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Home My WebLink AboutEDCO Disposal Corporation - Rate Adjustment - Increase - 1984ity of National City, California COUNCIL AGENDA STATEMENT MEETING DATE October 2, 1984 22 AGENDA ITEM NO. 171/02 /c- _gd ITEM TITLE TRASH SERVICE RATE INCREASE PREPARED BY Joint - Alex Caloza/ EPARTMENT C. R. William EXPLANATION. Edco, by their letter of May 16, 1984, attached, requested a rate increase. Numerous discussion and meetings have taken place between A- staff and representatives of Edco, resulting in a mutually agreed rate increase to be presented for Council approval. The increases will amount to approximately 6.72% for residential customers and 18.19% for commercial customers. These increases will provide specific rates as per the attached Rate Sheet, but in general, the new residential rate will be $6.25 per month and the commercial rate for one bin, once -a - week will be $40.50 per month. The increases consider cost,'and revenue figures presented by Edco, changes in city requirements including dis- posal of sweeper sweepings and mandatory trash service, application of the San Diego area Consumer Price Index, and are based upon the operating ratio method of determining profitability. They should be effective for an approximate 2-year period. Their rate compares favorably with rates in nearby communities, as shown on the attached comparative Rates Sheet. Finance/Public Works Director of Finance's and Public Works' recommendations on TRASH SERVICE RATE INCREASE (In their letter of May 16, 1984, EDCO requested a rate increase; numerous discussions and meetings have taken place between staff and representatives of EDCO, resulting in a mutually agreed rate increase to be presented to Council for approval; The increases will amount to approximately and 18.19% for commercial customers...igeneral e new6.72for residential rateel customers lle4s=7-FV $6.25 a month and the com mercial rate for one bin, once —a —week will be $40.50 per month; the increases consider cost and revenue rfiguresnew residential will be in City requirements including disposal of sweeper sweepings nand service a by EDCO, changes application of the San Diego area Consumer Price gIndex andarebased upon the operating ratio method of determiningmandatory trash an approximate 2—year period; their rate compares b'favorably should be effective for communities) was presented. Moved by Waters, seconded byy withCoo rates in nearby rate rate increase. Carried by unanimous vote. Cooper, in favor of the N/A AT�CHMENT$ (Listed Below) 1. Edco letter of 5/16/84 2. Rate Sheet 3. Comparative Rates Sheet Resolution No. A-200 (Rev. 9/80) :ityof National City, California COUNCIL AGENDA STATEMENT MEETING DATE October 2, 1984 22 AGENDA ITEM NO. % ITEM TITLE TRASH SERVICE RATE INCREASE PREPARED BY Joint - Alex Caloza/ EPARTMENT Finance/Public Works C. R. William EXPLANATION. '�/143 Edco, by their letter of May 16, 1984, attached, requested a rate increase. Numerous discussion and meetings have taken place between ,-staff and representatives of Edco, resulting in a mutually agreed rate increase to be presented for Council approval. The increases will amount to approximately 6.72% for residential customers and 18.19% for commercial customers. These increases will provide specific rates as per the attached Rate Sheet, but in general, the new residential rate will be $6.25 per