HomeMy WebLinkAboutEDCO Disposal Corporation - Rate Adjustment - Decrease -1996City of National City, California
COUNCIL AGENDA STATEMENT
MEETING DATE .tune 11, 1996
AGENDA ITEM NO.
6
ITEM TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVING A RATE
CHANGE REQUEST FOR EDCO DISPOSAL CORPORATION
PREPARED BY C.R. Williams, Jr.
EXPLANATION.
DEPARTMENT public Works
EDCO is proposing a rate reduction for single family from $14.85 per month to $14.36 per month, for
Commercial/Industrial from $90.07 for a 3 yard container service once per week to $87.04 for that
service. Staff is recommending an imposition of a $0.54 per month per unit recycling fee imposed on
apartments to encourage recycling. Staff is also recommending an increase in the Silver Bag fees from
$1.50 per bag to $1.85 per bag in accord with prior Council direction.
Environmental Review " N/A
Financial Statement
Benefits of the trash rate reduction will accrue to the Citizens of National City. To the extent that gross
income to the contractor falls, the Franchise for payments will decrease. The planned increase in
franchise fee will largely offset this loss. Account No. N/A
STAFF RECOMMENDATION
Adopt Resolution.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below)
1. EDCO letter of May 15, 1996
2. Deloitte-Touche letter of April 30, 1996
3. FY-97 EDCO Rate Review
96-83
Resolution No.
A-200 (Rev. 9/80)
RESOLUTION NO. 96-83
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NATIONAL CITY
APPROVING A TRASH SERVICE RATE CHANGE FOR
EDCO DISPOSAL CORPORATION
WHEREAS, the last trash service rate change for Edco Disposal
Corporation, the City's contract trash hauler, was in June, 1995; and
WHEREAS, the rate for waste disposal will be reduced to $40.00 per ton
effective July 1, 1996, and the City Council has approved that this change be passed -
through to trash subscribers; and
WHEREAS, a public hearing was held to consider the trash service rate
change at the regularly -scheduled City Council meeting of June 11, 1996, notice of which
hearing was published according to law in a newspaper of general circulation in the City.
At said hearing, the City Council considered oral and written evidence presented by the
City Council, staff, and members of the public; and
WHEREAS, the proposed trash service rate changes will be comparable to
those of other cities in San Diego County.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of National City that the proposed trash service rate schedule, a copy of which is attached
hereto as Exhibit "A" and incorporated herein by reference, is hereby approved, effective
July 1, 1996.
PASSED and ADOPTED this llth day of June, 1996.
ATTEST:
Lon Anne Peoples, City C erk
APPROVED AS TO FORM:
George H. Eiser, III
City Attorney
George H. VI aters, Mayor
NATIONAL CITY RATE SCHEDULE
July 1, 1996
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
2. TRAILER PARKS AND MOTELS
One time per week. per unit, per month
3.APARTMENT HOUSES
One time per week, per unit, per month
4. SENIOR CITIZEN RESIDENTIAL
Per month
5. COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
One time par week. per month
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Two times per week. per month
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Three times per week. per month
Up to (2) AO gallon containers
Or (1) 90 gallon automated cart
Four times per week. per month
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Daily (six days(Monday-Saturday)
Additional or unusuei accumulation
of rubbish (per cubic yard)
MONTHLY
RATE
$14.36
$1 1.33
$9.96
310.11
311.49
$16.46
326.21
$33.69
341.54
$54.38
310.20
EXHIBIT Q
NATIONAL CITY RATE SCHEDULE
July 1, 1996
BOX TYPE REFUSE SERVICE
COLLECTION NUMBER YARDS
FREQUENCY OF BINS PER MONTH
1
2
3
4
5
6
7
MONTHLY
RATE
13 487.04
25 3146.92
39 $206.81
52 3268.46
65 4330.11
78 3391.75
91 3453.40
26 $148.59
2 2 52 3266.70
3 78 3384.71
4 _ 104 4500.96
5 2 130 3617.21
6 2 156 3733.46
7 2 182 3849.71
1 3 39 3210.33
2 3 78 3382.95
3 3 117 3555.56
4 3 156 4726.41
5 3 195 4897.27
6 3 234 $1,068.12
7 3 273 31,238.97
1
2
3
4
5
6
7
1
2
3
4
6
7
4
4
4
4
4
4
4
Ui U1 1.11 III /11 U1 U1
1 6
2 6
3 6
4 6
5 6
6 6
7 6
52 $271.98
104 3499.20
156 4726,41
208 3951.37
260 $1 ,177.32
312 41,402.78
364 $1.528.23
05 3333.53
130 3615.45
195 3897.27
260 $1 ,170.28
325 31,443.29
390 41,716.30
455 31,989.31
78 3395.28
156 4731.70
234 31,068.12
372 31 ,393.97
390 31 .719.82
468 32,045.58
546 32,371,53
EXHIBIT A
Passed and adopted by the Council of the City of National City, California, on June 11, 1996 by
the following vote, to -wit:
Ayes: Council Members Beauchamp, Inzunza, Morrison, Zarate, Waters.
Nays: None.
Absent: None.
Abstain: None.
AUTHENTICATED BY:
GEORGE H. WATERS
Mayor of the City of National City, California
City lerk of the City of National City, ifornia
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 96-83 of the City of National City, California, passed and adopted by the
Council of said City on June 11, 1996.
City Clerk of the City of National City, California
By:
Deputy
11::31 P IC) S li_. 41!=®11=15=aiL7- iON
6670 Federal Boulevard, Lemon Grove, California 91945 (619) 287-7555 Fax 1619) 287-5242
May 15, 1996
City of National City
1243 National Avenue
National City, California 92050
Honorable Mayor and Members of the City Council:
The Refuse Collection and Recycling Agreement between the City of National City and EDCO Disposal-
Corporation provides for certain periodic rate adjustments. The contract allows for a pass through of
changes in the disposal site fee and annual adjustments by the amount of the local consumer price
index.
San Diego County i Solid Waste Authority staff plans to approve a decrease in the landfill tipping fee on
July 1, 1996 to $40.00 per ton, a 15.8% decrease from the current $47.50 per ton.
improved market prices for recyclables collected in the curbside recycling program have resulted in a
reduction in the residential rate of $0.07 and in the commercial rate of $0.40.
As we have discussed, the proposed rate structure includes a direct charge for multi -family costs on a
per unit basis of $0.54. As a revenue neutral allocation of costs this has resulted in a reduction in the
residential rate of $0.29 and in the commercial rate of $1.79.
in addition, we are requesting an adjustment for operating expenses based on the most recent CPI index
of 1.7%.
The overall effect on the residential rate is a reduction of $0.49 in the residential rate and of $3.03 in the
commercial rate.
As in prior years, EDCO°s requests for rate increases have been subjected to independent review by the
auditing firm of Deloitte & Touche. Their report supports our request for what we feel are fair and
reasonable rate adjustments.
EDCO continues to offer a 20% discount for senior citizens in National City.
Please approve the attached rate schedule to be effective July 1, 1996. As always, thank you for your
consideration.
