Loading...
HomeMy WebLinkAboutMINUTES - 02052008 - D.1 �,... ..o� Contra TO: BOARD OF SUPERVISORS `L— , 4 ,z Costa FROM: Dennis M. Barry, AICP County Sra'co6K Community Development Director DATE: February 5, 2008 SUBJECT: RATE INCREASE FOR SOLID WASTE COLLECTION IN THE UNINCORPORATED AREAS SERVED BY CROCKETT GARBAGE SERVICE UNDER THE COUNTY FRANCHISE AGREEMENT SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS 1 . ACCEPT report from NewPoint Group dated January 3, 2008 regarding their review of the Interim Year Rate Application submitted by Crockett Garbage Service. (EXHIBIT A). 2. APPROVE a solid waste collection rate increase of 2.31% effective March 1 , 2008, for customers in the unincorporated areas served by Crockett Garbage Service 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 Crockett Garbage Service (CGS), a subsidiary of Republic Services, Inc., for service to the following unincorporated areas: Crockett Port Costa Tormey The County's CGS Service Area includes portions of Supervisorial District II. CONTINUED ON ATTACHMENT: X YES SIGNATURE RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COM ITTEE ,,APPROVE OTHER SIGNATURE (S): ACTION OF BOti� D ON APPROVED AS RECOMMENDED L O ER _ VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE Z UNANIMOUS (ABSENT f4q\Z, AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Contact: Deidra Dingman (925/335-1224) ATTESTED cc: Community Development Department (CDD) JOHN CUL , CLERK OF THE Crockett Garbage Service (via CDD) BOARD OF UPERVISORS AND COUNTY ADMINISTRATOR BY , DEPUTY G:\Conservation\Bryn\Franchise\Franchise-BS\Crockett\2008 Rates O-Crockett Interim Year Rate Increase 2008_Draft.doc Changes in Solid Waste Collection Rates Charged by Crockett Garbage Service February 5, 2008 1J' Page 2 BACKGROUND/REASONS FOR RECOMMENDATIONS (continued) NewPoint Group Review The County entered into an agreement with NewPoint Group to review the Interim Year Rate Change Application submitted by Crockett Garbage Service. NewPoint Group conducted their review consistent with the applicable provisions of the rate setting manual approved by the County for use in other areas within the County served by Republic Services. The result of NewPoint Group's review is contained in their letter dated January 3, 2008 which is attached as EXHIBIT A. Proposed Solid Waste Collection Rate Increase Interim year rate changes are calculated based on a weighted increase in controlled and uncontrolled costs. The recommended 2.31% increase of the solid waste collection rate was calculated based on 4% projected increase in uncontrolled costs and 1 .47% increase in controlled costs. Uncontrolled Costs Uncontrolled costs refer to tipping fees and associated regulatory charges. CGS submitted an Interim Year Rate Application showing a projected 4% increase of the tipping fee (also referred to as the gate rate) at the Golden Bear Transfer Station from $66.95 per ton to $69.93 per ton. Controlled Costs Controlled costs include all costs other than the tippling fees and associated regulatory charges. Changes to controlled costs are calculated based on the adjusted change in the Consumer Price Index (CPI). The CPI increased by 2.63% from August 2006 to August 2007. An adjustment factor is applied to this increase to account for the difference (1 .14%) between the actual change in CPI (2.63%) and the projected change in CPI from the previous year(3.79%). The adjusted change in CPI is 1 .47%. The below table summarizes the existing and recommended residential solid waste collection