5%ofgrosscollectionsforservice&TheagreementexpiresinMay2015.TotalfeesfortheyearendedDecember31,2008are$5,052.RELATEDPARTYTRANSACTIONSTheCompanyhasengagedrelatedpartiestoprovideequipment,servicesandfacilitiesforitscollectionservices.Additionally,interestisaccruedonbalancesadvancedtoarelatedparty.TherelatedpartyactivityisasfollowsfortheyearendedDecember31,200&ExpensesEquipmentrental.$1,321,076Refusepreparationandtransferservice1,153,959Accountingservices19,476Facilitiesandofficespacerental1.8,183Computerrental•.2.580*.L2.515.274RevenuesInterestincome.$6949/-—Recyclingrevenues_________C.5-7-
OAKLEYDiSPOSALSERVICE,iNC.NOTESTOFINANCIALSTATEMENTSRgATEDPARTYTRANSACTIONSconUnued.iTheCompanyleasesequipment,computersandofficespacefromrelatedpartiesundervariousoperatingleases.TheleaseagreementsexpireatvariousdatesthroughMarch2011andrequiremonthlypaymentsof$101,639.TheamountofexpenserecognizedundertheseteaseagreementsfortheyearendedDecember31,2006is$1,341,839.MinimumfutureleasepaymentsundertheseleaseagreementsasofDecember31,2008areasfollows.2009$1,212,20820101,197,2582011298.677$J.705,173MALLARDFINANCIALGROUPTheCompanymaintainsadepositoryrelationshipwithMallardFinancialGroup(Mallard),arelatedentity.theCompany’sshareholderisthesoleownerofMallardandhaspersonallyguaranteedallrelatedpartyassetsandliabilitiesoftheentity.ThebalanceduefromMallard,Cpresentedasduefromrelatedparty,asofDecember31,2008is$222,368.COMMITMENTSANDCONTINGENCIESGuarantees—Lineofcredit—TheCompanyguaranteesalineofcreditonbehalfofentitiesrelatedthroughcommonownership.TheCompany’sassetsarecross-collateralizedwiththeassetsoftheserelatedentitiestosecurethebalancesowedtothebank.Thetotalamountoutstandingonthelineofcreditis55,000,000atDecember31,2008.Lettersofcredit—TheCompany,aswellasrelatedaffiliates,guaranteeslettersofcreditwithBankofAmerica.ThelettersofcreditaresecuredbytheassetsoftheCompany,aswellasrelatedaffiliates.Theamountavailableunderthelettersofcreditis$36,505,283atDecember31,2008.NoamountshavebeendrawnagainstthelettersofcreditasofDecember31.2008.Contingentliabilities—Intheordinarycourseofconductingitsbusiness,theCompanymaybeinvolvedinlawsuitsandadministrativeproceedings.Someoftheseproceedingsmayresultinfines,penaltiesorjudgmentsbeingassessedagainsttheCompanythat,fromtimetotime.mayhaveanimpactonearnings.Itistheopinionofmanagementthattheaforementionedproceedings,individuallyorintheaggregate,willnothaveamateriallyadverseeffectontheCompany’sfinancialposition.C-6-
OAKLEYDISPOSALSERVICE,INC.NOTESTOFINANCIALSTATEMENTSCOMMITMENTSANDCONTINGENCIES(continued,)Collectivebargainingagreüment—AsignificantportionoftheCompanflemployeesaresubjecttoacollectivebargainingagreementwithTeamstersLocal315,whichwillexpireFebruary28.2814.Environmentalrisk—TherefuseandrecyclingindustriesinwhichtheCompanyoperatesaresubjecttoacertainlevelofenvironmentalrisk.SuchenvironmentalliabilitiescouldhaveamaterialeffectonthefinancialpositionoftheCompanyanditsaffiliates.However,itisnotpossibletoreasonablyestimatetheamountofanyobligationforenvironmentalremediationthatwouldbematerialtotheCompanyanditsaffillatesatDecember31.2008.Accordingly,theCompanyhasnotaccruedanyliabilityforenvironmentalcontingencies.VNCENTRATIONOFRISKTheCompansrevenuesarederivedprimarilyfromcustomersintheSanFranciscoBayArea,Assuch,theCompany’srevenueandoperationscanbenegativelyimpactedbytheSanFranciscoBayAreaeconomy.-9.,.
BRENTWOODDISPOSALSERVICE,INCCFINANCIALSTATEMENTSFORTHEYEARENDEDDECEMBER31,2008WITHINDEPENDENTAUDITOR’SREPORT
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.FINANCIALSTATEMENTSFORTHEYEARENDEDDECEMBER31,2008-WITHINDEPENDENTAUDITOR’SREPORT
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.flTABLEOFCONTENTSIndependentAuditor’sReport1FinancialStatementsBalancesheet2Statementofoperationsandretainedearnings3Statementofcashflows4Notestofinancialstatements5C
INDEPENDENTAUDITOR’SREPORTBoardofDirectorsPittsburgDisposal&DebrisBoxService,Inc.Concord,CaliforniaWehaveauditedtheaccompanyingbalancesheetofPittsburgDisposal&DebrisBoxService,Inc.(aCaliforniaScorporation),asofDecember31,2008,andtherelatedstatementsofoperationsandretainedearningsandcashflowsfortheyearthenended.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditprovidesareasonablebasisforouropinion.Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofPittsburgDisposal&DebrisBoxService,Inc.asofDecember312008andtheresultsofitsoperationsanditscashflowsfortheyearthenendedinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.LU’BBRLLPWalnutCreek,CaliforniaAugust24,2009—1—1676NorthCaliforniaBoulevard‘ThirdFloor.WalnutCreek,California94596-4137‘Tel925.9540100.Fax925.954.1068‘www.bbrcpa.comCarmel.SanFrancisco•WalnutCreek
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.BALANCESHEETDECEMBER31,2008(Seenotestofinancialstatements)ASSETSCURRENTASSETSCashAccountsreceivable$1,209,681801,183$7,274,908$733,532239,964973,49610,0006,291,4126,301,412$7,274,9082,010,8645,255,7638,281TotalcurrentassetsDUEFROMRELATEDPARTYPROPERTYANDEQUIPMENT,netTotalassetsLIABILITIESANDSTOCKHOLDEREQUITYCURRENTLIABILITIESAccountspayableandaccruedliabilitiesDeferredrevenuesTotalcurrentliabilitiesSTOCKHOLDEREQUITYCommonstockRetainedearningsTotalstockholderequityTotalliabilitiesandstockholderequity-2-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.STATEMENTOFOPERATIONSANDRETAINEDEARNINGSFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatements)REVENUESResidentialrefusecollectionservices$4,397,335Commercialrefusecollectionservices5,281,304Totalrevenues9,678,639OPERATINGEXPENSESWastedisposal2,946,984Equipmentrental2,792,292Laborandrelated1,334,342Franchisefees551,164Repairsandmaintenance15,648Facility5,433Depreciation3,163Totaloperatingexpenses7,649,026‘GROSSPROFIT2,029,613GENERALANDADMINISTRATIVEAdministrationsalariesandrelated626,332Officeandadministration216,824Professionalfees56,902Advertisingandpromotion31,799Travelandentertainment4,960Totalgenera!andadministrative936,817INCOMEFROMOPERATIONS1,092,796OTHERINCOME(EXPENSE)Interestincome98,911Contributions(3,410)Totalotherincome(expense)95,501INCOMEBEFOREINCOMETAXES1,188,297PROVISIONFORINCOMETAXES17,866NETINCOME1,170,431RETAINEDEARNINGSBeginningofyear5,620,981Shareholderdistributions(500,000)Endofyear$6,291,412-3-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.STATEMENTOFCASHFLOWSFORTHEYEARENDEDDECEMBER31,2008(Seenotestofinancialstatements)CASHFLOWSFROMOPERATINGACTIVITIESNetincome$1,170,431AdjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivitiesDepreciationandamortization3,163(Increase)decreaseinAccountsreceivable(55,064)Duefromrelatedparty312,947Increase(decrease)inAccountspayableandaccruedexpenses524,591Deferredrevenues(16,421)Duetorelatedparty(229,004)Netcashprovidedbyoperatingactivities1,710,643CASHFLOWSFROMINVESTINGACTIVITIESPurchaseofpropertyandequipment(2,489)CASHFLOWSFROMFINANCINGACTIVITIESShareholderdistributions(500,000)NETCHANGEINCASH1,208,154CASHBeginningofyear1,527Endofyear$1,209,681SUPPLEMENTARYCASHFLOWINFORMATIONCashpaidforincometaxes$35,300-4-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.NOTESTOFINANCIALSTATEMENTSSUMMARYOFOPERATIONSPittsburgDisposal&DebrisBoxService,Inc.(Company)isprimarilyengagedinthesolidwastecollectionandrecyclingbusinessinandaroundtheCityofjttsbutgoperatinguieragreementswiththecityoLPittbwgandContracostaCounty,California.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESBasisofpresentation—TheaccompanyingfinancialstatementsarepresentedontheaccrualbasisofaccountinginaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Generally,revenuesarerecognizedwhentheybecomebothmeasurableandavailable,andexpensesarerecognizedwhenanobligationisincurred.Useofestimates—Presentationoffinancialstatements,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsanddisclosuresinthefinancialstatements.Consequently,actualresultscoulddifferfromtheseestimates.Cash—Forthepurposesofthestatementofcashflows,cashincludesamountsonhandandamountsondepositatfinancialinstitutions.TheCompanyusuallywillhaveamountsondepositatfinancialinstitutionsthatexceedfederallyinsuredlimits.TheCompanybelievesthereisnosignificantriskwithrespecttothesedeposits.Accountsreceivable—Accountsreceivablearestatedattheamountmanagementexpectstocollectfromoutstandingbalances.TheCompanycloselymonitorsoutstandingreceivablesandchargesoffanybalancesthataredeterminedtobeuncollectible.TheCompanyconsidersitsaccountsfullycollectibleatDecember31,2008.Propertyandequipment—Propertyandequipmentarecarriedatcost.Depreciationiscomputedutilizingthestraightlineanddecliningbalancemethodsovertheestimatedusefullifeoftheassets(generally3to39years).Revenues—Revenuesconsistprimarilyofbillingsforthecollection,recyclinganddisposalofsolidwastefromadiversifiedbaseofcustomersincludingresidential,commercialandindustrial.Residentialcustomersmakepaymentsinadvanceforcollectionservices.Revenuesfromthosereceiptsaredeferredandrecognizedastheservicesareperformed.Advertisingandpromotion—Advertisingandpromotioncostsareexpensedasincurred.PROPERTYANDEQUIPMENTPropertyandequipmentconsistofthefollowingasofDecember31,2008.Furnitureandfixtures$40,977Accumulateddepreciation(32,696)8.281-5-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INCNOTESTOFINANCIALSTATEMENTSINCOMETAXESTheCompanyhaselectedtobetaxedundertheprovisionsofSubchapterSoftheInternalRevenueCode.Accordingly,thefinancialstatementsdonotincludeaprovisionforfederalincometaxes.Underthiselection,theCompany’staxableincomeorlosswillbereportableonthestockholder’spersonalincometaxreturn.Statefranchisetaxesareassessedatarateof1%%oftaxableincome.Accordingly,aprovisionforstatefranchisetaxesisincludedintheaccompanyingfinancialstatements.OPERATINGLEASETheCompanyleasesabuildingunderanoperatinglease.TheleaseagreementrunsthroughJanuary2012andrequiresmonthlypaymentsof$2,999increasing3.5%annuallyeffectiveFebruary1ofeachyear.MinimumfutureleasepaymentsunderthisleaseagreementasofDecember31,2008areasfollows.2009$37,143201038,447201139,78820123,325$118.703TheamountofexpenserecognizedunderthisleaseagreementfortheyearendedDecember31,2008is$36,965.RETIREMENTPLANSTheCompanymakescontributionstoacollectivelybargained,multiemployerdefinedbenefitpensionplan.Contributionsaredeterminedinaccordancewiththeprovisionsofthenegotiatedlaborcontractortermsoftheplan.Theplan’sadministratorsdonotprovidesufficientinformationtoenabletheCompanytodetermineitsshare,ifany,ofplanassetsorunfundedvestedbenefits.RetirementplanexpensefortheyearendedDecember31,2008forthedefinedbenefitpensionplanis$102,612.TheCompanyalsohasa401(k)profitsharingplanforthebenefitofitseligibleemployees.Non-unionemployeeswhohavereachedagetwentyandone-halfyearsandhavecompletedoneyearofservicemaybeginelectivedeferrals.TheCompany’scontributiontotheplan,asdeterminedbytheBoardofDirectors,isdiscretionarybutcannotexceedcertainmaximumdefinedlimitations.InordertobeeligibletoreceiveanallocationoftheCompany’scontribution,theemployeemusthavecompletedatleast500hoursofserviceduringtheplanyearandbeanemployeeonthelastdayoftheplanyear.RetirementplanexpensefortheyearendedDecember31,2008is$9,813.