HomeMy WebLinkAboutB- 4 Staff Report for Refuge Rate PUBLIC HEARING
TO: HONORABLE MAYOR AND MEMBER OF THE CITY COUNCIL
FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES
VIA: RICK COLE, CITY MANAGER
DATE: JUNE 16, 2003
SUBJECT: PUBLIC HEARING TO CONSIDER REFUSE RATE AND AB 939 FEE ADJUSTMENTS FOR
FISCAL YEAR 2003-04.
RECOMMENDATION
It is recommended that the City Council conduct a public hearing to consider refuse rate and AB 939
fee adjustments for fiscal year 2003-04 and approve of the adjustments as proposed:
Service 2002-03 2003-04 % Change
Residential Barrel $17.63 $18.29 3.74%
Residential Bin 14.73 15.37 4.34%
Commercial 3 Cub Yard Weekly 89.37 94.69 5.95%
BACKGROUND
The City of Azusa has an exclusive franchise agreement with Athens Services for refuse collection
and recycling services. Each year, the City is obligated to adjust rates to reflect changes in the cost-
of-living as well as changes in the cost to process and dispose of solid waste. The adjustment made
pursuant to the contract results in the following monthly rates:
Service 2002-03 2003-04 % Change
Residential Barrel $17.63 $19.08 8.22%
Residential Bin 14.73 15.37 4.34%
Commercial 3 Cub Yard Weekly 89.37 94.69 5.95%
While the Consumer Price Index (CPI) increased by 2.96% from April 2002 to April 2003, the amount
of waste collected increased by 6.26% for residential barrel customers, 4.88% for residential bin
customers, and 3.78% for commercial bin customers. This amounted to an overall increase of 2,008
tons over the prior year, and resulted in higher costs being incurred by Athens Services to process
these tons through their Material Recover Facility (MRF).
While the cost of processing increased due to increased tonnage, revenues to Athens Services did
not increase as fast. For example, revenue from disposal and processing charges from Commercial
bin customers increased by only 2.23%, creating a shortfall of $29,474.06 to cover Athens Services’
cost to MRF process the added tonnage. This revenue shortfall must be made up over the next year
through this rate adjustment per the terms of the contract.
Residential rates were similarly affected. However, in the case of residential barrel customers the
effect on the rate was more dramatic due to a mid-year correction in the customer counts in the
billing system. 352 units were incorrectly coded in the billing system as barrel customers when they
were actually bin customers. These were corrected in September 2002; the residential barrel
customer count went down, and the bin customer count went up.
This helped lower the cost of service to residential bin customers (mostly multifamily customers),
but it created a revenue shortfall to Athens Services for the tonnage collected from residential barrel
customers. The shortfall amounts to $23,565.56 for this last year and when combined with the prior
year shortfall, the total is $62,098.68. This amounts to about $0.78 per household per month over
the next 12 months if we follow the procedure in the contract for making up such shortfalls.
Rather than have the shortfall for residential barrel customers made up through the rate adjustment
over the next 12 months, staff recommends using the AB 939 fund balance to stabilize the rate this
year for residential barrel customers. Hence, staff requests authorization to pay Athens Services
$5,175 per month over a 12 month period from AB 939 fund balance, to reduce the rate increase to
3.74%:
Service 2002-03 2003-04 % Change
Residential Barrel $17.63 $18.29 3.74%
Staff believes this is an appropriate use of AB 939 funds, since this component of the rate pays for
MRF processing. Through MRF processing this last year, Athens Services diverted over 14,000 tons,
which exceeds last year’s diversion of about 13,000 tons. This increase in diversion is important to
continued compliance with AB 939 given the increasing tons collected by Athens Services in Azusa.
Later this fiscal year, around October or November, we expect the Los Angeles County Sanitation
Districts to adjust landfill rates. At that time, staff anticipates coming back to the City Council for a
rate adjustment to reflect the actual costs to Athens of the landfill charges, and avoid larger
adjustments next year.
FISCAL IMPACT
A complete rate schedule is attached which includes a breakdown of all service charges, with a
comparison to last year’s service charges. Franchise fee revenues would increase by about $30,000
to about $490,000 for next fiscal year; AB 939 Fee revenues would increase by 2.9% or $5,500 to
about $195,800 per year.
Report Prepared by:
Cary Kalscheuer, Assistant to the Director of Utilities
Attachments: