HomeMy WebLinkAboutEDCO Disposal Corporation - Extension and Modification of Franchise Agreement - 1990'City of National City, California-
CtGUNCIL AGENDA STATEMEr T
c'.
MEETING DATE August 21, 1990
AGENDA ITEM NO. 10
ITEM TITLE
REQUEST FOR RATE INCREASE FOR TRASH SERVICE
PREPARED BY C. R. Williams,
EXPLANATION.
See attached.
DEPARTMENT Public Works
Environmental Review X N/A
Financial Statement
Increase in rate will cause an increase in the franchise fees received
by the city.
4%0
Account No.
IMF RECOMMENDATION
APPROVE THE RATE REQUEST, AS REVISED, TO BE EFFECTIVE OCTOBER 1, 1990.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below)
1. Revised resolution
2. Revised rate schedule for October 1, 1990
3. Letter dated August 10, 1990 from ALDER, GREEN & HASSON
4.. &.wised rato reviccw
A-2*05Rov vluly 17, 1990 Council Agenda Statement
6. Draft letter from EDCO to customers
Resolution No 16 , 319
COUNCIL AGENDA STATEMENT
MEETING DATE August 21, 1990
ITEM TITLE Request for Rate Increase for Trash Service
EXPLANATION
This item was deferred from the July 17 meeting to permit
further review of some cost elements. EDCO has reviewed the
estimated costs of recycling, and while some elements are
added, some are increased and some are decreased. The
overall impact is to reduce the costs for this service for
all customers. This change is reflected in the revised back-
up data submitted. The requested change in the single-
family rate from $7.25/month to $9.50/month is a 31% change;
the commercial rate change from $46.75 for a 3-cu.yd. bin in
once -a -week service to $59.75 is a 27.8% increase.
In response to questions with respect to the rate structure
proposed for the EDCO contract, the following is provided:
1. Explain how and why recycling is charged.
The present law in the State of California says that not
only must each city recycle, but it also must meet
specific % goals by specific dates, or face heavy fines.
Recycling provides many benefits including conservation
of the earth's resources and many environmental consider-
ations. It also would extend the life of our present
landfills and will delay the time when more remote sites
will have to be opened. This saves all trash customers
money in the long run.
Recycling at present is not cost-effective, certainly in
the short run. The dollars received from the sale of
recycled materials and the savings from not having to
pay landfills for recycled items is significantly less
than the costs associated with collection, sorting and
selling recyclables.
In simplified form there are three primary areas of
recycling with which we are concerned: household curb-
side, multifamily, and commercial/industrial. All three
elements benefit equally from any recycling, and
ultimately we will need to accommodate all three areas.
We are starting, initially, with the easiest to do -
residential curbside. The costs for this initial
recycling effort are spread among the three areas based
essentially on the share of overall revenue produced.
Single-family trash provides about 30% of the revenue to
EDCO; therefore, single-family will pay about 30% of the
cost of curbside recycling, and the other components
will pay the remaining portion. Since all customers
benefit from recycling essentially equally, it does not
seem rational to charge one segment of customers for the
full cost of recycling effort even though the actual
recycling is done to/by them. Single-family residents
(who are putting forth their own effort to segregate
materials for collection) who receive no direct benefit
and receive only the same long-range benefits that all
customers will receive, should not bear the brunt of
recycling costs.
Accordingly, the cost of the recycling that we are
initially doing is spread .over all customers, with 30%
applicable to single-family and 70% applicable to multi-
family and commercial/industrial.
The blue boxes for single-family residences to use for
recycling are ready for distribution. CURBSIDE
RECYCLING is scheduled to start October 1 for single-
family households. Multifamily "curbside" recycling
will commence in the near future (some "bugs" with
respect to on -site space and procedures remain to be
solved), and commercial/industrial recycling will take
the form of virtual individual contacts to determine
methods and procedures. 'Flyers in both English and
Spanish are in process of production.
2. There was an indication of a problem with a 15% before -
tax profit. The attached letter from the accounting
firm of ALDER, GREEN & HASSON has been submitted by EDCO
as further support of their position.
3. The itemized recycling costs have been questioned
including truck costs, administrative costs, and
PR/education. EDCO has reviewed cost elements
associated with recycling and has made significant
changes (both up and down) in pages 6, 7, 11, and 12 of
their original backup, affecting the cost of recycling,
and resulting in an overall decrease in the projected
cost from $220,380 to $181,100, with revenue required
dropping from the original $168,165 to $122,215.
Program charges drop from $0.56/month for residential
customers to $0.41/month, and from 8.6% to 6.3% for
commercial/industrial customers. This will result in a
lowering of the rate schedule for all customers.
4. The second citywide cleanup has already tentatively been
scheduled with the Chamber of Commerce.
5. The enclosed draft letter from EDCO is scheduled to go
out with the October bills and explains the bulky -item
and airtight -door programs.
-2-
RESOLUTION NO. 16,319
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NATIONAL CITY APPROVING A TRASH SERVICE
RATE INCREASE FOR EDCO DISPOSAL CORPORATION
WHEREAS, the last trash service rate increase for EDCO
Disposal Corporation, the city's franchised trash collector, was
approved in June 1988; and
WHEREAS, in October 1989 and on July 1, 1990, the County
of San Diego raised the rate of the solid waste disposal fee
schedule, and EDCO Disposal Corporation has requested that this
increase be treated as a pass -through cost to its subscribers; and
WHEREAS, additional services are being requested of the
EDCO Disposal Corporation; and
WHEREAS, the new trash service rates would be comparable
to those of surrounding cities.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of National City that the proposed rate schedule dated October
1, 1990, a copy of which is on file as Exhibit "A" in the office
of the City Clerk, is hereby approved.
PASSED AND ADOPTED this 21st day of August, 1990.
George H. Waters, Mayor
ATTEST:
Lori Anne Peoples, City Clerk
APPROVED AS TO FORM:
/ vJ
George H. Eiser, III
City Attorney
NATIONAL CITY RATE SCHEDULE
10-01-90
CURRENT PROPOSED
RUBBISH AND GARBAGE (COMMERCIAL MONTHLY MONTHLY
AND INDUSTRIAL ESTABLISHMENTS) RATE RATE
Up to (2) 40 gallon containers
One time per week -per month
Up to (2) 40 gallon containers
Two times per week -per month
Up to (2) 40 gallon containers
Three times per week -per month
Up to (2) 40 gallon containers
Four times per week -per month
Up to (2) 40 gallon containers
Daily (six days/Monday thru
Saturday)
ldditional or unusual accumulation
of rubbish (per cubic yard)
8.50
13.50
17.40
21.50
10.85
17.25
22.25
27.50
28.10 35.90
5.10 6.50
NATIONAL CITY RATE SCHEDULE
10-01-90
RUBBISH AND GARBAGE
1. RESIDENTIAL
Per month residential single family
properties.
For the second and for each additional
residential unit in multiple dwellings
which do not exceed four units
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
7.25 *9.50
5.45 7.15
2. TRAILER PARRS AND MOTELS (5.00 MINIMUM)
One time per week, per unit, per month 5.15 6.75
3. APARTMENT HOUSES (NO MINIMUM)
One time per week, per unit, per month 5.10 6.70
4. SENIOR CITIZEN -RESIDENTIAL
Per month 5.90 7.75
* $0.41 per month is included for cost of recycling program
EXHIBIT "A"
NATIONAL CITY RATE SCHEDULE
10-1-90
BOX TYPE REFUSE SERVICE
CURRENT PROPOSED
NUMBER COLLECTION YARDS PER MONTHLY MONTHLY
BINS FREQUENCY MONTH RATE RATE
1 1 13 46.75 59.75
1 2 26 75.25 96.15
1 3 39 103.75 132.60
1 4 52 .132.25 169.00
1 5 65 160.75 205.45
1 6 78 189.25 241.85
1 7 91 234.25 299.35
2 1 26 95.00 121.40
2 2 52 150.00 191.70
2 3 78 206.00 263.25
2 4 104 264.50 338.05
2 5 130 306.50 391.70
2 6 156 349.00 446.00
2 7 182 410.00 524.00
3 1 39 139.00 177.65
3 2 78 220.00 281.15
3 3 117 301.00 384.70
3 4 156 349.25 446.35
3 5 195 451.50 577.00
3 6 234 543.50 694.60
3 7 273 670.50 856.90
4 1 52 170.00 217.25
4 2 104 277.00 354.00
4 3 156 384.25 491.05
4 4 208 485.00 619.85
4 5 260 581.00 742.50
4 6 312 654.50 836.45
4 7 364 862.00 1101.65
5 1 65 202.00 258.15
5 2 130 335.00 428.15
5 3 195 468.25 598.40
5 4 260 575.00 734.85
5 5 325 690.50 882.45
5 6 390 833.50 1065.20
5 7 455 1022.50 1306.75
6 1 78 233.75 298.75
6 2 156 393.00 502.25
6 3 234 552.25 705.80
6 4 312 635.50 812.15
6 5 390 769.50 983.40
6 6 468 936.50 1196.85
6 7 546 1151.75 1471.95
10920 Wilshire Boulevard
Suite 1200
Los Angeles
"...Marcia 90024
aliphatic: (213) 208-1200
Teiecopiar. (218) 208-4978
Mr. Edward Burr
Edco Disposal Corp.
6670 Federal Blvd.
Lemon Grove, CA 92045
American Institute of
Certified Public Accountants
Calibrate Society of
Certified Public Accountants
Private Companies Practice
Section, AICPA, Division
for CPA Firms
August 10, 1990
A �d1
�er�,
Greeil
& Hasson
Certified Public Accountant'
Dear Ed:
You have informed us that'the City of National City has raised
objections to your rate review increase to yield a 15% pre-tax
profit margin. The 15% pre-tax profit is based on a projection of
the amount of profit needed. Edco is currently earning a 10.8%
pre-tax profit.
A pre-tax profit margin of 15% seems too low based on current tax
rates, profit margins of other companies, rate increases granted by
other cities and counties, the need for heavy capital expenditures
in your industry, and to fund start up costs for recycling as
mandated by AB 939.
The following is an analysis of the need for increased profit
margins.
a) Currently, the maximum tax rate for corporations is 34%
Federal and 9.3% for California.
Federal % = 34% X 15% = 5.1%
State % = 9.3% X 15% - 3.4%
6. 5%
Therefore, Federal and State taxes would be 6.5%, and
after tax profit margin would be 8.5%. The after tax
profit on $1,000,000 of revenue would be $85,000.
b) The County of Sacramento approved a 12 1/2% profit after
allowing the State franchise tax as an operating expense
for another client. In addition, that rate is
guaranteed, in effect, by computing excess profits and/or
shortfalls with the differences carried over, which then
affects rates going forward.
Mr. Ed Burr
Edco Disposal Corp.
August 10, 1990
Page Two
c) The need for capital expenditures to replace trucks and
containers is quite high for your business. Capital
additions are funded through profits and debt. To fund
capital expenditures entirely by debt is not a sound
business practice since the interest payments further
reduce profits and the debt payments reduce cash flow.
Present profits are computed using historical cost
depreciation and not on current replacement costs.
d) AB 939 has placed requirements on cities and the trash
haulers to recycle up to 50% of the waste stream by the
year 2000. To accomplish this, you must make investments
now in recycling trucks, containers and technology. An
8.5% after tax profit does not provide any excess profits
to enable you to do this.
Browning Ferris Industries of California, Inc., one of the larger
companies in your industry, has raised their rates 19.1% from
$39.78 to $47.37 per quarter in addition to the recycling charge of
$4.62 (11.6%) per quarter (see attached).
I strongly suggest that you review your rate increase requests in
all the cities and areas you operate to be sure that your rates are
sufficient to allow you to remain competitive.
Very truly yours,
,i,x)
Sandra A. Lash, CPA
Partner
SAL/ch
Enclosure
10920 Wilshire Boulevard, Suite I200, Los Angeles, California 90024 (213) 208.1200
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR
CITY OF NATIONAL CITY CONTRACT
MAY 1, 1990
itEvia-D
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR CITY OF NATIONAL CITY
MAY 1, 1990
CONTENTS
Page
Accountants' Report 1
Rate Review Analysis 2
Background Data 3
Assumptions for Rate Review Analysis 4
Computation of Rate Adjustment 6
Analysis of Computation of Rate Increase 7
Computation of Dump Cost Increase 8
and Unrecovered Dump Expense
Schedule of All Other Cost Increases 9
Schedule of New Services 10
Computation of Cost of Recycling 11
1
Board of Directors
Edco Disposal Corporation
We are pleased to have the opportunity to assist you in developing the
accompanying documents for rate review purposes in the City of National City,
California. The rate review analysis has been prepared to submit to the City of
National City for purposes of evaluating the request by Edco for a rate
increase.
In accordance with the professional standards that apply to our practice, we
have included this transmittal letter to describe certain procedures we
performed and certain limitations associated with the rate review analysis.
