CITY OF CARMEL-BY-THE-SEA Council Report November 5, 2103

To: From: Submitted by: Subject:

Honorable Mayor and Members of the City Council Jason Stilwell, City Administrator Sharon Friedrichsen, Public Services Director Consideration of a Resolution Approving a Solid Waste/Recycling Hauler Rate Increase

Recommendation{s): Adopt the resolution approving a solid waste and recycling hauling rate

increase of 2.50 percent for services provided by Carmel Marina Corporation (Waste Management, Inc.), effective January 6, 2014.
Executive Summary: The City has granted an exclusive franchise agreement to the Carmel

Marina Corporation (also known as Waste Management) for the regularly scheduled collection, hauling, recycling and disposal of garbage, recycle materials and yard waste within the City's jurisdiction. Per Section 6 of the franchise agreement, the hauler is allowed to request an increase in the rates chargeable to customers based upon inflation (the cost-of-living adjustment or COLA). Pass through rate adjustments to cover the increased cost of landfill tipping fees, or dump fees, are also allowable. On September 26, 2013, the City received a letter from Waste Management requesting a rate adjustment of 3.08 percent, modified on October 31, 2013 to reflect a proposed rate adjustment of 2.84 percent. The proposed rate adjustment consists of two items: • • Disposal rate pass through increase of 1.15 percent; and Cost-of-living adjustment of 1.69 percent.

Analysis/Discussion: On June 21, 2013, the Monterey Regional Waste Management District

approved a rate increase of $3.50 per ton for solid waste disposal, resulting in a 7.25 percent increase in disposal, or landfill tipping fee, effective on January 1, 2014. As part of the proposed rate adjustment, Waste Management would pass through 1.15 percent of this increase to Carmel customers, based upon a formula contained within the franchise agreement. In addition, Waste Management is proposing a COLA of 1.69
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percent, which includes the inclusion of the franchise fee factor (see attachment). In addition, the franchise agreement allows for rate increases the as long as several conditions are met: • Hauler gives written notice to City 30 days prior to proposed rate increase (v- letter received 9/26/13); hauler to notice customers 60 days prior to effective date of agreed upon increase (pending) • Hauler has not increased rates twelve months prior to proposed effect date of increase (v- disposal pass through in August 2012, no cost-of-living adjustment in 2012) • • Financial statement provided to City (v- received 10/29/13) Amount of proposed COLA does not exceed the lesser of ten percent of existing rate or % of Consumer Price Index for the San Francisco-Oakland-Bay Area for twelve month prior to date of written notice less operating expense attributable to dump fees (v) City staff has determined the percent of di sposal increase to be 1.03 percent, using different assumptions, including omitting the cost of the sale of goods as a disposal or dump fe e cost from the calculation. In addition, staff utilized the formula contained within the fran chise agreement to determine the price increase to be 1.50 percent, for a total increa se of 2.50 percent (see attachment). While staff recommends Council approve the proposed rate increase of 2.50 percent, Council has several other alte rnatives for consideration including: 1. Allow for the percent disposal rate increase including the franchise fee factor only using either (A) City calculation or (B) WM calculation . 2. Remove the franchise fee factor from the disposa l rate increase using either (A) City calculation or (B) WM calculation. 3. Remove the franchise fee factor from the COLA either (A) City calculation or (B) WM calculation. 4.
Fiscal Impact:

Deny the entire rate increase.

The proposed rate adjustment will impact the month charge residential and commercial customers pay for services. The amount of revenue the City receives through the franchise fee agreement is also impacted and would increase if any of the proposed rate increases are enacted. Should a rate increase be approved, staff recommends that the fees become
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effective on January 5, 2104 to allow for 60 day noticing from the November 5, 2013 adoption date. Budgeted (yes/no) N/A Previous Council Action/Decision History: The City Council approved a .77 percent disposal fee pass through on August 7, 2012 and denied a 5.08 percent cost-of-living adjustment. Attachment: WM Carmel Rate Increase Calculation City Staff Carmel Rate Increase Calculation Matrix of Options Resolution Funding Source( general fund, grant, state) N/A

