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HomeMy WebLinkAboutEDCO Disposal Corporation - Refuse Rate - No Change - 1999City of National City, California COUNCIL AGENDA STATEMENT MEETING DATE May 11, 1999 AGENDA ITEM NO. ITEM TITLE REFUSE RATE RECOMMENDATION FOR FY-00 PREPARED BY C.R. Williams, Jr. )��, DEPARTMENT Public Works EXPLANATION See attached explanation. 15 (Environmental Review X N/A >STAFF RECOMMENDATION Approve, again, the Refuse rates that wereblished in FY-98 and carried to FY-99, approve the Refuse enterprise fund amount, approve the automated curbside program, and approve the Franchise fee to stay at 8% for FY-00. Financial Statement The Refuse Fund will be augmented by $150,000, the Franchise fee to remain at 8%. Keeping the rate constant for this 3`d year will benefit the Citizens and Businesses of National City. Account No. N/A BOARD / COMMISSION RECOMMENDATION ATTACHMENTS ( Listed Below Resolution No. 1. EDCO letter of May 4, 1999 2. Deloitte and Touche report of April 16, 1999 3. Description of Automated Curbside A-200 (9/80) REFUSE RATE RECOMMENDATION FOR FY-00 Basis: 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, recycables 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, which are adjusted by increasing or decreasing the Enterprise fund collection. Overcollection/Undercollection: For the FY-99 rates, we anticipated that the tip fee would start the year at $32.00 per ton, and would end at $36.00 per ton giving an average of $34.60, which was used in rate calculations. Because of a number of factors, the rate has stayed at $32.00, thus causing an overcollection by EDCO of about $50,000. The amount collected for curbside recycling was within a few dollars of the $37,000 projected, and no over/under collection is appropriate. Yard waste tonnage and costs resulted in a difference of less than $400 on a $55,000 estimate, so no over/under collection is appropriate. FY-00 Projections: The tip fee rate for FY-00 will stay at $32.00 per ton, which, will generate another $50,000 in FY-00. In addition, we are projecting a decrease in total trash to be disposed, generating an additional cost reduction of $30,000 for this reason. The existing rate already has a $21,000 Enterprise fund contribution. These factors will allow the $150,000 contribution to the Enterprise fund to occur, without a rate change. The curbside program is anticipated to generate the same level of funds ($37,000) as last year, so no adjustment is necessary for this element. Automated Curbside: EDCO has proposed transitioning from the present hand -sorted "blue box" system for recyclables to an automated blue cart system. The new Marts would be 60 gallon carts, similar to the 90 gallon trash carts, except blue, and would be an automated system. By this we anticipate an increase in participation in the curbside program (it is easier to recycle everything into the blue cart); and by that increase, concurrently reduce the quantity of trash to be disposed. The sheer size of these carts should reduce the amount of scavenging, since it will be much more difficult to remove items. In addition to the two downward pressures on the rate, there are upward pressures in the cost of the carts and equipment, and further downward pressures due to decreased collection costs. The net result is an increase of about $26,000 per year, 'or $15,000 for the program in FY-00 (since it will take until 1 December to get the program up and running). A further description of the program is attached. EDCO Letter and Auditor Report: The "Rate Adjustment" letter from EDCO is appended. The figures upon which the rate is based are subject to review (specifically on agreed upon procedures) by an audit firm selected by the City and paid by the Contractor. (Deloitte and Touche LLP has been selected in the past few years and their report is also attached.) Recommendations: a) That the Refuse fund amount be set at $150,000 for FY-00, b) That the Contractor's offer to transition to blue carts for Automated Curbside in the 1 December time frame at a cost of about $15,000 for FY-00 be approved, c) That in the interest of keeping trash rates the same, the Contractor's offer to forgo the CPI increase to which he is entitled by the contract be accepted, d) That the City delay the 1 % franchise fee increase (to 9%) for the same reason, and, e) That the rates for all of EDCO services to the City remain at the current level, (i.e., established by Resolution 97-68) without an increase for FY-00. Subscript: It should be noted that if approved, the single family rate history will be as follows: FY-95 $16.68/$16.30 FY-96 $14.85 FY-97 $14.36 FY-98 $13.98 FY-99 $13.98 Proposed FY-00 $13.98 ! Future: It should further be noted that preliminary review of pertinent factors indicate a FY-01 rate increase in single family of the range of $0.50 to $0.75 per month, with corresponding increase in the other EDCO services. ti CIISPCDSAL- CORPORATION 6670 Federal Boulevard, Lemon Grove, California 91945 (619) 287-7555 Fax: (619) 287-5242 May 4, 1999 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, EDCO is pleased to propose that the rates for the upcoming year be unchanged from current rates again this year, as they were last year. 