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MINUTES - 11161999 - C127
F { Contra Costa TO: BOARD OF SUPERVISORS County FROM: DENNIS M. BARRY, AICP COMMUNITY DEVELOPMENT DIRECTOR DATE: October 26, 1999 SUBJECT: Accept the Rate Setting Methodology Manual Developed for Residential Solid Waste Charges as Applied to Garaventa Enterprises - SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION ACCEPT the rate-setting methodology manual developed by NewPoint Croup for residential solid waste charges in the unincorporated areas served by Garaventa Enterprises. FISCAL IMPACT None to the County General Fund. Board action on July 14, 1998 authorized the costs of developing the manual to be funded by franchise fees collected from the area served by Garaventa Enterprises. CONTINUED ON ATTACHMENT: /YES SIGNATUREJ�� RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMI TEE APPROVE OTHER SIGNATURE S ACTION OF BOARD ON Novarber 16,1999 APPROVED AS RECOMMENDED ML OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE xx UNANIMOUS (ABSENT #iii ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE ABSENT: ABSTAIN: BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Linda Moulton (925-335-1238) ATTESTED November 16 , 1999 cc: Community Development Department (CDD) PHIL BATCHELOR, CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR B , DEPUTY s:conservAhdal10-26-99bo Accept Rate Setting Methodology Manual Developed for Residential Solid Waste October 26, 1999 Page 2 BACKGROUND/REASONS FOR RECOMMENDATIONS On July 14, 1998 the Board of Supervisors directed the Community Development Director to execute a contract with NewPoint Group to develop a solid waste rate-setting process and methodology manual for the communities served by Garaventa Enterprises. The Rate Setting Manual is divided into five sections: Section 1. The rate-setting overview outlines the goals of the rate setting process and policies guiding the rate-setting manual. The rate change application process is also outlined and allowable and pass-through costs are specified. Section 11. This section gives an overview of the base year setting process and discusses timing of the process and outlines the steps such as: (1) preparation and submission of the rate change application; (2) verification of completeness; (3) review of the application; (4) survey of rates in similar service areas; (5) preparation of draft report and recommendations; (6) conducting of public hearing; (7) preparation of final report; (8) presentation of final report to the Board of Supervisors; and (9) implementation of new rates. Section 111. The rate-setting methodology is a step-by-step process. This section outlines the preparation of the Base Year change application. Section IV. The interim year rate-setting process outlines the provisions for applications that provide for CPI increase in the three years between base years. There are also provisions for changes in uncontrolled costs such as tipping fees and changes in regulatory fees. Section V. This section outlines the methodology and worksheets used for interim year rate changes. A copy of the Board Order of July 14, 1998 authorizing the development of the Rate-Setting Methodology Manual is attached as Exhibit A and a copy of the rate-setting manual is attached as Exhibit B. s:conservAindal3 0-26-99bo EXHIBIT s as County evelopment Department F ' CO s i e6fr i t 'r ey Rate Setting Process and Methodology Manual for Residential. Solid 'Neste Charges As Applied to G'araventa Enterprises �� � * �> fine ✓ �,, a= Garauenta Enterprises Management Consultants Rate Setting Process and Methodology .Macnnal,for Residential Solid Waste Charges Contra Costa County Rate Setting Process and Methodology Manual for Residential Solid Waste Charges Prepared far Contra Costa County Garaventa Enterprises Prepared by NewPoint Group, Inc° 2555 Third Street, Suite 215 Sacramento, California 95818-1100 (916) 442-0508 Revised.dune 28, 1999 Rate Setting Process and Methodology Manuel for Residential Solid Waste Charges Table of Contents Page I. Rate Setting Overview ............................................................................................ 1-1 A. Introduction to the Manual .............................................................................. I-I B. Goals of Rate Setting Process .......................................................................... 1-4 C. Policies Guiding Rate Setting Manual ............................................................. 1-8 D. Rate Change Application Process.................................................................... 1-13 E. Allowable and Pass Through Costs.................................................................. I--I5 F. Use of the Manual............................................................................................ 1-23 G. Future Enhancements to the Manual................................................................ I-25 IL Base Year Rate Setting Process.............................................................................. U-1 A. Overview of the Base Year Rate Setting Process............................................. H-1 B. Timing of the Base Year Rate Setting Process................................................. II-2 C. Steps of the Base Year Rate Setting Process.................................................... H-2 1. Preparation and Submission of Rate Change Application ...................... H-5 2. Verification of the Completeness of Rate Change Application ............. H-9 3. Review of Rate Change Application and Preparation of Responses....... H-10 4. Response to Additional Information Requests from County .................. U-13 5. Survey of Rates in Similar Service Areas............................................... H-14 6. Preparation of Draft Report and Recommendations ............................... H-16 7. Review of Draft Report and Recommendations...................................... 11-18 8. Conduct Public Hearing .......................................................................... 11-19 9. Preparation of Final Report and Recommendations................................ II-21 10. Presentation of Final Report and Recommendations to the Board of Supervisors......................................................................... II-22 11. Implementation of New Rates................................................................. H-23 III. Base Year Rate Setting Methodology.................................................................... III-1 A. Preparation of the Base Year Rate Change Application .................................. III-1 1. Entry of Operating Costs and Profit........................................................ 111-9 2. Determination of Residential, Commercial and Light Industrial Revenues........................................................................ III-12 3. Calculation of Allowable Operating Profit and Revenue Requirement............................................................................................ III-15 4. Calculation of Percent Change In Rates.................................................. III-17 5. Preparation of Summary Form................................................................ 111-18 B. Survey of Rates in Similar Areas..................................................................... III-19 Contra Costa County r - _... ......... ......... ......... ......... ......... ......... ............................................................................................................................................................................................................................................................................................................................ Rate Setting Process and Methodology Manual �o� Q�u��� �l �u�U�� �^�'������G '_' ' .-_'__'_'__ - - ~. Table of Contents (continued) PageIV. Interim Year Rate Setting Process......................................................................... l\/_I l. Preparationoud Submission ofRate Change Application ...,.—_.,... IV-4 2. Preparation ofRate Adjou1ozeot Iodicem..,—....—.--.—.........--.. I\/-5 3. Review and Response to County Analysis audCalculubonm----.—. IV-7 4` Preparation of Final Report and ................................ I\7-8 5. Presentation of Final Report and Recommendations to the Board ofSupervisors....--...—.—....—.---....-----.—.—. Il-9 6. Implementation ofNew Rates................................................................. TV-10 V. Interim Year Rate Setting Methodology.-------------------.—.. V-I A. Preparation ofthe Interim Year Rate Change Application .............................. V-1 L Report of Changes inUncontrolled Costs...--......------..—.. l/-4 2. Explanationof Changes boUncontrolled Costs ...................................... V-5 3. Application Certifinabou.—.—.,,.—.---.------..--.--.--- V'h B. Preparation ufthe Interim Year Rate Change Worksbeet---..—.----.. \/-7 L Determination ofBase Year Costs and Weighting .............................. V-ll 2. Projection of Change inConsumer Price Index...................................... V-13 3. Calculation ofPercent ChangesbzUncontrolled Costs.......................... V-15 4. Calculation of Weighted Change inResidential Rates ........................... V-16 5. Presentation nfSummary Form............................................................... lc18 Appendices Appendix A Franchise Between �dGu�v�� s� Appendix Comparison of Franchise Agreement Terms and Conditions with Manual Appendix Iruoubiae Agreement BetpveenIronhouxe Sanitary District and Oakley Disposal Service Appendix Blank Forms and Worksheets Contra Costa County H Rate Setting Process and Methodology Manual for Residential Solid Waste Charges List of Exhibits Exhibit Page I-1 Garaventa Enterprises— Unincorporated Contra Costa County Refuse Collection Service Areas.................. I-3 I-2 County/Hauler Solid Waste Rate Setting Philosophy............................................... 1-7 I-3 County/Hauler Solid Waste Rate Setting Policies .................................................... 1-9 I-4 Timing and Financial Statement Requirements of Contra Costa County RateSetting Process.................................................................................................. I-14 I-5 Definition of Financial Terms................................................................................... I-16 1-6 Organization of Each Step......................................................................................... 1-24 II-1 Base Year Rate Setting Process Overview................................................................ H-3 H-2 Timing of the Base Year Rate Change Process......................................................... II-4 11-4 Sample Public Hearing Announcement.................................................................... H-20 111-1 Preparation of the Base Year Rate Change Application ........................................... III-2 III-2 Sample Base Year Rate Change Application............................................................ I11-3 111-3 Sample Solid Waste Fee Survey ............................................................................... III-20 IV-I Interim Year Rate Change Process............................................................................ IV-2 IV-2 Timing of the Interim Year Rate Change Process..................................................... IV-3 V-1 Preparation of the Interim Year Rate Change Application ....................................... V-2 V-2 Sample Interim Year Rate Change Application........................................................ V-3 V-3 Preparation of the Interim Year Rate Change Worksheet......................................... V-8 V-4 Sample Interim Year Rate Change Worksheet.......................................................... V-9 Contra Costa County iii ............................................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................ Section I Date Setting Overview rt IY Fete Setting Overview This introduction chapter provides an 1. Bay Point a 4. Ironhouse overview of the rate setting process and also 2. Byron Sanitary Sanitary District b details significant guiding policies, which are District 5. North Concord" used throughout the manual. The process for 3. Discovery Bay" how rates are changed is described. Also These five areas are depicted in Exhibit 1.1, included is a description of how the refuse collection hauler's costs are treated for rate on page I-3. setting purposes. The area served by the Ironhouse Sanitary This chapter reviews how to use the District includes the community of Oakley, manual and identifies what future which incorporated as the City of Oakley on enhancements might be made as the County July 1, 1999. The area within the City of and hauler gain experience with the process. Oakley is served by Oakley Disposal Service, The chapter includes the following seven (7) an affiliate of Garaventa Enterprises, through a franchise with Ironhouse Sanitary District. sections: Oakley's incorporation is not expected to A. Introduction to the Manual result in any change in Ironhouse B. Goals of.Rate Setting Process responsibility for solid waste management and collection. C. Policies Guiding Rate Setting Manual The manual provides a formal structure D. Rate Change Application Process for establishing residential solid waste E Allowable and Pass Through Costs charges. Prior to adoption of this manual, no formal rate setting process or methodology I. Use of the Manual existed for this portion of the County. The G. Future Enhancements to the Manual. manual was developed with input and direction from the County's Community Development Department and Garaventa. A. Introduction to the Manual The manual is based on the current This manual provides a step-by-step guide franchise agreement with!Garaventa and for Contra Costa County(County) and one of existing Garaventa operating conditions in the its four franchise haulers, Garaventa County. As the County and Garaventa gain Enterprises (Garaventa), to prepare and more experience using the rate setting approve changes to residential solid waste methodology, the process should be updated, collection charges for unincorporated areas of revised, and improved in future base years. Contra Costa County. The manual details The manual establishes rate change procedures for setting residential service policies, provides application forms, specifies charges in the following five eastern portions of the County: reporting formats, identifies required supporting documentation, and describes procedures for requesting, reviewing, and adopting residential rate changes. Cost and ' Unincorporated Contra Costa County b Including[lie communities of Oak-ley,Bethel Island,and surrounding areas,including portions of Knightsen Contra Costa County Page 1-1 1. Rate Setting Overview revenue information is required for all This discussion focuses on responsibilities residential, commercial, and light industrial of participants in the process, describes services; however, the intent of the manual is activities performed, and identifies the to regulate charges for residential solid waste timing of these activities. handling service and residential recycling. ❑ DIL Base Year Rate Setting Commercial and light 'industrial solid waste Methodology This chapter provides collection charges are not specifically covered detailed instructions on how to complete by this manual. forms used to establish new residential The rate setting process and methodology rates in base years. described in this manual is not automatically ❑ IV. Interim Year Rate Setting Process intended for use in other unincorporated A detailed discussion of the interim year Contra Costa County areas serviced by other rate setting process is provided in this franchised waste haulers. For example, chapter. This discussion focuses on Richmond Sanitary Service, the hauler responsibilities of participants in the providing service to western portions of process, describes activities performed, and unincorporated Contra Costa County, is identifies the timing of these activities, regulated based on a methodology previously adopted by the County in the early 1990s. ❑ V. Interim Year Rate Setting Much of the structure and many of Methodology In this chapter, detailed policies in this manual may apply to these instructions are provided for completing other haulers' operations. However, other forms used to establish new residential haulers may provide different services with rates in interim years. different corresponding rates and rate The manual also contains the following structures, and may maintain entirely different four appendices: accounting and financial records. A. Franchise Agreement Between County This manual is organized into five and Garaventa Enterprises chapters as follows: B. Comparison of Franchise Agreement ❑ I. Rate Setting Overview Terms and Conditions with Manual This chapter provides an introduction to C. Franchise Agreement Between Ironhouse the manual and discusses the policies Sanitary District and Oakley Disposal followed in establishing the rate setting Service(for Ironhouse Sanitary District processes. areas) ❑ U. Base Year Rate Setting Process D. Blank Forms and Worksheets. A detailed discussion of the base year rate setting process is provided in this chapter. Contra Costa County Page 1-2 __ - . - ............................................................................................................................................................................................................................................................................................................................. __._. EXHIBIT 1-1 Garaventa Enterprises Unincorporated Centra Costa County Refuse Collection Service Areas 5 •<a�r, S 9 Rid,eyand 3qn+s,ry yrrviccli;rcukett tiarhxBc Sentcc _ -- -' � i B niug k n f+du.rr+cnlPl<axant I IM Baydwm E7ixlxail } f `� � L'i:vrnt F tetFtar> �x �� 2 C+t +flitrn—d +?, B yv cw Raknm 'x H wuing-kt reiw Indu..crlcJl'Irasaru Hill flay.ham i)1.4-1 and 4'allcr a'ax+e Ai rtm.mrnr f;n+.+axpnrx+cd.xmax Bay Point Byron Sanitary District r Discovery Bay Ironhouse Sanitary District ; North Concord Contra Costa County Page 1-3 i. Rate Setting Overview B. Goals of Rate Setting Process The Ironhouse Sanitary District is The primary goal of the rate setting sympathetic with the County's desire to process and methodology is to determine equalize rates in areas served by Garaventa residential solid waste collection charges Enterprises, and intends to implement rates which are fair and equitable to Contra Costa in the Ironhouse area which are similar to County residents, and which provide a those of the County. The Ironhouse Board reasonable profit to the franchise hauler. of Directors has ultimate approval authority for rates in the Ironhouse areas. The County shall recommend rates to all The process is designed to move toward of the unincorporated areas serviced by Garaventa Enterprises. Ironhouse and Byron amore formal rate setting..process from a Sanitary Districts will have ultimate less formal rate setting process. Currently, rates and rate structures are different for the responsibility for approval and five unincorporated County areas serviced implementation of the rates in their respective areas. At the time of this manual's by Garaventa. The County has expressed a development, representatives for these policy goal of common rates for these Sanitary Districts indicated a willingness to service areas. As an example, the single can residential rates (with and without toter) at use the guidelines established in this manual and an intention to, in the future, implement the time of this manual's development are rates recommended through the County's rate provided below: review process, with certain possible Basic exceptions. Service Total The County has agreed that a small island Rate Rate a area in the center of the City of Concord will ❑ Bay Point $20.30 $23.30 have the same rates as those of the City. The ❑ Ironhouse Sanitary company that services this area is Concord District 20.30 23.30 Disposal Service, Inc. (CDS), a subsidiary of Garaventa Enterprises. At the time of the ❑ Byron Sanitary manual's development, this North Concord District 18.30 21.30 area included approximately 250 residential ❑ Discovery Bay 20.25 23.25 customers. In an effort to maintain continuity of rates with neighboring City of Concord LJ North Concord 17.45 20.45 customers, it is assumed that future rates a Includes $3 toter rental fee. charged to these unincorporated County customers will be the same as rates charged A total of seven (7)key rate setting to the City customers. process goals are summarized in Exhibit I- The County would like the remaining 2, and described in detail'below: four areas of Bay Point, Ironhouse Sanitary 1. The County and hauler should start District, Discovery Bay, and Byron Sanitary with a strong and committed District to have common rates. Garaventa partnership. The current franchise has indicated a willingness to attempt to agreement between the County and move toward common rates across these Garaventa extends twenty(20) years service areas as long as the services provided through May 8, 2015., The County and are comparable. hauler should view this franchise as a long-term business partnership where Contra Costa County Page 1-4 i. Rate Setting Overview both parties commit to use the formal will set an expectation for the hauler, rate setting methodology, and plan and ultimately will protect the continuous communication on rate ratepayer. The process should be setting throughout the franchise term. designed to prevent large, unexpected 2. The charges requested by the franchise fluctuations in charges due to changes hauler must be justifiable and in costs or from the need to fund a supportable. A formal request to broadening scope of waste management change residential charges, submitted by services. a franchise hauler, should be based on 5. The process should be easy to adopted guidelines for expenses and administer, while still ensuring that profits which include only allowable and any rate request is justifiable and necessary costs. In determining rates, reasonable. The process should be easy the County shall consider both the need to explain and not place an undue cost for fairness to the ratepayer and the need on either the County or the franchise for the hauler to be compensated fairly hauler to implement. Rate changes and consistently with the methodology. ultimately should be easily explained 3. The process should ensure that and defensible to ratepayers. revenues are adequate to fully meet 6. The County and Garaventa should reasonable costs-of-service. Estimated strive to maximize opportunities to costs of service, and resulting solid improve performance and service waste management charges, should be quality while maintaining cost reasonable. Granting a franchise for competitiveness in the marketplace. In solid waste collection implicitly a"cost plus profit"relationship such as recognizes the private sector's ability to exists between the County and hauler, provide quality services at reasonable there often can be no incentive for the costs. Further, the County acknowledges hauler to decrease costs because that maintenance of quality service is increases in allowable costs actually related to providing adequate result in increases in allowable compensation and financial incentives operating profit levels. However,cost for continued good performance. increases cause rates to rise above Revenues generated should be adequate market levels, and penalize ratepayers. to fully meet reasonable costs-of-service. Ideally, the County and hauler should The resulting monthly charges for solid set rates in a base year, and the hauler waste service should be approximately should attempt to reduce its costs in comparable to those charged in other subsequent interim years. The County jurisdictions providing similar services and Garaventa need to determine a with similar cost structures, assuming mutually agreeable and measurable some efficiency of operations in these mechanism to provide incentives for other jurisdictions. Garaventa to reduce costs, and where 4. The rate setting process should provide possible, increase efficiency. This can mechanisms for ongoing rate review be accomplished through cost-sharing and long-term charge stability. A programs as described in Section G of periodic formal and thorough County this chapter. review of financial and operating data Contra Costa County Page 1-5 ............................................................................................................................................................................................................................................................................................................................ 1. Rate Setting Overview 7. The County should not micro-manage the hauler's operation. A policy to n&romanage Garaventa operations is counterproductive, requiring additional administration, which ultimately increases costs to the ratepayer. This methodology requires base year rate reviews every four years, and optional interim year adjustments. These reviews should be sufficient to efficiently manage Garaventa. Overuse of time-and-motion studies, performance audits, and other efficiency and effectiveness studies requires additional administration time, and costs, for both the County and the hauler. Contra Costa County Page 1-6 EXHIBIT I-2 E County/Hauler Solid Waste bate Setting Philosophy 1.Start With a Strung,Committed Partnership Between the County and Hauler 7.Micro-managing the 2.Utilize a Formal,Systematic, Haulers Operations Is Counter- " and Documented flats Setting Process and Methodology Cor Productive and Resource Justifiable and Supportable Intensive " '� Charges 1 5.Identify Performance 3.Ensure Revenue Adequacy Incentives for the Hauler to Maintain Competitiveness to Meet Reasonable and Quality Services Costs-at 4.Provide a Process Which Service t a + ? t t 5.Make Process Easy to Explain .k and Administer Ensures Ongoing Rate Review and Charge Stability a r€ Contra Costa County Page 1-7 i. Rate Setting Overview C. Policies Guiding hate Setting Manual not to be aligned with actual costs of providing service. This process and A fatal of six (6) guiding policies were methodology codifies strict rate review considered in developing the processes and timelines and responsibilities. If the methodologies described in this manual. County and hauler adhere to these time These policies and their impacts are frames for submission and rate change identified in Exhibit I-3 on the following approval, and no party defaults on these page. The remainder of this section describes time frames, all future rates should be each of these policies. established such that there is no need for 1. Focus on rate regulation of residential retroactive rate increases. solid waste management collection 3. Allow no balancing accounts. This rate charges. Residential and recycling solid setting process is based on projecting waste management charges are regulated results during base years. Thus, actual by the County in this manual, and base year results likely will differ from represent recovery of allowable costs base year projections. In some incurred by the franchise hauler, and a regulatory environments, these profit level prescribed by the County. differences are "balanced" in subsequent These allowable costs include those costs years by using a balancing account. associated with removal, collection, and disposal of residential solid waste and Balancing accounts are occasionally curbside collection of residential used in the waste industry as an accounting-based approach to true up a recyclable materials. previous year's projections to actual Costs incurred by the franchise hauler financial results. A balancing account must be adequately documented in a can then be used to address differences formal request for a rate change, and the between actual and projected results. A rate request must be supported by balancing account requires substantial company audited financial statements. administration, reporting, and control The first formal request for a rate measures which determine how funds in adjustment(submitted during 1999) will the account are invested and managed. not require audited financial statements, When a balancing account is established, but all future base year rate requests will. terms and conditions related to these This manual is not intended to accounts are clearly documented as part specifically regulate commercial and light of a rate setting process and industrial solid waste charges. However, methodology manual. Also, terms and revenues and costs for commercial and conditions are specifically incorporated light industrial services will be used to set by reference into contractual agreements residential rates. The County will between the respective parties. evaluate commercial and light industrial Balancing accounts are not commonly rates and rate changes separately from utilized. The problem with balancing this manual. accounts is that by funding surpluses and 2. Allow no retroactive rate increases. deficits using rate revenues, rates There will be no allowance for a charged to customers ultimately do not retroactive increase in rates, except by reflect the true cost of providing service special agreement, or by party default. to customers because they include Retroactive reimbursements cause rates Contra Costa County Page 1-8 EXHIBIT I-3 County/Hauler Solid Waste Rate Setting Policies Policy Impact i 1. Focus on rate regulation of Commercial and light industrial residential solid waste charges charges are not set by this process i,MMMMM t Rates are never increased in one 2. Allow no retroactive rate increases period for activity of a prior period Rates are set prospectively and are 3. Allow no balancing accounts not trued up in subsequent years x The hauler should work with the County 4. Fund source reduction and to implement these programs with costs HHW programs " allowable and funded through rates 5. Provide County drop box and bin The hauler should provide these services to the County,with costs service allowable and funded through rates Assure that related party transactions 6. Indirectly regulate affiliated from affiliated companies are companies consistent with market transactions Centra Costa County Page 1-9 t. Rate Setting Overview retroactive components. Overtime, The County signed a franchise agreement current ratepayers can end up ultimately with Garaventa Enterprises in May 9, subsidizing, or benefiting from, prier 1995, in an effort to assure that generations of ratepayers. For example, if Garaventa would cooperate to meet rates are raised to pay off a balancing mandated AB 939 diversion account, then current ratepayers bear the requirements. The franchise hauler will responsibility of what previous ratepayers work closely with the County to meet should have paid for initially. diversion goals mandated by the Municipal finance principles generally California Integrated Waste Management require a strong nexus between(1) cost-of- Board(CIWvfB). The franchise hauler service and benefits and (2) cost-of-service and County shall agree on specific and rates. Use of a balancing account programs and activities to show a good generally breaks down this nexus and faith effort to meet CIWMB diversion results in rate inequalities. goals. Examples of these efforts may include: (1) developing a separate green A balancing account also frequently is less waste program, (2) increasing materials useful when a long-term franchise exists. collected via the current curbside With a long-term business partnership recycling program, (3) maximizing there is less need to recover variances diversion activities at,the transfer station, between actual and projected results on a or other disposal facilities that the year-to-year basis. These variances can franchise hauler may use, and (4) often be absorbed over the course of a providing economic incentives to reduce twenty-year franchise, such as is the case residential solid waste generation between the County and Garaventa. through variable can rates. Costs Balancing accounts are not designed for associated with theseAB 939 diversion accounting for differences between"rates goals are considered allowable costs for asked for" and "rates received." They also rate setting purposes. The franchise are not designed for accounting for hauler will be allowed a profit on these differences between"rates received" and "a costs. fair rate of return." Balancing accounts, by Oakley Disposal Service, a sole their very nature, result in retroactive rates, proprietorship of Garaventa Enterprises, which do not reflect cost-of-service based provides service to the areas within the rates. Ironhouse Sanitary District(i.e., Oakley. 4. Fund costs to implement State and Bethel Island areas) through a mandated source reduction and franchise agreement between the two household hazardous waste programs. parties. The County and Ironhouse The County has adopted the Source Sanitary District signed a memorandum Reduction and Recycling Element (SRRE) of understanding (MOU) on July 31, and Household Hazardous Waste Element 1997. This MOU specifies how the (HHWE) as required by the Integrated County and Ironhouse Sanitary District Waste Management Act of 1989 (AB shall coordinate solid waste efforts to 939). These elements contain a number of meet A13 939 diversion requirements. recommended programs whose costs are The MOU specifies each party's projected to be funded by solid waste associated responsibilities in collection charges. implementing these programs. The Contra Costa County Page 1-10 1. Rate Setting Overview MOU is under review and is herein are considered a pass-through cost and incorporated by reference_ no additional profit is allowed. 5. Provide the County drop box and bin Additionally, if the franchise hauler rents service. The franchise hauler shall office and/or warehouse space from a provide solid waste collection and parent or affiliated company, then rent disposal services at County buildings at no charged by its parent company will be charge to the County. Costs associated compared with rent charged by property with the franchise hauler providing these managers for comparable office and services are allowable costs for rate warehouse space setting. The hauler also shall provide up At the time this manual was developed, to ten, 20-cubic yard, drop boxes per year Garaventa had been identified as having for community cleanup projects with these related-party transactions with the costs also allowable for rate setting. following affiliated companies: 6. Indirectly regulate affiliated ❑ Contra Costa Waste (d.b.a. companies. Transactions between Pittsburg Recycling Center and Garaventa and affiliates, or related parties, Transfer Station)—This should be examined for reasonableness. recycling center and transfer These "related party transactions" have station located in the City of potential for mistreatment in rate setting. Pittsburg handles all waste For example, if a cost of a related party collected by Garaventa already includes a profit component, and Enterprises from unincorporated that cost is allowed for rate setting with a County customers. This waste is profit, a double-counting of profit can consolidated into transfer trailers occur. For each related party transaction, and transported to Potrero Hills the hauler should disclose the nature of Landfill in Solano County the relationship and whether the ❑ Concord Disposal Service, transaction is a market-based transaction. Inc.----Services the City of The hauler should provide documentation Concord and a small area of to support the reasonableness of these transactions. In particular, leasing of unincorporated County, called North Concord trucks and equipment, or office space, are often related party transactions. ❑ Oakley Disposal Service— Services the Ironhouse Sanitary At the time a base year rate change District areas of Oakley, application is submitted, the franchise Knightsen, and Bethel Island hauler is required to provide the County with at least three comparable rates for ❑ Byron Disposal Service— trucking charges, office space, and Services the Byron areas. The warehouse space (i.e., a minimum of nine 10-year term of the current comparable rates). County staff will be franchise agreement between the responsible for determining if these Byron Sanitary District and charges are reasonable. Byron Disposal Service began in If the franchise hauler leases trucks and October 1991. other equipment from an affiliated or parent company, then all trucking charges Contra Costa County Page 1-11 ......... ......... ......... _..... ..- _..._ _.... -- _....... _....._.. _. ._..._... __ ............................................................................................................................................................................................................................................................................................................................ 1. Rate Setting overview ❑ Discovery Pay Disposal ❑ Mt. Diablo Paper Stock— Service---Provides primarily Handles all of the recyclable residential service to the materials that are collected Discovery Bay area of the curbside by Garaventa unincorporated County. This Enterprises companies. company was purchased by ❑ SPG Trucking—SEG leases Garaventa Enterprises in 1986. vehicles to other Garaventa- ❑ Pittsburg Disposal Service-- affiliated companies, which are Services the City of Pittsburgh used for collection and to haul and the unincorporated area of waste from the Pittsburg transfer Bay Point. In 1995, the County station to the Potrero Hills divided the Bay Point service area Landfill. between Browning Ferris ❑ Brentwood Disposal Service— Industries {BFI} and Garaventa Purchased by Garaventa in 1984, Enterprises. Rates charged by this company provided service to Garaventa for the Bay Point area Discovery Bay areas prior to historically were those charged by Garaventa's purchase of BFI and thus are not similar to Discovery Bay Disposal Service other Garaventa serviced in 1986. Now, Brentwood unincorporated County areas. Disposal services rural areas around Discovery Bay and Brentwood. Contra Costa County Page 1-12 1. Rate Setting Overview D. Rate Change Application Process ❑ Change in costs for tipping fees A Base Year Rate Change Application and regulatory fees estimated to from the franchise hauler is required once occur in the next interim year every four years as shown in Exhibit I-4, on ❑ An adjustment for the franchise fee, the following page. This process requires which is based on a percentage of detailed financial and operating information gross annual revenues generated which is carefully reviewed and analyzed by from residential and non-residential the County. These detailed reviews are integrated solid waste collection referred to as "base"years in the service. methodology. The franchise hauler has the option to With the Base Year Rate Change submit an Interim Year Rate Change Application, the hauler submits annual Application for a rate increase between base audited financial statements for the previous years. The scope of each interim year year(except for the initial base year application is much more limited than a base application after this manual is adopted). year request. A formal application is These statements serve as the base documents required each year the company requests a of the application. Financial forms contained rate change. The hauler can adjust rates in the application should be reconciled to the following the County's interim year rate audited financial statements to provide review of its application, but is not obligated assurance that all of the company's activities to do so. The hauler is encouraged not to are accounted for. raise rates in interim years except for At the time a Base Year Rate Change extraordinary changes in their costs. Application is submitted, the County shall The County or franchise hauler may survey rates and services provided in at least request an extraordinary, or consequential, six other municipalities of comparable size adjustment outside of the base year and and service. interim year adjustment schedules. For In each of the "interim" three years, rate example, an extraordinary adjustment might adjustments will be based on the annual result from a change in service or additional percentage change in the following three program requested by the County. The items: franchise hauler requesting an extraordinary or consequential cost change shall ❑ Annual change in the most recent demonstrate, to the satisfaction of the actual, not forecasted, Consumer County, that it has incurred extraordinary Price Index (CPI) for all Urban and consequential cost changes. Consumers for the San Francisco- Oakland-San Jose area published The County may request an interim year by the Bureau of Labor Statistics rate change when there are extraordinary in their Monthly Lobar Review. This changes, either up or down, in tipping fees CPI is applied to costs of the franchise charged to the hauler. For example, if there hauler other than tipping fees and is a large drop in tipping fees paid by the regulatory fees. hauler, the County can request a rate decrease in an interim year. Contra Costa County Page 1-13 ...................................................... ......................................... ................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................ EXHIBIT 14 Timing and Financial Statement Requirements of Contra Costa County Rate Setting Process TIMING rte--— Base Year Every 4 Years Timing of Ease Year hate Change_ aces rs (See Exhibit Base Interim Interim Interim Base Interim Year I Year I Year 2 Year 3 Year 2 Year€ . .. . Submit Base Year Application 1998 2999 2004 2001 2402 2043 2004.... Beginning of Year(January 1) FINANCIAL.STATEMENT REQUIREMENTS Audited Base Actual Actual (Actual) Estimated Projected Year l 1 . 111 2003 1999 2000 2401. 