HomeMy WebLinkAboutMINUTES - 05222007 - SD.10 i
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Contra
TO: BOARD OF SUPERVISORS
Costa
FROM: Dennis M. Barry, AICP County
Community Development Director
DATE: May 22, 2007
SUBJECT: RATE INCREASE FOR SOLID WASTE COLLECTION IN THE UNINCORPORATED AREAS
SERVED BY GARAVENTA ENTERPRISES UNDER THE COUNTY'S FRANCHISE
AGREEMENT
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
1. ACCEPT report from NewPoint Group dated April 30, 2007 regarding their review of the
Base Year Rate Application submitted by Garaventa Enterprises (EXHIBIT A).
2. APPROVE changes to"Rate Setting Process and Methodology Manual for Residential
Solid Waste Charges" as applied to Garaventa Enterprises.
3. APPROVE residential and commercial solid waste collection rate increase of 6.44%for
customers in the unincorporated areas served by Garaventa Enterprises under the
County's Franchise Agreement.
FISCAL IMPACT
No impact to the County General Fund.
BACKGROUND/REASONS FOR RECOMMENDATIONS
The County has a solid waste collection Franchise Agreement with Garaventa Enterprises
(Garaventa) for service to the following unincorporated areas:
Bay Point (portion*)
Brentwood, unincorporated
Oakley (portion**)
Discovery Bay
Knightsen
* Portion of Bay Point falls within the area served under the County's Franchise with Pleasant Hill Bayshore Disposal
** Portion of Oakley falls within the area controlled under the Ironhouse Sanitary District Franchise
CONTINUED ON ATTACHMENT: X YES SIGNATURE
_✓RECOMMENDATION OF COUNTY ADMINISTRATOR _ RECOMMENDATION OF BOARD
COMMITTEE
'APPROVE OTHER
SIGNATURES :
ACTION OF BO DONao 7 APPROVED AS RECOMMENDED O R
crf- °D:jf�-„moi
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS (ABSENT AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS O I THE DATE SHOWN.
Contact: Deidra Dingman (925/335-1224) ATTESTED 60
cc: Community Development Department (CDD) JOHN VILLEN, CLERK OF THE
County Counsel — L. Fujii BOARD OF SUPERVISORS AND
Garaventa Enterprises (via CDD) OUNTY ADMINISTRATOR
BY , DEPUTY
G:\Conse"ation\Bryn\Franchise\Franchise-BS\GE\2007 Rates\BO-GE Base Year Rate Increase 2 .doc
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Changes in Solid Waste Collection Rates Charged by Garaventa Enterprises
May 22, 2007
Page 2
BACKGROUND/REASONS FOR RECOMMENDATIONS (continued)
NewPoint Group Review
The County entered into an agreement with NewPoint Group to review the Base Year Rate
Change Application submitted by Garaventa. The result of NewPoint Group's review is
contained in their report dated April 30, 2007, which is attached as EXHIBIT A. NewPoint
Group conducted their review consistent with the applicable provisions of the Rate Setting
Manual approved by the County for use in the Garaventa Service Area and the
recommendations resulting from this review are detailed in Section IV of the report.
The Base Year Rate setting process occurs every four years. This process requires that a
detailed rate change application be submitted by the hauler along with the most recent
financial audit and supplemental financial and operational information. Using the detailed
financial data provided, New Point reviews several cost categories to determine the
appropriate rate adjustment. The major cost categories include:
• Direct Labor Costs
• Tipping Fees
• Corporate and Local General and Administrative Costs
• Household Hazardous Waste Program Costs
• Trucking and Equipment
• Allowable Profit
• County's Franchise Fee
Between Base Years, the hauler is permitted to request Interim Year Rate Adjustments.
The Interim Year Rate Review is less rigorous than that carried out in a Base Year. The
Interim Year Adjustments are calculated based on a weighted increase in controlled and
uncontrolled costs, including tipping fees, regulatory charges and Consumer Price Index
adjustments. Special extraordinary cost increases are also taken into account.The hauler
is not required to submit audited financial data with the interim year rate application.
Proposed Changes to Rate Setting Manual
The Rate Setting Manual specifies that new rates are to be rounded up or down to the
nearest five cent increment. Staff recommends that proposed rates no longer be rounded
to the nearest five cent increment, effective immediately (no rounding included in this
recommended rate increase). Staff anticipates that no longer rounding rate changes will
help avoid potential concerns and confusion resulting from discrepancies between the
actual rounded amount charged to customers and the exact amount calculated based on
the percent increase recommended and approved.
NewPoint recommends a modification to the Base Year Application that is included in the
Rate Setting Manual. In order to have the fees associated with Household Hazardous
Waste (HHW)services correctly classified, NewPoint suggests the Application be changed
with the removal of the"County Administrative Fee" line and the addition of a "HHW Fees"
line. The 2003 and 2007 Base Year Reviews have shown that the County Administrative
Fee line is not necessary because these costs are internalized by the hauler and
represented in other cost categories. The HHW costs should be reflected as a separate
line item to ensure they are treated as a pass through cost.
History of Solid Waste Collection Rate Increases
Below is a brief summary of rate increases approved by the County over the past several
years in the Garaventa Service Area:
2003: Base Year Rate Application -average residential &commercial rate increase of
7.66% and residential rates were standardized
2004: Interim Year Rate Application — average commercial rate increase of 11.79%
(actual increases ranged between 2% - 25% depending on the level of service)
and commercial rates were standardized
2005: Interim Year Rate,Application - residential and commercial increase of 3.89%
2006: Interim Year Rate Application - residential and commercial increase of 2.69%
Sold
Changes in Solid Waste Collection Rates Charged by Garaventa Enterprises
May 22,2007
Page 3
Proposed Solid Waste Collection Rate Increase
Garaventa has proposed to increase residential and commercial rates in their
unincorporated service area.The Base Year Application submitted by Garaventa requested
a rate increase of 11.02%. The NewPoint Group made specific adjustments to costs
reflected in the Application and,thus, recommends a 6.44% rate increase.The adjustments
reflect the reductions in the amount of revenue required to cover allowable costs, profit
levels and pass through costs.
The below table summarizes the existing and recommended residential solid waste
collection rates.
Monthly Residential Solid Waste Collection Rates
Level of Service Existing Rate 6.44%Increase Recommended
in Rate Rate
20-gallon can/cart $20.55 $ 1.32 $21.87
Up to 40-gallon can/cart $25.40 $ 1.64 $27.04
Over 40-gallon can/cart' $25.50 $ 1.64 $27.14
" Customers have the option of renting a 90-gallon cart for an additional $3.00 per month rather than
purchasing their own.
The recommended 6.44% increase would also apply to commercial and light industrial
customers served by Garaventa under the County's Franchise Agreement.
ATTACHMENTS
Exhibit A—Report from NewPoint Group dated April 30, 2007
G:\Conservation\Bryn\Franchise\Franchise-BS\GE\2007 Rates\BO-GE Base Year Rate Increase 2007.doc
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EXHIBIT A
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Contra Costa County
C;ommmnity Development Department
Review of Garaventa Enterprises
Solid Waste Rate Application
For 2007
Garaventa Enterprises
April 30, 2007
i
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517•/d
Review of
Solid Waste Application
For 2007
Final Report
April 30, 2007
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Table of Contents
Table of Contents
-Executive Summary....................................................................................................................... ES-1
L Introduction and Background
A. Background of Review...............................................................................................I-1
B. Goals and objectives of Review................................................................................1-4
C. Scope of Re:vievv..................... . ................... ....................,............,,...,.,.,.............I-4
II. Rate Setting Process
A. Base Year Process..................................................................................................... 11-1.
B. 2007 Base Year Rate Application...........................................................................II-2
C, Interim Year Process................................................................................. .........._11-2
III. Review of hate Change Application for 2007
A. Review of Revenues. Costs and Profits.................................................................II14
B. Components of Single Can .Rate..........................................................................111-1
IV. Recommendations
A. Recommended Rata: Change........... ..................................................................IV-I
B. Comparisons of gates and Services to CatherJurisdictions................................IV-1
C. Recommendations for a Change to the Model....................................................AV-3
D. Automation of Collection Services ........................................................................I V-3
Appendix A —2007 Garaventa Enterprises Rate Application..................................................... A-1
AppendixB—Audited Financial Statements..................................................................................B-1
Appendix C—Adjusted Base Fear Rate.Model............................................................................ C-1
TOC - I
Review of
Solid Waste Application
List of Exhibits, Tables and Figures
Executive Summary
Table ES-1, Impact of'Proposed Rate Increase on
Current 40-G'alion Residential Rates.........................................................I SA
1. Introduction and Background
Exhibiti-I Garaventa Enterprises Unincorporated East Contra Costa County
RefuseCollection Service Areas................................................ ................... 1-2
Table 1-1 2003 Unincorporated County Basic 40-gallon Monthly Service Rate........ 1-3
Table 1-2 2006 Unincorporated County Basic 40-gallon Nlonthh, Service Rate........1-3
It. Rate Setting Process
Table 11-1 Averaoc Percent Rate Increases 12003 to 2006)......................................... 11-2
111. Review of.Rate Change Application for 2007
Table 1114. Revenue Requirement(200.3 to 2007) ........................................................111-2
Table 111-2 Primary Components of Requested Rate Increase...................................III-2
Table 111-3 Impact of NewPoint Group Findings on Net Shortfali.............................111-3
Table 111-4 Tipping Fee Rates (2003 to 2007) ...............................................................111-6
1�
Table 111-5 Comparative Tipping Fee Rates of Neighboring
Transfer Stations ./Landfills (20061)....................................................... 111-6
Table 111-6 Summary of Adjustments to Corporate and Local G&A Costs..............111-7
T able 11.1-7 Lstimated G
.1araventa Profit Le-vels (200" to 2006).................................111-11.
Table 111-8 Pubiiely-held Waste Management Companies' Operating Ratios........111-12
Table 1II-9 Privateh-held Waste 'Management Companies' Operating Ratios......111-.13
Table 111-10 Sannnar� of Ne-vi-Point Group Adjustments to
Fear 2007 Revenue.Requirement............................................................11.1-13
Table III-11 Summary of Adjustments to Garaventa
Revenues and I"xpenses (2007) ................................................................. 111-14
Figure 1114 C."otuponents of the Single 40-Callon ("an Rate.......................................111-16
Figure 111-2 Comparison of Average Singie Can Rate with
CM-Adjusted Average Single Can Rate(1995 to 20074........................:111-16
IV. Recommendations
Table.W-1 Impact of Proposed Rate Increase on Current 404-y'allon
Residential ........................................... .................................-- IV-1
Table IV-2 Comparative Residenvial, Coninjerciai, and Industrial Rates.................1V-2
TOC - 2
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Executive SummarY
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Executive Summary
Executive Summary
In its 2007 Base Year Rate Change Based upon adjustments made to the
Application (Application), Garaventa Enterprises Application,NewPoint Group recommends a
(Garaventa), requested an increase in solid waste 6.44 percent rate increase. This rate increase
collection rates of 11.02 percent. Garaventa reflects reductions to the amount of revenue
submitted this Application in 2006 for rates to go required to cover allowable costs, allowable
into effect in the rate year 2007. profit levels, and pass through costs (called the
revenue requirement) of$143,690. Primary
Contra Costa County (County) engaged categories adjusted include: trucking and
NewPoint Group to review the Application. This equipment, direct labor, and corporate and local
report presents the results of the review. The general and administrative costs. Total revenue
review performed was consistent with the was also increased by $155,943 as a result of a
County's 1998 Rate Setting Process and reduction in the allowance for bad debt. The
Methodology Manual for Residential Solid Waste total impact of adjustments is a reduction in the
Charges as Applied to Garaventa Enterprises net shortfall for 2007 of$299,633 ($143,690+
(Manual). $155,943). This 6.44 percent increase is 4.58
The.review focused on calendar year 2005 percent below that requested.
actual information, 2006 estimated information Table ES-1, below, shows the impact of the
(based on 6 months of actual information), and rate increase on the 40-gallon rate across the
2007 projected information. We also relied on County areas. The resulting rate increase would
audited financial statements provided by range from $1.53 to $1.64 per customer per
Garaventa for calendar year 2005. month.
Garaventa provides serviceto the following 'fable ES-1
six (6) geographic areas located with the County:. Ent;tact of Proaposed Rate Increase on
• Bay Point Current 40-Gallon Residential Rated"
• Brentwood „
• Byron Sanitary District
• Discovery Bay Bay Point, $ 25.40 $ 27.04 $ 1.64
• Ironhouse Sanitary District Brentwood 25.40 27.04 { 1.64
i
• North Concord—unincorporated areas. Byron Sanitary 23.80 25.33 1.53
District
Four of these areas (Bay Point, Brentwood, Discovery Bay 25.40 27.04 i 1.64
Discovery Bay, and North Concord) currently lronhouse I `,
have the same rates. Byron and Ironhouse Sanitary District 24.75 26.34 1.59
Sanitary Districts have different rates.
(a)For 90-gallon toter service,there is an additional
monthly toter rental charge.
E:S-1.
SJ> !o
Review of'
Solid `'Waste Rate application
From our survey of surrounding jurisdictions, There have been some indications that the
residential rates in the County are amongst the County and Garaventa would like to consider
highest(on a weighted average basis) of 11 areas automation of refuse collection services for
surveyed. Part of the reason that County County operations. We would recommend that
residential rates may be higher than other the County and Garaventa work toward
jurisdictions is that the County has a lower automating services to County areas within the
density of residential customers than other next four years, or before the next base year.
neighboring areas.
ES d
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I. Introduction and Background
L Introduction and Background
Contra Costa County (County) contracted Garaventa provides service to the following
with NewPoint Group, Inc. to help conduct this six (6) geographic areas located within
2007 rate review of one of its municipal solid unincorporated Contra Costa County:
waste collection haulers, Garaventa Enterprises, 1. Bay Point(part of Bay Point)
Inc. (Garaventa). Garaventa is a privately-owned 2. Brentwood
company located in Concord, California. This
3. Byron Sanitary District areas
report represents results of the second base year 4. Discovery Bay
rate review of Garaventa. 5. Ironhouse Sanitary District areas
The review was performed according to the 6. North Concord—unincorporated areas.
guidelines provided in the County's 1998 Rate Exhibit I-1, on the next page, shows the
Setting Process and Methodology Manual for areas located within the unincorporated County.
Residential Solid Waste Charges as Applied to Garaventa has four subsidiary companies that
Garaventa Enterprises (Manual). The.Manual perform the actual collection activities for the
principally establishes a process for submitting first five service areas, noted above. These
applications for rate changes and for reviewing
companies.are:
rate change applications. The remainder of this
introductory section is organized as follows: ° Brentwood Disposal (Brentwood,Byron,
A. Background of Review Knightsen, other rural County areas)
B. Goals and Objectives of Review ° Discovery Bay Disposal (Discovery Bay
area)
C. Scope of Review.
Oakley Disposal'(Ironhouse Sanitary District
A. Background of Review area)
Garaventa has an exclusive franchise with the Pittsburg Disposal(Bay Point area).
County to collect, and remove for disposal and Concord Disposal Service(CDS)performs
recycling, all residential and commercial, and the refuse collection for the small North Concord
light industrial solid waste, including recyclable area. A total of approximately 30 County
materials. Garaventa has a twenty-year franchise customers are serviced by CDS in this area.
with the County, beginning with an effective date CDS rates are subject to rate review by the City
of May 9, 1995, and ending May 8, 2015. The of Concord and, as a result,the revenues and
County has jurisdiction to regulate collection, costs for this small area have not been included
removal, and disposal of all solid waste, and the in this County rate review. North Concord area
recycling of all materials. rates are set equal to City of Concord rates.
The County engaged NewPoint Group, Inc. Rates for all areas except for Ironhouse and
in 2006 to conduct this rate review using the Byron Sanitary Districts were unified as a result
Manual. The previous base year rate review was of a recommendation made in the 2003 Base
conducted in 2002. Year.
I-I
.1 as o7
Review of
Solid Waste Rate Application
Exhibit t-t
Garaventa Enterprises
Unincorporated East Contra Costa County Refuse Collection Service Areas
1
6 5
All
55,
yjx-
t '�:R
1. Bay Point ,
2. Brentwood 3�
3. Byron Sanitary District
1 6 ;
4. Discovery Bay
5. Ironhouse Sanitary District
6. North Concord
t-?
L Introduction and Background
Residential customers can either provide Table 1-2
their own can or, for a monthly charge, rent a 90- 2006 Unincorporated County Basic
gallon toter from Garaventa. In 2006, there were 40-gallon Monthly Service Rates
17,485 residential customers, of whom 95
percent rented toters from Garaventa. W
Tables I-1 and I-2, below, summarize the 1. Bay Point $ 25.50 ii 7.1%
basic service rates for County areas as of 2003 2. Brentwood 25.50 1 7.1%
and 2006 respectively. Table I-2 shows how 3. Byron Sanitary 23 80 20.8%
rates have changed since the last base year District(b)
review in 2003. 4. Discovery Bay j 25.50 7.1%
5. Ironhouse Sanitary 25.40 7.6%
Fable 1-1 District
2003 Unincorporated County Basic I
40-galloat Matathiy Service vtee Dates (a)For 90-gallon toter service,there is an additional
monthly toter rental charge.