Rate Review Analysis
The accompanying rate review analysis has been prepared based on assumptions
made by management about operating expenses. The analysis has been prepared
from historical financial statements and forecasted statements of income for
years ending May 31, 1990 and 1991.
The historical statements for the year ended May 31, 1989 were audited by us and
we expressed an unqualified opinion on them in our .report dated October 31,
1989, but we have not performed any auditing procedures since that date.
The forecasted proforma statements of income for the years ending May 31, 1990
and 1991 were compiled by us in accordance with standards established by the
American Institute of Certified Public Accountants.
444.4 //0-2=-0.2-)
ALDER, GREEN 5 HASSON
May 1, 1990
Los Angeles, California
L. 1 . r 1 _ • V-• �_
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR CITY OF NATIONAL CITY
RATE REVIEW ANALYSIS
-2-
NATIONAL CITY
BACKGROUND DATA
Edco Disposal Corporation is a solid waste hauler with corporate offices at 6670
Federal Boulevard, Lemon Grove, California 92045. Edco's primary operating
center is located at the same location. Edco has additional operating centers
in Orange County, San Bernardino County and in North San Diego County.
The Company operates the following city contracts and non -contract areas:
6670 Federal Boulevard
City Contract Areas - City of La Mesa _
City of Lemon Grove
National City
Coronado
Non -Contract Area - City of San Diego
Orange County
City Contract Areas - City of Buena Park
City of La Palma
City of Signal Hill
San Bernardino County
City Contract Area - City of Rialto
Non -Contract Area - County Adjacent to Rialto
North San Diego County
Non -Contract Area - Fallbrook Area
Edco Disposal Corporation has a fiscal year ending May 31. The Company's fiscal
year end financial statements are audited.
Direct cost of operations are charged to each of the contract operations.
Indirect costs or shared costs of the Federal Boulevard operating center have
been allocated on a route basis.
Edco's administrative costs have been allocated to all of Edco's operating
centers.
See Accountants' Report
-3-
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR THE CITY OF NATIONAL CITY
ASSUMPTIONS FOR RATE REVIEW ANALYSIS
NOTE 1 - RATE OF RETURN ON REVENUE
Based on the historical income statement for the National City Division, the
pre-tax profit from operations is 10.8%. Costs have risen and are projected to
increase further in 1990 and 1991. Edco has not had an increase in rates since
1988 in National City. The following is a comparison of pre-tax income of com-
panies in the same industry and was abstracted from various published reports.
The average pre-tax profit obtained was 15.0%.
Pre -Tax Income Comparison
Pre -Tax Income:
All Waste - 1988 5.3
Canonie Environmental - 1988 17.5
Groundwater Tech - 1988 9.4
International Tech 1988 7.6
Rollins Env. - 1988 33.3
Waste Management 20.9
Browning Ferris 17.4
Robert Morris Associates 8.8
TOTAL 120.2
Average Pre -Tax Profit 15.0
Net Tax at 40.1% 6.0
ASSUMED AFTER-TAX RETURN 9.0
NOTE 2 - INCOME TAX RATE
The effective tax rate on income, using the tax rates currently in effect, was
computed as follows:
Computation of Income Tax Rate
Franchise Tax Rate
Federal Tax Rate
Effect of Deductibility of Franchise
Tax for Federal Purposes
TOTAL NET TAX ON TAXABLE INCOME
See Accountants' Report
-4-
X
9.3
34.0
(3.2)
40.1
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR THE CITY OF NATIONAL CITY
ASSUMPTIONS FOR RATE REVIEW ANALYSIS
NOTE 3 - BASIS FOR RATE INCREASE REQUEST
Increases in rates are being requested to cover certain additional projected
costs and to provide a reasonable profit margin.
To achieve a pre-tax profit of 15.0%, the percentage of operating expenses to
revenue exclusive of city franchise fees would be 80.0% as follows:
Computation of Operating Expense Ratio
Pre -Tax Profit Margin
Add: City of National City Franchise Tax
at 5% of Gross Receipts
PROFIT MARGIN BEFORE TAXES
AND FRANCHISE TAX
OPERATING EXPENSE RATIO
15.0
5.0
20.0
80.0
NOTE 4 - VEHICLE AND BIN REPLACEMENT
The rate review analysis includes a provision for vehicle and bin replacement
that is equal to the historical book depreciation which is 7.5% of revenue.
This provision may not be adequate to cover the cost of replacement of vehicles
and bins.
See Accountants' Report
-5-
EDCO/NATIONAL CITY
COMPUTATION OF RATE ADJUSTMENT
Based on the following analysis of the operations of the National City Contract
for refuse collection, which is being modified to include recycling, the land-
fill increase by the County of San Diego and other cost increases, an increase
of 25.6% for residential accounts and 21.4% for commercial accounts effective
July 1, 1990 is needed. In addition, a monthly charge of $0.41 to each
residential account and $3.09 (representing 6.3%) for each commercial account is
needed for the recycling cost.
Analysis of Impact of Rate Increase on Rates
% of
1989 Residential Commercial
Revenue Amount Amount
Existing Rate - Monthly (See Note) $ 7.25 $46.75
Landfill Increase 9.8% $ .71 $ 4.58
Unrecovered Landfill Cost 6.7%4.7% .494 3.1320
Other Costs
INCREASE
New Services
Recycling Cost - Basic
PROPOSED RATES - MONTHLY
21.2%
1.54 9.91
.32 .09
.41 3.09
$ 9.52 $59.84
NOTE: The commercial rate illustrated is for one 3 cubic yard bin serviced
once a week.
See Accountants' Report
-6-
EDCO/NATIONAL CITY
ANALYSIS OF COMPUTATION OF RATE INCREASE
Impact of Dump Expense Increases
$156,799/80.O%
Impact of Unrecovered Dump Cost
$ 78,304/83.O%
Impact of All Other Cost Increases
$107,141/80.0%
TOTAL
Impact of New Services
$ 31,000/95.0%
TOTAL EXCLUSIVE OF
RECYCLING COST
Impact of Cost of Recycling
$97,772/80.O%
TOTAL
Fiscal Year Ended
t4a 31 1991
of
1989
Amount _ Revenue
$ 195,999 9.8
94,342 4.7
133,926 6.7
424,267 21_2
32,632
456,899
122,215
$ 579,114
NOTE: Costs for new services have been grossed up only for the city franchise
fee of 5%.
Unrecovered dump cost has been grossed up for the city franchise fee of
2% which was effective until July 1, 1990, income taxes and a fair
return for the contractor.
All e
r the cit
fee otherve n sed to franchise
.
The percentages have been computed using fiscal year May 1989 revenue.
See Accountants' Report
-7-
EDCO/NATIONAL CITY
COMPUTATION OF DUMP COST INCREASE
AND UNRECOVERED DUMP EXPENSE
Estimated unrecovered dumping cost for the period from October 1, 1989 to
July 1, 1990 is computed as follows:
1990 Projected Dump Expense
1989 Actual Dump Expense
INCREASE FOR ONE YEAR
$ 469,458
365,053
$ 104,405
Unrecovered Dump Expense Estimated
at 9/12 of $104,405 or $ 78,304
Estimated dump costs for the period July 1, 1990 to June 30, 1991, considering
proposed county increase from $13.50 to $18.00 per ton effective July 1, 1990,
is computed as follows:
1991 Projected Dump Expense $ 626,257
1990 Projected Dump Expense 469,458
INCREASE FOR THE YEAR $ 156,799
See Accountants' Report
-8-
EDCO/NATIONAL CITY
SCHEDULE OF ALL OTHER COST INCREASES
Operating Costs
Less: Dump Fees
Less: City Franchise Fees
TOTAL ALL OTHER COSTS
ALL OTHER COSTS INCREASE
Actual
1989
Forecasted
May 31,
1990
$ 1,781,407 $ 1,970,388
(365,053) (469,458)
(38,918) (38,918)
$ 1,377,436 $ 1,462,012
$ 84,576
See Accountants' Report
May 31,
1991
$ 2,234,328
(626,257)
(38,918)
$ 1,569,153
$ 107,141
-9-
EDCO/NATIONAL CITY
SCHEDULE OF NEW SERVICES
Present service includes one major clean-up day 1990
per year. National City requests one additional
clean-up day. Cost estimated at $5,000/day.
($5,000I$0.95) $ 5,264
Residential - $1,526/7,500 residences/12 $0.02/month
Commercial - $3,737/3,375 bins/12 $0.09/month
Special truck to pick-up bulky items once per week.
Cost estimated at $500/week (residential only)
$26,000/$0.95/7,500 residences/12
Total Cost of New Services
$ 27,368
$0.30/month
$ 31,000
Cost of New Services Plus Franchise Fee $ 32,632
See Accountants' Report
-10-
EDCO/NATIONAL CITY
COMPUTATION OF COST 'OF RECYCLING
CAPITAL EXPENDITURES:
1. Truck (1 Truck @ $90,000
2. Containers (8,750 @ $4.25 each)
3. Yard Improvements
TOTAL CAPITAL EXPENDITURES
1990.
$ 90,000
37,188
40,000
$ 167,188
OPERATING COSTS:
1. Depreciation (Three Years on Containers
and Five Years on All Other Capital
Expenditures) $ 38,390
2. Labor - One Person Crew at an Average of
50 Hours a Week. Total of One Crew
at 2,600 Hours/Year at $9.00 Per Hour 23,400
3. Fringe at 40% 9,360
4. Truck Operating Costs - 70 Miles/Day x 5
Days = 18,200 Miles/Year at 75t per Mile 13,650
5. Disposal Cost (300/Month) 3,600
6. Processing Costs and Shipping - 73 Tons/
Month X 12 Months = 876 Tons/Year x $30 26,200
7. Administration Costs 32,000
8. Office Supplies 5,000
9. PR/Education 27,000
10. Container Delivery 2.500
TOTAL COST OF PROGRAM $ 181,100
The cost of the program was based on the results of the pilot program conducted
in La Mesa and Lemon Grove.
See Accountants' Report
-11-
EDCO/NATIONAL CITY
COMPUTATION OF COST OF RECYCLING
(continued)
1990
Total Cost of Program $ 181,100
Less: Landfill Savings (876 tons @ $18.00) (15,768)
Less: Revenue Estimated to be Realized from
Sales (876 tons @ $60.00 per ton) (52,560)
Less: County Grant (15,000)
TOTAL - NET COST OF RECYCLING 97,772
Factor to Yield 15% Pre -Tax Margin and
Franchise Fee of 5% .80
REVENUE INCREASE NEEDED $ 122,215
If Residential Customers Assume 30% of the
Needed Increase
Revenue Required Per Month
Number of Residential Accounts Serviced
Cost Per Month Per Account
If Commerical Customers Assume 7O% of the
Needed Increase
Forecasted Commercial Revenue
Rate Increase Required (Percentage)
See Accountants' Report
$ 36,665
3,055
7.500
.41
$ 85,550
1,366,000
6.3%
-12-
EDCO/NATIONAL CITY
COMPUTATION OF COST OF RECYCLING
(continued)
PROJECTED ROUTES
City M T W T F Total
La Mesa 3 ,3 3 3 3 15
Lemon Grove 1 2 1 1 1 6
National City 1 1 1 1 1 5
Coronado 1 1 1 1 2 6
Santee 3 3 3 2 2 13
TOTAL 9 10 9 6 9 45
National City Percentage of Total - 5/45 - 11%
See Accountants' Report
-13-
RATE REVIEW COMPARISONS
LEMON NAT'L
GROVE LA MESA CITY
RECYCLING
ADMINISTRATION 24,000 40,000 32,000
P/R EDUCATION 18,000 36,000 27,000
RECYCLING RATE
OTHER SERVICE
MONTHLY RATE
1.14
9.75
1.56 .41
.32
10.05 9.52
City of National City, California
COIICIL AGENDA STATEMEN``
MEETING DATE July 17, 1990 AGENDA ITEM NO.
ITEM TITLE REQUEST FOR RATE INCREASE FOR TRASH SERVICE
PREPARED BY C. R. WILLIAMS,
¥XPLANATION _
See attached.
DEPARTMENT Public Works
1
Environmental Review X N/A
Financial Statement
Increase in rate will cause an increase in the franchise fees received
by the city.
Account No
STAFF RECOMMENDATION
APPROVE THE RATE REQUEST AS SUBMITTED, EFFECTIVE AUGUST 1, 1990.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below)
1. Rate review by ALDER, GREEN & HASSON
2. Rate review analysis
3. Local rate comparison
Resolution No
A-200 (Rev. IAD)
COUNCIL AGENDA STATEMENT
Meeting Date July 17, 1990
Item Title REQUEST FOR RATE INCREASE FOR TRASH SERVICE
EXPLANATION
The terms of the present (and proposed new) contract with
EDCO for trash services permit the contractor to apply to
the City Council for rate changes from time to time.
At the request of Council, the increase in dump fees at the
County dumpsite in October 1989 was deferred, to be
considered simultaneously with the July 1, 1990 fee
increase, and with the increased cost of additional services
desired under the contract (additional citywide cleanup,
increased franchise fee, bulky item pickup, curbside
recycling, etc.), all in the July 1990 time frame.