-6-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.NOTESTOFINANCIALSTATEMENTSRETIREEHEALTHCAREBENEFITSInadditiontoprovidingpensionbenefits,theCompanyalsoprovidescertainhealthcarebenefitsforretiredemployeescoveredbytheunionagreement.ThecurrentagreementrequirestheCompanytopay$258permonthformedicalinsurancepremiumsfornon-Medicareeligibleretireesandtheirnon-Medicareeligiblespousesand$25permonthforMedicareeligibleretireesandtheirMedicareeligiblespousesforthedurationofthecontract.SubstantiallyalloftheCompany’semployeesmaybecomeeligibleforthosebenefitsiftheyreachnormalretirementagewhileworkingfortheCompany.Thisandsimilarbenefitsareprovidedforactiveemployees.TheCompanyfundsthebenefitcostonapay-as-you-gobasis,accordingly,therearenoplanassets.Theeffectofthehealthcarecosttrendisnotapplicablebecausethebenefitamountisafixedsumindependentofhealthcarecostchanges.TheCompanyrecognizesthecostofprovidingthesebenefitsbyexpensingtheannualinsurancepremiums.For2008,therearenoeligibleretirees;therefore,thecostofprovidingthosebenefitsfortheyearendedDecember31,2008is$0.FRANCHISEAGREEMENTSTheCompanyhasenteredintoafranchiseagreementwiththeCityofPittsburgforthecollectionofrefusewithinthecitylimitswhichexpiresJune30,2017withanoptiontoextendforsevenadditionalyears.TheagreementrequirestheCompanytopaytheCityofPittsburg7%ofgrossresidentialcollectionsand5%ofgrosscommercialcollectionsforserviceswithinthecitylimits.TotalfeesfortheyearendedDecember31,2008are$495,258.TheCompanyalsoenteredintoafranchiseagreementwithContraCostaCountyinMay1995toproviderefusecollectionservicestotheunincorporatedareasofContraCostaCounty.Theagreementprovidesforpaymentstothecountyof5%ofgrosscollectionsforservices.TheagreementexpiresinMay2015.TotalfeesfortheyearendedDecember31,2008are$55,906.RELATEDPARTYTRANSACTIONSTheCompanyhasengagedrelatedpartiestoprovideequipment,servicesandfacilitiesforitscollectionservices.Additionally,interestisaccruedonbalancesadvancedtoarelatedparty.TherelatedpartyactivityisasfollowsfortheyearendedDecember31,2008.ExpensesRefusepreparationandtransferservice$2,943,197Equipmentrental2,792,292Accountingservices34,800Facilitiesandofficespacerental26,675Computerrental11,424$5,808.388RevenuesInterestincome$98,911Recyclingrevenues13,138$112.049-7-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.NOTESTOFINANCIALSTATEMENTSRELATEDPARTYTRANSACTIONS(continued)TheCompanyleasesequipment,computersandofficespacefromrelatedpartiesundervariousoperatingleases.TheleaseagreementsexpireatvariousdatesthroughMarch2011andrequiremonthlypaymentsof$196,479.TheamountofexpenserecognizedundertheseleaseagreementsfortheyearendedDecember31,2008is$2,830,391.MinimumfutureleasepaymentsundertheseleaseagreementsasofDecember31,2008areasfollows.2009$2,347,99320102,328,4732011579,262$5,255,728MALLARDFINANCIALGROUPTheCompanymaintainsadepositoryrelationshipwithMallardFinancialGroup(Mallard),arelatedentity.TheCompany’sshareholderisthesoleownerofMallardandhaspersonallyguaranteedallrelatedpartyassetsandliabilitiesoftheentity.ThebalanceduefromMallard,includedinduefromrelatedparty,asofDecember31,2008is$5,251607.COMMITMENTSANDCONTINGENCIESGuarantees—Lineofcredit—TheCompanyguaranteesalineofcreditonbehalfofentitiesrelatedthroughcommonownership.TheCompany’sassetsarecross-collateralizedwiththeassetsoftheserelatedentitiestosecurethebalancesowedtothebank.Thetotalamountoutstandingonthelineofcreditis$5,000,000atDecember31,2008.Lettersofcredit—TheCompany,aswellasrelatedaffiliates,guaranteeslettersofcreditwithBankofAmerica.ThelettersofcreditaresecuredbytheassetsoftheCompany,aswellasrelatedaffiliates.Theamountavailableunderthelettersofcreditis$36,505,283atDecember31,2008.NoamountshavebeendrawnagainstthelettersofcreditasofDecember31,2008.Contingentliabilities—Intheordinarycourseofconductingitsbusiness,theCompanymaybeinvolvedinlawsuitsandadministrativeproceedings.Someoftheseproceedingsmayresultinfines,penaltiesorjudgmentsbeingassessedagainsttheCompanythat,fromtimetotime,mayhaveanimpactonearnings.Itistheopinionofmanagementthattheaforementionedproceedings,individuallyorintheaggregate,willnothaveamateriallyadverseeffectontheCompany’sfinancialposition.-8-
PITTSBURGDISPOSAL&DEBRISBOXSERVICE,INC.NOTESTOFINANCIALSTATEMENTSCOMMITMENTSANDCONTINGENCIES(continued)Collectivebargainingagreement—AsignificantportionoftheCompany’semployeesaresubjecttoacollectivebargainingagreementwithTeamstersLocal315,whichwillexpireFebruary28,2014.EnvironmentalriskTherefuseandrecyclingindustriesinwhichtheCompanyoperatesaresubjecttoacertainlevelofenvironmentalrisk.SuchenvironmentalliabilitiescouldhaveamaterialeffectonthefinancialpositionoftheCompanyanditsaffiliates.However,itisnotpossibletoreasonablyestimatetheamountofanyobligationforenvironmentalremediationthatwouldbematerialtotheCompanyanditsaffiliatesatDecember31,2008.Accordingly,theCompanyhasnotaccruedanyliabilityforenvironmentalcontingencies.CONCENTRATIONOFRISKTheCompany’srevenuesarederivedprimarilyfromcustomersintheSanFranciscoBayArea.Assuch,theCompany’srevenueandoperationscanbenegativelyimpactedbytheSanFranciscoBayAreaeconomy.-9-
Appendix C
Customer Satisfaction Survey Results
Appendix C
Customer Satisfaction
Survey Results
Garaventa Enterprises (Garaventa) conducted a 2009 County customer satisfaction
survey of its residential customers. Contra Costa County approved the survey questions.