Reviewed by:
City Administrator Asst . City Admin . Public Safety Dir City Engineer

~City Attorney D
D D D
Dir of CPB Library Dir

Administrative Services Dir of Public Svcs Other

D

D D

D D

3

Carmel Rate Increase Calculations Effective 1/1/14
1. Disposal Rate Increase Current Effective Jan 1, 2014 Change %Change
Garbage & Green Waste Collection Revenue Disposal Fees for Garbage & Green Waste Cost of Goods Sold Garbage & Green Waste Disposal % of Total Collection Revenue Proposed Increase for Disposal $48.25 $51 .75 $3.50 7 .25% $2.009 ,033 $256,075 $31.475 14.31% 1.04%

IProposed Increase for Disposal with Franchise Fee Factor 1.11
2. Cost-of-Living Adjustment !From CPI Table) Aug '2013 Aug'2012 Change %Change
Garbage Collection Revenue All costs except disposal Cost-of-Living % of Collection Revenue COLA Adjustment per Agreement @75%

1.15%1

(A)

246.07 241 . 17 4.90 2.03% $2,009,033 $1 ,721.483 85.69% 1.52%

leoLA with Franchise Fee Factor 1.11

1.69%1 0.00%1

(B)

13.

Fair Rate of Return Total Increase (A)+(B)+(C)

(C)

2.84%! A+B+C

Carmel Rate Increase Calculations Effective 1/6/14
D. ISPOSa I Rate ncrease Current Effective Jan 1, 2014 Change %Change
All Collection Revenue Disposal Fees Garbage Disposal % of Total Collection Revenue Proposed Increase for Disposal Total Proposed Increase for Disposal with Franchise Fee Factor of 1.11 2. Cost-of-Livina Adiustment /From CPI Table) Aug'2013 Aug '2012 Change %Change COLA Adjustment per Agreement @75% All Collection Revenue Disposal Fees Revenue minus dump fee minus waste wheeler rental revenue Adjusted income multiplied by percent increase Dollar increase divided by revenue mutplied by 1.11 franchise fee factor $48.25 $51.75 $3.50 7.25% $2,009,033 $256,075 12.75% 0 .92% 1.03%

(A)

Total Rate Increase

246.07 241.17 4 .90 2 .03% 1.52% Percent Request $2,009,033 $256,075 Adjusted Income $1,752,958 Dollar increase $26,722.85 1.3% 1.11 1.5% Adjusted percentage increase (B) 2.5% Total rate Increase (A+B)

Matrix of Rate Options

Residential

Current Rate

WMDispasal w/FF+COLA

WM DF+COLA no FF

WM D+COLA, NOFF

City Disposal w/FF+ Adjusted Percentage Increase

WMCOLA Only

City API Only

WM Dispasoi+F F

WM Disposal Only/City Disposoi+F F

City Disposal Only

No Rate Increase

Proposed Rote@2.84%

Proposed Rate @2.68%

Proposed Rate @2.56% Proposed Proposed Rote@2.50% Rate@1.52%

Proposed Rote @1.50%

Proposed Rate @1.15%

Proposed Rote @1.04%

Proposed Rote @.92% Proposed Rote @0%

35 gal cart 64 gal cart 96 gal cart
Commercial 35 gal cart 64 gal cart 96 gal cart 1 ya rd bin 2 yard bin 3 yard bin 4 yard bin Roll Off 15 yard roll off 20 yard roll off 30 yard roll off

$25.45 $40.23 $51.00
Current Rote

$26.17 $41.37 $52.45
2.84%

$26.13 $41.31 $52.37 2.68% $26.97 $51.96 $64 .08 $147.97 $217.44 $307.86 $409.59 2.68% $387.75 $426.28 $529.69

$26.10 $41.26 $52.31 2.56% $26.94 $51.90 $64.01 $147.80 $217.18 $307.50 $409.11 2.56% $387.30 $425.78 $529.07

$26.09 $41.24 $52.28 2.50% $26.93 $51.87 $63.97 $147.71 $217.05 $307.32 $408.87 2.50% $387.07 $425.53 $528.76