Respectfully,
EDCO Disposal Corporation
Edward Burr
President
Printed on Recycled Paper
A WASTE COLLECTION AND RECYCLING COMPANY
NATIONAL CITY RATE SCHEDULE
July 1, 1996
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
2. TRAILER PARKS AND MOTELS
One time per week, per unit, per month
3. APARTMENT HOUSES
One time per week, per unit, per month
4. SENIOR CITIZEN RESIDENTIAL
Per month
5. COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
$14.85
$11.72
$10.31
$10.46
$14.36
$11.33
$ 9.96
$10.11
$11.88 $11.49
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
One time per week, per month $17.03
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Two times per week, per month $27.1 2
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Three times per week, per month S34.86
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Four times per week, per month $43.09
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Daily (six days/Monday-Saturday) $56.28
Additional or unusual accumulation
of rubbish (per cubic yard) $10.65
$1 6.46
$ 26.21
$33.69
$41 .64
$ 54.38
$10.20
NATIONAL CITY RATE SCHEDULE
July 1, 1996
BOX TYPE REFUSE SERVICE
COLLECTION NUMBER YARDS
FREQUENCY OF BINS PER MONTH
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
1 1 13 $90.07 $87.04
2 1 26 $152.04 $146.92
3 1 39 8214.02 $ 206.81
4 1 52 $277.81 $268.46
5 1 65 $341.61 $330.11
6 1 78 $405.40 8391 .75
7 1 91 $469.20 $453.40
1 2 26 $153.87 $148.69
2 2 52 $275.99 $266.70
3 2 78 $398.11 $384.71
4 2 104 $518.41 8500.96
5 2 130 $638.71 $617.21
6 2 156 $759.01 $733.46
7 2 182 $879.31 $849.71
1 3 39 $217.66 $210.33
2 3 78 $396.29 $382.95
3 3 117 $574.92 $555.56
4 3 156 $751.72 $726.41
5 3 195 $928.52 $897.27
6 3 234 $1,105.33 $1,068.12
7 3 273 $1,282.13 $1,238.97
1 4 52 $281.46 $271.98
2 4 104 $516.59 $499.20
3 4 156 $751.72 $726.41
4 4 208 $985.03 $951.87
5 4 260 $1,218.34 51,177:32
6 4 312 51,451.65 $1,402.78
7 4 364 $1,684.96 $1,628.23
? 5 65 $345.25 $333.63
2 5 130 $636.89 $615.45
3 5 195 $928.52 8897.27
4 5 260 $1,211.05 $1,170.28
5 5 325 81 ,493.57 81 ,443.29
6 5 390 $1,776.09 $1,716.30
7 5 455 $ 2,058.61 81 ,989.31
1 6 78 $409.05 $395.28
2 6 156 $757.19 $731.70
3 6 234 $1,105.33 $1,068.12
4 6 312 81 ,442.53 81 ,393.97
5 6 390 $1,779.74 $1,719.82
6 6 468 $2,116.94 $2,045.68
7 6 546 $2,454.15 $2,371.53
Deloitte &
Touche ALP
April 30, 1996
Mr. C. R. Williams, Jr.
Public Works Depai intent
City of National City
2100 Hoover Avenue
National City, California 91950-6599
Dear Mr. Williams:
Suite 1900 Telephone: (619) 232-6500
701 "B" Street ITT Telex: 4995722
San Diego, California 92101-8198 Facsimile: (619) 237-1755
We have applied certain agreed -upon procedures, as discussed below, to accounting records and other
items as related to EDCO Disposal Corporation ("EDCO") and San Diego Recycling (Recycling"), as
requested by you to assist you in evaluating your contractual relationship with EDCO and Recycling. It
is understood that this report is intended for use of the City Council of National City and the
management of EDCO and Recycling. However, this report is a matter of public record and its
distribution is not limited.
The procedures we performed, which relate primarily to your fiscal 1997 residential refuse rate are
summarized as follows:
1. We read EDCO's internally prepared financial statements for the nine months ended February 29,
1996, and the audited financial statements for the year ended May 31, 1995. We inquired of Dan
Gallaher (Controller for EDCO), as to any changes in accounting policies and methods of
application which night affect the fiscal 1997 refuse rate for National City.
1. We agreed the fiscal 1996 refuse rate from the prior year's calculation to the refuse rate used in
the fiscal 1997 refuse rate calculation.
3. We obtained information from the U. S. Depai tnnent of Labor - Bureau of Labor Statistics and
agreed such information to the amount used in the Consumer Price Index ("C.P.I.") adjustment in
the fiscal 1997 refuse rate calculation_
We recalculated franchise fees due to National City for the period from April 1, 1995 to
March 31, 1996, to ascertain that they were calculated based on 5% of cash collected as reported
in EDCO's underlying financial records.
We read franchise fee remittances made to National City by EDCO for the period from April 1,
1995 to March 31, 1996 to ascertain that they were made on a monthly basis.
DeloitteTouche
Tohmatsu
International
6. We agreed San Diego County estimated landfill tip fee of $47.50 per ton projected in the fiscal
1996 rate review process to correspondence from the County of San Diego regarding the Tip Fee
Resolution Approved for Implementation July 1, 1995.
7. We agreed actual tons of refuse collected for two judgmentally selected days in the period from
July 1, 1995 to February 29, 1996 to the supporting landfill tickets.
8. We recalculated the percentage effect of the projected fiscal 1997 San Diego County landfill tip
fee decrease on the fiscal 1997 refuse rate.
We ascertained that one-time adjustments to the fiscal 1996 refuse rate were properly excluded
from the fiscal 1997 refuse rate.
10. We recalculated the difference between the actual annualized revenues from the sale of
recyclables and the projected revenues from the sale of recyclables used in the fiscal 1996 refuse
rate.
11. We agreed total tons of recyclable materials collected to underlying accounting records for two
judgementally selected months. From the underlying accounting records, we judgmentally
selected five daily recyclable totals and agreed those totals to supporting work tickets. We
determined the reasonableness of recycling rates as compared to three judgmentally selected
recycling receipts.
12. We recalculated the effect of franchise fees on the fiscal 1997 refuse rate.
1�. We recalculated the percentage effect of the yard waste disposal fee reduction on the fiscal 1997
refuse rate.
14. We agreed coverage levels of insurance in force to the insurance provider's certificate of
insurance to ascertain that such coverage was in compliance with contractual requirements.
In connection with the procedures referred to above, no :natters came to our attention that caused us to
believe that the specified accounts or the final calculation of items noted above, as they relate to the
fiscal 1997 rate calculation prepared for the City of National City by EDCO, should be adjusted.
Because the above procedures do not constitute an audit made in accordance with generally accepted
auditing standards, we do not express an opinion on any of the accounts or items referred to above.
Had we performed additional procedures or had we conducted an audit of financial statements in
accordance with generally accepted auditing standards, matters might have come to our attention that
would have been reported to you. This report relates only to the accounts and items specified above and
does not extend to any financial statements of EDCO, taken as a whose.
Very truly yours,
1
-2-
FY-97 EDCO RATE REVIEW
BACKGROUND:
• The contract with EDCO provides for an annual rate review in June of each year. Changes in
landfill costs are to be treated as pass -through costs, and the contractor is entitled to an
increase based upon the San Diego C.P.I. with a 6% cap. The figures upon which the new
requested rate is based are subject to review by an audit firm selected by the City and paid by
the contractor (Deloitte & Touche LLP has been selected for the past few years and their
report is attached).
• The funds received for sale of recycled materials are to be used by the contractor as a
negative cost (that is, funds are to the benefit of City customers, and are used to decrease the
rates charged).
• The franchise fee will increase by 1% to a total of 6% in accord with the contract.
• The tipping fee (the cost to dispose of trash at the landfill) is predicted to decrease from
$47.50 per ton to $40.00 per ton, effective 1 July 1996. The contractor has been instructed to
base his rate calculations on that decrease for the entire Fiscal Year period.
• The amount of trash being generated in National City is increasing recently, contrary to the
requirements of AB939 to reduce trash flow. Actions are required. Reasons for the increase
are being developed by the City and EDCO, and additional actions may be recommended in
the future.
FY-97 RATE FACTORS:
The data presented by the contractor shows the impacts of various conditions upon specific
elements that make up the rate.
Specifically:
• The tip fee reduction from $47.50 to $40.00 per ton generates a rate reduction of $0.74 per
month on single family households.
• The contractor is entitled by the contract to a C.P.I. increase in his costs, with a 6% cap. The
C.P.I. for this year is 1.7%. Tipping fees and franchise fees are excluded from the
calculation, and the result is an increase of $0.13 per month single family. This is the
contractor's basic increase.
