HomeMy WebLinkAbout6.2 - 2710 Garbage Rates
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STAFF REPORT
CITY COUNCIL
DATE: June 18, 2019
TO: Honorable Mayor and City Councilmembers
FROM:
Christopher L. Foss, City Manager
SUBJECT:
Public Hearing: Adoption of Rates for Garbage Collection, Disposal, and
Recycling Services Provided by Amador Valley Industries and Establishing
the 2019-2020 Annual Assessment
Prepared by: Jay Baksa, Financial Analyst
EXECUTIVE SUMMARY:
The City Council will consider adopting two separate resolutions establishing the
garbage rates effective July 1, 2019 and establishing the Fiscal Year 2019-2020 refuse-
related property tax assessment.
STAFF RECOMMENDATION:
Conduct the public hearing, deliberate, adopt the Resolution Amending the Schedule
of Service Rates for Integrated Solid Waste Services; and , adopt the Resolution
Approving and Establishing the Collection of Minimum Residential Garbage and
Recycling Service Fees for Fiscal Year 2019-2020.
FINANCIAL IMPACT:
The residential garbage and recycling service fees which are collected on the Property
Tax bill as an annual assessment will increase by 10.48%, resulting in a $2.73 per
month increase on the required residential 32 -gallon can to a total of $28.82 per month.
When compared to the Tri-Valley cities of Livermore, Pleasanton and San Ramon, the
$28.82 monthly fee is 11% below the Tri-Valley average monthly rate of $32.37. The
proposed Dublin commercial rate increases vary based on the service level selected.
The proposed rate of $139.86 represents the average service level for a one -yard bin
collected once per week and is 7% above the Tri-Valley average rate of $129.88. The
rates include the cost associated with the increase in the price of recycling and the
extraordinary adjustment needed to compensate AVI for those costs.
DESCRIPTION:
In January 2005, the City executed an Agreement with Amador Valley Industries (AVI)
for service that began July 1, 2005 and continues to June 30, 2020. The Agreement
requires the City to adopt a rate schedule, which is estimated to produce a specified
revenue amount as identified in the Agreement. The Agreement provides for an annual
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adjustment to the total revenue based on economic indices applied to the base cost
included in AVI’s original proposal. The adjustment formula also factors in growth in the
number of customers and disposal tonnage. In addition, the Agreement allows for
extraordinary adjustments to be made if specific criteria are meet as identified in the
Agreement.
The City has also adopted an ordinance which requires all parcels in the City to
subscribe to weekly minimum garbage service. For residential properties that are
serviced with individual containers, the City collects the annual cost of minimum service
with the property tax bill. This minimum service includes: weekly curbside collection of a
32-gallon garbage container; up to two organic waste carts, including food scraps (96
gallons each); up to two recycling carts (96 gallons each); recycling collection of used oil
and filters; an annual household hazardous waste drop -off event; and three on-call
bulky waste pick-ups per year. Residents desiring larger garbage carts are billed directly
by AVI for the incremental rate difference. The City pays AVI for the service cost of the
minimum residential service with monies collected from the property tax bill.
The Fiscal Year 2019-20 annual rate adjustment included two steps 1) The annual
adjustment as prescribed in the Collection Service Agreement (Agreement) and detailed
in Attachment #1; and 2) Implementation of an extraordinary adjustment related to
recycling costs, as discussed below.
GARBAGE RATE CALCULATION
Annual Adjustment
Garbage Rate Background
The current garbage rates became effective July 1, 2018. The Agreement with AVI
provides a process for addressing the compensation generated from a ll rate classes on
an annual basis. The Agreement establishes a total annual revenue requirement for AVI
with the City retaining responsibility for establishing the rates for all categories. The
Agreement contains a provision that rates must be reasonably forecasted to provide AVI
with an appropriate level of compensation based on a formula detailed within the
Agreement. The forecasting methodology compares customer counts between the two
most recent calendar years to calculate revenue generation based on t he level of
services provided multiplied by the appropriate rates. Rates are adjusted as appropriate
across all service sectors to meet the calculated revenue requirement as set forth by the
rate model.