2002 2003 2007 2003 2004 2005 2006 2007 2014 2007 2008 2009 2010 2021 Contra Costa County Page 1-14 1. Rate Setting Overview E. Allowable and Pass Through Allowable Costs Costs The hauler is allowed to earn a profit on Rates are established for each base year certain costs. The majority of allowable based on the hauler's projected revenue costs are direct labor, corporate and local requirement. The revenue requirement is general and administrative costs, trucking defined as the sum of the following: and equipment costs, and tipping fees. U Allowable costs These allowable costs are defined in Exhibit 1-5, on the following page. The * Allowable operating profits following costs of providing collection * Pass through costs. service are clarified because of their special treatment for rate setting. Thus, for purposes of computing the revenue requirement, itis necessary to determine d Tipping fees—Profit is allowed on which of the franchise hauler's costs are (1) tipping fees in each base year. The allowable costs, (2)pass through costs, and franchise hauler is allowed to include (3) non-allowable costs. tipping fees of up to a set amount per ton in the calculation of profit described When a cost is said to be "allowable," above. The actual limit is established by that cost, plus a profit component associated County policy. At the time of this rate with that cost is included in rates charged to manual's development, tipping fees are the ratepayers. Allowable costs are often set by the County at a cap of$45.00 per those costs that are integral to the hauler's ton with profit. Any amounts over this operation and/or are associated with actual limit are considered pass through costs, activity performed by the hauler. and profit is not allowed. If the tipping Pass through costs are costs which also fee is less than the.established limit, are included in rates charged to customers, actual fees paid are used to calculate total however these costs do not have an tipping costs. associated profit component. Pass through This tipping fee limit allows the franchise costs are generally transactional in nature and hauler to make a reasonable profit on often are thought of as costs not associated tipping fees, but removes excess profits with any significant effort performed by the caused by dramatically increasing tipping hauler. fees. The franchise hauler must conduct Non-allowable costs are not allowed in certain activities related to tipping fees rates charged to ratepayers. These costs are such as keeping records and making disallowed because (1) they may not be payments to the disposal facility. As associated with the core business, (2) they tipping fees increase, the franchise may be included implicitly in the profit level hauler's workload does not change. To allowed by the County (e.g., interest), or(3) allow the full amount of the tipping fees they may unnecessarily complicate rate in the calculation of profit may give the regulation (e.g., income taxes). franchise hauler excess and unreasonable profits. Contra Costa County Page 1-15 EXHIBIT I-5 Definition of Financia( Terms Application Line Number/item Definition Allowable Costs 1. Direct Labor Wages and related benefits paid to refuse collection, office, and administrative staff, including wages, overtime, payroll taxes, health and welfare benefits, workers compensation,and pension benefits. 2. Tipping Fees (Profit Allowed) Costs to dispose of solid waste at transfer stations,transformation facilities, or landfills. These fees are capped with profit at a set amount per ton. The per ton limit is established by the County and is currently$45.00 per ton. 3. Corporate and Local General All general and administrative costs in addition to corporate overhead.The and Administrative Costs amount of this item cannot exceed 13.2 percent of total costs in the initial base year. This item includes the following costs: • Accounting Management fees • Collection fees • Medical expenses • Computer equipment • Postage • Dues and subscriptions • Office supplies • Insurance • Office repair and maintenance • Janitorial • Telephone • Laundry and uniform • Travel • Legal services • Utilities. • Licenses 4. Depreciation and Other Principally includes depreciation and leases of real estatelfacilities, building Operating Costs maintenance, and use taxes. 5. Services Provided to County Cost of services provided to collect and dispose of waste from County- owned facilities. 6. Total Allowable Costs Sum of lines 1 through 6. Allowable Operating Profit 7. Operating Ratio Determines allowable operating profit, and is the ratio of total operating costs to total operating revenue. The operating ratio must be between 88 and 92 percent. if the franchise hauler's actual operating ratio is outside this range,the operating ratio is to be set at 90 percent during the base year. 8. Allowable Operating Profit Established by the allowable operating ratio and equal to total allowable costs (Line 7) +0.90—Line 7. Pass Through Casts 9. County Administration Fee Fee associated with the franchise. This fee can be used for rate review costs, audits, or other studies. 10. Trucking and Equipment Includes depreciation of trucks,fuel expense, licenses, parts,tires, and associated repair and maintenance expenses. 11. Tipping Fees (w/o profit) Cost to dispose of solid waste at transfer stations, transformation facilities, or landfills. These are fees above the$45.00 per ton limit. 23. Residential/Commercial/Light Equal to five(5) percent of total gross residential, commercial, light Industrial Franchise Fees industrial, and recycling revenue. 29. Total Pass Through Costs Sum of lines 10, 11, and 23. Contra Costa County Fuge 1-16 ! Rate Setting Overview If the franchise hauler utilizes a disposal Garaventa shall review the cap on G&A facility awned by an affiliated company to assure that this cap reflects industry (i.e., the Pittsburg Transfer Station), as is averages. the case currently with Garaventa, the .Pale I-I tipping fee limit still applies. however, Comparative General and Administrative the tipping fee charged by the disposal Casts,Expressed as a Percent of Casts facility to the franchise hauler must be (1934 to 1996) equal to, or less than, the rate charged to other non-affiliated franchise haulers for COVa axny 19941995 1996 the same service. Tipping fees are defined 1. WMAC-Alameda to include both transfer station and landfill County 14.6 14.1 13.5 disposal costs. 2. WMAC-Fremont 10.8 In each interim year, tipping fees would 3. Vacaville sanitary not be automatically adjusted by the CPI, service 11.6 11.3 13.3 as is proposed for all controlled costs. 4. Richmond Sanitary Rather, a projection would be made of service 13.7 14.7 10.8 what tipping fees would be in the new 5. Concord Disposal interim year, then a comparison made with Service 11.7 16.1 this cost item in the previous year. 6. San Anselmo Refuse& 16.4 ❑ General and administrative costs--- ng cli Corporate and local general and 7, Recycling l Sanitary administrative{G&A}are allowed up to a Service 16.1 capped limit set by the County. This 8. Sunset Scavenger 10.4 11.4 amount should be examined in each base year to assure that the cap reflects Average 12.5 13.8 _13.0 industry norms. Table 1-1 (right) shows Average of 1994-1996 13.2°In that at the time of the manual's development, total G&A costs for eight ❑ Certain regulatory charges- separate hauling companies over a recent regulatory charges assessed on refuse three-year period(sixteen separate data disposed of by the franchise hauler, points)ranged from 10.8 to 16.4 percent which are collected by the disposal of total costs, with an average of 13.2 facility operator(not the franchise percent. The hauler is thus allowed a cap hauler) are normally incorporated in of 13.2 percent of costs for the tipping fees. The franchise hauler will combination of corporate, regional, and be allowed a profit on a portion of its local G&A in the initial base year. tipping fees and, therefore, on these General and administrative costs often can regulatory costs. To do otherwise would include costs which may be misstated in create a significant bookkeeping burden rate setting such as: (1)accounting and on the franchise hauler to track such tax planning expenses, (2)legal costs, (3) charges separately. management fees,and(4)officers salaries. ❑ Recycling---costs of providing residential The County should continue to examine curbside recycling and non-residential these costs during future base years. In recycling services provided to the County future base years, the County and by the franchise hauler would be an Centra Costa County Page E-17 1. Rate Setting Overview allowable cost. Therefore, solid waste ❑ Toter Rental—The franchise hauler is management rates charged to customers allowed to maintain the current toter include recovery of allowable costs of rental charge at a rate no greater than providing recycling services, and a profit $3.00 per customer, per month. Should is allowed on these costs. this rate increase at any future time ❑ Costs to implement State mandated above the $3.40 per customer, per source reduction and household month,the County can request to include hazardous waste programs—the County the toter rental business in the formal has adopted the Source Reduction and rate setting process. Recycling Element(SRRE) and Household Hazardous Waste Element(HHWE)as Allowable Operating Profits required by AB 939. These elements ❑ Provide allowable profit-----based on contain a number of recommended current industry norms, we recommend programs whose costs are paid for by the the County adopt an operating ratio which hauler and funded by solid waste ranges from 88 to 92 percent, with a management rates. The franchise hauler target of 90 percent. In the first base year, will be allowed a profit on these AB 939 the operating ratio will be set at 90 surcharges. percent. In each succeeding base year ❑ Depreciation—the following Table I-2 (once every four years), the operating depreciation methods and useful lives are ratio can range from 88 to 92 percent recommended for amortizing future without a rate change, which will help capital costs for rate setting purposes: stabilize rate changes and afford the Table I-2 company an incentive to reduce costs. In any succeeding base year, if the company Depreciation Methods earns an operating ratio outside this 88 to Capital Item Type(a) Years 92 percent range, then in that base year rates are reset to a 90 percent operating Office Equipment SL 5 years ratio. Vehicles and Equipment SL 8 years The operating ratio determines the profit Buildings and Leasehold allowed to the franchise hauler on Improvements SL 20 years operating costs. The operating ratio is (a) SL=straight line depreciation frequently used in the waste management Current methods used to depreciate industry as a basis for determining profit. capital items, which were in use prior to The operating ratio (OR) is based on the rate regulation, are allowed to continue. following formula: Useful lives in Table I-2 are for new OR_ Allowable Expenses capital purchases (i.e., those after 1999). Allowable Expenses+Profit ❑ Lease payments—lease payments to The rate of return on operating expenses non-affiliated companies are an allowable corresponding to each operating ratio expense. These payments may implicitly between 88 and 92 percent is shown in contain interest. Lease payments to Table I-3, on the following page: affiliated companies are a pass through cost. Contra Costa County Page 1-18 ............................................................................................................................................................................................................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................ f. Rate Setting Overview Table 1-3 We reviewed financial information for Operating Ratio as Compared to twelve publicly traded companies Return on Operating Expenses between 1994 and 1996. The twelve companies included: R :of Return oper iRatib ou Allowable 0 Allied Waste Industries Poee4penses • American Waste Services 88 13.64 • Browning-Ferris Industries 89 12.36 • Laidlaw 90 11.11 91 9.89 • Mid-American Waste Systems 92 8.70 • Philip Environmental • Sanifill The 90 percent targeted operating ratio corresponds to a 11.11 percent return on United Waste Systems allowable operating expenses. • USA Waste Services The operating ratio is the most • Waste Management commonly used method for refuse rate International regulation. Our recommended operating ratio is supported by recently Western Waste Industries available information for publicly-held • Waste Management companies,privately-held companies, Technologies. and neighboring jurisdictions. Table 14, on the following page, As support for a target operating ratio shows that the weighted average of 90 percent we compared recent operating ratio on an KBIT(earnings financial data available for publicly and before interest and tax)basis between privately held waste management 1994 and 1996 was 86.8 percent, while companies. Because available financial the average operating ratio during the data is for combined collection, same period was 93.7 percent. The transportation, and disposal operations, data for this period indicates that a few the corresponding operating ratios are larger companies performed better than lower than for businesses providing the average company, thus decreasing exclusively waste collection services the weighted average operating ratio. (i.e., without disposal). Operating Operating ratios increased for 1996 ratios for collection operations alone are alone (i.e., profit levels decreased)for generally higher than for disposal the weighted average measure. The operations alone because disposal weighted average operating ratio in companies require greater returns due to 1996 was 94.1 percent, and the average the significant environmental and operating ratio was 90.2 percent. regulatory risks of operating landfills. Contra Costa County Rage 1-19 1. Rate Setting Overview Table I-4 collecting and transporting refuse Publicly-Held without disposal." As shown in Table I- Waste Management Companies 5, the operating ratio, on an EBIT basis, Average Operating Ratios of over 300 companies surveyed in each (1994 to 1996) of the three years from 1994 to 1996, ranged from 90.2 to 90.7 percent. Weighted Number Average Average Table I-5 of Operating Operating Robert Morris & Associates Year(s) Companies Ratio Ratio Operating Ratios g 1994 to 12 86.8% 93.7% (1994 to 1996) 1996 Number of Operating 1996 12 94.1% 90.2% Year Companies Ratio a On an earnings before interest and tax basis(EBIT). 1994 300 90.7% Due to the recent significant acquisition 1995 325 90.2% and merger activity in the waste management industry, some of these 1996 304 90.7% companies are now part of other a For SIC Code 4953,Refuse Systems,on an companies. Namely, American, Philip, earnings before interest and tax basis(EBIT). and Sanifill were acquired by USA 'Waste Services. Likewise, Laidlaw was Profit methods other than the operating acquired by Allied Waste Industries. At retia often are harder to determine, or the time of this writing, USA Waste don't compensate the hauler sufficiently. Services had recently merged with For example, a return on assets profit Waste Management. However, we methodology might encourage a hauler to believe that the historic data for these over-invest in assets, or alternatively, companies represents the best available over time might cause a hauler's profits to information for publicly-held decrease as book assets are depreciated companies. A return on equity calculation may be problematic as limited comparable We also reviewed data published by benchmark data exists,determining Robert Morris & Associates (RMA). equity contributions is difficult, and RMA publishes its "Annual Statement returns can be insufficient for less Studies" for an array of industries, capitalized companies. including privately-held waste In the future the County can update the management companies. RMA data is for operating ratio figure to reflect current companies doing business as refuse industry norms and practices. However, systems (SIC Code 4953). These are historical operating ratios for similar systems "primarily engaged in the collection businesses frequently have fallen collection and disposal of refuse by within the recommended operating ratio processing or destruction or in the range of 88 to 92 percent (on an earnings operation of incinerators, waste treatment before interest and tax basis). plants, landfills, or other sites for disposal of such materials." This data"does not There is no contractual obligation by the include companies primarily engaged in County to provide the hauler with a fair rate Contra Costa County Page 1-20 ............................................................................................................................................................................................................................................................................................................................ 1. Rate Setting overview of return through this review process. Based on a recent memorandum of Rather, the County reviews revenues, costs, understanding(MOU)'established and profits as a basis for recommended between the County and the Ironhouse changes to residential refuse collection Sanitary District, for Ironhouse areas charges. Charges should be sufficient to only, the five percent franchise fee is cover costs of operations and allow a allocated as follows: reasonable profit to the hauler. However, this Q Two percent to the County profit level is not guaranteed. LI Two percent to Ironhouse Sanitary Pass Through Casts District The following pass through costs do not 0 One percent to a trust fund held by earn a profit, but are included in determining Ironhouse for purposes specified in total revenue requirements to establish solid the MOU. waste management charges: ❑ County administrative fee -this fee is U 'Tipping fees (pass through)—at the established by the County to pay for time of this rate manual's development, costs associated with rate reviews, tipping fees with profit Were set at a cap policies and procedures development, of$45.00 per ton. This corresponds to audits, and other studies. This fee is in the current rate charged at the Pittsburg addition to the franchise fee and is Transfer Station. Any amounts over this intended for large, one-time, costs that may not be paid for by the franchise fee. limit in the future are considered pass through costs, and profit is not allowed. ❑ Trucking charges--trucking charges The County can adjust this cap in a from companies affiliated with the reasonable manner during subsequent base franchise hauler will be a pass-through years. If the tipping fee is less than the cost, and no profit is allowed to the established cap, actual fees paid are used franchise hauler. This is based on the to calculate total tipping costs and there is assumption that profits are already no pass through component of tipping included in the trucking charges paid by fees, the franchise hauler. Surcharges imposed ❑ Franchise fees—franchise fees paid to the for regulatory requirements, and which County by Garaventa are set equal to five are collected by the franchise hauler (5) percent of gross residential, directly, also will be pass-through costs commercial and light industrial refuse and with no profit allowed. recycling revenues. These fees help provide funding for: (1) administering the Franchise Agreement, (2)solid waste services and programs provided by the County, and (3) State required Solid Waste Program development and implementation. These fees are paid to the County in return for providing an exclusive franchise to the hauler. The County approved initiation of these franchise fees in July 1998, Contra Costa county Page 1-21 i. Rate Setting Overview Non-Allowable Costs ❑ Interest expenses----consistent with the The following costs are not allowable for waste management industry, the rate setting, and as a result will not be passed operating ratio is typically used on a on to the ratepayers: before interest and tax basis. The operating ratio allowed is intended to ❑ Amortization of franchise purchases— provide the hauler with sufficient returns consistent with the waste management to pay its debt and equity holders. industry, we recommend that the County Disallowing interest expense eliminates disallow amortization of franchise artificial incentives for the hauler to purchases. The operating ratio is finance its operations using either debt designed to provide a return to the hauler or equity financing. In other words, a sufficient to compensate Garaventa for its company's financing decisions are investment in the business. independent of the amount of profit ❑ Charitable and political contributions---- earned. this category includes charitable, or Interest expenses are not allowed in the political, contributions and donations of profit calculation in this methodology, cash, property, and services. Also non- which differs from the practice in some allowable are costs associated with municipalities. Allowing profit on attempting to influence the outcomes of any interest expense may provide an artificial federal, state, or local election, referendum, incentive for the hauler to increase use of initiative, or similar procedure, through in debt-financing. Further, in cases where kind or cash contributions, endorsements, the operating ratio used is on an after publicity, or similar activities. interest basis, the operating ratio often is ❑ Fines and penalties-posts associated adjusted upward(i.e., the hauler earns with violations of, or failure of, the hauler less profit) to account for interest as an to comply with federal, state, local, or allowable expense. foreign laws and regulations. This ❑ Other costs on a case-by-case basis— category of non-allowable costs can also all costs incurred to provide solid waste include costs in connection with services to areas outside of alteration or destruction of records, or unincorporated Contra Costa County are other false or improper charging or not allowed. Additionally, consistent recording of costs. with reasonable practices in the waste ❑ Income taxes—the operating ratio is management industry, certain costs may typically provided on a pre-tax basis. To be determined non-allowable for rate allow income tax expense would setting through the course of the base unnecessarily add complexity to the rate year rate setting process. A cost that is review process. determined non-allowable in one base year may be determined allowable in a future base year. Contra Costa County Page 1-22 ................................................................................................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................ i Rata Setting Overview F. Use of the Manual begins at the top of a page and is Each chapter of the manual has been prominently marked for easy reference. divided into a number of sections. A The organization of each step is shown in section begins with a capital letter and Exhibit I-6, following this',page. includes a discussion related to a major The manual also contains blank topic. Many sections of this manual worksheets and forms,which are used include a series of"steps" which must be during the various processes. These completed during a process. Each step materials are located in Appendix D. Contra Costa County Page 1-23 EXHIBIT I-G Organization of Each Step Manual Organizadon d. I, Chapter A. Section Task Chapter Number and Name Step Title Step Number U. Base Year Rate SettingNocess, Party Responsible Preparation and for Process or Submission of Rate Completing Activity Change Application the Step Where Step Occurs Responsibility: Franchise Hauler Timing: Completed six months prior to the date new rates become effective Tasks: a. Prepare Cost Information When the b. Prepare Revenue Information Step Should be Required c. Prepare Operating Information Completed to d. Prepare and Submit Rate Change Application and Supporting Documents Complete the Step Description of Tasks Overview Estimated During this step,the franchise hauler ❑ Year 4-Current Year prepares the Base Year Rare Change Projected Application. The franchise hauler should be able to complete the application over a two ❑ Year 5-Base Year. month period. Instructions for preparing the application forms referred to in this step,are available in Chapter III of this manual. Blank a. Prepare Cost Information forms are provided in Appendix D to this Cost information from the franchise manual. hauler is provided in the Bare Year Rate In general,information provided by the Change Application. Cost information franchise hauler is for five fiscal years.Actual is reported for the three most recently data is required for the first three years, completed fiscal years,the current fiscal estimated data for year four(based on actual year,and the new base year. results to date),and projected data for year five. Information reported in each line item is Detailed the total cost for residential, Subsequent base years will replicate the data Descriptions requirements in this example. commercial,and light industrial waste of Actions and recycling services. A segregation of Actual costs by residential,commercial,and Required in ❑ Year 1-Last Base Year light industrial services is not required. Each Task ❑ Year 2-Year Following Last Base Year ❑ Year 3-Prior Year Contra Costa County Page II-5 10 Contra Costa County Page 1-24 ._. ._._..... ...__....... ._.. .._..._.. ......... ............................................................................................................................................................................................................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................ 1. Rate Setting overview G. Future Enhancements to Opportunities for cost-savings might the Manual be identified by the franchise hauler or As the County and franchise hauler gain through performance audits initiated experience in working with the new rate by the County. setting process, refinements and revisions Monitoring actual savings achieved is should be identified and incorporated in this the most difficult task in developing a document over time. Four areas which cost-savings program. Cost, and in should be considered for future inclusion are some cases, operating data must be (1)implementation of special cost-savings identified and carefully reviewed. programs, (2)occasional performance Without careful monitoring, the audits, (3)no interim year increases on program may be abused. selected cost and line items, and(4) Adjusting rates to reflect the savings expansion of the rate review to include a also is difficult because rate detailed review of tipping fees. adjustments for each interim year are U Cost-Savings Programs The determined by a change in the franchise hauler would be allowed to consumer price index instead of by an share in cost-savings due to examination of base year costs. The improvements implemented by the hauler may, in fact, lower costs of hauler. This savings program would operation through a cost-savings provide an incentive to the franchise program, though the rates would not hauler to reduce costs. Under the rate automatically be lowered. Cost- setting process described in this savings cannot be included simply by manual, if the franchise hauler is able reflecting the savings as a reduction in to reduce costs, the benefits of these total cost. cost-reduction efforts are passed on to New polices and procedures would the ratepayers in the next base year. have to be established to allow for There otherwise may be no direct cost-savings adjustments under the incentive for the franchise hauler to methodology presented in this manual. identify and implement cost-savings These policies must address a number activities. The purpose of a formal of issues including: the time period for program is to allow the franchise sharing costs, the split of the savings, hauler to receive some of these the form in which cost reduction benefits while also lowering rates for proposals must be prepared, the customers. process for monitoringactual cost- Examples of cost-savings programs savings, and incorporation of the include: concept into the current methodology. * Investing in new equipment The amount of cost-savings would be identified initially during development • Redesigning collection routes of a proposed new program and then * Automating administrative would be monitored during functions implementation of the new program. Savings would be shared by the * Streamlining administrative franchise hauler and the ratepayers on a processes. pre-determined basis. For example, Centre Costa County Page 1-25 1. Rate Setting Overview during the first year of a new program, the Uncontrollable franchise hauler might receive 75 percent • Tipping fees of the savings and the ratepayers would receive 25 percent. In year two, the • Regulatory charges franchise hauler might receive 50 percent Controllable of the benefit and the ratepayer would receive 50 percent. In year three, the + Labor franchise hauler might receive 25 percent * Equipment of the cost-savings. In the fourth year, all savings might be passed through to the • Trucking ratepayers. • Operating costs Alternatively, the County and hauler • General and administrative. might create a system as depicted in Figure 1-1, below, whereby revenue or The hauler would be allowed to keep 100% cost savings are treated differently controllable cost savings which are not depending upon the cause of the detrimental to the customers,County, and difference. Controllable and employees. The hauler would share uncontrollable cost categories would need 50%150% on uncontrollable cost savings. to be created.The County and hauler The hauler would be allowed 100 percent of might define each of these categories as all noncontrollable cost increases, however, follows: the hauler would not be reimbursed for any controllable cost increases. Example Cost Sharing Methodology Savings Increase Controllable 100% savings 0% of increase Cas allowed to hauler allowed to hauler ol- 50%/50% shared by 100% of Uncontrollable City ratepayer and allowed to hauler hauler increase Decrease Increase 100% of decrease 100% of increase Revenues reimbursed to reimbursed to City hauler Ratepayer increase Figure 1-1 Contra Costa County 'Rage 1-26 IV. Interim Year Rate Sating Process Interim year rate adjustment requests are Both the County and franchise hauler may accepted in the three years between base initiate the extraordinary rate adjustment years. The interim year process requires less process. For these adjustments, the information and preparation time, while still franchise hauler will provide necessary allowing fair and reasonable rate information and documentation so the adjustments. County can make a judgment as to the During interim years, rates can be reasonableness of such a rate adjustment. adjusted annually through application of a With Board of Supervisor approval, an composite index. The index consists of: extraordinary adjustment can be made by the franchise hauler. Historical changes in the Consumer Price Index (CPI) for the San Francisco- Exhibit IV-1, following this page, Oakland-San Jose published by the provides an overview of the interim year rate Bureau of Labor Statistics in their adjustment process. Exhibit IV-Z following Monthly Labor review Exhibit IV-1 shows the timing of the interim year process. ❑ Projected changes in tipping fees Generally, interim year rate changes are ❑ Adjustment for the franchise fees which implemented at the beginning of the fiscal change if revenues change. year in which the new rates will take effect. In each interim year, the franchise hauler The rate change process should begin four is responsible for determining the actual months prior to the beginning of the new annual change in the CPI for the most recent calendar year and the rate change application 12-month period. The franchise hauler also should be submitted to the County a will be responsible for estimating and minimum of three months prior to the documenting projected changes in tipping implementation of the rates. For rate fees in the interim year for which a rate changes effective January 1, the application adjustment is requested. should be submitted to the County in September. Even if the interim-year adjustment would justify an increase in rates, the The current Franchise Agreement allows franchise hauler is not required to apply for the hauler to adjust rates up to the CPI the increase. This will help stabilize rate without Board of Supervisor approval. adjustments even when small increases Consistent with these terms we allow the might be warranted. hauler in Interim Years to adjust rates up to the CPI without Board of Supervisor Special extraordinary adjustments are approval. Most of the time frames are allowed outside of the annual schedules of recommended; however,certain key the base year and interim year adjustments. products are noted in the exhibit by circled letters. Following these exhibits is a description of each step in the interim year process. Contra Costa County Page IV-1 IV. Interim Year Fate Setting Process EXHIBIT IV-1 Contra Costa County Page IV-2 ............. . ...... IV.Interim Year Rate Setting Process EXHIBIT IV-2 Contra Costa County Page IV-3 ........... ............................ IV.Interim Year Rate Setting Process Preparation and Submission of Rate Change Application Responsibility: Franchise Hauler Timing: Completed four months prior to the implementation of the new rates Tasks: a. Prepare an Interim Year hate Change Application b. Submit Draft to County Staff Description of Tasks Overview Projected changes in uncontrolled costs During this first step, the franchise then are entered on the Interim Year Rate hauler prepares the Interim Year Rate Change Application. In addition, any Change Application. discussion about these changes is provided with the application. The application is signed by an appropriate representative of a. Prepare an Interim Year Rate the franchise hauler. Change Application The franchise hauler is responsible for b. Submit Draft to City Staff projecting any change in tipping fees. The projection is made for the interim year for The completed application is sent to the which new residential rates are being County for review and calculation of new requested. residential rates. The franchise hauler's application does not include any new residential rates; these are determined by the County during Step 2. The hauler should note whether the proposed change would equal or exceed the CPI, and thus require Board of Supervisor Approval. Contra Costa County Page IV-4 ._.._.................................................................... _._........................................................................................................................................................................................ ....._ .................................................................................. .................................................................................................................................... _ _ _ _ __ IV.Interim Year Rate Setting Process Preparation of Bate Adjustment Indices Responsibility: County Timing: Completed within three weeks of receiving a completed Interim Year Rate Change Application Tasks: a. Identify Consumer Price Index b. Complete Interim Year Rate Change Worksheet and Determine New Rates c. Request Additional Data, and Clarification, if Necessary d. Prepare Draft Report and Recommendations Description of Tasks Overview prior twelve months also is used as the County staff uses the franchise hauler's projected CPI for the interim year. This own projections of uncontrolled costs, information is available from the United determines changes in the Consumer Price States Department of Labor, Bureau of Index for controlled costs, and then Labor Statistics, San Francisco, and is calculates the rate change and new rates prepared monthly. for the next interim year. The Interim Year Rate Change Worksheet is used to b. Complete Interim Year hate complete this step. Change Worksheet and Determine New hates a. Identify Consumer Price Index County staff prepares the Interim Year The annual change in the San Rate Change Worksheet and calculates new Francisco-Oakland-San Jose Metropolitan residential rates during this task. This Area Consumer Price Index (CPI) provides Worksheet requires information from the the single largest factor for determining most recent Base Year Application and the new rates during interim years. The actual current Interim Year Application. This change in this index during the twelve worksheet also requires the Bay Area months prior to the date the Interim Year Consumer Price Index information collected Rate Change Application is submitted to in task a. The worksheet is used to calculate the County is used for the actual change in the new residential rates. Detailed the methodology. Because a projected instructions on how to complete this change in the CPI is not produced for the worksheet are provided in Section IV of this San Francisco-Bay Area by a public manual. agency, the actual change in CPI for the Contra Costal County Page IV-6 IV.Interim Year Rate Setting Process c. Request Additional Data,and ❑ Background Clarification, if Necessary This section of the report provides a brief If necessary, County staff requests overview of the rate change process and clarification and/or additional data from the discussion of any significant historical franchise hauler. The request is to clarify the issues. franchise hauler's assumptions for projected ❑ Analysis and Discussion of Issues changes in tipping fees and to indicate the expected change in residential rates. This section includes a review of the analysis work completed by County staff. This section also includes a discussion of d. Prepare Draft Report and any significant changes in uncontrolled Recommendations costs and an identification of the change County staff prepares a draft report with in CPI assumed by the County. recommendations of new rates for Board of ❑ Recommendation Supervisor consideration. If the change in County staff presents its recommendation rates does not exceed the CPI, County staff regarding any change in rates in this will inform the Board of Supervisors of the section. upcoming change in rates. For a change above the CPI, County staff will solicit ❑ Attachments feedback and comments from the Board Attachments to the report would include: before obtaining the Board's approval for the Interim Year rate change. With respect to + Rate change application Ironhouse areas, County staff will forward # Revised rate schedule their recommendations to Ironhouse staff, who will submit any proposed change in • Rate change worksheet. rates to the Ironhouse Board for approval, whether the increase is within or above the After the draft report and CPI. This report should be brief and include recommendations have been prepared, the the following sections: document should be submitted to the franchise hauler for comment and review. ❑ Executive Summary This is a summary of the review process and includes a chart showing current and proposed rates, and the recommended rate change. Contra Costa County Page N-6 IV.interim Year Rate Setting Process .Review and Response to County Analysis and Calculations Responsibility: Franchise Hauler Timing: Completed within three weeks of receiving the completed interim year draft report from the County Tasks: a. Review County Staff Calculations and Analysis b. Prepare and Submit Response Description of Tasks Overview ❑ Rate changes are reasonable and The franchise hauler reviews the draft acceptable. report to ensure that any calculations and analysis completed by County staff are fair, b. Prepare and Submit response reasonable, and justified. A written response to the draft report is prepared. The response may cover one or a. Review County Staff Calculations and more of the following topics: Analysis ❑ Data discrepancies in any of the The franchise hauler reviews the draft areas noted in the prior task report to ensure the following: ❑ Clarification for the County or ❑ Correct data are included alternative analysis of the application • City staff analysis is accurate and ❑ Responses to the County's fair request for additional information. Contra Costa County Page IV-7 IV.interim Year Rate Setting Process Preparation of Final Report and Recommendations Responsibility: County Tinting: Conducted within two weeks of receiving comments from the franchise hauler Tasks: a. Incorporate the Franchise Hauler's Comments in Final Report b. Prepare Final Report and Recommendations Description of Tasks Overview with representatives from the County and the The County prepares the Final Report franchise hauler. Final solutions to and Recommendations incorporating outstanding issues should be included in the comments from the franchise hauler, as report. appropriate. b. Prepare Final Report and a. Incorporate the Franchise Hauler's Recommendations Comments in Final Report After final comments from the franchise Any comments or issues raised during hauler have been considered, the Final the franchise hauler's review of the draft Report and Recommendations is prepared. report are addressed during this task. If A copy of the Final Report should be necessary, meetings should be conducted submitted to the franchise hauler. Contra Costa County Page IV-8 _...................................._................................................................................................................................................................................................................................. ............................................................................................................................... IV interim Year Rate Settinq Process Presentation of Final Report and Recommendations to the Burd of Supervisors Responsibility: County Timing: Completed within ninety days of receiving a completed Interim Year Rate Change Application Tasks: a. Distribute Report to Supervisors b. Obtain Board of Supervisors Approval Description of Tasks Overview the Board should be notified four weeks In this step, the Final Report and prior to the meeting at which the rate change Recommendations is submitted to the Board will be considered and reports will be of Supervisors for review, comment, and provided two weeks prier to the meeting. approval, during this step. b. Obtain Board of Supervisor Approval a. Distribute Report to Supervisors For changes in rates which exceed the The Final Report and Recommendations CPI, Supervisors will review the report and is included as an agenda item for Board proposed rate changes. If the Board agrees consideration at a regular Board of with the recommendations of County staff, Supervisors meeting. This item may be the report and rates should be approved. If placed on either the regular or consent the Board does not agree with the calendar. Copies of the report are provided recommendations, the report is returned to to the Clerk of the Board for distribution County staff for additional analysis. If the with other agenda materials. The Clerk of report and rates are not approved, the Board should be asked to specifically identify deficiencies. The Ironhouse Board is the responsible party for approving rate changes for its areas. Contra Costa County Mage IV-9 IV.Interim Year Rate Setting Process Implementation Of New Rates Responsibility: Franchise Hauler Timing: Conducted following the approval of the new rates by the Board of Supervisors Tasks: a. Notify Residential Customers b. Implement Rate Change Description of Tasks Overview b. Implement Rate Change After new rates have been approved by During this final task, the franchise Board of Supervisors, the final step in the hauler enters the new rates into their process is to implement the new rates. billing system and includes the new rates on the next appropriate customer invoice. If a rate change occurs during the middle a. Notify Residential Customers of a billing cycle, unbilled amounts are After the report is approved, a calculated and included in the next billing notification of a rate change should be cycle. mailed to all customers. Contra Costa County Page IV-10 .. ......... ......... ......... _.. ...._... ...... _.... ............................................................................................................................................................................................................................................................................................................................ V. interim Year Rate Setting Methodology Two forms are required to complete the during the interim year rate change process. Interim Year Rate Setting Process: This application is prepared by the franchise • Interim Year Rate Change hauler, and identifies changes in Application uncontrolled costs. Uncontrolled costs are tipping fees and regulatory fees paid directly This is completed by the franchise hauler by the franchise hauler. These two items are and documents changes in tipping fees reported as a cost per ton. and regulatory charges. Exhibit V-1, following this page, ❑ Interim Year hate Change Worksheet provides an overview of the steps and This form is completed by the County related tasks which must be completed to and is used to calculate the change in prepare the application form. Exhibit V-Z, residential changes during an interim following Exhibit V-1, is a sample year. application as it might be prepared by the This section provides detailed instructions franchise hauler. This exhibit includes for completing these two documents, and is references to the various steps which must organized as follows: be completed to prepare the application. Following this exhibit is a detailed A. Preparation of the Interim Year Rate description of these steps and related tasks. Change Application Similar to the base year forms, these B. Preparation of the Interim Year Rate forms identify all areas to be completed with Change Worksheet. double outlined boxes. If data are to be entered in the form, the box has no shading. If a calculation is required, the box has light A. Preparation of the Interim Year Rate shading. Please note that data included in Change Application these forms are provided for illustrative The Interim Year Rate Change purposes only and are not intended to reflect Application is the first document completed actual operating or financial conditions. Contra Costa County Page V-1 ..................................................................................................................................................................................................................................................................................