• As mentioned, trash tonnage is higher than last year and higher than projected. Since the tip
fees are by the contract a pass -through cost; the contractor is entitled to reimbursement for
the cost of the additional tonnage. The tonnage of trash collected through the two City-wide
collection events has escalated from the planned 320 tons in the rate to 542 tons actual. The
additional tip fees assessed are a pass -through cost, and increase the rate. The tonnage of
sweeper sweepings is relatively constant and no adjustment is required. Impact of these
adjustments on FY-97 rate is an increase of $0.35.
FY-97 EDCO Rate Review
Page 2
• Current rate (FY-96) was based upon a given tonnage of green wastes delivered to Organic
Waste Recyclers at a tip fee well below the tip fee price at the landfill (such price was
negotiated by EDCO with Council approval). The amount of green waste collected and the
rate paid are within a few pounds or pennies respectively of the projection, and no adjustment
is required.
• As indicated also the dollar value of materials recovered by EDCO is used to reduce the rate.
Quantities of recyclables and prices are estimated for the year to set trash rates, and an
adjustment is made in the following year based upon actuals. The total quantity of
recyclables collected in FY-96 is higher than planned, and the value received was higher than
anticipated. The contractor collected more money in FY-96 than was in the planned rate,
and he must now give back that extra money over the next year, in the form of a rate
reduction. That amount is $0.22. However, a similar situation occurred for FY-95. The
FY-96 (current) rate is already artificially low by $0.22 to give back the 95 money (The $0.22
is coincidentally the same for both years). The impact is that the already low rate gave back
the FY-95 excess money; if we make no adjustment and keep the rate the same, it will now
give back the FY-96 excess money. One further element - projections for FY-97 (total
tonnage of recyclables estimated and the estimate of the rate to be obtained from sales) will
generate sufficient funds to decrease the rate by $0.07.
• The costs of recycling initially were spread over all three segments of our trash program - that
is single family, multi -family and Commercial/Industrial. The theory being that since
everyone benefits from reductions in deposits in Iandfills, everyone should pay. Both the
multi -family and Commercial/Industrial customer could gain some of the recycling costs
back by increasing their recycling. Basis is that by increasing the recycling there is therefore
less trash - service could be reduced, and in most cases by an amount approximating the
charges for recycling. Single family does not have this option. Their trash rate is essentially
unaffected by what they do as an individual. Multi -family recycling is lagging behind the
recycling being done in the single family sector and to an increasing degree in the
commercial/industrial sector. To encourage this multi -family sector to increase recycling, I
am proposing a "recycling fee" to be imposed on multi -family accounts (essentially we will
be withholding the tip fee reduction from that sector). Multi -family in most cases can gain
back monies equal to the reduction simply by reducing their level of trash service. And this
they can do by increasing the level of recycling. We must take action in accord with
requirements of AB 939 to reduce trash, and this seems most appropriate at this time. It
should be noted that this action is revenue neutral...revenue neutral to the City and to the
contractor in that it is simply a redistribution of costs within the rate. It should be noted that
the average rate per unit for multi -family is substantially below that of single family, and is
contingent upon the level of service provided.
• The franchise fee is up from 5% by 1% to a total of 6%. This is in accord with the current
contract with EDCO for an annual increase in the Franchise fee in increments of 1% to reach
10%. It should be noted that the overall decrease in rate will cause the income from the
Franchise fee to also decrease, since it is a percentage of the Contractor's gross. The increase
to 6% will provide only a slightly increased income to the City.
FY-97 EDCO Rate Review
Page 3
SILVER BAG PROGRAM:
• In January 1995, the matter of the Silver Bag program was discussed at great length. The
problem being that the cost had been pegged at $0.91 per bag for a few years, and that the
cost of providing such service was continuing to escalate and was then at about $2.73. A
decision was made that the price should be more akin to the cost (all other trash users make-
up the shortfall), but that it would be unfair to make the jump at one time and that it should
be made in easy steps. Council directed the rate to increase to $1.50 in January 1995 and to
be in effect for 12 months until January 1996. Council subsequently agreed that a "mid -year"
price change should be avoided, and that the increase would be more properly considered at
this rate review. The cost of providing this service has decreased slightly from the $2.73
figure of 1994 to a projected $2.63 for the coming year. In accord with Council direction to
increase the price of the bags in easy steps, it is proposed that the rate be adjusted this year to
accommodate one third of the remaining difference (i.e. at $1.50 per bag price, and $2.63 per
bag cost, the difference is $1.13. On third of that is $0.38). Adjustment by $0.35 to $1.85
per bag is recommended. The remaining difference to be accomplished in two steps.
FY-97 RATE RECOMMENDATION:
• The recommendation is to reduce the monthly charge for single family residential from
$14.85 per month to $14.36 per month. Commercial/Industrial be reduced from $90.07 for a
3 cubic yard bin service one time per week, to a charge of $87.04 for that service, with other
levels of service being also appropriately reduced. Multi -family accommodations to be
assessed a recycling fee of $0.54 per unit per month to encourage recycling, and the price
Silver Bags be raised to $1.85 per bag.
•
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NOTICE TO
ISSUING
THE CERTIFICATE
POLICIES
COMPANY
BE CANCELLED
HOLDER
WILL
fillm�I,
BEFORE
ENDEAVOR TO
NAMED TO THE
L Z w 3 N A T IO NA L CITY B L V U
NA T I UN AL C 1T Yip CA 9 19 50
.DAYS
' LEFT, BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR
; LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
AU HORDREPRESENTATIVE a
DE
%('��E"'tdd��ai I(3d @I pp }. �.7t:41 ,tii �L{'ttfri lE 1 iy ttll, t
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warren G. Jonnsons V.P./oca
n
NAMED INSUREDS
Edward G. Burr & Sandra L. Burr, But Only As Respects
Property Owned By Them Individually
Edward G. Burr & Sandra L. Burr and Security Title Insurance
Trustee Trust #1291 As Respects Property Only At:
418 West Aviation Road, Fallbrook, CA
EDCO Disposal Corporation, Inc.
Rialto Services, Inc.
A-1 Disposal Company
La Mesa Disposal Service
Waste Transporting Company
San Diego Refuse Company
San Diego Recycling
Thomas & Sons Recycling
Fallbrook Refuse Service
National City Rubbish Service
Park Disposal
Signal Hill Disposal
Litterbox Containers
S.E.J., Inc.
Reliable Disposal Service
Dependable Garbage Service
Tri-County Disposal
Sanco Equipment Corp. (Old S.E.J. - Trucks Registered To)
Pacific Coast Recycling
American Trash Service
J & S Disposal & Rolloff, Inc.
Policy Number: AS PER CERTIFICATE
Authorized Representative:
Warren G. Johnson, V.P.
Robert F. Driver Co., Inc.
P.O. Box 670
San Diego, CA 92112-4121
(619) 238-1828
CL 246
(11-85)
POLICY NUMBER: CR9139209
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
CG 20 10 11 85
ADDITIONAL INSURED - OWNERS, LESSEES
OR CONTRACTORS (FORM B)
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
Name of Person or Organization:
CITY OF NATIONAL CITY
1243 NATIONAL CITY BLVD
NATIONAL CITY, CA 91950
(If no entry appears above, information required to complete this
endorsement will be shown in the Declarations as applicable to this
endorsement.)
WHO IS INSURED (Section II) is amended to include as an insured the
person or organization shown in the Schedule, but only with respect to
liability arising out of "your work" for that insured by or for you.
Insured: EDCO Disposal Corporation
Producer: Robert F. Driver Co., Inc., San Diego, CA
Copyright, Insurance Services Office, Inc., 1984
City of National City, California
COUNCIL AGENDA STATEMENT
MEETING DATE June 11, 1996
1
AGENDA ITEM NO.
( ITEM TITLE
A PUBLIC HEARING TO CONSIDER A RATE CHANGE REQUEST FOR EDCO DISPOSAL
CORPORATION
PREPARED BY C.R. Williams, Jr.
