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HomeMy WebLinkAboutMINUTES - 06031997 - D3 Contra TO: BOARD OF SUPERVISORS Qosta FROM: HARVEY BRAGDON DIRECTOR OF COMMUNITY DEVELOPMENT DATE: JUNE 3, 1997 SUBJECT: APPROVE AND AUTHORIZE THE COMMUNITY DEVELOPMENT DIRECTOR TO EXECUTE A CONTRACT TO DEVELOP A SOLID WASTE RATE SETTING PROCESS AND RATE SETTING METHODOLOGY MANUAL FOR UNINCORPORATED AREA OF THE COUNTY SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: AUTHORIZE the Community Development Department Director or his designee to execute a contract with NewPoint Group to develop a solid waste rate setting process and methodology manual. The amount of expenditure will be $25,000. FINANCIAL IMPACT: The County General Fund may need to advance funds to accomplish the project. Costs will be funded by future Franchise Fees or pass through costs to be paid by rate payers. CONTINUED ON ATTACHMENT: X YES SIGNATURE: C p _RECOMMENDATION OF.COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON June 3, 1997 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS X UNANIMOUS(ABSENT ---------- 1 HEREBY CERTIFY THAT THIS IS A TRUE AND AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Linda Moulton (510) 335-1238 cc: Community Development Department(CDD) ATTESTED June 3. 1997 PHIL BATCHELOR,CLERK OF THE BOARD OF SUPERVISORS AND Y ADMINISTRATO Attachment B4risE mpler LM:rw RLM1:manual.7bo Board Order Execute a contract to develop a solid waste manual June 3, 1997 -Page 2- BACKGROUND/REASONS FOR RECOMMENDATIONS: Since the County does not have an adopted solid waste rate setting methodology and process to facilitate possible rate reviews and because Browning-Ferris Industries (BFI) has requested a rate review, the County Ad Hoc Solid Waste Committee directed the Community Development Department to ask for a proposal from a consultant to prepare a rate setting process and methodology manual that can be used in unincorporated areas of the County. The City of Concord had a rate setting process and methodology manual for residential Solid Waste Fees prepared in February, 1993 and recently completed a rate review for Garaventa Enterprises using the process and manual. Ernst & Young created the process/manual for the City in 1993 and NewPoint Group/Ernst & Young used the procedures to complete the rate reviewing in March of 1997. NewPoint Group/Ernst &Young has submitted a proposal for creating a methodology and manual which would be adapted to the County's needs. They have presented us with a project work plan which would include the following tasks: Task 1 Initiate and Administer the Project Task 2 Review Current Rate Setting Policies & Practices Task 3 Clarify Rate Setting Objectives and Policies Task 4 Develop Rate Setting Process and Methodology Task 5 Develop Rate Setting Procedures and Tools Task 6 Prepare Draft and Final Rate Setting Manual A copy of the NewPoint Group's proposal and a copy of BFI's letter requesting a rate increase are attached. The proposal discusses the proposed tasks in detail. At their April 30, 1997 meeting the County Ad Hoc Solid Waste Committee directed the Community Development Department to present the proposal to the Board of Supervisors and to obtain authorization to enter into a contract with NewPoint Group. LM:rw RLM1:manual.7bo May-05-97 03: E0P NEWPOINT GROUP filo 338 0104 P.02 NewPOInt Group Monogement Consultants May 5, 1997 Ms. Linda Moulton Community Development Department Contra Costa County County Administration Building 651 Pine Street 4m Floor,North Wing Martinez,California 94553-0095 Subject: Solid Waste Rate Setting Manual Consulting Assistance =. Dear Ms. Moulton: Thank you for considering NewPoint Group,Inc. for your solid waste rate setting consulting needs in the unincorporated portion of Contra Costa County(County). We are familiar with the County's franchises with Garaventa Enterprises and Browning Ferris industries(BFI,aka Pleasant Hill Bayshore Disposal,Inc.),hereafter collectively referred to as the haulers. Having recently completed a rate review and franchise extension evaluation of Concord Disposal Inc. for the City of Concord,we also are aware of the dynamic history of the County's waste management collection and disposal issues. We understand that you would like to prepare a rate setting process and methodology manual that can be used for rate setting in certain unincorporated areas of the County. The intent of this letter is to describe NewPoint Group's rate setting methodology manual and to provide our workplan for completing such a manual for the County. A. Our Rate Setting Process and Methodology Manual Our firm's Solid Waste Rate Setting Process and Methodolo8y Manual is a comprehensive,step-by-step guide to refuse collection rate setting. The manual's contents represent the result of extensive research and development by our firm into state- of-thc-art waste industry approaches and methods;other jurisdiction's refuse collection rate setting processes and methodologies; historical