(b)For a 32-gallon toter.
1. Bay Point $ 23.80 Curbside recycling services are provided to
2. Brentwood 23.80 all areas. Materials collected through the
3. Byron Sanitary District 19.70 curbside program include:
4. Discovery Bay 23.80 ® Aluminum
5. Ironhouse Sanitary District 23.60 Glass
#I and#2 Plastic
(a)For 90-gallon toter service,there is an additional Cardboard
monthly toter rental charge. Newspaper
Tin.
Customers place cardboard and newspaper in
one milk cart and all other materials in a second
milk cart. Milk carts are provided by Garaventa.
Since 2000, there has been greenwaste
collection service in unincorporated County.
Greenwaste is placed at the curb either in plastic
bags (up to five)or in 32-gallon customer-
provided containers (up to two).
Residential customers in the County can take
their Household Hazardous Waste (HHW)to the
Delta Diablo Sanitary District HHW facility.
Delta Diablo bills the County, Byron and
Ironhouse Sanitary Districts based upon the zip
I-3
/D
Review of
Solid Waste.Bate Application
code of the household (operators at the facility R Reconciled calendar year 2005 financial
record the zip code from the driver's license of information in the Application to the
each customer). financial audit
® Compared actual 2005 results with estimated
B. Goals and Objectives of Review2006, and projected year 2007 financial
The Manual specifies that the primary goal of results
the rate setting process and methodology is to
determine fair and equitable refuse collections Reviewed actual and projected revenues
charges which provide a reasonable profit level ° Analyzed significant historical fluctuations in
to Garaventa. Fairness is demonstrated through a major cost categories, and compared year-to-
rigorous review of Garaventa's actual revenues year changes in costs with the change in the
and expenses. Rate changes also must be Consumer Price Index(CPI)
justifiable and reasonable. Examined the relationships between financial
and operating information for reasonableness
There is no contractual obligation by the Analyzed trucking and equipment costs
County to provide the hauler with a charged
constitutional fair return through this review. Reviewed both salaried and hourly labor
process. Rather,the County reviews revenues,
costs as well as associated health and
costs, and profits as a basis for recommended
welfare, and workers compensation costs
changes to refuse collection charges. Charges
should be sufficient to cover costs of operations Benchmarked Garaventa against recently
and allow a reasonable profit to the hauler. published publicly-held and privately-held
financial results
C. Scope o1 Review Conducted a survey of rates in other similar
The scope of work for this project is based on nearby communities
requirements of the rate setting process a Determined components of the requested
documented in the Manual. The base year
change in rates
process describes eleven (l 1) steps, seven (7) of
which are the responsibility of the County. . Determined adjustments to the requested
Garaventa is responsible for the other four(4) change in rates.
steps. Our review does not represent a financial
audit of Garaventa. Blanding, Boyer&
NewPoint Group, as the Consultant, assumed Rockwell, LLP performed calendar year 2005
the role of the "County" in the rate review financial audits for Brentwood Disposal,
process (with the exception of Step 8 which is Discovery Bay Disposal, and Oakley Disposal.
conducting the Public Hearing). All income statement information used for this
The project team completed the following rate review was unqualified by the auditor.
activities during the course of the review: Pittsburg Disposal Service (Bay Point area)
® Verified the application was complete . did not have audited financial statements for
• Determined data presented in the application 2005. In lieu of an audit, Garaventa provided
were mathematically correct and consistent reviewed financial statements of Pittsburg
operations for 2005. These documents were used
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sv�o
I. Introduction and Background
to verify the information for Pittsburg contained
in the Application.
The remainder of this report addresses the
findings and recommendations of our 2007 base
year review of refuse collection rates in the
County. There are three report sections that
follow:
e Section II—Rate Setting Process
m Section III—Review of Rate Change
Application for 2007
a Section IV—Recommendations.
I->
Review of
Solid Waste.Rate Application
[This page intentionally left blank]
1-6
sw ro
. Rite Setting Process
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II. Rate Setting Process
II. date Settinri Process
On September 28, 1998, the County adopted retroactive rate adjustments except under
the Manual. The Manual was subsequently conditions of a party's default in the process.
updated on June 26, 1999. The Manual was
completed with assistance from NewPoint Two rate change processes exist: the base
Group,with input from Garaventa, and the year process, and interim year process. Each of
Ironhouse Sanitary District. Prior to adopting these processes is described below. This section
this Manual, no formal rate setting process or also summarizes the 2007 base year rate
methodology existing in the County. application. The remainder of this section is
organized as follows:
The first base year was in 2003. NewPoint A. Base Year Process
Group assisted the County with the base year B. 2007 Base Year Rate Application
review.
C. Interim Year Process.
Included in the Manual is a formal structure
A. Base Year Process
for establishing refuse collection charges. The
County elected to focus on residential garbage Base year rates are established every four
and curbside collection or recyclable materials, years. This 2007 review represents the second
and not focus its rate regulation on commercial base year review of Garaventa. At the time the
charges. Residential charges represent recovery Manual was completed in 1998,the County did
of allowable costs and a reasonable profit to the not conduct a base year rate review as rates had
hauler for providing refuse and curbside recently been adjusted for program changes. The
recycling collection services. first base year review was conducted in 2003.
The base year process requires that the hauler
The Manual establishes rate change policies, submit a detailed rate change application with the
provides application forms, specifies reporting most current financial audit and other supporting
formats, and identifies required supporting financial and operating data.
documentation. Procedures for requesting,
reviewing, and adopting residential rate changes This rate application is carefully reviewed
also are specified. and analyzed in accordance with formal step-by-
step procedures specified in the Manual. In the
The process is set up to (1) encourage long- base year, residential commercial, light
term rate stability and mitigation of rate impacts industrial, and curbside recycling costs are
to ratepayers, and (2)provide an incentive to the combined. However, residential, commercial,
hauler to improve operations performance so as and light industrial revenues are reported
to increase profitability. Thus, annual.CPI-based separately.
rate increases while allowed, are not encouraged
using this process. Also, there is no formal, or
conceptual, balancing account whereby projected
revenues and costs are "balanced"with actual
revenues and costs. Finally, there are no
II-I
s'aa-v7
Review of
Solid Waste hate Application
K 2007 Base Year- Rate Application C. lnterinr Year Process
The County received Garaventa's Base Year In each of the interim three years between
Rate Change Application (Application) on base years, rate changes follow a streamlined
November 1, 2006. A copy of the Application is process. Interim year rate changes are based on
provided in Appendix A. Garaventa provided the annual percentage change in a composite
calendar year ended 2005 audited financial index of the following three items:
results with the Application. Year-to-date Change in the most recent actual, not forecasted,
information (i.e., January I through June 30, San Francisco-Oakland-San Jose Metropolitan
2006) was used as a basis for the estimated 2006 Consumer Price Index, applied to specific costs
financial results. Finally, year 2007 results are of the franchise hauler(such as wages, salaries,
projected in the Application. payroll taxes,rent,and general and administrative
costs)
The Manual requires that applications
received after 1999 include audited financial Change in tipping fees and regulatory costs
statements for the most recently completed year. estimated to occur in the next interim year .
With its Application, Garaventa included 2005 An adjustment for the franchise fee, which is
financial audits for three subsidiary companies, based on a percentage of total revenues generated
Brentwood Disposal, Discovery Bay Disposal from residential and commercial services.
and Oakley Disposal. Copies of these audits
prepared by Blanding, Boyer& Rockwell LLP There have been three (3) interim year rate
adjustments since the last base year in 2003.
are provided in Appendix B. Garaventa operates
o
Table II-1, below, shows the average percent
n a calendar year ending December 31 basis.
rate increase for residential and commercial
The 2007 Application was carefully reviewed customers in each of the interim years.
and analyzed by NewPoint Group. The review
Table I1_I
was conducted in accordance with formal
Average Percent Rate Increases (2003 to 21906)
procedures specified in the Manual.
M
In the Application, Garaventa requested an
11.02 percent increase in rates based upon total. 2004 3.91% 6.02%
revenues (prior to a rate change) of$6,794,346 0 °
2005 4.20/0 2.97/o
and a revenue requirement(the amount of
revenue required to cover all costs, profits and 2006 1.96% 1.43%
fees) of$7,539,131. The Application showed a
net shortfall of$744,786.
11-2
1
t
HL Review of Rate Change
Application op- 2007
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III. Review of Rate Change Application for 2007
III. Review of date Change Application fair 2007
This section provides a summary of The Application showed a net shortfall of
NewPoint Group's review of Garaventa's $744,786.
Application for 2007. We identify our findings
and the impact of these findings on County This section describes NewPoint Group
ratepayers. This section also details major adjustments to the Application. Adjustments are
categories of revenue and costs. Findings from expressed based on their net impact(i.e.,
this section are translated into our including both cost impact and profit impact)to
recommendations for a rate change in the shortfall of$744,786. For example, if an
Section IV. allowable cost of$1,000 was reduced by $100 to
$900,the net impact to the shortfall would be a
A copy of the Application is provided in reduction of$111 ($100 /0.90).
Appendix A. NewPoint Group reviewed the
Application for consistency with the Manual, Table III-1, on the next page, shows the
County policies, and with waste management estimated revenue requirement for five years
industry practices. (2003 to 2007). The 2007 projected revenue
requirement is shown before any adjustments
In our review of Garaventa financial results, determined during this rate review process.
we compared year-to-year changes in revenues Since 2003, the revenue requirement has
and costs for reasonableness and solicited increased an estimated 22.4 percent.
explanations from Garaventa for material
changes. We examined actual,'audited results Table III-2, on the next page, shows the
from 2005, estimated results for 2006, and major components of the cost increases from the
projected results for 2007. Where ever possible, audit year (2005)to the projected base year
line item increases have been based upon the (2007).
2005 audit year and any increase supported by
documentation provided by Garaventa.
This chapter is organized into two sections:
A. Review of Revenues, Costs, and Profits
B. Components of Single Can Rate.
A.. Review of Revenues, Crests, ant]
Profits
Garaventa requested an 11.02 percent
increase in rates based upon total revenues (prior
to a rate change) of$6,794,346 and revenue
requirement(the amount of revenue required to
cover all costs, profits and fees) of$7,539,131.
IIl-I.
S.ZL 16
=ate-�7
Review of
Solid Waste Rate Application
'fable III-1
Revenue Requirement(2003 to 2007)
2003 $ 6,161,457
20046,336,645 2.8%
2005 6,639,541 -4.8%
2006 6,785,737 2.2%
2007 7,539,132 11.1%
�'1�jf13W
11 1 1 1
Table III- 2
Primat-v Components ofilequested Rate Increase
1
Increase in wages,payroll taxes,health and
Direct Labor welfare benefits,and pension plan costs - 0.6%
Decreases in workers' compensation costs
Tipping Fees Increases in tipping fee rate 4.8%
Re-allocation of operations management staff,
Office Salaries customer service staff,and administrative staff 89.7%
Rent New leased office space 24.0%
Trucking and CPI increase
Equipment Charges Increase in fuel costs 6.2%
Bad Debt Increased allowance for uncollectible accounts n16
For each of the cost categories, we reviewed shortfall reflect changes to revenues and changes
the estimates for 2006 and the projections for to costs. An increase in costs (or a decrease in
2007. We created a modified application based revenues) will lead to an increase in the shortfall.
upon reasonable adjustments to Garaventa's
Application. As a result of our adjustments,the net
shortfall for 2007 is $299,633 lower, and totals
A summary of the impact of NewPoint $445,154. The remainder of this section
Group's findings is provided in Table III-3, on describes our adjustments to revenues and
the next page. Findings are shown as expenses, and details each of our eight (8)
adjustments to the $744,787 projected net findings.
shortfall for 2007. Adjustments to the net
Ili-2
szl �
M. Review of Rare Change Application for 2007
`fable 111-3
Impact of NewPoint Uroup Findings on Net Shortfall
IN
rt ,
Allowable Costs
3
3
1. Direct Labor $ 9,416 $ 1,046 ; $ 10,462
2. Tipping Fees(capped at$45.00 per ton) (4,770) (530) i (5,300)
3. Corporate and Local General and Administrative Costs f (46,258) (5,140) ; (51,398)
4. Depreciation and Other Operating Costs(HHW Fee) (88,058) (9,784) (97,842)
Subtotal — $ (129,670) $ (14,408) c $ (144,078)
Pass Through Costs without Franchise Fees
5. County Administrative Fee ; $ (17,500) $ (17,500)
6. Trucking and Equipment (131,770) i (131,770)
I
Tipping Fees(Pass Through) 72;123 72,123
Household Hazardous Waste Fees 84,720 84,720
_ ... .__.... ........... .!.
Subtotal $ 7,573 $ 7,573
......e_.... _._.
Franchise Fees
7. Franchise Fees $ (7,185) $ $ (7,185)
Subtotal $ (7,185) $ (7,185)
......... __ :. _ ............
Bad Debt
8. Residential Bad Debt Allowance(a revenue item) ; $ (155,943) $ (155,943)
_i
Subtotal $ (155,943) i $ (155,943)
m �'.;�`.n a `� a011m °�tr�. "' " * a �,'j
� �yp3y�%'�d g,& 1 4frS s• ..
TC9"m.'Hr. om � "+£ ...'.,.
(a)The Application showed$744,786. The difference is due to rounding.
Revenuas not made any adjustments to the revenue amounts
We reviewed the projected revenues for 2007 in the Application.
to determine the reasonableness of the (Residential revenues
projections. We compared the projections with
historic trends in both tonnage and account Residential revenues (prior to the allowance
numbers. For 2007, the three revenue categories for uncollectible accounts) are projected to grow
in the Application are projected as follows: by approximately 3.0 percent between 2006 and
Residential $5,197,393 2007. In the Application, Garaventa provided
residential account and tonnage data. Residential
Commercial and light industrial $1,766,893 accounts and tonnage are expected to grow 3.13
Recycling$37,955. percent, and 0..8 percent, respectively between
For the three revenue categories, we found 2006 and 2007.
that the projections are reasonable and we have
111-3
SOLD
s-�a---a7
Review of
Solid Waste Rate Application .
Using this account and-tonnage data, we curbside program ($13,060 for 2005, received in
confirmed that the 2007 residential revenue 2006).
projection is consistent and reasonable. The 2007
residential revenue projection also is in line with Based on a weighted average per ton rate of
prior year residential account growth (an average $7.90 received for commingled recyclables
of 2.4 percent between 2003 and 2006) and (newspaper, glass, aluminum, and plastic
residential tonnage growth (an average of 1.8 materials),the Company receives approximately
percent between 2003 and 2006). $24,000 per year in recyclable revenues for the
nearly 3,000 tons of recyclables collected.
Commercial revenues
Commercial revenues are not projected to We have confirmed that the 2007 projection
change between 2006 and 2007. In the is consistent with audited 2005 recycling
revenues (including an adjustment for the DOC
Application, Garaventa provided commercial payment received in early 2006), and with prior
account and tonnage data. Commercial accounts
are not expected to grow between 2006 and 2007. year reported recycling revenues. We did not
Commercial tonnage is expected to increase 5.0 make any adjustments to recycling revenues.
percent between 2006 and 2007, consistent with E-XI)e"ses -
prior tonnage growth levels (which averaged 5.3
percent between 2003 and 2006). Escalation Factor
Because 2007 is a projection year, we
Between 2003 and 2006, the average annual assume that certain Garaventa costs will increase
commercial revenue increase (adjusted for at levels consistent with the most recent change in
County-approved commercial rate increases)was the Consumer Price Index(CPI) for the San
0.6 percent, while commercial tonnage grew an Francisco-Oakland-San Jose area(all items, all
average of 5.3 percent as stated above. This urban consumers). We used the change in CPI
suggests that small increases in commercial for the period of August 2005 to August 2006.
tonnage, for this County, have not had a material This period is used to be consistent with the
bearing on commercial revenues. Commercial previous base year where we also used the
customers do not appear to change their service August to August period. This change in CPI is
level in response to small tonnage increases. equal to 3.8 percent [(210.7—203.00) /203.00].
Consequently, we believe the commercial Consistent with how.interim year rate
revenue growth projection of zero (0)percent for adjustments (those between base years) are
2007 is consistent and reasonable, despite the treated in the Manual, we recommend that the
expected growth in commercial tonnage. County use this 3.8 percent escalation factor to
project changes to inflationary expenses for 2007.
Recycling revenues
Recycling revenues for 2007 are projected to Garaventa used 3.9 percent as an escalation
remain at 2006 levels. We reviewed recycling factor which results in minor differences between
tonnage reports for the completed 2005 year and our projection and the Application. For
matched them with those provided to the County simplicity, we have not noted every difference
for diversion reporting purposes. Garaventa where it is purely due to this discrepancy; rather,
receives a payment from the DOC for its certified we have incorporated the difference into the two
1114
s"a,.r0
�aa-o7
III.Bevies+- of Rate Change Application for 2007
impacted cost categories (direct labor, and We made no adjustments to the three (3) percent
corporate and local general and administrative). increase in direct labor wages. In addition, the
six(6)percent increase in pension costs is in line
Finding 9 I with the increase in premiums described the
Direct I...abor Union Agreement.