The proposed revised and extended contract is being
considered tonight under a companion agenda item.
The accounting firm of ALDER,GREEN and HASSON has prepared a
rate review analysis (Attachment I), forecasting rates
required based upon estimated expenditures. That analysis
has been reviewed and approved by our City FINANCE
DEPARTMENT (Attachment II).
The requested change in single-family rate from $7.25 to
$9.67 per month is a 33% change; the commercial rate change
from $46.75 for a 3-cubic-yard bin in once -a -week service to
$60.77 is a 30% increase. They should be effective for the
next 12-month period.
Trash service costs for same area jurisdictions are appended
for comparison purposes, as Attachment III.
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR
CITY OF NATIONAL CITY CONTRACT
MAY 1, 1990
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR CITY OF NATIONAL CITY
MAY 1, 1990
CONTENTS
Page
Accountants' Report 1
Rate Review Analysis 2
Background Data 3
Assumptions for Rate Review Analysis
Computation of Rate Adjustment 6
Analysis of Computation of Rate Increase 7
Computation of Dump Cost Increase
and Unrecovered Dump Expense
Schedule of All Other Cost Increases
Schedule of New Services
Computation of Cost of Recycling
9
10
11
10920 Wilshire Boulevard
Suite 1200
s Angeles
.ifornia 90024
(213) 208-1200
Member:
American Institute of
Certified Public Accountants
California Society of
Certified Public Accountants
Private Companies Practice
Section, AICPA, Division
for CPA Firms
Alder,
Green
& Hasson
Certified Public Accountants
Board of Directors
Edco Disposal Corporation
We are pleased to have the opportunity to assist you in developing the
accompanying documents for rate review purposes in the City of National City,
California. The rate review analysis has been prepared to submit to the City of
National City for purposes of evaluating the request by Edco for a rate
increase.
In accordance with the professional standards that apply to our practice,we
have included this transmittal letter to describe certain procedures we
performed and certain limitations associated with the rate review analysis.
Rate Review Analysis The accompanying rate review analysis has been prepared based on assumptions
made by management about operating expenses. The analysis has been prepared
from historical financial statements and forecasted statements of .income for
years ending May 31, 1990 and 1991.
The historical statements for the year ended May 31, 1989 were audited by us and
we expressed an unqualified opinion on them in our report dated October 31,
1989, but we have not performed any auditing procedures since that date.
The forecasted proforma statements of income for the years ending May 31, 1990
and 1991 were compiled by us in accordance with standards established by the
American Institute of Certified Public Accountants.
Ztter, /,64.)
ALDER, GREEN & HASSON
May 1, 1990
Los Angeles, California
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR CITY OF NATIONAL CITY
RATE REVIEW ANALYSIS
-2-
NATIONAL CITY
BACKGROUND DATA
Edco Disposal Corporation is a solid waste hauler with corporate offices at 6670
Federal Boulevard, Lemon Grove, California 92045. Edco's primary operating
center is located at the same location. Edco has additional operating centers
in Orange County, San Bernardino County and in North San Diego County.
The Company operates the following city contracts and non -contract areas:
6670 Federal Boulevard
City Contract Areas - City of La Mesa
City of Lemon Grove
National City
Coronado
Non -Contract Area
Orange County
City Contract Areas
City of San Diego
- City of Buena Park
City of La Palma
City of Signal Hill
San Bernardino County
City Contract Area - City of Rialto
Non -Contract Area - County Adjacent to Rialto
North San Diego County
Non -Contract Area - Fallbrook Area
Edco Disposal Corporation has a fiscal year ending May 31. The Company's fiscal
year end financial statements are audited.
Direct cost of operations are charged to each of the contract operations.
Indirect costs or shared costs of the Federal Boulevard operating center have
beenallocated on a route basis.
Edco's administrative costs have been allocated to all of Edco's operating
centers.
See Accountants' Report
-3-
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR THE CITY OF NATIONAL CITY
ASSUMPTIONS FOR RATE REVIEW ANALYSIS
NOTE 1 - RATE OF RETURN ON REVENUE
Based on the historical income statement for the National City Division, the
pre-tax profit from operations is 10.8%. Costs have risen and are projected to
increase further in 1990 and 1991. Edco has not had an increase in rates since
1988 in National City. The following is a comparison of pre-tax income of com-
panies in the same industry and was abstracted from various published reports.
The average pre-tax profit obtained was 15.0%.
Pre -Tax Income Comparison
Pre -Tax Income:
All Waste - 1988
Canonie Environmental - 1988
Groundwater Tech - 1988
International Tech - 1988
Rollins Env. - 1988
Waste Management
Browning Ferris
Robert Morris Associates
5.3
17.5
9.4
7.6
33.3
20.9
17.4
8.8
TOTAL 120.2
Average Pre -Tax Profit 15.0
Net Tax at 40.1% 6.0
ASSUMED AFTER-TAX RETURN 9.0
NOTE 2 - INCOME TAX RATE
The effective tax rate on income, using the tax rates currently in effect, was
computed as follows:
Computation of Income Tax Rate
Franchise Tax Rate
Federal Tax Rate
Effect of Deductibility of Franchise
Tax for Federal Purposes
9.3
34.0
(3.2)
TOTAL NET TAX ON TAXABLE INCOME 40.1
See Accountants' Report
-4-
EDCO DISPOSAL CORPORATION
RATE REVIEW FOR THE CITY OF NATIONAL CITY
ASSUMPTIONS FOR RATE REVIEW ANALYSIS
NOTE 3 - BASIS FOR RATE INCREASE REQUEST
Increases in rates are being requested to cover certain additional projected
costs and to provide a reasonable profit margin.
To achieve a pre-tax profit of 15.0%, the percentage of operating expenses to
revenue exclusive of city franchise fees would be 80.0% as follows:
Computation of Operating Expense Ratio
Pre -Tax Profit Margin
Add: City of National City Franchise Tax
at 5% of Gross Receipts
15.0
5.0
PROFIT MARGIN BEFORE TAXES
AND FRANCHISE TAX 20.0
OPERATING EXPENSE RATIO 80.0
NOTE 4 - VEHICLE AND BIN REPLACEMENT
The rate review analysis includes a provision for vehicle and bin replacement
that is equal to the historical book depreciation which is 7.5% of revenue.
This provision may not be adequate to cover the cost of replacement of vehicles
and bins.
See Accountants' Report
-5-
EDCO/NATIONAL CITY
COMPUTATION OF RATE ADJUSTMENT
Based on the following analysis of the operations of the National City Contract
for refuse collection, which is being modified to include recycling, the land-
fill increase by the County of San Diego and other cost increases, an increase
of 25.6% for residential accounts and 21.4% for commercial accounts effective
July 1, 1990 is needed. In addition, a monthly charge of $0.56 to each
residential account and $4.02 (representing 8.6%) for each commercial account is
needed for the recycling cost.
Analysis of Impact of Rate Increase on Rates
% of
1989 Residential Commercial
Revenue Amount Amount
Existing Rate - Monthly (See Note) $ 7.25 $46.75
Landfill Increase 9.8% $ .71 $ 4.58
Unrecovered Landfill Cost 4.7% .34 2.20
Other Costs 6.7% .49 3.13
INCREASE 21.2% 1.54 9.91
New Services .32 .09
Recycling Cost - Basic .56 4.02
PROPOSED RATES - MONTHLY $ 9.67 $60.77
NOTE: The commercial rate illustrated is for one 3 cubic yard bin serviced
once a week.
See Accountants' Report
-6-
EDCO/NATIONAL CITY
ANALYSIS OF COMPUTATION OF RATE INCREASE
Impact of Dump Expense Increases
$156,799/80.0%
Impact of Unrecovered Dump Cost
$ 78,304/83.0%
Impact of All Other Cost Increases
$107,141/80.0%
TOTAL
Fiscal Year Ended
May 31, 1991
% of
1989
Amount Revenue
195,999 9.8
94,342 4.7
133,926 6.7
424,267 21.2
Impact of New Services
$ 31,000/95.0% 32,632
TOTAL EXCLUSIVE OF
RECYCLING COST 456,899
Impact of Cost of Recycling
$134,532/80.0% 168,165
TOTAL $ 625,064
NOTE: Costs for dump and new services have been grossed up only for the city
franchise fee of 5%.
Unrecovered dump cost has been grossed up for the city franchise fee of
2% which was effective until July 1, 1990, income taxes and a fair
return for the contractor.
All other costs have been grossed up to provide for the city franchise
fee of 5%, income taxes and a fair return for the contractor.
The percentages have been computed using fiscal year May 1989 revenue.
See Accountants' Report
-7-
EDCO/NATIONAL CITY
COMPUTATION OF DUMP COST INCREASE
AND UNRECOVERED DUMP EXPENSE
Estimated unrecovered dumping cost for the period from October 1, 1989 to
July 1, 1990 is computed as follows:
1990 Projected Dump Expense $ 469,458
1989 Actual Dump Expense 365,053
INCREASE FOR ONE YEAR $ 104,405
Unrecovered Dump Expense Estimated
at 9/12 of $104,405 or $ 78,304
Estimated dump costs for the period July 1, 1990 to June 30, 1991, considering
proposed county increase from $13.50 to $18.00 per ton effective July 1, 1990,
is computed as follows:
1991 Projected Dump Expense
1990 Projected Dump Expense
INCREASE FOR THE YEAR
$ 626,257
469,458
$ 156,799
See Accountants' Report
-8-
EDCO/NATIONAL CITY
COMPUTATION OF COST OF RECYCLING
(continued)
PROJECTED ROUTES
City M T W T F Total
La Mesa 3 3 3 3 3 15
Lemon Grove 1 2 1 1 1 6
National City 1• 1 1 1 1 5
Coronado 1 1 1 1 2 6
Santee 3 3 3 2 2 13
TOTAL 9 10 9 8 9 45
National City Percentage of Total - 5/45 = 11%
See Accountants' Report
-13-
EDCO/NATIONAL CITY
SCHEDULE OF ALL OTHER COST INCREASES
Operating Costs
Less: Dump Fees
Less: City Franchise Fees
TOTAL ALL OTHER COSTS
ALL OTHER COSTS INCREASE
Actual
Forecasted
May 31, May 31,
1989 1990 1991
$ 1,781,407 $ 1,970,388 $ 2,234,328
(365,053) (469,458) (626,257)
(38,918) (38,918) (38,918)
$ 1,377,436 $ 1,462,012 $ 1,569,153
$ 84,576 $ 107,141
See Accountants' Report
-9-
EDCO/NATIONAL CITY
SCHEDULE OF NEW SERVICES
Present service includes one major clean-up day
per year. National City requests one additional
clean-up day. Cost estimated at $5,000/day.
($5,000/$0.95)
Residential - $1,526/7,500 residences/12
Commercial - $3,737/3,375 bins/12
Special truck to pick-up bulky items once per week.
Cost estimated at $500/week (residential only)
$26,000/$0.95/7,500 residences/12
1990
$ 5,264
$0.02/month
$0.09/month
$ 27,368
$0.30/month
Total Cost of New Services $ 31,000
Cost of New Services Plus Franchise Fee $ 32,632
See Accountants' Report
-10-
EDCO/NATIONAL CITY
COMPUTATION OF COST OF RECYCLING
CAPITAL EXPENDITURES:
1. One Truck
2. Containers (8,750 @ $4.00 each)
TOTAL CAPITAL EXPENDITURES
1990
$ 125,000
35,000
$ 160,000
OPERATING COSTS:
1. Depreciation (Three Years on Containers
and Five Years on All Other Capital
Expenditures) $ 36,670
2. Labor - One Person Crew at an Average of
50 Hours a Week. Total of One Crew
at 2,600 Hours/Year at $9.00 Per Hour 23,400
3. Fringe at 40% 9,360
4. Truck Operating Costs - 70 Miles/Day x 5
Days = 18,200 Miles/Year at 75¢ per Mile 13,650
5. Disposal Cost (300/Month) 3,600
6. Processing Costs and Shipping - 73 Tons/
Month X 12 Months = 876 Tons/Year x $30 26,200
7. Administration Costs 50,000
8. Office Supplies 5,000
9. PR/Education 50,000
10. Container Delivery 2,500
TOTAL COST OF PROGRAM $ 220,380
The cost of the program was based on the results of the pilot program conducted
in La Mesa and Lemon Grove.