Garaventa mailed the survey on February 6, 2009. The survey covered the following areas:
Garbage service Customer service
Recycling service Billing procedures
Yard waste service New services
Service options Communications.
As shown in Table C-1, on the next page, the survey covered the following four (4)
unincorporated County service areas:
Unincorporated Area Company
1. Brentwood, Byron, and Knightsen Brentwood Disposal Services
2. Discovery Bay Discovery Bay Disposal
3. Pittsburg and Bay Point Pittsburg Disposal and Debris Box
4. Unincorporated Oakley Oakley Disposal Service.
Garaventa sent the survey to 2,531 residential customers, representing 33 percent of
County residential customers. Garaventa received 284 responses. The survey had an
overall response rate of 11.22 percent.
Exhibit C-1, beginning on page C-3, summarizes the survey results by questionnaire
area, by rating, and by company. Responses did not vary that much by company. Based
on the survey results, Garaventa’s overall customer satisfaction rating was 89.95 percent
for all surveyed service areas, including garbage service, recycling service, yard waste
service, and other areas (see Exhibit C-1, page C-5).1 Customer satisfaction was highest
for garbage collection service and lowest for yardwaste collection service. Customers
expressed high satisfaction with both Garaventa customer service, and billing
procedures (each above 91 percent).
Residential customers were generally informed about services and options (75.81
percent). A little more than half of the residential customers surveyed expressed a
desire for new services. These new services generally included battery collection, used
oil collection, e-waste collection, and household hazardous waste collection.
1 Customer satisfaction was defined as a rating of excellent, good, or average divided by the total number of
ratings. We did not count respondents who had no opinion or those who did not answer the question.
Appendix C. Customer Satisfaction Survey Results
C-2 Review of Garaventa Enterprises Solid Waste Rate Application
Table C-1
Garaventa Enterprises
2009 Contra Costa County
Customer Satisfaction Survey Response Rate
No. Service Area Residential Customers
Total Sent to Survey Rate Received Response Rate
1 Brentwood, Byron, and Knightsen 846 280 33% 34 12.14%
2 Discovery Bay 4,441 1,465 33% 183 12.49%
3 Pittsburg and Bay Point 2,317 746 32% 61 8.18%
4 Oakley 103 40 39% 6 15.00%
Total 7,707 2,531 33% 284 11.22%
C-3
Exhibit C-1
Garaventa 2009 County Customer Satisfaction Survey Results
Residential Services Page 1 of 3
Brentwood Disposal Services
Basic Services
Rating Satisfactory, or Better Poor, or No Answer Total Satisfaction
Rate Excellent Good Average Poor No Opinion No Answer
Garbage Service 21 11 1 – – 1 34 100.00%
Recycling Service 6 11 4 6 3 4 34 77.78%
Yard Waste Service 4 7 5 1 14 3 34 94.12%
Subtotal 31 29 10 7 17 8 102 90.91%
Other Areas2
Rating Yes No No Answer/
No Opinion Total Satisfaction
Rate
Service Options 24 7 4 34 78.86%
Customer Service 17 1 1 19 94.44%
Billing Procedures 33 1 – 34 97.06%
New Services 16 8 10 34 66.67%
Subtotal 90 17 15 121 84.54%
Total 160 24 40 223 87.21%
Discovery Bay Disposal
Basic Services
Rating Satisfactory, or Better Poor, or No Answer Total Satisfaction
Rate Excellent Good Average Poor No Opinion No Answer
Garbage Service 89 70 17 1 1 5 183 99.44%
Recycling Service 39 76 29 25 7 7 183 85.21%
Yard Waste Service 29 51 23 25 41 14 183 80.47%
Subtotal 157 197 69 51 49 26 549 89.24%
Other Areas
Rating Yes No No Answer/
No Opinion Total Satisfaction
Rate
Service Options 128 43 12 183 74.85%
Customer Service 80 5 – 85 94.12%
Billing Procedures 165 6 12 183 96.49%
New Services 76 71 36 183 51.70%
Subtotal 449 125 60 634 78.22%
Total 872 176 135 1,183 83.21%
2 Based on the following general questions:
• Service options – Do you fee adequately informed about services and options available to you?
• Customer service – If you have tried customer service, were you satisfied with your ability to reach us with a question or problem?
• Billing services – Are you satisfied with the accuracy/clarity/convenience of your bill?
• New services – Are there new waste and recycling collection services you would like to have made available?