Labor costs are estimated to decrease in the
Application by three (3) percent between 2005 The total adjustment to direct labor shown in
and 2006. This decrease was due to the reduction Table III-3 includes a reallocation from Corporate
in the number of drivers and helpers from.18 in and Local General and Administrative Costs of
2005 to 17 in 2006. Total labor costs are $54,781. This reallocation is discussed in
projected to increase by 3.8 percent between 2006 Finding#3. As both categories (Direct Labor,
and 2007. This 3.8 percent increase includes a 20 and Corporate and Local General and
percent increase in health and welfare costs, a 6 Administrative Costs) are allowable costs, there
percent increase in pension costs, a 12.8 percent is no net impact to the shortfall from this
decrease in workers' compensation costs, and a 3"' reallocation.
percent increase in wages.
Garaventa identified a mistake in ther �. lt�
Application whereby the increase in health and
welfare costs had been overstated. We obtained a Finding #2
copy of the "Agreement Between Teamsters Local Tipping Fees
315 and Recycling Center& Transfer Station,for There are two components of tipping fees:
the period 31112003 and 21812008" (Union (1)allowable costs, capped at$45.00 per ton, and
Agreement) and verified that the correct increase (2) pass through costs equal to the difference
in health and welfare costs between 2006 and between the actual tipping fee per ton and $45.00
2007 should be 11 percent compared with 21 per ton. In 2007, Garaventa included $2,041,314
percent as included in the Application. This in tipping fees: $1,573,200 in allowable costs,
translates into a $0.65 per hour, per employee, and $468,114 in pass through costs.
increase in health and welfare contributions in
2007. The correction represents a $17,204 We confirmed that tipping fees in the
reduction in health and welfare costs. Application equaled the tipping fee rate per ton
multiplied by the projected tonnage. Table III-4,
The reduction in the workers' compensation on the next page, shows the per ton tipping fee
costs was driven by a reduction in the premiums rate for 2003 and 2007. Tipping fee rates have
charged to Garaventa. Based on the workers' increased due to increases in transportation costs
compensation premiums provided by Garaventa, as well as increases in AB 939 fees charged by
we have used a 29 percent reduction,rather than the City of Pittsburg.
the 12 percent reduction included in the
Application. The adjustment is a $24,385
reduction in workers' compensation costs.
The increase in wages is in line with the
increases provided for in the Union Agreement.
III-p
Review of
Solid Waste Nate Application
'fable III-4 The second area of adjustment related to
Tipping Fee Rates (2003 to 20017) total projected tonnage. The Application
included a five (5)percent increase in commercial
2003 $51.10 tonnage. While this increase is consistent with
2004 52.60 the average increase in tonnage from 2003 to
2006 (an average of 5.3 percent), the average is
2005 55.00 affected by a large, one time 11.5 percent
2006 55.90 increase in 2006. We reduced tonnage growth for
2007 58.35 2007 to 2.5 percent which is more consistent with
prior year growth trends other than for the large,
(a)Blended average annual rate. one time increase in 2006.
However,the amount of pass-through costs This impacts two line items in the
included is understated by using the blended Application: (1)the allowable tipping fees, and
average annual rate. We adjusted the tipping fee (2)the pass through,tipping fees. The reduction
rates for 2007 to equal $60.50 for the full year(or in total tonnage is 106 tons resulting in a decrease
an increase of$2.15 per ton from that used in the in allowable tipping fees of$4,796, and pass
Application). through tipping fees of$1,643.
We surveyed public (self haul)tipping fee The net adjustment to total tipping fees is an
rates of six other neighborhood disposal facilities. increase in costs of$67,353. Including the profit
Table III-5, below, shows the results of the requirement for the allowable portion of tipping
survey. The survey indicates that the $60.50 per fees gives a net increase in the shortfall of
ton tipping fee rate used by Garaventa is 13 $66,823.
percent lower than the average self haul tipping
fee rate at these other facilities.
N
t $ `48.
�
Table III-5
Comparative Tipping Fee Rates of.Neiglihoring Transter Stations i Landfills (2006)
Davis Street Transfer Station Oakland $ 89.25
Berkeley Transfer Station Berkeley 89.30
West County Landfill(T/S) Richmond 75.25
Contra Costa Transfer&Recover Station Martinez 62.25
Pleasanton Transfer Station Pleasanton 53.00
�WAltamont Landfill Livermore - 48.50
Projected 2007 Tipping Fee $ 60.50
Difference from Average $ 9.09
9 tPRO
111-6
07
III:. Review of Rate Change Application for 2007
Finding #3 The office manager had previously not been
Corporate an(] l...ocal General and allocated to the County, and following a recent
Administrative Costs allocation review, the position was in large part
The Manual specifies that Corporate and servicing eastern County areas. The additional
Local General and Administrative (G&A) costs collections staff were required to support the
cannot exceed a capped limit set by the County. collection of delinquent accounts (discussed in
This cap reflects prior industry norms. The cap more detail below).
set by the County is 13.2 percent of total costs in
the base year. We reviewed the allocation bases used for .
allocating office salaries and determined that
In the Application, Corporate and Local they were reasonable. The allocations reflected
G&A costs for 2007 are projected to be 11.7 each geographic area's share of total tonnage
percent of the revenue requirement(total collected by Garaventa. However, we did
allowable costs plus profit plus franchise fees). determine that the 2006 estimate was overstated
This is less than the specified cap. by $9,612 based upon schedules provided by
Garaventa. We confirmed with Garaventa that
We conducted a line-item review of the additional cost, while not apparent in 2006
Corporate and Local G&A costs for 2006 and supporting schedules, would be seen in 2007
made several adjustments totaling $46,258. A through increasing seniority of staff. We
summary of these adjustments is shown in Table reduced the 2006 estimate by $9,612, and
III-6,below. increased the 2007 projection by the same
amount.
`fable 111-6
Summary of Adlustrnents to Two positions included in office salaries
Corporate and Local G&A Costs directly relate to operations; the general manager
and the general manager's assistant. We
Office salaries(re-allocated reclassified these positions to the Direct Labor
General Manager and General i $ (44,506) category to reflect more accurately their
Manager Assistant salary) positions' responsibility, and the Manual
Payroll taxes and pension costs, requirements. There is no impact on the shortfall
salary costs,and inflation
adjustment (9,214)
from this reclassification. The combined salaries
1
Audit costs 7,462 of the two positions, in 2007, are projected to be
$44,507.
The total adjustment to payroll taxes and
In 2006, office salaries increased by pension costs in 2007 is a reduction of$9,214.
$176,410. Garaventa added a number of new This adjustment is comprised of 1) adjustments
positions including an office manager for a salary to payroll taxes and pension costs for the general
of$103,569, and additional collections and manager and general manager's assistant
customer service staff. Several administrative ($6,505), 2) adjustments to payroll taxes and
staff salaries also increased due.to increases in pension costs due to the $9,612 reduction in 2006
seniority. salary costs ($1,561), and 3) impact of using
III
Revie'Vr'of
Solid Waste Rate Application
inflation of 3.8 percent across G&A categories The latitude for categorizing HHW Fees
($1,148). costs as a pass through cost is provided on page
1-15 of the Manual which specifies that"pass
Garaventa had included one quarter of its through costs are costs which are included in
one time County audit fee as part of the "County rates charged to customers, however these costs
Administrative Fee" line item. As will be do not have an associated profit component.
discussed in Finding#5, on the next page, this Pass through costs are generally transactional in
audit fee was moved into Corporate and Local nature and often are thought of as costs not
G&A costs. The estimated fees are $29,852 over associated with any significant effort performed
four years, or $7,463 per year. by the hauler."
The remaining line item that was reviewed In the 2003 base year review, the HEW Fees
in detail was rent. The Application included an were reclassified to a pass through cost. The
increase from 2005 to 2006 of 19 percent and HHW facility, operated by Delta Diablo Sanitary
then an inflation increase between 2006 and District, bills the County directly and the County
2007. We obtained the lease agreements for the allocates the charges to each of the
Oakley Main Street office building as well as unincorporated areas on the basis of the zip code
payment records for the facilities not covered by' of customers using the facility. The County then
formal lease agreements. bills Garaventa directly for the HHW Fees.
The _19 percent increase in rent was driven The Manual has specific provision, on page
by the shift in office location to the new Oakley I-17 for the"costs to implement State mandated
Main Street office at the end of 2005. The lease source reduction and household hazardous waste
for this new property replaced a prior lease held programs"to be an allowable cost. However, as
with Western Capitol Management for a former the implementation of the HHW program in the
office location. We did not adjust this rental County sits entirely with Delta Diablo, we do not
expense. consider the HEW Fees to be an allowable cost.
The HHW Fees in the County meet the criteria of
The total adjustment to Corporate and Local anon-allowable cost of being transactional in
G&A costs is a reduction $46,258. The total nature and not associated with any significant _
impact on the shortfall is $51,398. effort on behalf of Garaventa.
5, _ N
11 ,11071V ��
f€riding �4` 4
Housebold Hazardous NVaste Program
Costs
For 2007, Garaventa projected $88,024 for
Household Hazardous Waste (HHW)Fees
included in Depreciation and Other Operating
Costs line item. We re-categorized this HHW
Fees from an allowable cost(with profit)to a
pass through cost(without profit).
fIf-8
s 7
Ill. Review of Rate Change Application for 2007
Garaventa included an inflation increase to provide documentation to support the
HHW Fees for 2007. As HHW Fees have reasonableness of transactions with related
historically declined,we have not used an parties. The Manual states that the hauler should
inflation factor for 2007. Rather we have left provide at least three (3) comparable lease rates.
HHW Fees constant at the 2006 amount of The market for leases of garbage trucking
$84,720. The combination of removing the equipment is limited. It was not possible for
profit component($9,784) and leaving the HHW
Fees at the 2006 level ($3,338),translates to a Garaventa to provide three comparable lease
rates. Instead, we obtained permission from
reduction in the shortfall of$13,122. Garaventa to review the detailed costs for SEG
Trucking.
Trucking and equipment charges include:
0 Labor for welders and mechanics
Iiindin- # 5
B Truck, bin, and other equipment depreciation
Count-Administration Fee
Fuel costs
The Application included $17,500 for the
County Administrative Fee. Garaventa Truck licenses
calculated the administrative fee by taking one c Truck insurance
quarter of County audit fees as well as one a .General and administrative costs.
quarter of the fees for the NewPoint Group base Trucking and equipment costs are estimated
year review. Only one quarter of the combined to have increased by eight (8) percent between
fees were taken to spread the review and audit 2005 and 2006. The 2007 projection is based
costs across the base year and subsequent interim upon an inflation increase between 2006 and
years. 2007.
The County pays for the rate review from Garaventa provided a schedule that details
franchise fees so this cost was disallowed. We the monthly trucking and equipment lease costs
reclassified the audit fee portion of the County charged to the County by SEG Trucking. We
Administration Fee to Corporate and Local G&A reviewed the individual truck lease rates, and line
costs. The impact of this reallocation is item expenses within the lease rates, for
described in Finding#3. reasonableness. Based on our analysis of 2005
line items we disallowed selected general and
administrative costs consistent with industry
In
L practice and Manual guidelines, including
Finding #6 director's salaries, dues/subscriptions,
Trucking and Equipmentcontributions, employee functions, legal costs,
outside services, sales promotion costs, and
Garaventa included $2,204,420 for trucking travel and entertainment. The resulting
and equipment in the 2007 projection. Trucks adjustment to 2005 trucking rates was $113,471.
and other vehicles used in the County areas are
leased from a related company called SEG To determine 2007 trucking lease rates we
Trucking. The Manual requires the hauler to used the estimated increase in total costs of eight
111-9
S D ld
v�-JJT7
Review of
Solid Waste Rate Application
(8)percent for 2006 increases. We then used days after the bill becomes delinquent and the
inflation (3.8 percent) for the 2007 projection. unpaid bill is passed to a collections agency.
The impact is a reduction in the trucking and
equipment costs in 2007 of$131,770. Garaventa believes that the County has a
relatively high level of bad debt due to the
� w � ®7
County policy to bill the occupier of the house
rather than the homeowner. In other jurisdictions
m
where the homeowner is billed, rather than, for
Finding 4 7 example,tenants, bad debt levels are lower.
Franchise Fees
In order to review the reasonableness of the
The franchise fee paid to the County is equal
to Eve percent of gross.revenues. Gross 4 percent allowance for bad debt, we examined
revenues include all residential, commercial, bad debt provisions for publicly.traded waste
light industrial refuse, and recycling revenues. management companies. The average bad debt
Franchise fees are a pass through expense that allowance was 0.4 percent of revenues.
does not earn a profit. We reduced the allowance' for bad debt to
A total of three percent of the five percent $51,974 or one(1)percent of the residential
franchise fee is remitted to the Ironhouse revenues. While this allowance is higher than
Sanitary District by the County. lronhouse the industry average, it does reflect the more
Sanitary District uses this portion of the franchise difficult collection situation (renters vs.
fee to administer its own solid waste programs homeowners billed) experienced in the County.
and services.
Based on the adjustments made in this e
chapter, franchise fees for 2007 were reduced by ,
$7,185 to $369,772. Allowable Profit
M
The Application uses an operating ratio of
x a�, m�Will,
5 R a a�.$`1422,g 6ai aea �gx€� � � � � ,���� � �� 90 percent to calculate allowable profits (prior to
'�aa `"�`Fa��a �'� adjustments) of$447,214. Consistent with the
Manual, we have set the operating ratio to 90
Finding 4 8 percent in the base year 2007. Once adjustments
Bad Debt Allowance to allowable costs have been made,the allowable
For 2007, Garaventa projected a $207,896 profit for 2007 is $432,806.
allowance for uncollectible residential accounts
(line 15). This represents four(4)percent of Estimated Garaventa profit levels since 2003
residential revenues. are shown in Table III-7, on the next page.
During this four-year period, the operating ratio
Garaventa bills residential customers has ranged from 91 to 95 percent. Adjustments
quarterly in advance. Payment is due by the end Were made to 2006 profit levels to reflect the
of the quarter. If, 30 days beyond the end of the results of our review.
cycle, the bill remains unpaid, it is classified as
delinquent. Garaventa discontinues service 15
III-IO
�-tea cr7'
Ill. Review of Rate Change Application for 2007
Table 11.1-7 We compared recent financial data available
Estimated £;arae enta Trott bevels for publicly and privately held waste
(2003 to 2006) management companies for the period 1995 to
2005. Because available financial data is for
,E
lm
combined collection,transportation, and disposal
operations,the corresponding operating ratios are
2003 $ 197,975 ; 95 lower than businesses providing exclusively
2004 369,517 9.1 waste collection services(i.e., without disposal).
2005 202,304 95 Operating ratios for collection operations alone
2006 257,233 94 are generally higher than for disposal operations
alone because disposal operations require greater
returns due to significant environmental and
The operating ratio without a rate change regulatory risks of operating landfills.
would be 94.9 percent for 2007. To calculate
this operating ratio, we divided projected 2007 There has been significant merger and
costs with adjustments but without allowable acquisition activity in the waste management
profit of$6,592,864 (total allowable costs of industry over the last ten years resulting in a
$3,895,257 plus total pass through costs without reduced number of companies available for
franchise fees of$2,697,607) by total projected analysis. Table III-8, on the next page, shows
revenues of$6,950,288 and converted this the companies used, the number of years of
number to a percentage.' financial information incorporates in our study,
and, if appropriate, the company that acquired
We recommend that the County continue to them. The final column shows the average
use an operating ratio ranging from 88 to 92 operating ratio on an EB1T(earnings before
percent, with a target of 90 percent for all base interest and taxes) basis for the years included in
year rate setting. This 90 percent operating ratio the analysis.
is equivalent to an 11.1 percent return on
operating expenses. The operating ratio is the The weighted average operating ratio for the
most commonly used method for refuse rate 1995 to 2005 period is 88.5 percent (i.e.,the
regulation. The Manual's operating ratio is average that takes into account different
supported by recently available information for company sizes) with the average for the last three
publicly and privately held companies,presented years (2003 to 2005) equal to 86.2 percent.
below.
III-I I
cS:C1,/O
IZeviery of
Solid Waste Date Application
Table 111-8
Publiciv-held Waste Management Companies" Operatino Ratios
Allied Waste Industries n/a 10 83.2%
Browning Ferris Industries Allied Waste Industries 3 E 90.3
Casella Waste Systems n/a 8 93.8
Laidlaw Allied Waste Industries 1 88.9
Republic Services,Inc. n/a 10 82.2
Superior Vivendi 3 1 85.3
i
United Waste Systems USA Waste Services 1 77.5
USA Waste Services Allied Waste Industries 1 90.6
Waste Connections n/a 8
78.5
Waste Industries n/a 10 89.2
WCA Waste Corp n/a 4 88.3
Divested Waste Management
Waste Mgt. International (U.S.operations) 1 i 94.6
Waste Management, Inc. n/a 10 j 82.7
Source: Company financial statements,Hoovers,Inc,NewPoint Group analysis.
The Risk Management Association (RMA), Comparative operating ratios of privately
formerly Robert Morris&Associates, publishes held waste management companies are shown in
its"Annual Statement Studies" for an array of Table III-9, on the next page. These published
industries,including privately held waste returns fluctuate year to year, but on an overall
management companies. RMA data is for basis, from 2001 to 2005, compare favorably
companies doing business as refuse systems. with the operating ratio range used by the County
These are systems "primarily engaged in the of 88 to 92 percent, with a target of 90 percent in
collection and disposal of refuse by processing or base years.
destruction or in the operations of incinerators,
waste.treatment plants, landfills, or other sites for
disposal of such materials." This data does not
include companies primarily engaged in
collecting and transporting refuse without
disposal."