See Accountants' Report
-11-
EDCO/NATIONAL CITY
COMPUTATION OF COST OF RECYCLING
(continued)
1990
Total Cost of Program $ 220,380
Less: Landfill Savings (876 tons @ $18.00) (15,768)
Less: Revenue Estimated to be Realized from
Sales (876 tons @ $80.00 per ton) (70,080)
TOTAL - NET COST OF RECYCLING 134,532
Factor to Yield 15% Pre -Tax Margin and
Franchise Fee of 5% .80
REVENUE INCREASE NEEDED $ 168,165
If Residential Customers Assume 30% of the
Needed Increase $ 50,450
Revenue Required Per Month 4,204
Number of Residential Accounts Serviced 7,500
Cost Per Month Per Account $ .56
If Commerical Customers Assume 70% of the
Needed Increase
Forecasted Commercial Revenue
Rate Increase Required (Percentage)
See Accountants' Report
-12-
$ 117,715
1,366,000
8.6%
COMPARATIVE TRASH RATES
SINGLE 3-CUBIC-YARD BIN
FAMILY ONCE A WEEK
Chula Vista $ 9.10 $53.20
Lemon Grove - 9.65 56.45
La Mesa 10.05* 52.55
Carlsbad 8.60 48.95
El Cajon N/A N/A
Encinitas 9.80 55.85
Escondido 8.97** 49.38
*Includes $1.50 recycling fee
**Includes $1.43 recycling charge
CITY OF NATIONAL CITY
DEPARTMENT OF FINANCE
MEMORANDUM
June 28, 1990
TO: Curtis R. Williams, Jr., Public Works Director
FROM: Alex Caloza, Finance Director
SUBJECT: EDCO RATE REVIEW AND PRO -FORMA STATEMENTS
We have reviewed EDCO' s calculation of its proposed rate adjustments
and the accompanying pro -forma statements. We found no basis to
question the propriety of EDCO's calculation of the proposed rate
adjustments.
We regret our inability to perform the review in a more timely manner As
you know, we were in the middle of working on the preliminary budget
when we received your request to review EDCO's proposed rates.
In the future, we recommend that an outside accounting firm, to be chosen
by the City and to be paid by EDCO, be engaged to verify EDCO's cost
assumptions and rate adjustment calculations. This proposal, originally
made by EDCO in a letter dated September 5, 1989 from Mr. Edward
Burr, would result in a faster review for EDCO at no cost to the City.
Dear Customer;
On October 1, 1989 and again on July 1, 1990, the County
of San Diego increased the fee we must pay to dispose of
rubbish at the County landfill sites by a total of 58%.
Further, a new state law (AB939) requires all cities to
reduce and/or recycle 25% of their waste stream by 1995 and
50k by the year 2000. Therefore, as a first step toward
meeting these new mandated standards, the City Council has
established a citywide residential curbside recycling
program. This collection will be one of the best in the
state and will divert very high amounts of material from the
landfill.
The City Council has also provided for the establishment
of a special pickup of "bulky" items and a procedure to
insure that children cannot be locked inside abandoned
refrigerators and freezers. For door lock removal and
collection of household appliances and furniture, you merely
need to make an appointment and a special truck will pickup,
from the curb, the following Saturday. A welder will also,
on request, visit your property and render safe any item
having air tight doors.
The City has granted an adjustment in the refuse
collection charge to cover these added services and a pass
through of the exorbitant landfill fee along with a small
operating cost increase.
The new single family rate will increase from $7.25 to
per month along with a corresponding increase in the
mu ti-family and commercial charges effective 1, 1990.
The new charges are reflected in the enclosed bill.
06EK
Thank you for the opportunity to be of service. tie'
appreciate your patronage. If there is a service we could
provide and have not thought of or a suggestion to help us
improveY 'service, please call us at 287-7555. We will
try hard to fill y8ur needs.
EDCO DISPOSAL CORPORATION
SAN DIEGO RECYCLING
lity of National City, California
COUNCIL AGENDA STATEMENT
MEETING DATE September 25, 1990
AGENDA ITEM NO. 3
(-ITEM TITLE REQUEST FOR RATE INCREASE FOR TRASH SERVICE
PREPARED BY C. R. Williams, Jr. ['DEPARTMENT Public Works
EXPLANATION.
See attached.
Environmental Review x N/A
Financial Statement
Increase in rates will be reflected in an increase in dollars collected
by the city as a result of the existing 2% franchise fee.
Account No.
STAFF RECOMMENDATION
See attached.
BOARD/COMMISSION RECOMMENDATION
N/A
/4/ 3 3`(
ATTACHMENTS (Listed Below) Resolution No. 16 ,333
1. Agenda item 10 from August 21, 1990 Council meeting
2. Revised rates, 9/19/90
3. Copy of slide presentation from 9/18/90 workshop
4. FDCO letter of 9/19/90, with attAehmants
A-200 (Rev. 9/80)
RESOLUTION NO. 16,33f
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NATIONAL CITY APPROVING A TRASH SERVICE
RATE INCREASE FOR EDCO DISPOSAL CORPORATION
WHEREAS, the last trash service rate increase for EDCO
Disposal Corporation, the city's franchised trash collector, was
approved in June 1988; and
WHEREAS, in October 1989 and on July 1, 1990, the County
of San Diego raised the rate of the solid waste disposal fee
schedule, and EDCO Disposal Corporation has requested that this
increasebe treated as a pass -through cost to its subscribers; and
WHEREAS, additional services are being requested of the
EDCO Disposal Corporation; and
WHEREAS, the new trash service rates would be comparable
to those of surrounding cities.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of National City that the proposed rate schedule dated October
1, 1990, a copy of which is attached hereto as Exhibit "A", is
hereby approved.
PASSED AND ADOPTED this 25th day of September, 1990.
George H. Waters, Mayor
ATTEST:
Lori Anne Peoples, City Clerk
APPROVED AS TO FORM:
George H. Eiser, III
City Attorney
COUNCIL AGENDA STATEMENT
MEETING DATE September 25, 1990
ITEM TITLE REQUEST FOR RATE INCREASE FOR TRASH SERVICE
EXPLANATION
The terms of the contract with EDCO provide for periodic
rate increases. Based upon numerous discussions and the
Workshop of 9/18/90, the contractor has submitted a letter
(EDCO letter of 9/19/90 attached) requesting a rate change
for 10/1/90, recommending a deferral of some elements of new
services desired by the city, and proposing a future method
of determining rate changes.
The rate change proposed is an approximate 20% rate increase
to single-family units from $7.25 to $8.75 per month; and an
approximate 16% increase in commercial services.
The deferral of citywide curbside recycling in favor of a
pilot program, and the deferral of an increase in the
franchise fee has reduced the rate changes from those
originally submitted. Staff agrees with the deferral of
these two programs.
The proposed use of the local urban consumer price index as
a vehicle for determining future rate increases appears
acceptable, with the % change in rate being equal to the %
change in index, and with a maximum 6% cap.
The further proposal to treat tipping fee changes as "pass -
through" costs has merit. The County has advised that the
fees will continue to rise; the amount and timing of
increases are not known. Treating this as a "pass -through"
cost with the rate increase being only for tipping fee
increases and with the timing being concurrent, the element
of risk on both sides is reduced to zero. Approval is recom-
mended.
RECOMMENDATION
Approve the rates proposed, to be effective October 1, 1990.
Approve the bulky item pickup and refrigerator door programs
to start October 1, 1990. Approve the second citywide
cleanup to be in October 1990. Approve the pilot recycling
program to start October 1990. Approve citywide curbside
recycling to start July 1991. Approve the use of the CPI to
establish new rates in October 1991 and thereafter approve
increasing the franchise fee to 5% on October 1, 1992, and
1% per year thereafter; and approve the treating of County
landfill tipping fee increases as a pass -through cost.
Resolution No. 16,333
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY
AUTHORIZING THE MAYOR TO EXECUTE A REVISED AGREEMENT
BETWEEN THE CITY OF NATIONAL CITY AND THE
EDCO DISPOSAL CORPORATION FOR THE
COLLECTION OF RUBBISH AND TRASH
WITHIN THE CITY
BE IT RESOLVED by the City Council of the City of
National City that the Mayor is authorized to execute a
revised agreement between the City of National City and the
EDCO Disposal Corporation to modifythe present services,
and to extend the service thereof to four (4) years from its
present expiration date on November 17, 1990. Said
agreement is on file in the office of the City Clerk.
PASSED AND ADOPTED this 25th day of September, 1990.
ATTEST:
40C" /
George H. Waters, Mayor
APPROVED AS TO FORM:
George H. iser, III, City Attorney
Passed and adopted by the Council of the City of National City, California,
on September 25, 1990 by the following vote, to -wit:
Ayes: Councilmen Dalla, Inzunza,, Pruitt, Van Deventer Waters
Nays: Councilmen None
Absent: Councilmen None
Abstain: Councilmen None
AUTHENTICATED BY:
GEORGE H. WATERS
Mayor of the City of National City, California
City Clerk of the City of National City,California
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and cor-
rect copy of RESOLUTION NO. 16,333 of the City of National City,
Calif., passed and adopted by the Council of said City on September 25,
1990
(Seal)
City Clerk of the City of National City, California
By:
Deputy
of
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
THIS AGREEMENT is entered into this 25th day
September
1990, by and between the City of National
City, hereinafter referred to as "City" and EDCO Disposal
Corporation, hereinafter referred to as "Contractor."
RECITAL
The parties desire to enter into this agreement to
provide for the exclusive right and duty of EDCO to collect,
transport, recycle and dispose of garbage, rubbish and
recyclable material from single-family residential, multi-
family, commercial, industrial and from City -occupied
facilities in accordance with this agreement, the ordinances
of the City of National City, the regulations established by
the County of San Diego and all applicable State and Federal
Laws. Roll -off containers for construction debris and for
recycling are not included in this exclusive right.
SECTION 1. TERM: The term of this agreement shall be
from the date first written above and shall expire
November 17, 1994.
SECTION 2. DEFINITIONS: A. "GARBAGE" is all refuse
and waste, fruit, vegetable and animal matter, prepared and
intended for human consumption, and not so used.
1
B. "RUBBISH" is refuse and waste material, whether com-
bustible or noncombustible, not included within the
definition of garbage as herein defined, including but not
limited to paper, rags, glass, ashes and yard waste (leaves,
grass, tree and vine trimmings). It shall not include
plaster, rock, sand, dirt, automobile frames or fenders, or
waste material relating to building operations, construction
or repair. It further does not include hazardous or toxic
materials nor dead animals.
C. "RECYCLE" or "RECYCLING" means the process of
collecting, sorting, cleansing, treating, and reconstituting
materials that would otherwise become solid waste, and
returning them to the economic mainstream in the form of raw
material for new, reused, or reconstituted products which
meet the quality standards necessary to be used in the
marketplace. "Recycling" does not include "transformation."
D. "RECYCLABLE MATERIAL" is material that is subject to
the process of recycling, and includes such items as
newspaper, glass, ferrous and non ferrous metals, PET and
other plastics, cardboard, mixed paper, waste paper, yard
waste and other material mutually agreed upon.
SECTION 3. CONTRACTOR'S OBLIGATION TO COLLECT AND
RECYCLE GARBAGE AND RUBBISH: Contractor will collect and
remove all combustible and noncombustible rubbish and
garbage from the curbs, sidewalks or alleys within the city
2
limits of National City, as far as said garbage and rubbish
is placed properly for pickup; and Contractor will provide
all materials, supplies, equipment, and personnel necessary
to collect said rubbish and garbage pursuant to the terms of
this agreement. A pilot curbside recycling program shall be
established in October 1990. In April, May and June of
1991, the results of the pilot program will be reviewed by
Contractor and by City. If agreement can be reached on the
scope and price of the service, a full citywide curbside
recycling program will be established in July 1991 with the
costs thereof to be coordinated with the October 1991
scheduled rate review. If agreement cannot be reached, the
City will advertise for bids to accomplish curbside
recycling.
Contractor shall collect and handle all appropriate
materials included within the term "Recyclable Material"
defined in Section 2, and as mandated by existing or future
City, County, State or Federal legislation or requirements.
Original and replacement containers for the household
accumulation of recyclable material shall be provided by
Contractor without charge and shall remain the property of
Contractor.
SECTION 4. RATES FOR CONTRACTOR'S SERVICES: Contractor
shall charge no more than the maximum rate set forth in the
Rate Schedule, which is exhibit "A" hereto and by this
reference incorporated herein as though fully set forth here-
3
inafter. Contractor may charge less than the rates in the
Rate Schedule, but not more. Any rate charged to a classifi-
cation of user shall be charged uniformly to all users in
that classification. In view of the unknown elements of
retrieval costs of recycling, the unpredictable changes in
landfill tipping fees, avoided tipping fees and the
volatility of the recycling market among other factors, the
rate schedules proposed by Contractor will be accompanied by
a report from an outside auditing firm (to be selected by
City and paid by Contractor) covering both the refuse collec-
tion and recycling operations. Funds obtained from the sale
of recycled items shall be used to offset other elements of
cost in consideration of an appropriate rate structure.
Charges to commercial or industrial customers who present
large amounts of recyclable material may be offset to
acknowledge the value of such material to the customer. The
Rate Schedule may be modified from time to time as provided
later in this agreement.
SECTION 5. EXTRA COMPENSATION: In the event the volume
of rubbish and/or garbage left for pickup by a user is
excessive or, in the event that accessibility to pickup
points is restricted or impaired, thereby causing additional
cost of collection to Contractor, Contractor shall
negotiate, in good faith, a collection fee with the affected
user. In the event a dispute arises between Contractor and
4
a user as to the excessiveness of the volume of trash left
for pickup, City shall make the final determination as to
excessiveness.