EXPLANATION.
DEPARTMENT Public Works
EDCO is proposing a rate reduction for single family from $14.85 per month to $14.36 per month, for
Commercial/Industrial from $90.07 for a 3 yard container service once per week to $87.04 for that
service. Staff is recommending an imposition of a $0.54 per month per unit recycling fee imposed on
apartments to encourage recycling. Staff is also recommending an increase in the Silver Bag fees from
$1.50 per bag to $1.85 per bag in accord with prior Council direction.
Environmental Review
Financial Statement
Benefits of the trash rate reduction will accrue to the Citizens of National City. To the extent that gross
income to the contractor falls, the Franchise for payments will decrease. The planned increase in
franchise fee will largely offset this loss. Account No. N/A
X
N/A
TAFF RE OMMENDA ION
Hold the hearing.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below)
1. EDCO letter of May 15, 1996
2. Deloitte-Touche letter of April 30, 1996
3. FY-97 EDCO Rate Review
Resolution No.
A-200 (Rev. 9/80)
City oi, .National City
Office of the City Clerk
1243 National City Boulevard, National City, CA 91950-4397
Lori Anne Peoples, CMC - City Clerk (619) 336- 4226
NOTICE OF PUBLIC HEARING
TRASH SERVICE RATE CHANGE
FOR EDCO DISPOSAL CORPORATION
NOTICE IS HEREBY GIVEN that the City Council of the City of National
City will hold a public hearing after the hour of 6:00 p.m., Tuesday, June 11, 1996,
in the City Council Chambers, Civic Center, 1243 National City Boulevard,
National City, to consider:
APPROVAL OF A TRASH SERVICE RATE CHANGE
FOR EDCO DISPOSAL CORPORATION
Anyone interested in this matter may appear at the above time and place and
be heard.
If you challenge the nature of the proposed action in court, you may be
limited to raising only those issues you or someone else raised at the public hearing
described in this notice, or in written correspondence delivered to the undersigned,
or to the City Council of the City of National City, at or prior to, the public hearing.
DATED: June 28, 1996
la-Aj AVIL4
Lori jAnne Peoples
City Clerk of the City of
National City, California
® Recycled Paper
PROOF OF PUBLICATION This space is for the County Clerk's Filing Stamp
(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Diego:
I am a citizen of the United States and
a resident of the County aforesaid; I am
over the age of eighteen years, and not
a party to or interested in the above -
entitled matter. I am the principal clerk
of the printer of the STAR -NEWS,
NATIONAL CITY, a newspaper of gen-
eral circulation, published TWICE -
WEEKLY in the City of National City,
and the South Bay Judicial District,
County of San Diego, and which news-
paper has been adjudged a newspaper
of general circulation by the Superior
Court of the County of San Diego, State
of California, under the date of April 23,
1951, Case Number 164327; that the
notice, of which the annexed is a print-
ed copy (set in type not smaller than
nonpareil), has been published in each
regular and entire issue of said news-
paper and not in any supplement there-
of on the following dates, to -wit:
6/1
all in the year 1996
I certify (or declare) under penalty of
perjury that the foregoing is true and
correct.
Dated at CHULA VISTA
California, this lst day of JUN- , 1996
Signatu
PRINCIPLE CLERK
NC12720
Proof of Publicaton of:
NOTICE OF PUBLIC HEARING
NOTt8T GI
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TRASHHSE Y
CHANGE T..EEiC
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or -to the c4,,yr. Council Of the
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®0S1=11®SAS GO- - RATION
6670 Federal Boulevard, Lemon Grove, California 91945 (619) 287-7555 Fax (619) 287-5242
May 15, 1996
City of National City
1243 National Avenue
National City, Califomia 92050
Honorable Mayor and Members of the City Council:
N
The Refuse Collection and Recycling Agreement between the City of National City and EDCO Disposal —
Corporation provides for certain periodic rate adjustments. The contract allows for a pass through of
changes in the disposal site fee and annual adjustments by the amount of the local consumer price
index.
San Diego County / Solid Waste Authority staff plans to approve a decrease in the landfill tipping fee on
July 1, 1996 to $40.00 per ton, a 15.8% decrease from the current $47.50 per ton.
Improved market prices for recydables collected in the curbside recycling program have resulted in a
reduction in the residential rate of $0.07 and in the commercial rate of $0.40.
As we have discussed. the proposed rate structure includes a direct charge for multi -family costs on a
per unit basis of $0.54. As a revenue neutral allocation of costs this has resulted in a reduction in the
residential rate of $0.29 and in the commercial rate of $1.79.
in addition, we are requesting an adjustment for operating expenses based on the most recent CP1 index
of 1.7%.
The overall effect on the residential rate is a reduction of $0.49 in the residential rate and of $3.03 in the
commercial rate.
As in prior years, EDCO's requests for rate increases have been subjected to independent review by the
auditing firm of Deioitte & Touche. Their report supports our request for what we feel are fair and
reasonable rate adjustments.
EDCO continues to offer a 20% discount for senior citizens in National City.
Please approve the attached rate schedule to be effective July 1. 1996. As always, thank you for your
consideration.
Respectfully,
EDCO Disposal Corporation
Edward Burr
President
Printed on Recycled Paper
A WASTE COLLECTION AND RECYCLING COMPANY
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
NATIONAL CITY RATE SCHEDULE
July 1, 1996
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
$14.85
$11.72
$14.36
$11.33
2. TRAILER PARKS AND MOTELS
One time per week, per unit, per month $10.31 $9.96
3. APARTMENT HOUSES
One time per week, per unit, per month $10.46 $10.11
4. SENIOR CITIZEN RESIDENTIAL
Per month 811.38 $1 1 .49
5. COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
One time per week, per month $17.03 $16.46
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Two times per week, per month $27.12 $26.21
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Three times per week, per month $34.86 $33.69
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Four times per week, per month $43.09 $41 .64
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Daily (six days/Monday-Saturday)
Additional or unusual accumulation
of rubbish (per cubic yard)
$56.28
$ 54.38
$10.5 5 $10.20
BOX TYPE REFUSE SERVICE
NATIONAL CITY RATE SCHEDULE
July 1, 1996
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
COLLECTION NUMBER YARDS
FREQUENCY OF BINS PER MONTH
1 1 13 $90.07 $87.04
2 1 26 $152.04 $146.92
3 1 39 $214.02 $206.81
4 1 52 $277.81 $268.46
5 1 65 $341.61 $330.11
6 1 78 $405.40 $391.75
7 1 91 $469.20 $453.40
1 2 26 $153.87 $148.69
7 2 52 $275.99 $266.70
3 2 78 $398.11 $384.71
4 2 104 $518.41 $500.96
5 2 130 $638.71 $617.21
6 2 156 $759.01 $733.46
7 2 182 $879.31 $849.71
1 3 39 $217.66 $210.33
2 3 78 $396.29 $382.95
3 3 117. $574.92 $555.56
4 3 156 $751.72 $726.41
5 3 195 $928.52 $897.27
6 3 234 $1,105.33 $1,068.12
7 3 273 $1,282.13 $1,238.97
1 4 52 8281.46 $271.98
2 4 104 $516.59 8499.20
3 4 156 8‘751.72 $726.41
4 4 208 $985.03 $951.87
5 4 260 $1,218.34 $1,177.32
6 4 312 $1,451.65 $1,402.78
7 4 364 $1,684.96 $1,628.23
1 5 65 $345.25 $333.63
2 5 130 $636.89 $615.45
3 5 195 $928.52 $897.27
4 5 260 $1,211.05 $1,170.28
5 5 325 $1,493.57 $1,443.29
5 5 390 $1,776.09 $1,716.30
7 5 455 $2,058.61 $1,989.31
1 6 78 $409.05 $395.28
2 6 156 $757.19 $731.70
3 6 234 $1,105.33 $1,068.12
4 6 312 81 ,442.53 81 ,393.97
5 6 390 $1,779.74 $1,719.82
6 6 468 $2,116.94 $2,045.68
7 6 546 $2,454.15 $2,371.53
Deloitte &
Touche LLP
ie
April 30, 1996
Mr. C. R. Williams, Jr.