II(-12
S a��a7
III. Review of Rate Change Application roi-2007
'.Table ILII-9 Summary of findings
Privately-held Waste Management Results of NewPoint Group findings are
Coutpanies' Operating Ratios
summarized in Table III-10, below. The total
projected revenue requirement(with
2002 92.0% adjustments) for 2007 is $7,395,442. With
2003 88.8% adjustments, we recommend a rate increase of
2004 94.7% 6.44 percent. Exhibit C-1 in Appendix C is a
zoos 90.3% copy of the first page of the Application with the
l +l"93i. ,irl IAf®+' fait, a'! recommended adjustments shown.
Source: RMA,Annual Statement Studies(NAICS Code This 6.44 percent increase is 4.58 percent
562111,SIC Code 4212)for companies of$10 to$25 below the 11.02 percent rate increase originally
million in sales.
requested in the Application. Implementation of
this rate increase is discussed in more detail in
the following chapter. Table III-11, on the next
page, shows the original Application line items,
the adjustments made as part of the review and
the adjusted 2007 projection.
Table IIT-10
Summary of Neiviloint Group Adjustments to Year 2007 Revenue Requirement
Reallocation of General Manager and Assistant positions
Direct Labor Correction of health and welfare premiums 0.15%
Correction of workers' compensation premiums
Use a full year rate of$60.50 per ton rather than a blended
Tipping Fee ' rate 0.99%
Reduction in projected commercial tonnage
_...... _.. ...
Reallocation of General Manager and Assistant positions
Corporate and Local General Correction to salaries (0.76)%
and Administrative Costs
Reclassification of audit fee
Depreciation and Other Reclassification of I HW Fees to pass through expense and (0.19)%
Operating Costs no increase for 2007
_--- _..... - -___-_ --_ --- _. _...._..._
County Administrative Fee Removed (0.26)%
Trucking and Equipment Disallowed G&A costs,corrected number of trucks (1.95)%
Residential Bad Debt Allowance r Reduced to one(1.)percent of residential revenues (2.24)%
Allowable Profit Recalculated (0.21)%
Franchise Fee Recalculated ? (0.11)%
r '
III-13
/ Sv/O
Review of
Solid Waste Rate Application
Table III-11
Summary of Ad
justntents to Gat-aventa Revenues and Expenses (2007)
Revenues
Residential(e $ 4,989,497 $ 155,943 $ 5,145,440
Commercial and Light Industrial 1,766,893 1,766,893
Recycling 37,955 37,955
«ate-,. ..a taE3�'as '�,.".w w�, ad a¢ e%�• m9 ^' cmai9,y�' ® �_ 4 a � R
Allowable Expenses
Direct Labor i $ 1,494,962 $ 9,416 i $ 1,504,378
i
Tipping Fees(Profit Allowed up,to$45.00) 1,573,200 (4,770) 1,568,430
i
r
Corporate and Local G&A Costs 837,107 (46,258) 790,849
Depreciation and Other Operating Costs 119,658 (88,058) 31,600
Services Provided to County
Pass Through Expenses
County Administrative Fee 17,500 (17,500)
Trucking and Equipment 2,204,420 (131,770) 2,072,650
Tipping Fee(Pass Through) 468,114 72,123 i 540,237
Household Hazardous Waste Fees 0 84,720 i 84,720
Franchise Fees 376,957 (7,185) 369,772 Profit $ 447,214 $ (14,408) $ 432,806
MIME Ems=
Shortfall(Surplus) $ 744,7871°) ! $ (299,633) $ 445,154
(a) Includes bad debt allowance.
(b) The Application showed$6,794,346. The difference is due to rounding.
(c) The Application showed$744,786. The difference is due to rounding.
I11-1.4
7
IIT. Review ol'Rate Change Application for 2007
B. Components of Single Can costs are identified as Household Hazardous
Rate Waste Fees(line 12) in the adjusted application.
Trucking and Equipment includes
There are a number of cost components that depreciation and leases of trucks, fuel expense,
are included in rates for residential and.
commercial service. Using the single 40-gallon licenses,parts,tires, and associated repair and
can rate as an example, the pie chart in Figure maintenance expenses. These costs are
identified as Trucking and Equipment(line 10),
III-1,on the next page, shows the major and Depreciation and Other Operating Costs
components of the projected 2007 rates, and the
(line 4) in the adjusted application.
relative cost of each component. Line items
shown are from the adjusted application Profit is any revenue that exceeds expenses
contained in Appendix D. Categories of costs (total allowable costs plus total pass through
are described below:
costs). The operating ratio is used to determine
allowable profit, as discussed in the profit
a . Direct Labor includes compensation of the analysis section of the report. Profit is shown in,
waste removal staff, including regular time, line 8 of the adjusted application.
overtime, payroll taxes, and associated benefits. County's Franchise Fee is five(5)percent of
This category corresponds to Direct Labor(Line total residential, commercial, light industrial
1)of the adjusted application. revenues, and recycling revenues. Use of these
Tipping Fees include all charges for the funds includes development of programs and
disposal of solid waste at a landfill or transfer compliance with State waste reduction
station,which are currently set at$60.50 per ton. requirements. Franchise fees are show in line 24
A cap on the allowable cost portion if tipping of the adjusted application.
fees is set at$45.00 per ton. The remaining fees
between$45.00 and$60.50 per ton are a pass Figure III-2, on the next page, shows a
through cost. These tipping fees also include comparison between the average basic service, or
transportation costs from the transfer station to a 40-gallon single can rats, and the CPI-adjusted
the landfill. This category corresponds to rate for the period of 1995 to the present. Based
Tipping Fees (profit allowed)(line 2)and on rate adjustments previously approved during
Tipping Fees ass through) line 11 in the this period, average County rates are actually
ju g (p g )( ) $2.55 per customer, per month, lower than the
adjusted application.
$26.58 per customer, per month, CPi-adjusted
• Corporate and Local General and average rate for January 2007. The County's
Administrative Costs include accounting, average residential collection rate has remained
office space rental, utilities, office supplies,legal below the CPI-adjusted rate since the beginning
services, insurance, postage, etc. for Garaventa. of 1995 when the current franchise agreement
These costs are identified as Corporate and with Garaventa was signed. With the
Local General and Administrative Costs(line 3), recommended rate increase of 6.44 percent,the
and County Administrative Fee(line 9)of the County rate is $1.01 per customer, per month,
adjusted application. below the CPI-adjusted rate for 2007.
• Household Hazardous Waste Program Costs
included operating costs of the permanent.
Household Hazardous Waste facility. These
[II-I5
sv�o
Review of
Solid Waste-Rate Application
Figure 111-1
Components o€`the Single 40-gallon Can Date
Household Hazardous Profit
Waste Program Costs 6%
1%
County Franchise Fee
9f.fir �jp�
Trucking and g
� Equipment
ME
e
riaA
Corporate and Local Nl
o
ll/o
Fig11re 161-2
Comparison of Average Sing.le Can Rate (w/0 Toter) with
CM-Adjusted Average 4ingie Can Rate (w/o Toter)
(1995 to 20071)
27.00
$25.75 $26.58
26.00 ___. . .... _
_. .. $25.25. .._.
$24.95 $25.57
w 25.00 $24.12 $24.52 - $24.03
m
c24 00 $23.56
F _ $22.89 $22.65..
0
3 23.00 _........ .._..._ _...... .$21.76 _.... .__.. _._.
m $21.91 .
22.00 ....__. - ........ .___ $21.48 .. ...._ __.
$21.35
'.. $21.0
cc
a 21.00 _._.. -520.38. .. .. _. .. ... _..... .._ .. ._.._..... .. .. ..
m
$19.70 $20.00 20.00
N 20.00 ..._$18.26 ...,. ... ... _. ._. .... _. _ ._.
19.00
18.00
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-Ot Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07
Year Actual--&—C
111-1.6
IV. Recommendations
5-a16
IV. Recommendations
Iii'. Recommendations
In the previous chapter we detailed NewPoint light industrial and recycling revenues are
Group's findings from our review of the 2007 $6,950,288 before any rate increase. This would
Application. We presented these findings based result in Garaventa operating with a total
on the impact to the 2007 revenue shortfall. In shortfall of$445,154.
this chapter we provide our recommendations for
a rate increase. The revenue requirement from In order to reduce this shortfall to zero,
the previous chapter is now translated into the residential, commercial, and light industrial rates
real impact on County rates. would need to be increase by 6.44 percent
[shortfall /projected revenue]. Table IV-1,
The current overall rate structure has minor below, shows the impact of the 6.44 percent rate
variations in rates across geographic areas. We increase on 40-gallon rates across each
propose a common residential rate structure for geographic area.
all County areas except for Byron and Ironhouse
Sanitary Districts. We also compare proposed Table IV-]
new unincorporated County rates with those Impact of Date Increase on
charged in other similar jurisdictions. Current 40-Gallon Residential RatestRl
W
We also make a recommendation for j I
change to base year application to address the
classification of Household Hazardous Waste Bay Point
$ 25.40 ! $ 27.04 $ 1.64
(HHW) Fees in subsequent base years. The final Brentwood 25.40 27.04 1.64
recommendation looks at the potential for future Byron Sanitary
automation of collection services to County District 23.80 25.33 i 1.53
areas. Discovery Bay 25.40 27.04 1.64
Ironhouse
This section is organized as follows: Sanitary District 24.75 26.34 1.59
A. Recommended Rate Change
B. Comparisons of Rates and Services to Other (a)For 90-gallon toter service,there is an additional
Jurisdictions monthly toter rental charge.
C. Recommendation for a Change to the Model B. Comparison of Rates and Services to
D. Automation of Collection Services. Other,Jurisdictions
A. Recommended Rate ChangeCounty rates were compared with survey data
from eleven other jurisdictions. The residential,
As summarized in the previous chapter, and commercial, and industrial rates determined from
in the adjusted application shown in Appendix C, the survey are summarized in Table IV-2, on the
the total projected revenue requirement for 2007 next page. This table compares current average
is $7,395,442. This includes all rate setting County rates (before a rate change)with the
adjustments described in the previous chapter. average rates of those jurisdictions surveyed.
The total projected 2007 residential, commercial,
IV-1
i
i
Review of
-Solid Waste Rate Application
Current County residential rates (before a percent higher than the weighted average of the
rate change) are generally higher than average 11 jurisdictions and would rank amongst the
for lower service levels, and are lower than highest of those surveyed. Part of the reason that
average for higher service levels. Rates for the County residential rates may be higher than other
20-gallon and 32-gallon residential customer are jurisdictions is that the County has a lower
22 and 27 percent above the average while rates density of residential customers than other
for the 96-gallon customer are 35 percent below neighboring areas.
the average.
Comparative commercial and industrial rates
Perhaps a better comparison is how County (prior to a rate change) are also shown in Table
residential rates compare on a weighted average IV-2. Existing commercial 2- and 3-yard bin
basis to the eleven jurisdictions. if we weight rates are up to seven (7)percent below average
each jurisdiction's rates by the percentage of depending upon the service level. The 20-yard
customers within each rate category we can drop box rate is 15 percent below the average.
determine a single weighted average rate for each Relative to other jurisdictions surveyed, the
jurisdiction. County areas served by Garaventa have a small
amount of commercial business.
Based on this approach, current residential
County rates (before a rate change)are 14
Table.I V-2
Comparative Residential, Commercial, and Industrial Monthly Rates
Antioch $ 22.48 $ 23.55 $ 29.51 $ 34.43 1 $ 189.94 $ 379.88 $ 285.74 $ 554.35 $ 414.89
Clayton 19.28 MAI 29.65 32.31 i 180.21 -360.35 243.36 486.74 361.95
i
Concord 15.95 24.50 - 27.50 ', 219.85 399.70 300.00 560.00 ! 403.64
Danville 14.17 16.35 32.70 49.05 225.44 450.88 338.16 676.32 506.87
Lafavette, j 14.90 17.18 34.36 51.54 i 250.96 501.92 376.44 752.88 % 506.87
Martinez j 17.75. 25.44 28.38 59.60 205.93 351.09 353.21 411.59 377.63
Moraga 15.88 18.33 36.66 54.99 234.24 468.47 351.35 702.71 506.87
i
Orinda 17.18 19.82 39.64 59.46 258.63 517.26 387.95 775.89 506.87
Pleasant Hill 23.05 25.00 25.46 25.99 177.79 355.10 266.35 532.83 326.00
Uninc.County ]417 16,35 3270 4905 [ 208.50 417.00 312.75 62550 506.87
. . .
(CCCSWA) -
1
Walnut Creek ' 11.16 13.37 26.74 40.11 i 136.20 272.40 204.30 408.60 506.87
AvEN'ppf �ar�� Ww0�97 �@ "` 2'' III' $ 2$ Ilw g ,e40 "1079 $ 4Obx7$ $QS7�R `a ��
xi xw r'"R''e,ffiaura� ° cm�° "9r�nau'";3.,.,.Ssax..va "icm, a,. � :; Y"� w w � $�76 'Ya
Contra Costa County - $ 20.55 $ 25.40 N/A $ 28.50 tl $ 210.70 S 378.75 $ 294.45 S 548.35 $ 380.00
Garaventa ,
Percent Difference 22% - 27% (35)% i 1% (7)% (5)% (7)% E (15)%
1V-2
IN. Recommendations
C. Recommendations, for a Change to the We recommend that the County and
Model Garaventa work toward automating services to
The Manual contains a pro forma for the County areas within the next four years, or
Base Year Application. When the Manual was before the next base year. Aspects of the
developed, Household Hazardous Waste (HHW) possible transition to automation are described
Fees were not identified as a separate line item. below.
In preparation of the Application, Garaventa
included HHW Fees as part of"Depreciation and Description ref utrrrrPutinra
Other Operating Costs". This is an allowable Garaventa currently uses "manual collection"
cost line item and hence is used in the calculation to pickup refuse, recycling, and yardwaste. This
of profit. means that the driver, or a helper, exits the truck,
physically picks up the container, and empties
In both the 2003 and 2007 base years, HHW the contents into the truck.
Fees were reclassified as a pass through cost. In
both of these years an additional line was added In an automated system,the driver does not
to the Application to accommodate HHW Fees. need to exit the truck to pickup the material.
Instead,the truck has an articulated mechanical
In order to have HHW Fees correctly arm that is used to grab the container and tip it
classified in the Application in subsequent base into the truck. The driver operates this arm using
years, we recommend that the Application be a joystick from inside the cab.
changed from the current version in the Manual.
As the "County Administrative Fee" line is not We recommend that the County consider
used because the costs are internalized by this automating collection of all three services: (1)
hauler in its other categories, the County could refuse, (2) recycling, and (3) yardwaste.
keep the numbering in the Application relatively
similar by deleting the "County Administrative utoinati to 6 a>Cdeeticata Scsterra tiaith
�Gitrtt3ZtdtGr)ft
Fee" (Line 9) and adding HHW Fees as a new
Line 9. Currently, for refuse, County customers can
provide their own 40-gallon container(s), or can
1), Automation of Coliection Sewices choose to rent a 90-gallon wheeled container.
There have been some indications that the With an automated system, all customers would
County and Garaventa would like to consider be provided wheeled containers (e.g., 32-, 64-, or
automation of refuse collection services for 96-gallon).
County operations. Garaventa has initiated
efforts to add a single stream recycling line at its Currently, for recycling, County customers
Pittsburg facility. In the City of Concord,the are provided two crates, one of which is used for
City and Concord Disposal Service are in the fiber materials and the other for commingled
process of considering automation of the containers. With an automated system,
collection fleet and a variable can system. Other customers would be provided a single larger
areas served by Garaventa's related companies
wheeled container. This is referred to as "single
have automated service. stream"recycling as all recyclable materials are
placed in one container.
IV-3
i
i
i
Review of
Solid Waste Date Application
For yardwaste, County customers currently of customers will be satisfied with new carts for
provide their own containers. With an automated refuse, recycling, and yardwaste. While
system, all customers would be provided a customers are less concerned with how the carts
wheeled container. are picked up, they definitely perceive newcarts
as a service enhancement.
Other jurisdictions that have rolled out new
automated systems indicate that a large majority
IV-4
sEJ�C�
Appendices
S�dcJ
,.s-a��?
JV/Q
.11 lz;7a e7
Appendix A
Appendix A
2007 Garaventa Enterprises Date Application
This appendix includes the 2007 Base Year. The information provided in this application
Rate Change Application submitted by is for the following five years:
Garaventa Enterprises on November 1, 2006. In
their Application, Garaventa proposes to increase ° 2003
residential and commercial collection rates by u 2004
11.02 percent. t 2005 (audit year)
The Application includes the following Y 2006(estimated)
forms: W 2007 (projected).
• Financial information.
® Cost summary for year 2005
® Single family residential summary _
d Operating information
• Current rates by unincorporated County
service areas
• Adjusted income statements for 2003 to 2007
A-1
Review of
Solid Waste Rate Application .