As required in the Agreement, the City has provided AVI with information showing the
rate calculations and assumptions. A detailed description of the methodology required
by the Agreement is included as Attachment 1.
Extraordinary Adjustment
Background
The FY 2019-20 rates include an extraordinary adjustment to offset the increased cost
associated with disposing of recycling material. This is the first time such an adjustment
has been requested since AVI and the City first entered into the Agreement in 2005.
From the inception of the Agreement until late 2017, the revenue from the sale of
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recycling material offset the recycling program’s operating costs. In late 2017, AVI was
notified that their disposal site would stop paying for recycling due to the downturn in the
commodities market for recycled goods. AVI notified the City, worked to contain costs to
avoid having to request an extraordinary adjustment , and began talking with the City on
ways to address the loss of revenue.
In October of 2018, AVI notified the City that their disposal site would be i mplementing a
charge per ton for processing the City of Dublin’s recyclables. To avoid the City having
to implement a mid-year adjustment, AVI absorbed the increased cost on the basis that
the cost would be addressed during the next annual rate setting. As the recycling
markets have continued to decline, the City has determined that an extraordinary
adjustment is warranted and would need to include both the costs for F iscal Year 2018-
19 and for the upcoming Fiscal Year 2019-20, as the rate setting methodology included
in the franchise agreement did not have a process to adjust the rates without the
extraordinary adjustment. The total amount needed from the extraordinary adjustment
for both years recycling costs equates to $3.3 million.
Extraordinary Adjustment
Section 5.11 of the City’s Agreement allows AVI to petition for an additional
compensation adjustment on the basis of extraordinary and unusual changes in the cost
of operations or programs so long as specific conditions are met. The City has reviewed
AVI’s request and determined that an extraordinary adjustment should be gr anted
based on the following: the increase in costs materially alters AVI’s overall costs; the
increase could not reasonably have been foreseen at the time of AVI’s original propos al;
and all reasonable expectations show that the recycling market decline will continue for
at least a period of six months.
Recycling Market
The increased cost for the processing and disposal of recycling is not unique to Dublin
or the Tri-Valley but is an issue that is impacting the entire nation. Beginning in 2018,
the Chinese Government instituted a “National Sword” policy, which, coupled with the
earlier “Green Fence” policy, lowered the allowable level of contamination on recycled
goods and banned more than 20 types of material. At the time, it is estimated that 90%
of domestic recycling went to foreign countries, with the majority of that going to China.
The net result of the actions by the Chinese Government is the disappearance of the
United States’ biggest market, causing the commodities associated with recycling to
decline significantly. Historically, recycling programs could generate enough revenue to
offset the cost of hauling and processing the materials, and therefore was offered either
as a free service or at a significant discount in many jurisdictions. With the loss of the
revenue from the recycling material and the new cost associated with its disposal,
agencies are now faced with a funding gap.
City Recommendation
Without the extraordinary adjustment, the rates would have increased 2.61% for both
residential and non-residential categories. After consultation with AVI and extensive
work on the rate model to incorporate recycling costs, Staff recommends the following:
1) Increase residential rates by a total of 10.48% (see Note)
2) Increase non-residential garbage rates by 10.48%
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3) Establish a new non-residential line-item for recycling, equal to 25% of the
garbage rate
In total, the increased revenue needed from the extraordinary adjustment will be born
25% by residential customers and 75% by non-residential customers, which is
approximately each group’s share of the total annual recycling tonnage.
Note: Residential customers currently pay their garbage bill on their property taxes and
receive bundled service, (i.e. all services are bundled into one rate). Commercial
customers currently are billed directly for the level of service they receive, with the
exception of recycling, which is currently free.
Detailed Comparison of Current and Proposed Rates
Attachment 2 compares the proposed rates to the current rates for service levels that
represent a majority of the subscribers in the City. The proposed rates would be
effective July 1, 2019.