__................... ............................................................................................................................................................................................................................................................................................................................ _....................................................................................... _ _...._.... _ _ ................................................................................... V.Interim Year Rate Setting Methodology Exhibit V-1 Summary of Steps Contra Costa County Page V-2 ---- .................._.................................................................................................................................................................................. V.Interim Year Rate Setting Methodology Exhibit V-2 Sample Application Form Contra Costa County Page V-3 .............................................................. ....... ................................... ......... ................. ................ .......... V.Interim Year Rate Setting Methodology Report of Changes in Uncontrolled Casts Responsibility: Franchise Hauler Timing: Prepared during Step 1 of the Interim Year Rate Change Process (Refer to Section IV) Tasks: a. Provide Prior Year Uncontrolled Costs b. Project Interim Year Uncontrolled Costs c. Calculate Change in Uncontrolled Costs .Description of Tasks a. Provide Prior Year Uncontrolled for the next interim year. Projected interim Costs year tipping fees per ton are entered on line The first task in this step is to provide 4, and projected interim year regulatory fees prior year tipping fees and regulatory fees. per ton are entered on line 5. The values These items are to be reported in terms of entered on lines 4 and 5 then are added and cost per ton to eliminate any changes which entered on line 6. are due to increases or decreases in tons of solid waste removed by the franchise hauler. e. Calculate Change in Uncontrolled Prior year tipping fees per ton should be Costs entered on line 1. Prior year regulatory fees per ton should be entered on line 2. The The percent change in uncontrolled costs values entered on lines 1 and 2 should then is determined as follows: be added and entered on line 3. line 6 - line 3 b. Project Interim Year Uncontrolled line 3 Costs The franchise hauler estimates what The product of this equation,rounded to the tipping fees and regulatory charges will be nearest one decimal place, is entered on line 7. Contra Costa County Page V-4 ............................................................................................................................................................................................................................................................................................................................ V.Interim Year state SettinaMethodology Explanation of Changes in Uncontrolled Costs Responsibility: Franchise Hauler Timing: Prepared during Step 1 of the Interim Year bate Change Process (Refer to Section IV) Tasks: a. Provide Explanation of Changes b. Provide Supporting Documents Description of Tasks a. Provide Explanation of Changes b. Provide Supporting Documents Any changes in either tipping fees or Documents which support or further regulatory charges should be fully explained explain any change in costs are provided, as in this task. For example, if a landfill closes appropriate. This might include formal and the franchise hauler begins using a new announcements of tipping fee increases landfill with higher tipping fees, this provided by the landfill operator, or information should be disclosed. descriptions of new regulatory fees which will be pard directly by the franchise hauler. Contra Costa County Page V-5 Y.interim Year Rate Setting Methodology �► Application Certification Responsibility: Franchise Hauler Timing: Prepared during Step 1 of the Interim Year Rate Change Process (Refer to Section IV) Tasks: a. Sign Application b. Submit Application to County Description of Tasks a. Sign Application b. Submit Application to County An authorized representative from the At this point, the application should be franchise hauler should sign and date the complete. The application is submitted to application. This signature provides the County for review and calculation of the certification by the franchise hauler that the rate change, as described in the following application is complete, accurate, and subsection. consistent with the instructions provided in this manual. Contra Costa County Page V-6 ..................................................... _.. _................................................................................................................................................................................................................................. __ V.interim Year Rate Setting Me#hodology B. Preparation of the Interim Year hate change. Steps I through 4 of the Change'Worksheet methodology will be completed using page 2 The Interim Year Rate Change of the worksheet. Step 5 will be completed Worksheet is used to calculate new interim using page I of the worksheet. year residential rates. This document is Exhibit IV-3, following this page, prepared by the County after the franchise provides an overview of the steps and hauler has submitted an Interim Year Rate related tasks which must be completed to Change Application. Interim year rate prepare the worksheet form and calculate changes are based on a weighted increase in new residential rates. Exhibit IV-4, controlled and uncontrolled costs. Inflators following Exhibit IV-3, is a sample of the for this process include changes in the San two page worksheet as it might be prepared Francisco-Oakland-San Jose Consumer by County staff. This exhibit includes Price Index (described in Step 2) and references to various steps which must be changes in uncontrolled costs (documented completed to prepare the worksheet. by the franchise hauler in the Interim Year Following Exhibit W-4 is a detailed Rate Change Application). description of each step and related tasks. The worksheet is a two-page form. Page Please nate that the data included in I provides summary information about the these exhibits are provided for illustrative rate change requested and the resulting new purposes only and are not intended to residential rates. Page 2 includes detailed reflect actual operating or financial calculations required to determine the rate conditions. Contra Costa County Page V-7 V.Interim Year late Setting Methodology Exhibit IV-3 Worksheet Preparation Steps Contra Costa County Page V-8 ............................... _-.........................-..........................................._.... - ............................................................................................................................................................................................................................................................................................................................ V.Interim Year Rate Setting Methodology Exhibit IV-4 Sample Worksheet Page 1 of 2 Contra Costa County Page V-9 ........................... .... ............ ........................ ....... ......... ......... ... ............ ................................-......I ''I'll, V.Interim Year Rate Setting Methodology Exhibit IV-4 Sample Worksheet Page 2 of 2 Contra Costa County page V-3 0 V.Interim Year Rate Setting Methodology Determination of Base Year Costs and Weighting Responsibility: County Timing: Prepared during Step 2 of the Interim Year Rate Change Process (Refer to Section IV) Tasks: a. Identify Prior Base Year Controlled Costs b. Identify Prior Base Year Uncontrolled Costs c. Calculate Weightings Description of Tasks a. Identify Prior Base Year Controlled Costs Base Year Interim Year Name Controlled costs are those items which Application worksheet of can be reasonably managed by the franchise Line Number Line Number Line Item hauler in order to minimize future rate b, 1. Total Allowable Costs increases. Changes in these costs should approximate the change in the San 8. 2. Allowable Operating Francisca-Oakland-San Jose Consumer Profit Price Index (CPI). 2. 1 Tipping Fees In order to streamline the base year (Profit Allowed) process, controlled costs are adjusted based on an annual change in the CPI instead of projected changes in each cost item. This 'Pipping fees are included in total operating eliminates the need to conduct a detailed costs (line 1); however, they are uncontrolled review of the franchise hauler's audited costs. Because of this, tipping fees must be financial statements. deducted to determine total controlled costs in The following table identifies the line the base year(line 1 plus line 2 minus line 3). items in the base year application which This total then is entered on line 4 of the must be entered on the controlled cost worksheet and is used to calculate the portion of the interim year worksheet. The weighted change in controlled costs. name of each line item is the same in both applications. Contra Costa County Page V-11 ......... .......... ........................................................................... _ _.._. V.interim Year Rate Setting Methodology b. Identify Prior Base Year c. Calculate'Weightings Uncontrolled Costs Total controlled costs(line 4)plus total Uncontrolled costs are those items over uncontrolled costs (line 7,)equals total base which the franchise hauler has little or no year revenue requirements(excluding control. These include tipping fees and franchise fees). This total is entered on line associated regulatory charges. Because 8 of the worksheet(base year revenue changes in these cost categories do not occur requirement less franchise fee). at predictable intervals and amounts, A weighting for both controlled costs adjustments to uncontrolled costs during an and uncontrolled costs is calculated as interim year are based on the franchise follows: hauler"s projections,not projected changes in the CPP. Total uncontrolled costs in the prior base year must be calculated to Controlled Costs: determine the weighting of controlled costs Line 4 Total controlled costs to uncontrolled costs. The following table identifies the line Divided items in the prior base year which must be by Line 8 Base year revenue entered on the interim year worksheet in the requirement uncontrolled costs sub-section. The name of Equals Controlled costs as a each line item is the same in bath forms. percentage of base year revenue requirement. Base Year Interim Year Name Application Worksheet of This percentage figure is entered on line 4, Line Number Line Number Line Item column 2, and line 1.9. 2. S. Tipping Fees (Profit AIlowed) Uncontrolled Costs: 11. 6. Tipping Fees Line 7 Total uncontrolled costs (Pass Through) Divided by Line 8 Base year revenue The amounts in lines 5 and 6 are added and requirement the total entered on line 7. Equals Uncontrolled costs as a percentage of base year revenue requirement. This percentage figure is entered on line 7, column 2, and line 22. Contra Costa County Page V-12 V.Interim Year Rate Setting Methodology Projection of Change in Consumer Price Index Responsibility: County Timing: Prepared during Step 2 of the Interim Year Rate Change Process (Refer to Section IV) Tasks: a. Determine Projected Change in Consumer Price Index b. Determine Consumer Price Index Adjustment Factor c. Calculate Adjusted Projected Change in Consumer Price Index Description of Tasks a. Determine Projected Change in CPI for the San Francisco-Oakland--San Jose Consumer Price Index Metropolitan Area are available from the In this task, the San Francisca-Oakland- United State Department of Labor, Bureau San Jose Metropolitan Area Consumer of Labor Statistics, in San Francisco. Price Index (CPI) is determined. The actual This adjustment is not required for the change in the index between the prior year first interim year rate change following a and the current year will be used as the base year. If this is the first rate change projected CPI for the upcoming interim following a base year, enter a zero on line year. This information is available from the 10 and proceed to task c. United States Department of Labor, Bureau The adjustment factor is determined of Labor Statistics, San Francisco, and is based on the following formula: prepared monthly. Enter this projected percentage increase on line 9. Actual change in the CPI during b. Determine Consumer Price Index the previous interim year Adjustment Factor Minus Adjusted projected change in Because interim year rates are partially the CPI from the prior year determined based on projected changes in interim Year Rate Change Worksheet (line 11 on page 2 the Bay Area Consumer Price Index (CPI), corrections are required during the second of prior application) and third interim years to reflect the Equals Adjustment factor difference between actual and projected changes in the index. Actual changes in the Contra Costa County Page V-13 ........................................................... _......._._... - - .................................................................................................................................................................................._........................................................................................_.. ............................................................................................................................................................................................................................................................................................................................ V.Interim Year Rate Setting Methodology This adjustment is entered on line 10 of the c. Calculate Adjusted Projected worksheet. Two examples of this Change in Consumer Price Index calculation are provided below: The adjusted change in CPI then is calculated by adding the figures on line 9 Example 1: Actual change in CPI is higher than and line 10. This adjusted projection of the the prior year's projected change in CPL If the change in CPI then is entered on line 11 and prior year's projected CPI change was 4.5 line 20 of the worksheet. This information percent but the actual change was 5.0 percent, will be used in Step 4. then the adjustment factor for interim year two would be 0.5 percent: Actual change in CPI 5.0% Minus Prior year adjusted CPI 4.5 Equals Adjustment factor A& Example 2: Actual change in CPI is lower than the prior year's projected change in CPL If the prior year's adjusted projected CPI was 5.5 percent,but the actual change in the CPI was 5.0 percent,then the adjustment factor for year two would be-0.5 percent. Actual change in CPI 5.0%n Minus Prior year adjusted CP1 5.5 Equals Adjustment factor Contra Costa County Page V-14 V Interim Year Rate Setting Methodology Calculation of Percent Changes in Uncontrolled Costs Responsibility: County Timing: Prepared during Step 2 of the Interim Year Rate Change Process (Refer to Section IV) Tasks: a. Enter Uncontrolled Cost Information from Application b. Review Mathematical Accuracy Description of Tasks a. Enter Uncontrolled Cost information b. Review Mathematical Accuracy from Application The mathematical accuracy of the The figures on lines 1 through 6 of the franchise hauler's totals for Total Prior Year application(actual and projected Uncontrolled Cost (line 14), and Total uncontrolled costs)are entered on lines 12 Projected Interim Year Uncontrolled Cost though 17, respectively,of the worksheet (line 17) are checked during this task. The Any significant changes in these costs are percent change in uncontrolled costs should documented by the franchise hauler. A be calculated as follows: significant change would be any increase greater than the change in the CPI, or a decrease of any amount. If a significant line 17 - line 14 change has not been adequately explained, line 14 additional 'information is requested from the franchise hauler. After the percentage change in uncontrolled costs has been verified,this figure is entered on lines 18 and 23 of the worksheet. Contra Costa County Page Y-15 .._..._............................................................................ __..._............................................................................................................................................................................................................. ............................................................................................................................................................................................................................................................................................................................ V Interim Year(tate Setting Methodology. ---.-- Calculation of Weighted Change in Residential Rates Responsibility: County Timing: To be prepared during Step 2 of the Interim Year Rate Change Process (Refer to Section IV) Tusks: a. Calculate Weighted Change in Controlled Costs b. Calculate Weighted Change in Uncontrolled Costs c. Calculate Total Change in Cost d. Calculate Franchise Fee Adjustment e. Calculate Percent Change in Existing Rates Description of Tasks a. Calculate Weighted Change in c. Calculate Total Change in Controlled Costs Cast Figures should have been entered on To calculate total percentage change in line 19,controlled costs as a percent of costs, line 21, the weighted change in base year revenue requirements, and line controlled costs, is added to line 24,the 20, the adjusted projected change in CPI, weighted change in uncontrolled costs, and based on calculations completed in the result entered on line 25, total change previous tasks. To obtain the weighted in costs. change in controlled costs, line 19 is multiplied by line 20 and the result entered on line 21. d.. Calculate Franchise Fee Adjustment In order to account for changes in the b. Calculate Weighted Change in franchise fee resulting from an change in Uncontrolled Costs residential rates, an adjustment is made to Line 22, uncontrolled costs as a the percentage change in total costs which percent of base year revenue requirements, was entered on line 25. The adjustment and line 23, projected change in factor is equal to one minus the franchise uncontrolled costs, should now have an fee(1.00-0.005 =0.950). This value entry based on calculations completed in should be entered on line 26. previous tasks.To obtain the weighted change in uncontrolled costs, line 22 is multiplied by line 23 and the result entered on line 24. Contra Costa County Wage V-16 --. V.Interim Year Rate Setting Methodology e. Calculate Percent Change in Existing Rates The final task in this step is to calculate the percent change in existing rates. To determine this change, line 25 (total percent change in costs)is divided by line 26 (franchise fee adjustment), and the result is entered on line 27. The value on line 27 should be greater than the value on line 25. The difference accounts for the change in franchise fees. Contra Costa County Page V-17 V.interim Year Rate Setting Methodology Preparation of Summary Form Responsibility: County Timing: To be prepared during Step 2 of the Interim Year Rate Change Process (Refer to Section I-V) Tasks: a. Enter Rate Change b. Calculate New Rates Description of Tasks a. Enter Rate Change line 1. The new rates are entered on the The rate change identified in line 27 second column of lines 2-6. should be entered on Page 1, line 1 of the The new rates then are rounded up or worksheet. down to the nearest five cent increment. The adjustment amount required to reach the nearest five cent increment is calculated and b. Calculate New Rates entered on the third column of lines 2-6. Current rates for residential solid waste To determine new residential rates, collection are entered in the first column of column two, lines 2-6, is added to column lines 2-6 on page 1. The new rates then are three and the result is entered on column calculated by multiplying the current rate by four. This column provides the new one plus the rate change identified on schedule of residential rates. Contra Costa County Page V-18 Appendix A Franchise Agreement with Garaventa Enterprises Appendix A includes the Franchise Prior to this manual's development, the Agreement between Garaventa Enterprises franchise agreement indicated that the and Contra Costa County. The Agreement County shall designate reasonable costs of was signed on May 9, 1995 and is for twenty Garaventa Enterprises as "pass through"or (20)years through May 8, 2015. This "subject to reasonable profit" through a rate agreement will need to be amended to review process. incorporate by reference this Rate Setting Further,the agreement requires Process and Methodology Manual for Garaventa Enterprises to prepare rate Residential Solid Waste Charges. applications in accordance with forms and The agreement grants Garaventa detail required by the County. This manual Enterprises an exclusive franchise to collect provides the format and content for these and remove for disposal and recycling, all rate applications. The agreement generally residential and commercial solid waste, requires financial statements and financial including recyclable materials, within the information from the previous rate change to unincorporated County franchise area. the present. Contra Costa county Page A-1 .............................................................. ............................................................................................... _. _. ........... ... ......................................................................................................................................... ' ORIGINAL FRANCHISE AGREEMENT WITH GARAVENTA ENTERPRISES CONTRA COSTA COUNTY 3 • • I TABLE OF CONTENTS 1. EFFECTIVE DATE, PARTIES. . . . . . . . . . . . . 1 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 1 `ay. Agreement. . . . . . • . . . • • . . . . . . . . . I Y. Act. . . . . . i . . . . M • i • ♦ • • i . • ♦ • . 1 C. Board. i . . . . . . . . . . . . ♦ . . . . . . . . 1 d. Commercial Solid Waste. . . . . . . . . . . . . . . 1 e. County . . . . . . . . . . . . . . . . . . . . 1 f. County/.. . . . . . . . . . . . . . . . • . . . . . . 1 g. Customers. . . . . . . . . . . . . . . . . . . . . i h. Designated Waste. . . . . . . . . . . . . . . . . . 1 I . Franchise Area. . . . . . . . . . . . . . . 2 J . Hazardous Waste. . . . . . . . . . . . . . . . . . 2 k. Industrial Waste. . . . . . . . . . . . . . . . . 2 1 . Infectious Waste. . . . . . . . . . . . . . . . . . 2 M. Recycle or Recycling. . . . . . . . . . . . . . . . 3 n. Residential Solid 'Waste. « . . . . . . . . . . . . 3 0. Syyep Waste �t a gYye.�w . . . . . . . . . . . . . . . . . . . . . 3 p. Solid ante. Y . . . . . i . . . . . . i a . • i Y 3 q. Waste Stream. . . . . . . . . . . . . . . . . . . . 3 3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 . INTENT TO REGULATE ALL RECYCLING AND RESIDENTIAL AND SOLID WASTE COLLECTION, REMOVAL AND/OR DISPOSAL. . . . . 3 5. EXCLUSIVE PRIVILEGE AND DUTY. . . . . . . . . . . . . . 3 6. EXCEPTIONS TO EXCLUSIVE PRIVILEGE. . . . . . . . . . . 4 7• CONTRACTOR'S DUTY TO MAINTAIN RECORDS; COUNTY'S �y RIGHT TO EXAMINE RECORDS. . . . . . . . . . . . . . . . 4 S. RATES. . . . • . . . . . . . • ♦ r s . . . . . . ♦ . . . 5 9. RATE APPLICATIONS. . . . ♦ . . • . . . . . . . 6 10. OPERATION BY CONTRACTOR. . . . . . . . . . . . . . . . 7 11. LIMITATION ON TIME AND MANNER OF COLLECTION. . . . . . . 7 12. CUSTOMER SATISFACTION, AS 939 AND EFFICIENCIES IN OPERATION. . . . . . . . . . . . . . . . . . . . . . . . 8 13. CUSTOMER SERVICE STANDARDS. . . . . . . . . . . 9 Hay 2. 1995 i 14 . LOCAL ADVISORY BOARD. . . . . . . . . . . . . . . . . . 10 15. CUSTOMER COMPLAINTS. . . . . . . . . . . . . . . . . . . 10 16. BILLING. . . a • 10 17 . RECYCLING. . . r . . . « . . 10 18. FREE SERVICE FOR COUNTY. . . . . . . . . . . . . 11 19. FRANCHISE AREA—WIDE COLLECTION• . . . . . . . . . . . 11 20. PARTICIPATION IN COMMUNITY CLEAN—UP PROJECTS. . . . 11 21• DISPOSAL AND WASTE STREAM CONTROL. . . . . . . . . . . 12 22. MISCELLANEOUS OBLIGATIONS OF CONTRACTOR. . . . . . . . . 12 23. ADMINISTRATIVE SERVICES AND FRANCHISE FEES. . . . . . . 12 24 . HAZARDOUS WASTE. . . . . . . . . . . . . . . . . . . . . 12 25. PRELIMINARY DISPUTE RESOLUTION. . . . . . . . . . . . . 13 26. FAITHFUL PERFORMANCE BOND. . . . . . . . . . . . . . . . 13 27 . INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 13 28 . INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 14 29. A'TTORNEY'S FEES. . . . . . . . . . . . . . . . . . . . . 15 30. ASSIGNABILITY. . . . . . . . . . . . . . . . . . . . . . 15 31. INVOLUNTARY ASSIGNMENT. . . . . . . . . . . . . . . . 16 32. NOTICE PROVISIONS. . . . . . . . . . . • . . . . . . . . 17 33. ANNEXATION AND CHANGE OF FRANCHISE AREA BOUNDARIES . . . 17 34. AFFILIATED ENTITIES. . . • . . . . . . . . . . . . . . . 18 35. BREACH AND TERMINATION. . 0 • « . . . . . . . . • 18 36. EMERGENCY. . . . . • . . . . . . . . . . . . . • . . • . 20 37. COMPLIANCE WITH FEDERAL, STATE AND LOCAL LAW'S. . . . . . 20 38. AMENDMENT OR MODIFICATION. . . . . . . . . . . . . . . . 20 39 . POLICE POWERS. . . . . . . . . . . . . . . . . . . . . . 20 May 2. 1995 ii 40. CONTEST OF AGREEMENT'S TERMS. . . . . . . . . . . 20 41. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . 20 42. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . 21 43. SURVIVAL OF OBLIGATIONS. . . . . . . . . . . . . . . . . 21 44. NEW AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 21 45. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . 21 46. OPERATIVE DATE. . . . . . . . . . . . . . . . . . . . . 21 May , 1995 iii _....- - FRANCHISE AGREEMENT WITH GARAVENTA ENTERPRISES 1. EFFECTIVE DATE, PARTIES. This Agreement is binding between the County and the below named Contractor and is effective on the date last signed by the parties hereto. 2. DEFINITIONS. As used herein, the followingterms shall have the meanings set forth below: a. Agreement. Agreement means this Agreement by and between the County and Contractor for the collection,' removal, and disposal of solid waste and the recycling of material. b. Act. Act means the California Integrated Waste Management Act of 1989 (Public Res. Code, S 40000 et seri. ) and all rules and regulations adopted under any of those sections, as such sections, rules and regulations may be amended from time to time in the future. C* Board. Board means the Board of Supervisors for the County of Contra Costa. d. Commercial Solid Waste. Commercial Solid Waste means Solid Waste routinely originating from stores, business offices and other commercial and light industrial sources, excluding residences and any wastes from heavy industry (i.e. , industry that manufactures or processes petroleum, lumber, steel, chemicals, explosives, fertilizers, gas, rubber, cement, sugar and other such products [see section 84-60.402 of the Contra Costa County Ordinance Code. ] ) . e. Contractor. Contractor means Garaventa Enterprises, a California Corporation, and is the entity which has been granted an exclusive franchise pursuant to the terms and conditions set forth herein. Silvio Garaventa, Sr. and Mary C. Garaventa own 100% of the stock in Garaventa Enterprises. f. County. County means the County of Contra Costa. g. Customers. Customers means those who have contracted with the Contractor for the collection of materials for recycling and/or for the collection, removal, or disposal of Solid Waste, pursuant to this Agreement and applicable ordinances of County, including mandatory subscription ordinances . h. Designated Waste. Designated Waste as used herein has the meaning set forth in section 2522 of Title 23 of the California Code of Regulations, as amended from time to time. May 2, 1995 • r i. Franchise Area. Franchise Area means the geographic area generally described in Exhibit A to this Agreement with Garaventa Enterprises, which Exhibit, dated March, 1995 and prepared by McGill-Martin-Self, is attached hereto and incorporated herein by reference and illustrated in the six hundred (600)- scale maps to be maintained and available for inspection at the Community Development Department. Exhibit A and said six hundred (600)- scale maps shall be amended from time to time to reflect changes of boundaries of the Franchise Area in such a manner as to identify each alteration to the franchise Area and the effective date thereof. j. Hazardous Waste. Hazardous Wastes include any waste material or mixture of wastes which is toxic, corrosive, flammable, an irritant, a strong sensitizer, which generates pressure through decomposition, heat or other means, if such a waste or mixture of wastes may cause substantial personal injury, serious illness or harm to humans, domestic animals, or wildlife, during or as an approximate result of any disposal of such wastes as defined in Article 2, Chapter 6.5, Section 26117 of the Health and Safety Code. The terms "toxic," "corrosive," "flammable, " "irritant, " and "strong sensitizer" shall be given the same meaning as in the California Hazardous Substances Act (Chapter 13 commencing with Section 28740 of Division 21 of the Health and Safety Code) . ( 14 Cal.Code Regs . , S 17225.32 . ) k. Industrial Waste. Industrial Waste includes all types of Solid Waste which result from industrial processes and manufacturing operations and/or which originates from such facilities . 1. Infectious Waste. Infectious Wastes includes ( 1) Equipment, instruments, utensils and other fomites of a disposable nature from the rooms of patients who are suspected to have or have been diagnosed as having a communicable disease and must, therefore, be isolated as required by public health agencies; (2) laboratory wastes, including pathological specimens (i.e. , all tissues, specimens of blood elements, excreta and secretions obtained from patients or laboratory animals) and disposable fomites (any substances that may harbor or transmit pathogenic organisms) attendant thereto; (3) surgical operating room pathologic specimens - including .recognizable anatomical parts, human tissue, anatomical human remains and disposable materials from hospital, clinics, outpatient areas and emergency rooms, as is also defined in Section 314(d) of the California Administrative Code, Title 17. ( 14 Cal .Code Regs. , S 17225.35. ) May 7, 1995 2 ............................................................................................................ ....................................................................................................................................................................................................... _.. _ _ _ __ m. Recycle or Recycling. Recycle or Recycling means the process of collecting, sorting, cleaning, treating and reconstituting materials and recovering them so that ', they may be used in the form of raw material for new, reused, or reconstituted products. n. Residential Solid Waste. Residential Solid Waste means Solid Waste routinely originating from single-family or multiple family dwellings. Residential Solid Waste includes household hazardous waste, but does not include septage. +o. 5eptage. Septage means non-severed liquid or semi-liquid waste which may be trucked to treatment facilities for disposal, to include, but not be limited to, waste from residential septic tanks, commercial grease clean-outs, and industrial waste holding facilities. p. Solid Waste. Solid Waste has the meaning set forth in Section 401191 of the California Public Resources Code as of the date of execution of this Agreement. Solid Waste includes, but is not limited to, all putrescible and nonputrescible solid, semisolid, and liquid wastes, including garbage, trash, refuse, paper, rubbish, ashes, demolition and construction wastes, abandoned vehicles and parts thereof, discarded home and industrial appliances, dewatered, treated, or chemically fixed sewage sludge which is not hazardous waste, manure, vegetable or animal solid and semisolid wastes and other discarded solid and semisolid wastes . "Solid Waste" does not include infectious, designated, and hazardous waste, except household hazardous waste. q. Waste Stream. Waste Stream means the Solid Waste to be collected under this Agreement from the time of its collection by the Contractor to its disposal at a landfill or, at County's discretion, delivery to a transfer facility or other facility by Contractor. 3. TERM. Subject to Section 33 (Annexation and Change of Franchise Area Boundaries) and Section 35 (Breach and Termination) , the term of this Agreement and the exclusive franchise granted hereunder shall be 30 years, commencing on the effective date first mentioned in section 1 of this Agreement. ` 4. INTENT TO REGULATE ALL RECYCLING AND RESIDENTIAL AND SOLID WASTE COLLECTION$ REMOVAL AND/CSR DISPOSAL. The parties hereto agree that County currently has jurisdiction to regulate the collection, removal and disposal of all Solid Waste, and the recycling of all material, in the Franchise Area. The intent of this Agreement is to regulate Solid Waste handling service and recycling of material in the Franchise Area. 5. EXCLUSIVE PRIVILEGE AND DUTY. To the extent allowed by May 2, 1995 3 • i + r law, County hereby grants to Contractor the exclusive privilege and duty to collect and remove for disposal and recycling, all residential and commercial Solid Waste, including recyclable materials, within the Franchise Area and to charge and receive charges therefor, pursuant to and subject to the terms of this Agreement. Contractor promises and agrees to perform the responsibilities and duties set forth herein. The Franchise Area may be expanded or reduced in size by mutual agreement of the parties, or as provided in Section 33 (Annexation and Change of Franchise Area Boundaries) of this Agreement. S. EXCEPTIONS TO EXCLUSIVE PRIVILEGE. The exclusive privilege granted by this Agreement shall not apply if: (a) A person or entity generates Solid Waste, including recyclable materials, and personally collects, removes and disposes or recycles such in a clean and sanitary manner in conformance with all applicable laws and regulations, including mandatory subscription ordinances. This exception shall not apply to a person who incurs a net cost of collection to a third person in the above described activities, or (b) A person or entity contracts with a third person for the removal and disposal or recycling of inorganic refuse or garden waste (a "Non-Franchised Contractor") and such removal and disposal or recycling is solely incidental to work such as remodeling or gardening occasionally performed by or for the customer. This exception shall not apply if the Non-Franchised Contractor incurs a net cost of collection to any third person in connection with its collection and/or disposal of said :olid Waste. 7. CONTRACTOR'S DUTY TO MAINTAIN RECORDS; COUNTY'S RIGHT TO EXAMINE RECORDS. Contractor shall maintain a proper set of books and records in accordance with generally accepted accounting principles, accurately reflecting the business done by it under this Agreement. Contractor shall further maintain and make available to County, upon its request, records as to number of Customers, total and by type, route maps, service records and other materials and operating statistics in such manner and with such detail as County may require. County shall treat the information required by this paragraph that affects the competitive position of the company as confidential information to the extent permitted by law. County may at any time during the term of this Agreement, have the books and records of the Contractor examined by a County Agent or Agents appointed for that purpose by the County. County may 2, 1995 4 shall give thirty (30) days' written notice to the Contractor of such examination date. County expenses incurred under this section shall be paid by Contractor subject to their recovery through the rates allowed by the County hereunder. The information required by this section shall pertain to Contractor's operations covered and regulated by this', Agreement, and nothing contained herein shall require the Contractor to provide the County with information pertaining to the Contractor's operations which are not regulated by the County, except in conformance with this section. County's Agents may examine Contractor's books, records and financial statements pertaining to operations not regulated by the County as may be reasonably required for the sole', purpose of gathering information necessary to allow the Agents to ascertain whether income, expenses, assets and liabilities are reasonably and consistently allocated among operations regulated by County and those not regulated by the County. Contractor shall obtain County's written approval of its method of segregating its financial records between County-regulated and non-County regulated operations. County shall not unreasonably withhold such approval. To the extent allowed by law, information gained from examination of records pertaining to operations not regulated by the County shall be treated by County and its agents as confidential information. For the review of books and other financial records necessary to verify the Contractor's income, expenses, assets and liabilities, "County Agent" shall mean County employees or an independent Certified Public Accountant or public accountancy firm. For all other information or records, including the results of financial verification, •County Agent" shall mean any consultant designated by the County or County employees. Nothing in this section will prevent County from allowing public access to County records as provided for under the California Government Code, and in the event any dispute arises as to the public access to information provided by Contractor under the terms of this Agreement, the County shall in its discretion provide public access to said information according to law or tender the defense of any claims made against the County concerning said information to Contractor. Prior to releasing any information pursuant to this paragraph, County shell make a good faith effort to notify Contractor of the intended release. S. PATES. Rates shall be fixed by the County from time to time. In determining the rates, the County shall consider fairness to both Contractor and the Customers. Reasonable casts Incurred by Contractor pursuant to this Agreement shall be may 2, 2995 5 designated as "pass-through" or "subject to reasonable profit•' as determined by the County during the rate review process. Rates fixed by County shall be maximum rates which Contractor may charge the Customers. The maximum rates fixed by the County at this time shall be the highest commercial rates and the highest residential rates being charged by Garaventa Enterprises within the Franchise Area immediately before the effective date of this Agreement, as set forth in the better and enclosures from Garaventa Enterprises to Val Alexeeff dated April 141 1995, attached hereto as Exhibit B and incorporated herein by this reference. Nothing in this Agreement precludes Contractor from charging rates less than the maximum rates fixed by the County. Pending a rate review by the Cauntyj the maximum rates chargeable shall be those rates charged on the effective date of this Agreement. Following consultation with the Contractor and examination of industry norms and trends, the County, in its sole discretion, shall determine the method of determining Contractor profitability. All costs associated with County review and processing of rate applications shall be paid by Contractor and shall be allowed as a pass-through cost in the rate application process. Contractor will offer a mini-can program at reduced rates as directed by the County following consultation with Contractor. 