[This page intentionally left blank]
c
i
A-2
S old
Garaventa Enterprises
4080 MALLARD DRIVE • P.O.BOX 5397
CONCORD, CALIFORNIA 94520
(925) 689-8390
November 1, 2006
Ms. Deidra.Dingman
Contra Costa County
Community Development Department
651 Pine Street
4`h Floor—North Wing
Martinez, CA 94553
RE: Rate Application
Dear Ms. Dingman:
Enclosed is the Base Year Rate Application for Garaventa Enterprises franchised areas
for unincorporated Contra Costa County and Ironhouse Sanitary District. The Base Year
Rate Application is supported by Audited Financial Statements of those operations for the
calendar year 2005, current estimated results of calendar year 2006 based on six months
of operation, and projected 2007 results.
Our resulting calculation shows a change in the current Residential and Commercial
rates of 11.02%.
A meeting with you, your staff, consultants, Board committee and Ironhouse Sanitary
District representatives should be scheduled,at your earliest convenience. If you have
any questions,please call us at(925)689-8390.
Sincerely, /
Clark Colvis
CFO /
Cc: Eric Nylund (w/enclosures)
Cc: Denise Nunn, Ironhouse Sanitary District(w/enclosures)
�alO
i
Contra Costa County
Base Year Rate Change Application
Financial lnformalfon
Actual Estimated ::Ptdiacted:
I-Imto ieal Years Cunene Year ::Dose.Year::'.
Yaart Year Year Year
2003 1 2004 2005 200 7 200`7.
Section I-Allowable Costs
1. Direct Labor $ 1,326,321 $ 1,365038 $ 1478,027 $ 1439,7851494;962
2. Tipping Fees(Profit Allowed) 1,454,171 1,478,674 1,521,316 1552,412 :::1;573;200:
3. Corporate and Local General and Administrative Costs 659,855 610125 687,291 805685 :< :2:837JO.
4. Depreciation and Other Operating Costs 202,806 161,812 125,142 115,167 '. >:':115,659
5. Services Provided to County
6. Total Allowable Costs(Lines 1+2+3+4+5) - $ 3,643.152 $ 3,615,649 $ 3,811,T77 $ 3,913,049 :$"':::4.024.0-
Section II-Allowable
7. Operating Ratio 95% 91% 95% 98% :':'9bt6':.':':':'
S. Allowable Operating Profit[(Line 6+0.9)-Line 6)] $ 197 975 $ 369 517 $ 202 304 $ 60 304. :$::::::>;;>:43j2i4'
Section III-Pass Through Costs without Franchise Fees
9. County Administrative Fee :$':::':::':17,500,'00.
10 Trucking and Equipment 1,799,985 1,804096 1,962,886 2121,675 :->:2204,420
11. .Tipping Fees(Pass Through) 202,939 254,563 342,405 342,360 ::c:488:1:14:
12. Total Pass Through Costs(without Franchise Fees) (Lines 9+10+11) $ 2 002,924.26 S 2 058 661 $ 2305 292 $ 2464 034.72 :$':<::' 690'0340
Section W-Revenue Requirement without Franchise Fees
13. Total Allowable Costs(Line 6)plus Allowable Operating Profit(Line 8)plus
Total Pass Through Costs(without Franchise Fees)(Line 12) 1 $ 5,9".051.61 $ 6,D43,827.35 $ 6,319,37i-9-27-$ 6,437,387.7c) :5.::: :7-:182:175:
Section V--Revenue without Rate Change in Base Year
14, Residential Revenue
15. Less Allowance for uncollectible Residential Accounts $:::':>:-i207.e96
16, Total Residential Revenue(without Rale Change in Base Year) $ 4,628,026 $ 4,692,609 $ 4,691 4565 $ 4,960,688 1:4:�:>:::.:dse9:497.
17. Commercial and Light Industrial RevenueE:':'>:'.a:766,994
18, Less Allowance for uncollectible Commercial and Light Industrial Accounts
19. Total Commercial/Light Industrial Revenue(without Rate change in base year) r$-1,486,171 $ 1.607,195 1 $ 1 724 493 $ 1,766,893 :$<':':«-1768;893:
20. Recycled Material Sales $ 47,259.33 $ 36,841.62 $ 23,592.97 $ 37,955.0 I
21, Total Revenue(Lines 16+19+20) $ 6,161,456 $ 6,336,645 $ 6,639,542 $ 6,785,737 :6'
Section VI--Net Shortfall(Surplus)
22. Net Shortfall(Surplus)without Franchise Fees(Line 13-1-ine 21)
23. Residential/Commercial/Light Industrial Franchise Fees(see calculation below) $ 317,405 $ 292,815 $ 320 170 $ 348,349
24. Net Shortfall(Surplus)with Franchise Fees(Lines 22+23)
Section VII-Percent Change in Rates
25. Total Commercial/Light Industrial Revenue Prior to Rate Change(Lines 16+19)
26. Percent Change in Existing Residential/Commercial/Light Industrial Rates(Line 24+Line 25)
Franchise Fee Calculation- EMU_ Summary Revenue Requirement
Franchise fees are set by the County at 5 percent of the revenue requirement 27. Total Allowable Costs(Lime 6) :$':':4=4;926:97'.
Solve for two equations with one unknown,and identify franchise Tees as X => 28. Allowable Operating Profits(Line 8)
Equation 1)Revenue Requirement x 0.05=X 29. Total Pass Through Costs(with Franchise Fees)(Lines 12+23)
Equation 2)Revenue Requirement =Line 13+X,or $ 7,162,175 +X 30. 2007 Revenue Requirement(Lines 27+28+29)
Substitute equation 2)into equation 1)and solve for X =>
( $ 7,162,175 +X x.05 = X.or X= $ 376,957
Year:2006 Page 1 of 6
Contra Costa County
Base Year Rate Change Application
Cost Summary for Year 2005 Section Vill--Base Year Cost Allocation
Audited
Unincorporated Non-Uninc. Geraventa Allocation
Go,m!X County Financial Base s
Labor-Regular $ 948,601 NIA
Labor-Overtime NIA
Benefits 447,967 N/A
Payroll Taxes 81 459 NIA
31 Total Direct Labor $ 1,478,027 $ $ NIA
32. Total Tipping Fees(Profit Allowed) is 1,521,316 $ is NIA
Salaries-Officers $ 7,119 $ - $ - NIA
Salaries-Directors 278,224 NIA
Salaries-Office 103,651 NIA
Taxes-Payroll _ 14,154 N/A
Pension 2,746 NIA
Accounting 51,381 WA
Alarm 428 NIA
Bank charges 434 NIA
Collection Fees 1,318 NIA
IBM Rental,Software&Repair 13,930 N/A
Dues&Subscriptions 1,238 NIA
Fuel&Oil 14 NIA
Janitorial 2,700 NIA
Landscape and maintenance 251 NIA
Legal 1,051 NIA
Medical Expense 1,947 N/A
Miscellaneous 234 NIA
Office Supplies&Expense 69,451 .NIA
Outside Services 159 N/A
Postage 39,267 NIA
Lease-Outside Equipment - 15,873 N/A
Rent-Office 66,954 N/A
Repairs-General 298 - NIA
Taxes-Other 180 NIA
Utilities 2,296 NIA
Telephone 11 993 NIA
33. Total Corporated and Local General and.Administrative Costs $ 687 291 11 $ -$
Depreciation -Buildings&Furniture - $ 1,012 $ - $ - N/A
Customer repairs 30.931 - NIA
NIA
34. Total Depreciation and Other Operating Costs $ 31,943 11 $ $ -
35. Household Hazardous Waste 93,200 $ $ WA
36. Total Allowable Costs(Lines 31+32+33+34+35) $ 3,811,777 1 $ $ -
37: Total County Administration Fee $ $ $
Equipment rental $ 1,962,886 $ - $ - NIA
Gas and oil N/A
Insurance N/A
Parts N/A
Repairs and Maintenance - NIA
Tires N/A
Other NIA
38. Total Trucking and Equipment $ 1,962,885 $ $ -
39 Total Tipping Fees(Pass Through) I $ 342,4051 $ - $ - I N/A
40. Total ResidentiaXommercial/Light Industrial Franchise Fees $ 34B,349 1 $ $ - N/A.
41. Total Pass Through Costs(Lines 37+38+39+40) $ 2,653,641 1 $ - $ - N/A
42. Total Costs(Lines 36+41) $ 7.591$ $ NIA
Year:2006 Page 2 of 6
Contra Costa County
Base Year Rate Change Application
Cost Summary for Year 2005
Section IX--Revenue
Actual - .Estimated - pm)ectw
Historical Years Current Year Base Year
Year 1 Year 2 Year 3 Year4
2003 2004 2005 2006
Single Family Residential Service -
43. Single Family Residential Revenue(Bse Year from Page 4 of 6) $ 4,62B4O26 $ 4,692,609 $ 4,891.456 $ 4,980,888
Multiunit Residential Service
44. Number of Accounts
45. Multiunit Residential Revenue
46. Residential Revenue(w/o Allowance for Uncollectible Accounts)(Lines 43+45) 1,692,609 $ 4 891 456 $ 4,980,888 a::::::5A92,393'.
47. Allowance for Uncollectible Residential Accounts
48. Total Residential Revenue(Line 46-Line 47) $ 4.628.0,2:6]1$ 4,692,6D9 $ 4,891,456 $ 4,980,888 i::::::4:,B73B;492
Commercial and Light Industrial Can Service
49. Number of Accounts 1671 167 1691 109 I
50. Commercial and Light Industrial Can Revenues $ 421,879 $ 456,452 $ 497,360 1 $ 513,333 :5:::::::::::::j4,ppp
Commercial and Light Industrial Bin Servide-
51,- Number of Accounts 239 226 311 225 :.::225:
52. Commercial and Light Industrial Bin Revenues $ 1,064,297 $ 1,150,732 $ 1,227,133 S 1,253,560
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) $ 1 486,176 1$ 1,607,184 $ 1 1724,493 $ 1,766 893
56. Allowance for Uncollectible Commercial and Light Industrial Accounts
57, Total Commercial and Light industrial Revenues(Line 55-Line 56) $ 1 486,176 $ 1,607 184 $ 1,724 493 $ 1,766,893
58. Recycled Material Sales $ 47,259.33 $ 36,841.62 S 23,592.97 $ 37.955.00
59. Total Revenue(Lines 48+57+58) $ 6,161 461 $ 6,336,635 $ 6,639 542 $ 6,785,737 :S::::: `795+4527
Year:2006 Page 3 of 6
i
Contra Costa County
Base Year Rate Change Application
Single Family Residential Summary
Section X--Singfe Family i4esidentiaf Revenue
PMded
Base Year
2007
Single Family Residential revenue(without Rate Change in Base Year)
Current Pro ed
Ratemonth Accounts Total
Oakley Can/Toter(Ironhouse) $7 24.75 8607 $ 2,556,279
Oakley extra can with toter(Ironhouse) $ 8.70 291 $ 30,380
Oakley mini can(Ironhouse) $ 2035. 56 $ 13,675
Oakley 40 gallon can(Ironhouse) $ 24.75 284 $ 84,348
Oakley Canrroter(County) $ 25.50 108 $ 33,048
Oakley extra can with toter(County) $ 8.90 1 $ 107
Oakley mini can(County) $ 20.55 $
Oakley 40 gallon can(County) $ 25.40 5 $ 1,524
Brentwood(out of City)Canrroter - $ 25.50 995 $ 304,470
Brentwood(out of City)extra can with toter $ 8.90 4 $ 427
Brentwood(out of City)mini can $ .20.55 3 $ 740
Brentwood(out of City)32 gallon can $ 25.40 48 $ 14,630
Bryon toter $ 23.80 46 $ 13,138
Byron extra can with toter $ 8.30 1 1 $ - 100
Byron mini can $ 19.25 1 $ 231
Byron 32 gallon can $ 23.80 6 $ 1,714
Discovery Bay Can Toter $ 25.50 4282 $ 1,310,292
Discovery Bay Mini Can $ 20.55 29 $ 7,151
Discovery Bay extra can with toter $ 8.90 6 $ 641
Discovery Bay 32 gallon can $ 25.40 178 $ 54,254
Baypoint(PDS)Canrroter $ 25.50 2192 $ 670,752
Baypoint(PDS)Mini Can $ 20.55 68 $ 16,769
Baypoint(PDS)extra can with toter $ - 8.90 4 $ 427
Baypoint(PDS)32 gallon can $ 25.40 270 $ 82 296
60. Total Base Year Single Family Residential 17.aes.00 E 5,te7,3ea.2o
Year:2006 Page 4 of 6
Contra Costa County -
Base Year Rate Change Application
Operating Information
Current Year
Historical ..:Perceht:::: Historical Peri eot> Historical PercenY:S Estimated .?Percent: Projected
Information :;Cfr.lit e::: Information ::Cfi.. 'e::: Information ;::Ch'4 ge::�: Information =;:Glia Information
- - Year 1 :YT.1to2:: Year 2Yr.:2;to>3> Year 3 Yr:3ao:4: Year 4 ::Yr:4 to 5: Year 5
2003 2004 2005 2006 2007
XI-OperatingSection Data
,Accounts
61. Residential 15,793 1.21% 15,984 4:40° 16,640 a.:89°k 16,955 3 431k 17,485
62. Commercial 401 .0'Z5°!°: 398 -1 26% 393 - .0:76% 396 0'00%n 396
........... ......... ........... ...........
63. Light Industrial
64. Total Accounts 16 194.00 :: 115% 16,382 '-.3:97% 17,033 :1:87°% 17,351 05
3. % 17,881
Waste Tonnage
65. Residential E32.314.91
1:639h: 29,133.93 2:@6% 29,996.04 0:85% 30,25022 :: 0:83°I 30,500.00
....
66. Commercial ::..::2:11% 3,725.49 ....:.2:30% 3,810.99 54:46% 4,247.82 :.::.5:00% 4,460.00
67. Light Industrial
68. Total Tons 1 69% 32,859.42 2:BB% 33,807.03 2:04% 34,498 04 1:34% 34,960.00
Recyclable Tonnage
69. Residential 4,770.60 :::2:42,% 4,885.81 ::6:15.°C° 5,186.31 :: :::6:47% 5,677.20 4:96°k 5,960.00
70. Commercial
71. Light Industrial
72. Total Tons 4,770.60 2.42%: 4,885.81 - 6 n 5,166.31 - :9:47°.6 5,677 20 AM.% 5,960.00
County Services
73. County Bins >RD1V(o rFDtvrvl:::
74. County Drop Boxes a0two :. u0i91o! Abivio
Section XII-Change in Commercial Rates
75. 3 Yard Bin-Once per Week 252.00 > :452^ 276.00 : :<:5;0o°re 269.80 1;80'!0 294.451:::::.:::::6.66% 294.45
76. 2 Yard Bin-Once per Week 181.95 8:55% 197.50 3:90"!° 20510 2:66% 210.701 0:00% 210 .70
77. 20 yd Debris Box-per pick up 380.00 O.DD% 380.00 ...:.:0:00% 380.00 ::0:00% 380.00 0:00% 380.00
Fiscal Year: 2006 Page 5 of 6
�711J
Contra Costa County
Base Year Rate Change Application
Unincorporated Area: AH Areas
78. Rate Change Requested 11.02%
Abbreviated Increased New
Rate Schedule Current Rate Rate Adjustments 121 Rate
Oakley Canrroter(Ironhouse) E 24.75 E 27.48 S 0.92 S 27.50
Oakley extra can with toter(Ironhouse) 8.70 965 0.01 9.85
Oakley mini can(Ironhouse) 20.35 22.59 0.07 22.80
Oakley 40 gallon can(Ironhouse) 24.75 27.48 0.02 27.50
Oakley Ca rroter(County) 25.50 28.31 0.01 28.30
Oakley extra can with toter(County) 8.90 9:88 0.02 9.90
Oakley mini Can(County) 20.55 22.82 0.02 22.80
Oakley 40 gallon can(County) 25.40 28.20 28.20
Brentwood(out of City)Carv7oter 25.50 28.31tool) 28.30
Brentwood(out of City)extra can with toter 8.90 9.89 0.02 9.90
Brentwood(out of City)mini Can 20.55 22.82 0.02 22.80
Brentwood(out of City)32 gallon can 25.40 28.20 28.20 .
Bryon toter 23.80 26.42 0.02 26.40
Byron extra can with toter 8.30 9.21 0.01 9.20
Byron mini can 19.25 21.37 0.02 21.35
Byron 32 gallon can - 23.80 26.42 0.02 25.40
Discovery Bay Canrroter 25.50 28.31 0.01 28.30
Discovery Bay Mini Can 2055. 22:82 0.02 22.80
Discovery Bay extra can with toter 8.90 9.88 0.02 9.90 .
Discovery Bay 32 gallon Can 25.40 28.20 28.20
Saypoint(PDS)Can/Toter 25.50 28.31 (Oc) 28.30
Baypoint(PDS)Mini Can 20.55 22.82 0.02 22.80
Baypoint(PDS)extra can with toter 8.90 9.88 0.02 9.90
Baypoint(PDS)32 gallon can 25.40 28.20 28.20
(a)Calculated rates are rounded up to the nearest$0.05
79. Multiunit residential Rate increase of '11.02% will be applied
to all rates in each structure with each rate rounded up
or down to the nearest$0.05
To the best of my knowledge,the data and information in this application is complete,accurate,and consistent with
the instructions provided by Contra Costa County.