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 increased for the coming year. EDCO is proposing to automate the collection of curbside recyclables later this year to increase participation and reduce scavenging. Also, EDCO is pleased to waive an increase in rates related to cost of living increases in operating expenses this year. 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, 1999. As always, thank you for your consideration. Respectfully, EDCO Disposal Corporation Edward Burr President Painted on Recycled Paper A WASTE COLLECTION AND RECYCLING COMPANY NATIONAL CITY RATE SCHE 1LE July 1, 1997 PESO #97—u8 RUBBISH AND GARBAGE 1. RESIDENTIAL. MONTHLY RATE Per month residential single family properties $13.95 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 CrZEN RESIDENTIAL er month 5. COMMERCIAL AND INDUSTRIAL ESTABUSHMENTS Up to (2) 40 gallon containers Or (1) 90 gallon automated cart One time per 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) 40 gallon containers Or (1) 90 gallon automated cart Four times per week, per month Up to (2) 40 gallon containers (1) 90 gallon automated cart tjaily (six days/Monday-Saturday) $11.00 $9.57 $9.82 $11.16 $15.99 $25.45 $32.72 $40.44 $52.82 Additional or unusual accumulation of rubbish (per cubic yard) $9 91 NATIONAL CITY RATE SCHEDULE July 1, le!. MONTHLY BOX TYPE REFUSE SERVICE RATE COLLECTION NUMBER FREQUENCY OF SINS 1 1 $84.54 2 1 5142.71 3 1 5200.83 4 1 $260.713 5 1 5320.64 6 1 3380.52 7 1 $440.40 1 2 5144.42 2 2 5259.05 3 2 3373.68 4 2 5486.5.3 5 2 5599.51 6 2 5712.43 7 2 5825.34 1 3 $204.3(0 2 3 5371.97 3 3 5539.63 4 3 $705.58 5 3 $871.54 6 3 $1,037.49 7 3 $1,203.44 1 4 5264.18 2 4 $484.88 3 4 3705.58 4 4 5924.57 5 4 $1,143.56 6 4 $1,362.55 7 4 $1,581.54 1 5 $324.06 2 5 $597.80 3 5 $871.54 4 5 31,136.72 5 5 $1,401.90 6 5 $1,667.08 7 5 51,632.27 1 6 5383.94 2 6 5710.72 3 6 51,037.49 4 6 $1,354.00 5 6 $1,670.51 6 6 $1,987.01 -A•Popmnr Deloitte & Touche 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 Mr. C.R. Williams, Jr. Public Works Department City of National City 2100 Hoover Avenue National City, California 91950-6599 We have performed the procedures enumerated in Attachment A, which were agreed to by the City of National City and EDCO Disposal Corporation ("EDCO") (collectively, "the Specified Parties"), solely to assist you and EDCO with respect to evaluating components of the fiscal 2000 refuse rate for the City of National City. This engagement to apply agreed -upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described in Attachment A either for the purpose for which this report has been requested or for any other purpose. We were not engaged to, and did not, perform an audit, the objective of which would be the expression of an opinion on the specified elements, accounts, or items. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report will not be used by, or circulated, quoted, disclosed, or distributed to, nor will reference to such report be made to, anyone who is not a member of the Specified Parties without the express written consent of Deloitte & Touche LLP ("D&T"). The parties hereby acknowledge that the report is intended solely for the information and use of the Specified Parties and is not intended to be used by anyone other than the Specified Parties. Not withstanding the foregoing, the City of National City may disclose such report to the extent required by any regulatory authority having jurisdiction over the City of National City, in which case the City of National City will cooperate with D&T in seeking appropriate protection for the disclosure and use of, and reference to, the report. April 16, 1999 DeloitteTouche Tohmatsu ATTACHMENT A The procedures we performed, which relate primarily to your fiscal 2000 residential refuse rate, are summarized as follows: 1. We read EDCO's intemally prepared financial statements for the nine months ended February 28, 1999, and the audited financial statements for the year ended May 31, 1998. We inquired of Dan Gallaher (Controller for EDCO), as to any changes in accounting policies and methods of application which might affect the fiscal 2000 refuse rate for National City. No changes which might affect the fiscal 2000 refuse rate for National City were identified. We agreed the fiscal 1999 refuse rate from the prior year's calculation to the refuse rate used in the fiscal 2000 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 2000 refuse rate calculation. We noted the Company elected not to request an increase related to the Consumer Price Index. 