SECTION 6. STANDARD OF SERVICE: In rendering services
pursuant to this agreement, Contractor shall use equipment
that is in good operable condition, and good, clean appear-
ance. All field employees of Contractor who deal with the
public shall wear uniforms, first reasonably approved by the
City Manager of City, and all employees shall be required by
Contractor to be courteous and helpful in their dealings
with the public.
Contractor's employees are required to remove properly
contained rubbish and garbage but have no responsibility to
clean up a littered area when the fault is overfilled
containers, dumping by vandals or otherwise poor housekeep-
ing. Contractor is required to clean up litter or liquid
spills caused by his operation, and this must be done
immediately.
SECTION 7. DUMP SITE: Contractor shall either furnish
its own disposal site, or use disposal sites provided to it
by the County of San Diego. In any event, Contractor will
not burn any combustible substances within the City of
National City. All disposal activities of Contractor shall
be conducted in such a way as to enhance, and not impair,
the health, welfare, sanitation and safety of the people of
the City of National City.
5
Upon 30 days written notice, City may require Contractor
to use a disposal site designated by City, provided that
adequate acess is available to Contractor to provide reason-
able use of such a designated disposal site. In this
regard, Contractor shall pay whatever reasonable use fees
are charged for such a designated disposal site, and said
fees shall be an operating expense for purposes of setting
rates hereunder.
SECTION 8. FREQUENCY OF SERVICE: Contractor shall
collect rubbish and garbage from residential users at least
one time per week, with collections from any user being on
the same day of the week, such day to be designated by
Contractor.
Collection from commercial, industrial, and manufactur-
ing users, except recycling, shall be as frequently as
agreed upon between Contractor and user, but not less often
than weekly.
SECTION 9. HOURS FOR COLLECTION: All collection
activities of Contractor pursuant to this contract shall
occur between the hours of 7:00 a.m. and 4:30 p.m.
SECTION 10. CARE OF USERS' CONTAINERS: Contractor
shall insure that its employees make reasonable efforts to
avoid damage to users' rubbish and garbage containers.
SECTION 11. SERVICE TO CITY: Contractor shall collect
garbage and rubbish from City -owned property, as frequently
6
as is necessary to prevent the accumulation of rubbish or
garbage on City -owned property, without charge to City.
Collection service includes removal of sweeping debris.
SECTION 12. BIANNUAL CLEANUP: Contractor agrees to
provide two annual cleanup campaigns and to cooperate with
City as to the date and manner of conducting said cleanup
campaigns.
SECTION 13. CONTRACTOR TO OBEY ALL LAWS IN THE PERFORM-
ANCE OF THIS CONTRACT: Contractor warrants that it will
comply with all Local, State and Federal laws and regula-
tions applicable to its operation.
SECTION 14. COLLECTION OF BULKY ITEMS: Contractor 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
furniture (couch, chair, table, mattress, etc.). Said
program shall include a procedure for informing Contractor's
customers of the existence of said program, and of the
details of said program (e.g., pickup times).
The program shall require pickup on Saturday. An
appointment is required which may be made by contact with
EDCO as late as Friday for pickup the following day.
Provision also shall be made to ensure that set out items
having doors are rendered safe by either removal of the door
latch mechanism, by welding the doors shut or by removal of
the doors, such action to occur within eight (8) working
7
hours of notification to Contractor by the customer. Costs
for this program are considered a basic business cost to be
included in overall rate establishment and without
additional charge to the customer. It is understood
that this program does not include removal of autos or
automotive components, construction or demolition debris,
dirt, sand, concrete, asphalt, etc. These type materials
are to be hauled on a for -a -fee basis. Bulky items are to
be set out at normal trash location.
SECTION 15. INSURANCE: Contractor, at its sole cost
and expense, shall purchase and maintain throughout the term
of this agreement, the following insurance policies:
A. Automobile insurance covering all bodily injury and
property liability incurred during the performance of this
agreement, with a minimum coverage of $10,000,000 combined
single limit per accident. Such automobile insurance shall
include non -owned vehicles.
B. Comprehensive general liability insurance, with
minimum limits of $1,000,000 combined single limit per
occurrence, covering all bodily injury and property damage
arising out of its operation under this agreement.
C. Workers' compensation insurance covering all of its
employees and volunteers.
D. The aforesaid policies, except for the workers'
compensation policy, shall name City and its officers,
8
agents, and employees as additional insureds, and shall
constitute primary insurance, with respect and limited only
to Contractor's performance under this agreement,
as to
City, its officers, agents and employees, so that any other
policies held by City shall not contribute to any loss
under said insurance. Said policies shall provide for
thirty (30) days prior written notice to City of
cancellation or material change.
E. Concurrently with the execution of this agreement,
Contractor shall furnish City with a certificate or other
sufficient proof that the above insurance provisions have
been complied with. Said certificate or other proof shall
be filed with and approved
Contractor does not keep all
full force and effect at all
agreement, City may elect to
the requisite insurance as
terminate the agreement as
F.
"claims
shall
by the City Risk Manager. If
of such insurance policies in
times during the term of this
treat the failure to maintain
a breach of the contract and
provided herein.
If any required insurance coverage is provided on a
made" rather than "occurrence" form, Contractor
maintain such insurance coverage for three years after
expiration
agreement.
of the term (and any extensions) of this
G. Insurance provisions may be updated at the option of
City every three years.
HOLD HARMLESS:
Contractor shall at its own risk, cost
and expense, indemnify, defend, and hold harmless, City,
9
its officers, agents and employees from and against any and
all liability, loss, expense, including defense costs, legal
fees, and claims for damages, arising from Contractor's
performance under the terms of this agreement.
SECTION 16. FRANCHISE FEE: As a franchise fee,
Contractor will pay the City of National City a sum of money
equal to two percent (2%) of Contractor's gross collections
derived from services rendered pursuant to this agreement.
The franchise fee will increase to 5% effective October 1,
1992 and will increase by 1% on July 1 of each succeeding
year for the remainder of the contract term. Said franchise
fee will be payable on the 20th day of each month. City
shall have the right, at reasonable times and places, to
inspect Contractor's books and records to insure the proper
and correct payment of the franchise fee.
SECTION 17. EXCLUSIVE CONTRACT: City hereby grants to
Contractor, during the term of this agreement, the exclusive
right to collect all rubbish and garbage and recyclable
material within the City of National City, as it now, or in
the future, exists. City will not grant, during the term of
this agreement, any other person the right to collect any
rubbish or garbage or recyclable material for compensation
within its city limits. Nothing herein is intended to
prevent customary agreements to service commercial/indus-
trial facilities for recyclable material from roll -off
containers nor to prevent individuals from recycling their
10
own material nor charitable organizations from recycling
donated materials. Roll -off containers for construction
debris are not included in this exclusive right.
SECTION 18. NOTICE OF DEFAULT OF CONTRACT: If City
determines Contractor is in default of any term or condition
of this agreement, it shall give Contractor written notice
of said default, and Contractor shall correct said default
within 30 days. If Contractor fails to correct fault to the
satisfaction of City, City may, by written communication,
cancel this agreement and purchase at the then fair market
value all of Contractor's equipment, books, records, and
supplies, used by it in the performance of this agreement,
and to take immediate possession of said property and use it
as City deems appropriate.
SECTION 19. CITY CONTROL DURING NATURAL DISASTER OR
DECLARED DISASTER OR LABOR DISPUTE: In the event of a local
natural disaster or any declared disaster, City may direct
and control and use all of the equipment of Contractor used
by it in the performance of this agreement.
Furthermore, in the event of a labor dispute, which
prevents Contractor from performing the terms and conditions
of this contract, City may, but need not, take over
Contractor's equipment and operate the same for rubbish and
garbage collection purposes within the City of National
City.
11
In the event any such labor dispute is not settled
within 120 days after City exercises its right to take over
Contractor's equipment and operate the same, City may, but
need not, purchase all of Contractor's equipment, books, and
records, necessary to perform this agreement at the then
fair market value, cancel this agreement and use said
property as it deems proper.
SECTION 20. CONTRACTOR'S PERFORMANCE BOND: Contractor
shall deliver to the City Treasurer a performance bond
issued by a surety licensed to engage in business in the
state of California, or cash or government bonds in the sum
of $25,000.00 to guarantee its faithful performance of this
contract.
SECTION 21. CONTRACTOR'S OFFICE: During the term of
this agreement, Contractor shall maintain a business office
with regular office hours at a location in the City of
National City, which provides convenient access to the users
of Contractor's services. Contractor shall keep the City
Manager of City and its users informed of the location of
said office.
SECTION 22. BILL AND COLLECT: Contractor shall, at its
own expense, bill and collect service charges due it,
pursuant to this contract.
SECTION 23. APPLICATIONS FOR RATE CHANGE: Contractor
may apply, annually, for changes in the rates charged
12
pursuant to this agreement. Said application shall be in
writing, addressed to the City Manager of City, and contain
the financial and statistical data upon which the rate
change application is made. By agreement, 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,
however, a cap of 6%. Thereafter, after report and
recommendation to it by its manager, the City Council
will act on said application, either grant the same, denying
the same or granting some different rate schedule than that
applied for. Such rate change shall be effective on
October 1 of each year.
Changes in the rates (tipping fees) charged by the
owners/operators of sanitary landfill sites utilized by the
Contractor shall be considered as "pass -through" costs.
Upon notification to the Contractor of a proposed tipping
fee change, the Contractor should submit a letter request
for rate change to the City, defining the impact of such
change on his costs, and proposing a rate change that will
exactly recoup the tipping fee change. Any approved rate
change reflecting a change in tipping fees may be concurrent
with the change in tipping fees.
SECTION 24. NON -ASSIGNABILITY: Contractor's rights and
duties under this contract cannot be assigned, in whole or
in part, without the consent of the City Council first
13
obtained in the form of a resolution duly passed and
adopted.
SECTION 25. INDEPENDENT CONTRACTORS: City and
Contractor are independent contractors with respect to each
other, and none have the authority to incur obligations of
any kind in the name of or for the account of each other, or
to commit or bind each other without the other's written
consent.
SECTION 26. COMPLIANCE WITH APPLICABLE LAW:
Contractor, in the performance of the service to be provided
herein, shall comply with all statutes, State or Federal,
and all ordinances, rules, and regulations of the City of
National City, whether now in force or subsequently enacted.
SECTION 27. PRIOR AGREEMENTS. This agreement shall
supersede all prior agreements between City and Contractor.
CITY OF NATIONAL CITY
APPROVED AS TO EGRM BY:
George H. Eiser, 1I1
City Attorney
ATTEST:
By:
EDCO DISPOSAL CORPORATION
BY:
14
NATIONAL CITY RATE SCHEDULE
10-01-90
RUBBISH AND GARBAGE
MONTHLY
RATE
1. Residential
Per month residential single
family properties.
For the second and each
additional residential unit
in multiple dwellings which
do not exceed four units
2. Trailer Parks and Motels ($5.00 Min.)
One time per week, per unit, per month
3. Apartment Houses (no minimum)
One time per week, per unit, per month
4. Senior Citizen - Residential
Per month
8.75
6.60
6.20
6.15
7.10
EXHIBIT A
NATIONAL CITY RATE SCHEDULE
10-01-90
RUBBISH AND GARBAGE
MONTHLY
RATE
1. Residential
Per month residential single
family properties. 8.75
For the second and each
additional residential unit
in multiple dwellings which
do not exceed four units
2. Trailer Parks and Motels ($5.00 Min.)
One per week, per unit, per month
3. Apartment Houses (no minimum)
One time per week, per unit, per month
4. Senior Citizen - Residential
Per month
6.60
6.20
6.15
7.10
EXHIBIT A
NATIONAL CITY RATE SCHEDULE
10-1-90
RUBBISH AND GARBAGE
(COMMERCIAL AND INDUSTRIAL MONTHLY
ESTABLISHMENTS) RATE
Up to (2) 40 gallon containers
One time per week - per month
Up to (2) 40 gallon containers
Two times per week - per month
Up to (2) 40 gallon containers
Three times per week - per month
Up to (2) 40 gallon containers
Four times per week - per month
Up to (2) 40 gallon containers
Daily (Six days/Monday thru
Saturday)
Additional or unusual accumulation
of rubbish
10.25
16.30
21.00
25.95
33.90
6.15
NATIONAL CITY RATE SCHEDULE
10-1-90
BOX TYPE REFUSE SERVICE
NUMBER COLLECTION YARDS PER MONTHLY
OF BINS FREQUENCY MONTH RATE
1 1 13 54.25
1 2 26 87.30
1 3 39 120.35
1 4 52 153.40
1 5 65 186.50
1 6 78 219.50
1 7 91 271.75
2 1 26 110.20
2 2 52 174.00
2 3 78 238.95
2 4 104 306.80
2 5 130 355.55
2 6 156 404.85
2 7 182 475.60
3 1 39 161.25
3 2 78 255.20
3 3 117 349.15
3 4 156 405.15
3 5 195 523.75
3 6 234 630.45
3 7 273 777.80
4 1 52 197.20
4 2 104 321.30
4 3 156 445.75
4 4 208 522.00
4 5 260 673.95
4 6 312 759.20
4 7 364 999.90
5 1 65 234.30
5 2 130 388.60
5 3 195 543.15
5 4 260 667.00
5 5 325 801.00
5 6 390 966.85
5 7 455 1186.10
6
6
6
6
6
6
6
1
2
3
4
5
6
7
78
156
234
312
390
468
546
271.15
455.90
640.60
737.20
892.60
1086.35
1336.00
;ity of National City, Californic
C)UNCIL AGENDA STATEMEr`; "
MEETING DATE September 25, 1990
AGENDA ITEM NO. 2
i ITEM TITLE MODIFICATION AND EXTENSION OF TRASH FRANCHISE WITH
EDCO DISPOSAL
PREPARED BY C.
