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HomeMy WebLinkAboutExplanationStaff Recommendation: Approve an Amendment to the Agreement for Collection of Rubbish and Trash between the City of National City and EDCO Disposal Corporation to increase the rates charged. Background On September 25, 1990, the City entered into the Agreement for Collection of Rubbish and Trash in the City of National City by and between the City of National City and EDCO Disposal Corporation for Services Rendered (Agreement).The Agreement has been amended several times. In 1993 and 1997, the Agreement was amended to extend the term of the Agreement. In 2003, 2005, and 2007, the Agreement was amended to increase the rates charged by EDCO. The Agreement has not been amended since 2007. Pursuant to Section 23 of the Agreement, titled "Applications for Rate Change", EDCO may apply annually for changes in the rates charged. Changes in the rates charged by the owners/operators of sanitary landfill sites utilized by EDCO (tipping fees) are considered as "pass -through" costs. Once EDCO is notified of a proposed tipping fee change, EDCO can submit a letter request for rate change to the City. The annual "cost of living" changes will be based upon the CPI for San Diego and will be equal to the percentage change in the index with a cap of 6%. EDCO has submitted a request for a rate increase in compliance with Section 23 of the Agreement. Explanation The rates for trash service are based on various components; landfill and yardwaste rates and tonnage, recyclables sold, and the San Diego consumer price index (CPI). For the Rate Review, the actual total cost/price of budget items is determined, and is compared to budgeted amounts. FY-14 Rate Factors: Total proposed adjustment is $0.83 (5.01%) per month to the standard residential rate and $5.48 (5.23%) per month to the standard commercial rate. There are four main components to the rate. Landfill As the City is a member of the Regional Solid Waste Authority (RSWA), the landfill portion of the rate is based on approved changes in the RSWA rate. The RSWA rate per ton has increased from $39.11 to $41.28. This increase of $2.17 per ton equates to a weighted average adjustment of $.27 to the standard residential rate and $1.86 to the standard commercial rate. We estimate the trash tonnage hauled in FY-14 to be similar to last year. Yardwaste The yardwaste disposal rate increased from $25.36 to $26.65 with the tonnage remaining similar to last year. This equates to a weighted average adjustment of $0.01 to the standard residential rate and $0.06 to the standard commercial rate. Recycling Recyclable revenue decreased from last year by $74,514, a figure that was also impacted by scavenging. This equates to an adjustment of $.18 to the standard residential rate and $1.23 to the standard commercial rate. Consumer Price Index (CPI) The most recently published one-year San Diego CPI index is 2.71%. This equates to a weighted average adjustment of $.28 to the standard residential rate and $1.69 to the standard commercial rate. We will again have EDCO contribute $150,000 to the City's Enterprise Fund. The Enterprise Fund is funded by money collected by EDCO for the City from the rate payers, pursuant to Section 16 of the Agreement titled "Franchise Fee". Section 16 provides for an increase in the Franchise Fee every year. An increase in the Franchise Fee of $.09 to the standard residential rate and $.64 to the standard commercial rate is included in the overall rate adjustment. The funds in the Enterprise Fund are used to pay for AB939 programs such as Household Hazardous Waste collection and the City's annual report required by CalRecycle. The fund also pays for hazardous waste disposal collected from the public right- of-way and a street sweeper operator. It should be noted that the single-family rate has not been increased since 2007 and, even with the proposed rate increase; National City will remain the lowest trash rate in the County. The history of the single-family rate in National City is as follows: FY-02, 03 FY-04, 05 FY-06, 07 FY-08, 09, 10, 11, 12, 13 Proposed FY-14 $14.83 $15.33 $15.99 $16.64 $17.47 Service Rate Current Monthly Rate Change Proposed Monthly Rate Single Family Rate Senior Rate Silver Bag (ea) $16.64 $13.32 $ 2.28 $0.83 $0.67 $0.11 $17.47 $13.99 $ 2.39 In addition to general collection, hauling and disposal of the City's rubbish and trash, EDCO provides the following services at no cost to the City or the customer, pursuant to the Agreement: • Removal of garbage, rubbish and sweeping debris on City -owned properties. Section 11 of the Agreement, titled "Service to City", says "[EDCO] shall collect garbage and rubbish from City -owned properties, as frequently as is necessary to prevent the accumulation of rubbish or garbage on City -owned property, without charge to the City. Collection service includes removal of sweeping debris." • Biannual Cleanups. Section 12 of the Agreement, titled "Biannual Cleanup", and says [EDCO] agrees to provide two annual cleanup campaigns and to cooperate with City as to the date and manner of conducting said cleanup campaigns. • Collection of Bulky Items. Section 14 of the Agreement, titled "Collection of Bulky Items", says, "[EDCO] is required to establish a program for pickup, recycling as required and disposal of major household appliances (stove, refrigerator, washer, dryer, etc.), and major household fumiture (couch, chair, table, mattress, etc.). Said program shall include a procedure for informing [EDCO's] customers of the existence of said program, and of the details of said program (e.g., pickup times)." Section 14 goes on to say "Costs for this program are considered a basic business cost to be included in overall rate establishment and without additional charge to the customer." A copy of the Notice of Public Hearing to Consider Proposed Rate Increase for Refuse Services, sent to all customers and property owners, is attached. A copy of the proposed Amendment to the Agreement is also attached.