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HomeMy WebLinkAboutEDCO Disposal Corporation - Refuse Rate - No Change - 1998City of National City, California COUNCIL AGENDA STATEMENT MEETING DATE May 26, 1998 AGENDA ITEM NO. 8 r ITEM TITLE REFUSE RATE RECOMMENDATION FOR FY-99 PREPARED BY C.R. Williams, Jr. DEPARTMENT Public Works EXPLANATION. See attached. Environmental Review X N/A Financial Statement The Enterprise fund will be augmented by $21,000. The Franchise Fee goes to 8%, by contract. Keeping the rates constant for this second year will benefit citizens and businesses of National City. Account No. N/A STAFF RECOMMENDATION Approve the FY-99 Refuse rates to rem at the FY-98 level as established by Resolution 97-68 attached. BOARD/COMMISSION RECOMMENDATION N/A AT�CHMENTS (Listed Below) 1. EDCO letter of 18 May 1998 2. Deloitte & Touche Report of 11 May 1998 3. Resolution 97-68 Establishing Rates for FY-98 Resolution No. A-200 (Rev. 9/80) REFUSE RATE RECOMMENDATION FOR FY-99 Explanation: The establishment of the rates for trash service is based upon estimates of the quantities of various components to be used (Landfill quantities, yard waste quantities, recyclables sold, and consumer price index) as related to the cost/price of such components. This determines the rates. For the rate Review, the actual performance for 9 months (July -March) is escalated to 12 months, and the actual total costs/price of budget items is determined, and is compared to budgeted amounts. Overcollection or undercollection by EDCO occurs unless our estimates are uncannily exact, and in the past have required adjustments in the following year's rates. The tip fee situation at present is volatile with the County Landfills having been sold to private enterprise. Their rates have increased already and may again. City of San Diego is considering the application of a surcharge/tax on all trash disposited in the Miramar or Sycamore landfills (which we routinely do not use), but this presents an opportunity for a comparable and (windfall) increase by the private owner at Otay (which we do use). In addition EDCO's transfer station at LA MESA is nearing completion, which will give use the opportunity to send our trash out of the current system if that becomes desirable/economic. We are guessing that the average tip fee rate will increase to $34.60 per ton for the year. The franchise fee goes to 8% in accord with our contract. The cost for disposal of green waste is also going up from the $19.00 projected last year to $24.00 per ton for FY-99. The consumer price index is down, so that element of cost will decrease slightly. With all of the upward pressures on the rate, it would normally increase. However, for FY-98, Council established the Refuse Enterprise Fund, the primary purpose of which is to absorb all overcollection/undercollections; that is, to stabilize the rate itself. We will enter FY-99 with about $344,000 in this Fund. The Enterprise fund contribution for FY-99 can be reduced sufficiently to keep rates constant for FY-99. This will require reducing the contribution to $21,000. With a FY-99 beginning balance of $344,000, a $21,000 FY-99 contribution against a FY-99 $140,000 Enterprise Fund Budget (that will be presented at budget time) will give a planned end-of-year-FY-99 balance of $214,000. The rate change letter from EDCO (18 May 1998) recommending that the rates remain constant for FY-99 is attached. Also attached is the report of the independent Audit firm of Deloitte & Touche. This is a report, not an audit, as indicated. RECOMMENDATION: Ti-at the Refuse Enterprise Fund Contribution for FY-99 be set at $21,000 and that the Refuse rates for FY-99 remain at their FY-98 levels. Specifically, the single family rate to stay at $13.95 per month. The Senior Citizen rate stay at $11.16, the Silver Bag program stay at $ 1.85 per bag, and the Commercial rate stay at $84.50 per 3 yard can once per week, all as shown on the attached. The unit charge for multi -family non -recycling to remain at $0.51 per unit per month. NOTE: It should be noted that the rates for Single Family trash service provided by EDCO have been declining in the past few years: FY-95: $16.68/$16.30 FY-96: $14.85 FY-97: $14.36 FY-98: $13.98 FY-99: $13.98 PROPOSED F`1'-00 Projection: TI-•e uncertainties of the landfill tipping fees, the costs of the Household Hazardous Waste program, the volatility of the markets for re -usable materials, the 1 % increase in franchise fee next year, and the return to Enterprise fund contribution of about $150,000 will make it probable that the rate for next year (FY 2000) is unlikely to be kept down, and will probably rise by about $0.50 per unit per month for single family, and other rates a comparable amount. ISPOSAIL_ CORPORATION 6670 Federal Boulevard, Lemon Grove, California 91945 (619) 287-7555 Fax (619) 287-5242 May 18, 1998 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. After four straight rate reductions, and in accordance with cost projections made last year, EDCO is pleased to propose that the rates for the upcoming year be unchanged from current rates. This rate stability is made possible by favorable results of landfill costs and recycling revenues compared to projections made last year. Consistent with last year's plans the Trash Enterprise Fund contribution will be reduced for the coming year. Included in the proposed rates is a modest increase in operating expenses based on the most recent CPI index of 1.1%. EDCO continues to offer a 20% discount for senior citizens in National City. 