Name: Clark Colvis Title: CFO
Signature: Date: ( I 0110
Fiscal Year: 2006 Page 6 of 6
i
S-ate v7
Garaventa Enterprises
Rate Application
Income Statement
For year ended 12-31-2003
Oakley Brentwood Pittsburg Total Adjustment
Disposal Service Discovery Bay Disposal Service All for To
Service Disposal Disposal (Baypoint) Companies Application Applic lion
Revenues
Services-Residential In City 2,399,205 119,514 957,657 3,476,377 1,151,650 4,628,026
Services-Residential Out Of City 31,660 383,733 - 736,257 1,151,650 (1,151,650)
Services-Commercial In City 749,949 80,411 124,449 954,809 531,361 1,486,171
Services-Commercial Out Of City 45,497 247,721 - 238.143 531,361 (531,361) -
Sales.Recyding 21,749 20 25,428 63 47,259 - 47,259
Total Revenues .3,248,061 831,398 1,107,534 974,462 6,161,456 6,161,456
Cost of operations
Direct Labor
.Labor-Wages 429,198 134,123 142,881 141,690.72 847,893 847,893
Payroll Taxes 36,109 11,471 11,805 13,46062 72,845 72,845
Labor-HwIth&Welfare 87,968 23,991 - 31,988 25.334,40 169,282 169,282
Labor-Workmens Comp 68,191 21,397 22.073 21,195.86 132,857 132,857
Labor-Pension 53,103 16,958 20,018 13,365 29 103,444 103,444
Total direct labor 674,569 207,940 228,765 215,047 1,326,321 1,326,321
Dumping Costs 925,507 198,389 265,951 266,262 1,657,110 1,657,110
Franchise Fees 163,054 10,394 153,120 326,569 (9,164)1 317,405
Depreciation and Other Operating Costs
Repair:-Customer 20,116 1,754 4,384 3,655 29,910 - 29,910
Depreciation-Furniture&Futures 848 131 979 979
HHW fee 88,373 74,379 162,752 9,164 1 171,916
109,339 1,754 78,763 .3,786 193,642 202,806
Trucking costs:
Equipment,Maintenance,&Repair 893,150 370,972 334,486 201,377 1,799,985 1,799,985
General and Administrative Costs Salaries-Officers 82,505 - 19,468 101,973 101,973
Salaries-Direclors 74,375 38,285 38.265 7,784 158,729 _ 158.729
Salaries-Office 64,302 - 45,676 109,978 109,978
Payroll Taxes 8,629 3,331 11,980 11,960
Pension Plan Expense 1,330 1,199 2,529 2,529
Accounting 22,066 17,120 11,267 4,951 55,404 55,401
Advertising 10,393 4,099 2,831 1,644 18,968 (18,968) -
Alann 24 24 24
Amortization-Organization 130,581 14,032 25,452 170,065 (170.065) -
Bank Charges 83 83 83
Collections Fees 1,111 239 523 281 2,154 2,154
Contributions - - 209 209 (209) -
Dues&Subscriptions 373 138 5+. 562 562
Flowers 38,425 36,425 38,425
Freight-Delivery - - - - -
Ibm-Rental 2,580 8,844 1,296 1,196 13,916 13,916
Interst-Deposits 5,166 366 5,532 (5,532) -
Janitorial 2,700 2,700 2.700
Lease Outside Equipment 1,560 1,560 1,149 4,269 4,269
Legal - - - - - -
Licenses-Permits 60 60 60 14 194 194
Loan Fees - 223 223 _(223) -
Medical Expenses 1,407 53 - 351 80 1,891 1,891
Miscellaneous 432 43 475 475
Olhoes Supplies&Expense 19,776 7,557 9,758 3,806 40,897 40,897
Postage 20,341 3,928 6,934 4,216 35,418 35,418
Promotional - - -
Rent-Office 26,D65 15,855 11,330 5,549 60,819 60,819
Repairs&Maintermnce Gene 438 372 810 810
Sales Promotion 46 886 932 932
Sponsorships 11,900 2,466 - 2,200 16,566 (16,566) -
Taxes-Other 25 50 25 19 119 119
Taxes-Personal Property 31 49 80 BO
Telephone 10,670 1,021 435 1,667 13,793 13,793
Travel&Fntertainmenl-Mea 364 805 1,169 (1,169) -
Utilaies 1,393 330 1,723 1,723
Total general&administrative 534,338 121,489 110,695 106,064 872,586 659,855
Net income(loss)from operations (51,897) (79,539) (65,247) 181,927 (14,756) 197,975
1 Isolate just AB 939 costs on which profit is allowed pursuant to Page 1-17 of Rate Setting Process and Methodology Manuel
�dJ1d
Garaventa Enterprises
Rate Application
Income Statement
For year ended 12-31-2004
Oakley Brentwood Discovery Bay Pmbburg Total AdJusbnem
Disposal Disposal Disposal Disposal Service AB for To
Service Service Service (Baypoint) companies Applicatlon Application
Revenues
Servitss-Residential In City 2,443,925 38,152 1,111,129 3,593,206 1,099,403 4,692,609
Services-Residential Out Ol City 30,153 298,109 - 771,142 1,099,403 (1,099.403) -
Services-CommemallnCity 806.479 59,765 157,938 1,024,182 583,013 1,607,195'
Sales-Recyc in9 - 21,563 24 15,081 173 36,642 36,842
Total Revanues 3,350,345 653,373 1,284,148 1,048,779 6,336,645 6,336,645
Cost of operations -
overt Labor
Lebo-Wages 425,744 116,226 152,034 146,248 840.251 840,251
Payroll Texas 37,700 10,312 15,438 13,894 77,344 77.344
Labor-flesN1&Welfare 98.024 22,961 33.505 29,928 184,418 164,418
Labor-Workmens Comp 84,120 22,263 34,255 19,552 160,189 160,189
Labor-Pension 54,930 14,449 20.091 13,365 102.835 102,835
Total direct labor 700,517 186,211 255,323 222,987 1,365.038 1,365038
Dumping Costs 971,954 171,912 329790 259,571 1,733,237 1,733,237
Franchise Fees 205,938 5,382 122,105 333.426 (40,608)1 292.818
Depredation and Other Operating Costs
Repairs-Customer 14,535 2,796 7,021 4,535 - 28,887 28,687
Depredation-Furniture 8 F 363 - 118 481 481
HHW fees 59,883 31,954 91,837 40,608 1 132,445
74,780 2,796 38,975 4,653 121.204 161,812
Trucking costs'.
Rent-Equipment 957,096 344,682 288,016 214,304 1804,098 1,804,098
General and admmistrative costs:
Salaries-Officers 50,DD0 11,950 61,950 61,950
Solanes-Directors 75,625 37.813 38,776 7,531 159,745 159,745
Salaries-Office 68,054 - 41.7-70 109.824 109,824
Payroll Taxes 9,046 964 3,219 13,229 13,229
Pension Plan Expense 1,691 327 327 1,095 3,441 3,441
AcrAunong 19,476 15,530 10,392 4,835 50,233 50,233
Advertising 6,696 1,1D0 3,050 881 11,727 (11,727) -
Amorti:aoon 130,581 14,032 25,452 170,065 (170.065) -
Bank Charges - 18 2 20 20
Collections Fees 1,616 152 163 1.931 1,931
Contributions - - 350 149 499 (499)
Dues&Subscriptions 373 138 1.288 1,799 1,799
Ibm.Remal 2,580 8,844 1,296 1,138 13,858 13.858
Jamlonal 2.700 - 2,700 2.700
Lease Outside Equipment 7,440 3,480 7,800 2,235 20.955 20.955
Legal 270 - 1,262 1,532 1.532
Licenses-Permits 75 850 75 17 1.017 1,017
Medical Expenses 540 253 416 138 1,347 1,347
Miscellanams - - 170 170 170
Offices Supplies&Expense 19,141 5,906 11,970 3,534 40,551 40.551
Postage 27,109 4.074 17796 4224 53,203 53,203
Promotional 7,198 6,867 14,065 (14,015)
Rent-Office 28.085 15,855 11,330 5,280 60,550 60,550
Repairs&Maintenance Gene 1,095 - 746 1,841 1.841
Sponsorships 3,025 1,014 - 595 4,734 14.734) -
Taxes-Other (905) 15 (890) (905)
Taxes-Perspml Property 31 41 73 73
Telephone 6,692 1,397 616 1,259 9,965 9,965
Travel&Entertainment 150 90 904 1.144 (1,144)
Travel it Entemainment-Mea 595 - - 595 (595) -
Ofilmes 1,597 - 391 1,988 1,986
Total general&administrative 471.482 117,820 129,828 94,728 813,859 610,125
No income(kms)from operations (31,433.20) (175,430.82) 120.110.59 252,536.65 165,703 42 - 369.517
1 Isolate just AB 939 wsrs on which proM is allowed pursuant to Page 1-17 or Rate Setting Process and Methodology Manual
-D/D
Garaventa Enterprises
Rate Application
Income Statement/Audit tie-out
For the Year Ended 12-31-2005
Dalley Brenni Discovery Say Pittsburg Total Adp atr l"
Disposal Disposal Disposal Disposal Service All for To
Service Service Service (Baypolrti) Companies Application Application
Revenues
Services-Residential 2,581,233 335,182 1,278,507 4,194,922 696,534 4,891,456 -
Services-Residential Out 716,032 716,032 (716,032) -
Services-Commercial 915,252 317,639 188,556 1,421,447 303,046 1',724,493
Services-Commercial Out 303,046 303,046 (303,046) -
Services-Residential Recyding - - -
Sales-Paper Stock 4,095 4,095 19,498 23,593
Total Revenues 3,496,485 652,821 1,467,063 1,023,173 6,639,542 6,639,542
Cost of operations
Operating expenses
Labor-Wages 473,055 - _ 125,635 199,105 150,606 948,601 948,601
Labor-Payroll Taxes 39,876 10,790 16,466 14,327 81,459 81,459
Labor-Health&Welfare 93,939 19,512 38,324 35,322 187,097 187,097
Labor-Workers Compensation Ins. 78,101 20,974 32,303 19,153 150,530 150,530
Labor-Pension 53,888 10,604 22,248 23,600 110,340 110,340
Total Labor Costs 738,859 187,515 308.445 243,207 1,478,027 1,478,027
Dumping Cost 1,051,410 164,476 380,600 267,236 1,863,722 1,663,722
Depreciation and Other Operating Costs
Repairs-Customers 20,454 2,155 5,386 2,936 30,931 30,931
Depreciation 932 80 1,012 1,012
HHW Fees 59,908 896 19,557 12,838 93,199 93,199
81,294 3,051 24,943 15,854 125,142 125,142
Franchise Fees 172,841 31,275 66,679 49,375 320,170 320,170
Rent-Equipment 1,047,299 363,577 317,743 234,267 1,962,886 1962,886
General and Administrative Costs - -
Salaries-Directors 7,119 7,119 7,119
Salaries-Officers 181,065 37,500 37,500 22,159 278,224 278,224
Salaries-Office 63,308 40,343 103,651 103,651.
Taxes-Payroll 8,917 937 937 3,363 14,154 14,154
Pension 1,252 205 205 1,084 2,746 2,746
Accounting 21,101 15,820 10,092 4368 51,381 51,381
Advertising 7,728 828 3,008 599 12,263 - (12,263) -
Alarm 402 26 428 428
Bank charges 140 278 16 434 434
Collection Fees 913 300 105 1,318 1,318
Contributions 71 71 (71) -
IBM Rental Software&Repair 2,580 8,844 1,296 1,210 13,930 13,930
Dues&Subscriptions -52 136 1,050 1,238 1,238
Employee functions - -
Fuel&Oil 14 14 14
Janitorial 2,700 2,700 2,700
Landscape and maintenance 244 7 251 251
Laundry&Uniforms - -
Legal 944 107 1,051 1,051
Medical Expense 934 264 603 146 1,947 1,947
Miscellaneous 222 12 '234 234
Office Supplies&Expense 36,043 10,279 17,556 5,573 69,451 69,451
Outside Services 159 159 159
Postage 22,439 3,125 8,741 4,962 39,267 39,267
Lease-Outside Equipment 5,280 3,480 5,400 1,713 15,873 15,873
Rens-Office 34,736 15,855 11,330 5,033 66,954 66,954
Repairs-Gare l 298 298 298
Sponsorships 6,133 7,038 1,478 14,649 (14,649)
Taxes-Omer 51 89 25 15 180 180
Telephone 8,358 1,214 498 1,923 11,993 11,993
Travel&Entertainment 1,462 210 1,527 3,199 (3,199) -
.Utilities 1,941 355 2,296 2,296
Payroll Deposit Charges 255 500 250 1,005 (1,005)
Total General&Administrative 409,200 106,624 97,824 104,830 718,478 687,291
moome(Loss)From Operations (4,418) (203,697) 270,828 108,404 171,117 202,304
v�a-d7
Garaventa Enterprises
Rate Application
Annualized Statement of Operations
For the Year Ended 12-31-2006
~ Through 6.30.06
Oakley Brimm000d Discovery Bay McWry Total Prole ted Adjurib nt
Disposal Disposal Disposal 6ervin All or for To
service service servlee (BSYPDIre) Companies AnnrulWd APpIMBBon AppB®Bon
Revenues
Services-Residential in 1.305,165 4,133 656,656 1,965.954 3,931,908 1,048,981 4,960,BB8
Services-Residential Out 15,605 155.577 353,309 524,490 1048,981 (1,048,981)
Services-Commercial In 428,341 19,733 101,133 549,206 1,098,413 668,481 1,766,893
Services-Commercial Out 31,934 138,045 164,261 334,240 668,481 (668481) -
Services-Residential Recycling - - -
Saks-Paper Stock 17,770 28 14.873 252 32,923 37,955 37,955
Total Revenues 1798,814 317,516 772,662 517,822 3,406814 6,785,737 6,785,737
Cost of operations
Owed Labor - -
Labor-Wages 216,870 64,9D4 79,207 77,682 438,664 906.206 905,206
Labor-Payroll Taxes 19,644 5,990 .7,400 7,380 40,414 86,1180 86,090
Labor-Health&Welfare 45,527 12,697 18.015 19,331 95,570 191,140 191.140
Labor-Workers Compensation fins. 38,424 11,487 13,592 11,611 75,123 150,247 150,247
labor-Pension 24,831 5,403 10,266 12,553 53,051 106,103 106,103
Total Diced Labor 345295 100,481 128,479 ' 128,566 MAN 1.439785 1,439.785
Dumping Cost 545,466 87,591 186,365 105,956 925,377 1,894.772 1,894.772
Depreciation and Omer Operating Costs -
Repairs-Customers 3,3D0 600 2.505 781 7,265 29,060 29,060
Depreciation 673 20 693 1,386 1,386
Household haiardous wash fees 8,070 9,713 17,783 84,72D - B4,720
12,043 600 12,297 801 25,741 115,167 115,167
Trucking Costs -
Equipment,Meirdenance,It Repair 568,751 191,236 173,735 127,115 1,060,837 2.121,675 2,121,675
Franchise Fees 86,994 1,592 85.588 174,174 348,349 348,349
General and Administrative Costs -
Selaries-Officers 33,626 1,013 3,652 4.648 42,939 90.171 90.171
Salaries-Directors 37,500 18,750 18,750 2,734 T7,734 163,241 163,241,
Salaries-01 76.855 9,338 33.585 12.633 132,411 278,063 278,063
Taxes-Payroll - 9,571 1,498 3,699 1,393 16,162 32,323 32323
Pension Plan Expense 2,150 470 1.181 368 4,170 8,339 8339
Accounting 10,818 7,980 5,406 2,126 26,330 - 52,660 52,660
Advertising 1,672 878 192 2,742 5,483 (5,483) -
Aamn 228 12 240 480 480
Bank charges 2 2 4 4
Collection Fees (301 (30) (30) (30)
Contributions-Cherttaole 364 354 728 (728) -
IBM Rental,Software Is Repair 1,290 4.422 648 431 6,791 13.582 13,582
Dues 8 Subacripbons 740 740 1.480 (1.4110) -
Employeefunctions 69 69 138 138
Fuel and oil 4 4 8 8
Jannonal 1,350 1,350 2.700 2,700
Laundry B Uniforms 97 97 194 194
Lease-Outside Equipment 2,880 2040 - 584 5.504 11,008 11,008
Legal 4,D42 288 4,310 8,619 8,619
Licenses 220 11 231 462 462'
Medical Expense 216 1D2 175 66 558 _ 1,116 1,116
Office Supplies 8 Expense 3,712 675 1.080 813 6,280 12,560 12,560
Postage 9,841 1,540 6,511 2,036 19,928 39,856 39,856
Rent-Omce 24,245 7,927 5,665 2,114 39,951 79.902 79,902
Repaint-General 1,150 1,150 2,300 2,300
Sponsorship 1,500 .1,500 3,000 (3,000) -
Taxes-Omer 25 1 25 51 101 101
Telephone 2.487 277 218 243 3,225 645D 6,450
Travel B Entertainment 419 600 55 1,074 2,146 (2,148) -
Utilities 570 149 719 1,438 1,438
Total General&Administrative 225284 54,593 83.512 33,205 396,593 818.524 805,685
Total Expenses 1,783.833 436,093 669,976 395,643 3,285 545 6,738,271 6.725,433
Income(Loss)From Operabons 14,981 (118,577) 1021686 122.179 121,269 47,465 60,304
t
I s as-d�
Garaventa Enterprises
Rats Application
Projected Statement of Operations
For the Year Ended 12-31-2007
Oakley Brentwood Discovery Bay Pittsburg Toy! Adjustment
Disposed Disposal Disposal Service All for To
Service service Service 19eypoint) Companies Application Application
Revenues
Services-Residential In 2,618,939 8,266 1,313,311 - 3,940,517 1,048,981 4,989,497
Services-Residential Out 31,209 311,155 - 706,617 1,048,981 (1,D48,981) -
Services-Commercial In 856,682 39,465 202,265 - 1,098413 668,481 1,766.893
Services-Commercial Out 63,867 276,090 - 328,523 668,481 (668,481) -
Services-Residential Regciing - - - - - -
Saks-Paper Stock 20,286 2B 17,389 252 37,955 37,955
Total Revenues 3,590,964 635,004 1532,966 1.035392 6,794,346 6.794,346
Cost of operations -
Direct Labor
Labor-Wages 464,623 139,051 169,693 160,024 933,392 933.392
labor-Payroll Taxes 44,139 13,210 16,121 15,202 88,672 68,672
Labor-Health S Weltare 109264 30,473 43,236 46,395 229,369 229.369
Labor-Workers Compensation Ins. 67,034 20.W 23,713 20,273 131,060 131,060
Labor-Pension 52,641 - 11,454 21,763 26,611 112.469 112.469
Total Direct Labor 732701 214,228 274,526 268,507 1,494,962 1,494,962
Dumping Cost 1,203.257_ 193.219 411.107 233,731 2,041,314 2,041,314
Depreciation and Other Operating Costs
Repairs-Customers13,713 2,493 10,742 3,246 30,194 30,194
Depreciation 1,399 - - 42 1,440 1,440
Household natardous waste fees - 39,948 48,077 88,024 88,024
55,059 2,493 58,819 3,287 118.658 119,658
Tracking Costs -
EquipmentMaintenance,BRepair 1,181,865 397,3BB 361,021 264,146 2.204,420 2,204,420
Franchise Fees 188,277 3,446 185,234 - 376,957 376,957
General and Admimsbabve Costs
Salaries-Officers 73,369 2,209 7,968 10,141 93,688 93,688
Salamis-Diroctors 81,821 40,911 40,911 5,965 169,608 169,608
Salaries-Office 167,690 20,374 73,280 27,563 288,906 288,908
Texas-Payroll 19.888 3,114 7,687 2,895 33,584 33,584
Pension Plan Expense 4,468 977 2,454 765 8,664 8,660
Accounting 22.480 16,582 11,234 4,418 54,714 54,714
Alarm 474 - - 25 499 499
Bank charges - - 4 4 4
Collectron Fees (31) - - - (31) (31)
IBM Rental,Software 8 Repair 2,681 9,189 1,347 896 14.112 14,112
Employee functions - - 143 143 143
Fuel and oil - - - - 8 8 8
Janitorial 2.805 - - - 2,805 2,805
Laundry 8 Uniforms 2D1 - - - - 201 201
Lease-Outside Equipment 5,985 - 4,239 1.214 11,437 11.437
Legal 8,398 - - 557 8.955 8.955
Licenses 457 - - 23 480 480
Medical Expense 448 212 363 137 1,160 1,160
Office Supplies 8 Expense 7,714 1,403 2,243 1,689 13,050 13.050
Postage 20,419 3,201 13,529 4,231 41.410 41.410
Rem-Office W380 16.473 11,772 4,393 83,018 83,018
Repairs-General - - - 2,390 2,390 2.390
Taxes-Other 52 1 52 - 105 105
Telephone 5,169 575 453 505 6,701 6,701
Utilities 1,164 310 1,494 1,494
Total General B Admrnisterve 476,084 115,221 177531 68,271 837,107 837,107
Total Expenses 3,842,243 925,995 1468,237 837,942 7,074,417 7,074417
Income(Loss)From Operators !251,2591 (la991) 64,729 197,450 (200,071) (280,071)
l
Appendix B
Appendix:
Audited Financial Statements
This appendix provides audited financial The 2005 revenues and expenses presented in
statements prepared for Garaventa by their the 2007 Base Year Rate Change Application
independent auditor, Blanding, Boyer& were reconciled to the 2005 audited financial
Rockwell, LLP. Audited financial statements statements.