Public Works Department
City of National City
2100 Hoover Avenue
National City, California 91950-6599
Dear Mr. Williams:
Suite 1900
701 "B" Street
San Diego, California 92101-8198
Telephone: (619) 232-6500
ITT Telex: 4995722
Facsimile: (619) 237-1755
We have applied certain agreed -upon procedures, as discussed below, to accounting records and other
items as related to EDCO Disposal Corporation ("EDCO") and San Diego Recycling (Recycling"), as
requested by you to assist you in evaluating your contractual relationship with EDCO and Recycling. It
is understood that this report is intended for use of the City Council of National City and the
management of EDCO and Recycling. However, this report is a matter of public record and its
distribution is not limited.
The procedures we performed, which relate primarily to your fiscal 1997 residential refuse rate are
summarized as follows:
1. We read EDCO's internally prepared financial statements for the nine months ended February 29,
1996, and the audited financial statements for the year ended May 31, 1995. We inquired of Dan
Gallaher (Controller for EDCO), as to any changes in accounting policies and methods of
application which might affect the fiscal 1997 refuse rate for National City.
2. We agreed the fiscal 1996 refuse rate from the prior year's calculation to the refuse rate used in
the fiscal 1997 refuse rate calculation.
3. We obtained information from the U. S. Depar talent of Labor - Bureau of Labor Statistics and
agreed such information to the amount used in the Consumer Price Index ("C.P.I.") adjustment in
the fiscal 1997 refuse rate calculation.
4. We recalculated franchise fees due to National City for the period from April 1, 1995 to
March 31, 1996, to ascertain that they were calculated based on 5% of cash collected as reported
in EDCO's underlying financial records.
We read franchise fee remittances made to National City by EDCO for the period from April 1,
1995 to March 31, 1996 to ascertain that they were made on a monthly basis.
DeloitteTouche
Tohmatsu
International
L.
6. We agreed San Diego County estimated landfill tip fee of $47.50 per ton projected in the fiscal
1996 rate review process to correspondence from the County of San Diego regarding the Tip Fee
Resolution Approved for Implementation July 1, 1995.
We agreed actual tons of refuse collected for two judgmentally selected days in the period from
July 1, 1995 to February 29, 1996 to the supporting landfill tickets.
We recalculated the percentage effect of the projected fiscal 1997 San Diego County landfill tip
fee decrease on the fiscal 1997 refuse rate.
We ascertained that one-time adjustments to the fiscal 1996 refuse rate were properiy excluded
from the fiscal 1997 refuse rate.
10. We recalculated the difference between the actual annualized revenues from the sale of
recyclables and the projected revenues from the sale of recyclables used in the fiscal 1996 refuse
rate.
11. We agreed total tons of recyclable materials collected to underlying accounting records for two
judgementally selected months. From the underlying accounting records, we judgmentally
selected five daily recyclable totals and agreed those totals to supporting work tickets. We
determined the reasonableness of recycling rates as compared to three judgmentally selected
recycling receipts.
12. We recalculated the effect of franchise fees on the fiscal 1997 refuse rate.
13. We recalculated the percentage effect of the yard waste disposal fee reduction on the fiscal 1997
refuse rate.
14. We agreed coverage levels of insurance in force to the insurance provider's certificate of
insurance to ascertain that such coverage was in compliance with contractual requirements.
In connection with the procedures referred to above, no matters came to our attention that caused us to
believe that the specified accounts or the final calculation of items noted above, as they relate to the
fiscal 1997 rate calculation prepared for the City of National City by EDCO, should be adjusted.
Because the above procedures do not constitute an audit made in accordance with generally accepted
auditing standards, we do not express an opinion on any of the accounts or items referred to above.
Had we performed additional procedures or had we conducted an audit of financial statements in
accordance with generally accepted auditing standards, matters might have come to our attention that
would have been reported to you. This report relates only to the accounts and items specified above and
does not extend to any financial statements of EDCO, taken as a whole.
Very truly yours,
a t ttP
--
FY-97 EDCO RATE REVIEW
BACKGROUND:
• The contract with EDCO provides for an annual rate review in June of each year. Changes in
landfill costs are to be treated as pass -through costs, and the contractor is entitled to an
increase based upon the San Diego C.P.I. with a 6% cap. The figures upon which the new
requested rate is based are subject to review by an audit film selected by the City and paid by
the contractor (Deloitte & Touche LLP has been selected for the past few years and their
report is attached).
• The funds received for sale of recycled materials are to be used by the contractor as a
negative cost (that is, funds are to the benefit of City customers, and are used to decrease the
rates charged).
• The franchise fee will increase by 1% to a total of 6% in accord with the contract.
• The tipping fee (the cost to dispose of trash at the landfill) is predicted to decrease from
$47.50 per ton to $40.00 per ton, effective 1 July 1996. The contractor has been instructed to
base his rate calculations on that decrease for the entire Fiscal Year period.
The amount of trash being generated in National City is increasing recently, contrary to the
requirements of AB939 to reduce trash flow. Actions are required. Reasons for the increase
are being developed by the City and EDCO, and additional actions may be recommended in
the future.
FY-97 RATE FACTORS:
The data presented by the contractor shows the impacts of various conditions upon specific
elements that make up the rate.
Specifically:
• The tip fee reduction from $47.50 to $40.00 per ton generates a rate reduction of $0.74 per
month on single family households.
• The contractor is entitled by the contract to a C.P.I. increase in his costs, with a 6% cap. The
C.P.I. for this year is 1.7%. Tipping fees and franchise fees are excluded from the
calculation, and the result is an increase of $0.13 per month single family. This is the
contractor's basic increase.
• As mentioned, trash tonnage is higher than last year and higher than projected. Since the tip
fees are by the contract a pass -through cost; the contractor is entitled to reimbursement for
the cost of the additional tonnage. The tonnage of trash collected through the two City-wide
collection events has escalated from the planned 320 tons in the rate to 542 tons actual. The
additional tip fees assessed are a pass -through cost, and increase the rate. The tonnage of
sweeper sweepings is relatively constant and no adjustment is required. Impact of these
adjustments on FY-97 rate is an increase of $0.35.
FY-97 EDCO Rate Review
Page 2
• Current rate (FY-96) was based upon a given tonnage of green wastes delivered to Organic
Waste Recyclers at a tip fee well below the tip fee price at the landfill (such price was
negotiated by EDCO with Council approval). The amount of green waste collected and the
rate paid are within a few pounds or pennies respectively of the projection, and no adjustment
is required.
• As indicated also the dollar value of materials recovered by EDCO is used to reduce the rate.
Quantities of recyclables and prices are estimated for the year to set trash rates, and an
adjustment is made in the following year based upon actuals. The total quantity of
recyclables collected in FY-96 is higher than planned, and the value received was higher than
anticipated. The contractor collected more money in FY-96 than was in the planned rate,
and he must now give back that extra money over the next year, in the Rhin of a rate
reduction. That amount is $0.22. However, a similar situation occurred for FY-95. The
FY-96 (current) rate is already artificially low by $0.22 to give back the 95 money (The $0.22
is coincidentally the same for both years). The impact is that the already low rate gave back
the FY-95 excess money; if we make no adjustment and keep the rate the same, it will now
give back the FY-96 excess money. One further element - projections for FY-97 (total
tonnage of recyclables estimated and the estimate of the rate to be obtained from sales) will
generate sufficient funds to decrease the rate by $0.07.