Appendix C. Customer Satisfaction Survey Results
C-4 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit C-1
Garaventa 2009 County Customer Satisfaction Survey Results
Residential Services (continued) Page 2 of 3
Pittsburg Disposal and Debris Box
Basic Services
Rating Satisfactory, or Better Poor, or No Answer Total Satisfaction
Rate Excellent Good Average Poor No Opinion No Answer
Garbage Service 24 27 8 1 1 – 61 98.33%
Recycling Service 14 23 12 6 3 3 61 89.09%
Yard Waste Service 13 22 10 9 5 2 61 83.33%
Subtotal 51 72 30 16 9 5 183 90.53%
Other Areas
Rating Yes No No Answer/
No Opinion Total Satisfaction
Rate
Service Options 42 13 6 61 76.47%
Customer Service 24 6 – 30 80.00%
Billing Procedures 57 4 – 61 93.44%
New Services 27 24 10 61 52.94%
Subtotal 150 47 16 213 76.17%
Total 303 63 30 396 82.80%
Oakley Disposal Services
Basic Services
Rating Satisfactory, or Better Poor, or No Answer Total Satisfaction
Rate Excellent Good Average Poor No Opinion No Answer
Garbage Service 4 2 – – – – 6 100.00%
Recycling Service 3 1 1 – 1 – 6 100.00%
Yard Waste Service 2 3 – – – 1 6 100.00%
Subtotal 9 6 1 – 1 1 18 100.00%
Other Areas
Rating Yes No No Answer/
No Opinion Total Satisfaction
Rate
Service Options 5 1 1 6 81.82%
Customer Service 5 – 1 6 100.00%
Billing Procedures 6 – – 6 100.00%
New Services 1 3 2 6 25.00%
Subtotal 17 4 4 24 80.49%
Total 33 4 6 42 89.04%
C-5
Exhibit C-1
Garaventa 2009 County Customer Satisfaction Survey Results
Residential Services (continued) Page 3 of 3
All 4 Companies
Basic Services
Rating Satisfactory, or Better Poor, or No Answer Total Satisfaction
Rate Excellent Good Average Poor No Opinion No Answer
Garbage Service 138 110 26 2 2 6 284 99.28%
Recycling Service 62 111 46 37 14 14 284 85.55%
Yard Waste Service 48 83 38 35 60 20 284 82.84%
Total 248 304 110 74 76 40 852 89.95%
Other Areas
Rating Yes No No Answer/
No Opinion Total Satisfaction
Rate
Service Options 199 64 22 284 75.81%
Customer Service 126 12 2 140 91.30%
Billing Procedures 261 11 12 284 95.96%
New Services 120 106 58 284 53.10%
Total 706 193 94 992 78.58%
Overall 1,368 267 210 1,844 83.70%
Appendix C. Customer Satisfaction Survey Results
C-6 Review of Garaventa Enterprises Solid Waste Rate Application
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Appendix D
Adjusted Base Year Model
Appendix D
Adjusted Base Year Rate Model
Exhibit D-1 of this appendix provides the adjusted base year rate model based on
NewPoint Group adjustments discussed in Section 4. The model reflected the
following general adjustments:1
Revenues
Minor residential revenue increase
Minor recycled material sales revenue increase
Allowable Costs/Profits
Minor increase to direct labor
Moderate net decrease to tipping fees (profit allowed and pass through)
Moderate decrease to corporate and local general and administrative costs
Minor decrease to depreciation and other operating costs
Minor decrease to trucking and equipment costs
Minor decrease to allowable operating profit to set operating ratio to 90 percent
Pass Through Costs
Minor decrease in franchise fees.
We developed a comprehensive Microsoft Excel spreadsheet model which we have in our
workpapers, for this rate review, documenting the details for each of these adjustments.
1 Where a minor adjustment is less than or equal to $30,000; a moderate adjustment is above $30,000 and less
and or equal to $100,000; and a major adjusmtent is greater than $100,000.
Appendix D. Adjusted Base Year Rate Model
D-2 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit D-1
Base Year 2008 Rate Model
With NewPoint Group Adjustments
Application Corrected
Application
NPG
Adjustments
NPG
Adjusted 2010
Section I – Allowable Costs
1. Direct Labor $1,991,991 $1,979,171 $67,729 $2,046,900
2. Tipping Fees (Profit Allowed) 1,880,000 1,880,000 (188,000) 1,692,000
3. Corporate and Local General and Administrative Costs 1,638,557 1,638,558 (374,300) 1,264,258
4. Depreciation and Other Operating Costs 38,499 38,499 (15,766) 22,733
5. Services Provided to County 0 0 0 0
6. Total Allowable Costs (Lines 1+2+3+4+5) $5,549,047 $5,536,228 ($510,337) $5,025,891
Section II – Allowable Operating Profit
7. Operating Ratio 90.0% 90.0% 90.0%
8. Allowable Operating Profit [(Line 6 / 0.90) - Line 6] $616,561 $615,136 ($56,704) $558,432
Section III – Pass Through Costs without Franchise Fees
9. County Administrative Fee $118,587 $118,587 ($3,361) $115,226
10. Trucking and Equipment 3,249,864 3,249,864 (60,561) 3,189,303
11. Tipping Fees (Pass Through) 940,000 940,000 84,600 1,024,600
12. Total Pass Through Costs (without Franchise Fees) (Lines 9+10+11) $4,308,451 $4,308,451 $20,678 $4,329,129
Section IV – Revenue Requirement without Franchise Fee
13. Total Allowable Costs (Line 6) plus Allowable Operating Profits (Line 8) plus
Total Pass Through Costs (without Franchise Fees) (Line 12) $10,474,059 $10,459,815 ($546,363) $9,913,453
Section V – Revenue without Rate Change in Base Year
14. Residential Revenues $5,932,680 $5,932,680 $46,840 $5,979,520
15. Less Allowance for uncollectible Residential Accounts (59,327) (59,327) (468) (59,795)
Plus Toter Rental 0 0 0 0
16. Total Residential Revenues (without Rate Change in Base Year) $5,873,353 $5,873,353 $46,372 $5,919,725
17. Commercial Revenues $3,231,036 $3,231,035 $0 $3,231,035
18. Less Allowance for uncollectable Commercial Accounts 0 0 0 0
19. Total Commercial Revenues (without rate change in Base Year) $3,231,036 $3,231,035 $0 $3,231,035
20. Recycled Materials Sales $0 $0 $14,200 $14,200
21. Total Revenues (Lines 16+19+20) $9,104,389 $9,104,388 ($468) $9,164,960
Section VI – Net Shortfall (Surplus)
22. Net Shortfall (Surplus) without Franchise Fees (Lines 13-Line 21) $1,369,670 $1,355,427 ($606,934) $748,493
23. Residential and Commercial Franchise Fees (see calc below) $551,266 $550,517 ($28,763) $521,754
24. Net Shortfall (Surplus) with Franchise Fees (Lines 22 + 23) $1,920,936 $1,905,944 ($635,697) $1,270,247
Section VI -- Percent Change in Rates
25. Total Residential and Commercial Revenue Prior to Rate Change (Lines 16+19) $9,104,389 $9,104,388 $46,372 $9,150,760
26. Percent Change in Existing Residential and Commercial Rates (Line 24 / Line 25) 21.10% 20.93% 13.88%
Appendix E
Comparative Refuse Collection Rates
Appendix E
Comparative Refuse
Collection Rates
We compared Garaventa County area refuse collection rates to those of the following
eleven (11) jurisdictions:
1. City of Antioch
2. City of Clayton
3. City of Concord
4. City of Lafayette
5. City of Martinez
6. City of Moraga
7. City of Orinda
8. City of Pleasant Hill
9. City of Walnut Creek
10. Contra Costa County (Central Contra Costa Waste Authority (CCCWA) areas)
11. Town of Danville.
In Exhibit E-1, on the next page, we compare current Garaventa County area
residential rates with the eleven (11) jurisdictions. Garaventa County area residential rates
are well above average for the smaller can sizes at twenty-one (21) percent above the 20
gallon comparative rate and twenty-nine (29) percent above the 32-gallon comparative
rate. The 96 gallon residential rate is 42 percent below the comparative average.