were included in the rate application for three (3)
companies related to unincorporated County
refuse collection:
• Brentwood Disposal Service
o Discovery Bay Disposal Service
® Oakley Disposal Service.
Audited financial statements were for the
calendar year end 2005.
B-1
Review of
Solid Waste Rate Application
[This page intentionally left blank]
B-z
i
BRENTWOOD DISPOSAL SERVICE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005
WITH INDEPENDENT AUDITOR'S REPORT
i
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BRENTWOOD DISPOSAL SERVICE
TABLE OF CONTENTS
Independent Auditor's Report.................................................................................................1
Financial Statements
BalanceSheet......................................................................................................................2
Statement of Operations and Accumulated Deficit .................................................... ..........3
-- Statement of Cash Flows ........................................
Notes to Financial Statements ................................................................................. ...... . 5-7
Supplementary Information
Schedule of Direct Operating Expenses.................... ..................... ...........—......................9
Schedule of Selling, General and Administrative Expenses ...............................................10
�LL,
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Brentwood Disposal Service
Concord, California
We have audited the accompanying balance sheet of Brentwood Disposal Service (a California
S corporation), as of December 31, 2005, and the related statements of operations and
accumulated deficit and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Brentwood Disposal Service as of December 31. 2005 and the results of
its operations and its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary schedules of direct operating expenses and selling,
general and administrative expenses are presented for purposes of additional analysis and are
not a required part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial statements, and, in our
opinion, is fairly stated in all material respects in relation to the basic financial statements taken
as a whole.
Blanding Boyer & Rockwell, LLP
Walnut Creek, California
June 19, 2006
w - 1 -
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BRENTWOOD DISPOSAL SERVICE
BALANCE SHEET
DECEMBER 31, 2005
(See notes to financial statements.)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 253
Accounts receivable 37,198
Other receivable 10,000
Due from related party 3,200
Total current assets 50,651
OTHER ASSETS
Deposits 900
Total assets $ 51,551
LIABILITIES AND SHAREHOLDER DEFICIT
CURRENT LIABILITIES
Bank overdraft $ 755
Accounts payable and accrued liabilities 18,620
Due to related party 771,641
Deferred revenues 288
Total current liabilities 791,304
SHAREHOLDER DEFICIT
Common stock - $1 par value; 100,000 authorized;
1.000 shares issued and outstanding 1,000
Accumulated deficit (740,753)
Total shareholder deficit (739.753)
Total liabilities and shareholder deficit $ 51,551
- 2 -
BRENTWOOD DISPOSAL SERVICE
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2005
(See notes to financial statements.)
REVENUES
- Commercial $ 317,639
Residential 335,182
Total revenues 652,821
OPERATING EXPENSES
Direct 747.739
Selling, general and administrative 108,779
Total operating expenses 856,518
LOSS FROM OPERATIONS (203,697)
OTHER INCOME (EXPENSE)
Interest income 1.478
Interest expense (10,495)
LOSS BEFORE INCOME TAXES (212.714)
PROVISION FOR STATE INCOME TAX 1.200
NET LOSS (213.914)
ACCUMULATED DEFICIT
Beginning of year (526,839)
End of year $ (740,753)
- 3 -
i
' Sold
I
BRENTWOOD DISPOSAL SERVICE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
(See notes to financial statements.)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (213.914)
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation
(Increase) decrease in
Accounts receivable, net (17,799)
Other receivable 52,300
Due from related party (800)
Increase (decrease) in
Due to related party 190,715
Deferred,revenues (10,858)
Accounts payable and accrued expenses 356
Net cash provided by operating activities -
- CASH AND EQUIVALENTS
Beginning of year 253
End of year $ 253
-4 -
i
Sold
BRENTWOOD DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF OPERATIONS
Brentwood Disposal Service (the Company) is primarily engaged in the solid waste collection
and recycling business. The Company provides services under exclusive agreements to
unincorporated areas of Eastern Contra Costa County including the towns of Byron and
Knightsen, all located in California. The Company is provided with facilities and services by
several related companies whose sole shareholder is also the shareholder of the Company
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Company include the following.
Basis of presentation - The accompanying financial statements are presented on the
accrual basis of accounting in accordance with accounting principles generally accepted
in the United States of America. Generally, revenues are recognized when they become
both measurable and available, and expenses are recognized when an obligation is
incurred.
Use of estimates Presentation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires management to
make estimates and assumptions that affect the reported amounts and disclosures in the
financial statements. Consequently, actual results could differ from these estimates.
Cash and equivalents - The Company considers as cash and equivalents all highly
liquid investments with original maturities of three months or less.
Income taxes - The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, the financial statements do
not include a provision for federal income taxes. Under this election, the Company's
taxable income or loss will be reportable on the shareholder's personal income tax
return: State franchise taxes are assessed at a rate of 1'/z% of taxable income.
Accordingly, a provision for state franchise taxes is included in the accompanying
financial statements.
Property and equipment - Property and equipment are carried at cost. Depreciation is
computed using the straight-line and declining balance methods, over the estimated
useful lives of the assets (generally 5 to 7 years).
Revenues - Revenues consist primarily of billings for the collection. recycling and disposal
of solid waste from a diversified base of customers including residential, commercial and
industrial. Residential customers make payments in advance for collection services.
Revenues from those receipts are deferred and recognized as the services are performed
- 5 -
i
BRENTWOOD DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
FRANCHISE AGREEMENTS
The Company provides services under exclusive agreements with the Byron Sanitary District.
annexed areas of Brentwood and the County of Contra Costa. The agreements provide for
payments to the district and county on a percentage of gross revenues from collection services.
The agreement with Contra Costa County expires in May 2015. All remaining customers under
the agreement with Byron Sanitary.District, within the Central Annexation Area, were transferred
to the City of Brentwood in March 2006.
RETIREMENT PLAN
The Company makes contributions to a collectively bargained. multiemployer defined benefit
pension plan. Contributions are determined in accordance with the provisions of the negotiated
labor contract or terms of the Plan. The Plan's administrators do not provide sufficient
information to enable the Company to determine its share, if any, of Plan assets or unfunded
vested benefits. Pension expense for the defined benefit pension plan was $10,604.
RELATED PARTY TRANSACTIONS
The Company rents certain facilities on a month-to-month basis from the shareholder for $1.321
per month. Total rentals under this arrangement were $15,855.
The Company leases certain machinery and equipment under the terms of an operating lease,
which expired December 31, 2003, from a related company. The lease is automatically
renewed annually unless written notice is given that the lease shall not be renewed. Total
rentals were $363,577.
The Company contracts with a related company for the preparation and transport of refuse.
Payments for these refuse transfer services aggregated $164,476. The amount due to the
related company for these services was $14,646 at year end.
The Company has a payable to a related corporation which maintains the majority of the
Company's cash and pays for certain expenses. The payable to this corporation at year end
was $771,641.
- 6 -
BRENTWOOD DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES
Contingent liabilities - In the ordinary course of conducting its business, the Company
becomes involved in lawsuits and administrative proceedings. Some of these
proceedings may result in fines, penalties or judgments being assessed against the
Company that, from time to time, may have an impact on earnings. It is the opinion of
management that the aforementioned proceedings, individually or in the aggregate, will
not have a materially adverse effect on the Company's financial position.
Collective bargaining agreement A significant portion of the Company's employees
are subject to a collective bargaining agreement with Teamsters Local 315, which
expires February 28, 2008.
Environmental risk - The refuse and recycling industries in which the Company
operates are subject to a certain level of environmental risk. Such environmental
liabilities could have a material effect on the financial position of the Company and its
affiliates. The Company has not accrued any liability for environmental contingencies.
- 7 -
r
SUPPLEMENTARY INFORMATION
BRENTWOOD DISPOSAL SERVICE
SCHEDULE OF DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2005
- Equipment rental $ 363,577
Dumping costs 164,476
Wages 125,635
Franchise fees 31,275
Workers compensation insurance 20,974
Group health insurance 19,512
Payroll taxes 10,790
Pension plan 10.604
Household hazardous waste fees 896
$ 747,739
i
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BRENTWOOD DISPOSAL SERVICE
SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2005
Officer salaries $ 37,500
Office rent 15,855
Accounting 15,820
Office supplies 10,279
Office equipment rental 8.844
Sponsorship 7.038
Outside equipment lease 3,480
Postage 3,125
Repairs - customers 2.155
Telephone 1.214
Payroll taxes -937
Advertising and promotion 828
Miscellaneous 700
Payroll deposit fees 500
Travel and entertainment 210
Pension plan 205
Taxes and licenses 89
$ 108,779
0
- 10 -
t
DISCOVERY BAY DISPOSAL SERVICE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005
WITH INDEPENDENT AUDITOR'S REPORT
DISCOVERY BAY DISPOSAL SERVICE
TABLE OF CONTENTS
Independent Auditor's Report.... ............ ..... ............. .....
Financial Statements
BalanceSheet............_.................................. .. ................. ............... ....... .................... -2
Statement of Operations and Retained Earnings ....................... ...... .. ......... . ... ......—3
Statement of Cash Flows ...... ..... ...... .. ..... .... . 4
Notes to Financial Statements .... .... ..... ... ......... ............ .. . ......... 5-7
Supplementary Information
Schedule of Direct Operating Expenses..... .. .... .... ......... .... . ..
Schedule of Selling, General and Administrative Expenses .... ....... .... . 10
I
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BlI ,
I
aOC <WPri '
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Discovery Bay Disposal Service
Concord, California
We have audited the accompanying balance sheet of Discovery Bay Disposal Service (a
California S corporation), as of December 31, 2005, and the related statements of operations
and retained earnings and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to, obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Discovery Bay Disposal Service as of December 31, 2005 and the
results of its operations and its cash flows for the year then ended in conformity With accounting
principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial statements
taken as a whole. .The supplementary schedules of direct operating expenses and selling,
general and administrative expenses are presented for purposes of additional analysis and are
not a required part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial statements, and, in our
opinion, is fairly stated in all material respects in relation to the basic financial statements taken
as a whole.
Blanding Boyer & Rockwell, LLP
Walnut Creek, California
June 19, 2006
- 1 -
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DISCOVERY BAY DISPOSAL SERVICE
I.
BALANCE SHEET
DECEMBER 31, 2005
(See notes to financial statements.)
ASSETS
CURRENT ASSETS
Accounts receivable $ 54,418
Prepaid expenses 11,463
Due from related party 613,637
Total current assets $ 679,518
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Bank overdraft $ 2.640
Accounts payable and accrued liabilities 80,608
Deferred revenues 11681
Total current liabilities 84,929
SHAREHOLDER EQUITY
Common stock - $1 par value-, 100,000 authorized,
1,000 shares issued and outstanding 1,000
Retained earnings 593,589
Total shareholder equity 594,589
Total liabilities and shareholder equity $ 679,518
- 2 -
DISCOVERY BAY DISPOSAL SERVICE
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2005
(See notes to financial statements.)
REVENUES
Commercial $ 188,556
Residential 1.278,507
Total revenues 1,467,063
OPERATING EXPENSES
Direct 1.093.025
Selling, general and administrative 103.210
Total operating expenses 1,196,235
INCOME FROM OPERATIONS 270,828
OTHER INCOME (EXPENSE)
-- Interest income 4.734
Interest expense (185)
INCOME BEFORE INCOME TAXES 275,377
PROVISION FOR STATE INCOME TAX 3,288
NET INCOME 272,089
RETAINED EARNINGS
Beginning of year 321.500
End of year $ 593,589
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v-ate-07
DISCOVERY BAY DISPOSAL SERVICE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
(See notes to financial statements.)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 272.089
Adjustments to reconcile net income to net cash provided by
operating activities
Increase in
Accounts receivable, net (42,882)
Prepaid expenses (11.463)
Due from related party (189,595)
Increase (decrease) in.
Bank overdraft 1,014
Accounts payable and accrued expenses 18,157
Deferred revenues (47,320)
Net cash provided by operating activities
CASH AND EQUIVALENTS
Beginning of year
End of year $
4
i
DISCOVERY BAY DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF OPERATIONS
Discovery Bay Disposal Service (the Company) is primarily engaged in the solid waste
collection and recycling business. The Company provides services under an exclusive
agreement to 'the area of Discovery Bay in Eastern Contra Costa County, California. The
Company is provided with facilities and services by several related companies whose sole
shareholder is also the shareholder of the Company.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Company include the following.
Basis of presentation - The accompanying financial statements are presented on the
accrual basis of accounting in accordance with accounting principles generally accepted
in the United States of America. Generally, revenues are recognized when they become
both measurable and available, and expenses are recognized when an obligation is
incurred.
Use of estimates - Presentation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires management to
make estimates and assumptions that affect the reported amounts and disclosures in the
financial statements. Consequently, actual results could differ from these estimates.
Cash and equivalents - The Company considers as cash and equivalents all highly
liquid investments with original maturities of three months or less.