Competitiveness of Dublin Rates with Neighboring Agencies
As shown in Attachment 3, the proposed City of Dublin rates remain competitive
compared to rates charged for similar services in surrounding communities. It should be
noted that as cities address the increased cost of recycling, the timing of the
adjustments and the way they are adjusted make comparing surrounding cities costs
difficult. For example, in Attachment 3, the Pleasanton rates shown are from July 2018
as updated rates have not been approved; Livermore now charges recycling at 75% of
the garbage rate; and San Ramon’s rates will be increasing by approximately 30%
beginning January 2020. Dublin remains competitive and the services offered are at
least comparable and are often better than the surveyed cities. For example, Livermore
and San Ramon charge extra for many items, such as electronic waste and appliances,
which AVI will pick up at no additional cost for Dublin residents. Therefore, the City of
Dublin customers continue to have more services included within the base cost of
services.
Annual Fee for Minimum Residential Garbage Service
The City Council will need to establish the annual fee, which is collected with the
property tax bill for residential properties, separately from the rates for other levels of
service. The proposed fee for basic residential service for Fiscal Year 2019-20 is
$345.84, which is collected in two installments on the property tax bill. The proposed
annual cost equates to $28.82 per month, which is $2.73 per month more than the ra te
levied in Fiscal Year 2019-20. This base rate includes $0.45 per month to cover the cost
associated with the collection being included on the property tax bill. These funds are
not paid to AVI but are retained by the City to offset the administrative cost in preparing
the tax roll. In addition, the cost of collection and delinquencies for the basic service is
expected to be covered from the following sources: prior year fund balance; penalties
and prior year taxes collected by the County Tax Collector; and interest on funds held
prior to payment to the Company.
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Historical Annual Fee for Minimum Garbage Service Collected with Property Tax
Bill
2017/18
2018/19
Proposed
2019/20
$299.28 $313.08 $345.84
Staff recommends that the City Council adopt the Resolution esta blishing the Fiscal
Year 2019-20 solid waste collection rates (Attachments 4 and 5) and adopt the
Resolution establishing the annual assessment for the required minimum level of
garbage service (Attachment 6).
STRATEGIC PLAN INITIATIVE:
None.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
A notice was placed in the East Bay Times on June 8, 2019 and June 15, 2019,
notifying the community of the City Council’s consideration of the proposed rates.
ATTACHMENTS:
1. Methodology Used For Fiscal Year 2019-2020 Annual Rate Adjustment
2. Proposed vs. Current Rates
3. Tri-Valley Rate Comparison
4. Resolution Amending the Schedule of Service Rates for Integrated Solid Waste
Services
5. Exhibit A to the Resolution
6. Resolution Approving and Establishing the Collection of Minimum Residential
Garbage and Recycling Service Fees for Fiscal Year 2019-2020
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 1
How Adjustment Factors Are Applied to Elements That Comprise Total Compensation
The Agreement with Amador Valley Industries (AVI), as structured with the Company, initially
provided a lump sum figure to provide all services in the Agreement. The initial rates were
established to generate the annual revenue based on the initial level of customers. As new
customers are added, the Company also receives revenue for those services. In accordance
with section 5.14 of the Agreement, the Company retains any compensation in excess of
what is calculated. If actual compensation is less than calculated, the Company is not entitled
to any additional revenues.
Annually, there is a process established where a revised total compensation figure is
developed. This calculation takes into consideration changes in the number of accounts
serviced as well as adjustments to four elements. The Agreement divides compensation
provided to AVI into the following five Elements:
1. Collection Compensation Element
2. Commercial Recycling Incentive Element
3. Disposal Compensation Element
4. Container Compensation Element
5. Fee Compensation Element
1. Methodology for Adjusting Rates to Reflect Changes In Collection Costs
The Agreement with AVI contains a very detailed methodology for incorporating economic
changes into the annual rate adjustments . Specifically, two calculations are made as part of a
larger formula. The first is the Refuse Rate Index Adjustment (RRI) and the second an
Annual Growth factor. On July 1, 2019, the agreement provides for an annual adjustment to
Collection Compensation. The Agreement also details the time period to be used in making
the annual adjustments.