9 . RATE APPLICATIONS. Rate applications shall be prepared in accordance with such forms and in such detail as required by the County. The application shall include one reproducible hard copy, 15 hard copies bound in an appropriate manner and one copy on disk formatted pursuant to County specifications. Contractor shall submit its first rate application as directed by the County. All rate applications shall include information from the previous rate change to the present, or such other period of time as is selected by the County. Every three years, a rate application shall be accompanied by an audited financial statement covering the entire period since the last audited rate application together with supporting documentation as required to segregate its County regulated activities from other business activities . The County Administrator may, in writing, allow the rate application to be submitted without an audited financial statement provided the County Administrator is satisfied that the level of verifiable detail allows for adequate assessment of the Contractor's income, expenses, assets and liabilities. Rate changes may be initiated by County at any time or by Contractor under the conditions allowed in this section. In May 2. 1995 6 • r either case, Contractor shall prepare a rate application in accordance with the requirements of this section. If the rate change is initiated by County, the Contractor shall submit its rate application to County within 50 days of County's notice to Contractor. If the rate change is initiated by Contractor, it shall be submitted no more than once a year under normal operating conditions. The date of Contractor initiated applications shall be standard, year by year; such date to be determined upon mutual agreement of the parties and reasonably related to the fiscal year of Contractor. In the event that the rate change that would be requested by Contractor is no more than the change in the Consumer Price Index for All Urban Consumers for the San Francisco Bay Area for that fiscal year of Contractor, Contractor may increase its rate up to such amount and not request a rate change from the County. Contractor may defer a rate application pursuant to this paragraph for a maximum of two consecutive years. In the event that Contractor must make significant changes in its operations or experiences significant changes in costs or revenue not under its control, Contractor may submit ;a rate application. Contractor shall provide documentation , for the need for such rate application relative to those changes. The application will thereafter be considered by the Board. 10. OPERATION BY CONTRACTOR. Contractor shall furnish all necessary equipment (excluding containers for single-family residential wastes) for services provided pursuant to this Agreement in the Franchise Area and shall maintain such equipment in a sanitary condition at all times. Contractor shall furnish all necessary labor in connection with the operation of a Solid Waste collection system in the Franchise Area. The Contractor, in performance hereof, shall use trucks with covered, waterttight truck bodies constructed of sufficient strength to withstand a fire within, without endangering adjacent property. Trucks, drop boxes, bins, or similar types of equipment shall be kept clean and in good repair. Contractor shall have its name and telephone number on the side of each truck and on each drop box, bin or similar type equipment provided by Contractor. 11. LIMITATION ON TIME AND MANNER OF COLLECTION. Contractor shall systematically collect Solid Waste, and to the extent permitted by this Agreement, materials for recycling from its Customers. Frequency, place of pickup (e.g. , curbside, backyard, etc. ) or any other manner of collection shall be subject to the review and approval of the Director of Community May 2, 1995 7 Development. Upon commencement of service and upon changes in collection day schedules, Contractor shall provide each customer with notice of the scheduled collection day. Contractor shall not collect Solid Waste from an inhabited dwelling or dwelling unit between the hours of 7.00 p.m. and 4:00' 'a.m. , except that if a dwelling unit is part of a collection route that predominately serves commercial accounts, collection may begin as early as 3.00 a.m. 12. CUSTOMER SATISFACTION, AS 939 AND EFFICIENCIES IN OPERATION. (a) From time to time, at its discretion, County may examine Contractor's operation in order to evaluate whether the Contractor is operating at a satisfactory level of efficiency and customer satisfaction. Contractor agrees to cooperate in any such examination and Shall permit County representatives to inspect, at Contractors principal place of business, such information pertaining to Contractor's obligations hereunder as County may require, including, but not limited to, such things as customer inquiry records, collection routes and equipment records . Access to Contractor's records shall be subject to Paragraph 8 (Contractor's Duty to Maintain Records: County's Right to Examine Records) . (b) Notwithstanding any contrary provision in this Agreement, the County shall have the right to direct Contractor to compile information, develop plans for and/or conduct programs on alternative methods of Solid Waste and recyclable material collection and management, or to take any other action requested by the County for the purpose of meeting the source reduction, recycling and composting requirements of the Act, and any other applicable federal, state or local laws regarding Solid Waste collection, recycling and disposal, including, without limitation, the County's Materials Diversion Ordinance. Contractor agrees to indemnify and hold the County harmless from and against any and all liability to the State of California for the County's noncompliance with the requirements of the California Integrated Waste Management Act due in whole or material part to the material failure of Contractor to properly carry out the reasonable directives of the County to Contractor regarding collection and disposition of Solid Waste and recyclable material, provided, however, that Contractor shall not be obligated to carry out any such directive (and shall not indemnify nor hold the County harmless from any resulting liability) if the County fails to agree to allow Contractor its reasonable costs (including a reasonable profit) associated with carrying out such directives. (c) County may require Contractor to develop plans for and conduct programs on alternative methods of Solid Waste collection, including pilot programs of limited scope, or may require additional programs, for the purpose of improving May 2, 1995 $ • r service, increasing customer satisfaction, and meeting diversion requirements. County may also require Contractor to implement efficiencies in its operation upon written notice from County. The notice shall allow Contractor a reasonable period of time to implement the specified service (efficiency) . Should County require commencement of such a program as outlined in this paragraph, Contractor agrees not only to do those things specified herein, but also to act at the direction of the County on other matters that may be necessary for the success and efficiency of the project, ,such as public informationand notification. In the *vent that County elects to direct Contractor to discontinue any service theretofore performed by Contractor at the direction of County hereunder, County shall allow Contractor to recover its reasonable capital equipment costs and other reasonable costs arising upon termination of the service. Rate adjustments applicable solely to programs instituted pursuant to this subsection (c) initially shall be established at the time the County authorizes implementation of the program or efficiency. 13. CUSTOMER SERVICE STANDARDS. Contractor shall provide prompt, efficient, continuous and professional service to its Customers. Contractor shall have a phone system with sufficient capacity to promptly respond to telephone calls for at least 8 hours a day during, weekdays, excluding those holidays observed by Contractor. Telephone numbers for customer service shall be located in the local telephone directory. All telephone lines for customer service shall be toll free to Customers. ' Not less than once every three years and not less than six months prior to an application for contract renewal, assignment or extension of term, Contractor shrill conduct a representative survey or surveys of Customers within the Franchise Area to determine satisfaction with service, including, without limitation, response to customer complaints. The survey methodology, format and content shall be subject to the prior review and approval of the Director of Community Development. A copy of the survey results shall be sent to the County within sixty (50) days of completion of the survey. Nothing in this paragraph shall limit the right of the County to conduct additional surveys . The Contractor shall cooperate with the ` County in such cases. Upon initiation of service, and at least once a year, Contractor shall send or deliver to Customers information concerning the conditions of service, including, but not limited to, rates, fees, charges, service options, payment options, discounts (if any) , days of collections, the amount and manner of refuse to be collected, service level and inquiry/complaint procedures, including the name, address and local, telephone number of Contractor and the name, address and telephone number Of the County Community Development Department. The form and May 2, 1995 9 r content shall be subject to the review and approval of the Director of Community Development. 14. LOCAL ADVISORY BOARD. The Board of Supervisors may designate an existing committee to represent the Franchise Area, or form an advisory body to advise the Board on the performance Of the Contractor in the community, local service interests and needs, and rate applications. In all cases, the Committee shall hold its meetings at a time and place convenient to the public. The Committee shall keep a record of all public comments and submit such comments when reporting to the Board. 15. CUSTOMER COMPLAINTS. Contractor shall develop and implement policy and procedure for responding to and recording customer complaints, including dispute resolution. The policy and* procedure shall be subject to the approval of the Director of Community Development. 16» SELLING. The form and content of customer bills shall be subject to the review and approval of the Director of Community Development. Bills for services may be monthly, bimonthly or quarterly as determined by County. Contractor may bill its customer in advance or in arrears. The County may establish billing period options for Customers upon a finding that such options are cost- effective and meet a community need. Full payment for drop boxes may be required by Contractor prior to delivery of the drop box to the customer. The County shall have the right to direct the Contractor to change or alter its billing system in which event the marginal additional expenses incurred by the Contractor in the Implementation of the change, with regard to the accounting, printing, mailing, loss of use of funds, or otherwise, shall be recoverable by the Contractor through the rates -allowed by the County provided such expenses are reasonable. Contractor shall Inform customers of all rate changes at least 30 days prior to their effective date. A copy or facsimile of such notice shall be provided to County at the time of customer� notification. 17. RECYCLING. County grants to Contractor the right and obligation to operate recycling programs, including curbside Pickup of recyclable materials, as determined and designated by County, subject to County's right to terminate this grant to Contractor pursuant to the provisions of this section. Contractor has instituted and is implementing a recycling program including regular curbside pickup at all single family residences of at least aluminum, tin, newsprint, glass bottles, non-colored HDPE and PET. This program is currently operating to May 2, 2995 10 4 • M' the satisfaction of County; however, County has the right at anytime to modify said program or require new programs as provided at Section 12 (b) hereof. Contractor shall maintain and provide to the County records relating to its recycling programs as directed by the Director of Community Development. Contractor's provision of recycling service shall be reviewed within three (3) years of the effective date of this Agreement and, at County's discretion, every five years thereafter. If County determines that continuation of such service by Contractor is not consistent with the County's ratepayers best interest, but not an a result of Contractor's failure to satisfactorily provide ,recycling services. Contractor shall be allowed to recoup its ?unamortired capital expenditures as follows. Contractor shall make a gated faith effort to sell all disposable assets acquired in furtherance of the program for their fair market value. if income derived from the sale is insufficient to cover the unamortixed costs of such assets, Contractor may transfer those losses together with net operations profits or losses to its general account and submit a rate application to cover such losses . If County determines that Contractor has failed to satisfactorily provide and perform recycling services, County may terminate this grant to Contractor of the right and obligation to provide and operate recycling programs, at no cost or further obligation on the part of County or County's ratepayers. 1S. FREE SERVICE FOR COUNTY. Contractor shall provide Solid waste collection and disposal services at those County buildings designated by the Director of Community Development from time to time, at no charge to the County. 19. FRANCHISE AREA-WIDE COLLECTION. In addition to its regular collections, Contractor shall provide two annual collections for each region in the Franchise Area as determined by the Community Development Director. Said collections shall be made each year throughout the term of this Agreement in accordance with practices and procedures established by Contractor and subject to the approval of the Community Development Director. 20. PARTICIPATION IN COMMUNITY CLEAN-UP PROJECTS. Contractor shall provide, upon direction of the Community Development Director, Solid waste drop boxes or equivalent containers for community or other clean-up projects within the Franchise Area. The Contractor's obligation shall be ',limited to the equivalent of ten (10) 20-cubic yard drop boxes ger year, per region in the Franchise Area. May 2, 1995 12 • r 21. DISPOSAL AND WASTE STREAM CONTROL. Contractor shall be solely responsible for the disposal of the Solid Waste collected pursuant to this Agreement. County has complete authority and control over the Franchise Area waste stream. County may, at its sole discretion upon providing SO days• notice to Contractor, direct the Solid Waste collected under this Agreement to be delivered to any site or facility of its choosing. This shall include the right of the County to direct the Solid Waste to be delivered to any County designated transfer station, disposal site, transformation facility and/or resource recovery facility. it is understood that County may contract with any party, public or private, to commit the waste stream from the Franchise area, and that Contractor's contracts may not bind County, nor need County consider such other contracts for any purpose. Notwithstanding the above, Contractor may propose, and County may but need not consider, ,waste management and/or disposition alternatives which are cost effective. In determining or comparing costs, County shall consider all relevant factors, including but not limited to, transportation costs, closure and postclosure requirements, costs and liabilities, disposal fees, fees levied by governmental entities, including benefits to Contractor's customers from paying such fees, costs of compliance with ordinances and other local requirements, and long-term costs, including degree of control over future costs. 22. MISCELLANEOUS OBLIGATIONS OF CONTRACTOR. Contractor shall assist County in its enforcement of its mandatory subscription ordinance by providing County with the addresses of properties not subscribing to collection service within the Franchise Area and by providing collection service to such properties upon written request by the County. 23. ADMINISTRATIVE SERVICES AND FRANCHISE FEES. Contractor shall pay to the County for (a) the services provided by the County in administering this Agreement, (b) for services and programs pertaining to Solid Waste provided by the County, and (c) additionally as directed by the County, a percentage of its gross annual revenues generated from the performance of such waste collection services under this Agreement. Such percentage, time and frequency of payment shall be established by County from time to time. Said sums shall be payable from the Contractor to the County upon the inclusion of the administrative service charge in the allowed rate and upon the collection of said rate by the Contractor. Such administrative and program services and any franchise fees shall be considered a reasonable cost and subject to "pass-through" as described in Section S on Rates . 24 . HAZARDOUS WASTE. The parties hereto recognize that federal , state and local agencies with responsibility for May 2, 1995 12 defining hazardous waste and for regulating the collection, handling or disposing of such substances are continually providing new definitions, tests and regulations concerning these substances . Under this Agreement, it Is Contractor's' responsibility to keep current with the regulations and tests on such substances and to Identify such substances and to comply with all federal, state and local regulations concerning such substances. Contractor agrees to provide to County upon its request, Contractor's program for Identifying hazardous waste and complying with all federal, state and local statutes and regulations dealing with hazardous waste. Contractor shall make every reasonable effort to prohibit the collection and the disposal of hazardous waste in any manner inconsistent with applicable law. 25. PRELIMINARY DISPUTE RESOLUTION. If Contractor has a question as to the interpretation of this Agreement, it shall submit a written request to the Director of CommunityDevelopment for a determination of the issue. The Contractor shall provide and submit such information as the Director of Community Development may request or require to make the requested determination. The written determination of the Director of Community Development may be appealed to the Board of Supervisors pursuant to Ordinance Cade Chapter 14-4 . 26 . FAITHFUL PERFORMANCE BOND. Contractor shall submit to County simultaneously with the execution of this Agreement a corporate surety bond in the amount of $18,000.0of provided however, that the Board may increase this amount not more often than every three years to reflect changes in the Consumer Price Index for All. Urban Consumers for the San Francisco Bay Area. The bond shall be executed by a surety company licensed to do business in the State of California and acceptable to County. The bond shall be approved by County and shall be payable to County. The condition of the bond shall be that Contractor will faithfully perform the duties imposed by .ordinance, this Agreement and the rules and regulations of County. Any action by County to proceed against the Bond shall not limit or affect the right of County to use ether remedies available to County under the Agreement, or in courts of law or equity. Notwithstanding the foregoing, in lieu of the corporate surety bond, Contractor may provide to County a letter of credit, cash bond or other security acceptable to the County Administrator's Office in a form satisfactory to the County. 27. INSURANCE. Contractor shall procure and maintain in full force and effect at all times during the entire term of this Agreement the following insurance coverages May 2, 1995 13 (a) Public liability and property damage insurance including completed operations, products, contractual, broad form property damage, personal injury and owned and non-owned automobile liability with such coverages and limits as may be reasonably requested by County from time to time, but in no event with limits not less than the sun of $1 million combined single limit for each occurrence arising from the services as stated in the Agreement herein. County shall be named as an additional insured under such liability insurance policy or policies, if commercially available. (b) Contractor shall carry workers' compensation insurance for all its employees. Evidence of liability and workers' compensation insurance shall be provided by Contractor by filing with County a certificate of insurance indicating that County is endorsed as an additional named insured under the liability policy. All policies shall include a provision that written notice of cancellation or any material change in coverage shall be delivered to County thirty (30) days in advance of the effective date thereof. No cancellation, alteration or change of beneficiary shall be made without written notice to County. County reserves the right to examine all policies from time to time to ensure appropriate conformity to prevailing practices and standards of the insurance industry. Such insurance shall be obtained from a company or companies licensed to do business in the State of California and acceptable to County. Failure of .Contractor to maintain insurance in the manner and amount stated herein and as directed by County Administrator, subject to the approval of the Board, will constitute a material breach of this Agreement. Z$. INDEMNIFICATION. a. Complete Indemnification of County. All work and performance covered by this Agreement shall be at the risk of Contractor. Contractor agrees to save, indemnify and keep harmless the County, its officers, employees, agents and assigns against any and all liability, claims, judgments, or demands, including demands arising from injuries or deaths of persons and damage to property, including environmental damage, arising directly or indirectly out of the obligations herein undertaken or out of the operations conducted by Contractor, save and except claims or litigation arising through the sole negligence or willful misconduct of County, and will make good to and reimburse County for any expenditures, including reasonable attorney's fees, that County may make by reason of such matters and, if requested by County shall defend any such suit at the sole cost and expense of Contractor. May 2, 1995 14 - ....................................................... _............................................................................................................................................................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................ _. The above promise by Contractor to indemnify, hold harmless and defend the County expressly includes, but is not 'limited to, all claims, damages (including by not limited to special and consequential damages) , natural resources damages, punitive damages, injuries, costs, response, remediation and removal costs, losses, demands, debts, liens, liabilities, causes of action, suits, legal administrative proceedings, interest, fines, charges, penalties and expenses (including but not limited to attorneys and expert witness fees and costs incurred in connection with defending against any of the foregoing or in enforcing this indemnity) of any kind whatsoever paid, incurred or suffered by, or asserted against, County, its officers, employees or agents arising from or attributable to any repair, cleanup or detoxification, or preparation and implementation of any removal, remedial, response, closure or other plan (regardless or whether undertaken due to governmental action) concerning any hazardous substances or hazardous waste at any place where municipal solid waste is or has been transported, transferred, processed, stored, disposed of or otherwise come to be located by Contractor under Agreement, or the activities of Contractor pursuant to this Agreement resulting in a release of hazardous substances or waste into the environment. The foregoing is intended to +operate, in part, as an agreement pursuant to Section 107(e) of the Comprehensive Environmental Response, Compensation and Liability Act, "CERCLA", 42 U.E.C. Section 9607(e) , and California Health and Safety Code section 26364, to defend, protect, hold harmless and indemnify County. The intent of the section is to provide County with the highest level of protection possible under existing and future laws. b. Defense of Agreement. Should any party successfully challenge the validity of this Agreement, the procedure by which this Agreement was entered into or the validity of any County ordinance which authorizes the County to enter into this Agreement, then in such case the Contractor shall have no cause of action for damages or any other relief against County as a result of such successful challenge. Contractor has the right to defend this Agreement and County. County has no duty to Contractor to defend the validity of this Agreement or any provision hereof. 29. ATTORNEY'S FEES. In the event of litigation between the parties arising hereunder, each party shall be responsible for and pay its own litigation expenses, including attorney's fees. 34. ASSIGNABILITY. Contractor shall not sell, assign, subcontract or transfer this Agreement or any part hereof, or any obligation hereunder, without the written consent of County. The term assignment shall include any dissolution, merger, May 2, 1995 15 consolidation or other reorganization of Contractor, which results in change of control of Contractor, or the sale or Cather transfer by probate proceeding or otherwise of a controlling percentage of Contractor's capital stock to a person not a shareholder on the date of the execution of this Agreement. The term "assignment" does not include internal business reorganizations or formations of new companies by Contractor, formation of trusts by Contractor or transfers of any interest of Contractor as a result of death, disability or estate planning by one or more of the principals of Contractor, so long as essential management decisions are retained by Silvio Garaventa, Sr. , his spouse, his children, and/or their spouses. It is understood and agreed by the parties that corporations (a.g. , Pittsburg Disposal Company) , sole proprietorships (e.g. , Oakley Disposal Company), and partnerships that are 100% owned by the shareholders of Garaventa Enterprises may presently and in the future perform the obligations and responsibilities of the Contractor in the regions of the Franchise Area. Performance of the obligations and responsibilities of the Contractor by such companies shall not be deemed an assignment under this ,section. In the event Contractor herein attempts to assign or subcontract this Agreement or any part hereof or any obligation hereunder, County shall have the right to elect to terminate this Agreement forthwith, without suit or other proceeding. Consent to assignment may not be unreasonably withheld. However, .it is understood that County's grant of this franchise to Contractor is partly persuaded by the Contractor's financial strength and background in the field of waste management; therefore, assuming Contractor maintains it ability to faithfully carry out its duties; hereunder, it is in the County's ratepayers' best interest for Contractor to continue under this Agreement. Following a public hearing, County may assign or transfer any or all of its rights under this Agreement without the consent of Contractor to any legally authorized public entity. 31. INVOLUNTARY ASSIGNMENT. No interest of Contractor in this Agreement shall be assignable by operation of law. Each or any of the following acts shall be considered an involuntary assignment providing County with the right to elect to terminate the Agreement forthwith, without suit or other proceeding: (1) If Contractor is or becomes insolvent, or makes an assignment for the benefit of creditors; (2) If Writ of Attachment or Execution is levied on this Agreement or other property of Contractor such that would affect Contractor's ability to perform its duties and obligations under this Agreement. May 2, 1995 16 • s (3) If in any proceeding to which Contractor is a party, a Receiver is appointed with authority to take possession of Contractor's property such that would affect Contractor's ability to perform its duties and obligations under this Agreement. (4) Except as otherwise provided in Section 31 (Assignab.ility) , in the event of a probate proceeding where the rights of Contractor under the Agreement would pass to another individual or other individuals. 32. NOTICE PROVISIONS. Any notice 'requir+ed or 'permitted under this Agreement shall be in writing and shall b* deemed to have been given if delivered personally or ten (10) clays after posted by certified mail, return receipt requested, addressed as appropriate either to Contractor. Garaventa Enterprises Attn: Silvio Garaventa, Sr. 4080 Mallard Drive Concord, CA 94520 or to County: Attention: Director of Community Development 651 Pine Street, 4th Floor North Wing Martinez, California 94553 33. ANNEXATION AND CHANGE OF FRANCHISE AREA BOUNDARIES. Contractor shall give notice to County by January 30 of the next calendar year of any geographic area in the Franchise Area or immediately contiguous to the Franchise Area, in which Contractor has commenced service within the preceding year, notwithstanding whether Contractor deems that area to be regulated or unregulated. Contractor realizes that the public agency boundaries may be altered by virtue of actions taken by the Contra Costa County Local Agency Fbrmation Commission (LAFCO) . Contractor agrees that should a municipal corporation lawfully annex territory which is within the franchise Area, County may make such alterations to the Franchise Area as the annexation necessitates. Should the Franchise Area boundaries be amended, Contractor agrees that it will abide by any change resulting from the franchise Area change. Contractor agrees that the Board of Supervisors may make such alterations to the Franchise Area as are necessitated by such Local Agency Formation Commission actions and shall have no right or claim to damages or other relief against the County for such alterations to the Franchise Area. However, nothing herein is intended to abrogate Contractor's rights under Public Resources Cade Section 49520 or any successor or similar statute. May 2, 1995 27 ....................... ..................... ... _.. _........... .........._.... ......... ......... ......... ........................ ..................................................... .. 34. AFFILIATED ENTITIES. Contractor shall provide information necessary to reasonably satisfy County that the charges made by any Affiliated Entity are reasonable in accordance with the provisions of Section 8 (Contractor's Duty to Maintain Records; County's Right to Examine Records) . Information gained from examination of books and records pertaining to operations not regulated by the County shall be treated by the County and its agents as confidential information. "Affiliated Entity" shall be defined, for purposes of this section, as any entity which provides products or services to Contractor and in which either Contractor or the affiliated entity owns a ten percent (10%) or greater interest in the other, or where one person or entity owns ten percent (104) or greater interest in both. For purposes of this section, the term "Contractor" shall include Contractor, and if Contractor is an individual or a group of individuals (partnership) , all immediate family members, or if a corporation, major shareholders, and if any major shareholder is an individual, said individuals' immediate family members. For the purpose of this paragraph, "immediate family" includes spouses and relatives of the first degree of sanguinity, and their spouses. 35. BREACH AND TERMINATION. The Director of Community Development shall have authority, subject to review by the Board of Supervisors upon appeal, to determine whether a breach of any provision of this Agreement by Contractor has occurred. Any waiver of a breach shall not be deemed to be a waiver of any subsequent breach or to be construed as approval of a course of conduct. In the event that the Director determines that a breach has occurred, County shall give Contractor written notice of the breach setting forth the breach or default. Contractor shall have a reasonable period to cure the noticed breach, said breach not to exceed 50 days . In the event the breach or default is cured to the satisfaction of the Director of Community Development within the period of time allotted, the breach shall not be deemed a material breach. In the event that the Director of Community Development determines that Contractor has failed to satisfactorily cure the breach or default within the period of time allotted, the Director of Community Development may determine such breach or default to be material. Multiple or repeated breaches, or a pattern of breaches and subsequent attempts to cure said breaches by Contractor shall provide an adequate basis for the Director of Community Development, in his discretion, to declare any subsequent breach to be material, notwithstanding whether that breach is ultimately cured by Contractor. If such a determination of material breach is made, the Director of Community Development's determination shall be automatically appealed to the Board of Supervisors for final May 2, 1995 �� + • i action. A material breach shall be cause for termination of this Agreement by the Board of Supervisors. In the event of a termination pursuant to this section, County shall have the right to temporarily assume the obligations of Contractor and shall have the right to forthwith take possession of all trucks and other equipment of Contractor and exercise Contractor's right to enter and use any disposal facilities for the purpose of performing the services agreed to be performed by Contractor herein until such time as 'County can make other arrangements for the performance of said services. However, such temporary assumption of Contractor's obligations under the Agreement shall not be continued by County for a period exceeding twelve (12) months from the date such operations are undertaken by County. Curing any period in which County has temporarily assumed the obligations of Contractor under this Agreement, County shall be entitled to the gross revenue attributable to operations during such period and shall pay therefrom only these costs and expenses applicable or allocable to said period, including the reasonable rental value of the trucks and equipment to be paid to Contractor. County shall be entitled to the excess, 'if any, of revenue over applicable or allocable costs and expenses during such period. The loss, if any, during such period shall be a charge against Contractor, and shall be paid to County by Contractor on demand. Final adjustment and allocation of gross revenue, costs, and expenses to the period during which County temporarily assumed the obligations of Contractor shall be determined by an audit by a Certified Public Accountant and prepared in report form with his unqualified opinion annexed thereto. Nothing in this Agreement shall prevent County during any period in which County temporarily assumes the obligations of Contractor under this Agreement, from employing persons who were employed by the Contractor for the collection of Solid Waste under this Agreement. Upon the occurrence of a material breach and the declaration of such and termination of this Agreement by the Board of Supervisors, this Agreement and the franchise granted thereunder shall be of no further force and effect, expecting these provisions concerning County's right to temporarily assume Contractor's obligations and to use Contractor's facilities, and Section 28 ( Indemnification) . County then shall be free to enter ,into whatever other arrangements are deemed justified and necessary for the collection, removal and disposal of Solid Waste within the Franchise Area. May Z, 1995 19 36. EMERGENCY. Notwithstanding Contractor's exclusive franchise rights set forth in Paragraph 5 (Exclusive Privilege and Duty) , in the event of an emergency due to natural disaster or labor strike which interrupts the collection of Solid Waste by Contractor, the board of Supervisors shall have the right to declare a temporary suspension of this Agreement for the reasonable duration of the emergency and until such time as County determines that Contractor is able to reassume all obligations under this Agreement. Should Contractor fail to demonstrate to the sa- ::sfaction 'of the Board of Supervisors that required services can :.e resumed by Contractor prior to the expiration of a six (t:: month period, this Agreement may be terminated at the direction of the Board. 37. COMPLIANCE WITH FEDERAL, STATE AND LOCAL LAWS. Contractor shall be responsible for and shall comply with all applicable laws, rules and regulations that are now in effect or may be promulgated or amended from time to time by the Government of the United States, the State of California, the County and any other agency now authorized or which may be authorized in the future to regulate the services to be performed herein regarding the collection, removal and disposal of Solid Waste and recycling of material. This includes County Ordinance Code Chapter 4186 (on mandatory subscription to Solid 'Waste collection service) , and the County's Materials Diversion Ordinance. 38. AMENDMENT OR MODIFICATION. This Agreement may be amended or modified upon written agreement of the parties hereto. The parties agree to meet and 'confer' in good faith if amendments or modifications are proposed. 39. POLICE POWERS. Nothing in this Agreement is intended to or may limit County authority pursuant to its police power. 40. CONTEST OF AGREEMENT'S TERMS. In the event either party to this Agreement attempts to challenge the validity of any portion of this Agreement, such action in attempting to challenge the Agreement shall constitute a material breach of this Agreement and the non-breaching party shall have the right to elect to terminate this Agreement forthwith without suit or other proceeding. This section shall not be construed to prevent either party from seeking redress from the courts for the purpose of legal review of administrative proceedings regarding rate setting or County actions taken pursuant to this Agreement, or for the purpose of interpreting or enforcing the provisions contained in this Agreement. 41. SEVERABILITY. In the event legal action is brought by a person or entity, other than the parties to this Agreement, to challenge, invalidate, contest or set aside any of the provisions May 2. 1995 20 ....................................................................................................... .................................................................................................................................................... __ of this Agreement, each and every term and condition, and each and every section and paragraph is severable from the remaining terms, conditions, sections, and paragraphs. The invalidation of any term, condition, section or paragraph as a result of a legal action, brought by a person or entity not a party to this Agreement shall not affect the validity or enforceability of the remaining provisions. However, if material provisions hereof are affected, the parties agree to negotiate in good faith to reach agreement on revisions which preserve the substance hereof to the greatest extent allowed by law` 42. WAIVER. The waiver by either party of any breach or violation of any provisions of this Agreement shall not be deemed to be waiver of any breach or violation of any other provision nor of any subsequent breach or violation of the same or any other provision. The acceptance of any monies which become due hereunder shall not be deemed to be a waiver of any pro-existing or concurrent breach or violation by the other party of any provision of this Agreement. 43. SURVIVAL OF OBLIGATIONS. obligations of this Agreement which embody continuing obligations, including but not limited to Section 28 (.Indemnification) shall survive the termination or expiration of this Agreement. 44 . NEW AGREEMENT. Upon the effective date of this Agreement, all other Agreements between the parties for the provision of solid waste and/or recycling services within the Franchise Area are superseded except that all, continuing obligations under said superseded agreements shall continue in full force and effect for the periods covered by said superseded agreements. 45. ENTIRE AGREEMENT. This Agreement represents the full and entire agreement .between the parties hereto with respect to the matters covered herein. 