Income taxes - The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, the financial statements do
not include a provision for federal income taxes. Under this election, the Company's
taxable income or loss will be reportable on the shareholder's personal income tax
return. State franchise taxes are assessed at a rate of V/z% of taxable income
Accordingly, a provision for state franchise taxes is included in the accompanying
financial statements.
Revenues - Revenues consist primarily of billings for the collection, recycling and
disposal of solid waste from a diversified base of customers including residential.
commercial and industrial. Residential customers make payments in advance for
collection services. Revenues from those receipts are deferred and recognized as the
services are performed.
- 5 -
i
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as d7
DISCOVERY BAY DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
FRANCHISE AGREEMENTS
The Company provides services under exclusive agreements with the County of Contra Costa
The agreement provides for payment to the county on a percentage of gross billings from
ti collection services. The agreement expires May 2015.
RETIREMENT PLAN
The Company makes contributions to a collectively bargained. multiemployer defined benefit
pension plan. Contributions are determined in accordance with the provisions of the negotiated
labor contract or terms of the Plan. The Plan's administrators do not provide sufficient
` information to enable the Company to determine its share, if any, of Plan assets or unfunded
vested benefits. Pension expense for the year ended December 31, 2005 for the defined
benefit pension plan was $22,248. Non-union employees are covered by the profit sharing plan
of an affiliated company and for those who elect to participate, a 401(k) plan is available
Matching contributions made by the Company to the 401(k) plan for the year were $205.
_ RELATED PARTY TRANSACTIONS
The Company rents certain facilities on a month-to-month basis from the shareholder for $944
per month. Total rentals under this arrangement were $11,330.
The Company leases certain machinery and equipment under the terms of a four year operating
lease, which expired December 31, 2003 from a related company. The lease is automatically
renewed annually unless written notice is given that the lease shall not be renewed. Total
rentals were $317,743.
The Company contracts with a related company for the preparation and transport-of refuse.
Payments for these refuse transfer services aggregated $380,600. The amount due to the
related company for these services was $30,261 at year end.
The Company has a receivable from a related corporation which maintains the majority of the
Company's cash and pays for certain expenses. The receivable due from this corporation at
year end was $613,637.
6
i
DISCOVERY BAY DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES
Contingent liabilities - In the ordinary course of conducting its business, the Company
becomes involved in lawsuits and administrative proceedings. Some of these
proceedings may result in fines, penalties or judgments being assessed against the
Company that, from time to time, may have an impact on earnings. It is the opinion of
management that the aforementioned proceedings, individually or in the aggregate, will
not have a materially adverse effect on the Company's,financial position.
Collective bargaining agreement - A significant portion of the Company's employees
are subject to a collective bargaining agreement with Teamsters Local 315, which .
expires February 28, 2008.
Environmental risk - The refuse and recycling industries in which the Company
operates are subject to a certain level of environmental risk. Such environmental
liabilities could have a material effect on the financial position of the Company and its
affiliates. The Company has not accrued any liability for environmental contingencies.
- 7 -
as-a7
SUPPLEMENTARY INFORMATION
- 8 -
i
-c)7
DISCOVERY
_. DISCOVERY BAY DISPOSAL SERVICE
SCHEDULE OF DIRECT OPERATING EXPENSES
_. FOR THE YEAR ENDED DECEMBER 31, 2005
Dumping costs $ 380.600
Equipment rental 317,743
Wages 199,105
Franchise fees 66,679
Group health insurance 38,324
Workers compensation insurance 32,303
Household hazardous waste fees 19,557
Pension plan 22,248
Payroll taxes 16,466
$ 1,093,025
9
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DISCOVERY BAY DISPOSAL SERVICE
SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2005
Officer salaries $ 37,500
Office supplies 17,556
Office equipment rental 6.695
Office rent 11,330
Accounting 10,092
Postage 8,741
Repairs - customers 5.387
Advertising and promotion 3,008
Payroll taxes 937
Medical 603
Telephone -498
Bank changes and fees 278
Penalties 250
Pension plan 205
Collection fees 105
Corporate filing fees 25
$ 103,210
- 10 -
t �fl,w
OAKLEY DISPOSAL SERVICE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005
WITH INDEPENDENT AUDITOR'S REPORT
' v -,2-2-d7
OAKLEY DISPOSAL SERVICE
TABLE OF CONTENTS
Independent Auditor's Report............... ...... . ........... ....... .. . 1
Financial Statements
BalanceSheet......... ................................ ... . ............................... _.. ..... .. . .. ...2
Statement of Operations and Retained Earnings ............. ..... .. .. . ...._... . .. . ....... ........3
Statement of Cash Flows.. ......... ... ...... .. . .._ ......... .. 4
Notes to Financial Statements ........._... .... ..... 5-7
Supplementary Information
Schedule of Direct Operating Expenses.. . .. ...................... ....... .9
Schedule of Selling, General and Administrative Expenses .... .................10
i
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INDEPENDENT AUDITOR'S REPORT
Board of Directors
Oakley Disposal Service
Concord, California j
We have audited the accompanying balance sheet of Oakley Disposal Service (a California S
corporation), as of December 31, 2005, and the related statements of operations and retained
earnings and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects.
the financial position of Oakley Disposal Service as of December 31, 2005 and the results of its
operations and its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary schedules of direct operating expenses and selling,
general and administrative expenses are presented for purposes of additional analysis and are
not a required part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial statements, and, in our
opinion, is fairly stated in all material respects in relation to the basic financial statements taken
as a whole.
Blanding Boyer & Rockwell. LLP
Walnut Creek, California
June 19, 2006
i
OAKLEY DISPOSAL SERVICE
BALANCE SHEET
DECEMBER 31, 2005
(See notes to financial statements.)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 220
Accounts receivable 230,287
Due from related party 591,572
Total current assets 822.079
PROPERTY AND EQUIPMENT, net 4.731
Total assets $ 826,810
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Bank overdraft $ 3.018
Accounts payable and accrued liabilities 155.403
Deferred revenues 274,823
Total current liabilities 433,244
SHAREHOLDER EQUITY
Common stock - $1 par value; 100,000 authorized;
1,000 shares issued and outstanding 1,000
Retained earnings 392,566
Total shareholder equity 393,566
Total liabilities and shareholder equity $ 826.810
- 2 -
nm
OAKLEY DISPOSAL SERVICE
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDING DECEMBER 31, 2005
(See notes to financial statements.)
REVENUES
Commercial $ 915,252
Residential 2,581,233
Total revenues 3,496,485
OPERATING EXPENSES
Direct 3,070,317
Selling, general and administrative 430,586
Total operating expenses 3,500,903
LOSS FROM OPERATIONS (4.418)
OTHER INCOME
Interest income 11,985
INCOME BEFORE INCOME TAXES 7,567
PROVISION FOR STATE INCOME TAX 800
NET INCOME 6,767
RETAINED EARNINGS
Beginning of year 385,799
- End of year $ 392,566
- 3 -
i
Spiv
OAKLEY DISPOSAL SERVICE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDING DECEMBER 31, 2005
(See notes to financial statements.)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6.767
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 932
(Increase) decrease in
Accounts receivable, net (67,096)
Due from related party 24,147
Increase (decrease) in
Bank overdraft 1,677
Accounts payable and accrued expenses (4.422)
Deferred revenues 42,351
Net cash provided by operating activities 4,356
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (4,356)
NET INCREASE IN CASH AND EQUIVALENTS
CASH AND EQUIVALENTS
Beginning of year 220
End of year $ 220
4
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OAKLEY DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF OPERATIONS
Oakley Disposal Service (the Company) is primarily engaged in the solid waste collection and
recycling business. The Company provides services under exclusive agreements to the Iron
House Sanitary District that includes the City of Oakley and certain areas of Contra Costa
County, all located in California. The Company is provided with facilities and services by
several related companies whose sole shareholder is also the shareholder of the Company.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Company include the following.
Basis of presentation - The accompanying financial statements are presented on the
accrual basis of accounting in accordance with accounting principles generally accepted
in the United States of America Generally, revenues are recognized when they become
both measurable and available, and expenses are recognized when an obligation is
incurred.
Use of estimates - Presentation of financial statements, in conformity with accounting
principles generally accepted.in the United States of America, requires management to
make estimates and assumptions that affect the reported amounts and disclosures in the
financial statements. Consequently, actual results could differ from these estimates.
Cash and equivalents - The Company considers as cash and equivalents all highly
liquid investments with original maturities of three months or less.
Income taxes - The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, the financial statements do
not include a provision for federal income taxes. Under this election, the Company's
taxable income or loss will be reportable on the shareholder's personal income tax
return. State franchise taxes are assessed at a rate of 1'/a% of taxable income.
Accordingly, a provision for state franchise taxes is included in the accompanying
financial statements.
Property and equipment - Property and equipment are carried at cost Depreciation is
computed using the straight-line and declining balance methods, over the estimated
useful lives of the assets (generally 5-to 7 years).
Revenues - Revenues consist primarily of billings for thecollection, recycling and disposal
of solid waste from a diversified base of customers including residential, commercial and
industrial. Residential customers make payments in advance for collection services.
Revenues from those receipts are deferred and recognized as the services are performed.
- 5 -
OAKLEY DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
FRANCHISE AGREEMENTS
The Company provides services under exclusive agreements with the Iron House Sanitary
�. District and the County of Contra Costa The agreements provide for payments to the district
and county on a percentage of gross revenues from collection services. Rate schedules are
adjusted based on cost of living adjustments. The agreements with Contra Costa County and
Iron House Sanitary District expire in May 2015 and January 2014. respectively.
µ . PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of December 31, 2005
Furniture and fixtures $ 13,010
Less accumulated depreciation (8..279)
Net property and equipment 4 731
- RETIREMENT PLAN
The Company makes contributions to a collectively bargained, multiemployer defined benefit
pension plan. Contributions are determined in accordance with the provisions of the negotiated
labor contract or terms of the Plan. The Plan's administrators do not provide sufficient
information to enable the Company to determine its share, if any, of Plan assets or unfunded
vested benefits. Pension expense for the year ended December 31, 2005 for the defined
benefit pension plan was $53,888. Non-union employees are covered by the profit sharing plan
of an affiliated company and for those who elect to participate, a 401(k) plan is available.
Matching contributions made by the Company to the 401(k) plan for the year were $1,252.
RELATED PARTY TRANSACTIONS
_. The Company rents certain facilities on a month-to-month basis from the shareholder for $1,340
per month. Total rentals under this arrangement were $16,085.
The Company leases certain machinery and equipment under the terms of a four year operating
lease, which expired December 31, 2003 from a related company. The lease is automatically
renewed annually unless written notice is given that the lease shall not be renewed. Total
rentals were $1,047,299.
- 6 -
OAKLEY DISPOSAL SERVICE
NOTES TO FINANCIAL STATEMENTS
RELATED PARTY TRANSACTIONS (continued)
The Company contracts with a related company for the preparation and transport of refuse.
Payments for these refuse transfer services aggregated $1,051,410 for 2005 The amount due
to.the related company for these services was $88,949 at year end.
The Company has a receivable from a related corporation which maintains the majority of the
Company's cash and pays for certain expenses. The receivable due from this corporation at
year end was $591,572.
COMMITMENTS AND CONTINGENCIES
Contingent liabilities - In theordinary course of conducting its business, the Company
becomes involved in lawsuits and administrative proceedings. Some of these
proceedings may result in fines, penalties or judgments being assessed against the
Company that, from time to time, may have an impact on earnings. It is the opinion of
management that the aforementioned proceedings, individually or in the aggregate, will
not have a materially adverse effect on the Company's financial position.
Collective bargaining agreement - A significant portion of the Company's employees
are subject to a collective bargaining agreement with Teamsters Local 315, which
expires February 28, 2008.
Environmental risk - The refuse and recycling industries in which the Company
operates are subject to a certain level of environmental risk. Such environmental
liabilities could have a material effect on the financial position of the Company and its
affiliates. The Company has not accrued any liability for environmental contingencies.
- 7 -
SSk�its
SUPPLEM ENTARY INFORMATION
Rock le �..t
i
s��d
OAKLEY DISPOSAL SERVICE
SCHEDULE OF DIRECT OPERATING EXPENSES
FOR THE YEAR ENDING DECEMBER 31, 2005
Equipment rental $ 1..047,299
Dumping costs 1,051.410
Wages 473.055
Franchise fees 172.841
Group health insurance 93.939
Workers compensation insurance 78.101
Household hazardous waste fees 59,908
Pension plan 53.888
Payroll taxes 39,876
$ 3,070.317
4 - 9 -
OAKLEY DISPOSAL SERVICE
SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDING DECEMBER 31, 2005
Officer salaries $ 181.065
Office salaries and wages . 63.308
Office supplies 36,043
Office rent 34,736
Postage 22,439
Accounting 21.101
Repairs - customers 20.454
Telephone 10.299
Payroll taxes 8,917
Advertising and promotion 7.728
Contributions 6.133
Outside equipment lease 5,280
Janitorial 2,700
Office equipment rental 2,580
Travel and entertainment 1.462
Pension plan 1,252
Legal 944
Medical 934
Depreciation 932
Collection agency 913
Miscellaneous 681
Payroll deposit fees 250
Landscape and maintenance 244
Bank charges 140
Taxes - personal property 26
Corporate filing fees 25
$ 430,586
- 10 -
Appendix C
Appendix C
Adjusted Base Year Date Model
Exhibit C-1 of this appendix provides the
adjusted base year rate model. The model shows
the 2007 projections provided by Garaventa, the
NewPoint Group adjustments and the adjusted
projection. The adjustments are discussed in
detail in Section III of this report. The
adjustments to the net shortfall (with profit
impact included) are:
■ Diredt labor costs increase($10,462)
u Tipping fees increase($66,823)
e Corporate and Local, General and
Administrative cost decrease($51,398)
Reclassification of HHW fee with decrease
for profit allowance($13,122)
® Removal of County Adminstration Fee
($17,500)
® Trucking and Equipment decrease($131,770)
■ Franchise fee decrease($7,185)
w Residential bad debt allowance decrease
($155,943).
C-1
-e 7
Review of
Solid Waste Rate Application
Exhibit C-1
Application NPC Atli Adjusted
2007 2007
1. Direct Labor - $ 1,494,962 $ 9,416 $ 1,504,378
2. Tipping Fees(Profit Allowed) 1,573,200 (4,770) 1,568,430
3. Corporate and Local General and Administrative Costs 837,107 {4E.258) 790.849
4. Depreciation and Other Operating Costs 119,658 i88:J58) 31,600
5. Services Provided to County
6. Total Allowable Costs(Lines 1+2+3+4+5) $ 4,024,927 S (1.29,670) $ 3,895,257
7. Operating Ratio 90% 90%
8. Allowable O eratin Profit (Line 6/0.9-Line 6 S 447,214 S 04,4088 432,806
L Section I I I--PassThrough Costs i�ithout Franchise Fees
9. County Administrative Fee _ $ 17,500 $ (171�D,'t $ 0
10. Trucking and Equipment 2,204,420 t 131,77:) 2,072,650
11. Tipping Fees(Pass Through) 468,114 72,123 540,237
12. Household Hazardous Waste Fee 0 84,720 84,720
13. Total Pass Through Costs(without Franchise Fees)(Lines 9+10+11+12) $ 2,690,034 $ 7,573 S 2,697,607
14. Total Allowable Costs(Line 6)plus Allowable Operating Profits(Line 8)plus
Total Pass Through Costs(without Franchise Fees)(Line 13) $ 7,162,175 $ 7,025;670
Section V--ReN cone%%ithout Rate Cha ni!c in Base Year
15. Residential Revenue $ 5,197,393 $ 5,197,393 .
16. Less Allowance for uncollectible Residential Accounts (201896? $ 155,943 (;1.9.5 3)
17. Total Residential Revenue(without Rate Change in Base Year) $ 4,989,497 $ 5,145,440
18. Commercial and Light Industrial Revenue 1,766,893 1,766,893
19. Less Allowance for uncollectible Commercial and Light Industrial Accounts 0 0
20. Total Commercial/Light Industrial Revenue(without rate change in Base Year) $ 1,766,893 S 1,766,893
21. Recycled Materials Sales 37,955 37,955
22. Total Revenue(Lines 17+20+21) $ 6,794,345 S 155,943 S 6,950,288
L Section VI--Net Short�lWphus)
23. Net Shortfall(Surplus)without Franchise Fees(Lines 14-Line 22) $ 367,830 $ 75,382
24. Residential/Commercial/Light Industrial Franchise Fees(see tale below) $ 376,957 $ (7,19,-, $ 369,772
25. Net Shortfall(Surplus)with Franchise Fees(Lines 23+24) $ 744,787 $ 445,154
26. Total Residential/Commercial/Light Industrial Revenue Prior to Rate Change(Lines 17+20) $ 6,756,390 $ 6,912,333
27, Percent Change in Existing Residential/Commercial/Light Industrial Rates(Line 25+Line 26) 11.02% 6.44%
Franchise fees are set by the County at 5 percent of the revenue requirement
Solve for two equations with one unknown,and identify franchise fees as X=>
Equation 1)Revenue Requirement x 0.05=X
Equation 2)Revenue Requirement=Line 15+X,or
Substitute equation 2)into equation 1)and solve for X
Franchise Fee $ 376,957 $ 369,772
C;-7