month and the commercial rate for one bin, once -a - week will be $40.50 per month. The increases consider cost 'and revenue figures presented by Edco, changes in city requirements including dis- posal of sweeper sweepings and mandatory trash service, application of the San Diego area Consumer Price Index, and are based upon the operating ratio method of determining profitability. They should be effective for an approximate 2-year period. Their rate compares favorably with rates in nearby communities, as shown on the attached comparative Rates Sheet. J Environmental Review x N/A Financial Statement Account No. STAFF RECOMMENDATION Approve the new rates as shown on the attached Rate Sheet. BOARD/COMMISSION RECOMMENDATION N/A ATTACHMENTS (Listed Below) Resolution No. 1. Edco letter of 5/16/84 2. Rate Sheet 3. Comparative Rates Sheet A-200 (Rev. 9/80) i DISPOSAL CORPORATION := Cabforr a 92045 (714) 287-7555 May 16, 1984 City of National City 1243 National Avenue National City, CA 92050 Attention: Mr. Thomas McCabe - City Manager Honorable Mayor and Members of the City Council: Please accept this letter as our application and request that you approve the attached rate schedule for the collection of residential and commercial refuse from within the City of National City, commencing July 1, 1984. The last rate adjustment was July 1, 1981 and the firm's accountant has concluded our operating costs, including a 7% county landfill increase in 1983, have risen some 21.2% since that time. In June 1983, we started auling the city's sweeping debris at a cost to the company of approximately $37,000.00 for a 13 month period and projections of an ongoing program will run approximately $34,500.00 annually to haul this material. Taking all these factors into consideration, along with the intro- duction of mandatory residential service, we are requesting a modest $.50 per unit raise in the residential rate and an approximate 20% increase in the commercial rate, as layed out in the attached schedule. Enclosed you will find various documents supporting these requests. We will; of course, furnish any additional information council or staff may desire. Thank you for your kind consideration of this proposal. Very truly yours, EDCO DISPOSAL CORPORATION /-) Y(/' Edward Burr - President PROPOSED RATE SCHEDULE 7-1-84 RUBBISH AND GARBAGE 1. Residential EXISTING PROPOSED MONTHLY MONTHLY RATE RATE Per month residential sinclle family properties $ 5.85 $ 6.35 For the second and for each additional residential unit in multiple dwellings which do not exceed four units 2. Trailer Parks and Motels ($5.00 minimum) One time per week, per unit, per month • 3. Apartment Houses (No minimum) One time per week, per unit, per month SCHEDULE "A" 4.40 4.80 4.15 4.50 4.15 4.50 PROPOSED RATE SCHEDULE 7-1-84 Aggso- RUBBISH AND GARBAGE (COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS) Up to (2) 40 gallon containers One time per week Up to (2) 40 gallon containers Two times per week Up to (2) 40 gallon containers Three times per week L2 to (2) 40 gallon containers Four times per week Up to (2) 40 gallon containers Daily (six days/Monday thru Saturday) Additional or unusual accumulation of rubbish Per Month Per Month Per Month Per Month EXISTING MONTHLY RATE $ 6.20 9.90 12.75 15.75 Per Month 20.50 SCHEDULE "A" 3.75 per cubic yard PROPOSED MONTHLY RATE $ 7.45 11.90 15.25 19.00 24.50 4.50 per cubic yard PROPOSED RATE SCHEDULE 7-1-84 BOX TYPE REFUSE SERVICE NUMBER COLLECTION YARDS PER EXISTING BINS FREQUENCY MONTH RATE PROPOSED MONTHLY RATE 1 - 1 13 34.25 41.10 1 2 '26 55.00 66.00 1_ 3 39 75.75 90.90 1 4 52 96.50 115.80 1 5 65 117.25 140.70 1 6 .78 138.00 165.60 1 7 91 171.25 205.50 2 1 26 69.50 82.20 2 2 52 111.25 132 00 2 3 78 152.00 .181.00 2 4 104 193.25 230.00 2 5 130 224.25 279.00 2 6 156 255.00 328.00 2 7 182 299.50 381.40 3 1 39 101.50 121.80 3 2 78 158.50 193.80 3 . 