46. OPERATIVE GATE. a. This Agreement becomes operative on the effective date in Section 1, except as follows. b. For the North Concord region depicted in the inset on Exhibit A, the operative date shall be March 31, 1996. c. For the portions of the Franchise Area that are located within the Ir+onhouse Sanitary District and the Byron Sanitary District, as depicted -on Exhibit A, the previsions of this section become operative on the effective date in Section 1 and the remainder of this Agreement becomes operative as set forth herein. The County may, at any time, elect to have the remaining provisions of this Agreement become operative in said territories, and may contract with the appropriate District Board, with the District Hoard's concurrence, for the May 2, 1995 21 .............. ......... ......... ......... -_ _ ._.... ... - administration of this Agreement and the provision of policy recommendations to the Board of Supervisors. The County may at any time cause the remaining provisions of this Agreement to become operative within the Ironhouse Sanitary District and/or the Byron Sanitary District by providing sixty (60) days' written notice to Contractor of County's; decision to do so. Contractor shall notify the Ironhouse Sanitary District and the Byron Sanitary District of the requirements of this section and, in the event 60 days' written notice is given to Contractor by County as provided in this section, Contractor shall immediately notify the District that such notice has been received. Until such notice is given, County hereby directs Contractor to continue its operations consistent with its franchise agreement within the Sanitary Districts. Upon County's request, Contractor shall provide County with a status report of said operations within the District territories. Except for the requirements of this section, until this Agreement is made operative as to the territories within the Ironhouse and Byron Sanitary Districts as set forth herein, neither County nor Contractor shall be required to fulfill any of their obligations to each other under this Agreement for said territories. COUNTY OF CONTRA COSTA HA IR, B ARI} OF SUPERVISORS I7 ATTEST, Phil Batchelor, Clerk of the Board " and County A ministrator By: (L AAAd D TY CONTRACTOR GARAVENTA ENTERPRISES, a California Corporation ,.. ,/'�� �, �" $y: Silvio 4eaventa, 5 .,• Date President _ Taxpayer I .D. No. LTF 17a: \grv5295. fin May 2, 1995 22 .ro nrwr Garaventa Enterprises std?MALLARD DRIVE * POi BOX 5397 CONCORD.CALWORNIA 94520 015)669.8390 April 14, 1995 Valentin Alexeeff, Director Growth management and Economic Development Agency 651 Fine Street, 2nd Floor, N. Wing Martinez, CA 94553 Re: Maximum Rates in Garaventa Franchise Area Dear fir. Alexeeff This letter confirms that the highest monthly rates for the handling of Commercial Solid Waste (defined in section 2.d. of the Franchise Agreement with Garaventa Enterprises) currently charged by Garaventa Enterprises and related companies within the Garaventa Franchise Area described in Exhibit A to the Agreement are the rates as described in Attachments A-1 and A-2 to this letter. We understand those rates will be the maximum monthly rates, as described in the Franchise Agreement at section 8, for the handling of Commercial Solid Waste:. We understand that this letter will be included as Exhibit S to the Franchise Agreement With Garaventa Enterprises to confirm that mutual understanding. This letter ;also confirms that the highest monthly rates for handling Residential Solid Waste {defined in section 2.n. of the Agreement} currently being charged by . Garaventa Enterprises and related companies within the Garavonta Franchise Area described in Exhibit A to the Agreement are the rates described in Attachment A-3 to this letter. With the approval of the Franchise Agreement with Garaventa Enterprises, the Board will establish those rates as the maximum monthly rates, as defined in the Franchise Agreement at section 8, for the handling of Residential Solid Waste in the Garavonta Franchise Area. The maximum residential rates in Attachment A--3 refl+ect the fact that based on the last Board of Supervisors, action on this Franchise Agreement, residential rates have now been reduced by two dollars per month. Furthermore, existing Garaventa residential customers are being credited on their latest bill with a retroactive reduction equivalent to two dollars per month for EXHIBIT B S • r Valentin Alexeeff, Director April 14, 1995 Page 2 provided service dating back to January 1, 19950 consistent with our voluntary commitment to the Board of Supervisors. The Franchise Agreement only"sets the maximum rates to be charged. There are no minimum rates. It is acknowledged by Garaventa Enterprises that the County is free to initiate a review and potential reduction of those maximum nates with 60 days notice to the Contractor, consistent with section 9 of the Franchise Agreement. Notwithstanding the established maximum rates, please be advised that for any residential customers presently receiving service from Pleasant Hill Bayshore Disposal Company in the unincorporated areas near Antioch, Bay Pointe and Concord and which will now receive waste collection service from Garaventa Enterprises or related companies under this Franchise Agreement, their rates will be the current rates being charged by Pleasant Hill Sayshore or an amount equal to the rate charged to adjoining Garaventa residential customers after the Franchise Agreement with Garaventa Enterprises goes into effect, whichever is less. When the adjoining Garaventa residential rate is less than the present Pleasant Hill Sayshore rate, then any rate changes shall equally apply to both sats of residential customers. Please also be advised that if Garaventa Enterprises and related companies intend to further decrease the rates they charge to residential customers with the Franchise Area, the County will be notified in advance. our desire is to reduce the rates by two dollars more per month when The Recycling Center and Transfer Station is opened. Very truly yours, GARAVENTA ENTERPRISES, INc. Silvio Garaventa,,, Jr. Vice President SGJtkh Attachments (A-1, A-2 and A-i3) ------------- . -- ..................................................................... ............................................................................................................................................................................................................................................................................................................................ .......... _ _ ___ ............... . . ....... . . ....... ....... _ _ __ _ _ __ __ __ MONTHLY MAXIMUM COMMERCIAL CAN RATES f of pickups 1 x wk 2 x wk 3 x wk 4 x wk 5 x wk 1 Can $23.00 $46.00 $69.00 $92.00 $115.00 2 Gans $46.00 $92.00 $138.00 $164.00 $230.00 3 Cans $69.00 $138.00 $207.00 $276.00 $345.00 4 Cans $92.00 $184.00 $276.00 $368.00 $460.00 5 Cans $115.00 $230.00 $345.00 $460.00 $575.00 MONTHLY MAXIMUM COMMERCIAL TOTER RATES I of pickups 1 x wk 2 x wk 3 x wk 4 x wk' 5 x wk 1 Toter $36.20 $72.20 $108.30 $144 .40 $180.50 2 Toters $72.20 $144 .40 $216.603 $288.80 $361.00 3 Toters $208 .303 $216.60 $324 .90 $433.20 $541. 50 4 Toters $144 .40 $288.80 $433.203 $.577»60 $722.0303 5 Toters $180.50 $361. 00 $541.50 $722.00 $902.50 Attachment A-2 to Exhibit B to Garaventa Franchise .Agreement EXHIBIT • ..gyp MONTHLY MAXIMUM 2 YARD SIN RATES I of pickups l x wk 2 x wk 3 x wk 4 x wk 5 x wk 1 Bin $169.60 $285.35 $401.00 $516.70 $632.45 2 Bins $339.20 $570.70 $802.00 $1,033.40 $1,264.90 3 Bins 008.80 $856.05 $1,703.00 $1,550.10 $1,897.35 4 Bins $678.40 $1,141.40 $1,604 .00 $2,066.80 $2,529.80 5 Bins $848. 00 $1,426.75 $2,005.00 $2,583.50 $3,162.25 Sutras Dimensions Extra Bin Pickup $83.00 720 Length One Time Lack Charge $75.00 350 Width Lock Replacement $20.00 410 Height Charge to Steam Clean $75.00 Replace Bin for UPB $75.00 Attachment A-2 to Exhibit B to Garaventa Franchise Agreement ETH r i r � w .a MONTHLY MAXIMUM RESIDENTIAL RATES Mini-Can Service RM1�1 Monthly Fee Quarterly Fee $14.60 $43.80 1 Can Service Rll-1 $18.75 $56.25 2 Can Service 811-•2 $24.25 $72.75 3 Can Service R21-3 $29.75 $89.25 Toter Service RT1_1 $21.75 $65.25 BASIC SERVICE: Mini-Can Service - 1 can 20 gal.. maximum, w/2 bags yard waste. One Can Service - 1 can 32 gal. maximum, w/2 bans yard waste. Toter Service - 1 toter, 90 gal. capacity, (no additional yard waste) . Recycling ,included in all residential service. Yard waste not separately picked up. Attachment A-3 to Exhibit S to Garaventa Franchise Agreement r♦it t ♦ Ali AMEMMENT HQ 1 to EU}4CHIS E AQREZMENT WITH GAE.AVENTA ENTERPRISES between contra Crista C2=ty and Garayentsa EnteiMriaez This is amendment No. 1 (this "Amendment") to the "Franchise Agreement with Garaventa Enterprises* effective May 9, 1993 (the "original Agreement*) between Contra Costa County ("County"} , a political subdivision of the State of California, and Garaventa Enterprises, a California corpo- ration ("Contractor") . Since the original Agreement, County has entered into a Memorandum of Understanding dated July 31, 1997 (the "MOU" ) with Ironhouse Sanitary District ("Ironhouse" ) , a California sanitary district, concerning the Franchise Agreement dated June 1, 1993 ("Ironhouse Franchise" ) be- tween Ironhouse and Oakley Disposal Services (an affiliate of Contractor) , County' s responsibilities under the State of California' s solid waste laws and certain other matters. To implement the MOU and related actions, County and Con- tractor are entering into this Amendment. Ironhouse and Oakley Disposal Services have earlier entered into Amendment No. 1 (the "Ironhouse Amendment") to the Ironhouse Franchise concerning Ironhouse reimbursement of County' s household hazardous waste costs and certain other matters. The costs of certain County household haz- ardous waste programs and portions of Delta Diablo Sanita- tion District' s SOPA program have earlier been designated as pass-through costs for purposes of the Original Agree- ment. Initially capitalized terms used in this Amendment have the same definition as that given them in the Original Agreement except as otherwise provided in this Amendment. In consideration of the above and the promises and other provisions in this Amendment, the parties agree as follows. IR00-09.02 .61A 01/61/02 1 . The geographic area located within the borders of Ironhouse (the "Ironhouse Area" ) is deleted from the Fran- chise Area and from Section 46 .c of the Original Agreement, effective as of May 9, 1955. Exhibit A to the Original Agreement is deemed correspondingly amended to delete the Ironhouse Area from the Franchise Area. The 600 scale maps maintained by the Community Development Department (re- ferred to in the definition of Franchise Area in Section 2 (i) of the original Agreement) shall be amended to delete the Ironhouse Area within _ months after the date of this Amendment. No payment shall be owing by Contractor to County under Section 23 of the original Agreement for the Ironhouse Area. Contractor need not give notice to County of any service being provided by Contractor or any affili- ate of Contractor in the Ironhouse Area pursuant to Section 33 or other provision of the original Agreement. 2 . Notwithstanding anything to the contrary in Sections 4, 5, 33 and 46 (c) of the Original Agreement, the Ironhouse Area shall not be added to the Franchise Area in the fu- ture, except pursuant to this Section 3 . a. If either: i. County terminates the MOU under Section 5.b of the MOU; or ii. Ironhouse and the County agree to terminate the MOU, then (but not otherwise) Section 3 .b following shall apply. b. If either of the events described in Section 3 .b. i or 3 .b.ii above occurs, then thereafter County may elect to add the Ironhouse Area to the Franchise Area on 90 days written notice to Ironhouse. Any such election and addition (and this Section 3 of this Amendment) are without prejudice to the contentions of County or Ironhouse con- cerning County's authority to add. the Ironhouse Area to the Franchise Area or concerning any other matters relating to such election or addition or this Section 3. 3 . The following phrase is deleted from the third para- graph of Section 30 of the Original Agreement: (e.g. Oakley Disposal Service) . 2 IFt00-09.02.61A 01/61/02 ............................... 4 . This Amendment shall prevail over anything to the con- trary in the Original Agreement, but in all other respects the Original Agreement and this Amendment shall be con- strued together as one and the same agreement. 5. The preceding provision: of this Amendment shall not be amended or otherwise changed without the prior written agreement of Ironhouse. Dated: 1998• Contractor Ilistirictt Garaventa Family 'frust, County of Contra Costa dba Oakley Disposal Service, By: By: Chair, Board of Supervisors trustee utd duly authorized signer Attest : 3 I1t00-09.02.61n 01/61/02 Appendix B Comparison of Franchise Agreement Terms and Conditions with Manual Appendix B provides a summary of Conditions with the DateSetting Process how current franchise agreement terms and Methodology Manual for Solid and conditions are treated in the manual. Waste Charges." This matrix identifies Included in this appendix is an exhibit the franchise agreement term/issue, titled"Comparison of Contra Costa describes how the manual treats this County and Garaventa Enterprises issue, and where in the manual the issue Franchise Agreement Terms and is covered. Contra Costa County Page B-1 _.. . _. ......... ......... _. .. __ _........ ....._... Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft Rate Setting Process and Methodology Manual for Solid Waste Charges Draft Draft Description of Franchise hate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 1. Regulation The Agreement Section 4 The manual regulates rates for Page I-I of Commercial focuses on regulation residential solid waste handling services and Industrial of all recycling and and recycling and allows the hauler Charges residential solid waste latitude to set commercial and industrial collection,removal rates outside of the manual with County and/or disposal approval. Commercial and Sections Cost and revenue information is Page I-I Industrial wastes are 2d,2k required for all residential,commercial, only defined in the and light industrial services combined; Agreement. There is however only residential rates are no specific mention of established in the process. This commercial and treatment allows commercial and light industrial rate industrial rates to subsidize the regulation. residential rates. This approach allows the Company to realize the subsidy within the rates charged. 2. Multi- Multi-family waste is Section 2n Multi-family revenues and costs are Page I11-5,Page family included in the included within residential costs and 3 of 6 of the Customer Franchise Agreement revenues in the manual. Therefore, Base Year Rate Revenues and definition of when providing revenue and cost Application Costs Residential Solid information/projections,the hauler Waste should incorporate multi-family business into residential business. Contra Costa County Page 5-2 Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft Mate Setting Process and Methodology Manual for Solid Waste Charges (Continued) Draft Draft Description of Franchise Bate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 3. Mandatory Identified within in Section 2g, No apparent impact on rate setting and N/A Subscription Franchise Agreement as Section 37 on manual. A mandatory ordinance Ordinance County Ordinance Code will decrease the amount of self-haul Chapter 418-6 customers. Such an ordinance also may reduce potential bad debt expenses because with a mandatory subscription ordinance,liens may more easily be placed on customers who do not pay bills. 4. Solid Waste The Agreement Section 5 Identified as charges initially in the N/A Rates,Fees, specifies that the hauler Policies portion of the manual and Taxes,or has a"right to charge generally as"rates"throughout the Charges and receive charges." manual. Alternatively,Section 8 The manual assumes that because a is entitled"Rates"and hauler is providing the refuse collection refers to rates rather services rather than the government than charges. In no case does the body directly,and that refuse is not a Agreement specify that "property related fee,"that,Proposition refuse ens 218 does not effect changes to refuse charges are fees or collection charges. Nor do refuse ,, taxes. Further,nowhere collection charges represent"taxes. does the Agreement Thus,an argument can be made that the indicate that the residential charges do not have to be Contractor is entitled to aligned with the actual cost of service a constitutional fair rate and the County can maintain the of return on its existing subsidy between commercial investment. and residential customers whereby commercial customers help keep residential rates lower than they otherwise would be. 5. Information gained Sections 7 Rewire operating statistics by service Page 11-1 Confidentiality horn examination of and 34 type(i.e.,residential,multi-family, books and records... commercial,and light industrial shall be treated by the services)including tons per year, County and its agents as accounts per year,number of customers confidential information within the rate structure,and dollar to the extent permitted value of County provided services. by law. These statistics that the hauler wishes to remain confidential should be so noted. Contra Costa County mage B-3 _.... ............_.... _...... ..._..... _ .... ......... ....._ ........ ......... ................_........._...........__ . . Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft Rate Setting Process and Methodology Manual for Solid Waste Charges (Continued) Draft Draft Description of Franchise Rate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 6. Allocation information sufficient Section 7 The manual is not prescriptive on Page II-12 Methodology to determine allocation proper allocation methodology to use, between regulated and but instead allows the hauler to non-regulated determine their own method. In each portions. Base Year,the allocation methodology is examined for reasonableness and at that time the County provides written Written approval of approval for the methodology. allocation methodology. 7. Allowable Reasoble costs shall Section 8 Allowable costs,pass-through costs, Exhibit I-5, na costs be determined"pass and non-allowable costs are described Page 1-16 through"or"subject to throughout manual. The manual a reasonable profit" attempts to identify and closely scrutinize certain costs which within the waste management industry can exceed averages(e.g.,legal,accounting, corporate overhead). The manual is proscriptive in attempting to place reasonable caps or"rules of thumb"to benchmark costs against in future rate setting. Contra Costa County Page 6"4 Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft Rate Setting Process and Methodology Manual for Solid Waste Charges (Continued) Draft Draft Description of Franchise Rate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 8. Maximum Rates charged shall be Section 8 The hauler may choose to set charges at Page 1I-25 Rates maximum rates a level below charges determined through the rate setting process (i.e., accept a lower profit,or a higher operating ratio). Rates could be set lower by the hauler for a number of reasons,including political pressures, rate stabilization needs,geographic factors,or other reasons. However,in no case shall setting charges below the level approved through the rate setting process imply or result in a balancing account concept or an actual balancing account. 9. Allowable ...the County,in its Section 8 The method of profit established for Page I-18,and Profit Level sole discretion,shall County rate setting is the operating Page III-15 determine the method ratios. For base year rate setting,the for determining operating ratio shall range from 88 to Contractor 92 percent,with a target of 90 percent. profitability." During each base year,the hauler's revenue requirement(i.e.,allowable costs plus profit plus pass-through costs)is projected for the following year. If after projecting this revenue requirement using an operating ratio ranging between 88 and 92 percent,no rate change is required,then no rate change is implemented. If however,a rate change is required(i.e.,the operating ratio falls outside of the 88 to 92 percent range),then a 90 percent operating ratio is reestablished in that base year. An operating ratio range for base year rate setting is intended to mitigate fluctuations in charges while providing the hauler an incentive to operate efficiently. 'Through efficiency, the hauler can increase its profit level to an operating ratio as low as 88 percent. Alternatively by operating inefficiently the hauler's profit could rise to 92 percent without a rate change. Contra Costa County Page B-5 Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft Rate Setting Process and Methodology Manual for Solid Waste Charges (Continued) Draft Draft Description of Franchise Rate Setting Process and hate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 10. Mini-can Contractor will offer a Section 8 Some areas currently provide a mini- NIA Program mini-can program at can service,others a senior can service. reduced rates as This is a rate structure issue and a directed by the service issue which will be dealt with County... separately outside of this manual. 11. Rate All rate applications Section 9 Each base rear requires five years of Exhibit I-4 on Application shall include information,including three completed Page I-14,Page Timing and information from the interim years,current year(estimated), 11-5 Audited previous rate change to and a projected base year data Financial the present Statements Every three years,a rate Section 9 In the first base year,audited financial Page 11-8 application shall be statements will not be required,but in accompanied by an subsequent base years audited financial audited financial statements for the three completed statement covering the fiscal years between base years must be entire period since the submitted with rate applications. last audited rate application together with supporting documentation as required to segregate its County regulated activities from other business activities Rate changes may be Section 9 Do not recommend that County and N/A,replaced initiated by the County hauler continue practice of rate changes by Manual at any time or by at times other than the base year. The Contractor under the purpose of the manual and the new conditions allowed in process is to provide formal structure this section. and timing for rate applications to be Contractor shall submitted in base years and interim submit its rate years. application to County within 60 days. Rate changes may be initiated by Contractor no more than once a year under normal operating conditions. Contra Costa County Page B-6 _............................_......................................... ................................................................................................................................................ ......................................................................................................................................................................................... . . .. .......................................................................................... Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement'berms and Conditions with Draft Rate Seung.process and Methodology Manual for SoUd ante Charges (Continued) Draft Draft Description of Franchise Rate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 12. Interim: Contractor may section 9 Do not recommend a short form,or Sec Interim Year hate increase its rate up to automatic rate change. We believe all Year Process in Setting such amount(CPI-all rate changes should be approved by the Chapter IV. urban consumers for County. The interim year process the SF Bay Area)and allows the hauler to submit applications not request a rate for changes in charges in any interim change from the year between base years. The interim County year process allows the CPI on non- controllable costs. 13. In the event the Section 9 Rate changes to account for Page IV-I Extraordinary Contractor must make extraordinary cost changes are allowed Cost Changes significant changes in in the manual. An example of such its operations or extraordinary cost changes would be experiences significant major capital improvements or outlays changes in costs...not during a non-base year. We do not see under control, that there will be many cases where Contractor may submit such extraordinary rate setting will a rate application occur. relative to those changes 14. Source The County shall have Section 12b AB 939 costs are treated as allowable Page I-10, Page Reduction and the right to direct costs(with profit)for purposes of rate I-18 Profit on AB Contractor to compile setting. This practice differs from some 939 Costs information,develop municipalities where all regulatory plans for and/or costs are treated as pass-through costs conduct programs on (in rates without profit). alternative methods of solid waste and recyclable material collection and management,or to take other action for the purpose of meeting [AB 933] requirements. Reasonable[AB 939] costs associated with carrying out directives (in lude a reasonable rmft Contra Costa County page 8-7 ................................................... _ ......... ......... .... ......... ......... ......... ......... ... ............. _ Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft Rate Setting Process and Methodology Manual for Solid Waste Charges (Continued) Draft Draft Description of Franchise Rate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual issue Provision Reference Manual Treatment Reference 15. Program County also may Section 12c The County may wish to formalize a Page I-27 Efficiency and require Contractor to performance audit schedule and Changes in implement efficiencies implement efficiencies and other results Service in its operations upon of the audit. It is recommended that written notice from the timing of these performance audits and County. implementation of the findings occur during base years. 16.Changes in Changes in the billing Section 16 Will be incorporated as an allowable NIA Billing System system required by the cost for rate setting. Generally,legal County are allowable costs are included in the corporate and expenses. local general and administrative cost category which may be capped for ratesetting. 17. Rate Contractor shall Section 16 Incorporated into rate setting schedule. Exhibit II-2 on Change inform customers of Page II-4, Announcement all rate changes at least Exhibit IV-2 on 30 days prior to their Page IV-3 effective date. 18. County Contractor shall Section 18 This is not a"free"service,but instead Exhibit 1-5 on Collection provide solid waste a service provided to the County at an Page I-16,Line Services services at County allowable cost passed on in the rates 5 of Base Year Provided by buildings at no charge with profit. Application Hauler to the County. 19. Area-wide Contractor shall Section 19 This is not a"free"service,but instead Exhibit I-5 on Collection provide two annual a service provided to the County at an Page 1-16,Line Services collections for each allowable cost passed on in the rates 5 of Base Year region in the Franchise with profit. Application Area. 20. Solid Contractor shall Section 20 This is not a"free"service,but instead Exhibit 1-5 on Waste Drop provide up to ten 20- a service provided to the County at an Page 1-16,Line Boxes for cubic yard drop boxes allowable cost passed on in the rates 5 of Base Year Clean-up per year,per region. with profit. Application Projects Contra Costa County Page B-8 ............................... ............................................................................................-----...................... ............................................................................................................................................................................................................................................................................................................................ ......... ................................................. ...... Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement'berms and Conditions with Draft Rate Setting Process and Methodology Manual for,valid Waste Charges (Continued.) Draft Draft Description of Franchise Rate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 21. Contractor shall pay Section 23 The County can charge costs of Exhibit I-5, Administrative the County for a}the administering the Agreement,and for Page I-16 Lines Services and services provided by services and programs which are in 9 and 23 of Franchise Fees the County in addition to franchise fees. Base Year administering the Application Agreement,b}for The County has established a franchise d fee equal to 5 percent of gross total services and programs pertaining Solid revenues(i.e.,residential and non- Waste provided by the residential revenues). County,and c) additionally as directed by the County,a percentage of its gross revenues...established by the County. Administrative and Section 23 Incorporated as pass-through expenses Page I-16,Page program services for rate setting. I-17 charges,and any franchise fees are "pass through." 22. Contractor shall Section 28 Will be incorporated as an allowable NIA Indemnification reimburse the County cost for rate setting. Generally,legal for reasonable costs are included in the corporate and attorney's fees local general and administrative cost associated with the category which may be capped for County defending ratesetting. itself for obligations under the Contract. 23. Affiliated Contractor shall Section 34 Affiliated companies and associated Pagel-11 Entities provide information "related party transactions"will be necessary to reviewed for reasonableness. The reasonably satisfy franchise hauler will be responsible for County that the providing documentation to determine charges made by any that the transaction is market-based. Affiliated Entity are reasonable in accordance with the provisions of Section 8. Contra Costa County Page 8-9 Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement Terms and Conditions with Draft.Rate Setting Process and Methodology Manual for Solid'Waste Charges (Continued) Draft Draft Description of Franchise Rate Seting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference 24.North Operative date of the Section 46 This area is served by Concord Page I-4 Concord agreement for the Disposal Service and includes an island Region rates North Concord region area in the center of the City of and rate is March 31, 1996. Concord service area. Rates should structure This area is identified likely be similar to the City of Concord as pats of Franchise because the area is served by the same Area and County rate Company with the same cost structure. regulation is clearly covered by the franchise. 25. Ironhouse Operative date of the Section 7 of The County would like to equalize rates Page 1-4 Sanitary current agreement MOU in this area with all other County areas District Region between the Ironhouse other than North Concord. The area is rates and rate Sanitary District and served by Oakley Disposal,and structure Garaventa Enterprises includes areas of Oakley,Bethel Island, is June 1, 1993(The and Knightsen.Ironhouse Sanitary County has entered District was established in the 1940's into an MOU with the and is served by a 5-member Ironhouse Ironhouse Sanitary District Board. District that specifies A Memorandum of Understanding Page I-10 the responsibilities of (MOU)dated July 31, 1997 required both parties for certain that the County and Ironhouse Sanitary solid waste matters). District cooperate and work together to implement solid waste programs and on matters concerning diversion goals. The MOU listed the specific solid waste programs and the respective responsible parties. The County continues to be responsible for AB 939 reporting. The authority to set rates in the Ironhouse area resides with Ironhouse. In general,Iroahouse intends to equalize rates in its area for which the County is responsible;there may be some qualifications to this and Ironhouse reserves its independent rate setting authority. The MOU increased the franchise fee Page 1-21 charged to Garaventa from two(2) percent to five(5)percent. This franchise fee is split as follows: 1) two percent goes to the County,2)one Contra Costa County Page B-10 ............................................... .............................. _......................_-.........--................-..-.................................................................................................................................................................. _. Comparison of Contra Costa County and Garaventa Enterprises Franchise Agreement 'Terms and Conditions with Draft Rate Setting Process and Methodology Manual for Solid Waste Charges (Continued) Draft Draft Description of Franchise Rate Setting Process and Rate Setting Franchise Agreement Agreement Methodology Manual Issue Provision Reference Manual Treatment Reference percent to a mist fund used for the Oakley and Bethel Island Municipal Advisory Councils and to fund non- recurring expenses,and 3)two percent to the Ironhouse Sanitary District. The MOu specifically identifies that Ironhouse's will fund a share of the cost of the County's new rate-setting methodology for Garaventa Enterprises. This will be paid for by the 1/2 of i% of the franchise fee used to fund non- recurring expenses. 26. Byron Section 46 The County would like to equalize rates NIA Sanitary in this area with all other County areas District Region other than North Concord. rates and rate stricture 27. Bay Point Operative date of the Section 46 This area is served by Pittsburg Page 1-12 area rates and agreement for the Bay Disposal Service. historically this rate structure Point region is March territory had areas served by both 31, 1996.This area is Garaventa and BFI,so rates have identified as part of evolved based on different service Franchise Area and levels and cost structures. Includes a County rate regulation total of approximately 2,300 customers. is clearly covered by the franchise. 28. Discovery Operative date of the Section 46 The County would like to equalize rates N/A Bay rates and agreement for the in this area with all other County areas rate structure Discovery Bay region other than North Concord. The area is is March 31, 1996. served by Discovery Bay Disposal This area is identified Service. Rates are different from all as part of Franchise other rates currently charged by Area and County rate Garaventa in the unincorporated regulation is clearly County. The area includes a total of covered by the approximately 2,800 customers. franchise. Contra Costa County Page B-11 ............................. _..... _. _. .......................... _ .._....... ......... ......... ......._. __... _..._ ......... ......... i FRANCHISE AGREEMENT THIS FRANCHISE AGREEMENT (this '"Agreement") , is entered into effective as of this 1st day of June, 1993, by and between IRONHOUSE SANITARY DISTRICT, a public corporation, hereinafter designated the "District, " and OAKLEY DISPOSAL SERVICE, a sole proprietorship, Silvio Garaventa, Sr. , proprietor, hereinafter designated the "Company.$' W I T N E S S E T Ht WHEREAS, District was formerly called the Oakley Sanitary District and served the Oakley, California area. District has since been enlarged by the addition of the territory and sanitary sewage and refuse collection responsibilities previously held by Contra Costa County Sanitation District No. 15, which territory was primarily Bethel Island and adjacent Hotchkiss Tract, California. District's name has been changed to I,ronhouse Sanitary District, and additional territory has been added to District in the Oakley, Hotchkiss Tract and Bethel Island vicinities; WHEREAS, District and Company are parties to a Franchise Agreement entered into in 1988 ("Prior Franchise Agreement") , which the parties desire to replace with this Agreement to reflect the additional territory included in District and make other changes; 14000124.81C 01/61/10 07/01/94 ............................................................................................................................................................................................................................................................................................................................ _. _. WHEREAS, the proper sanitation of the District and the preser- vation of the health of the inhabitants thereof requires one responsible party to provide for the collection, removal, and disposal of all Refuse within the District boundaries; and WHEREAS, the Company has provided Refuse disposal services to the inhabitants of District under the Prior Franchise Agreement within the territory included within District, NOW, BEFORE, IN CONSIDERATION OF THE PREMISES above stated, and the terms, covenants and conditions contained herein, the District and the Company do hereby agree as follows 1. Definitions. For the purposes of this Agreement, and whenever the same are used herein, the following words, terms and phrases shall have the meaning ascribed to them as hereinafter set forth, except where the context clearly indicates a ',different meaning, to wit: (a) GARRAGE shall mean all putrefactive or easily decomposable animal or vegetable matter which is likely to attract flies or rodents and ,which has no property value, including dead animals of less than ten (10) pounds in weight. The term "Garbage" shall likewise include all use- less material normally produced in the prepara=- tion, cooking and consumption of food, as well as tin cans and other food containers used in conjunction with such preparation. 11000124.810 01/61/10 07/01/94 2 ......... ......... ......... _. . ......... ......._. ..... ......... ......... ......_.. .......... .......... (b) SWILL shall mean all putrefactive or easily decomposable animal or vegetable matter which is likely to attract flies or rodents and which has a property value. (c) GARDEN WASTE shall mean grass, shrubs, weeds, leaves, tree and shrub trimmings, and similar vegetable matter. (d) RUBBISH shall mean and include all matters and materials not defined as Garbage, Swill or Garden Waste but which are rejected by the owners or producers thereof as useless, where such matter and materials are not Hazardous Waste, Infectious Waste or Sludge, and shall include, among other matters, metals, concrete, rocks, earth, sand milled wood, rough lumber, glass, rubber, leather, brick, minerals, plas- tics, oils, greases, rags, crockery, paper, and all ashes, house sweepings and similar matter. (e) REFUSE shall mean and include all types of "Waste" which are "Garbage, " "Swill," "Garden Waste," "Industrial Waste's or "Rubbish," ex- cluding, however, from the foregoing "Sludge", "Hazardous Waste", and "Infectious Waste". (f) HAZARDOUS WASTE means a waste, or combination of wastes, which because of its quantity, con- 1*000124.81C 01/61/10 07/01/94 3 ............................................................................................................................................................................................................................................................................................................................ centration, or physical, chemical, or infec- tious characteristics may either: (1) Cause, or significantly contrib- ute to an increase in mortality or an increase in serious irre- versible, or an incapacitating irreversible, illness; or (2) Pose a substantial present or potential hazard to human health or the environment when improp- erly treated, stored, transport- ed, or disposed of, or otherwise' managed. The term "HAZARDOUS WASTE" is intended to include all waste items which are defined as being hazardous waste pursuant to any federal, state, or county laws, statutes, ordinances or other regulations currently in effect or as may be enacted or amended in the future. (g) INDUSTRIAL WASTE means "Waste originating from mechanized manufacturing facilities, factories, refineries, and publicly operated treatment works, but excluding sludge. (h) INFECTIOUS WASTE as used herein has the meaning set forth in Health and Safety Code Section 25117.5, as amended from time to time. (i) RECYCLE or RECYCLING means the process of col- lecting, sorting, cleaning, treating, and re- 1K000124.81C 01/61/10 07/01/94 4 ..................... ......... ......... ....1 ...............1.111 .. 11.1.. ......... _........ ._..................... . constituting materials that would otherwise become Refuse, and recovering them so that they may be used in the form of raw material for new, reused, or reconstituted products. (j) SLUDGE means solids generated from a sanitary district/wastewater treatment plant. (k) WASTE means solid waste (within the meaning of the California Integrated Waste Management Act of 1989) which has been discarded by the owner thereof. (1) The following terms are defined elsewhere in this Agreement; these definitions also apply throughout this Agreement. Affiliate. See Section 14 (d) . Company. See introductory paragraph. Chapter 6. See Section lo. District. See introductory paragraph. Prior Franchise Agreement. See second paragraph of Recitals. 2. Excluaiy-e Fran he That for and in, consideration of the payments, covenants and agreements hereinafter continued to be paid, kept, and performed by the Company, and on the terms and conditions of this Agreement, the District hereby grants and extends to the Company the exclusive contract right, franchise and privilege to collect at the residence or other place of origin, IR000124.I11C 01/61/10 07/01/94 5 including but not limited to commercial facilities, and dispose of all Refuse emanating from within the boundaries of the District, as they may now or hereafter be defined but subject to 'Section 13, during the period commencing with the date hereof and ending January 1, 3004 . (a) It is specifically agreed that upon collection and as between Company and District, said Refuse, including discarded recyclable and salvageable materials, both decomposable and non-decomposable, shall be owned by Company. (b) Neither the exclusive right, franchise and privilege granted above, nor this Agreement, includes or regulates the collection, removal and disposal of Sludge, Infectious Waste, or Hazardous Waste, without regard to the origin of such materials, or prohibits any individual from transporting that individual's own Refuse to a legal dump site. (c) District specifically acknowledges (but subject to the terms of (and Company's due performance of) this Agreement) : that District retains no right of revocation as to this exclusive right; and that District may not compete with Company in the exercise of this contract right, or otherwise impair' it. (d) Subject to Section 13(d) , Company agrees not to impair District's continued and exclusive exercise of its authority and jurisdiction over Refuse within the boundaries of District. 3. Refuse Collegtion. Refuse collection, as used herein, shall mean the collection, transportation, hauling, altering, tR000124.$IC 4#!61/'10 07/01!44 6 shredding, compacting, processing, moving, removing, collecting, purchasing, salvaging, recycling, selling, transporting and/or disposing of Refuse generated from, or received within, the Dis- trict limits. 