HomeMy WebLinkAboutE-1.1. Refuse Rate AdjustmentSCHEDULED ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES
DATE: APRIL 27, 2015
SUBJECT: AUTHORIZATION TO SCHEDULE AND NOTIFY PROPERTY OWNERS OF
PUBLIC HEARING FOR REFUSE RATE ADJUSTMENT ON JUNE 15, 2015
SUMMARY
The City of Azusa has an Exclusive Franchise Agreement with Athens Services for refuse
collection and recycling services. Each year refuse rates are adjusted effective July 1 pursuant to
contract terms and conditions with the franchised hauler. A summary of the proposed July 1,
2015 rate changes are included later in the report. The proposed action would authorize staff to
print and mail notices of public hearing to consider the annual refuse rate adjustment.
RECOMMENDATION
It is recommended that the Utility Board authorize staff to print and mail a 45-day advanced
notice of public hearing to be held June 15, 2015 to consider the annual refuse rate adjustment.
BACKGROUND
The City of Azusa’s waste is collected by Athens Services and taken to Athens’ Material
Recovery Facility (MRF) in the City of Industry where most recyclables are removed. The MRF
waste residue is then transported by Athens to a landfill designated by the City. Following the
closure of Puente Hills Landfill on October 31, 2013, the City directed Athens to use the Mid
Valley Landfill in Rialto. Each year refuse rates are adjusted effective July 1 pursuant to contract
terms and conditions with the franchised hauler.
Our City Attorney has advised that Proposition 218 requires all refuse rate adjustments be
approved at a public hearing with a notice to the public 45 days in advance of the hearing. Azusa
Light & Water staff has been working with Athens Services to calculate rate changes pursuant to
E-1
APPROVED
UTILITY BOARD
4/27/15
2015 Refuse Rate Adjustment
April 27, 2015
Page 2
the City’s contract in order to notice the public of proposed rate changes. Proposed FY 2015/16
rates are attached for reference and are summarized below:
July-June July-June
2014-2015 2015-2016
SERVICES
Current Proposed Change
Total Monthly
Rate
Total Monthly
Rate % $
Residential Barrel Service $22.16 $23.62 6.57% $1.46
Multifamily Bin $18.60 $21.19 13.92% $2.59
Commercial Bins
Size - 3 Cubic Yards
1 Day/Week $110.40 $117.29 6.24% $6.89
2 Days/Week $161.49 $175.30 8.55% $13.81
3 Days/Week $212.63 $233.38 9.76% $20.75
4 Days/Week $263.62 $291.28 10.49% $27.66
5 Days/Week $314.89 $349.48 10.99% $34.59
6 Days/Week $425.29 $466.77 9.75% $41.48
Size - 2 Cubic Yards
1 Day/Week $99.49 $104.06 4.60% $4.57
2 Days/Week $141.76 $150.96 6.49% $9.20
3 Days/Week $183.84 $197.64 7.51% $13.80
4 Days/Week $226.96 $245.37 8.11% $18.41
5 Days/Week $268.77 $291.80 8.57% $23.03
Size - 1.5 Cubic Yards
1 Day/Week $75.93 $79.35 4.51% $3.42
2 Days/Week $126.35 $133.24 5.45% $6.89
3 Days/Week $176.01 $186.34 5.87% $10.33
Size - 30 Cubic Yards* $368.00 $385.44 4.74% $17.44
*Rate includes 1 Ton of Waste Processed at Material Recovery Facility (MRF)
The City’s refuse rates are adjusted based on changes in: (1) the Consumer Price Index (CPI) --
the CPI decreased by -0.06% from January 2014 to January 2015, and so this adjustment was
applied to pertinent parts of the rate components in formulating the new rates; (2) per ton rates at
Mid Valley Landfill; and (3) amount of tonnage collected from residents and businesses within
the City. Refuse rates are comprised of four components, with fifth component added to
residential rates, and are as follows:
(1) Processing/Disposal Fee. The most volatile component of this rate adjustment is the
landfill or disposal charge. These are collected to pay for the cost of Athens’ MRF processing,
disposal of post MRF residue at Mid Valley Landfill, and disposal of green waste at Recycled
Wood Products (RWP) located in Pomona. Athens’ per ton MRF processing charges are to be
adjusted by the CPI annually, thus, this portion of the rate was decreased by the -0.06% CPI
reduction. At the time 2014-2015 rates were calculated, landfill rate for Mid-Valley was
projected to be $28.86 per ton; actual per ton rate was $29.04. For this adjustment period, Mid
Valley landfill rate is expected to increase to $29.53 per ton. In addition to landfill rate, starting
with the FY 2014/15 rate adjustment period, an incremental transportation cost of $5.05 was
2015 Refuse Rate Adjustment
April 27, 2015
Page 3
added to per ton disposal costs to help Athens recover the increase in transportation costs to
divert waste to Mid-Valley after the closure Puente Hills Landfill; this portion of the disposal
cost is subject to CPI. Also included in the disposal portion of the rates for Single Family Barrel
Customers, is the cost for green waste disposal. Beginning November 1, 2014, green waste
collected by Athens is directed to RWP. Per contract, rate at RWP increases by 3.0% CPI each
November 1. Effective November 1, 2015, per ton rate at RWP will increase to $24.40 from
$23.69.