3 117 222.75 265.80 3 4 156 255.25 337.80 3 5 195 330.00 409.80 6 234 397.25 481.80 7 273 490.00 593.10 4 1 52 124.20 149.00 4 2 104 205.50 243.00 4 3 156 281.00 337.00 4 4 208 354.50 431.00 4 5 260 424.50 525.00 4_ , 6 _ 312 478.50 619.00 4 7 364 630.00 800.80 5 1 65 147.75 177.30 5 2 130 252.50 292.30 5 3 195 336.75 407.30 5 4 260 420.25 522.30 5 5 325 504.75 637.30 5 6 390 609.25 752.30 5 7 455 747.25 917.90 6 1 78 171.00 205.25 6 2 156 293.25 340.55 3 234 410.50 475.85 6 4 312 464.50 611.15 6 5 390 562.50 746.45 6 6 468 684.50 881.75 6 7 546 841.75 1070.45 SCHEDULE MARSHALL A. PETERS, CPA YOUNOMAN KWON, CPA JOSE►H C. STEINS, CPA MARSHALL D. EATINOF?, CPA May 3, 1984 BOARD OF DIRECTORS EDCO DISPOSAL SERVICE, INC. Gentlemen: MARSHALL A. PETERS AN ACCOUNTANCY CORPORATION 4676 ADMIRALTY WAY, SUITE 236 MARINA DEL REY, CALIFORNIA 90292 (213) R21-1400 MEMRERS AMERICAN INSTITUTE OF CERTIFIED PURUC ACCOUNTANTS CAUPORNIA SOCIETY OF CERTIFIED PURLIC ACCOUNTANTS Pursuant to your instructions, we have reviewed the cost of doing business for your operating division, NATIONAL CITY RUBBISH SERVICE, which operates under contract with the City of National City. We recommend that the residential rates be increased 8.5%, which results in an $0.50 increase per month, and that the commercial rates be increased by 20%. Our study was based upon the financial data of the company's operating division books and records and certain cost data furnished by management. Costs have been projected generally based upon the company's recent experience of the effects of inflation. Because this study is based upon partially the company's operating division re- cords and have been projected to reflect inflationary increases, so as to reflect expectedfuture costs, we are not in aposition to render an accountant's opinion on this study as promulgated by Rule 58 of the California State Board of Account- ancy. Sincerely, Marshall A. Peters . Certified Public Accountant /mvd SCHEDULE "B" EDCO DISPOSAL CORPORATION NATIONAL CITY CONCLUSIONS OF RATE ADJUSTMENTS REQUIRED Base Rate Increase Projected 1984/85 Index 1981 Index Points Residential Commercial 74.8 61.7 Increase 13.1 % Increase (13.1 ; 61.7) 21.2 21.2 Less: Estimated income to be realized due to mandatory service, 665 units at 5.85 less 2% franchise fee -11.5 Less: Income Growth 5.2 -5.2 -5.2 Net % Increase 4.5 16.0 Sweeping Debris Hauling Cost Base Monthly Service Make up for service provided from June :1, '1983 to June 30, 1984" not billed and to.be billed over.a 24 month period from July 1, 1984.to June 30,-_1986 GRAND TOTAL 2.6 2.6 1.4 1.4 8.5 20.0 EDCO DISPOSAL CORPORATION NATIONAL CITY COMPARISON OF COST OF OPERATIONS INDEX Salaries - Route 10.5% 14.7% - Mechanics and Yard 5.6 6.5 - Supervisors 2.0 1.7 - Office 1.6 2.0 Six Months Ended Projected November 30,1981 1984/85 Percentage Percentage • TOTAL SALARIES 19.7 24.9 Health Insurance 1.5 2.5 Payroll Taxes 1.3 1.7 