EXPLANATION
See attached.
R. Williams, J
DEPARTMENT Public Works
Environmental Review x N/A
Financial Statement
N/A
Account No.
STAFF RECOMMENDATION
Authorize the Mayor to execute the contract.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below) Resolution No 16,332
Contract
/0, 333
A-200 (Rev. 9/80)
'ity of National City, California
COUNCIL AGENDA STATEMENT
MEETING DATE December 5, 1989
AGENDA ITEM NO. 6
ITEM TITLE EXTENSION - EXISTING TRASH FRANCHISE
PREPARED BY C. R. Williams, Jr / DEPARTMENT Public Works
EXPLANATION
This item was discussed on October 17, 1989 and was held over
for additional information. Responses have been received from nine
(of 14) neighbor cities, which are included in the attached report.
Environmental Review x N / A
Financial Statement
An increase in franchise fee is being recommended.
Account No.
STAFF RECOMMENDATION Approve the contract extension and direct staff
to draft revisions to the existing contract to provide additional serv-
ices including recycling, and an increased franchise fee.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below) Resolution No.
1. A-200 of October 17, 1989 (Item 10)
2. Report on TRASH FRANCHISE EXTENSION
A-200 (Rev. 9/80)
L..
City of National City, Californi..
CuUNCIL .AGENDA STATEMENT
MEETING DATE October 17, 1989
ITEM TITLE EXTENSION OF EXISTING TRASH FRANCHISE
PREPARED BY C. R. Williams, Jr.
'EXPLANATION
By the attached letter, EDCO has requested that National City be includ-
ed in its present curbside recycling program, that EDCO hire an auditor
as selected by the city to provide financial data for the rate structure,
that the price increase caused by the County's October price increase in
"tipping" fees be deferred and combined with the recycling increase in
the January time frame, and that the present contract which expires in
November 1990 be extended for a 10-year period.
AGENDA ITEM NO. 10
The staff report is appended.
DEPARTMENT Public Works
Environmental Review x N/A
Financial Statement
N/A
Account No
STAFF RECOMMENDATION
Approve the contract extension and direct staff to draft a new contract
containing recycling requirements and an increased franchise fee.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below)
1. EDCO letter of September 5, 1989
2. Staff report
3. City Attorney opinion
Resolution No.
A -Zoo (Rey. 9/!0)
i
1
DISPOSAL CORPORATION
6670 Federal Boulevard
Lennon Grove, California 92045 (619) 287-7555
City of National City
1243 National Ave.
National City, CA 92050
September 5, 1989
at w r*
> 1 ,r+r-i
�--�-' (II :3C1"",
Attention: Mr. Thomas McCabe - City Manager n~ nR 'a
t
SUBJECT: 1) Curbside recycling program h --,
2) Postponement of the tipping fee increase to 't,,„
January 1, 1990. Z
3) Renewal of the refuse collection franchise
agreement.
Honorable Mayor and Members of the City Council:
EDCO Disposal is presently conducting a pilot residential,
curbside recycling program in the City of La Mesa. A similar pilot
program will commence shortly in the cities of Lemon Grove and
Coronado. Plans now call for city wide collection and processing of
recyclables to commence the first part of 1990. Please consider our
proposal to start the city wide collection in National City on January
14, 1990.
The company is preparing to install a processing plant in our
50,000 square foot building on Federal Boulevard. The plant will
receive, grade, sort and bale the commingled material for market. The
combined volume of recyclables from the four cities, will give us the
power to demand the highest price possible.
As you know, the sale of recyclables and voided disposal fee
savings will most likely not pay for the recycling program. In order
to justify any future rate adjustments, we are proposing to contract
and pay for an outside auditing firm, to be chosen by the city, to
verify the cost and recommend to council a rate structure for both the
refuse collection and recycling operations.
You may be aware, the County of San Diego is raising the disposal
fee 28.6%, from $10.50 to $13.50 per ton, on October 1, 1989. This
will, of course, have a significant impact on our refuse collection
costs. After the audit review, a new rate very probably will need to
be established again in January 1990. Council may be reluctant to
grant two rate adjustments in a three month period. For this reason we
are proposing the company absorb the landfill increase until January 1,
1990, when the entire package would take affect. The new rates would
recover the tipping fee increase since October 1st spread out over the
next 12 months.
It seems the residents of National City would be best served to
have EDCO Disposal continue with refuse collection service and
integrate the recycling service in with the present refuse routes. The
cost will be much lower due to the resultant efficiencies along with
the higher market price we will receive.
The present franchise expires on November 17, 1990. The recycling
program is requiring a considerable commitment in time and money for
specialized trucks, containers and construction of the recycling plant.
Obviously it would be very imprudent for us to make this huge
investment without the assurance of a long term contract.
Please consider our proposal to renew the franchise agreement for
10 years commencing November 18, 1990. Further, we recommend the
recycling program and independent audit requirements be added to the
contract. We are also open to suggestions and willing to consider
other changes in any provisions in the new agreement.
By continuing to contract with EDCO, you have the best of two
worlds. Proven service and the lowest possible rate as assured by an
independent audit. An ongoing contract will allow EDCO to continually
invest in the most modern, cost effective, up to date equipment.
Thank you for your consideration of these proposals. Of Course,
we will answer any questions or provide any information council or
staff may request.
Respectfully submitted,
EDCO DISPOSAL CORPORATION
dba/National City Rubbish
Edward Burr
President
I. BACKGROUND
There has been a number of recent developments in the
world of trash handling.
a. The current landfills used for trash disposal in
the County of San Diego are becoming full at an
increasing rate; and siting of new facilities,
while currently in process, will take quite a
while. These new facilities will be more expensive
to operate and will be further removed from popula-
tion centers, with attendant higher transportation
costs.
b. The legislature has been very active this year in
the trash area with well over 100 bills having been
submitted. Most probably we will end up in a
situation where recycling of trash will be
required, initially at the 30% level and going to
the 50% level, with sanctions against cities which
do not recycle - including refusal to accept trash
from such cities.
c. The County has raised the disposal fees that
haulers must pay from $10.50 per ton to $13.50 per
ton effective October 1, 1989, with future
increases a certainty.
d. EDCO, trash franchisee for La mesa, Lemon Grove,
Coronado, and National City, has established a curb-
side recycling pilot program for La Mesa and Lemon
Grove that is presently in process, and will
establish programs in Coronado in the near future.
II. EDCO PROPOSAL
By the attached letter, EDCO is making a number of
proposals:
a. They propose to include National City in their
recycling, effective in January 1990.
b. Because of the unknown costs of collection and the
volatility of prices paid for recycled items, EDCO
is proposing that an auditing firm be selected by
the city and hired by EDCO to pass upon the rate
structure for refuse collection and recycling.
c. Rather than have a cost increase in October, asso-
ciated with the 28% increase in tipping fees at
county landfills, and again in January, associated
with the recycling program, EDCO proposes that they
temporarily absorb the OCTOBER increase and that
funds be recovered in a single increase in JANUARY.
d. To be able to spread the capital costs associated
with new facilities and new equipment for recycling
over a few years, EDCO is proposing that its
present franchise, which expires NOVEMBER 17, 1990,
be extended for 10 years.
III, CITY ATTORNEY ANALYSIS
An analysis by the City Attorney, appended, states that
a municipality has the authority to renew an existing
exclusive contract with or without competitive bidding.
3
IV. STAFF ANALYSIS
EDCO has been providing trash disposal service for a
number of years in this city. Complaints with respect
to service are routed through the Public Works office.
Although no formal records are kept, the best of my
recollection is that receipt of less than one call per
month is average. Generally, any problem has received
immediate attention from EDCO staff and has usually
been resolved within a day or two. I am sure that not
every customer in National City is thoroughly satisfied
with the quality of or price of EDCO service; but by
and large, the company seems to be doing an excellent
job, with prices that are comparable for similar
service in neighboring cities.
I am concerned about evaluation of bidders for trash
service, should Council decide to offer the work to the
lowest bidder. The volatility of the costs associated
with tipping fees (the cost to dump materials at the
County's landfill sites), the presently unknown costs
associated with recycling collection, plus the
constantly changing prices paid for recycled materials,
would indicate that any "bid" for services would of
necessity be for a limited time. Subsequent
adjustments in rates would require approval of the City
Council and would be based upon audited financial
statements of the contractor. We are presently doing
4
this in our relationship with EDCO. If we were buying
a specific items or even a specified one-shot service
where the item/service to be provided is well-defined,
and where the price is 'fixed', then a competitively
bid contract is the proper way to go. On the other
hand, when professional services are involved (DOCTOR,
LAWYER, ENGINEER) and the quality of the end product
depends upon the individual or, as in this case, where
over the contract period the cost elements vary widely,
then competitive bidding is not necessarily the way to
get the best job for the lowest price.
V. RECOMMENDATION
In this instance, becauseof the long-term nature of
the commitment, the fact that all price determinations
after the first one will be negotiated between the
contractor and the City Council, because of the good
performance record of EDCO, and because of EDOD's offer
to hire an auditor recommended by the City to assist in
future rate charges, it is recommended that the
contract for trash services be extended to EDCO,
without bidding, for the 10-year period.
VI. CONTRACT CHANGE
It should be noted that the existing contract should be
changed to reflect the additional service of recycling
being requested, and a change in the franchise fee
5
should be considered. The price associated with trash
services should be reviewed in time to be effective in
the January 1990 time frame to accommodate changes in
cost factors including increased tipping fees in
October 1989 and recycling costs starting in January
1990.
VII. COUNCIL REVIEW
Upon approval by Council of the requested extension of
the contract, a revised contract so reflecting that
change, the recycling change, a possible change in the
franchise fee, and the price change for the January
1990 time frame will be brought back for final Council
review.
City of National City s
Office of the City Attorney $.74 "'-°Fn;
1243 National City Boulevard, National City, CA(41205Q-4 9P,y
George H. Eiser, III —City Attorney (613) O 4 4 ,
c/rr 04.
- DATE: AUGUST 30, 1989
TO: DIRECTOR OF PUBLIC WORKS
FROM: CITY ATTORNEY
SUBJECT: EXTENSION OF EDCO TRASH CONTRACT
You have requested an opinion as to the propriety of the City
extending the exclusive trash contract with Edco Disposal
Corporation for an additional 10 years. The current contract
with Edco expires in November, 1990. Implicit in your
request is the issue of whether the City must go through a
competitive bidding process, in deciding whether to extend
the Edco contract or to consider contracting with another
disposal company. This precise issue was decided by the
United States Court of Appeals for the Ninth Circuit in Tom
Hudson & Associates, Inc. v. City of Chula Vista (1984) 746
F.2d 1370.
In the Hudson case, the court held that a municipality has
complete authority to grant an exclusive trash collection
contract, or to renew an existing exclusive contract, with or
without competitive bidding. The court's decision was based
primarily on the provisions of California Government Code
Section 66757(b), which provides:
"Notwithstanding any other provision of law,
each ... city ... may determine ... (b)
whether (solid waste handling] services are
to be provided by means of non-exclusive
franchise, contract, license, permit, or
otherwise, either with or without
competitive bidding, or, if in the opinion
of its governing body, the public health,
safety, and well-being so require, by
partially or wholly exclusive franchise,
contract, license, permit, or otherwise
either with or without competitive bidding."
AUGUST 30, 1989
PAGE TWO
Although the City need not undertake a competitive bidding
process in awarding an exclusive trash contract, the City
Council may wish to do so as a policy matter. I would therefore
suggest that this matter be brought to the City Council's
attention to allow sufficient time to solicit competitive
proposals, in the event the Council chooses this course of
action.
GEORGE H. EISER, III
CITY ATTORNEY
TRASH FRANCHISE EXTENSION
Following the Council meeting of 10/17/89, a request for
information pertaining to trash services was sent to 14
nearby cities. Responses received from nine cities are
included as attachment #1 and are summarized on attachment
#2. Additionally, a staff study prepared for the CARLSBAD
COUNCIL in early 1989 contains a wealth of information and
is appended as attachment #3.