In Exhibit E-2, following Exhibit E-1, we compare current Garaventa County area
commercial bin rates with the eleven (11) comparative jurisdictions. For all bin sizes
shown, Garaventa County area commercial rates are below the comparative average,
ranging from one (1) to seven (7) percent below the average.
In Exhibit E-3, following Exhibit E-2, we compare current Garaventa County area
20-yard drop box rates with the eleven (11) comparative jurisdictions. Current
Garaventa County area drop box rates are 15 percent below the comparative average.
In Exhibit E-4, following Exhibit E-3, we compare current Garaventa County area
residential rates with those of other Contra Costa County service providers. For the
smaller-sized container service, Garaventa County area rates are well above the average
of these other County service providers (19 to 21 percent). For the larger-sized 96-
gallon container service, Garaventa County area rates are well below the average of
these other County service providers (39 percent).
Appendix E. Comparative Refuse Collection Rates
E-2 Review of Garaventa Enterprises Solid Waste Rate Application
In general, we caution the County’s use of
comparative rates as a basis for setting rates. This
is because it is difficult to make “apples to apples”
comparisons with other jurisdictions. Other
jurisdictions may have unique:
Cross-subsidies between sectors
Franchise fees and other services
(contained within the rate)
Legacy rate setting practices
Levels of residential, commercial, and
industrial business
Profitability levels and targets
Rate structure objectives (e.g., that
penalize larger waste generators)
Rate setting processes
Service levels (e.g., bi-weekly versus weekly
yardwaste or recycling collection)
Transfer station and landfill tipping fees
(based on the proximity to these facilities).
E-3
Exhibit E-1
Contra Costa County
Garaventa-Served Areas
Comparative Residential Rate Survey
(As of May 2010)
No. Jurisdiction 20 gallon 32 gallon 64 gallon 96 gallon
1 Antioch1 $23.99 $25.11 $31.49 $36.75
2 Clayton 20.36 21.58 31.64 34.54
3 Concord – 23.00 31.00 38.00
4 Danville 15.48 17.85 35.71 53.56
5 Lafayette 20.44 23.57 47.12 70.69
6 Martinez 19.15 27.45 30.60 64.30
7 Moraga 18.75 21.65 43.30 64.95
8 Orinda 24.28 28.01 56.02 84.03
9 Pleasant Hill 19.58 22.66 30.91 46.36
10 Unincorporated County (CCCSWA) 16.35 18.87 37.73 56.60
11 Walnut Creek 14.19 17.00 33.99 50.99
Average $19.26 $22.43 $37.23 $54.62
Contra Costa County – Garaventa $23.34 $28.85 N/A $31.85
Percent Difference 21% 29% N/A -42%
1 Effective July 1, 2010, the rates will be $20.99, $24.65, $39.80 and $46.75, respectively, for 20-, 32-, 64-, and 96-gallon service.
Exhibit E-2
Contra Costa County
Garaventa-Served Areas
Comparative Bin Service Rate Survey
(As of May 2010)
No. Jurisdiction 2-yd/1 pickup per week 3-yd/1 pickup per week
1 Antioch $219.57 $330.36
2 Clayton 196.16 264.91
3 Concord 269.00 364.00
4 Danville 246.18 369.27
5 Lafayette 301.90 452.84
6 Martinez 222.11 380.97
7 Moraga 269.35 404.03
8 Orinda 333.16 499.74
9 Pleasant Hill 189.84 284.40
10 Unincorporated County (CCCSWA) 240.59 360.88
11 Walnut Creek 173.17 259.75
Average $ 241.91 $361.01
Contra Costa County – Garaventa $ 239.00 $334.00
Percent Difference -1% -7%
Appendix E. Comparative Refuse Collection Rates
E-4 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit E-3
Contra Costa Country
Garaventa-Served Areas
Comparative Debris Box Rate Survey
(As of May 2010)
No. Jurisdiction 20 cu. yd.
1 Antioch2 $479.67
2 Clayton 393.98
3 Concord 420.00
4 Danville 582.83
5 Lafayette 609.74
6 Martinez 407.00
7 Moraga 582.84
8 Orinda 645.34
9 Pleasant Hill3 349.83
10 Unincorporated County (CCCSWA) 575.57
11 Walnut Creek 644.43
Average $517.38
Contra Costa County – Garaventa $440.00
Percent Difference -15%
2 Recycling services are mandated with the industrial services.
3 Recycling services are mandated with the industrial services.
Exhibit E-4
Comparison of Garaventa County Area Residential Rates
With Other County Service Providers
(As of July 2010)
Service Provider 20 gallon 32 gallon 64 gallon 96 gallon
Allied Waste Services – East/Central County $12.15 $15.90 $23.70 $30.75
Richmond Sanitary Service – West County Areas 24.41 29.36 56.31 83.85
Richmond Sanitary Service – Crockett Area 22.44 26.61 46.66 56.69
CCSWA – County 16.35 18.87 37.73 56.60
Garaventa – Ironhouse Sanitary District 23.11 28.11 N/A 31.11
Average $19.69 $23.77 $41.10 $51.80
Garaventa County Areas (Non Ironhouse Sanitary
District Areas) $23.34 $28.85 N/A $31.85
Percent Difference 19% 21% -39%
Appendix F
Comparative Jurisdiction Franchise
Extension Terms and Conditions
Appendix F
Comparative Jurisdiction
Franchise Extension Terms
and Conditions
This appendix provides franchise agreement terms and conditions agreed to as part
of franchise agreement extensions for comparative cities and counties in California.
In Exhibit F-1, we provide summaries of 31 city and county jurisdiction franchise
extensions occurring between 1991 and 2010. For each city or county, we identify the
year of the extension, the length of extension, and the general terms and conditions
agreed to as part of the extension.