rates for curbside and backyard service. MONTHLY •LID WASTE COLLECTION Size Existing CR 2.31% Increase of Recommended CR CR 20-gallon backyard can $21 .19 $0.49 $21.68 32-gallon curbside cart $25.13 $0.58 $25.71 32-gallon backyard can $25.81 $0.60 $26.41 45-gallon curbside can $33.21 $0.77 $33.98 45-gallon backyard can $33.91 $0.78 $34.69 65-gallon curbside cart $44.07 $1 .02 $45.09 95-gallon curbside cart $53.55 $1 .24 $54.79 A majority of residents in the CGS service area receive 32-gallon backyard service. The recommended 2.31% increase would also be applicable to rates charged to commercial and light industrial customers served by CGS under the County's Franchise Agreement. ATTACHMENTS Exhibit A— Letter from NewPoint Group dated January 3, 2008 G:\Conservation\Bryn\Franchise\Franchise-BS\Crockett\2008 Rates\BO-Crockett Interim Year Rate Increase 2008_Draft.doc �l -s— d? EXHIBIT A NeWPolnt Group' Management Consultants January 3, 2008 Ms. Deidra Dingman Solid Waste Program Manager Community Development Department Contra Costa County 651 Pine Street 4th Floor,North Wing Martinez, California 94553-0095 Subject: 2008 Interim Year Rate Review of Unincorporated Contra Costa County Areas Served by Crockett Garbage Service Dear Ms. Dingman: This letter report represents results of NewPoint Group's evaluation of an Interim Year Rate Application submitted by Crockett Garbage Service for unincorporated Contra Costa County (County). For purposes of this review,we used the County's 2003 Rate Setting Process and Methodology Manual for Solid Waste Charges as applied to Richmond Sanitary Service, Inc. —a division of Republic Services Inc. (RSS Manual). Republic Services, Inc., dba as Crockett Garbage Service (CGS),purchased the company in May of 2001. Since then CGS has provided residential,commercial, and industrial refuse collection services to the unincorporated County areas of Crockett, Port Costa, and Tormey. Our review was conducted consistent with Steps 2,4, and 5 in Chapter 3 of the County's RSS Manual. This letter report is organized into four sections as follows: A. Summary B. Background C. Analysis of Interim Year Application D. Recommendations. There also are three(3) attachments to this letter report. 2555 Third Street.suite 215,Sacramento,California 95818 } Phone:(916)442-0508 + Fax:(916)442-0714 http://www.newpoir)tgroup.com -. ! NewPent Group' Management Consutcnts Ms. Deidra Dingman Page 2 January 3, 2008 A. Summary Based on our analysis,we recommend a rate increase of 2.31 percent. Changes to the most common residential rates in the County rate structure are shown on page 1 of the Interim Year Rate Change Worksheet(Worksheet) included as Attachment 1. This recommended 2.31 percent rate increase also is applicable to multi-family residential, commercial, and light industrial customer rates. B. Background The franchise agreement specifies that CGS is allowed to submit an application for a rate change in a format required by the County. In 2003, the County adopted the RSS Manual. The County and CGS use the RSS Manual for Crockett area rate setting. The RSS Manual reflects the County's desire to use the operating ratio method for establishing allowable profit levels in base years. The RSS Manual identifies guidelines for allowable,pass-through,and non-allowable costs. Every four years,during base years,the hauler submits audited financial statements and a Base Year Rate Application. These documents are reviewed to determine whether a rate change is necessary. Interim years follow a more streamlined