4. Rates. (a) Residential. Company covenants and agrees to collect and dispose of ,all residential Refuse from the District in accordance with the rates adopted by the Board of Directors of District by resolution from time to time in accordance with the terms of this Agreement. Current rates are those set forth in Exhibit "A" attached hereto. (b) Commercial. Company covenants and agrees to collect and dispose of all commercial and other non-residential Refuse from the District. The charges for such collection and disposal will be agreed upon between the Company and the merchants or other persons involved, and in any event fixed on a uniform basis consistently applied at a figure commensurate with the time spent, the frequency of collection, and the character of the Refuse removed. In case of dispute, the District will fix such charges. (e) Rate Adjustment. Either Company or District may apply annually for a rate or fee adjustment based upon substantial changes in the costs of operation, or in revenues or other factors, which may render the fees provided for in this Agreement (including the rates of Company pursuant to this Section 4 and the franchise fee of District pursuant to Section 12) unfair to one of the 14000124.810 01/61/10 07/01/94 7 ....................................... ........... ..................................... parties to this Agreement. In determining such adjustment, Dis- trict shall consider comparable rates in other areas for services similar to those provided by Company, Company's cost of operations, and such other factors as may be appropriate. If the request for a rate or fee adjustment has been made by the Company, District shall, within thirty (30) days after submittal of Company's request pursuant to the first sentence of this Section 4 (c) , request all such further information from Company as District shall reasonably determine is needed to enable District to determine the rate adjustment. District shall make a determination in good faith as to the amount of the adjustment to be made within sixty (60) days after Company completes the submittal of all such information. 5. Company Covenants. (a) Compliance with Laws. Company covenants and agrees to fully and faithfully comply with all of the provisions of any Ordinance of the District relating to the collection and disposal of Refuse, the sanitary laws of the State of California and the sanitary regulations of any agencies thereof, and all other appli- cable regulations and other laws of all governmental authorities with jurisdiction, provided that such Ordinances of District shall not prevail over the rights and duties of the parties under this Agreement to any greater extent than required by the laws of the State of California or other higher governmental authority. Company also covenants and agrees, to the extent not already included in the foregoing, to obtain all permits necessary or IR000124.E1G 01/61/10 07/01/44 8 desirable for its performance of this Agreement, to dispose of Refuse only at facilities or by other means which have all required permits, to comply with the source reduction, recycling, composting and other requirements of the California Integrated Waste Manage- ment Act, Public Resources Code Sections 40,000 et seq. (the "Act") to the extent applicable to District or Company, and to make and file all such reports and other documents as may be required by law. The Act, Contra Costa County Ordinance No. 91-31 or other laws may have the effect of terminating or modifying, or may grant authority to Contra Costa County or other governmental agency (other than District) to terminate or modify, District's authority for solid waste collection or its authority to grant the exclusive franchise provided by this Agreement. Company contends that such laws and ordinances do not have such effect or grant such authori- ty. Subject to Section 13 , if Contra Costa County or other govern- mental authority (other than District) takes the position that District's authority or this Agreement are terminated or modified, this Agreement shall be terminated or modified accordingly unless either District or, upon the provision of an indemnity and assur•- ances reasonably acceptable to District, Company elects to contest such termination or modification, in which event this Agreement shall have such effect as Company and District may agree, or if they do not agree, as may be determined in the litigation, arbitra- tion or other means by which such contest is resolved. (b) information. Company further agrees to provide to IR000124.81c 01/61/10 07/01/54 9 District, upon request: by District and at Company's expense, the following information: i. Copies of any and all reports reasonably requested by District which Company is otherwise required to produce to any state, county, or other official agency regulating waste disposal practices; ii. A list by street address of each residential, commercial and other customer of Company in District; iii. Copies of Company's financial statements for such portions of the period covered by this Agreement and the Prior Franchise Agreement as District may request. Subject to Section 14 (d) , financial statements prepared for calendar 1934 or later shall be prepared in accordance with the same income tax basis accounting principles as applicable to the Schedule C or other income tax return for the Company; iv. The notifications and other information required by Public Resources Code Section 40061 (and upon request by Dis- trict Company shall perform the distribution to residential house- holds, publication and other requirements placed on the local agency by such Section 40061) ; and V. Such additional information as District may reasonably request. (c) AB, 939 Reports. Company shall also timely prepare for District, subject to its review and approval, all reports required for District to comply with the Act and other requirements 11000124.810 01/61/10 07/01/94 10 of law concerning solid waste collection, transportation and disposal. (d) Provide System. Company further agrees that at all times during the life of this Agreement the Company shall, at its own cost and expense: (i) provide and maintain an adequate sanitary refuse collection service sufficient to systematically and effi- ciently collect, transport and dispose of all Refuse from the District, and (2) systematically and efficiently collect, transport and dispose of all Refuse, in consideration of receiving the fees and charges referred to in this Agreement or as hereafter set pursuant to the terms of this Agreement. 6. Pick-Ups. Company agrees to. (a) make regular weekly collections of Refuse from curbside of each residence on the same day of each week, and regular collections from each business and other person requesting Refuse collection in the District; (b) provide one (1) residential spring clean-up annually comparable to that provided in the spring of 1993; (c) provide residential pick- up of Christmas trees at the end of the Christmas/New Year's season; (d) dispose of all Refuse collected at a waste disposal facility (or by other means) furnished and paid for by Company which (except as District may otherwise approve) is located outside the District; and (e) conduct the recycling programs required pursuant to Section 9. All of the foregoing shall be included in the fees established pursuant to Section 4 . 1*000124.81C 01/61/10 07/01/94 11 7. Insurance. (a) Coyeragls. Company further covenants and agrees to take out, maintain, and keep in full force and effect during the term of this Agreement the following insurance: i. Workers' Compensation Insurance: insuring said Company against liability for death or injury to any and all employees employed by the Company in the performance of the work of this Agreement, and complying with all requirements of California law; ii. General Liability: $1, 440, 400 per occurrence for personal injury and property damage. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to District and the other additional insureds or the general aggregate limit shall be twice the foregoing required occurrence limit. iii. Automobile Liability: $1,000, 400 per accident for personal injury and property damage. (b) Additional Requirements. All of the foregoing coverages: (i) shall be on an occurrences basis, and not claims made, (ii) shall have a deductible which does not exceed $20,444 per occurrence; (iii) shall name the District, its officers, employees, agents and volunteers as additional insureds (except workers compensation insurance) ; (iv) shall be primary insurance as respects District and the other additional insureds, and any insurance or self-insurance maintained by District or any other 14000126.81G 01/61/10 07/01/54 12 such additional insured shall be in excess of Company's insurance and shall not contribute with it; (v) any failure to comply with reporting provisions of the policies shall not affect the coverage provided to District and the other additional insureds; (vi) shall be issued by an insurance carrier with a Best's rating of A:VII or better; and (vi) there shall be delivered to District annually on each anniversary of the date of this Agreement policies embodying the required coverages or, in lieu thereof, a certificate issued by the insurance carrier showing the required coverages to be in force pursuant to the foregoing and providing District with at least 30 days notice of cancellation or modification, each in form approved by the District's Secretary. (c) Increases In Coverage. During the term of this Agreement, the coverage amounts shall be increased as District may reasonably require, but only in conjunction with any rate setting pursuant to Section 4 (c) so that any resulting increase in the costs of coverage may be considered in establishing rates. (d) Suhrocration Waiver. To the extent permitted by the terms of Company's and District's insurance policies and applicable law, Company and District mutually waive (but only to the extent of the insurance coverage actually available for the occurrence concerned) their rights to recover from each other by way of subrogation, assignment or otherwise. 7.5Risk: Indemnity. The work to be performed under this Agreement will be performed entirely at Company's risk, and Company I2000124.81C 01/61/10 07101/94 13 assumes all responsibility for the condition of any equipment used in the performance of t;his Agreement. Company agrees to defend, protect, indemnify and hold harmless District and its officers, employees, agents, volunteers and independent contractors from and against any claim, demand, expense, loss or liability arising directly or indirectly out of the performance of this Agreement (or lack thereof) by Company or its Affiliates, officers, employees, agents or independent contractors, including without limitation the reasonable attorneys fees' and other expenses of defending against any such claim, demand, expense, loss or liability and claims arising from injuries or deaths of persons and damage to property, except such loss as may be caused by the sole negligence or willful misconduct of district. Without limiting the generality of the foregoing, among the matters included in the immediately preceding sentence are Company's selection and use of waste disposal facili- ties or other means of disposition, compliance with the Act, any CERCLA or other hazardous substance liability arising out of Company's collection, transport, disposal or other act or omission with respect to any Refuse, and any claim by Company that this Agreement has the effect of prohibiting a non-individual customer from transporting its own Refuse to a waste disposal facility. This Section 7.5 and Section 15 shall remain in effect following (and notwithstanding) any termination of this Agreement, whether due to breach by either party or otherwise. 8. AUic� . It is understood that this is an agreement IA W0124.81C 01/61!10 07/01/94 14 for personal service on the part of the Company, and Company covenants and agrees not to subcontract its duties or rights under this Agreement to any Affiliate or other person or to sell, assign, or voluntarily or involuntarily transfer this Agreement, without the prior written consent of the District. District shall not unreasonably withhold its consent to any such assignment, and in considering whether to grant such consent, may consider the Assignee's ability to provide the level of service and cost bene- fits provided by Company and such other factors as District may reasonably determine are appropriate. A transfer of ownership or control of Company shall constitute an assignment, whether by way of a sale of stock in a subsequently formed corporation or other voluntary or involuntary transfer, except as otherwise provided in the following provisions of this section 8. However, it shall not be deemed to be an assignment, sale, or transfer under this Agree- ment if the ownership of Company is transferred: (i) to or through a trust as to which the resulting beneficial owner of the Company is the original Trustor (but it shall be a transfer if changes in the trustee and/or current beneficiaries of such trust change beneficial ownership or control to persons other than the immediate family of the present owner) ; or (ii) to a corporation or other business entity in which the present owner of Company and/or any member of his immediate family (son, daughter, son-in-law, daugh- ter-in-law, or grandchildren) are the owners of more than a fifty percent (50%) ownership interest and have actual voting control of 10000124.81C 01/61/10 07/01/94 15 the resultant entity, or (iii) if more than fifty percent (50%) of the ownership of Company shall be transferred by testamentary succession or by gift to such members of his immediate family and they shall have actual voting control of Company. Company repre- sents that its present 100% owner is Silvio Caraventa, Sr. 8.5 de2pndent C ntractor. The parties intend that their relationship be one of independent contractors. District is interested only in the results to be achieved, and the conduct and control of the work will lie solely with the Company. Nothing contained in this Agreement or otherwise shall be construed so as to create a partnership between or a joint venture by Company and District or constitute either the agent or employee of the other. Company shall not represent itself to be an agent or employee of the District and has no authority, express or implied, to act on behalf of the District or to bind District to any obliga- tion whatsoever. Employees of Company are not employees of Dis- trict and are not entitled to any of the benefits that District provides for District employees. 9. Recycling. Company shall have the right to operate Recycling programs, including curbside pickup of recyclable materi- als, pursuant to the provisions of this Agreement. District hereby grants to Company the exclusive right to operate a residential customer curbside pickup Recycling program. For purposes of this paragraph, cardboard recycling may be provided by means of drop boxes placed at locations acceptable to District. Company shall 1*000124.81C 01/61/10 0'7/01/9x. 16 operate a curbside Recycling program for all residential customers for glass, aluminum, plastic and newspaper and for such other materials and customers, and to such greater extent, as may be required by or needed to comply with applicable regulations or other laws. Company shall furnish its residential customers with containers suitable for such purpose, and shall conduct such public information/education programs as may be necessary or desirable to comply with law. 10. QR on toxtend. Subject to due performance of this Agreement by Company, and provided that Company is not then in default under this Agreement, District grants to Company an option to extend the term of this Agreement for an additional period of ten (10) years on the same terms and conditions as contained herein. Notice of election to exercise said option shall be given to the District at least one hundred twenty (120) days before the expiration of the term herein provided. This option and the: initial term until January 1, 2004 are subject to Chapter 6 of Part 8 of Division 30 of the California Public Resources Code, Sections 49,500 V_ s Z. ("Chapter 6") . 11. Office and Cgllectigns,. Company may collect for three (3) months in advance from all customers within the District. Company agrees to maintain within the borders of District an office with telephone service and regular business hours for the conduct of its business pursuant to this Agreement, to furnish all customers with adequate statements and, if requested, receipts, and to provide 1R000124.&IC 01/61/10 07/01/94 17 customers with information inserts with billings and such other information as District shall reasonably request. Company shall maintain records of all customer complaints and Company's response, which shall be open to Districts' inspection pursuant to Section 14, and shall provide timely and reasonable responses to such complaints. 12. Franchise Fee. Company shall pay District a franchise fee equal to two percent (2%) of Company's gross receipts derived from all Refuse collection services (including without limitation all residential and commercial charges, but excluding toter rentals) within the District. Such fee shall be paid within 45 days after the end of each quarter of the calendar year on gross receipts during such quarter, and shall be accompanied by a statement of such gross receipts in reasonable detail certified by the owner of Company as complete, true and correct. Company shall also provide District with such Refuse collection services as District may reasonably require for its own operations at no cost to District, provided that District shall pay Company at Company's cost plus 10% for any substantial increase in collection services required by District. 13. Territory Changes. (a) Annexation. In the event District annexes territory wherein Refuse collection and disposal service is provided by another company, District shall terminate such other company's service: (i) to the extent then permitted by Public Resources Code 14000124.81C 01/a1/10 07/01/94 18 Section 49520, Chapter 6, and the applicable provisions of any contract or other obligation then legally binding on District (without prejudice to the contentions of either Company or District as to what the effect of Section 49520 may be) ; (ii) so long as no city, sanitation district or other public agency is exercising or planning to exercise its authority to regulate refuse collection or disposal in the territory annexed (unless District shall in its discretion elect to waive this requirement) ; and (iii) provided Company indemnifies, holds harmless and defends District against any claim, demand, expense, loss or liability, including reasonable attorneys' fees and other costs of defense, arising out of such termination. (b) Detachment. In the event District detaches terri- tory, Company acknowledges that its right may be limited by Chapter 6 (including Public Resources Code Section 49520) (if exercised) or that District may lack the legal authority to keep this Agreement in effect as to such detached territory, in either of which events this Agreement shall be deemed terminated as to such territory. (c) BIMID. Notwithstanding anything to the contrary elsewhere in this Agreement, with respect to the portion of Dis- trict within the borders of the Bethel Island Municipal Improvement District (BIMID) only, the five-year termination period provided by Public Resources Code Section 49520 may be shortened to one year's notice, and this Agreement may be terminated (but only with respect to such portion of District) on one year's notice, upon (a) BIMID iR000124.61C 01/d1/10 07/01/94 19 demonstrating to the reasonable satisfaction of District's Board of Directors that BIMID can provide as adequate and cost effective refuse collection service as that provided by Company on a sus- tained basis over a period of five years or more comparable to or better than that provided by Company, (b) BIMID's agreement to compensate Company for the reasonable unamortized capital costs incurred by Company in serving the BIMID area, and (c) BIMID's payment to the Ironhouse Sanitary District of the franchise fee (currently 2%) at the same rate as then paid by the Company. To the maximum extent legally feasible District shall require that BIMID not subcontract or assign at any time during the original term of this Agreement the right to provide Refuse collection service to any entity or subcontractor other than Company. (d) City of Brentwoodisdiction. Notwithstanding anything to the contrary in Section 2 or elsewhere in this Agree- ment, upon request of District there shall be excluded from the territory granted Company by this Agreement the portions of Dis- trict which are subsequently annexed to the City of Brentwood. 14. Records• Inspections: Accounti.ncx. (a) Records. The Company shall maintain complete and accurate books of account in accordance with generally accepted accounting principles consistently applied accurately reflecting the business done by it under this Agreement, and shall also maintain records relating to all services rendered pursuant to this Agreement. INW0124.81C 01/61/fa 07/01/94 20 (b) Inspections. District shall have the right upon reasonable written notice to inspect, or to have either its desig- nated representatives or a mutually agreeable representative inspect, and make copies of, Company's accounting and other records relating to this Agreement, and to inspect Company's facilities, equipment and daily operations relating to this Agreement. Any such inspection shall ordinarily take place during Company's normal working hours and at the offices, facilities and other places of business of the Company, except as Company may otherwise agree. Such inspections shall be performed at the expense of the District. However, should any inspection disclose monies owed by Company to District in an amount equal to five percent (5%) or more of the amounts previously reported on Company's financial statements, the expense of such inspection and (where applicable) audit shall be paid by the Company. (c) Accounting. In its financial statements and other accountings, Company: shall distinguish between residential and commercial revenues and expenses wherever feasible; shall show separately all proceeds from the sale or other disposition of recycled materials and of other Refuse and shall include them in the Company's income; and shall show the revenues, expenses and operations of Company in the District separate and apart from any of those of Company outside the District. (d) Changes in Accounting. In conjunction with a request for a fee adjustment pursuant to Section 4 (c) , District may 1R000124.81C 01/61/10 OTr01/94 21 elect by written request to Company to require any one or more of the following: (i) that Company's financial statements and other accountings prepared thereafter show the revenues, expenses and operations of Company separate and apart from those of other businesses operated by Company's owner or his Affiliates; (ii) that financial statements prepared thereafter be prepared in accordance with generally accepted accounting principles, consistently ap- plied; (iii) that financial statements prepared thereafter shall be audited by such independent certified public accountants as Dis- trict shall reasonably approve; and (iv) that Company in its accounts shall identify any charges by (or revenues received from) any Affiliate, including one to whom Company sells recyclable materials. An "Affiliate" shall be any entity which provides or acquires products or services from or to Company, and either (i) which is controlled by, controls, or is under common control with Company, or (ii) in which a ten percent or greater interest is owned, directly or indirectly, by Company or the owner of Company. Any resulting changes in Company's costs of performance shall be considered in establishing rates. (e) Affiliates. Any charges by any Affiliate of Company shall be reasonable in amount, and any payments or other consider- ation for recycled materials or other Refuse transferred to an Affiliate of Company shall be equivalent to the fair market value thereof. The inspection right in the first sentence of Rection 14 (b) does not include any right to inspect the accounting and IK000124.81C 01161/10 07/o1/94 22 other records of Company's Affiliates furnishing trucking or other goods or services which are an expense of Company. However, upon request of District, Company shall identify the portion of any item on its financial statements which arises from an Affiliate, and furnish District with the charges by two or more independent companies for the same goods or services in District's area, which charges Company believes to be comparable to those of its Affili- ate. 15. Attorneys' Fees. In the event of any litigation or arbitration concerning the terms, meaning, or interpretation of this Agreement, or any dispute arising out of or in connection with this Agreement, the prevailing party therein, in addition to any other relief, shall be entitled to reasonable attorneys' fees. 16. !2t ces. Any notice required or permitted under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or five (5) days after posted by first class mail, addressed as appropriate either to Company at: Silvio Garaventa Sr. , 4080 Mallard Drive, Concord, California 94524 or to District at. Ironhouse Sanitary District, 450 Walnut Meadows Drive, Post office Box 1105, Oakley, California 94561. 17. Miscellaneous. (a) ntire Agreement. This Agreement constitutes the entire agreement of the parties concerning its subject matter. The Prior Franchise Agreement and any other prior or contemporane- ous agreements among the parties, whether written or oral, are 12000124.81C 01/61/10 07/01/94 23 _...... .................................................................................................................................. _ _. .._........................................................................... hereby terminated and shall no longer be of any further force or effect. This Agreement cannot be amended, modified, waived, rescinded or terminated orally, but only by an instrument in writing, signed by the parties to this Agreement. (b) Cooperation. The parties agree to meet and confer in good faith if amendments or modifications are proposed, and to cooperate reasonably and in good faith in the implementation of this Agreement. . (c) Severability. In the event any provision of this Agreement is found to be unenforceable by any court or other body having jurisdiction thereof, the invalidation of any such term, condition, section, or paragraph, shall not affect the validity or enforceability of the remaining provisions, and each such provision shall remain in full force and effect. (d) Governing Law,--jurisdiction. This Agreement is made in accordance with, and shall be governed by and construed in accordance with, the laws of the State of California as they are interpreted and applied to persons resident in and transactions wholly occurring in the State of California. Any litigation (The rest of this page intentionally left blank. ) t*000124.81C 01/d1/i0 07/01/96 24 concerning this Agreement shall be brought and maintained exclu- sively in the courts of the State of California in Contra Costa County and, to the extent such courts lack jurisdiction, the federal district court whose district includes Contra Costa County. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed in duplicate, effective as of June 1, 1993 but signed on _J"4-Y S , 1994. MPANY QISTRICT OAKLEY DISPOSAL SERVICE, IRONHOUSE SANITARY DISTRICT, a sole proprietorship a public corporation By: .-_ 'trio Ga yenta, S , enny er, Pr 1dent Sole Proprietor `' CO ERSIGN &hL 6� Cthea Bauer, Secretary jr (SEAL) 1R000124.31C 01/61/10 07/01/94 25 _.. ..................................................................................................................................................................................................... _.. ......... ......... .... ...................................................................... MMIBIT "A" to Franchise Agreement dated as of June 1, 1993 EFFECTIVE JUNE 1, 1993 ONE CAN SERVICE . . . . . . $21.30 PER MONTH (CAN - 40 GALS. ) TWO CAN SERVICE . . . . . . $29.00 PER MONTH EACH ADDI'T'IONAL CAN . . . . . $ 7.70 PER MONTH 90-GALLON TOTER . . . . . . . $21.30 PER MONTH RENTAL OF TOTER . . . . . . . $ 3.00 PER MONTH (Additional) 14000124.810 01/61/10 07/01/44 26 to FRANCEISE AgRS EMENT (Ironhouse unitary District - Oakley Disposal Service) This is amendment No. 1 (this "Amendment" ) to the Franchise Agreement dated June 1, 1993 ("Original Agree- ment") between Ironhouse Sanitary District ("District"} , a California sanitary district, and Oakley Disposal Service ("Company") , formerly a sole proprietorship of Sil Gara- venta, Sr. and now held by the Garaventa family trust, Mary Garaventa, trustee. Since the Original Agreement, District has entered into a Memorandum of Understanding dated July 31, 1997 (the "MOU") with Contra Costa County ("County") concerning the "Franchise Agreement with Garaventa Enterprises" effective May 9, 1995 ("County Franchise" ) between County and Gara- venta Enterprises (an affiliate of Company) , County' s re- sponsibilities under State solid waste laws and certain other matters. To implement the MOU and related actions, District and Company are entering into this Amendment . County and Garaventa Enterprises are expected to enter into an amendment to the County Franchise with provisions re- lated to those in this Amendment . Initially capitalized terms used in this Amendment have the same definition as that given them in the Original Agreement except as otherwise provided in this Amendment . In consideration of the above and the promises and other provisions in this Amendment, the parties agree as follows. 1. Franchise Fee. The first sentence of Section 12 of the Original Agreement is amended by adding the underlined language: Company shall pay District a franchise fee equal to the sum of (a) two percent (2%) of Company's gross re- ceipts derived from all Refuse collection services (including without limitation all residential and com- mercial charges, but excluding toter rentals) within the District. and (b) .thrce percent (3 t) Qf !Qomiany s IR00-09.02.60A 01/61/03 All other provisions of such Section 12 shall remain un- changed. As between Company and District, District shall be responsible for timely paying County the portion of such franchise fee owing County under the terms of the MOU. 2. Pass-Through Costs. A new Section (d) is added to Section 4 of the Original Agreement, to read in its en- tirety as follows. (d) pa$Q-ThrQuah Costs. District may designate cer- tain expenses as "pass-through costs" , in which event . (i) the entire expense so designated shall be included in Com- pany' s costs for purposes of rate-setting but shall not be subject to a profit to Company; and (ii) upon such expense being included in the allowed rate and a reasonable time being provided for Company to institute collection, the amount of such pass-through cost shall be paid by Company to District or such other person as District shall desig- nate. Such pass-through costs may include (among others) franchise fees and the expenses of complying with Federal, State, County and other solid waste requirements and pro- grams . Such designation may (but need not) be made by an amendment to the Original Agreement. 3. Household Hazardous waste and SOPA. District desig- nates as pass-through costs the District' s share of the cost of (i) the County's household hazardous waste pro- grams, and (ii) Delta Diablo Sanitation District' s BOPA program. Until further notice from District, Company shall pay to Districts a. $15, 699 for fiscal year 1997-98, $17,495 for fis- cal year 1998-1999, and $17, 495 per County fiscal year thereafter for household hazardous waste programs, payable no later than November 15, 1998 for FY 1997-1998, $8, 747 . 90 on December 31, 1998 for the first half of FY 1998-99, and $4, 373 . 95 per quarter at the end of each quarter of the calendar year thereafter. b. $3, 500 per fiscal year for Delta Diablo Sanita- tion District' s SOPA program, commencing with the FY 1997- 1998, payable $3,500 by November 15, 1998 for FY 1997.98, $1, 750 on December 31, 1998 for the first half of FY 1998- 99, and $875 .00 per quarter at the end of each quarter of the calendar year thereafter. 2 IR00-09.02.60A 01/61/03 4 . Miscellaneous. a. Individual Warkanty. Each individual signing this Amendment on behalf of a public district, trust or other legal entity, by his or her signature of this Amendment, warrants and represents to the other party to this Amendment that he or she has the authority of such district, trust or other entity to enter into this Amendment. Without modifying or limiting the foregoing sentence, upon request of either party, the other party shall provide evidence reasonably satisfactory to the requesting party that the signatory on behalf of the other party is duly authorized to enter into and execute this Amendment . b. Original Agreement Relationship. This Amendment shall prevail over anything to the contrary in the Original Agreement, but in all other respects the Original Agreement and this Amendment shall be construed together as one and the same agreement. Dated: December 1998 . Co=anv District Garaventa Family Trust, Ironhouse Sanitary District, dba Oakley Disposal Service, a California special district By: By Lenny Byer, President trustee utd duly authorized signer Attest: Cynthia Bauer, Secretary (SEAL) 3 IR00-09.02.60A 01/61/03 ........................................................................................................................................................................................................................................................................................................................... Contra Casio County Base Year Fate Change Application Financial fnformatlon Actual ESUMated P historical Years Current Year Base Year Year 1 Year 2 Year 3 Year 4 Year 6 Enter Actual Year in this Row MINI I 1. Direct tabor 2. Tipping Feas(Profit Allowed) 3. Corporate end Local General anal Aclin"strative Costs 4, bapmciation and Other Operating Costs 6. Servloes ProvidedCoon 8, ofat le (Linea 1+2+ +4+5) Y 7 Ogiam"Ratio 8. Allowable Opw*"Prolit((Lite 6+02)-tine 6)] S. County AdmiNstrativa Fee 1L1. Trttt9rkng and Equipniem ; Tt. Fees Passro 12, inlet ass rough E;(wftlxut ranrttnst sea ( to 9+tQ+t 1 13. Total A lowabie Coats(Line 61 plus AAowable Operating Profit OJne 8)pias Total Paas Through Casts(without Franchise Fees)(Lie 12) i 14. Residential Revenue 15. Lasa Allowance for Urtoafactibls Rssidentiel Accounts 16. Total Residential Revenue(without Rate Change in Bass Year) # 17. Commeroial and tight Industrial Revenue 18. Less Ahowarwe for Uncoitectibia Commercial and tight industrial Accounts 19. Total Commermt+Light Induafrial Revenue(w*W Rate Change in Base Year) IIOYIIi1 YYY®p �WII�OI!I�ff0Y1�YW 61iF1 Y��IYIiT/�M 20, Aocydsd Material Sawa 21. Total Revenue(lines 16+19+20) 22. Net Shortish(Surplus)without Franchise Fees(tine 13-Lite 21) 23. ResidentW/CommerciaN.ight industrial Franchise Fees(ase calculation below) 24. Net Shortfall(Surplus)with Fmn chise Fees(Lines 22+23) 26. Total ResidenbaVConunerclaYUght induxfti Revenue Prix to Rate Change(Lines 16+19) 26. Percent Change in Existing ReafdaraWCcm merriallUght Industrial Rates(Line 24+Line 25) ranch-" ars set by rhe County at 5 percent"07 ste revenue toquirament 27 Total AAOWabte Corm(Line 6) for two equations with one unlanown,and kWt*y franchise fats as X ma 28. Allow"Operating Pro%(Line 6) Equation 1) Revenue Requirement x 0.05 s X 29. TotalPass Thra h Costa With Franchise Fees Unes 12+23 Equation 2) Revenue Requirement-Lift 13+X,or 54,427_V1+X 30. 1 Venue Requirement(Linea 27+2 +29) ubstltute equation 2)Into equation 1)and solve for X �> $4,427,351+X)x 0.05 s X or X z 5233,021 Ve-ar. 2W2 Page 1 of 6 Figures for illustrative Purpos"only Contra Costa County Base Year Rate Change Application Cost Summary for Year 2001 Audited Unincorporated Non-Uninc. Garaventa A Location Description of Cost Coun countyFinancial Base(s Labor-Regular Labor-Overtime Benefits Payroll Taxes 31. Total Direct tabor 32. Total Tipping Fees(Profit Allowed) Accounting CornWer Services Dues and Subscriptions Insurance Laundry Legal Management Fees Miscellaneous and Other Office Expense Operating Supplies Outside Services Public Relations and Promotion Taxes and Licenses Telephone Travel Utilities 33. Total Corporate and Local General and Administrative Costs Depredation-Buildings Depredation-Vehicles Depredation-Containers Other Operating Costs 34. Total Depredation and Other Operating Costs 35. Total Services Provided to County $6. Total Allowable Costs(Lines 31+32+33+34+35) 37. Total County Administration Fee Equipment Rental Gas and Oil Insurance Parts Repair and Maintenance 79 Tires Other 38. Total Trucking and Equipment 39. Total Tipping Fees(Pass Through) 40. Total Residential/Commercial/Light Industrial Franchise Fees 41. Total Pass Through Costs(Lines 37+38+39+40) 42. Total Costs(Lines 36+41) Year. 2002 Page 2 of 6 Figures for fllus"tive Purposes only _............................................................................................................................................................................................................................................................................. . ...._. ................................................................................................................................................................................................................................................................................................................................... Contra Costa County Base Year Rate Change Application Revenue Summary gctuai stimated Historical Years CurrentYearFT ar Year 1 Year 2 Year 3 Year 4 Year 5 Enter Actual Year in this Row Single Family Residential Service 41 Single Family Residential Revenue(Base Year From Pape 4 of 6) Multiunit Residential Service 44. Number of Acoourft 45. Multiunit Residential Revenues 46. Residential Revenue(w/o Allowance for Uncoltactibie Accounts)(Lines 43+45) 47. Allowance for Uncollectible Residential Accounts 1 48. Total Residential Revenue{Line 46-Line 47) Commercial and Light industrial Can Service 49. Number of Accounts 50. Commercial and Light Industrial Can Revenues Commercial and Light Industrial Bin Service 51. Number of Accounts 52. Commercial and Light Industrial Bin Revenues Commercial and Light Industrial Drop Box service 53. Number of Accounts 54. Commercial and Light Industrial Drop Box Revenues 55. Commercial and Light industrial Revenue(w/o Allowance for Uncollectible Accounts)(Lines 50+52+54) 56. Allowance for UnoolWctibls Commercial and light Industrial Accounts $7: Total Commercial and Light Industrial Revenue(Line tis-Line 66) 58. Recycled Material Sales $9. Total Revenue(Linea 48+67+68) f Year: 2032 Page 3 of 6 Figures forlllusirstive Purposes Only Contra Costa County Base Year late Change Application Single family Residential Summary ro acted Base Year Single Family Residential revenue(without Rafe Change in Base Year) Current Projected Rate/Month Accounts Total a/ 1-20 gallon can of waste,recycling,2-32 gallon yard 1-32 gallon can of waste,recycling,2.32 gallon yard 2-32 gallon cans of waste,recycling,2-32 gallon yard 1-90 gallon toter,recycing,includes 2.32 gallon yard 2-90 gallon toters,recycling,kxiudes 2.32 gallon yard 60. Total Base Year Single Family Residential N a/ Equal to the current rate per month multiplied by 12 multiplied by the projected number of accounts. Year: 2002 Page 4 of 6 Figures for Illustrative Purposes Only _. ......... ......................................................................................._ __ Contra Costa County Base Year Rate Change Application Operating Information Historical Current Year Base Year Historical Percent Historical Percent Audited Percent Estimated Percent Projected Information Chance information Change Information Change information Change information Year 1 Yr.'t to 2 Year 2 Yr.2 to 3 Year 3 Yr.3 to 4 ' Year 4 Yr 4 to 6 Year 5 Enter Actual Year Section XI—Operating Data Accounts 61. Residential 62. Commercial 63. Light Industrial 64. Total Accounts Waste Tonnage 65. Residential ' I 66. Commercial 67. Light Industrial 68. Total Tons I L i Recyclable Tonnage 69. Residential 70. Commercial 71. Light Industrial E f 72. Total Tons County Services 73. County Bins l i 74. County Drop Boxes i Section XII—Change in Commercial Rates 75. 3 Yd.Bin-1 X per week 76. 2 Yd.Bin-1 X per week 77. 20 Yd.Box-per pick up Year: 2002 Page 5 of 6 Figures for Illustrative Purposes Only Contra Costa County Base Year Rate Change Application Unincorporated Area: All Areas 78. Rate Change Requested Abbreviated Increased New Rate Sdw4uie Current Rate fulm Rate 1.20 gallon can(+2-32 gallon yard) 1.32 gallon can(+2.32 gallon yard) 2.32 Q&HW Cam(+2-32 gallon yard) 1.90 gaflon toter(+2-32 gallon yard) 2.90 gallon loters(+2.32 gallon yard) (a)Calculated rates are rounded up to the nearest 50-05. 79, Multiunit Residential Rate increases of I will be applied to all rates in each structure with each rate rounded up or down to the nearest$0.05. To the best at my knowledge,the data and inforrvatim in this application is complete,accurate,and consistent with the instructions provided by Contra Costa County. Name: Title: Signature: Date: Year. 2002 Page 4 of 6 Figures for illustrative Purposes Only ........... ...... . .............. ........ .......... ....... i. Rate SettingOverview Because the hauler has little control conducted in Phase II,based on the over revenues received,increases in Phase I findings. revenues from the projections would be Information that would affect the paid back to the ratepayers, whereas competitive position of the hauler decreases in revenues would be should be kept confidential. For reimbursed to the hauler. In each case, example, this might include certain these cost savings or reimbursements tonnage and route information. could be based on real dollars (without interest) and could be amortized in the Q No Interim-Year Increases on rates over the next three years until the Selected Cost and Lute Items The next base year rate setting occurred. methodology described in this manual 0 Occasional Performance Audits allows for automatic increases in While rates for residential services are controlled costs basedon changes in the evaluated in detail during each base Consumer Price Index for the San year rate change process,the rate review Francisco Bay Area for the prior year. focuses on actual costs and does not Controlled costs include labor, administrative costs, truck and address opportunities for the franchise equipment, etc. While many of these hauler to improve general operational costs may increase at the same rate that efficiency. If actions can be taken to the CPI changes, others may change improve the franchise hauler's very little. The methodology could be efficiency, this could result in lower revised in the future to more accurately total costs, and correspondingly, lower determine true increases in costs during rates for customers. the interim years. In order to address this issue, Specific modifications could be made to performance audits of the franchise the process followed in interim years to hauler could be occasionally conducted, more thoroughly examine actual such as once every five to ten years. changes in allowable Operating costs. The timing of these audits could be In developing a rate application for the independent of the rate change process second interim year, the franchise described in this manual. In order to hauler would have actual financial and maintain objectivity, these audits would operating results available for the most be conducted by an independent recently completed base year. Actual organization which is selected jointly by results could be compared to original the County and the franchise hauler. projections to determine how well costs The County will keep information that are projected. would affect the competitiveness of the hauler confidential (e.g., routes,and U Review Tipping Fees Garaventa owns certain tonnage information). and operates the Pittsburg Transfer A two-phase approach may be Station, a separate business from the various companies providing collection appropriate for these audits. An overall diagnostic review would be conducted services to unincorporated County icustomers, as shown in Figure I-2. n Phase I, and more detailed and Thus, we cannot determine true transfer focused work in selected areas would be station costs, which should be charged to unincorporated County ratepayers unless Contra Costa County Rage 1-27 1. Rate Setting Overview a separate review is conducted. For the market-based tipping fee,currently set at first base year, the County will utilize a $45.00 per ton. Waste Flow Unincorporated Contra Costa County Areas Serviced By Garaventa t t Recycled material transported to t / Concord processing area t t t Unincorporated ; ILandfill, ro Hills Pittsburg County s TransferCollection Station a uOperations t t unty t ' t ' t ' ' Waste transported by Potrero Hills �Reccgyc�ttaebles t 545.00 Landfill Company approximately '—` ger ton 45 miles round-trip using transfer of waste trailer trucks Figure 1-2 The Pittsburg Transfer Station also receives a significant amount of waste from the City of Pittsburg, City of Concord, City of Rio Vista, and from the general public (i.e., self-haul). Contra Costa County Page 1-28 Section II Busse Year Forte Setting Process 11. Base Year Rate Setting Process Contra Costa County rate setting follows a A. Overview of the Brise Year Rate four-year cycle. In the first year of the cycle, Setting Process the franchise hauler is required to submit a The base year rate setting process Base Year Rate Change Application. In the requires the franchise hauler to submit to second through fourth years, the franchise the County a Base Year Rate Change hauler is allowed to submit an Interim Year Application every four years, beginning in Rate Change Application. The cycle repeats 1999. In this application, the franchise itself in year five. This section describes the hauler completes a number of forms, and detailed processes and steps involved, from provides supporting financial and the franchise hauler completing a base year operational information. Unlike the application through to the County's approval of new rates. Interim Year Rate Change Application which is optional, the Base Year Rate Topics covered in this section of the Change Application is mandatory manual include: regardless of whether it will result in a U Who is responsible for the various steps rate change. in each process Exhibit II-1, on Page II-3, overviews U What tasks must be completed within the base year rate setting process. For each step each of the eleven (11) steps, participant responsibilities, tasks, and associated Cl When each task should be performed. outcomes(i.e., documents or deliverables) Information about how to complete worksheets are identified for each step. and forms for the Base Year Rate Change After reviewing the application, the Application is provided in Section III of this County evaluates whether proposed rate manual. This chapter is organized into three changes will be fair to both residents of subsections: the County and the franchise hauler. Fairness is demonstrated through an A. Overview of the Base Year Rate Setting analysis of the franchise hauler's actual Process and projected revenues and expenses included in the Base Year Rate Change B. Timing of the Base Year Rate Setting Application. Process Information required in the rate setting C. Steps of the Base Year Rate Setting process which is considered confidential Process. by the franchise hauler(e.g., routes, employee compensation, and certain tonnage data) will not be disclosed at any public meeting(i.e., County Board of Supervisor meetings). This might include routing employee compensation and certain tonnage information. The hauler should make the County aware of such confidential information. Contra Costa County Page 11-1 H. Base Year Rate Setting Process B. Timing of the Base Year state May, with the document submitted to the Setting Process County on July I. The total time required Timing of the base year rate setting to complete this process will depend on process is shown in Exhibit II-2, following the complexity of changes in operating Exhibit Ii-1. Most of the time frames are conditions and the resulting application. recommended;however,certain key points are noted in the exhibit by circled letters. The C. Steps of the Base Year Rate Setting rate change process should begin eight Process months prior to the beginning of the new calendar year. The remainder of this chapter Base Year Rate Change Applications are describes each of the eleven steps of the submitted by the franchise hauler at least six base year rate setting process. Each step includes an overview of the step and a (6)months in advance of when the proposed detailed description of the tasks required base year rate change would take place on January I of that base year. The County has to complete the step. up to thirty(30)days to verify the application Step I of I I describes, in general, the is complete. After the County verifies that the elements of the Base Year Rate Change hauler's application is complete,the process Application, for the benefit of both the is scheduled to take five (5)months until rates County and hauler. Chapter III describes are implemented. New rates are to become in detail how to prepare the Base Year effective on January I of each base year. Rate Change Application,primarily for The franchise hauler should begin the benefit of the franchise hauler, preparing the application during the prior Contra Costa County Page 11-2 EXHIBIT II-1 Base Year Rate Setting Process Overview Steps Responsibility Tasks Document(s)/Deiiverabie(s) 1. Preparation and a. Prepare Cost Information • Rate Application Submission of Rate Change Franchise b. Prepare Revenue information � Hauler � Audited Financial Statements Application c. Prepare Operating Information • Supporting Financial information d. Prepare and Submit Rate Change Application and Supporting Documents 2. Verification of Completeness a. Verify Financial Data and Format • Notification Letter to Franchise of Rate Change County b. Verify Supporting Documents and Schedules Hauler Application c. Notify the Franchise Hauler 3. Review of Rate Change a. Review Actual and Projected Revenue Requirements • Letter to Franchise Hauler Application and Preparation County b. Review Actual and Projected Revenues • Workpapers of Responses c. Review and Verify Operating Ratio d. Determine Components of Requested Change in Rates e. Review Performance Data I. Request Additional Data and Clarification,If Necessary g. Document Staff Review and Prepare Written Response 4. Response to Additional Franchise a. Provide Additional Information,If Requested • Additional Documents,if Necessary Information Requests Hauler b. Prepare and Submit Response from County S. Survey of Rates a. Survey Residential and Commercial Solid Waste Rates • Summary of Survey of Other in Similar County and Charges in Similar Service Areas Jurisdictions Service Areas b. Summarize Survey Results c. Prepare and Submit Summary to the Franchise Hauler 6. Preparation a. Prepare Draft Report and Recommendations - Draft Board of Supervisor Report of Draft Report County • Supporting Documentation and Recommendations 7. Review of a. Review Draft Report and Recommendations with + Response Letter to Draft Draft Report Franchises i Hauler County Staff Board of Supervisor Report and Recommendations b. Resolve Any Remaining issues c. Prepare Response to Draft Report and Recommendations 8. Conduct a. Post Notice of Public Hearing • Public Hearing Public County b. Conduct Public Hearing Hearing 9. Preparation of a. Incorporate Franchise Haulers Changes in Final Report • Final Board of Supervisor Report Final Report County b. Incorporate Comments from Public Hearing and Recommendations c. Prepare Final Report and Recommendations 10. Presentation of Final Report a. Distribute Report and Summary to Board of Supervisors • Notice of Board Review and Recommendations County b. Obtain Board of Supervisor Approval Approved Resolution to the Hoard of Supervisors 11. implementation Franchise a. Prepare Notification of Rate Change • Notification to Customer Of New Rates Hauler b• Implement Rate Change • Rate Schedule Contra Costa County Page 11-3 EXHIBIT II-2 Timing of the Base Year Rate Change Process 30 Day step Preparation Review Formal Review Process Implement Month I Month 2 Month 3 Month d Month 5 Month 6 Month 7 Month 8 1. Preparation and Submission of 4. I Rate Change Application A 2. Verification of Completeness of Rate Change Application B 3. Review of Rate Change Application and Preparation of Responses 4. Response to Additional Information : Requests from County C 5. Survey Rates in Similar pR Service Areas 6. Preparation of Draft Report and Recommendations 7. Review of Draft Report and Recommendations D 8. Conduct Public Hearing 9. Preparation of Final Report and Recommendations 10. Presentation of Final Report and Recommendations to the Board of Supervisors G H 11. briplementation of New Rates .*P:It:. Legend A- Submit Rate Change Application to County F. Public Hearing B. Acceptance/Retum Letter G. Final Report and Recommendations C. Additional Information from Hauler H. Application Approved D. Letter Review of Draft Report 1. Customer Notification E. Notification of Public Hearing J. New Rates Implemented on January 1 Centra Costa county Page 11-4 11. Base Year Rate Setting Process Preparation and MW Submission of Kate Change Application Responsibility. Franchise Hauler Timing: Completed six months prior to the date new rates become effective Tasks: a. Prepare Cost Information b. Prepare Revenue Information c. Prepare Operating Information d. Prepare and Submit Rate Change Application and Supporting Documents Description of Tasks Overview Estimated During this step, the franchise hauler Cl Year 4 -Current Year prepares the Base Year Rate Change Projected Application. The franchise hauler should be able to complete the application over a two U Year 5 - Base Year. month period. Instructions for preparing the application forms referred to in this step, are available in Chapter III of this manual. a. Prepare Cost Information Blank forms are provided in Appendix D to Cost information from the franchise hauler this manual. is provided in the Base Year Rate Change In general, information provided by the Application. Cost information is reported franchise hauler is for five fiscal years. for the three most recently completed fiscal Actual data is required for the first three years, the current fiscal year, and the new years, estimated data for year four(based on base year. Information reported in each line actual results to date), and projected data for item is the total cost for residential, year five. Subsequent base years will commercial, and light industrial waste and replicate the data requirements in this recycling services. A segregation of costs by example. residential, commercial, and light industrial services is not required. Actual © Year 1 -Last Base Year El Year 2-Year Following Last Base Year Q Year 3 - Prior Year Contra Costa County Page 11-5 11. Base Year Rate Setting Process The cost information, which is reported, States Department of Labor,Bureau of includes: Labor Statistics, and is prepared monthly. ❑ Allowable Costs Cost information for the current year and - Direct Labor base year must account for any increases or - Tipping Fees (Up to a Cap) decreases in the number of customers - Corporate and Local General and served, or tons of waste and recyclable Administrative Costs material collected. Actual increases in costs also must be included. For example, if labor - Depreciation and Other Operating costs will increase in the base year as a Costs result of existing labor agreement terms, this - Services Provided to County. additional cost should be included. If these ❑ Pass Through Costs costs are not included, a rate increase will - County Administrative Fee not be sufficient to compensate the franchise hauler for actual costs and will result in a - Trucking and Equipment reduction of the franchise haulers actual - Tipping Fees (Above a Cap) profits. - Franchise Fees. Cost information provided in the By aggregating costs into these line application is used with operating profit to items, it is possible to focus on major calculate the franchise hauler's revenue changes without becoming distracted by requirement. The revenue requirement is large changes in insignificant cost equal to the sum of the following three components. For example, if office categories: equipment maintenance doubled from $10,000 in the current year to$20,000 in the ❑ Allowable costs base year(i.e., a 100 percent increase), this ❑ Allowable operating profits might only cause Corporate and Local ❑ Pass through costs. General and Administrative Costs to increase by one percent, resulting in little This revenue requirement is compared to anticipated revenues. If a shortfall exists, impact on the overall rate. Minor rates may need to increase, and if a surplus components of Corporate and Local General and Administrative Costs may decrease exists,rates may need to decrease. between the current year and the base year, while others may increase. b. Prepare Revenue Information If one of the major cost line items in the Revenue information is provided in this application changes at an unusual rate, then task. Similar to cost information, revenues the hauler should provide an explanation for are reported for the three most recently the change. An unusual change in cost is completed fiscal years, the current fiscal any increase which is greater than the year, and the projected base year. Revenue change in the San Francisco-Oakland-San is reported in three separate categories: Jose Consumer Price Index, or any decrease. ❑ Residential The Consumer Price Index used in the analysis should be based on the most current ❑ Commercial and light industrial actual information for the San Francisco- ❑ Recycled material sales. Oakland-San Jose Metropolitan Area. This information is available from the United Contra Costa County Page 11-6 ................................................ II. Base Year Efate Sating Process Residential revenue in the base year is c. Prepare Operating Information projected without any changes in rates. During this task, non-financial operating Revenue projections are prepared based on information is compiled by the franchise existing rates and number of customers hauler. Information to be provided which the franchise hauler anticipates independently for residential, commercial, serving in the base year. and light industrial sectors includes: For the base year, the amount of ❑ Number of accounts commercial and light industrial revenue without any changes in rates the hauler ❑ Quantity of waste tonnage collected anticipates receiving also is reported. This ❑ Quantity of recyclable tonnage collected figure should include changes in revenue from servicing more or fewer accounts. ❑ County bins provided Recycled material sales revenues ❑ County drop boxes provided. represents the actual amount of revenue the This information allows both the County franchise hauler anticipates receiving during and the franchise hauler to monitor changes the base year. Again, this would include any in the service characteristics. to estimate projected changes in scrap prices, or total revenues at existing rates, and to quantities of recycled material sold. compare these to changes in total costs. Allowances for uncollectible residential Operating information also is provided on a accounts and commercial and light industrial form in the Base Year Rate Change accounts (i.e., bifid debt expenses)are Application. identified in the application. This provides for a more accurate determination of the d. Prepare and Submit Rate Change franchise hauler's revenue in the base year, Application and Supporting as a small number of customers do not pay the franchise hauler for service rendered. Documents Once all revenues have been reported in The completed Base Year Rate Change the application, total revenue without a rate Application is submitted by the franchise change is calculated. This total revenue is hauler to the County. The application subtracted from the revenue requirement to should include the following items: determine the net surplus/shortfall. A net ❑ Management Representation Letter shortfall determines the amount of a rate The management representation letter change. If there is a net surplus, the transmits the application to the County, franchise hauler should determine if the and should provide a listing of included operating ratio can be reduced to eliminate documents. The letter should identify the surplus (i.e., the franchise hauler retains the requested adjustment in rates and the surplus as additional profit). include a discussion of specific issues If the operating ratio is calculated at 88 which impact new rates (e.g., significant percent, which provides the franchise hauler increases in tipping fees). The letter with the maximum amount of profit should state that: allowable under current policy, and a surplus , Management reviewed and still exists, the County must determine if accepts responsibility for the rates will be lowered, and over what period rate application of time. Contra Costa County Paye II-7 It. Base Year Rate Setting Process • The application is based upon Once the application materials have been management's judgment of prepared, the franchise hauler submits one the most likely set of reproducible hard copy, 15 bound hard conditions and course of copies, and one disk copy formatted to the action County's specifications. They are submitted • All significant relevant to the County. The thirty(30)day review information are made for completeness will begin upon receipt of available the application. • Assumptions are reasonable The penalty to the franchise hauler for an and are accurate. incomplete application would be a loss of • Base Year Rate Change Application any additional revenue which would have been generated through a timely and The franchise hauler should provide a approved rate adjustment application. Base Year Rate Change Application, Similarly, for missing any other deadlines including completed application forms specified in the rate setting process (i.e., and supporting documentation. responding to County requests for additional Supporting documentation includes the information or reviewing the County's draft current rate schedules for residential, agenda report)the franchise hauler would commercial,and light "industrial lose revenue due to later implementation of customers. rates. If the County fails to meet established • Supplemental Audited Financial time frames for its responsibilities (i.e., steps Information 2, 3, 5, 6, S, 9, and 10), at no fault of the franchise hauler, the County will include the For applications received after 1999, value of revenue lost due to the daisy, as audited financial statements for the most part of the pending Base Year Rate Change recently completed fiscal year should be Application. included, as well as other documentation which support operating and financial data provided in the application. Because audited financial statements serve as base documents for the application, statements of revenues and expenses and other reports contained in the application shall be reconciled to the audited financial statements to provide assurance that all activities are accounted for. Contra Costa County Page 11-8 _.. __.................................................................................................................................................................................................................... — ii. Base Year Rate Setting Process Verification of mail Completeness of Rate Change Application Responsibility: County Timing. Completed within thirty(30)days after the rate change application is submitted Tasks: a. Verify Financial Data and Format b. Verify Supporting Documents and Schedules c. Notify Franchise Hauler Description of Tasks Overview b. Verify Supporting Documents During this step, the County ensures that and Schedules the application has been fully completed by the Various documents may be included in franchise hauler and that the data provided are the application package to support the rate consistent. During the 30-day period, the change. The purpose of these supporting County will obtain from the franchise hauler documents should be clearly identified by any information necessary to complete the the franchise hauler. application. c. Notify Franchise Hauler If the application is complete the County a. Verify Financial Data and Format will notify the franchise hauler that it will County staff reviews the application begin the process of evaluating the proposed package to determine if it is complete and rate adjustment. If incomplete, the County ready for analysis. Detailed analysis of the will attempt to obtain from the hauler contents of the application occurs during Step additional required information within the 30- 3. The County reviewer should determine the day verification period. following: A revision of rates shall not be ❑ Has the applicant included all authorized until the 1 st clay of the first required forms? calendar month following a five(5)month period from the date that an application is Cl Are all forms complete? verified to be complete. As an example, if U Are audited financial statements the franchise hauler's application is included? deemed complete on August 10th due to U Are all financial calculations the fault of the hauler(a',10 day delay), mathematically correct? rates would be effective February 1 st instead of on January 1st. The franchise hauler would gain or lose the incremental revenues that would have been received from applying the new rates during January. Contra Costa County Page 11-9 H. Base Year Rate Setting Process Review of Rate Change Application and Preparation of Responses Responsibility: County Timing: Completed within one month after determining that the application package is complete Tasks: a. Review Actual and Projected Revenue Requirements b. Review Actual and Projected Revenues c. Review and Verify Operating Ratio d. Determine Components of Requested Change in Rates e. Review Performance Data f. Request Additional Data and Clarification, if Necessary g. Document Staff Review and Prepare Written Response Description of Tasks Overview Absolute and percentage changes in During this step, County staff evaluates costs for the five years identified on the the entire rate change application. This application should be calculated and review includes examining significant reviewed. Projections prepared from changes in costs or operating performance previous years in prior Base Year Rate and evaluating explanations of these changes Change Applications are compared with provided by the franchise hauler. actual results. Costs are correlated with operating collection efficiency statistics provided by the hauler. a. Review Actual and Projected Any unusual trends or variances in Revenue Requirements aggregate areas should be explained by the In this task,costs and operating profit are franchise hauler. An unusual increase would reviewed and analyzed for reasonableness. be a change in cost which is greater than the Reconciliations of costs to audited financial change in the San Francisco-Oakland-San statements shall be checked for consistency. Jose Consumer Price Index, published by the Explanations are sought from the hauler for Bureau of Labor Statistics, and which can items significantly different than would not be attributed to changes in the number of otherwise normally be expected. customers serviced or tons of waste or recyclable materials collected. If these Contra Costa County Page 11-10 ...._. ......... _. ........ ......... 11. Base Year Rate Setting Process unusual changes are not adequately submitted by the franchise hauler should be explained in the application, the County consulted to determine the most recent rates. should request additional clarification from Account information included in the the franchise hauler. application is reviewed to determine changes The County should review the allocation in the number of accounts served. methodology used by the hauler to obtain Allowances for uncollectible accounts unincorporated County costs, if applicable. also are reviewed. These figures should be At a minimum, the County should check that deducted from total revenue projections. allocations assign costs to unincorporated These allowances may be based on a fixed County customers which are reasonably percentage of total revenues or on actual consistent with other operating metrics such experience. Assumptions related to as average number of accounts and tons allowances for uncollectible accounts should collected. be provided by the franchise hauler. Revenue from recyclable material sales b. Review Actual and Projected is provided in the application. Amounts Revenues identified in the third year of the five years provided should reconcile with the financial Actual and projected revenues should be audit. Amounts identified in the current reviewed in this task. Current residential, (fourth)year, the base(fifth)year should be commercial, and light industrial rates documented by the franchise hauler. The provided in the application are verified. Any County will review these projections to changes in the number of customers serviced ensure they are consistent with trends in should be identified and explained by the recycling collection costs, scrap values, franchise hauler. processing costs, as well as estimated The application requires the franchise diversion rates and tonnage. hauler to report five years of residential and commercial and light industrial revenues: (1)calendar year three years ago (2)calendar e. Review and Verify Operating Ratio year two years ago, (3)most recent calendar The operating ratio must be between year, (4)current year, and(5)projected 88 percent and 92 percent, and is set at "base"year. For applications received after 90 percent in the initial base year. County 1999, the County should reconcile the most staff verifies that the operating ratio used in recent year revenues with audited financial the application is within this range. The statements. Revenues for the current year allowable operating profit also is are compared with year-to-date unaudited recalculated utilizing the operating ratio financial statements and documentation stated in the application. If the operating supplied by the hauler. Projected revenues ratio does not fall within the range stated for the fifth,or"base"year, are evaluated by above,or if there are any errors in the County for reasonableness. All calculating allowable operating profit, these assumptions made by the hauler in preparing deficiencies are noted. these projections are reviewed. Residential revenues reported by the hauler should not include any rate increases in the base year(year 5). Rate schedules Contra Costa County Page II-11 it. Base Year Bate Setting Process d. Determine Components of operating statistics is any increase or Requested Change in Rates decrease of more than the Consumer Price The County evaluates all costs,revenues, Index (CPI)published by the Bureau of and operating profits provided in the Labor Statistics in their Monthly Labor application to determine the components of Review. Changes in accounts served, the requested adjustment in rates. This number of routes, tons collected,or direct would include determining the proportion of labor hours generally should correspond to the requested adjustment in rates which is changes in cost and revenue. In accordance due to changes in each of the following: with the Franchise Agreement, all operating statistics, which affect the competitive 0 Costs position of the hauler, should be treated as Ll Residential revenues confidential. d Commercial and light industrial revenues f. Request Additional Data and • Revenues from the recyclable Clarification,if Necessary sales Throughout the analysis of the • Operating profit(or loss). application, County staff may request clarification and/or additional data from the franchise hauler to explain any unusual e. Review Performance Data changes in costs or operating performance. This information is requested in a letter from County staff reviews and analyzes the County to the franchise hauler. performance data, which are included in the application (number of accounts and tons collected). Operating statistics are reviewed g. Document Staff Review and to explain past historical trends and justify Prepare Written Response future expenses. Both actual and percentage increases are examined and any unusual During this task, County staff documents changes in performance are investigated to the review process. A memorandum is determine their cause and effect on future prepared which lists the activities completed during the review process and highlights any cost performance. An unusual change in of the key findings of the review. Contra Costa County Page 11-12 ..........._............... _..__........................................................................................................................................................................................................................................ [i. Base Year Rate Setting Process Response to Additional Information Requests from County Responsibility: Franchise Hauler Timing: Completed within two weeks of receiving a request for additional information from the County Tasks. a. Provide Additional Information, if Requested b. Prepare and Submit Response Description of flasks Overview which require clarification or further During this step the franchise hauler explanation. The franchise hauler should responds to requests for additional respond to the County's request for information from the County. additional information. Responses will vary depending on the specific requirements of the County. a. Provide Additional Information, if Requested b. Prepare and Submit Response During Step 3, County staff reviewed the The franchise hauler prepares written application and may have identified missing responses to the County's request for information, or changes in the financial or operating data between the five fiscal additional information. These responses are scal years prepared and forwarded to the County during this step. Contra Costa County Page 11-13 ..........:.......... It. Base Year Rate Setting Process Survey of Rates in Similar Service Areas Responsibility: County Tinting: Conducted concurrently with the application review(Steps 3 and 4) Tasks: a. Survey Residential and Commercial Solid Waste Rates and Charges in Similar Service Areas b. Summarize Survey Results c. Prepare and Submit Summary to the Franchise Mauler Description of Tasks Overview U Introduction The County conducts a survey of U General Information residential and commercial solid waste rates U Rate Setting Process in communities similar in size and location to the unincorporated County. The County ❑ Residential Service also determines comparable charges for J Commercial and Drop Box Service. residential truck usage, as well as rental rates for buildings similar to those rented by the In order to avoid mailing and response franchise hauler. The purpose of this survey delays, the survey is conducted by telephone. is to benchmark the rates proposed by the A minimum of six other jurisdictions should franchise hauler to determine if the rates are be surveyed. Jurisdictions selected should be reasonable. Sample survey forms and located in Northern California and have instructions are provided in Section III-B of operating environments, which are similar to, this manual. unincorporated Contra.Costa County. a. Survey Residential and Commercial b. Summarize Survey Results Solid Waste Rates and Charges in After the survey has been conducted, the Similar Service Areas results are tabulated and compared. The In this task, the survey of rates in other purpose of surveying commercial rates is to areas, which are similar to the determine if there is an explanation for why unincorporated County, is conducted. The residential rates might vary significantly survey includes over 40 questions and among the surveyed communities. covers the following topics: Residential rates proposed in the rate change application should be compared to Contra Costa County Page 0-14 IL Rase Year Rate Setting Process residential rates in other jurisdictions. If the U Percent of agencies which have rates proposed in the application are granted franchises significantly higher than in other Q Average tipping fee per ton jurisdictions, then County staff should request the franchise hauler's assistance in Q Average monthly charge for explaining the differences. If the differences comparable residential can cannot be explained,County staff may services consider adjusting the rates in the application. U Average charge for once-a-week commercial service of a two and c. Prepare and Submit Summary to the three cubic yard bin Franchise Hauler Cl Average charge for 20 cubic yard The County then prepares a summary debris box service. report, which makes conclusions about how The report should compare the proposed rates and services provided by the current unincorporated County rates with averages franchise hauler compare with those in other from the survey. The report should jurisdictions. The summary report should summarize in a matrix format all results of overview other jurisdiction's general solid the survey listed by agency surveyed. waste practices and rate setting approaches. A copy of the survey summary is The report also should document residential provided to the franchise hauler. If the refuse, recycling, greenwaste, and County requires an explanation and/or commercial refuse collection services and clarification from the franchise hauler about rates. It should include the following how the proposed rates compare to rates in information: the survey, the County includes this request U Number of agencies surveyed in its transmittal memorandum. Contra Costa County Page 11-15 It. Base Year Rate Setting Process Preparation of Draft Report and NMI Recommendations Responsibility: County Timing: Completed approximately two months after determining the application package is complete Tasks: a. Prepare Draft Report and Recommendations Description of Tasks Overview report. Each of these report topics is A draft report with recommendations discussed below: from County staff is prepared and submitted 0 Executive Summary to the franchise hauler for review. The This is a one or two-page summary of report will be reviewed by the franchise the review process and may include a hauler in Step 7. Residents of the County chart showing current and proposed will be able to comment on the rate change rates, and the recommended rate change. process through a public hearing(refer to Step 8). U Introduction and Background This section documents the rate change a. Prepare Draft Report and requested by the franchise hauler. The Recommendations section identifies any proposed changes in services provided by the hauler. The In this step,County staff prepares a draft section also identifies the review goals, report including recommendations for a rate objectives, scope, and other relevant change. The draft report includes the background information. following sections: U Rate Change Review U Executive Summary This section of the report provides a Q Introduction and Background brief overview of the rate change process C) Rate Change Review and discussion of significant historical U Analysis and Discussion of Rate rate issues. Change Application U Analysis and Discussion of Rate El Recommendations Change Application This section of the report will include a E) Appendices. review of the analysis work completed Results of the public hearing (Step 8) also by County staff. This section includes eventually should be included in the draft the following sub-sections: Contra costa County Page 11-16 ........... ............ IL Base Year Rete Setting Process Review of Rate Changes, including a 0 Appendices discussion of interim year or Appendices to the report would include: extraordinary rate changes during each year since the last base year, the Rate change application relationship of these changes to . Revised rate schedule changes in the Bay Area Consumer Price Index, and an analysis of the Audited financial statements of the significant components of the change franchise hauler in rates(e.g.,changes in tipping fees • Other relevant supporting materials or changes in operating profit). provided by the franchise hauler Analysis of Projected Costs, • Results of the rate survey. including a discussion of any unusual changes in casts which were After the draft report is complete, copies discovered and unresolved during the are provided to the franchise hauler. These review process. copies must be provided two weeks prior to the public hearing date. Copies of the draft Discussion of Service Issues, report also are prepared for public review including changes in frequency or prior to and during the public hearing. type of curbside service. If The County also should provide separate significant service issues are not written approval to the hauler on its method involved with a rate change, this section would be omitted. of segregating its financial records between County-regulated and non-County regulated U Recommendations operations. Methods used by the hauler may County staff would present its vary from time-to-time and thus at each recommendations regarding specific Base Year the County should reexamine the changes in residential rates in this haulers method, and approve this method in section of the document. writing. Contra Costa County Page 11-17 ......... If. Base Year Rate Setting Process Review of Draft Report and Recommendations Responsibility: Franchise Hauler Timing. Completed within two weeks of receiving the County's Draft Report and Recommendations Tasks: a. Review Draft Report and Recommendations with County Staff b. Resolve Any Remaining Issues c. Prepare Response to Draft Report and Recommendations Description of Tasks Overview c. Prepare Response to Draft Report The franchise hauler reviews the Draft and Recommendations Report and Recommendations. The A written response to the draft report is franchise hauler also may provide additional prepared. The response may cover one or information related to any issues identified more of the following topics: during the County's survey of other U If data discrepancies exist in any of the communities' rates. areas noted in the prior task, the County should be notified of these a. Review Draft Report and discrepancies. Recommendations with County Staff ❑ If the analysis conducted by County During this task,the franchise hauler staff can be clarified or considered will review the draft report. Each section of differently, this information should be the report should be reviewed to ensure the provided to the County staff. following: ❑ If the report is acceptable and no ❑ Correct data are included clarification or comments can be offered, this should be relayed to ❑ County staff analysis is accurate and fair County staff. L) Rate changes are acceptable. If no written response is received by the County within two weeks of delivering the b. Resolve Any Remaining Issues county's Draft Report and Recommendations, then the County will If any issues are identified during this assume that the hauler has no issues with the step' the franchise hauler works with County report. staff to fully explore and resolve these outstanding issues. Contra Costa County Page 11-18 If. Base Year Rate Setting,Process Conduct Public Hearing Responsibility: County Timing. Completed approximately 3 months after determining the application package is complete Tasks: a. Post Notice of Public Hearing b. Conduct Public Hearing Description of Tasks a. Post Notice of Public Hearing Exhibit II-3, on the following page is a County staff will arrange for a public sample public hearing notice for newspaper hearing on the proposed change in publication. residential rates. This meeting should occur as part of a regularly scheduled Board of b. Conduct Public Hearing Supervisors meeting. This includes: Whenever legally required, during this task FI Selecting a location for the hearing the public hearing is conducted. Copies of the LI Selecting a date for the hearing Draft Report and Recommendations should be ❑ Preparing a public notice made available at the meeting. Representatives from the County should be available to respond D Submitting the notice twice to the to citizens questions about the proposed local newspaper for a publication changes. Representatives from the franchise date ten days prior to the hearing hauler may choose to attend at their option. date Oral and written presentations from citizens LI Preparing copies of the draft report should be heard at this hearing. All citizen for public review. comments should be recorded for consideration and possible inclusion in the final report. The Ironhouse Board also may have a public hearing prior to approving rate changes for its areas. K Contra Costa County Page 11-19 11. Base Year Rate Setting Process EXHIBIT II-3 Sample Public Hearing Announcement Public Notice Contra Costa County will hold a public hearing to consider proposed increases in the rates charged for the collection of residential solid waste in service areas covered by Garaventa Enterprises. A hearing will be held at 7.30 p.m. on in the Copies of the proposed rates and the rate change application are available at the Contra Costa County Community Development Department, 651 Pine Street, 4`h Floor, North Wing, Martinez, California between the hours of 8.00 a.m. and 5 p.m. Contra Costa County Page 11-20 If. Base Year Rate Setting Process Preparation of Final Report and Recommendations Responsibility: County Timing: Completed within one month of conducting the public hearing and receiving comments from the franchise hauler Tasks: a. Incorporate Franchise Hauler's Changes in Final Report b. Incorporate Comments from Public Hearing c. Prepare Final Report and Recommendations Description of Tasks Overview b. Incorporate Comments from The County prepares the Final Report Public Hearing and Recommendations, incorporating Relevant comments received during the relevant comments from the franchise hauler public hearing are considered during this task. and public hearing during this task. If appropriate, modifications to the report should be made. If significant modifications are to be made, the franchise hauler is notified a. Incorporate Franchise Hauler's and allowed an opportunity to respond to these Changes in Final Report changes. The public contact portion of the Any additional or outstanding comments report also is completed during this task or issues raised during the franchise hauler's including a summary of the results of the review of the draft report are addressed public hearing process. during this task. Clarification of issues raised in the public hearing also should be completed. If necessary, meetings are c• Prepare Final Report and conducted with representatives from the Recommendations County and the franchise hauler. Final After final comments from the franchise solutions to outstanding issues are included hauler and the public have been considered, in the report. the Final Report and Recommendation package is prepared. A copy of the Final Report is submitted to the franchise hauler. Contra Costa County Page II-21 11. Base Year Rate Setting Process Presentation of Final Report and Recommendations to the Board of Supervisors Responsibility: County Timing: Completed two weeks prior to the expected implementation of new rates Tasks: a. Distribute Report and Summary to Board of Supervisors b. Obtain Board of Supervisor Approval Description of Tasks Overview other agenda materials. The Clerk of the During this step, the Final Report and Board should be notified four weeks prior to Recommendations is presented to the Board the meeting at which the rate change will be of Supervisors for review, comment, and considered and reports should be provided approval. two weeks prior to the meeting. a. Distribute Report and Summary to b. Obtain Board of Supervisor Approval Board of Supervisors Supervisors review the report and In this task, the Final Report and proposed rate changes. If the Board agrees Recommendations is provided to members With the recommendations of the County of the Board of Supervisors. The report is staff, the report and rates are approved. if included as an agenda item.for Board of the Board does not agree with the Supervisors consideration at a regular Board recommendations, the report is returned to meeting. The rate change may be placed on County staff for additional analysis. If the either the regular, or consent calendar. report and rates are not approved, the Board Copies of the report are provided to the should specifically identify deficiencies. Clerk of the Board for distribution with The Ironhouse Board is responsible for reviewing and approving proposed rate changes in its areas. Contra Costa County Page 11-22 It. Base Year Rate Setting Process Implementation of New Rates Responsibility: Franchise Hauler Timing. Conducted following Board of Supervisor approval of the new rates Tasks: a. Prepare Notification of Rate Change b. Implement Date Change Description of Tasks Overview every two or three months, and a rate change During this final step, the franchise occurs during the middle of a billing cycle, hauler implements new rates. unbilled amounts in the current billing cycle due to the rate change are calculated and included in the next billing cycle. a. Prepare Notification of Rate Change In accordance with the franchise Once the report is approved, a agreement,residential rates charged by notification of a rate change is mailed by the Garaventa represent maximum rates. It is franchise hauler to all customers. This assumed for purposes of this manual that notification may be included with a regular Garaventa will charge these maximum rates. billing or may be mailed separately. The If Garaventa charges rates below these notification must be performed at least 30 maximum rates and fails to meet its revenue days prior to the effective date of the rate requirement, the County is not responsible change. The franchise hauler should provide for making up any future revenue a copy or facsimile of the notice to the inadequacies resulting from lower than County at the time of customer notification. maximum rates charged. In no case will Garaventa be entitled to recover past uncollected revenues through a balancing b. Implement Efate Change account or future increases in rates. The rate During this final task, the new rates are setting methodology is designed such that entered into the franchise hauler's billing rates are as closely aligned with costs-of- system and included in the billing cycle. If service as passible. the franchise hauler prepares billings once Contra Costa County Page It-23 111. Base Year Rate Setting Methodology This section provides detailed purposes only and are not intended to reflect instructions for completing the Base Year actual operating or financial conditions of Rate Change Application and for conducting the franchise hauler. the Solid Waste Fee Survey. The application Several lines in the application contain will be prepared by the franchise hauler and five columns. This includes lines 1-13, 16, reviewed by the County. The survey will be 19-21, and 23. These columns are intended prepared by the County. to show the relationship between the three Forms provided in this section identify all most recently completed years, the current areas to be completed with double outlined year, and projections for the new"base" boxes. If data are to be entered on the forms, year. These columns are organized as the box has no shading. If a calculation is follows: required, the box has light shading. l) Columns One through Three include This section of the manual includes the information for the franchise hauler's following sub-sections: three prior fiscal years. These are the A. Preparation of the Base Year most recent years that financial Rate Change Application information is available and that actual costs and revenues can be verified. B. Survey of Rates in Similar Areas. L7 Column Four is for estimating performance during the current fiscal A. Preparation of the Base Year year. The"current year" is the franchise Rate Change Application hauler's fiscal year prior to the new base year. The base year rate change The franchise hauler is responsible for application is prepared during the course preparing the Base Year Rate Change of the current year. Data in this column Application. This six page form includes should include year-to-date performance detailed financial and operating information plus estimated performance during the and is used to determine the actual costs and remaining months of the current fiscal revenues of the franchise hauler. year. Exhibit 111-1, following this page, Q Column Five is used to report projected provides an overview of the steps and performance during the new base year. related tasks which must be completed to This information is entirely a projection prepare the application form. Exhibit 111-2, and is utilized to determine any rate following Exhibit III-1, is a sample changes. application form as it might be completed by the franchise hauler. Following this exhibit The relationship between these five columns are detailed descriptions of each step and for any given line item should be consistent. related tasks. Please note that data included Any substantial difference between each of the in these exhibits are provided for illustrative five years should be explained by the franchise hauler and considered by the County during the review process. Contra Costa County Page I11-1 III. Base Year Rate Setting Methodology EXHIBIT III-1 Contra costa county Rage 111-2 EXHIBIT III-2 PAGE I OF G Sample Base Year Rate Change Application Contra Coats County Base Year Rate Change Application Financial beforrnation Actual Estimated P l tfiatodcal Yeen Current Year Sas•Year.: Years Year2 Year Year Year3 Enter Actual Year In this Row 1899 2000 1 2001 21303 1. Direct tabor 1. Tkul*g Fees(Profit Allowed) t Ki0 000 100() 1054500 1090000 1,111AM 3. Corporate and Local General and Adminfetratwa Casts 460= 465,000 MM477 70 7 42 4. Dwaciatim and Other Operating Costs 355 000 385 000 =1000 377 5. Services Provided to county 35 000 40000 44 054 94 6. • to nes 1+2+3+4+ - T EP 7, Operating Ratio d. Allowable Opnabrig Profit#(Une 8+0:9)-Una 8)j 710% 1M,2001 ST E P. County Adm ntrative Fee 00 10. Trucking and Equipt"ent 945 848 950400 980 000 874 400 '( '120 11. Ti Fees Pass Tarou 11. ass r is vn sea re-ft-)-(Ones +10+11) 1 965,W 1 975,4001 9795W 1,, JE.400 13. Total Allowable Costs(Une 6)Pius Allowable Operating Profit(Lite 8)Pius Taal Pass Through Costs t+ithout Franchiee Fees)(Une 12) 15 4,061,6571 F4,151,5791 EA-Z-1 L /<. Residential Revenue 3s438872 5. Lass Allowa n a for Uncollectible Residential Accounts :94,563 Tw 16. at Residential Revenue(without Rate Change in Base Year) 17. Cammendal and Light Industrial Revenue 1 Is. Less Allowance for Uncoiieotible Convnercial and Light Industrial Accounts : ,4 19. Total ConvnetcW/Ught Industdai Revenue(without Rate Change in Base Year) i 2482 20. Recycled Material Sates 50000 45000 51 500 55 000 A00 21. Twat Revenue(Unes 16+19+20) 11 4.275.42d I 4,370M 1 4, 4.456.5711 STEP 22. Net Shortfall(Surplus)v„thaut Franchise Fees(Line 13•Una 21) 23. Residentlal,00or rnercial/Ught Industrial Franchise Fees(see calculation below) 24. Net Shortfall(Surplus)%OM Francaise Fees(Urias 22+23) 25. Total Fksid•nttaYComaterciallUght Industrial Revenue Prim to Rate Change(Unes 16+19) 26. Percent Chun"In Existing ResidentfaMornmercla"ht Industrial Rates(Uns 24+Una 25) ranch a fees are sat y the my at-pennant 0?the revenue requirement 27. Total AJlovable Costs(Una 6) 1 far two squab"with one unknown,and identity fmnehbe ism as X .> 28. Allowable Operating Profits(Line 8) Equation 1)Revenue Requirement x 0.05-X 39. Total MTh rau h Carats with Franchise Fees Lines 12+23 :1277,1418 Equation 2)Revenue Requirement.Una 13+X.or$4,427,394+X 30. nue ui ant nes 27+28+ ) ubsdWte equation 2)into equation 1)and solve for X .y ,427,391+X)x 0.05.K or X r 5273,021 STEP k S, ak Year: 1002 Page-1-of 8 Pitares fortlustrative Purposes Only Contra Costa County Page 111-3 EXHIBIT III-2 PAGE 2 OF b Contra Costa County Base Year Rate Change Application Cost Summary for Year 2001 Audited Unincorporated Non-Uninc. Garaventa Allocation Description of Cost Coun Coun Financial Base s Labor-Regular Is 620,055 1 1 . Iours Labor.Overtime 31,0(x1 44,000 $ 75,000 labor Hours Benefits 280,40)0 369,6001$ 830,000 Labor Hours Payroll Taxes 65,10x1 92,400 $ 157,500 Labor Hours 31. Total Direct Labor LOurs 32. Total Tipping Fees(Profit Allowed) Tonnage Accounting 20,000 $ 35,00x1 $ 55,000 Direct Computer Services 25,000 50,000 75,000 Accounts Dues and Subscriptions 5,000 7,000 12,001 Accounts Insurance 75,000 65,000 140,000 Accounts Laundry 51000 7,500 12,500 Accounts Legal 25,000 50,000 75,000 Direct Management Fees 65,000 95,000 160,000 Labor Hours S T E P Miscellaneous and Other 6,000 6,000 12,000 Accounts Office Expense 55,000 40,000 95,000 Accounts Operating Supplies 35,000 40,000 75,000 Accounts Outside Services 20,0x10 20,000 40,000 Accounts Public Relations and Promotion 5,000 6,000 11,000 Accounts Taxes and Licenses L27,500 22,li00 50,000 Accounts Telephone 45,000 30,000 75, Direct Travel 5,000 7.000 12.000 Aocaunts Utilities 50,000 35,000 85,000 AOCOunis 33. Total Corporate and Local General and Administrative Costs Depreciation•Buildings 4 quare oa ge Depreciation•Vehicles NIA Depreciation-Containers 250,000 :;250,000 500,00x1 Acccuntslfons Other Operating Costs NIA 34. Total Depreciation and Other Operating Costs WA 4i .,.,.L 35. Total Services Provided to County xs=1 Viren 38, Total Allowable Costs(Lines 31+32+33+34+35) 37, Total County Administration Fee NO -701 Equipment Rental 5 665,000 665,000 3 1,330,000 No. Trucks Gas and Oil 85,000 85,000 170,000 Direct insurance 75,000 75,001 150,000 No.of Trucks Parts 35,000 35,000 70,000 Diced Repair and Maintenance 50,000 50,000 100,000 Direct Tires 50,000 50,000 100.000 Direct Other N/A 38, Total Trucking and Equipment 38. Total Tipping Fees(Pass Through) MIX 40. Total Residential/Commercial/Light Industrial Franchise Fees it 41. Total Pass Through Costs(Lines 37+38+39+40) 1,207,352 5 r 42. Total Costs(Lines 36+41) �a Year: 0 2 Page 2 of 6 Figures forNustrativr Purposes Only Contra Costa County Page 111-4 EXHIBIT III-2 PAGE 3OF6 c«nra Cori9 Cwnty Base Year Rate Change Application Revenue Summary Atloid E,rt:amated ad Ff810110ai Yours . Yw ;9dae'Vw Year 1- Year 2 Yaw 3 Yew 4 's>Yesr 5 Enter Actual Yew in tris Row 1999 2600 2001 2002 Strgts hent+Rosidentiat Service 43. Single Family Resider"Revarus(Bass,Yew From Page 4 d 6) Is 9 S 3.391.129 S 3 40B i7o S 3,415, 418IB09 r Multiunit Room""Service `< 44. Number of Accounts 951 10SI SB 95 92 45. lu4udla M Residential Revenues S 20 520 S 680 I S 21,1M 4 20 520 3 19 972- 46. Resider"Revwtus(w/o Agowance for ulodiactkie Accounts)(laser 43+45) IS 3.3W.9161 S 3 443 909 I S 3.429 338 $ :3,435, 520 3438 tS72� 47. Akwmnce for Lutcon®cabie Residential Accounts S 86198 $ 102,414 $ 102880 $ 103.066 S S4563j 4S. Total Residential Revenue(Line 46•Line 47) S 3243,747 $ 3,317,395 S 3,326,458 S 3,332,454 $ : 3,344;169 STEP Co mecW and Light Industrial Can Service 49. Number of Accounts 575 520 522 530 690 3s,. Commercial and Light Industrial Can Revenues $ 253 380 $ 255,W $ 256 924 S 266 750 $ 28D 789 Commerdal and Light industrial Bin Service _ 51. Number d Accounts 50 52 55 57 57 ' 52. Commercial and tight industrial&n Revanuaw S 780,0W 1 S $11,2001$ 8580001 S M S 689 Commercial and Light industrial Drop Box Service 33. Number of Mounts 34. Commetoial and Light industrial Drop Box Revatim Is S ts f 35. Comrrtercied and Light industrial Revenue(wloAll warv3e for LMcdlec"Accounts)(Lime 50+52+54) 1$ 7 033 380 S 1 067 040 S /174 824 S 7.9a60 S i 149 N 36. Allowance for Lftollectibie Commercial and lightindustrlaf Accounts S 51559 5 53352 S 56.741 S 57.498 S 57498- 67. Total Connatal and Light Industrial Revenue(Line 55-Une56) 15 951,741 S 7,013,688 S 7,059,053 S 1,092,452 S 1 092,— SB. RecydedMaterial Sales S 60008 S 45600 $ 51,500 $ 55,1706 s: 59. TothRwsrrtus(Liera46+57+56) S 4,275,428 S 4,370,083 $ 4,437,041T$ 4,479,9177774=-.5667, Asa Yean 2002 Page 3 of 6 !turas jbr Awstrativt Purpalres On& ��Fl Contra Costa County Page 111-5 EXHIBIT III-2 PAGE 4 OF 6 Contra Costa County Base Year Rate Change Application Single Family Residential Summary 'Pr d Base Year Single Family Reatdentld revanue twlthaut Nate Change in Bass Year) 2409 Current Pr' clad Rata w.bnth Accounts Total at ' 140 galbn tan of waste.recycling,2.32 gakn yard s 18.00 190 i s 1g e1f0 1.32 gallon can of waste,tdcycWV,2.32 galbn yW 20.00 9.000 7aA3;9W' 22gattoncauotwasle,recyckng,2-32gallonysM 25,90 190 30.9Wi 184galbnblmr,recling,7ntludos2.32gapanyatd 2� g} ' 500 2 90 ONiters rscyelinp,Includes 2.32 gallon rd 48.90 50 t V,wo ,R 60. Total Base Year Single Famlly Residential 1 750 S 3 18 f900 '' a/ Equal to the current rate per month multiplied by 12 multiplied by the projected number of accounts. Year: 2002 Page a of 8 Fkares for Mustratfve Purposes Only Contra Costa County Page 111-5 EXHI3IT III-2 PAGE S OF 6 Contra Costa County Base Year Rate Change Applicata©n Operating Information :;'i tfistoric�l Current Year 9es0 Year Hated" mw mstodcal ! iattratint ": Audited ` cart Estknated PerCe4lt Projected t famatlart C hfotmat�rt Momtaiion tdortnatlon Morrnatlan Year 1 Yr.f 162 Year 2 Yr.2 to 3 ; Year 3 Yr,3 fa 4 Year 4 �i ta'6 Year 6 Enter Actual Year 18$9 2440 2001 2002 2043 Accounts 61. Residential 11,845 211496: 12,087 ! 2.049&' 12,333 .04 12,585 12,862 62. Comtaercial 565 41496 $72 0.87% 577 1.73% 587 M00% 387 63. Light Industrial 0 IWA NIA h11A i1fA 64. Total Accounts 1 410 2.0096 12 654 1.4956 12 910 2 5)396 13.172. 1:95% 13,424 Waste Tonnage 6S. Residential 17,768 2.0495 18,130 2.04% 18,500 2.04 19,878 2."% 19,263 STEP 66. Comrrerciai 2,637 1.246 2.669 0.87% 2.693 1.73% 2.739 0.00%' 2,739 67. Light Industrial 0 NA 0 "A 0 N1 A 0 1vtA' 68. Total Tons 20,404 1.94% 20,800 1.89% 21,193 2,0096 11,617 1.78% '2.2,002- Recyclable Tonnage 69. Residential 3,554 2.0696 3,626 2.04% 3,700 2.i349f 3,776 2,04-#b 3,853 70. Commercial 527 1.7A%' 534 0.$7% 539 1.73% 548 0.00%' 548 71. light Industrial NA 0 'NIA 0 MA 0 17/0 0 72. Total Tons 4081 1.94% #160 1.8996 4,239 2.00% 421; 1,78% 4400 County Services 73. County Bins 1sx7.0095 15 33.334 20 5.t30�4 21 0.0096' 21 74. County Drop Boxes 7 28.3796 9 .11.119E 8 0.009E 8 23fl0 i0 75. 3 Yd.Bin-lX per%eek $ENA(-- 0 0,00%' S 214.00 2.80% 220.00 00095 S 220.00 0.0091 S 220.00 76. 2 Yd.Bin-iXper%eek 5 0.00% $ 162.45 2.80%' $ 167.00 1.009fi $ 167.00 0.00%' $ 167.40 77. 20 Yd.Bax-per pickup N/A NA NA NA NIA N/A I TfA N/A Year: 2110;! Page 5 of 6 --00 N; Figures for Nustrative Purposes Only ` Contra Costa County Page 111-7 EXHIBIT I11-2 PAGE 6 OF 6 Contra Costa county Base Year Rate Change Application Unincorporated Area: All Areas 78. Rate Change Requested Abbreviated trraessed New Rale Schedule Currera Rate Rate Adlustmanffi w Rate 1.20 gallon can(+2-32 gallon yard) 16.00 16.63 S 0.02 S t6.85 1-32 gallon can(+2.32 gallon yard) 2000. 20.78 0.02 20.60 232 gallon carts(+2-32 gallon yard) 25.00 25.98 0.02 26.00 1.90 gallon later(+2-32 gallon yard) 23.00 23.90 23.90 2-90 gallon tatera(+2.32 gallon yard) 46.00 47.80 47.60 (a)Calculated tates are rounders up to the nearest 40.05. 79. Multiunit Residential Rate increases of 1 3.92 will be applied to all rates in each structure with each rate rounded up or down to the nearest 40.05. y STEP : 7c To the beat of my knowledge,the data and information in this appiication is complete,accurate,and consistent with the Instructions provided by Contra Costa{':Aunty. Name: John Srruth Title: President as Signature: John Sni i h bate: June ,2002 r Year: Page 6 of 6 z .. Figures forVustnuivr Purposes Only ' .. Contra Costa County Page 111-8 ...................................................................................................................................................................... ........ ......... _...._. W. Base Year Rate Sating Methodology Entry of Operating Costs and Profit Responsibility: Franchise Hauler Timing: Prepared during Step 1 of the Base Year Rate Change Process (Refer to Section H-A) Tasks: a. Enter Prior Year Information b. Enter Current Year Estimated Information c. Enter Base Year Projected Information d. Enter Operating Data Description of Tasks a. Enter Prior Year Information Line 23 Residential/Commercial/ A copy of audited financial statements Light Industrial Franchise for the previous fiscal year should be Fee. obtained. Financial information from the The specific components of these cost audit is consolidated into specific categories categories are described in Exhibit 1-5 in identified in the application. All financial Chapter 1. Supplemental documentation information shall be in accordance with should be prepared which reconciles the generally accepted accounting principles. financial audit for the most recently These categories include: completed calendar year to information Line 1 Direct Labor provided in the application (e.g., a trial balance report). This documentation, along Line 2 Tipping Fees with a copy of the audit, should be included (Profit Allowed) in the application package. Line 3 Corporate and Local Total cost information for both General and Administrative residential refuse collectidnlcurbside Costs recycling and commercial and light Line 4 Depreciation and Other industrial refuse collection should be Operating Costs reported in this initial task, and in tasks b. and c., below. A breakdown of casts for Line S Services Provided to residential, commercial, and light industrial County refuse and curbside recycling services is not Line 9 County Administrative Fee required at any point in the rate setting Line 10 Trucking and Equipment process. Line 11 Tipping Fees (Pass Through) Contra Costa County Page 111-9 Ill. Base Year Rate Setting Methodology b. Enter Current Year Estimated refuse, and recycling operations,the Information projected franchise fee in the base year may Current year costs are determined by be calculated using the revenue projections adding actual costs to-date to estimated costs developed in Step 2. that will be incurred during the rest of the In addition to the cost information fiscal year. Total costs for the current year requested in the application, three should be similar to the prior year, after supplemental financial measures must be taking into account increases due to inflation provided as an attachment to the application: and changes in the number of residential, ❑ the total square feet of office space used commercial, and light industrial customers by the franchise hauler and the rental or served. Any significant changes should be lease rate per square foot per month explained and documented. A significant during the new base year change includes any increase in cost which is greater than the CPI,or any decrease in a U the fully-loaded cost per residential truck cost item. during the new base year ❑ the total square feet of warehouse space and the rate per square foot during the c. Enter Base Year Projected new base year. Information The franchise hauler must provide three Base year costs are projected by the comparable rates for each of these financial franchise hauler. These projected costs then measures (i.e., three for trucking charges, are used to calculate the net shartfaIllsurplus three for office space per square foot, and in revenues and, subsequently, the percent three for warehouse space per square feat), change in rates. These projected casts for a total of nine measures. The source of should be developed by estimating these comparable rates must be identified. anticipated service levels during the base year, and determining the expenses which will be incurred to provide these services. d. Enter Operating Data Each cost element in the application should be reviewed and any anticipated change in Operating information requested in the specific line items should be included in the application, provides an important indicator base year projection. For example, if of the franchise hauler's performance. If negotiated labor rates are scheduled to casts are changing at an unusual rate, change, or if tipping fees are expected to operating data may provide same change,these changes should be included in explanation of these changes. For example, cost projections for the base year. cost increases could be attributed to the increased level of service provided(i.e., Actual and estimated franchise fees for accounts served). Two operating the four years prior to the base year(years characteristics are required in the application one through four of the application) should for residential, commercial, and light be included in the application in tasks a and industrial customers: b. The franchise fee for the base year(year five of the application) is not estimated in Accounts served this task, but is estimated in Step 3. Because 0 Tons collected. franchise fees may be based on revenue from residential, commercial, and light industrial Contra Costa County Page 111-10 III. Base Year Rate Setting Methodology The franchise hauler should report the year used in the financial sections of the quantity of drop boxes and bins provided to application. Current year performance is the County. Additionally, upon request by the based on performance to-date plus estimated County, the franchise hauler should provide a performance for the remaining months of the frequency distribution of the number of current year. Projected base year data customers within each category of the rate represents the franchise hauler's best structure. estimate of service levels during the new Similar to cost data,five years of base year. operating data are required in the Year-to-year percentage changes then are application. The first three years are determined for accounts served, tons "historical," the fourth year is the"current" collected, and drop boxes/bins provided to year, and the fifth year is the"base"year. the County. Any significant changes should Historical data are based on actual annual be documented and explained by the operating statistics during the last three franchise hauler. A significant change in an complete fiscal years and reflect the same operating characteristic is an increase or decrease of more than two percent. Contra Costa County Page 111-11 Ill. Base Year Rate Setting Methodology Determination of Residential, Commercial, and Light Industrial Revenues Responsibility: Franchise Hauler Timing. Prepared during Step 1 of the Base Year Rate Change Process (Refer to Section H-A) Tasks: a. Determine Residential Revenue b. Determine Commercial and Light Industrial Revenue c. Determine Allowance for Uncollectible Accounts d. Determine Revenue from Recycled Material Sales e. Calculate Total Revenue Description of Tasks a. Determine Residential Revenue column of cells on page 4 of 6. Then enter Residential, commercial, and light the projected number of accounts by service industrial revenue comprise the majority of type in the second column of cells on page 4 revenues to the franchise hauler. Customers of 6. Total revenue for each service type is generally put out 96-gallon toters for refuse, calculated based on the following: which includes 32 gallons of refuse and 64 Calculation of gallons of yardwaste. Garaventa's rental Projected Base Year Revenue rates for all unincorporated areas are $3 per month per toter. Toters are not required but Rate per month are used by more than half of customers. Multiplied by Twelve months Customers also can provide their own 32 gallon refuse and up to two 32 gallon Equals Rate per year containers of yardwaste containers at the Multiplied by Projected residential curb. For all unincorporated County areas, accounts additional can or toter service is provided in Equals Revenue by service addition to the one can, or one toter, service. type Mini can (20-gallon) also is provided in Discovery Bay and Bay Point. Revenue by service type then is entered To calculate projected residential in the third column of cells on page 4 of 6. revenue for the base year,enter the current These values then are added together and monthly rates by service type in the first entered and totaled in line 60. Contra Costa County Page 111-12 _._ _... __._................................................................................................................................................................ Ili. Base Year Rate Setting Methodology The number of accounts in each service Projected commercial and light category may change throughout the year. industrial revenue for the new base year is For example, some customers may request entered in the fifth column. This amount, one can service part of the year and an net of any projected uncollectible accounts, additional can during the remainder of the is based on the estimated annual revenue year. The average number of accounts by received during the current fiscal year plus service type is to be used in these any additional revenue generated from calculations. In addition, the number of additional accounts. Operating data provided accounts identified for these calculations in Section XI(page 5)of the application must agree with operating data provided in should support any service level changes. Section VIII(page 6)of the application. In order to analyze changes in This base year amount should reconcile with commercial rates, information must be line 43,column 5 on page 3 of 6. Single provided for the three specific commercial family and multi-family residential revenue services. These services are: figures should be completed for all five years in lines 43 through 48 on page 3 of 6. 3 Yard Bin--once per week U 2 Yard Iain—once per week b. Determine Commercial and Light U Debris Box--once per week Industrial Revenue In the columns of lines 75 through 77, Because of the wide variety of the franchise hauler enters the rate for these commercial and light industrial services services for the prior three years, the current provided, it is not practical to use the year, and the base year, respectively. process described in task a to estimate Percentage changes then are entered in commercial revenue. Instead, the approach columns 2,4, 6 and 8. This information to be used is similar to estimating costs for provides an indication of the overall changes the new base year. in commercial rates which can be compared Commercial and light industrial revenue to the requested change in residential rates. information is entered in lines 49 through 57 of page 3 of 6 of the application. In the first c. Determine Allowance for three columns of this line,actual revenue Uncollectible Accounts generated by commercial and light industrial accounts during the prior three years is The franchise hauler likely will not be reported. The third year amount must paid by all customers served. While this reconcile with the financial audit for that amount is expected to be relatively small, it same year. Commercial and light industrial must be accounted for in the calculation of revenue for the current year is based on base year net revenues. These amounts are actual revenue to-date plus an estimate of reported in two places for each service type: the revenue that will be received through the on lines 15 and 47 for the allowance for end of the fiscal year. Commercial and light uncollectible residential accounts, and lines industrial revenue in the current year should 18 and 56 for the allowance for uncollectible be comparable to revenue in the prior year, commercial and light industrial accounts. after taking into account changes in rates These amounts can be calculated based and service levels. on a formula, such as one percent of anticipated revenues, or based on actual Contra Costa County Page 111-13 Ill. Base Year Rate Setting Methodology experience. All assumptions related to the scrap prices for recycled materials and the projection of uncollectible accounts must be anticipated quantity of materials sold. The documented and included as a supplement to projected scrap prices are multiplied by the the application. projected volume of materials to be sold to determine projected scrap revenue. This projected revenue is reported in the fifth d. Determine Revenue from column of lines 20 and 58 of the application. Recycled Material Sales In addition to revenue generated through residential,commercial,and light industrial e. Calculate Total Revenue services, some additional revenue is Total revenue is determined as follows: generated by selling recyclable materials collected through the curbside recycling Calculation of Total Revenue program. The amount of revenue generated through the sale of these materials is dependent upon the quantity of material Line 16 Total residential collected and the market price for these revenue materials. Both of these factors are outside Pius Line 19 Total commercial and direct control of the franchise hauler. light industrial revenue Therefore,revenues generated by recycled Pius Line 20 Recycled material sales material sales are not subject to an across- the-board rate change. Equals Total revenue In the first three columns of lines 20 and 58, actual revenues received during the most Total revenue is entered on lines 21 and 59. recently completed fiscal years are reported. In the fourth column of lines 20 and 58, estimated revenues for the current year are reported. For the base year, revenue from recycled material sales is determined by projecting Contra Costa County Page 111-14 Ill. Base Year Rate Setting Methodology - Calculation of Allowable Operating Profit and Revenue Requirement Responsibility: Franchise Hauler Timing: Prepared during Step 1 of the Base Year Rate Change Process (Refer to Section II-A) Tasks: a. Calculate Allowable Operating Profit b. Determine Franchise Fee c. Calculate Revenue Requirement Description of Tasks a. Calculate Allowable Operating These actual operating ratios on allowable Profit costs will reveal how well past base year For the three historical years of actual projections correspondedto actual results. data, the hauler will calculate the actual We would expect that the hauler would operating ratio based on the formula below: generally operate in an operating ratio range of 88 to 92 percent on allowable costs. Method For Calculating Actual Similarly, the formula estimated above is Operating Ratio on Allowable Costs used to calculate the operating ratio for the current year(column 4). Step I In the first base year, the operating ratio Total operating revenues will be 90 percent. In each succeeding base (Line 21) year, the operating ratio will range from 88 Minus Total operating costs to 92 percent, which will help stabilize rate (Line 6+ 12+23) changes and afford the franchise hauler an incentive to reduce costs. In any succeeding Equals Operating profit(Line 8) base year, if the franchise hauler will earn an operating ratio outside this range, then 90 Step 2 percent should be reestablished. Operating ratio on The following operating costs are allowable costs (Line 7) included as operating costs in the allowable Equals Allowable costs (Line 6) operating profit calculation: U Direct labor Divined by Allowable costs (Line 6) plus Operating profit (Line Tipping fees 8) Cl Corporate and local general and administrative costs Contra Costa County Wage I11-15 Ill. Base Year Rate Setting Methodology ❑ Depreciation and other operating value, the franchise fee, which is identified as costs X. The equations are summarized in the ❑ Services provided to County. bottom left corner of the Base Year Rate Change Application and are as follows: The actual operating profit received by the franchise hauler in the three most 1. Revenue Requirement x 0.05 =X recently completed fiscal years is entered on 2. Revenue Requirement=Line 13 +X, or line 8, columns 1 through 3. The estimated in more detail [Total Allowable Costs operating profit for the current fiscal year is (Line 6)plus Allowable Operating Profit entered on line 8,column 4. The actual (Line 8)plus Total Pass Through Costs operating ratio for these two years then is (without Franchise Fees) (Line 12)) +X. calculated using the operating ratio equation By substituting equation 2 into equation shown on the prior page. 1, the calculation is simplified to: To calculate the allowable operating (Line 13 +X) x 0.05 =X,or profit in the base year, the equation below is utilized: (Line 13 x 0.05) =0.95X, or Method For Calculating X= (Line 13 x 0.05)+0.95 Nominal Operating Ratio Projected franchise fees,X, should be entered on line 23 of the application. Operating costs Lines 9, 10, and 11 should be added and Divided by Operating ratio the result entered on line 12, total pass Equals Allowable operating through costs without franchise fees. Any significant changes in total pass through revenues costs should be explained and documented. ,tonus Operating costs Equals Allowable operating profit c. Calculate Revenue Requirement The revenue requirement establishes the level of revenue needed to meet all The allowable operating profit is entered on allowable costs and operating profit. This line 8,column 5 of the application. includes residential, commercial, and light industrial waste and recycling costs, and assumes a reasonable profit margin based on b. Determine Franchise Fee the operating ratio calculation. The current franchise fees paid to the Total revenue requirements are County is set equal to 5.0 percent of gross determined as the sum of: revenues. The calculation of the franchise fee is not a straightforward exercise because as ❑ Allowable operating costs (Line b) revenue is increased (e.g., via a rate change), ❑ Allowable operating profit (Line 8) so does the amount of franchise fees increase ❑ pass through costs (Line 12 + 23). because franchise fees are based on a percent of gross revenues. To calculate the franchise The revenue requirement is entered on line fee for the base year requires solving for two 30 of the application. simultaneous equations with one unknown Contra Costa County Page 111-16 ................................................................................................................................................................................................................................................. M. Base Year Rate Setting Methodology Calculation of Percent Change in Mates Responsibility: Franchise Hauler Timing: Prepared during Step I of the Base Year Rate Change Process (Refer to Section II-A) Tasks: a. Calculate Net Surplus/Shortfall b. Calculate Percent Change In Rates Description of Tasks a. Calculate Net Surplus/ b. Calculate Percent Change Shortfall in Rates The net surplus/shortfall, prior to the The percent change in rates is the franchise fee, is first determined based on amount that rates must be either raised to the following calculation: generate revenues sufficient to eliminate any Shortfall/Surplus Prior net shortfall or lowered so that no net to Franchise Fee surplus occurs. The projected amount of Line 13 Revenue requirement revenue generated during the base year from (without franchise fee) the sale of recycled materials was calculated [equal to total in Step 3; therefore, any change in revenue required must come from an increase or allowable costs (Line 6} decrease in residential and commercial/light plus allowable industrial rates. operating profit(Line 8) plus total pass The percent change in existing rates is through costs without calculated as follows: franchise fees (Line 12) Shortfall/Surplus Prior Less Line 21 Total revenue to Franchise Fee Equals Line 22 Net residential surplus/ Line 24 Net surplus/shortfall shortfall, without Divided franchise fee by Line 25 Total residential and commercial/light industrial revenue Next the franchise fee calculated in Line 23 is without change added to the surplus/shortfall in Line 22 to Eels Percent change in rates. get the total net surplus/shortfall (Line 24). This number is used to calculate the percent The percent change in rates is entered on change in existing rates. line 26 of the application. Contra Costa County Page 111-17 III. Base Year Hate Setting Methodology Preparation Of Summary Form Responsibility. Franchise Hauler Timing: Prepared during Step 1 of the Base Year Rate Change Process (Refer to Section H-A) Tasks: a. Calculate New Rates b. Sign and Submit the Application Description of Tasks a. Calculate New Rates This simplifies record keeping for the The rate change identified on page 1, franchise hauler and should not make a line 26 should be entered on page 6, line 78 material difference to customers. The of the Base Year Rate Change Application. adjustment required to reach the nearest five Current rates for residential solid waste cent increment should be calculated and collection should be entered in the first entered in the third column. To determine column of page 6 of 6. The adjusted rates new residential rates,column two should be then are calculated by multiplying the added to column three and the result should current rate by one plus the rate increase be entered in column four. This column identified in line 1. These adjusted rates are provides the new rate schedule. entered in the second column. Page 6 of 6 of the application is designed b. Sign and Submit the Application for use by each of the unincorporated An authorized representative from the County areas. The top left of this page has a franchise hauler should sign and date the space for the hauler to indicate which application. This signature provides a geographic area the rate change is to apply certification of the franchise hauler that the to. In the future, should the County adopt a application is complete, accurate, and uniform rate structure across these consistent with the 'instructions provided in geographic areas, this form may be used for this manual. The hauler should submit to the entire County. the County one reproducible hard copy, 15 The adjusted rates are rounded up or bound hard copies, and one copy on disk of down to the nearest five cent increment. the completed Base Year Rate Change Application. Contra Costa County Page 111-18 .......................................................................................................................................................................................................................................................................................................................... Ill. Base Year Rate Setting Methodology B. Survey of Rates in Similar Areas While all questions in the survey provide As a check of the reasonableness of valuable comparative information, there are existing and new refuse collection fees, a several key questions including: survey of rates in similar communities ❑ Monthly rates for a range of should be conducted during each base year residential service (once every four years). This survey covers ❑ Monthly rate for standard a variety of topics including: commercial and light industrial Residential service services (e.g., once-a-week pick-up ❑ Commercial service of a three yard bin) ❑ Rate setting process ❑ Tipping fees for transfer station and disposal services ❑ Tipping fees ❑ Operating ratios. ❑ Profit methodologies. After the survey has been conducted, the The survey is conducted by County staff results are summarized for comparison with during base year process Step 5. Exhibit the franchise hauler's rate application. This III-3, following this page, is a sample survey summary is included as an attachment to the form. The survey should be conducted by Final Report and Recommendations telephone instead of by mail. A minimum of package, as described in Section II-A, Step six cities should be contacted. These cities 6. This information also is used in the should be located in the East San Francisco evaluation of the franchise hauler's Bay Area, and should be similar in size and application. demographic make-up to unincorporated Contra Costa County. Contra Costa County Page 111-19 Ill. Base Year Rate Setting Methodology EXHIBIT 111-3 PAGE I OF 3 Contra Costa County Page 111-20 .................................................................................. .................. ....................... ........ .................... ............. ...................................................... Ill. Base Year Rate Setting Methodology EXHIBIT 111-3 PAGE 20F3 Contra Costa County Page 111-21 .......................... ........................................................... .......................................... .....................