The Agreement requires that landfill ‘costs’ and ‘revenues’ from disposal charges be tracked and
“trued-up” each year, rather than just applying the CPI to this rate component. Following shows
processing and disposal costs and revenues collected from disposal charges by customer class for
the 2014-2015 period and prior year cumulative excesses or deficiencies in rate revenue to cover
such disposal costs:
Single Family Barrel Customers:
MRF+Landfill Costs $878,105.59
Yard Waste 63,562.22
Total Costs $941,667.81
Revenues to Athens (833,320.57)
Current Yr Revenue Deficiency $108,347.23
Prior Yr Revenue Excess (116,555.52)
Credit to Customers ($8,208.29)
Multifamily Bin Customers
MRF+Landfill Costs $575,150.05
Revenues to Athens (470,978.55)
Current Yr Revenue Deficiency $104,171.49
Prior Yr Revenue Excess _ (59,909.05)
Cost to Customers $44,262.44
Commercial Customers
MRF+Landfill Costs $753,193.34
Revenues to Athens (637,379.52)
Current Yr Revenue Deficiency $115,813.82
Prior Yr Revenue Excess (170,346.36)
Credit to Customers ($54,532.54)
In addition to increasing per ton disposal rates at Mid-Valley landfill and RWP, the variance in
disposal cost changes between customer classes is due in large part to the amount of waste
disposed by each sector. Residential Barrel tonnage increased by 0.2% compared to prior period;
Multifamily Bin tonnage increased by 9.4%; and Commercial Bin tonnage went down by -0.5%.
Prior year revenue excess includes credits to customers applied in the FY 2014/15 rate period for
volume discounted landfill rates given to Athens by the Los Angeles County Sanitation District
in FYs 2012/13 and 2013/14 before the closure of Puente Hills Landfill. These prior year credits
continue to help control rates from rising too high for the FY 2015/16 adjustment period.
Collectively, prior year credits, increases in per ton disposal rates, and changes in the amount of
2015 Refuse Rate Adjustment
April 27, 2015
Page 4
waste disposed help explain changes in the disposal/processing rate component.
(2) Service Fee. This fee is paid to Athens to cover waste collection costs such as trucks,
personnel, and operating expenses like diesel fuel and compresses natural gas. Service Fees are
adjusted by annual change in CPI. Therefore, this component of the rate decreased by -0.06%
CPI in each sector with one exception. For Locked Lid service, the CPI decrease of -0.06% was
offset by prior year 0.77% CIP increase not collected by mutual agreement during FY 2014/15.
(3) Franchise Fee. The franchise fee is comprised of 10% of the sum of service fee,
processing/disposal fee, and the franchise fee itself. These fees are used to administer the
contract and to pay for wear and tear on City streets caused by disposal trucks.
(4) AB 939 Fee. This fee is collected and used by the City to pay costs for programs,
material, and events related to compliance with the State’s recycling mandate, AB 939. This fee
has not been adjusted for the July 1, 2015 rate period.
(5) Uncollectible Accounts and CS Charges. In the case of residential customers, a customer
service charge is also added to the rate for billing services and to recover losses due to
uncollectible accounts or write-offs. Pursuant to the Franchise Agreement, the City is required to
pay all amounts billed to refuse customers by Light & Water to Athens. Any uncollectible
accounts or bad debts need to be recovered through this service charge. In FY 2015/16,
uncollectible account costs are expected to be about $25,000. The Franchise Agreement also
requires that the City bill for residential refuse services and so a billing fee of $0.92 and $0.90 is
added to Single Family and Multi-family accounts, respectively. Prior to this rate adjustment
period, the monthly billing fee of $0.67 remained the same for several years. However, this
adjustment period, the billing fee is increased to reflect cost increases over the years.
Athens Services has reviewed and agreed to the attached rate calculations.
FISCAL IMPACT
The cost of printing and mailing the public notices is about $4,000 and such cost will be paid
from the AB 939 Fund.
Prepared by: Talika M. Johnson, Utilities Administrative and Financial Services Manager
Attachments: Draft Rate Changes and Calculations