• The costs of recycling initially were spread over all three segments of our trash program - that
is single family, multi -family and Commercial/lndustrial. The theory being that since
everyone benefits from reductions in deposits in landfills, everyone should pay. Both the
multi -family and Commercial/Industrial customer could gain some of the recycling costs
back by increasing their recycling. Basis is that by increasing the recycling there is therefore
less trash - service could be reduced, and in most cases by an amount approximating the
charges for recycling. Single family does not have this option. Their trash rate is essentially
unaffected by what they do as an individual. Multi -family recycling is lagging behind the
recycling being done in the single family sector and to an increasing degree in the
commercial/industrial sector. To encourage this multi -family sector to increase recycling, I
am proposing a "recycling fee" to be imposed on multi -family accounts (essentially we will
be withholding the tip fee reduction from that sector). Multi -family in most cases can gain
back monies equal to the reduction simply by reducing their level of trash service. And this
they can do by increasing the level of recycling. We must take action in accord with
requirements of AB 939 to reduce trash, and this seems most appropriate at this time. It
should be noted that this action is revenue neutral...revenue neutral to the City and to the
contractor in that it is simply a redistribution of costs within the rate. It should be noted that
the average rate per unit for multi -family is substantially below that of single family, and is
contingent upon the level of service provided.
• The franchise fee is up from 5% by 1% to a total of 6%. This is in accord with the current
contract with EDCO for an annual increase in the Franchise fee in increments of 1% to reach
10%. It should be noted that the overall decrease in rate will cause the income from the
Franchise fee to also decrease, since it is a percentage of the Contractor's gross. The increase
to 6% will provide only a slightly increased income to the City.
• FY-97 EDCO Rate Review
Page 3
SILVER BAG PROGRAM:
• In January 1995, the matter of the Silver Bag program was discussed at great length. The
problem being that the cost had been pegged at $0.91 per bag for a few years, and that the
cost of providing such service was continuing to escalate and was then at about $2.73. A
decision was made that the price should be more akin to the cost (all other trash users make-
up the shortfall), but that it would be unfair to make the jump at one time and that it should
be made in easy steps. Council directed the rate to increase to $1.50 in January 1995 and to
be in effect for 12 months until January 1996. Council subsequently agreed that a "mid -year"
price change should be avoided, and that the increase would be more properly considered at
this rate review. The cost of providing this service has decreased slightly from the $2.73
figure of 1994 to a projected $2.63 for the coming year. In accord with Council direction to
increase the price of the bags in easy steps, it is proposed that the rate be adjusted this year to
accommodate one third of the remaining difference (i.e. at $1.50 per bag price, and $2.63 per
bag cost, the difference is $1.13. On third of that is $0.38). Adjustment by $0.35 to $1.85
per bag is recommended. The remaining difference to be accomplished in two steps.
FY-97 RATE RECOMMENDATION:
• The recommendation is to reduce the monthly charge for single family residential from
$14.85 per month to $14.36 per month. Commercial/Industrial be reduced from $90.07 for a
3 cubic yard bin service one time per week, to a charge of $87.04 for that service, with other
levels of service being also appropriately reduced. Multi -family accommodations to be
assessed a recycling fee of $0.54 per unit per month to encourage recycling, and the price
Silver Bags be raised to $1.85 per bag.
City of 'ational City
Office of the City Clerk
1243 National City Boulevard, National City, CA 91950-4397
Lori Anne Peoples, CMC - City Clerk (619) 336- 4226
June 14, 1996
Steve South, General Manager
EDCO Disposal Corporation
6670 Federal Boulevard
Lemon Grove, CA 91945
Dear Steve:
Enclosed is a certified copy of Resolution No. 96-83 of the City Council of
the City of National City, which was passed and adopted on June 11, 1996.
The Resolution approves a trash service rate change for EDCO Disposal
Corporation.
Sincerely,
v/YU&
Jinie Daniels
Secretary to the City Clerk
Enclosure
® Recycled Paper
City of National City, California
COUNCIL AGENDA STATEMENT
MEETING DATE May 28, 1996
8
AGENDA ITEM NO.
ITEM TITLE
RESOLUTION SCHEDULING A PUBLIC HEARING TO CONSIDER A RATE CHANGE REQUEST
FOR EDCO DISPOSAL CORPORATION
PREPARED BY DEPARTMENT
C.R. Williams, Jr. Public Works
EXPLANATION.
EDCO is proposing a rate reduction for single family from $14.85 per month to $14.36 per month, for
Commercial/Industrial from $90.07 for a 3 yard container service once per week to $87.04 for that
service. Staff is recommending an imposition of a $0.54 per month per unit recycling fee imposed on
apartments to encourage recycling. Staff is also recommending an increase in the Silver Bag fees from
$1.50 per bag to $1.85 per bag in accord with prior Council direction.
The proposed Resolution would schedule a Public Hearing for the June 11, 1996 City Council meeting to
consider the requested change in the trash service rate.
Environmental Review
X N/A
Financial Statement
Benefits of the trash rate reduction will accrue to the Citizens
income to the contractor falls, the Franchise for payments
franchise fee will largely offset this loss.
STAFF RECOMMENDATION
Adopt Resolution setting Public Hearing.
BOARD/COMMISSION RECOMMENDATION
N/A
ATTACHMENTS (Listed Below)
1. EDCO letter of May 15, 1996
2. Deloitte-Touche letter of April 30, 1996
3. FY-97 EDCO Rate Review
of National City. To the extent that gross
will decrease. The planned increase in
Account No."
Resolution No. 96-72
A-200 (Rev. 9/80)
RESOLUTION NO. 96-72
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NATIONAL CITY
SCHEDULING A PUBLIC HEARING TO CONSIDER
A REQUEST FOR CHANGE IN TRASH SERVICE RATES
WHEREAS, it has been proposed that there be approved a change in trash
service rates to be charged by Edco Disposal Corporation; and
WHEREAS, Section 66018 and 6062a of the California Government Code
require a public hearing and 10 days' notice prior to the enactment of specified new or
increased fees or charges.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of National City that the time for hearing any and all persons interested in the proposed
change in trash service rates is hereby set for 6:00 p.m. on June 11, 1996, in the City
Council Chambers in the Civic Center, 1243 National City Boulevard, National City,
California.
BE IT FURTHER RESOLVED that the City Clerk of the City of National
City, California, is hereby directed to provide notice of the time and place of said hearing
in accordance with the law.
PASSED and ADOPTED this 28th day of May, 1996.
A'1'1'EST:
Anne Peoples, City C1 rk
APPROVED AS TO FORM:
s
George H. Eiser, III
City Attorney
o c1 [1l
George H. Waters, Mayor
Passed and adopted by the Council of the City of National City, California, on May 28, 1996 by
the following vote, to -wit:
Ayes: Council Members Beauchamp, Inzunza, Morrison, Zarate, Waters.
Nays: None.
Absent: None.
Abstain: None.
AUTHENTICATED BY:
GEORGE H. WATERS
Mayor of the City of National City, California
City
lee k of the City National ity�fomia
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 96-72 of the City of National City, California, passed and adopted by the
Council of said City on May 28, 1996.
City Clerk of the City of National City, California
By:
Deputy
S670 Federal Boulevard, Lemon Grove, California 91945 [6191 287-7555 Fax [6191 287-5242
May 15, 1996
City of National City
1243 National Avenue
National City, California 92050
Honorable Mayor and Members of the City Council:
The Refuse Collection and Recycling Agreement between the City of National City and EDCO Disposal-
Corporation, provides for certain periodic rate adjustments. The contract allows for a pass through of
changes in the disposal site fee and annual adjustments by the amount of the local consumer price
index.
San Diego County / Solid Waste Authority staff plans to approve a decrease in the andfill tipping fee on
July 1, 1996 to $40.00 per ton. a 15.8% decrease from the current $47.50 per ton.
Improved market prices for recyclables collected in the curbside recycling program have resulted in a
reduction in the residential rate of $0.07 and in the commercial rate of $0.40.
