HomeMy WebLinkAboutMINUTES - 01161990 - 2.1 J
2 . 1
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on January 16 , 1990 , by the following vote:
AYES: Supervisors Powers, Schroder, McPeak, Torlakson, Fanden
NOES: None
ABSENT: None
ABSTAIN: None
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SUBJECT: Proposed Rate for Acme Interim Transfer Station
The Board received the report dated January 16, 1990 from Sara
M. Hoffman, Solid Waste Manager, recommending the adoption of rate
application procedures, rate setting policies, and per ton rates
for the Acme Interim Transfer station, as recommended by Deloitte &
Touche. (A copy of the report is attached and included is a part
of this document. )
The Board received presentations from Gary Brayton, Deloitte
and Touche, and Don Blubaugh, City Manager, City of Walnut Creek,,
supporting the adoption of a transfer station rate of $51. 94 per
ton based on a 94 percent operating ration with a 37 months
transfer station amortization period. They also commented on the
feasibility of establishing an additional fee of $8. 63 per ton
assessed to gate customers to fund the gate share of remaining
landfill closure and post-closure costs.
The Board also heard. comments from Tom Bruen, representing
Acme Fill Corporation, 650 California Street, 29th Floor, San
Francisco, expressing opposition to the $51 . 94 rate, a reduction of
the $52. 22 rate proposed to the Board on December 5, 1989. He
advised that he did not believe the lower rate is a fair return on
Acme' s investment of the transfer station.
Board members discussed the position presented by Acme, the
increase in the amortization period from 31 months to 37 months,
the position of the cities relative to supporting the
recommendations, agreement on the need to establish a rate for
people coming to the gate, and the feasibility of delaying decision
for one week to allow opportunity for further review.
Therefore, IT IS BY THE BOARD ORDERED that a gate surcharge of
$8. 63 per ton for the Acme Fill interim transfer station is hereby
APPROVED.
IT IS FURTHER ORDERED that decision on the issues of rate
application procedures and rate setting policies is DEFERRED to
January 23 , 1990.
On request of Supervisor Torlakson, IT IS BY THE BOARD ORDERED
that Community Development Department staff PROVIDE a status report
on the issue of the Antioch and Richmond landfill closures and
fiscal implications thereto.
1 hereby certify that this is a true and correct copy of
an action taken and entered on the minutes of the
cc• Director, CDD Board of Supervisors on the date shown.
County Administrator ATTESTED. � l /G,
PHl ATCHEL Clerk of the Board
not Supervisors and County Administrator
1L_/1°
BY �.—.� ,Deputy
BOARD OF SUPERVISORS
FROM: Sara M. Hoffman
Solid Waste Manager Coontra
DATE: January 16, 1990' C )sta
CO
SUBJECT: Rate for Acme Interim Transfer Station
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION
Adopt rate application procedures, rate setting policies and per ton rates for
the Acme Interim Transfer station, as recommended by Deloitte & Touche.
FINANCIAL IMPACT
None to the County. The rates apply to the users of the interim transfer
station.
BACKGROUND/REASONS FOR RECOMMENDATIONS
On December 5, 1989., the consulting firm of Deloitte & Touche recommended that
the Board adopt a transfer station rate of $52.22/ton. This rate was based on a
95% operating ratio and amortization of invested capital over 31 months (the
term of current permits for the transfer station) . At the Board hearing, Acme
representatives proposed an alternate rate of $52.14 based on a 90% operating
ratio and amortization of invested capital over 55 months (Acme stated that they
would assume the risk associated with a longer term) . The Board adopted the
rate of $52.22 and directed Staff to review Acme's proposed operating ratio.
Deloitte and Touche has analyzed the impact of extending the amortization period
and reducing the operating ratio on the transfer station rate. Under Acme's
proposal, the average return on assets, weighted over the amortization period,
is 20.2% for Acme's proposal and 12.9% for the $52.22 rate.
Staff met with Acme, representatives of several franchising agencies (Walnut
Creek, Martinez and Central Sanitary District) , and Deloitte & Touche on the
issue. At that meeting the franchising agencies and Staff agreed upon the
acceptability of a 940 operating ratio (Central Sanitary District uses a 94%
ratio) combined with an amortization period of 37 months. This ratio results in
an average return on assets of 14.4% for Acme and a lower rate for the
ratepayers: $51.95/ton. Staff believes that adoption of this option would be
beneficial to all parties.
X
CONTINUED ON ATTACHMENT: YES • SIGNATURE:
i
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BO COMMITTEE
APPROVE OTHER -
SIGNATURE(S):
l
The rate components of the $51.95/ton rate are as follows:
Cost Component Cost Per Ton
Total Direct Labor Cost 8.12
Total Equipment 1.62
Total Variable Operating Cost 3.72
Total Administrative Cost 3.25
Amortization of Invested Capital 3.62
Sub Total - Operating Costs 20.32
Tipping Fee Charge 20.90
Total - Operating Costs 41.23
Operating Ratio Allowance 2.63
Solid Waste Planning Fees 2.24
Export Agreement Mitigation Fees 5.85
Total Rate 51.95
The $51.95/ton rate does not include costs for closure of Acme Landfill.
Assessment of those charges will be made quarterly to the local handlers by
community. However, the local haulers assessment does not cover the gate
customers, who have. historically contributed 11% of the landfill's wastestream.
According to preliminary estimates, gate customers are responsible for $308,180
of closure cost assessments each year. Since gate customers cannot be assessed
quarterly, it will be necessary to collect this assessment through a gate
surcharge of $8.63/ton. Staff believes that it would be advisable to authorize
this surcharge immediately.
In addition, Acme has expressed concern that the formal agreement for quarterly
assessment for closure has not yet been concluded between the County and cities.
They request that the Board authorize collection of $5.92/ton for closure in the
interim (see attached letter) .
Also, Deloitte & Touche developed procedures for periodic review of transfer
station rates. Rate setting policies cover the issues of closure and
post-closure of the Acme Landfill, capital costs for the transfer station and
rate of return methodology. These procedures and policies should be adopted in
conjunction with the rates.
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