Of the nine responding cities, the City of Coronado pays for
trash services itself (with a few exceptions); Santee
citizens contract directly with any hauler without city
input; Encinitas has two (5-year) permit holders that
provide trash service (but will probably go to a franchise
upon expiration of the permits); and Oceanside has a
contract with the hauler, rather than a franchise. Of the
five remaining cities, Imperial Beach has a flat fee of
about $100,000, Carlsbad has no franchise fee (but is
presently negotiating for one), La Mesa is at 4%, San Marcos.
at 5% and Escondido at 10%. As indicated by City Attorney
letter attachment #4, there is no legal limit on a trash
franchise fee. Our present rate of 2% (generating about
$35,000/year) should be increased to permit meeting addition-
al city costs associated with revised STATE requirements in
trash operations.
Of the nine cities reporting, only one (Santee) permits city
unregulated trash haulers to operate, and another
(Encinitas) has issued permits to two haulers but will
probably go to a single franchise upon expiration of the
permits. The other seven deal with a single.contractor,
most of them with a primary contract period followed by year-
to-year extensions dependent upon good performance by the
contractor.
Cities reporting have various methods of adjusting rates.
The formula -based charges are not favored in that no
generally accepted index accurately measures costs of provid-
ing trash services with its emphasis on fuel costs, capital
equipment (truck) amortization and tipping fees. It appears
that a negotiated rate, with charges being proposed from
time to time by the contractor, and as approved by Council,
is most equitable. Our procedures call for audit of the
contractor books in evaluating any request for price
increase.
Most of the agreements with trash haulers provide for free
pickup of city trash, with some participation in citywide
cleanup and "free" pickup of bulky items from citizens upon
advance notice. Increased services, including recycling,
can be included in either a contract extension or a new bid.
2
The data from attachments 1, 2, and 3 indicate that a
summary trash operational method would be a franchise,
originally for a rolling 5-year period with provisions for
annual renewal based upon adequate performance, that
contains provisions for either a formula -based or a
negotiation -based periodic rate increase, that provides for
some areawide cleanup plus city trash services for free and
large item disposal without additional cost to the citizen,
and includes an annual franchise fee of from 2% to 10% of
gross.
RECOMMENDATION:
a) That the present contract with EDCO be extended for a
rolling 5-year period, with year-to-year extensions
based upon an acceptable level of performance.
b) That the present EDCO-supported, annual citywide cleanup
(in connection with the Chamber of Commerce) be extended
to two per year.
c) That "free" pickup of large/bulky items (stoves, refrig-
erators, washing machines, couches, mattresses, etc.) on
a once -a -week schedule (probably SATURDAY) upon 24 hours
notice be instituted.
d) That the franchise fee be raised to 5% (from its present
2%) to cover the anticipated increased costs to the city
in connection with increased city responsibilities in
trash.
e) That provisions for recycling to permit National City to
at least meet State requirements be included.
f) That a contract containing the aforesaid modifications,
extensions and increased services be brought back for
final authorization from Council.
es4
RATE STo Dy IhATA
544.10N i 989
TBE
RESIDENTIAL REFUSE -RATE SURVEY
FOLLWING REPORT IS A SUMMARY OF THE SURVEY OF RESIDENTIAL REFUSE RATES OF LOCAL COPSIUNITIES.
1. Residential
CITY
ESCONDIDO
LA MESA
LEMON GROVE
NATIONAL CITY
CHULA VISTA
EL CAJON
CARLSRAD
VISTA
SAM MARCOS
SOLANA BEACH
DEL MAR
ENCINITAS
POWAY
OCEANSIDE
refuse rates of San Diego County Incorporated Cities of comparable site to Carlsbad:
RESIDENTIAL STREET RECYCLING TOTAL MAIN BILLING.
REFUSE SWEEPING FEE COST TO REFUSE SERVICE FRANCHISE
RATE FEE CHARGED CUSTOMER CONTRACT CHARGE FEE
S6.40
S6.72
$7.00
S7.25
$7.35
S7.60
S7.60
S7.65
S7.65
S8.25
$8.00
58.15
S9.20
$6.77•S2.955
•0- -0- S6.40 EDI INCLUDED1 10%
-0• -0- S6.72 EDCO N/A 2%
-0- •0- 57.00 EDCO N/A 4%
-0- -0- S7.25 EDCO N/A 2%
-0- -0- S7.35 UIDLAW N/A 5%
•0- -0- S7.60 UNIVERSAL N/A 3%
-0- -0- S7.60 COAST 2Z N/A
-0- -0- S7.65 VISTA N/A 5%
-0- -0- S7.65 MASHSURN N/A ' 5%
-0- -0- ` 81.25 COAST N/A 2JBASE 4.2
-0- S.55 S8.55 COAST INCLUOED3 5%
-0- S.55 s'. S8.70 MASHBURN N/A N/A
-0- -0- 19.20 MASHBURN N/A 2xBASE
S.39 '-0- S10.11 OCEANSIDE INCLUDED6 N/A
r: ✓
5t1Qa-'
2. Residential
AREA
RANCHO SANTA FE
RAMONA
FALLBROOK
BONSALL
FAUNA VALLEY
VALLEY CENTER
refuse rates for unincorporated communities:
RESIDENTIAL REFUSE RATE
S9.95
S9.00 S18.00
S12.25
S12.50
$13.10
S13.10
1 Billing service charge is included in the franchise fee
2 Franchise fee 1s based on S1,000 plus S2.00 multiplied times
3 Billing service charge is included in the franchise fee
4 Franchise fee is based on S1,000 plus S2.00 multiplied times
the customer base, per year
the customer base, per year.
5 Oceanside customers pay $6.77, which goes to Oceanside Disposal,
Oceanside to cover bitting, ',erre:im', etc.
6 Included in the S2.95 fee mentioned in Note
and $2.95, which goes to the City of
ATTACHMENT f3
3. COMMENTS
A. Comparisons of lmorporated Cities residential refuse rates .indicate:
MEAN • S7.54 MEDIAN • S7.60
B. Franchise fee. Alt Incorporated Cities in survey, except Oceanside, Carlsbad and Encinitas
charge their contractors s franchise fee.
C. Service Charge. Four communities provide billing services to their contractor, in the remaining
cities the contractors are responsible for the billing of customers.
0. Four communities have recycling programs in effect-
-Oceanside has recycling fee included in the refuse rate charge
-Encinitas and 0el Mar have a S.55 charge In addition to the residential refuse rate.
-The City of Solana Beach subsidizes their recycling program, with no additional charge to
refuse customers.
PAGE 2
COMMERCIAL RATE COMPARISONS
OP SURROUNDING INCORPORATED CITIES
1 BIN 1 TIME PER WEEK
CITY BAIA
OCEANSIDE
CHULA VISTA $ 42.629
5
ESCONDIDO 42.
LEMON GROVE 43.00
EL CAJON 44.0
ENCINITAS 44.50
SOLANA BEACH 46.18
VISTA CITY 46.20
SAN MARCOS 46.20
NATIONAL CITY 46.25
CARLSBAD 46.75
47
POWAY 52.05
DEL MAR .5
56.08
MEAN OF ABOVE CITIES $46.47
MEDIAN OF ABOVE CITIES $46.20
ATTACHMENT R
RATE INCREASES OF SURVEYED INCORPORATED CITIES
% CHANGE BETWEEN 1985 AND 1988
g.ZTY RESIDENTIAL
CARLSBAD $
CHULA VISTA
DEL MAR
EL CAJON
ENCINITAS
ESCONDIDO
LA MESA
LEMON GROVE
NATIONAL CITY
OCEANSIDE
POWAY
SAN MARCOS
SOLANA BEACH
VISTA
85
6.48
6.10
7.31
6.50
6.85
6.00
6.15
6.15
6.25
5.89
7.90
6.60
7.31
6.40
RATE PER MONT4
1988 $C ANq
7.60
7.35
8.80
7.60
8.15
6.40
6.72
7.00
7.25
6.77
9.20
7.65
8.25
7.65
TOTAL $ 91.89 106.39
The mean rate increase
July 1985 to September
commercial. Carlsbad's
27%, respectively.
17%
20%
20%
17%
19%
07%
09%
14%
16%
15%
16%
16%
13%
20%
�OiMERCIAL 1 BIN/pER w
85 1988
37.65
36.00
43.89
38.00
38.50
41.08
47.95
42.65
56.08
44.50
46.18
43.03
kC MU
27%
18%
28%
17%
20%
05%
38.50 44.00 14%
40.50 46.75 15%
37.50 42.29 13%
48.40 52.05 08%
39.70 46.25 16%
38.50 46.20 20%
38.60 46.20 20%
16% 516.67 604.13 17%
of the surveyed cities from the period of
1988 was 16% for residential and 17% for
rate increase for this period was 17% and
Note: Source for 1985 data - July 30 1985 Trash Rate Committee
report to the City Council, Agenda Bill 8219-1.
ATTACHMENT I
SOLID WASTE SERVICES
MATRIX
DESIRABLE ATTRIBUTES;
1. RECYCLING PROGRAM
2. UNLIMITED COLLECTIONS
3. SENIOR CITIZEN DISCOUNTS
COMMUNITY 1 2
4. MOBILE HOME DISCOUNT
5. FRANCHISE FEE CHARGED
6. PUBLIC TRASH AT NO COST
7. CONTRACTOR DOES BILLING
3 4 5 6 7
ESCONDIDO
LA MESA
LEMON GROVE
NATIONAL CITY
CHULA VISTA
EL CAJON
CARLSBAD
VISTA
SAN MARCOS
SOLANA BEACH
DEL MAR
ENCINITAS
POWAY
OCEANSIDE * *
FROM A SURVEY OF 14 INCORPORATED CITIES
*
*
*
*
CITY ES co^dtd
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
S i /1i 12 i-i- 4 ,41 /-eAt o JQ (
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise? L
c-tr C u./' /"{-'v T /`441,4 tse w as
t 4 J a-1-1 G. a.• (41.3 .por- & e
vlw-s ,
1 Gr-e. IS of "-au si/�o1 �t dr a(.t-c -Pi a,�i c.. G�rl nut4
re m „LA tc -1-7 C04.1c.: ( /0/- id c s A o{-ice_
of 404— ewe," ,
3. What provisions does your franchise(s) have for periodic
rate adjustment? Adequate? new/-��u s
Oele-
4. What is your present franchise fee? What estimated
annual income? What future plans? F//.« o
'�tl�l/.�ee {S/r �O o
D 5roSS ce-i,"6 — /���Jtilei- uJe, c{d L
a s �a.-- IL o 1C- LA., h.- 13, .1 q . 69-rl ,4
CO.N.e is egLigo 000 �/
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)?
Free Pi - 1 o C�� �rwsti -Pree du vvit, e.•
-
Strknce .
2
6. What is present rate for:
- residential
- 3-yard can once a week
- 30-yard dragon for 7 days
When was rate established?
What projections for future charges?
sk-e- psol1/4A-rt'
7. How are you handlin recycling? /-
; (o/' ,Q./) y4411 ha .r-e
C-Kv-l0c4 e f-e yc-tt�1) -1 5-0o (/[�la►ies . e
8. Do you have any special provisions in your franchise
that you would recommend especially?
e Yea-- i .1411' i- f ',l I` 5 4 j c.e
9. Please provide a copy of your franchise agreement. �--
10. Any general "words of wisdom"?
/vL tke 1- &
-7y/- y4,75--
6
3
RECEIVE--s,MJJe/ia/ H
PL Lit Ol tS (3E;EjtAVViF
89 0CT 24 Ay 18: 48
Does your city presently operate under a single
removal franchiseHAT'La,�;�� r: i ichise for residential
franchise for comMbeci&i'/T*dustrial, or some
method?
4iva2e iiuo<L N.acovm2
�0
trash
and a
other
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise?
wao �,uo-t itc iced . igs5 % , a .
aatidraca
Qe
6AiP-
17�
provisions do s your f�h se(s) have periodic
adjustment? Adequate?
--yttevzzerul‘etta9.....
eau. - y�x��-eoC 4-°� 6C, _Awe co enc
4. What is your present f
annual income? What futur
lia44Chat, �-- wad 4'92
Laze tee, -at
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
n )
ranchise fee? What estimate
e plans?
0 0 GGG lc/e5 •
notice, etc.)? �p�j�Qlu.1 �Q of � Q:�arfe � y�ue w�,� j � unc2.e.
a s D wiakt)71-14 Ut- a. ,�1r - yYd tG
agui .�
.1 Oa/. 1Z cO" icc 3 dcerv. ecru"-Ac.6ct-
w ±wo (2) L yeca- .14(C7 4 ,14 a. uzQ_
/iza40,c e- fLi L yecezt ,e4 ,L000 �-.
2
6. What is present rate for: -/
- residential 41 7'LZ /mo , /07- 7lw 1 Ce, !.� UJ?�k. `�J ic-K
- 3-yard can once a/ week 6.5-6
- 30-yard dragon for 7 days
When was rate established?
What projections
X/lG"
OcI -L/
for future charges?