process. Interim years occur during each of the three years between base years when the hauler submits an Interim Year Rate Change Application. The interim year process distinguishes between controlled costs (non-tipping fee costs) and uncontrolled costs(tipping fee costs). In interim years,controlled costs are adjusted based on the change in the San Francisco-Oakland-San Jose Consumer Price Index,All Items, for All Urban Consumers(CPI). The CPI is published by the U.S. Department of Labor,Bureau of Labor Statistics. CGS submitted an Interim Year Rate Change Application(Application) on December 5, 2007. A copy of the Application is included as Attachment 2. The request was for a 2.63 percent rate increase. The format and content of the Application was consistent with that specified in the RSS Manual. The Application requests a 4.00 percent increase in tipping fees and a 2.63 percent increase in all other costs. Crockett area rates, and rate changes, since 1996, are shown in Table 1 on the following page. In 2001,the following service changes were made to CGS-served areas: ❑ Added monthly collection of greenwaste using 64-gallon cart ❑ Changed frequency of collection of commingled recyclables from weekly to bi-weekly,using a 64-gallon cart ❑ Allowed exemption from greenwaste service to 20 percent of residential customers ❑ Required one container for greenwaste collection at multiple unit dwellings (unless otherwise exempted). Z,S,4f' New nt Group Mon gement cans t ants Ms. Deidra Dingman Page 3 January 3, 2008 Table 1 Contra Costa County Crockett Service Area Historical Rates Year Service 1996 2001 2002 2003 to 2006 2007 2005 20-gallon (backyard) $16.00 $18.34 $18.73 $19.13 $20.42 $21.19 32-gallon $20.00 $21.74 $22.20 $22.69 $24.22 $25.13 45-gallon $27.00 $28.74 $29.34 $29.99 $32.01 $33.21 65-gallon $39.80 $42.48 $44.07 95-gallon $48.35 $51.61 $53.55 Change in rate $1.74 - 2.10% 2.20% 6.74% 3.75% $2.34 Explanation for Service CPI CPI Base year CPI change in rate change review (tipping fee increase C. Analysis of Interim Year Application As part of the interim year process, the County is required to complete the Worksheet (Attachment 1). Based on completion of the Worksheet,the recommended rate increase is 2.31 percent, as shown on page 1 of the Worksheet. This rate increase corresponds to a$0.49 per customer,per month, increase for the 20-gallon can(backyard) service, a$0.60 per customer,per month, increase for the 32-gallon can(backyard) service, a$0.78 per customer,per month, increase for the 45-gallon can(backyard) service, a $1.02 per customer,per month, increase for the 65-gallon cart service, and a $1.24 per customer,per month,increase for the 95-gallon cart service. We used controlled and uncontrolled costs in the Worksheet consistent with those costs approved in the 2006 base year rate review. Controlled costs represent 71.6 percent of the total costs(Worksheet,page 2 of 2, line 4)while uncontrolled costs(i.e., tipping fees)represent the remaining 28.4 percent of the total costs(Worksheet,page 2 of 2,line 7). 