As we have discussed, the proposed rate structure includes a direct charge for multi -family costs on a
per unit basis of 30.54. As a revenue neutral allocation of costs this has resulted in a reduction in the
residential rate of $0.29 and in the commercial rate of $1.79.
in addition, we are reauestina an adjustment for operating expenses based on the most recent CP1 Index
of 1.7%.
The overall effect on the residential rate is a reduction of $0.49 in the residentiai rate and of $3.03 in the
commercial rate.
As in prior years, EDCO's requests for rate increases have been subjected to independent review by the
auditing firm of Deloitte & Touche. Their report supports our request for what we feel are fair and
reasonable rate adjustments.
EDCO continues to offer a 20% discount for senior citizens in National City.
Please approve The attached rate schedule to be effective .iuiy 1996. As always, thank you for your
consideration.
Respectfully,
EDCO Disposal Corporation
Edward Burr
?resident
Pranced an Recyctea Pacer
A WAS I L COLLECTION AND RECYCLING COMPANY
NATIONAL CITY RATE SCHEDULE
July 1, 1996
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
2. TRAILER PARKS AND MOTELS
One time per week, per unit, per month
3. APARTMENT HOUSES
One time per week, per unit, per month
4. SENIOR CITIZEN RESIDENTIAL
Per rnonth
5. COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS
Up to (2) 40 gallon containers
Or (1) 90 gailon automated cart
One time per week, per month
;Jo to (2) 40 gailon containers
Or (1) 90 gallon automated cart
Two times per week, per month
Up to (2) 40 gailon. containers
0r (1) 90 gailon automated cart
Three times per week, per month
Up to (2) 40 gallon containers
Or (1) 90 gallon automated cart
Four times per week, per rnonth
Up to (2) 40 gallon. containers
Or (1) 90 gallon automated cart
Gaily (six days,Monday-Saturday)
Additional or unusual accumulation
of rubbish 'per cubic yard)
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
$14.85 $14.36
$11..72 $11.33
61 0.3 1 $9.36
$10.46 $10.11
$11.88 $11.49
$ 17.03 > 1 5.46
$ 27.1 2 $ 26.21
$34.36 $33.69
$43.09 $41.54
>6,6.28 $54.38
$10.55 $10.20
BOX TYPE REFUSE SERVICE
NATIONAL CITY RATE SCHEDULE
July '1, 1996
CURRENT PROPOSED
MONTHLY MONTHLY
RATE RATE
COLLECTION NUMBER YARDS
FREQUENCY OF BINS PER MONTH
1 13 $90.07 $87.04
1 26 $152.04 $146.92
3 1 39 $214.02 $ 206.81
4 1 52 $277.81 $268.46
5 1 65 • 8341 .61 8330.1 1
6 1 78 $405.40 8391 .75
7 1 91 $469,20 5453.40
2 26 $153.87 $148.59.
2 2 52 8275.99 $266.70
3 2 78 $398.11 $384.71
4 '7 104 55 i 8.41 $500.96
- 130 $638.71 $617.21
6 2 156 $759.01 $733.46
7 2 182 $879.31 5849.71
? 3 39
$217.56 $210.33
78 $396.29 $382.95
3 3 117 $574.92 $555.56
4 3 156 $751.77 $726.41
5 3 195 $928.52 $897.27
6
3 234 $1 ,105.33 $1 ,068.1 2
3 273 $1,282.13 $1,238.97
1 4 52 $281.46 $271.38
4 104 551 6.59 $499.20
3 4 156 $751.72 $726.41
4 4 208 $985.03 $951.87
5 4 260 51,218.34 51,177,32
6 4 312 81 ,451 .65 81 ,402.78
7 4 364 $1,684.96 $1,628.23
1 5 65 $345?5 $333.63
. 5 130 $636.89 56615.45
3 195 $928.52 $897.27
4 5 260 81,211.05 51,170.28
2 5 325 $1,493.57 51,443.29
6 5 390 $1,776.09 $ 1,716.30
7 5 455 52,058.61 $1,989.31
6 7S $409.05 $395.28
2 6 156 $757.19 $731.70
3 6 234 $1 ,105.33 81 ,068.1 2
4 5 312 81 ,44253 $1 ,393.97
55 5. 390 81,779.74 $1,719.82
6 6 468 $2,116.94 $2,045.68
7 6 546 $2,454.15 $2,371.53
Deloitte &
Touche LLP
Suite 1900
701 "B" Street
San Diego, California 92101-8198
April 30, 1996
Mr. C. R. Williams, Jr.
Public Works Department
City of Nauionai City
2100 Hoover Avenue
National City, California 91950-6599
Dear Mr. Williams:
Telephone: (619) 232-6500
ITT Telex: 4995722
Facsimile: (619) 237-1755
We have applied certain agreed -upon procedures. as discussed below, to accounting re' -orris and other
items as relaxed to EDCO Disposal Corporation (°EDCO") and San Diego Recycling (Recvclinel, as
requested by you to assist you in evaluating your contractual relationship with EDCO and Recycling. It
is understood that this report is intended for use of the City Council of National Ciry and the
management of EDCO and Recycling. However, this report is a matter of public record and its
distribution is not limited.
The procedures we per oimed, which relate oru aarliy to ;our `scar. 1997 residential refuse rate are
summarized as follows:
We read EDCO's internally prepared financial statements for the aine months ended February 29
1996, and the audited financial statements for the year ended May 31, 1995. We inquired of Dan
Gallaher (Controller for EDCO), as to any changes in accounting policies and methods of
application winch might afecr the fiscal 1997 refuse rate for National City.
We agreed the fiscal 1996 refuse rate from the prior year's calculation to the refuse rate used in
the fiscal 1997 refuse rate calculation.
We obtained :n oriilation from the 1.1. S. Depa, sent oI Labor - Bureau of Labor Statistics and
agreed such information to the amount used in the Consumer Price index ("C.F.I.") adjusunent
the fiscal 1997 refuse rate calculation_
We recalculated franchise fees due to National City for the period from April 1, 1995 to
March 31, 1996, to ascertain that they were calculated based on 5% of cash collected as reported
in EDCO's underlying financial records.
5. We read franchise fee remittances made to National City by EDCO for the period from April 1.
1995 to March 31, 1996 to ascertain that they were made on a monthly basis.
Delete Touche
Tohmatsu
International
We agreed San Diego County estimated landfill tip fee of S47.50 per ton projected in the fiscal
1996 rate review process to correspondence from the County of San Diego regarding the Tip Fee
Resolution Approved for Implementation July 1, 1995.
We agreed actual tons of refuse collected for two judgmentally selected days in the period from
July 1, 1995 to February 29, 1996 to the supporting landfill tickets.
We recalculated the percentage effect of the projected fiscal 1997 San Diego County landfill tip
fee decrease on the fiscal 1997 refuse rate.
We ascertained that one-time adjustments to the fiscal 1996 refuse rate were properly excluded
from the fiscal 1997 refuse rate.
10. We recalculated the difference between the actual annualized revenues from the sale of
recyciables and the projected revenues from the sale of recyciabies used in the fiscal 1996 refuse
rate.
We agreed total tons of recyclable materials collected to underlying accounting records for two
judgementally selected months.. From the underlying accounting records, we judgmentally
selected five daily recyclable totals and agreed those totals to supporting work tickets. We
determined the reasonableness of recycling rates as compared to three judgmentally selected
recycling receipts.
12. We recalculated the effect of franchise fees on the fiscal 1997 refuse rate.
�. We recalculated. dhe percentage effect of the ard waste :iisposal fee reduction on the fiscal 1997
refuse rate.
?. We agreed coverage levels of insurance in force to the insurance provider's certificate of
insurance to ascertain that such coverage was in compliance with contractual requirements.
In connection with the procedures referred to above, no matters came to our attention that caused us to
believe that the specified accounts or the '9tts i calculation oI items noted above, as they relate TO the
fiscal 1997 rate calculation prepared for the City ofNationai City by EDC 0, should be adjusted.