Uniforms .2 .2 Insurance - Workers' Compensation 2.9 2.6 Safety Incentive - .3 Gas and Oil 5.3 Insurance - Liability 2.0 Licenses and Highway Use Tax 1.4 Maintenance .2 .5 8 6.9 .5 Tires 1.4 2.5 Accounting and Legal 15.8 19.7 Customer's Claims .3 .2 1.3 .2 Data Processing 1.1 1.1 Office Expense _ Taxes and Licenses 1.1 .9 Telephone ..3 Utilities .4 .5 .4 .5 5.2 4.2 Dumping 15.1 18.8 TOTAL 61.7% 74.8% EDCO DISPOSAL CORPORATION NATIONAL CITY 1984 RATE REVIEW THREE YEAR COMPARISON OF NET OPERATING INCOME Percentage of Gross Income 1981 1982 1983 -Gross Income 100 % '100 % 100 % Operating Expenses Payroll 28.6 31.1 31.8 Variable 17.2 18.5 `19.7 Equipment 7.7 6.9 6.4 Other Direct 8.9 9.0 8.3 Dump 15.5 16.5 18.6 Administrative 12.2 13.5 12.4 TOTAL OPERATING EXPENSES 90.1 95.5 97.2 NET OPERATING INCOME 9.9% 4.5% 2.8% EDCO DISPOSAL CORPORATION NATIONAL CITY ASSUMPTIONS 1) The operating data used as a base for this study is the cost of operations for the six months ended November 30, 1981. 2) The operating data was projected for 1984/85 by adjusting the operating data base as follows: Payroll Expenses 26.4% Equipment Operating Expenses 24.0% Fixed Equipment Expense 24.9% Other Direct Expenses 24.9% Administrative Expenses (19.2%) Dumping 24.5% The weighted average percentage increase for all operating cost excluding dumping is 18.9%. EDCO DISPOSAL CORPORATION NATIONAL CITY STREET SWEEPING DEBRIS HAULING COST Effective June 1, 1983 the Public Works Department of National City engaged Edco to collect the street sweeping operations debris. Normal Hauling Cost to January 31, 1984 (8 months) Add: February through June 1984 (5 months) $ 17,019 10,637 Total Discount Allowed 20% Charge To June 30, 1984 Dumping Fees - 8 Months Dumping Fees - February through June Total Unbilled Charges 27,656 5,531 22,125 $ 9,270 5,794 15,064 $ 37,189 Expect New Rates tb Remain in Effect Until June 30, 1986 or 24 Months or Monthly Also a Monthly Charge of $ 1,550 Monthly Charge to July 1, 1986 - 2,861 $ 4,411 EDCO DISPOSAL CORPORATION NATIONAL CITY PROOF OF SUGGESTED RATE INCREASE Increase Suggested Per Index 21.1% Sweeping Debris Hauling Cost 2.6 Unbilled Sweeping Debris Hauling Cost 1.4 Total Current Income Gross Increase Suggested at 25.2% 25.2% Residential Commercial Total $ 37,000 $ 72,000 $ 109,000 $ 9,324 $ 18,144 $ 27,468 Increase expected to be realized as follows: Growth 5.2% - $ 1,924 Mandatory Service 665 units at $5.85 3,890 $ 3,744 $ 3,890 8.5% increase on Residentials (37,000 3,890 4-3,890) 3,476 20.0% increase on Commercials 3,476 14,400 14,400 TOTALS $ 9,290 $ 18,144 $ 27,434 .. ,.....« ..v..caiVtl lVW SELECTED OPERATING COSTS AND INDEXES COST COMPONENT ITEM 1981 1984 -.-CHANGE Labor Salary - daily earnings 55.45 64 40 ' 16.1 Truck Replacement Based on 3 axle cab and chassis with body. Variable Equipment Internal expense statement Operating Expense 8 month comparison Ending 1/81 and 1/84 Container Replacement Producer Price Index - fabricated structrual products (code 10-7) Tires ?isposal Sites All Other Fuel Diesel cost per gallon 96.2 89.0 (7.5) 96,000 108,560 . 13.1 190,147 230,226 21.1 279.9 306.5 9.5 New tires (average each) 355'.00 438.22 Re -Cap (average each) 120.00 120.00 2-.- -0- San Diego County - Residential per load 51.00 Commercial per load 55.00 7.8 64.00 69.00 7.8 Consumer Price Index - Al1 Urban Consumer All Items SCHEDULF "C" 287.7 346.6 20.5 COMPARATIVE ANALYSIS OF 3 CUBIC YARD COMMERCIAL BIN RATES CITY RATE PER M0. 