1 For curbside service. Backyard service is currently$25.81 per customer,per month,for a 32-gallon container. A majority of 32-gallon customers use backyard service. z For curbside service. Backyard service is currently$33.91 per customer,per month,for a 45-gallon container. A majority of 45-gallon customers use backyard service. NewPalnt Group- Management C onsu"stfants Ms. Deidra Dingman Page 4 January 3,2008 For the controlled cost portion of the rate adjustment, we used the August-to-August CPI for this interim year review. Between August 2006 and August 2007, the CPI increased from 210.7 to 216.24 or by 2.63 percent(see Attachment 3).3 The adjustment factor for this interim year is -1.16 percent.4 The adjusted change in the CPI thus is equal to 1.47 percent(Worksheet,page 2 of 2, line 11). The Application indicated a 4.00 percent increase in tipping fees, or an increase from $66.95 per ton to$69.93 per ton (Worksheet,page 2 of 2, line 18). A total of six other neighboring disposal facilities were surveyed. Tipping fee rates for self-haul weighed loads are shown below: O Davis Transfer Station(Oakland)—$110.00 per ton O Berkeley Transfer Station(Berkeley)—$105.00 per ton O Contra Costa Transfer&Recover Station(Martinez)—$68.00 per ton O Pittsburg Transfer Station (Pittsburg) - $60.50 per ton O Pleasanton Transfer Station(Pleasanton)—$53.00 per ton O Altamont Landfill - $55.50 per ton. These rates average $75.33 per ton for weighed loads. This survey confirms that the tipping fee rate charged to Crockett residents is below average, and approximately in the middle of the range,of weighed tipping fee rates charged to self-haul customers at other neighboring disposal facilities. To account for the fact that the hauler must pay a five percent franchise fee to the County, we adjusted the 2.19 percent increase(Worksheet,page 2 of 2, line 25)upward to a 2.31 percent increase in rates(Worksheet,page 2 of 2, line 27). Historical trends for the change in August CPI are shown in Table 2. The last four years has been a period of relatively low inflation. For the most recent four-year period(i.e., 2004 to 2007), the change in the August CPI ranged from 1.2 to 3.8 percent, and averaged 2.5 percent. Following two interim years(2008 and 2009), in 2009 the County will conduct a base year rate review for rates to be set for March 1,2010. CGS will submit a base year application to the County by August 30,2009. In a base year rate review,the County will,among other analyses, assess whether the hauler's costs have escalated at a rate faster or slower than the CPI,which may provide a rationale for why rates would be increased or decreased at that time. Thus, if in interim years,use of the CPI has materially overstated or understated the hauler's actual change 3 For rates set in March 2006,as part of the prior base year rate review,the August-to-August CPI was used as an inflation estimate. In the future,the County should use the August-to-August change in the CPI for interim year adjustments. 4 As described on page III-9 of the RSS Manual,the adjustment factor is equal to the actual change in CPI during the current interim year(2.63 percent)less the adjusted projected change in the CPI from the previous year(3.79 percent). NewRt int Group' Management:omsui ants Ms. Deidra Dingman Page 5 January 3, 2008 in costs,rates could in turn be adjusted during that base year(based on a measurement of the operating ratio level). Table 2 Change in Consumer Price Index San Francisco-Oakland-San Jose (All Items, CPI-U) 2004 to 20075 (August-to-August Period) Percent Change in Year Index 2004 1.2 2005 2.2 2006 3.8 2007 2.6 Average—4 years 2.5 D. Recommendations Based on our evaluation of the Application,we recommend a rate increase of 2.31 percent. New residential rates, for typical County services, under our recommendation would be as follows: ■ 20-gallon mini-can(backyard) - $21.68 per customer,per month s 32-gallon can(curbside) - $25.71 per customer,per month ■ 32-gallon can(backyard) - $26.41 per customer,per month ■ 45-gallon can(curbside)- $33.98 per customer,per month . 