Below we summarize the types of franchise extension conditions used by
other jurisdictions:
Jurisdictional benefit – At ratepayer expense
1. Increase franchise fees
2. Add new programs to increase diversion (so that 50 percent AB 939 goal
is met and sustained, e.g., convert more apartments to recycling, single
stream recycling, more commercial recycling, food waste recycling)
3. Increase free services to the jurisdiction (e.g., number of drop boxes collected
for neighborhood collection program)
4. Provide local litter control
5. Develop recyclable materials transfer facility
6. Provide free disposal at transfer station for city/county vehicles
Jurisdictional benefit – At hauler expense
7. Require franchise extension payments
8. Establish diversion penalty payments
9. Provide performance penalties
10. Add franchise re-assignment fees
11. Consolidate existing franchise agreements (and or amendments)
into a single, unified franchise agreement
Appendix F. Comparative Jurisdiction Franchise Extension Terms and Conditions
F-2 Review of Garaventa Enterprises Solid Waste Rate Application
Ratepayer benefit – At hauler expense
Rates Stability and Relief
12. Provide rate freezes over specific intervals
13. Provide rate reductions
14. Reduce the current profitability level
15. Provide caps on interim year rate changes
(a discounted percent of CPI and an overall
CPI cap)
16. Provide long-term caps on tipping fees
17. Conduct rate reviews at the extension
point, where if rates not “at market”
then deny extension
Ratepayer benefit – At hauler expense,
if not rate reimbursed
Service Changes
18. Increase on-call clean ups (customer identified)
19. Provide new commercial recycling services
20. Shift to weekly yard waste collection (from
bi-weekly)
21. Expand single stream-additional material types
22. Use alternative fuel vehicles, and
compressed natural gas vehicles
Other Changes
23. Develop website or enhance content
24. Develop newsletter
25. Provide credit card and bank bill pay
We describe general franchise extension pros and
cons for the County in Exhibit F-2, on page F-7.
F-3
Exhibit F-1
Other Jurisdiction Franchise Extension Provisions
As of July 2010 Page 1 of 4
No. Jurisdiction
Year
Extension
Granted
Year
Originally
Franchise
Ended
Term of
Extension
(Years)
Year Now
Franchise
Ends
(Ended)
Terms of Extension/
New Award Hauler
1 City of Albany 2003 2004 10 2014 Provided free collection from
city parks ($36,000/year), and
contractor provided green waste
bins, and increased franchise fees.
Waste Management
of Alameda County
2 City of Antioch# 2010 2015 10 2025 Provided community impact
payment of $1 million in
exchange for the extension;
expanded existing services; and
increase the on-call pick-up for
bulky items from one to two
times per calendar year.
Allied Waste Services
3 City of Barstow 1996 2007 5 2012 Waived a $2.51 rate increase
that was necessary to fund
recycling, and froze rates for
two years.
Desert Disposal Service
4 City of Belmont 2005 2006 4 2010 Entered a 15-year agreement
with the South Bayside Waste
Management Authority
(SBWMA) for disposal at Ox
Mountain landfill at "most
favored client" rates, which
would reduce Belmont's total
costs about 7 percent. Made
$11.6 million cash payments to
SBWMA over a period of three
years beginning January 1, 2005.
BFI Waste Systems of
North America, Inc.
5 City of Concord 2006 2011
(with five
year option
to 2016)
10 2021
(with five
year option
to 2026)
Required relocation of
maintenance facility. Established
fixed city franchise fees through
2020. Established free City
parks disposal and increased
neighborhood cleanup debris
boxes. Provided 70 percent of the
CPI for interim year adjustments.
Established a five (5) percent
interim year rate cap.
Concord Disposal
Service
6 City of El Cerrito 2009 2009 8 2017 No specific new provisions. East Bay Sanitary
Company
7 City of Hayward 2006 2007 7 2014 Provided service enhancements
including: co-mingled recyclables
collection; annual residential
clean-up service; free disposal of
two cubic yards of self-hauled
waste; batteries collection; Christmas
tree collection; public litter cans
collection; free compost; food waste
collection; dirt and debris collection;
and biosolids disposal for residential
services, and commercial recycling
services; and alternative fuel vehicles.
Waste Management
of Alameda County
Appendix F. Comparative Jurisdiction Franchise Extension Terms and Conditions
F-4 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit F-1
Other Jurisdiction Franchise Extension Provisions
As of July 2010 (continued) Page 2 of 4
No. Jurisdiction
Year
Extension
Granted
Year
Originally
Franchise
Ended
Term of
Extension
(Years)
Year Now
Franchise
Ends
(Ended)
Terms of Extension/
New Award Hauler
8 City of Healdsburg 2010 2010 10 2015
or 2020
At minimal annual rate
increases, provided new services
including neighborhood
clean-up events, more recycling
education programs, Christmas
tree disposal, commercial food
waste composting, and free tire
recycling. Provided one-time
contract extension fee of
$150,000.
Redwood Empire
Disposal
9 City of Livermore* 2009 2010 10 2020 To develop an indoor recyclable
materials transfer facility in
the City to transfer recyclable
and compostable material
collected from within the City
into large trailers for transport
to offsite recycling facilities.
Minimize rate increases for
residential services. Added
new compressed natural gas
vehicles and new containers.
Livermore Sanitation,
Inc.
10 City of
Manhattan Beach
1998 1999 3 2002 Froze rate adjustments for
1998 and 1999, with a rate
adjustment resuming in 2000.
Put a specialized collection
vehicle, one that is smaller and
quieter, in the downtown area.
Waste Management
11 City of
Manhattan Beach
2002 2002 9 2011 To divert at least 50 percent
of the waste stream collected
and controlled by Waste
Management from landfills.
Waste Management
12 City of Martinez 2004 2011 2 2013 Reduced cost of new single
stream recycling program by
extending the term (equipment
depreciated over longer term).
Allied Waste
Industries, dba PHBD
13 City of Milpitas 2004 2007 10 2017 Waived the cost of the street
sweeping program for up
to 3 years (an approximately
$225,000 annual cost to the
General Fund).
Allied Waste
Industries, dba BFI
14 City of Oceanside# 2010 2012 3 2015 Offered to pay the City at least
$1 million a year for five years
in exchange for a three-year
franchise extension.
Waste Management
of North County, Inc.
15 City of Piedmont* 2008 2008 10 2018 Provided three new wheeled carts
for garbage, recycling, and green
waste to each household; and for
the first time, provided an option
for curbside pick-up services.
Richmond Sanitary
Services, Inc.
F-5
Exhibit F-1
Other Jurisdiction Franchise Extension Provisions
As of July 2010 (continued) Page 3 of 4
No. Jurisdiction
Year
Extension
Granted
Year
Originally
Franchise
Ended
Term of
Extension
(Years)
Year Now
Franchise
Ends
(Ended)
Terms of Extension/
New Award Hauler
16 City of Pleasant Hill 2003 2006 9 2015 Restructured franchise
agreement entirely, set up a
rate setting process, and fixed
residential rates for one year.