utility rate setting practices;relevant California and Federal regulations;and practical business experience with local governments and private sector hauling companies. Our manual is presented in a graphical and"user friendly"format. We intend to make the rate setting process simple and easy to understand for all parties,including the ratepayer, County staff,Board of Supervisors,and franchised haulers. Simultaneously,we would create a process and methodology that will produce reasonable and justifiable rates that • 555 caplloi Ma11,$Vito 650.sovarnento.C011fornio 9b$14 • Phone:(9)0)449.3400 • fox:(9 16)446-8149 ,May-05-97 03:51P NEWPOINT GROUP 510 338 0104 P.03 NewPoint Group Management Consultants Ms. Moulton Page 2 May S, 1997 are fair and equitable to County's ratepayers and provide a reasonable return to the hauler. NewPoint Group will work closely with the County to customize our manual as required to reflect your County's specific goals,processes,and constraints. We do not apply a boilerplate rate setting approach for a generic solution. As you are aware,our Rate Setting Process and Methodology Manual for Residential Solid Waste Fees originally was developed for the City of Concord and has been . successfully implemented and used for the past four years. Employing a process of continuous improvement, we follow up on the manual's implementation in Concord and other jurisdictions,and are constantly fine tuning its contents using feedback from actual users. Key features of our manual's approach arc as follows: O Identifies key goals and policies Q Outlines roles,responsibilities,and timelines O Includes a format and content for a survey of neighboring jurisdictions ❑ Provides forms and detailed procedures for completing forms 0 Encompasses both a base year process and an interim year process to make rate setting more efficient. B. Project Work Plan This section presents our workplan to assist the County in developing a solid waste rate setting policies and procedures manual. Our work consists of the following seven tasks which are described below: Task 1 Initiate and Administer the Project Task 2 Review Current Rate Setting Policies and Practices Task 3 Clarto Rate Setting Objectives and Policies Task 4 Develop Rate Setting Process and Methodology Task 5 Develop Rate Setting Procedures and Tools Task 7 Prepare Draft and Final Rate Setting Manual. Task 1 Initiate and Administer the Project At the formal kick-off meeting with the County's project manager we will verify the project's scope and objectives,discuss key project issues,and obtain additional May=05-97 03:51P NEWPOINT GROUP 510 338 0104 P.04 NewPOint Group Management Consultants Ms. Moulton Page 3 May 5, 1997 background information. During this kick-off meeting we will schedule appropriate follow-up meetings,establish points of contact,and gather key information required for conducting the review. We will prepare monthly progress reports,which will summarize work completed in the prior month,work planned for the next month,and any problems which may have arisen. NewPoint Group also will prepare monthly invoices which summarize level of effort and charges to-date. Subtasks 1.1 Conduct Project Kick-off Meeting 1.2 Request Relevant Documents and Data 1.3 Coordinate Initial Interviews with the County and Haulers 1.4 Refine Work Plan,if Necessary 1.5 Revise Project Schedule as Needed 1.6 Perform Ongoing Project Management 1.7 Prepare Monthly Written Status Reports Deliverable(s) O Revised Work Plan,if Necessary O Monthly Progress Reports, Task 2 Review Current Rate Setting Policies and Practices In this task,we will review background documentation,interview personnel from the County and the haulers,and review financial information in order to understand current policies,practices,and procedures. Completion of this task assumes access to hauler financial information for the current and previous fiscal years,including documents such as company organization charts,income statements,balance sheets,tonnage and volume statistics,staffing levels,residential and commercial accounts served,and supporting workpapers. We will work closely with the County to maintain confidentiality of specific financial information(to be defined)while at the same time obtaining and understanding of financial,management,and operational characteristics. May-:05-97 03: 51P NEWPOINT GROUP 610 338 0104 P.05 NewPoint Group Management Gonwrtorft Ms. Moulton Page 4 May 5, 1997 Subtasks 2.1 Interview County and Haulers 2.2 Analyze Current Ordinance and Franchise Agreements 2.2 Determine General,Financial,Management,and Operations Information Required from the Maulers 2.3 Conduct a Review of Hauler Financial,Management,and Operations Information and Accounting Practices Dellverable(r) © Workpapers on Past Practices,Operations,Financial Information,and Accounting Practices Task 3 Clarify Rate Setting Objectives and Policies During this task, we will work with County staff to clarify and update the County's waste management