$25.84 $40.84 $51.78 1.52% $26.67 $51.37 $63.36 $146.30 $214.98 $304.38 $404.96 1.52% $383.37 $421.46 $523.70

$26.09 $41.24 $52.28 1.50% $26.93 $51.87 $63.97 $147.71 $217.05 $307.32 $408.87 1.50% $387.07 $425.53 $528.76

$25.74 $40.69 $51.59 1.15% $26.57 $51.18 $63.13 $145.77 $214.20 $303.27 $403.49 1.15% $381.97 $419.92 $521.79

$25.71 $40.65 $51.53 1.04% $26.54 $51.13 $63.06 $145.61 $213.96 $302.94 $403.05 1.04% $381.56 $419.47 $521.22

$25.68 $40.60 $51.47 0.92% $26.51 $51.07 $62.98 $145.44 $213.71 $302.58 $402.57 0.92% $381.10 $418.97 $520.61

$25.45 $40.23 $51.00 0% $26.27 $50.60 $62.41 $144.11 $211 .76 $299.82 $398.90 0% $377.63 $415.15 $515.86

$26.27 $50.60 $62.41 $144.11 $211.76 $299.82 $398.90
Current Rate

$27.02 $52.04 $64.18 $148.20 $217.77 $308.33 $410.23
2.84%

$377.63 $415.15 $515.86

$388.35 $426.94 $530.51

CITY OF CARMEL-BY-THE-SEA CITY COUNCIL RESOLUTION NO. 2013-

A RESOLUTION OF THE CITY OF CARMEL-BY-THE-SEA APPROVING A RATE ADJUSTMENT FOR THE COLLECTION, HAULING, RECYCLING AND DISPOSAL OF SOLID WASTE BY WASTE MANAGEMENT

WHEREAS, the City of Carmel-by-the-Sea and USA Waste of California (currently Waste Management) have entered into an exclusive franchise agreement for the collection, hauling, recycling and disposal of solid waste within the City limits; and, WHEREAS, the franchise agreement allows for the hauler, or collector, to request an increase in the rates charged to customers; and, WHEREAS, Waste Management requested an increase of3.08 percent on September 26, 2013, reflecting an increase in disposal rate fees and a cost-of-living adjustment; and, WHEREAS, the City Council, in accordance with the franchise agreement, wishes to adjust the rates for residential and commercial customers residing within the City's boundary by 2.50 percent. NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES, AS FOLLOWS: Section One. Effective January 6, 2014, rates for residential and commercial garbage, yard waste and recycling collection services shall be set forth below and replace the rates approved on August 7, 2012 as noted in the table below:
Residential 35 gal cart 64 gal cart 96 gal cart Commercial 35 gal cart 64 gal cart 96 gal cart 1 yard bin 2 yard bin 3 yard bin 4 yard bin

Current Rate $25.45 $40.23 $51.00 Current Rate $26.27 $50.60 $62.41 $144.11 $211.76 $299.82 $398.90

Proposed Rate $26.17 $41.37 $52.45 Proposed Rate $27.02 $52.04 $64.18 $148.20 $217.77 $308.33 $410.23
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Variance $0.72 $1.14 $1.45 Variance $0.75 $1.44 $1.77 $4.09 $6.0 1 $8.5 1 $1 1.33

Roll Off 15 yard roll off 20 yard roll off 30 yard roll off

Current Rate $377.63 $415.15 $515.86

Proposed Rate $388.35 $426.94 $530.51

Variance $10.72 $11.79 $14.65

Section Two. Waste Management shall provide written notice of the amount and effective date of the approved rate increase to all customers no less than 60 days prior to the effective date of the rate increase. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THESEA this 51h day ofNovember 2013, by the following roll call vote:

AYES: NOES: ABSENT: ABSTAIN:

COUNCIL MEMBERS: COUNCIL MEMBERS : COUNCIL MEMBERS: COUNCIL MEMBERS:

SIGNED: ATTEST: Jason Burnett, MAYOR Daryl A. Betancur, CMC Deputy City Clerk

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