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 rate proposal. Please approve the attached rate schedule to be effective July 1, 1998. As always, thank you for your consideration. Respectfully, EDCO Disposal Corporation i)('elY2/ Efiward Burr President Printed an Recycled Paper A WASTE COLLECTION AND RECYCLING COMPANY A7TACL" E NT Deloitte & Touche LLP Suite 1900 701 "B" Street San Diego, California 92101-8198 Telephone: (619) 232-6500 ITT Telex: 4995722 Facsimile: (619) 237-1755 INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED -UPON PROCEDURES May 11, 1998 Mr. C. R. Williams, Jr. Public Works Department City of National City 2100 Hoover Avenue National City, California 91950-6599 Dear Mr. Williams: We have performed the agreed -upon procedures enumerated below, to accounting records and other items as related to EDCO Disposal Corporation ("EDCO") and San Diego Recycling ("Recycling"), which were agreed to by you, to assist you in establishing a refuse rate for the City of National City and in evaluating your contractual relationship with EDCO and Recycling. This engagement to apply agreed -upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The procedures we performed, which relate primarily to your fiscal 1999 residential refuse rate, are summarized as follows: 1. We read EDCO's internally prepared financial statements for the nine months ended February 28, 1998, and the audited financial statements for the year ended May 31, 1997. We inquired of Dan Gallaher (Controller for EDCO), as to any changes in accounting policies and methods of application which might affect the fiscal 1999 refuse rate for National City. No changes which might affect the fiscal 1999 refuse rate for National City were identified. 2. We agreed the fiscal 1998 refuse rate from the prior year's calculation to the refuse rate used in the fiscal 1999 refuse rate calculation. 3.. We obtained information from the U. S. Department 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 1999 refuse rate calculation. DeloitteTouche Tohmatsu International -r.-PIACR FPT 2 4. We recalculated franchise fees due to National City for the period from April 1, 1997 to March 31, 1998, to ascertain that they were calculated based on 6% or 7%, as applicable, of cash collected as reported in EDCO's underlying financial records. Recalculation was performed without exception. 5. We read franchise fee remittances made to National City by EDCO for the period from April 1, 1997 to March 31, 1998 to ascertain that they were made on a monthly basis. 6. We agreed San Diego County estimated landfill tip fee of $32.00 per ton projected in the fiscal 1998 rate review process to correspondence from the County of San Diego regarding the Tip Fee Resolution Approved for Implementation July 1, 1997. 7. We agreed actual tons of refuse collected for two judgmentally selected days in the period from July 1, 1997 to February 28, 1998 to the supporting landfill tickets. 8. We recalculated the percentage effect of the projected fiscal 1999 San Diego County landfill tip fee increase on the fiscal 1999 refuse rate. Recalculation was performed without exception. 9. We ascertained that one-time adjustments to the fiscal 1998 refuse rate were properly excluded from the fiscal 1999 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 1998 refuse rate. Recalculation was performed without exception. 11. We agreed total tons of recyclable materials collected to underlying accounting records for two judgmentally 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 1999 refuse rate. Recalculation was performed without exception. 13. We recalculated the percentage effect of the yard waste disposal fee increase on the fiscal 1999 refuse rate. Recalculation was performed without exception. 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. We were not engaged to, and did not, perform an audit, the objective of which would be the expression of an opinion on the refuse rate for the City of National City. Accordingly, we do not express such an opinion on the rate. The sufficiency of the procedures is solely the responsibility of the specified users of this report. Consequently, we make no representation regarding the sufficiency of the agreed -upon procedures described above either for the purpose for which this report has been requested or for any other purpose. Had we performed -2- additional procedures or had we performed an audit in accordance with generally accepted auditing standards, other 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. This report is intended solely for the use of the City Council of National City and the management of EDCO and Recycling and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. However, it is understood that this report is a matter of public record and its distribution is not limited. Very truly yours, LLP - 3 - RESOLUTION NO. 97-68 RESOLUTION OF iHk, CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVE G A REFUSE SERVICE RATE CHANGE FOR EDCO DISPOSAL CORPORATION, AND ESTABLISHLNG A REFUSE