Becauaa the above procedures do not constitute an audit made in accordance with generally accented
auditing standards, we do not express an opnnicn on any of the accounts or items referred to above.
Had we performed additional procedures or had we conducted an audit of financial statements Si
accord-ince with generally accepted auditing standards, -;-:tatters fight have come to our attention that
would have been reported to you_ This report relates only to the accounts and items specified above and
does not extend to any financial statements of EDC 0, taken as a whole.
Very truly yours,
--
FY-97 EDCO RATE REV I FIAT
BACKGROUND:
• The contract with EDCO provides for an annual rate review in June of each year. Changes in
landfill costs are to be treated as pass -through costs, and the contractor is entitled to an
increase based upon the San Diego C.P.I. with a 6% cap. The figures upon which the new
requested rate is based are subject to review by an audit firm selected by the City and paid by
the contractor (Deioitte & Touche LLP has been selected for the past few years and their
report is attached).
The funds received for sale of recycled materials are to be used by the contractor as a
negative cost (that is, funds are to the benefit of City customers, and are used to decrease the
rates charged).
The franchise fee will increase by 1 % to a total of 6% in accord with the contract.
The tipping fee (the cost to dispose of trash at the landfill) is predicted to decrease from
347.50 per ton to S40.00 per ton, effective 1 July 1996. The contractor has been instructed to
base his rate calculations on that decrease far the entire Fiscal Year period.
The amount of tras?7 being generated in National City is increasing recently, Contrary to the
requirements of AB939 to reduce trash tlow. Actions are required. Reasons for the increase
are being developed by the City and EDC0,. and additional actions may be recommended in
the future.
7'Y-97 RATE FACTORS:
The data. presented by the contractor shows the impacts of various conditions anon specific
elements that make up the rate.
Specifically:
• The tip fee reduction from S47.50 to S40.00 per ton generates a rate reduction of S0. ; 4 per
month on single family households.
• The contractor is entitled by the contract to a C.P.I. increase in his costs. with a 6% cap. The
C .P.I. for this year is 1 . i%. Tipping fees and franchise fees are excluded from the
calculation, and. the result is an increase of SO.13 per month single family. This is the
contractor's basic increase.
As mentioned. trash tonnage is higher than last year and higher than projected. Since the tip
fees are by the contract a pass -through cost; the contractor is entitled to reimbursement for
the cost of the additional tonnage. The tonnage of trash collected through the two City-wide
collection events has escalated from the planned 320 tons in the rate to 542 tons actual. The
additional tip fees assessed are a pass -through cost, and increase the rate. The tonnage of
sweeper sweepings is relatively constant and no adjustment is required. Impact of these
adjustments on FY-97 rate is an increase of S0.35.
FY-97 EDCO Rate Review
Page 2
• Current rate (FY-96) was based upon a given tonnage of green wastes delivered to Organic
Waste Recyciers at a tip fee well below the tip fee price at the landfill (such price was
negotiated by EDCO with Council approval). The amount of green waste collected and the
rate paid are within a few pounds or pennies respectively of the projection, and no adjustment
is required.
• As indicated also the dollar value of materials recovered by EDCO is used to reduce the rate.
Quantities of recyciabies and prices are estimated for the year to set trash rates, and an
adjustment is made in the following year based upon actuais. The total quantity of
recyclables collected in FY-96 is higher than planned, and the value received was higher than
anticipated. The contractor collected more money in FY-96 than was in the planned rate,
and he must now give back that extra money over the next year, in the form of a rate
reduction. That amount is S022. However, a similar situation occurred for FY-95. The
FY-96 (current) rate is already artificially low by S0.22 to give back the 95 money (The $0.22
is coincidenrally the same for both years). The impact is that the already low rate gave back
the FY-95 excess money; if we make no adjustment and keep the rate the same, it will now
give back the FY-96 excess money. One further element - projections for _ Y-97 (total
tonnage of recvciabies estimated and the estimate of the rate to be obtained from sales) will
generate sufficient funds to decrease the rate by S0.07.
The costs of recycling initially were spread over all three segments of our trash program - that
s single family, multi -family andCommercial/industrial. The theory being that since
everyone benefits from reductions in deposits in landrills, everyone should pay. Both the
niuiti- arnily and: Commercial/Industrial Customer could gain some of the recycling costs
back by increasing their recycling. Basis is that by increasing the recycling there is therefore
less trash - service could be reduced, and in most cases by an amount approximating he
charges for recycling. Single family does act have this option. Their trash rate is essentially
unaffected. by i'nat they do as an indivicuai. Multi-tarmly recycling is lagging 'behind he
recycling being done in the single family sector and to an incr.easing degree in the
-ornmerc4al industrial sector. To encourage this multi -family sector to increase recycling, 1
am proposing a "recycling fee" to be imposed on multi -family accounts (essentially we will
be withholding the tip fee reduction from that sector). Multi -family in most cases can gain
back monies equal to the reduction simply by reducing their level of trashservice. p � And this
they can do by increasing the level of recycling. We must take action in accord with
requirements of AB 939 to reduce trash, and this seems most appropriate at this time. it
should be noted that this action is revenue neutral...revenue neutral to the City and to the
contactor in that it is simply a redistribution of costs within the rate. It should be noted that
the average rate per unit for multi -family is substantially below that of single family, and is
contingent upon the level of service provided.
• The franchise fee is up from 5% by 1% to a total of 6%. This is in accord with the current
contract with EDCO for an annual increase in the Franchise fee in increments of I% to reach
1O%. It should be noted that the overall decrease in rate will cause the income from the
Franchise fee to also decrease, since it is a percentage of the Contractor's gross. The increase
to 6% will provide only a slightly increased income to the City.
FY-97 EDCO Rate Review
Page 3
SILVER BAG PROGRAM:
In January 1995, the matter of the Silver Bag program was discussed at great length. The
problem being that the cost had been pegged at $0.91 per bag for a few years, and that the
cost of providing such service was continuing to escalate and was then at about $2.73. A
decision was made that the price should be more akin to the cost (all other trash users make-
up the shortfall), but that it would be unfair to make the jump at one time and that it should
be made in easy steps. Council directed the rate to increase to $1.50 in January 1995 and to
be in effect for 12 months until January 1996. Council subsequently agreed that a"mid-year"
price change should be avoided, and that the increase would be more properly considered at
this rate review. The cost of providing this service has decreased slightly from the $2.73
figure of 1994 to a projected $2.63 for the coming year. In accord with Council direction to
increase the price of the bags in easy steps, it is proposed that the rate be adjusted this year to
accommodate one third of the remaining difference (i.e. at $1.50 per bag price, and $2,63 per
bag cost, the difference is $1.13. On third of that is $0.38). Adjustuient by $0.35 to $1.85
per bag is recommended The remaining difference to be accomplished in two steps.
FY-97 RATE RECOMMENDATION:
The recommendation is to reduce the monthly charge for single family residential from
314_35 per month to $14. 6 per month. Commercial/Industrial be reduced from $90.07 for a
cubic yard bin service, one time per week, to a charge of $87.04 ioI that service,with other
levels of service being also appropriately reduced. Mufti -family accommodations to be
assessed a recycling fee of $0.54 per unit per month to encourage recycling, cind the pric
Silver Bags be raised to $1.85 per bag. / r
City c`` Nlational City
Office of the City Clerk
1243 National City Boulevard, National City, CA 91950-4397
Lori Anne Peoples, CMC - City Clerk (619) 336- 4226
June 7, 1996
Steve South, General Manager
EDCO Disposal Corporation
6670 Federal Boulevard
Lemon Grove, CA 91945
Dear Steve:
Enclosed is a certified copy of Resolution No. 96-72 of the City Council of
the City of National City, which was passed and adopted on May 28, 1996.
The Resolution scheduled a public hearing to consider a request for change
in trash service rates.
Sincerely,
barn.e.e,C'
Janie Daniels
Secretary to the City Clerk
Enclosure
® Recycled Paper