ZeleAT
7. How are you handling
C LC
,dud P,ea/4 4
recycling?
ku-66e-e-
8. Do you have any special provisions in your franchise
that you would recommend especially?
Cl, h&Qdad. &Z L C a 24 l4t&cad cccCr ueziL.
9. Please provide a copy of your franchise agreement.
1 -- ,� .i� E /2evi&ezi .
10. Any general "words of wisdom"?
u
CITY 67Z_. /N 72.4-4PL --,
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
mA hod?
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for Ia franchise?
�/� C vie lt�lc 4
/Li
, ' % !L/i
lta/�l��i� `mil
t GL2s
3. What provisions does your franchise(s) have for periodic 14
" rate adjustment? Adequate? p r �y�
Z�Tx.t�l� Cw /n A� y t- n-C
62,1_
What is your present franchise fee? What estimated-
Whatfuture plans?
of
annual income?
, /t. r4,1 ,,/O , �o
Zf 0 Lic41-44".
5. What other benefits do y•u receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)?
ace V--/ucat-
M
i
2
6. What is present rate for:
- residential
-7, 0 4:9)) 1/1/-
r 04
When was rate established? /, /391
//99
What projections for future charges?
i
- 3-yard can once � ,a week + 97cl , p O
i yard drraa,goVr or 7 d ys ��,�' 00
7 /6� bd
7. How are you handling recycling?
O Co
8. Do you have any special provisions in your franchise
that you would recommend especially?
9. Please provide a copy of your franchise agreement.
10. Any general "words of wisdom"?
a4.-1,2_, (1-1A./7
q4 .1
6
CITY Santee
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
The City of Santee does not franchise any trash disposal service
within the City.
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise?
Not applicable.
3. What provisions does your franchise(s) have for periodic
rate adjustment? Adequate?
Not applicable.
4. What is your present franchise fee? What estimated
annual income? What future plans?
Not applicable.
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)?
Not applicable.
2
(Contacted Universal Refuse Co. in El Cajon
6. What is present rate for: for Santee area rates)
- residential
$9.25 per month
- 3-yard can once a week
$45.50 per month d
- 30 25 - and ad`ra° on ° 1370 to yempty, plus $3 per day 7 days = $21
40 - yarc dragon: 171 to empty, plus $3 per day (7 days = $21)
When was rate established?
N/A
What projections for future charges?
N/A
7. How are you handling recycling?
The City has allocated $85,300 in the Fiscal Year 1989-90 Budget for
implementation of a pilot curbside recycling program, utilizing a recycling
contractor. Residences will be targeted first (3,500 households), then
businesses will be adressed within the next two years. The program should
be operated by late 1989.
8. Do you have any special provisions in your franchise
that you would recommend especially?
Not applicable.
9. Please provide a copy of your franchise agreement.
No franchise agreement.
10. Any general "words of wisdom"?
CITY of 61Z0/1ca DO
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise?
AllA
3. What provisions does your franchise(s) have for periodic
rate adjustment? Adequate?
4. What is your present franchise fee? What estimated
annual income? What future plans?
N/A
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,„
free pickup of furniture or white goods with 24-I ou471
notice, etc.)?
See coPY of t1616EEa✓LE1•1 i cvr f{
= % r
r
--i v
r•Awl
l
nr, ,,.vr,
.-i-hh 7..... W
-4
cp PI
2
6. What is present rate for:
- residential
- 3-yard can once a week
- 30-yard dragon for 7 days
When was rate established?
What projections for future charges?
SEE En/ctoSCJ A6tCs Nt-gam
7. How are you handling recycling?
Ciro /S rn/ HASE l coa.rr/LACi we?K ED C.0 2/s,° - c. .
8. Do you have any special provisions in your franchise
that you would recommend especially?
9. Please provide a copy of your franchise agreement.
10. Any general "words of wisdom"?
CITY -mil /4?r
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
•
,�-c►/use �i���fis-e far a�GL er-ms .*9
wAe,o016a•n sa,•�i' Tian.
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise?
„r6?i// • s 74-ere.. ee
s i/, s is�A ,4:7)- r/�- mfroi c 4Ti2q Cam` �s
3. What provisions does your franchise(s) have for periodic
rate adjustment? Adequate?
%I /hti, 71//1 0T Z - 16k - f 7e 4 /telivt/..ffrii75- A'aseee-- 071.-
4. What is your present franchise fee? What estimated
annual income? What future plans?
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)? A`/o0 k!_4 v .
2
6. What is present rate for: e- lam/ moo'
- residential
- 3-yard can once a week,: e
- 30-yard dragon for 7 days: JiA#G0,1 / 4 P
When was rate established?
�crs'fai /9.g59•
What projections for future charges?
/4,e Lv 7‘7,i7e / g/V reeew4 daMpls
7. How are you handling recycling? - US<4h
8. Do you have any special provisions in your franchise
that you would recommend especially?
9. Please provide a copy of your franchise agreement.
.;E-,0eAreee
10. Any general "words of wisdom"?
CITY
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
' G..-..Q
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for franchise?
ilitw-t- . du/zit ft. ._ A.iw .c. .�. G.zet•40:
a#'44'°;e44.417,......1622ehlY0-144.e(5,4-e-e-le--444-"dizel.4-1:44‘4•44.-e"--- - --
3. What pr visions l `Aatn`chise (s) h e for eriVir
"
rate equate? ,�,c ,,�� `` ,0.ar. teipm
;020:144$4444-41-40L16-Cnr.,-cret xtra40,444--sice44Ac.ft
t# .ct-cam.. C G �-- f *ro +�-G - ,�Q,cyG. a.�s.�s.�.+
4. What is your presentcefranchise fee? What estimat . .„
annual income? What future plans?
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)?
P4A-4-;-1- fitt-'640.70 et'S AtA40-z-
6. What is present rate for:
- residential
- 3-yard can once a week
- 30-yard dragon for 7 days
When was rate established?
What pro)ections for future charges?
46.A..,,A. .a. J4 94+ Xi16.414
c•:
7. How are you handling recycling?
60.4 Jest �-- /, vs a l�-r .�, �2e.1 ', h c.€.4 ,4e
A .w.. s - iI..1k .- s c��t ,,. Gam,*
8. Do you have any special provisions in your franchise
that you would recommend especially?
9. Please provide a copy of your franchise agreement.
10. Any general "words of wisdom"?
eiVe# 4-q(4 %4 t des: -
CITY
Encinitas
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
Two permit system; both haulers may take commercial or
residential accounts.
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise?
5 years. Expires October 1, 1991. The City will probably
put out to bid for an exclusive franchise.
3. What provisions does your franchise(s) have for periodic
rate adjustment? Adequate?
All increases are subject to prior City approval.
4. What is your present franchise fee? What estimated
annual income? What future plans?
Zero. Will be determined when we go out to bid in 1991.
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)?
Two annual City-wide clean-up days.
• 2
6. What is present rate for:
- residential $8.65/month
- 3-yard can once a week $48.33/month
- 30-yard dragon for 7 days $110 + disposal site fee
When was rate established? 10/1/89
What projections for future charges?
7. How are you handling recycling?
Only as a result of an
increase in the County
tipping fee.
Solana Recyclers Inc., a non-profit recycling corporation,
handles all phases of our recycling (i.e. curbside, commercial,
office. etc.)
8. Do you have any special provisions in your franchise
that you would recommend especially?
Not at this point.
9. Please provide a copy of your franchise agreement.
Attached
10. Any general "words of wisdom"?
Include the recycling program as part of your franchise agreement.
CITY OCEANSIDE
1. Does your city presently operate under a single trash
removal franchise, a franchise for residential and a
franchise for commercial/industrial, or some other
method?
The City has a contract with Oceanside Disposal for residential and
business refuse collection.
2. What is the length of your present franchise(s)? When
does it(they) expire? What probable action will you
take then? (Renew?/Bid?) What is proper time length
for a franchise?
The current franchise is a five (5) year contract. The contract expires
in 1994. The action taken to renew the contract will be to roll over on
one (1) year extension until the Council can work out a new contract.
The Coucil has determined the five (5) year length for a contract.
3. What provisions does your franchise(s) have for periodic
rate adjustment? Adequate?
Provisions for adjustments come from increase in rates passed to the
City from the contract holder and reviewed by the City Council.
4. What is your present franchise fee? What estimated
annual income? What future plans?
We do not have a franchise.
5. What other benefits do you receive as regular or special
services (i.e., free pickup of city trash, dumpsters in
various locations periodically for neighborhood cleanup,
free pickup of furniture or white goods with 24-hour
notice, etc.)?
The City has no -charge refuse removal from City facilities. In the contract
the hauler will remove one (1) large item per week from any single
residential dwelling at no cost with 24-hour notice.
2 CITY OF OCEANSIDE
6. What is present rate for:
- residential $7.09 per mo
- 3-yard can once a week - $43.72 1 ti1e per week = 4 empties per month
- 30-yard dragon for 7 days - 30 Commercial/industrial - $25.00 delivery
$35.00 per dump
When was rate established? - July, 1989
What projections for future charges?
Also provided - 40 yd. bin - $35.00 Delivery - $186.00 per dump - $2.00 per day use
fee
- 20 yd. bin - $35.00 delivery - $160.00 per dump 0 $2.00 per day use
fee
7. How are you handling recycling?
Recycling is handled by contract hauler. Hauler has a buy back center
open five (5) days a week. Currently there is a City-wide, single residential
curb -side recycling program. Tri-stackable crates have been provided for
curbside collection on regular trash pick-up days.
8. Do you have any special provisions in your franchise
that you would recommend especially?
Responsibilty of hauler to clean-up after their collection when necessary.
One factor creating a problem is commercial trash only accounts and the
collection/billing process.
9. Please provide a copy of your franchise agreement.
We have a contract not a franchise. Will send contract if desired at a
later date.
10. Any general "words of wisdom"?
If a city is contracting -out services, be concerned with the level of
service provided with new contractor. The crisis with household toxic
collection, recycling programs, curbside recycling issues, landfill and
transfer station issues should also be addressed.
CITY
BILLING
BY
FRANCHISE FEE
BENEFITS
LENGTH
OF
CONTRACT
RATE
CHARGE
METHOD
RATE
DATE
SINGLE
FAMILY
RATE
%
$
DATE
AUTOMATIC
BINS FOR
CLEANUP
PICK UP
LARGE ITEMS
FREE CITY
TRASH
OTHER
6 yrs. +
automatic
Contractor
can request
6.85
ESCONDIDO
City
10%
480,000
1983
NO
x
renewal. on
anytime
10/1/89
1 yr. basis
45.20
Annual %
24 hrs.
Bi-month
5 yrs. +
100% of CPI
7.92
IMPERIAL
City
Flat fee
92,000
1985
increase
= CPI
notice -
FREE
citywide
alley clean-
two 5-yr.
contract
plus any
extraordi-
10/1/89
2x
,,e�
BEACH-
in '85
up @ 25
a month
options
nary ex -
penses.
38.80
48
9 yrs. w/
Annual re-
7 „
IA MESA
Contractor
(May go to
100,800
Nov. 1979
NO
x
x
x
yr. to yr.
quest in
10/1/89
6%)
extension
September
39.00
SAN1'EE
Contractor
NO FRANCHISE
-CITIZENS
CONTRACT
WITH VA-CI0US
PROVIDERS
N/A
N/A
9.2
45.50
5 yrs. +
Contractor
CORONADO
PAYS FOR
TRASH SERVICE
-
5-yr.
request as
N/A
CORONADO
N/A
SINGLE
OWIRAC1tt
x
x
extension
approved by
7/1/
Council,
formula
No change
5 yrs. w/
CPI + tip-
8.10
SAN MARC06
Contractor
5%
1963
antici-
pated
x
x
x
yr. to yr.
ext 1963
ping fee
10/89
(or opt.
5-yr. ext.
5 yrs. +
Special
9.77
CARISBAD
City
-0- but
presently
.
Partial
yr. to yr.
index of
12/1/88
negotia-;ng
with
renewals
cost
47.95
oontrac�or
for one
thereafter
ENCINITAS
-0-
Two permits
issued but
will
2 citywide
As approved
10/1/89
8.65
probably franchise
in
1991.
cleanup days
by Council
48.33
5 yrs. w/
Contractor
7.09
OCEANSIDE
Cbntractor
OCT'PNSID�
HAS CONTRACT
WITH HAULER
-
x
x
yr. to yr.
extension
request as
approved by
7/89
NOT A FRANCHISE
-
Council
43.72
City or National City
Office of the City Attorney
1243 National City Boulevard, National City, CA 92050-4397
George H. Eiser, III —City Attorney (619) 336-4220
TO: Director of Public Works
FROM: City Attorney
SUBJECT: Trash Franchise Fee
DATE November 6, 1989
You have inquired as to the existence of any legal limit on a
franchise fee for the City's trash hauler.
There is no such limit.
I would suggest as a starting point for fixing the appropriate fee
that the fees obtained by other cities be determined.
GHE/tls
-it
George H. Eiser, III, City Attorney