policies. This process will begin with a review of both formal and informal goals related to solid waste management. Based on a review of internal documents and the interviews conducted in Task 2,we will document our understanding of the County's solid waste management goals and corresponding policies. We then will identify alternative goals and policies. Regulatory,financial,and political requirements will play a major part in determining County rate setting policies; however,within these constraints,there exists the ability to structure rates that will provide incentives and disincentives to the ratepayer and the hauler(s). The rate setting policies for the County must be in accordance with goals adopted by the County and State,and must result in economical solid waste collection and disposal services to residential and commercial customers while meeting the County's revenue requirements. Changes to the current rates and rate structure must be understandable,defensible,and easy to explain. Subtasks 3.1 Identify Waste Management Coals 3.2 Document Rate Setting Policy Issues 3.3 Identify Alternative Methodologies for Setting Rates 3.4 Identify Operational and Performance Statistics to be Submitted by Haulers 3.5 Develop General Procedural and Information Requirements for Ratc Reviews May=OS-97 03: 61P NEWPOINT GROUP 610 338 0104 P.06 NewPoint Group Nk=Remont Cori ttonts Ms. Moulton Page 5 May 5, 1997 3.6 Review Alternative Methods and Requirements with the County and its Haulcrs(s) 3.7 Document Final Rate Setting Objectives and Policies Deltverable(s) ❑ Alternative Methods and Requirements for Rate Review O Rate Setting Policies. Task 4 Develop Rate Setting Process and Methodology In this task,we will begin developing procedures to implement the rate setting policies by determining the broader concepts of the process and methodology. The rate setting process addresses what tasks must be completed,who is responsible for these various steps in each task,and when each task should be completed. The rate setting methodology describes how the rate setting process is accomplished. Generally,the following activities are part of it rate setting process: ❑ Preparation and Submission of Rate Application ❑ Identification of Required Support Documentation,including Financial and Operational Information O Verification of Completeness of Rate Application ❑ Detailed Review of Rate Application ❑ Survey of Rates in Similar Service Areas O Preparation of Draft and Final Reports,Including a Public hearing O County Approval and Implementation of New Rates,if Applicable. Various methodologies can be considered in the rate setting process,including the use of actual and projected data,the determination of key ratios and factors for analysis purposes,and the normalization of data using survey results from similar service areas. We will present a proposed methodology for the County's review. The recommendation will include options to address the cost of future activities(e.g,meeting waste reduction requirements)in the rates, Further,we will work with the County to try and develop a methodology that is flexible to accommodate County regions with difl'erent service levels and cost structures. May-05-97 03:52P NEWPOINT GROUP 510 338 0104 P.07 NewPoSnt Group Management C ormiltants Ms.Moulton Page 6 May 5, 1997 Subtasks 4.1 Develop Activities for Processing Rate Change Requests 4.2 Determine Responsible Parties and Timing Requirements 4.3 Review Activities,Responsibilities,and Timing with the County and Haulers 4.4 Revise Activity Listing,as Necessary 4.5 Determine General Requirements for Compilation and Analysis of Data Deliverabk(s) ❑ Activity Listing with Assigned Responsibilities and Timing ❑ Overview of Key Data Requirements and Analysis Steps. Task 5 Develop Rate Setting Procedures and Tools In this task,we further develop,the activities determined in Task 4 into procedural steps and prepare reporting formats and worksheets. These formats and worksheets will need to be in sufficient detail to facilitate the compilation of data and to allow reconciliation of data to audited financial statements,yet be simple to use and understand. Again, input from both the County and haulers will be very important in this task. To calibrate and test the procedures,reporting formats,and worksheets,we will perform a "live test"using sample,historical financial data provided by one of the haulers. Testing will allow us to ensure that the methodology is technically sound. Any problems identified during testing will be reviewed and resolved,as appropriate. Suhlask s 5.1 Develop Procedural Step Outline for Each Task Identified in Task 4 5.2 Prepare Reporting Formats and Worksheets 5.3 Review Procedure Outline,Reporting formats,and Worksheets with the County and Haulers 5.4 Test Reporting Formats Using Sample, l listorical Financial Data and Recommend Procedures 5.5 Identify and List Difficulties Encountered in Completing the Test 5.6 Prepare Recommendations for Addressing Difficulties 5.7 