4. We recalculated franchise fees due to National City for the period from April 1, 1998 to March 31, 1999, to ascertain that they were calculated based on 7% or 8%, 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, 1998 to March 31, 1999 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 1999 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, 1998 to February 28, 1999 to the supporting landfill tickets. 8. We recalculated the percentage effect of the projected fiscal 2000 landfill tip fee decrease on the fiscal 2000 refuse rate. Recalculation was performed without exception. 9. We ascertained that one-time adjustments to the fiscal 1999 refuse rate were properly excluded from the fiscal 2000 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 1999 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 2000 refuse rate. Recalculation was performed without exception. -2- 13. We recalculated the percentage effect of the yard waste disposal fee increase on the fiscal 2000 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. - 3 - Ago -Fro .►A 4-r=. �° Cv B Sr o= City of National City Single Family Residential Commingled Curbside Recycling Collection Single Family Residential Recycling will continue to be collected curbside by EDCO on the same day as refuse service and is proposed to convert to a commingled automated program. It is anticipated that the effective implementation of this type of commingled program will increase recycling participation up to 50% over current levels and will assist the City in achieving the goals of AB 939. In this program, each single family resident will be provided a blue, six:v_ -four gallon automated cart for collection of recyclables. This container is approximately two thirds of the size of the existing gray refuse containers currently in service, and provides increased mobility for the entire residential base. By creating a convenient, more effective way to recycle through commingling of all goods, participation should dramatically increase, particularly for cardboard and mixed paper recycling. Acceptable commodities in the program will continue to include. but will not necessarily be limited to, glass, tin, aluminum, PET, IDPE, narrow -neck plastics, newspaper, mixed paper (including junk mail, telephone books, magazines) and cardboard. Given the evolving nature of recycling, as well as proposed legislation currently under consideration, it is very realistic to assume that this list will continue to expand during the life of this Agreement. By automating recycling collection, the resulting increased capacity the cart provides will easily accommodate additional commodities being added to the program. In addition, commingled programs have also been proven to decrease issues associated with scavenging of curbside recycling programs. The material, fully commingled within an upright automated cart, is much more difficult to scavenge. This is especially important to National City, given that scavenging has been an ongoing challenge and has removed revenue that otherwise would be credited against collection cost elements. EDCO will provide an extensive public education program prior to and through program implementation, as well as on an ongoing basis through billing inserts and the Environmental Times quarterly newsletter. In addition, each cart will be hot stamped noting the basic types of commodities acceptable to the program, thus creating a permanent point of disposal reminder. Through experience, EDCO has learned that public education is the cornerstone of a successful diversion program, including the creation of bi-lingual printed material. EDCO proposes to implement this program in approximately December, 1999, allowing for increased recovery of holiday generated material, particularly cardboard and mixed paper (wrapping paper). Carts will be distributed Citywide over the course of a one week period, including point of delivery information and program parameters. In order to ensure a smooth transition, the existing manually collection vehicle will run simultaneous with the automated truck the initial two weeks of the program. Residents will keep the existing blue curbside containers for gathering recyclables prior to disposal. This too has proven effective at increasing participation. The automation of recycling will also create an aesthetic improvement on collection day, providing for neat, uniform appearance throughout the City. In addition. carts reduce vector and odor concerns associated with residue (bottles/tin) in certain recyclables.