Steps Required to Calculate the RRI Factor
The weighted RRI factor cannot exceed 10%, and it is calculated based on the weighted
percentage change in specific indices multiplied by the costs associated with key company
expenses. The following tables provide a summary description of how these factors are
interrelated:
STEP 1: INDICES USED IN RRI CALCULATION
Operating Cost Category Index Used
(To Produce A Weighted Adjustment)
% Index Change @
12/31/2018
LABOR Labor - Teamsters Union Local 70 Contract -0.08%
VEHICLE REPLACEMENT Transportation Equipment-Truck & Bus Bodies
Sold Separately (wpu141301) 3.33%
VEHICLE MAINTENANCE Machinery & Equipment-Parts, Attachments
and Accessories (wpu11440378) 1.30%
ALL OTHER Consumer Price Index - All Urban Consumers:
San Francisco-Oakland-Hayward, CA
(CUURS49BSA0)
3.87%
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 2
The Company provides the City with their expenditures in each of these areas over Calendar
Year 2018. These costs are AVI expenses and exclude disposal costs or fees paid to the
City. The total costs for the year are used to determine the weighting to be applied for each of
the indices. The following table shows the actual weighting used in the FY 2019-2020
calculation.
STEP 2: RRI WEIGHTING FACTOR BASED ON RELATIONSHIP TO TOTAL COSTS
Operating Cost Category AVI $
reported
% Total Expenses
(Weighting Factor)
LABOR $4,307,722 44.84%
VEHICLE REPLACEMENT $252,539 2.63%
VEHICLE MAINTENANCE $2,166,727 22.55%
ALL OTHER $2,880,378 29.98%
TOTAL $9,607,366 100%
As mentioned earlier, these factors are applied on a weighted basis. The index factor for
each cost category is multiplied by the weighting factor. The result will produce the RRI,
which per the agreement cannot exceed 10%. The following table shows the FY 2019-2020
results:
STEP 3: RRI CALCULATION (CANNOT EXCEED 10%)
[Index Change multiplied By Weighting Factor]
Operating Cost Category % Index
Change @
12/31/2018
% Total
Expenses
(Weighting
Factor)
RRI
Index Change
x
Weighting Factor
LABOR -0.08% 44.84% -0.04%
VEHICLE REPLACEMENT 3.33% 2.63% 0.09%
VEHICLE MAINTENANCE 1.30% 22.55% 0.29%
ALL OTHER 3.87% 29.98% 1.16%
TOTAL 1.50%
Steps Required to Calculate the Annual Growth (AG) Factor
The AG factor uses a formula that compares revenue at two points in time. The “Beginning
Calculated Revenue” equals the current rates multiplied by the census as of the beginning of
January 2018. This is compared to the “Ending Calculated Revenue”. The Ending Calculated
Revenue is equal to the current rates multiplied by the December 2018 number of accounts
served. The adjustment reflects increases in the number of billed units served. The
methodology is relatively straight forward. The Agreement with AVI included an exhibit which
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 3
lists various service events. For example, it included the number of single family basic service
units, number of commercial bins by size, and frequency of service, etc. These are then
multiplied by the appropriate monthly rate. Residential service is a bundled rate for recycling
and garbage and, therefore, recycling is not included in the calculation. Moreover, each
single family unit is calculated at the Basic Rate regardless of whether they may have
multiple recycling or green waste bins. For the purpose of calculating growth, commercial
recycling bins are considered to have the same rate as commercial garbage bins with the
increase in bins from year to year factored within this formula.
For the FY 2019-2020 adjustment, the Agreement provides for the calculation to be done
based on the actual collection census data as of January 2018 and as of December 2018.
The rates used for this comparison are the rates in effect on July 1, 2018.