45-gallon can(backyard) - $34.69 per customer,per month ■ 65-gallon cart(curbside) - $45.09 per customer,per month ■ 95-gallon cart(curbside) -$54.79 per customer,per month. 5 CPI source data is provided in Attachment 3. NewR!int Group Monogement onsu tants. Ms. Deidra Dingman Page 6 January 3, 2008 Should you have any questions regarding the interim year rate review process,or any of the contents of this letter report,please do not hesitate to contact me at(916)442-2456. Sincerely yours, NewPoint Groups Inc. Erik Nylund Principal NewPt:nt Group` Management ansu''ents Ms. Deidra Dingman Page 7 January 3, 2008 Attachment I Interim Year Rate Change Worksheet NewPoint Group, Mcsnasc P.rent'Consultants Ms. Deidra Dingman Page 8 January 3,2008 Contra Costa County-Crockett Area Interim Year Rate Change Worksheet Summary Rate Change I. Percent Change in Rates z.37 r Rate Schedule Increased New Rate Schedule Current Rate Rate Adjustments(a) Rate 20 gallon rrinican(backyard) $ 21.79—T-21 66 $ $ 21.68 32 gallon container(backyard) _ 25.81 26.41 - 26.41 45 gallon container(backyard) 33.91 34.69 - 34.69 32 gallon container(curbside) 25.13 25.71 - 25.71 45 gallon container(curbside) 33.21 33.98 - 33.98 65 gallon container(curbside) 44.07 45.09 - 45.09 95 gallon container(curbside) 53.55 54.79 a) Not applicable. The County has elected not to round rates to the nearest$0.05 interval. Year: 2008 Page 1 of 2 NewPc int Group` mon.agement Consultants Ms. Deidra Dingman Page 9 January 3, 2008 Contra Costa County-Crockett Area Interim Year Rate Change Worksheet Financial Information Section 1--Base Year Costs Base Year Controlled Costs b) 1. Total Allowable Costs 2. Plus: Allowable Operating Profit 3. Minus: Tipping Fees(Profit Allowed) 4. Equals. Total Controlled Costs Base Year Uncontrolled Costs b) 5. Tipping Fees(Profit Allowed) 6. Plus: Tipping Fees((Pass Through) 7. Equal: Total Uncontrolled Costs 8. Base Year Revenue Requirement(Less Franchise Fee) Section 11--Changes in Costs Change in Controlled Costs 9. Projected Change in Consumer Price Index E;A 10. Adjustment Factor from Prior Interim Year11. Adjusted Projected Change in Consumer Price Index Change in Uncontrolled Costs 12. Prior Year Tipping Fees Per Ton Is 66.95 13. Plus: Prior Year Regulatory Fees Per Ton S 14. Equals: Total Prior Year Uncontrolled Costs Per Ton 15. Projected Interim Year Tipping Fees Per Ton S 69 3 16. Plus: Projected Interim Year Regulatory Fees Per Ton $ 17. Equals: Total Projected Interim Year Uncontrolled Costs Per Ton 18. Projected Change In Uncontrolled Costs F=-M-21 Section 111—Calculation of Percent Change in Rates Weighted Change in Controlled Costs 19. Controlled Costs as%of Base Yr.Revenue Requirement 71.6 20. Multiplied by: Adjusted Projected Change in Consumer Price Index 1.47 21. Equals: Weighted Change in Controlled Costs Weighted Change in Uncontrolled Costs 22. Uncontrolled Costs as%of Base Yr.Revenue Requirement 28 a 23. Multiplied by. Projected Change in Uncontrolled Costs 11 4.00% 24. Equals. Weighted Change in Uncontrolled Costs Total Change 25. Total Percent Change in Costs 2.19``o 26. Divided by: Adjustment for Franchise Fee(1-5.0%) 0`1 27, Equals: Percent Change in Existing Rates -LEz.31° Year: 2008 Page 2 of 2 b) Actual numbers are not shown to protect the hauler's confidentiality. NewP6int Group` Monagement Ccrosv2tants Ms. Deidra Dingman Page 10 January 3,2008 Attachment 2 Interim Year Rate Change Application Tr / NewMint Group, Monagernent Consul*ants Ms. Deidra