1 x week Lakeside/Santee $ 32.00 Chula Vista 33.00 Spring Valley 33.50 El Cajon 34.00 National City 34.25 La Mesa 35.50 Lemon Grove 35.50 Poway 37.20 C -lsbad 37.65 Vista 38.60 Bonita 38.95 San Marcos 39.70 Del Mar 43.89 Fallbrook 47.00 SCHEDULE "D" COMPARATIVE ANALYSIS OF 'RESIDENTIAL RATES CITY RATE PER MONTH • Chula Vista $ 5.60 (Mandatory Servi La Mesa 5.70 Lemon Grove 5.70 National City 5.85 El Cajon 5.95 Vista 6.40 Carlsbad 6.48 (City Bills) San Marcos 6.60 Santee 6.85 Bonita 7.00 Poway 7.00 Spring Valley . 7.25 Del Mar 8.70 (City Bills) Fallbrook 8.25 SCHEDULE "E" PROPOSED RATE SCHEDULE 10-1-84 RUBBISH AND GARBAGE 1. Residential Per month residential single family nrooerties For the second and for each additional residential unit in multiple dwellings which do not exceed four units 2. Trailer Parks and Motels ($5.00 minimum) One time per week, per unit, per month EXISTING PROPOSED MONTHLY MONTHLY RATE RATE $ 5.85 $ 6.25 4.40 4.70 4.15 4.45 3. Apartment Houses (No minimum) One time per week, per unit, per month 4.15 4.40 PROPOSED RATE SCHEDULE 10-1-84 RUBBISH AND GARBAGE (COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS) Up to (2) 40 gallon containers One time oer week Up to (2) 40 gallon Two times per week containers Up to (2) 40 gallon containers Three times per week Up to (2) 40 gallon containers Four times per week Up to.-(2) 40 gallon.containers Daily (six days/Monday thru Saturday) Additional or unusual accumulation of rubbish EXISTING PROPOSED MONTHLY MONTHLY RATE RATE Per Month $ 6.20 Per Month 9.90 Per Month 12.75 Per Month 15.75 Per Month $ 7.30 11.70 15.00 18.50 20.50 24.25 3.75 per 4.40per cubic cubic yard yard PROPOSED RATE SCHEDULE 10-1-84 BOX TYPE REFUSE SERVICE NUMBER -BINS COLLECTION FREQUENCY YARDS PER EXISTING PROPOSED MONTH RATE MONTHLY RATE 1 1 13 34.25 40.50 ] 2 '26 55.00 65.00 1 3 39 75.75 89.50 1 4 52 96.50 114.00 1 5 65 117.25 138.50 1 6 78 138.00 163.00 1 7 91 171.25 202.30 2 1 26 69.50 82.00 2 2 52 111.25 130.00 2 3 78 152.00 178.00 2 4 104 193.25 228.50 2 5 130 224.25 265.00 2 6 156 255.00 301.50 2 7 182 299.50 354.00 3 1 39 101.50 120.00 3 2 78 158.50 190.00 3 3 117 . 222.75 260.00 3 4 156 255.25 301.75 3 5 195 330.00 390.00 3 6 234 397.25 469.50 7 273 490.00 579.00 4 1 52 124.20 146.75 4 2 104 205 .50 239.25 4 3 156 281.00 331.75 4 4 208 354.50 419.00 4 5 260 424.50 501.75 4 6 312 478.50 565.50 4 7 364 630.00 744.50 5 1 65 147.75 5 2 130 252.50 5 3 195 336.75 5 4 260 420.25 5 5 325 504.75 5 6 390 609.25 5 7 455 747.25 6 1 78 171.00 6 2 156 293.25 t 3 234 410.50 6 4 312 464.50 6 5 390 562.50 6 6 468 684.50 6 7 546 841.75 174.50 289.50 404.50 496.75 596.50 720.00 883.00 202.00 339.50 477.00 549 .00 664.75 809.00 995.00 COMPARATIVE ANALYSIS OF 3 CUBIC YARD COMMERCIAL BIN RATES CITY RATE PER MO. 1 x week Lakeside/Santee $ 32.00 Chula Vista 33.00 Spring Valley 33.50 El Cajon _ 34.00 National City 34.25 La Mesa 35.50 Lemon Grove 35.50 Poway 37.20 Irlsbad 37.65 Vista 38.60 Bonita 38.95 San Marcos 39.70 Del Mar 43.89 Fallbrook 47.00 SCHEDULE "D" CITY Chula Vista La Mesa Lemon Grove National City El Cajon Vista Carlsbad San Marcos Santee Bonita Poway Spring Valley Del Mar Fallbrook COMPARATIVE ANALYSIS OF RESIDENTIAL RATES SCHEDULE "E" RATE PER MONTH ' $ 5.60 (Mandatory Servi 5.70 5.70 5.85 5.95 6.40 6.48 (City Bills) 6.60 6.85 7.00 7.00 7.25 8.70 (City Bills) 8.25