Finalize Forms and Worksheets. May-06-97 03: 62P NEWPOINT GROUP 610 338 0104 P.08 NewPOInt Group Monogernent Consultonis Ms. Moulton page 7 May 5, 1997 Deliverable(s) O Procedure Manual Outline ❑ Standard Forms and Worksheets. Task 6 Prepare Draft and Final Rate Setting Manual In this task,we will prepare the draft and final Rate Setting Manual. We will consider input from County staff and the haulers. The result should be a document that will serve as a step-by-step guideline in future years and be acceptable to all parties. Our goal for this Rate Setting Manual is to provide a clear,easy-to-read,and user-friendly tool to set rates. The manual should stand on its own and permit future rate setting efforts to be accomplished by the County with a minimum of time and effort. Further, it should be adaptable to other portions of the unincorporated area. NewPoint Group has developed tools and processes which will make such a document clear and helpful. Once we complete a final draft of the Rate Setting Manual, we will present this document to the County during a scheduled meeting. Our presentation also will include an "Executive Level"discussion of the rate setting process and methodology. Comments received from the County and haulers will be incorporated into the manual,as appropriate. After the presentation to the County,we will prepare the final Rate Setting, Manual. Subtaskr 6.1 Document the Formats and Procedures Developed in Task 5 6.2 Review Draft Rate Setting Manual with the County and Haulers 6.3 Revise Manual,as Necessary 6.4 Submit Draft Rate Setting Manual 6.5 Present Final Draft Manual to the County 6.6 Revise Final Draft Manual,as Required,and Submit Final Rate Setting Manual. Deliverable(s) O Draft Rate Setting Manual O Presentation Materials for County Meeting ❑ Rate Setting Process and Procedures Manual. May--05-97 03:52P NEWPOINT GROUP 510 338 0104 P.09 NewPo71nt Group Morwpement CormultaMs Ms. Moulton Page 8 May 5, 1997 C. Fixed Price We will conduct this engagement for a not-to-exceed fixed price of$25,000. Our fees reflect expenses for administration,word processing,and production. Our fees do not include time for formal status meetings. We expect to visit the County for interviews and to conduct research and frequently will keep the project manager informed of our progress. However,if it is necessary to conduct additional formal meetings with County management or the Board of Supervisors,we would bill for these additional meetings on a time and materials basis. NewPoint Group will bill monthly for our services. We will include a progress report with each billing. D. Schedule Our understanding is that the County is expecting to,or has recently received,an application fmm one of its haulers for a rate change. You have indicated that you need a process and methodology in place prior to conducting a review of this hauler's request. Therefore,to allow a timely response to the hauler's request,we intend to complete this project within eight weeks of the project start date. Timing on this project is dependent upon the full cooperation of the haulers. Should we encounter delays in obtaining information or conducting interviews, our timeline likely will adjust accordingly. We will notify you of any delays and will make every effort to complete the project on time. � rt • � e « We recognize that often when a long-term franchise agreement is already in place, adjusting provisions of an agreement is difficult,if not impossible. It appears that currently 13171 and Garaventa Enterprises may be agreeable to adopt anew rate setting manual and thus the County may have a rare window of opportunity. Due to the changing nature of the waste management industry,we recommend that the County seize this opportunity to pursue a sound rate setting process and methodology. May-05-97 03:52P NEWPOINT GROUP 510 338 0104 P. 10 NewPolnt Group Management Consultants Ms.Moulton Page 9 May 5, 1997 We look forward to the opportunity to assist Contra Costa County with its future waste management rate setting needs. Please do not hesitate to contact Dr. Jim Gibson in Sacramento at(916)449-3510 should you have any questions regarding this workplan or our qualifications to serve you. Very truly yours, NEWPOINT GROUP INC. ► rE l"a COSTA 97 MAR 20 PM 2: 1.8 C:Qt;�•;U��i�Y DEVEOPMENT.DEPT March 19, 1997 Mary Fleming Solid Waste Manager Contra Costa County 651 Pine Street, 4th Floor- North Wing Martinez, CA.94553-0095 Re: BFI Rate Increase Request. Dear Mary: BFI of Contra Coata County is requesting a rate increase on the garbage collection and recycling being performed under the franchise contract with the County. Please advise me on the application process and methodology that will be required for a rate change in our service area. If you have any questions, please feel free to call me at 468-1017. Very truly yours, Ken Etherin to Manager Bar Area Franchise Contracts Golden Gate Division•6601 Owens Drive•Suite 250•Pleasanton,California 94588 Fax 510-468-1120 30%Pwt-Consumer