ENTERPRISE FUND WHEREAS, the last refuse service rate change for Edco Disposal Corporation, the Ciry's contract refuse hauler, was in June 1996; and WHEREAS, the rate for waste disposal is estimated to be S32.00 per ton on July 1, 1997; and WHEREAS, a public hearing was held to consider the refuse service rate change at the regularly -scheduled City Council meeting of June 10, 1997, 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 Ciry Council, staff, and members of the public. NOW, TI-R EFORE, BE IT RESOLVED by the City Council of the City of National City that the proposed refuse service rate schedule, a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference, is hereby approved, effective July 1, 1997. Said document is filed in the office of the City Clerk. BE IT FURTHER RESOLVED that a Refuse Enterprise Fund is hereby established to provide rate stabilization and to be used for refuse related purposes including AB 939 expenses, litter control, City assistance at Citywide cleanup, special studies; staff support and other related functions. Continued on Page Two ATrAcrm'E 1T 3 Resolution No. 97-68 Paae Two PASSED and ADOPTED this loth day of June, 1997. A 1 1 b.ST: Michael R. Dalia, City Clerk APPROVED AS TO FORM: George H. City Attorney er,IIl George H. Waters, Mayor NATIONAL CITY RATE SCHEDULE July 1, 1997 C i ny;l ti UE 'H AND GARBAGE RESIDENTIAL er month residential single family properties or the second and for each additional !sidential unit in multiple dwellings which o not exceed four units . TRAILER PARKS AND MOTELS ne time per week, per unit, per month . APARTMENT HOUSES ne time per week, per unit, per month . SENIOR CITIZEN RESIDENTIAL er r •'nth . COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS p to (2) 40 gallon containers r (1) 90 gallon automated cart ne time per week, per month p to (2) 40 gallon containers r (1) 90 gallon automated cart wo times per week, per month p to (2) 40 gallon containers r (1) 90 gallon automated cart free times per week, per month p to (2) 40 gallon containers r (1) 90 gallon automated cart Sur times per week, per month p to (2) 40 gallon containers r (,""10 gallon automated cart ails x days/Monday-Saturday) dditional or unusual accumulation rubbish (per cubic yard) CURRENT PROPOSED MONTHLY MONTHLY RATE RATE $14.36 $13.95 311.33 311.00 39.96 $9.67 510.11 $9.82 $11.49 $11.16 316.46 $15.99 326.21 325.46 533.69 532.72 341.64 340.44 554.38 510.20 552.82 59.91 • BOX TYPE REFUSE SERVICE rare 1 1 JIrML. s.a 1 r RJ-+ 1 c JLnCLULC July 1, 1997 CURRENT PROPOSED MONTHLY MONTHLY RATE RATE COLLECTION NUMBER FREQUENCY OF BINS 1 1 587.04 584.54 2 1 5146.92 $142.71 3 1 $206.81 $200.88 4 1 $268.46 $260.76 5 1 $330.11 $320.64 6 1 $391.75 _ $380.52 7 1 $453.40 $440.40 1 2 $148.69 5144.42 2 2 $266.70 5259105 3 2 $384.71 $373.68 4 2 $500.96 $486.59 5 2 $617.21 $599.51 6 2 5733.46 $712.43 7 2 $849.71 $825.34 1 3 $ 210.33 $ 204.30 2 3 $382.95 5371.97 3 3 $555.56 $539.63 4 3 $726.41 $705.58 5 3 $897.27 $871.54 6 3 $1,068.12 $1,037.49 7 3 $1,238.97 $1,203.44 1 4 5271.98 $264.18 2 4 5499.20 $484.88 3 4 $726.41 5705.58 4 4 5951.87 $924.57 5 4 $1,177.32 $1,143.56 6 4 31,402.78 $1,362.55 7 4 $1,628.23 $1,581.54 1 5 S333.63 3324.06 2 5 $615.45 $597.80 3 5 $897.27 5871.54 4 5 51,170.28 $1,136.72 5 5 $1, 443.29 31, 401.90 6 5 51,716.30 $1,667.08 7 5 $1,989.31 $1,932.27 1 6 s395.28 2 6 $731.70 3 6 51,068.12 4 6 $1,393.97 5 6 $1,719.82 6 6 $2,045.68 5383.94 5710.72 $1,037.49 $1,354.00 $1,670.51 $1,987.01 IMO ■SPOSAIL— CORPpUPI I I 6670 Federal Boulevard, Lemon Grove, California 91945 (619) 287-7555 Fax (619) 287-5242 March 20, 1998 City of National City Public Works 2100 Hoover Ave National City, CA 91950 Attn: Curt Williams Dear Curt, Please find enclosed a continuation certificate on the existing performance bond that EDCO Disposal Corporation presently has with the City of National City. It is in the (7_ amount of $25,000 per our contract with the City. If there are any questions, pleasefeel free to contact me. I have enclosed a business card for your reference. Thank you very much. Sincerely, EDCO DISPOSAL CORPORATION cydP Michael P. Fellows Director of Human Resources Printed on Recycled Paper A WASTE COLLECTION AND RECYCLING COMPANY CNA SURETY COMPANIES 1800 East Imperial Highway Brea, CA 92821 CONTINUATION CERTIFICATE THE AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA (hereinafter called the Surety) hereby continues in force its Bond No. 142262112 in the sum of Twenty -Five Thousand and No/100ths ($25,000.00) dollars, on behalf of Edco Disposal Corporation in favor of The City of National City for the (extended) term beginning on the 18th day of April, 1998, and ending on the 18th day of April, 1999, subject to all the covenants and conditions of said Bond. This Continuation is executed upon the express condition that the Company's liability shall not be cumulative and shall be limited at all times by the amount of the penalty stated in the bond. In WITNESS WHEREOF, the Company has caused this instrument to be signed by its duly authorized Attorney -in -Fact and its corporate seal to be hereto affixed this 2nd day of , March 1998. EDCO DISPOSAL CORPORATION AMERICAN CASUALTY COMPANY OF Principal READING, PENNSYLVANIA CyR1h6"u'Acuv race B. Casis, Attorney -in -fact CNA Far All the Commitments You Make'