Allied Waste
Industries, dba Pleasant
Hill Bayshore Disposal
17 City of Richmond 2003 2003 22 2025 Increased franchise fee from
2.5 to 5.0 percent of gross
revenues. City residents get
free use of landfill.
Republic Waste
Services
18 City of San Mateo 2005 2006 4 2010 Provided a total settlement
payment of $2.7 million to the
City. The settlement payment
represented reimbursement of a
portion of the landfill disposal
fees previously charged to the
City. These funds were credited
to the City over a four-year
period and were used to
moderate rate increases.
Republic Services
(formerly Allied Waste)
19 City of San Rafael 2001 2021 1 2022 No specific new provisions. Marin Sanitary Service
20 City of Santa Rosa 2010 2012 5
(+5 year
Option)
2017 Increased franchise fee from
10 to 11 percent; established an
additional franchise extension
fee of 4.5%, which cannot be
passed onto the ratepayer; and
provide service enhancements
to benefit ratepayers.
North Bay Corporation
21 City of Seaside 2003 2010 5 2015 Provided City option to increase
citywide clean ups from existing
two (2) per year to four (4) per
year (at $0.50 per customer,
per month, additional cost).
Carmel Marina
Waste Management
22 City of Stockton 2003 2003 15
(+5 year
option)
2018 Created a 10 percent senior rate
discount (at age 65); free stickers
for extra waste pickup; seasonal
leaf collection; enhanced
neighborhood cleanup with
free bins and boxes for target
areas; added televisions,
computer monitors, and
appliances to curbside collection;
provided a best effort requirement
to meet 50 percent diversion;
established a cap on rate increases;
limited interim year adjustments
to 50 percent of the CPI and
subject to City approval.
Stockton Scavenger/
Sunrise Sanitation
23 City of Sunnyvale* 1991 1991 10 2001 Reduced rates by 16 percent. Bay Counties
Waste Services
Appendix F. Comparative Jurisdiction Franchise Extension Terms and Conditions
F-6 Review of Garaventa Enterprises Solid Waste Rate Application
Exhibit F-1
Other Jurisdiction Franchise Extension Provisions
As of July 2010 (continued) Page 4 of 4
No. Jurisdiction
Year
Extension
Granted
Year
Originally
Franchise
Ended
Term of
Extension
(Years)
Year Now
Franchise
Ends
(Ended)
Terms of Extension/
New Award Hauler
24 City of Sunnyvale 1992 2001 3 2004 Changed to OR-based rate
setting; purchased new trucks.
Bay Counties
Waste Services
25 City of Sunnyvale 1996 2004 7 2011 Changed operating ratio
(OR) level.
Bay Counties
Waste Services
26 City of Sunnyvale 2003 2011 7 2018 Changed depreciation schedule
to 10 years for rolling stock and
containers (from 7 years and 5
years, respectively). Savings with
conversion were split 50%/50%
to the City/hauler.
Bay Counties
Waste Services
27 Central Contra
Costa Solid
Waste Authority
2004 2005 10 2015 Implemented single stream
recycling by 9/1/2004, created
minimum diversion tonnage
goals, incorporated food waste
pickup with yardwaste, required
website, pre-set compensation
levels in years 1 and 2.
Valley Waste
Management
28 Central Contra
Costa Solid
Waste Authority
2004 2005 10 2015 Pre-set tipping fees over the
life of the contract. Pre-set
compensation in years 1 and
2 of the contract.
Allied Waste Industries
29 Pebble Beach
Community
Services District
2003 2010 5 2015 Allowed increase of 3.5 percent
versus 5.1 percent and
implemented single stream
recycling.
Carmel Marina
Waste Management
30 Monterey County 2010 2012 8 2020 Consolidated the two existing
franchise agreements
(Northeastern and Western
Franchise Agreements) into
a single, unified franchise
agreement that provided
economies of scale.
Standardized the service
package featuring wheeled
refuse and recycling carts.
USA Waste of
California, Inc., dba
Carmel Marina
Corporation
31 Santa Clara County 2007 2007 7 2014 No specific new provisions. Los Altos Garbage
* Franchise re-bid. All of the other examples in this table were negotiations with franchise holders and were not re-bid.
# Currently under negotiations.
F-7
Exhibit F-2
Franchise Extension
Pros and Cons
Pros Cons
Maintains continuity of collection services
Takes advantage of hauler’s local knowledge of County
streets/operations (e.g., route optimization, customer
requirements, and service delivery methods)
If applicable, retains a high quality hauler (in terms of
minimal complaints, consistent on-time delivery, other
measurable parameters)
Retains rates which may be competitive with other
jurisdictions with similar service offerings and objectives
Rewards a current hauler, who may have demonstrated a
willingness to implement program changes at affordable
costs, with the ability to gage the impact of those changes
Realizes that refuse collection contracts are best served by
long-term business partnerships between the County and
hauler (due to their capital intensive nature of the business,
the high costs of new vehicles/equipment, and the time
required to depreciate new purchases)
Recognizes that a formal procurement can be expensive
and administratively time-consuming for the County,
without a guarantee that all service parameters will be met
Potentially reduces the quality of service if let out to bid
(particularly by simply selecting a low bidder), though this
may be for a limited timeframe
Restricts potential leverage gained from competition.
A formal competitive procurement has the potential to
provide benefits to the County, which may include:
A one-time reduction in rates
New programs or changes to existing programs
Guaranteed periods of rate stabilization
Changes to the rate structure (if desired)
If granted with limited benefits realized by the County,
potentially fails to recognize that a contract extension has
tremendous value to a hauler in terms of future
profitability. Many jurisdictions use this value proposition
to negotiate some service modifications, or possibly some
rate relief. Absent a fair negotiation result, a procurement
often becomes the only solution
Limits the time required for a hauler to demonstrate an
extension is merited (if granted early in the franchise term)
Requires rebuilding County/hauler relationship. Potentially,
results in a new hauler who may not be motivated to work as
closely with the County to meet program needs (e.g., in the
case where margins already are slim)
Causes displacement of local laborers
Appendix F. Comparative Jurisdiction Franchise Extension Terms and Conditions
F-8 Review of Garaventa Enterprises Solid Waste Rate Application
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