Dingman Page 1 1 January 3, 2008 I2-05-07 15:31 -;cm-R,—,oaA Sana a,y Se,v':e 510-222-1032 T-B26 P-002/00's F-202 C_ROCKETT GARBAGE SERVICE P.O.BCX 4113•RICHMO,D,CALIFORNIA 94804 December 5,2007 Ms.Deidra Dingman,Solid Waste Program Manager Contra Costa County Department of Community Development 651 Pine Street,4`t'Floor,North Wing Martinez,CA 94553 Dear Ms.Dingman: As provided for in the Franchise Agreement between Contra Costa County anc Crockett Garbage Company dated October 22, 1996,and in accordance with tl�^ Rae Setting Process and Methodology Manuel for Solid Waste Charges dated June 30,2003,enclosed herewith is an Application for Interim Year CPl Rate Adjustment. The requested adjustment is for an increase in rates of 2.63% effective March 1,2008. We will appreciate early review and submittal of related suggestions or recommendations,so there will be appropriate oppominity for discussion and response on any issues of concern and to provide timely notice to our custome in the Crockett-Tormey-Port Costa service area If you have any questions or need additional information,please call Janna Coverston at(510)262-1644. Very truly outs, Shawn Moberg General Manager Enclosure Ce: J.Coverston W.Lau E.Skelly NewMint Group- Moncagement Cciriwtvrts Ms. Deidra Dingman Page 12 January 3, 2008 12-65-01 15.64 Frost-Richmond Sanitary Service 510-222-1032 T-RE P-O03/003 F-202 s NevwPoint Group' t%lionogement Consuitcnis Interim Year Rafe Change Application Ct-arrvs In un,-On4 ud Ccs: I Pr!-Year Tfpp-y Fees per Ton 2 P'a.a: Pew YaarReuwinfmFe­PwTei (tr,fi,dedinT.,, Fae� S 3 °q ac: Tot_I Prix Year Ursxmtraied casts Per TO. ,g 4 Prci--"-d W-irn Year Tq*Q Fear Per Tan 6 .63 3Ptr:s: Ftvir'ux1 InierSrt Year R flat Fens Per Ton g 8 kra'.s: I OLW tt'rcjectad truef-n Year Uncentn,W CcsEs f;77,— S 3 7 Pto,-x Chary in Uroordro?�d Celts. IRRP teas do not appy to the Croc ett eewirA a ea. Er',civ._2r7 G6 ron T�tir g Foes irrfude i:q{Cam6 "report,dilkposz3 sOd Wd'dQr-W feet reed`-'..d to tr'amfa''r c4 CYS{lv^r"3. i Gotw,mer P 100 N.dex ay rz A.4 2O05 " ' 7 fj 3 (eReWve case of tact raw aCJuskrsarcq Cc.'+.3u:ner Pram Imax as of All;2OW 216:24 Change in CH 5.54i,' 9e change in rhe C't L 6 6 -- To the I of trrj kroYAectpo,Lhe dg"a and Irrrannation kt a;, i;on jsampI& actLate,and or.riQeri%"I t.Re ^truri''a�rx_P-1.,d ty r7n Cv-1 Cc-ta Car.,,-. �Mcber^ TVe: ©emra(fta sager - aa�, 12/5!0; Year;2007 _. 1012 NewMint Group- Managprnent Consu"anti Ms. Deidra Dingman Page 13 January 3, 2008 Attachment 3 U.S. Bureau of Labor Statistics Consumer Price Index, All Items (CPI-U) San Francisco-Oakland-San Jose Area NewPent Group' Monageme3nt Consultantt Ms. Deidra Dingman Page 14 January 3, 2008 Series ID: CUURA422SA0 Not Seasonally Adjusted Area : San Francisco-Oakland-San Jose, CA Item : All items Base Period : 1982-84=100 Year Jan Feb Mar-1F-A----pr ` May Jun i Jul I Aug Sep Oct Nov Dec Ann 1997 157.0 157.9 159 2 159.6 159.8 1160.0----1-160.6'[-1, 61.2 161 6 -16 2.5 162.6 162.6 160.4 �_. [ I _ ,�. 1998 ;163.2 ���164.6 -1165.5 166.6 167.2 167.4 165.5 1999 169.4 ' 172.2 -__-1171.8 i - -173.5 175.2 174.5 172.5 _ 2000 j2176.5 _ ,178.7 ..... 179.1 181.7 183.4 �V 184.1 180.2 2001187.9 189.1 190.9 ry 191.0 191.7 190.6 189.9 2002 191.3 193.0 193.2 193.5 194.3 193 2 193.0 CCC-C��[ C - 2003 197 7r �197 3 `� 196 3x196.3 196 3 ;� 1195.3 196.4 _.__.. W__r _. _ -Jr J E 12004 198 T7j=[198.3 199.0 198.7 :,200 3 =95 198.8 ?-0-65-.-'[2-0-1-2 202.5 „ 201.2 ��203,01_ 205.9 -,20'202.7 2006 _}207.1 208 9 209.2 2007 213 688 215.842 „Am 216.123 1, 216 0]=24 217.949