The FY 2018-2019 calculation showed that the “Beginning Calculated Revenue”, or the
revenue collected by AVI for all services provided for that month, was $1,878,786 and the
“Ending Calculated Revenue” was $1,980,886. This results in a FY 2018-2019 Annual
Growth Factor of 5.43%. [$1,980,886 – $1,878,786 = $102,100; $102,100/$1,878,786 =
0.0543]
Application of RRI and AG to Collection Compensation Element
The FY 2018-2019 Collection Compensation Element was $9,351,421. In accordance with
the Agreement, this amount is first adjusted by the AG Factor [$9,351,421 * (1+.0543) =
$9,859,203] and then that total is escalated by the RRI factor. [$9,859,203 * (1 + .0150) =
$10,007,091]. This amount then flows into the projected total compensation shown in Section
6 of this report.
2. Methodology for Adjusting Commercial Recycling Compensation
The City has agreed to provide a compensation amount to AVI for the City’s Commercial
Recycling Program. This amount is escalated each year by the RRI factor, which is
calculated as described above, and the growth in commercial recycling tonnage.
The commercial recycling growth is calculated based on the total tonnage at the end of each
calendar year over the total tonnage for the previous. In years where the total tonnage has
decreased, the growth factor is set at 0%. For Calendar Year 2017, the total recycling tons
collected was 3,372.41. In 2018, AVI collected 3,162.94. This results in a decrease of 6.21%
(3,162.94 - 3,372.41= -209.47; -209.47 / 3,372.41 = -0.0621). Thus, the Commercial
Recycling Growth Factor is 0%, as discussed above, which is added to the RRI factor with
the combination of the factors used to inflate the previous year’s Commercial Recycling
Program compensation amount (0.0 + 0.0150 = 0.0150; $607,266 * 0.0150 = $8,974;
$598,292 + $8,974 = $607,266). This amount then flows into the projected total
compensation shown in Section 6 of this report.
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 4
Commercial Recycling Compensation Continued
AVI Commercial Recycling Compensation for FY 2019-20
Year
Commercial
Recycling RRI
Factor
Recycling Compensation Element
AVI Comp Effective
Date Tons Growth
2005 1418 Base Year $150,000
2006 1454 2.55% 3.60% $159,225
2007 1832 25.94% 2.89% $205,130 7/1/2008
2008 2097 14.53% 5.00% $245,189 7/1/2009
2009 1990 0.00% 5.74% $259,263 7/1/2010
2010 2082 4.65% 3.87% $281,344 7/1/2011
2011 1875 0.00% 2.91% $289,531 7/1/2012
2012 2023 7.97% 1.80% $317,515 7/1/2013
2013 2183 7.93% 1.70% $348,103 7/1/2014
2014 2444 11.92% 2.84% $399,479 7/1/2015
2015 2789 14.14% 2.78% $467,071 7/1/2016
2016 3120 11.87% 4.59% $543,951 7/1/2017
2017 3372 8.08% 1.91% $598,292 7/1/2018
2018 3162 0.00% 1.50% $607,266 7/1/2019
3. Methodology for Adjusting Rates to Reflect Changes in Landfill / Disposal Costs
Landfill disposal costs are established under a separate agreement between the City of
Dublin and Waste Management, Inc. AVI is required to use the disposal facility designated by
the City. AVI makes the payments for disposal costs and pays the price negotiated by the
City under the separate agreement with Waste Management. Since these are expenses
incurred by AVI, these costs must also be considered in setting the rates. The landfill
component has the following two factors that impact the rates: 1) Tip Fee Factor, and 2)
Annual Tonnage Factor.
Approved Tip Fee (ATF) Factor
In FY 2019-2020, the cost per ton for landfill fees will increase by $1.25 per ton. The increase
comes from two separate categories: increases in governmental regulatory fees and
increases as provided in the Disposal Agreement with Waste Management. The increase in
regulatory fees is $0.10 per ton. The increase as provided in the disposal agreement with
Waste Management is $1.15 per ton. Therefore, the total disposal cost for FY 2019-2020 will
be $41.07 per ton. Of this amount, $19.68 (48% of the per ton fee) is related to regulatory
fees and $21.39 reflects the portion paid to Waste Management for landfill services.
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 5
The portion paid to Waste Management can increase only as provided in a Disposal
Agreement between the City and Waste Management. The regulatory fees are levied by
other agencies such as StopWaste.Org; County Local Enforcement Authority; California
Department of Resources Recycling and Recovery; Household Hazardous Waste Fees;
County Business License; etc. This results in an ATF Factor of 3.14%. [2019 Rate =
$41.07/ton and 2018 Rate = $39.82/ton → 41.07 – 39.82 = 1.25; 1.25/39.82 = 0.0314].
Annual Tonnage (AT) Factor
The tonnage increase for the FY 2019-2020 adjustment is based on disposal reports for the
period January 1, 2018 – December 31, 2018 and is the summation of the monthly tonnages
over this period. This amount is then compared against the previous year’s disposal tonnage.
The total disposal in 2018 was 31,554 tons, and in 2017, it was 30,647 tons. This results in
an AT Factor of 2.96%. [31,554-30,647= 907; 907 / 30,647 = 0.0296].
Application of ATF and AT Factors to Disposal Compensation Element
The Landfill Compensation Element was $1,220,381 in 2017. In accordance with the
Agreement, this amount is first adjusted by the Annual AT Factor [($1,220,381 * 0.0296 =
36,123) + $1,220,381 = $1,256,504] and then that total is escalated by the ATF factor.
[($1,256,504 * 0.0314 = $39,454) + $1,256,504 = $1,295,959]. This amount then flows into
the projected total compensation shown in Section 6 of this report.
4. Methodology Addressing Container Compensation Element
This element represents the amortized cost of carts and bins over the life of the agreement.
The allowed amount is modified by the AG factor. As noted above, this factor was calculated
at 5.43% for the FY 2019-2020 adjustment. For the FY 2018-2019 adjustment, the amount
designated for the Container Element was $258,603. Adjusting this amount by the AG Factor,
there will be an $14,042 increase in the calculated amount resulting in $272,645 to be
recovered from the rates in FY 2019-2020. [$258,603 * (1 + .0543) = 272,645].
5. Methodology Addressing Fee Compensation Element
As part of the Agreement with the City of Dublin , AVI is required to remit franchise taxes and
certain fees to the City of Dublin based on a percentage of its revenue. Therefore, as the
company rates go up, the Fee Element must also be adjusted in order to recognize the fees
to be paid on the new revenue.
The Fee Compensation Element shall equal:
1. (Collection + Commercial Recycling Element + Disposal + Container Elements) =
“base compensation”
2. “base compensation” is divided by (one (1) minus the “Current Fee Percentage”)
[Where the “Current Fee Percentage” = 23.35%]
3. subtract “base compensation” from the obtained value
For FY 2019-2020, the Fee Compensation Element Calculation is as follows:
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 6
($10,007,091+$607,266+$1,295,959+$272,645 ) = $12,182,961 (base compensation)
$12,182,961 / (1- 23.35%) =$12,182,961 / (76.65%)
$12,182,961 / 76.65% = $15,894,274
For FY 2018-2019, the calculated fees payable to the City are:
$15,894,274 – $12,182,961 = $3,711,313
The adjusted total compensation for the Fee Element is shown in Section 6 below.
6. City Process of Developing Rates Projected to Meet Total Compensation
As discussed above, certain adjustment factors are applied to each area. The starting point is
the base compensation from the previous agreement year as required under the Agreement.
The adjustment methodology is shown in the table below. As the table shows, the Fiscal Year
2019-2020 rate adjustment process results in the need to establish rates at a level expected
to generate $15,894,274 in revenue. This amount is $984,037 more than the compensation
generated as part of the rate adjustment for Fiscal Year 2018-2019, i.e., the previous year.
Prior to establishing the compensation that will be generated from the rates, an adjustment is
made for grant revenues or other agreed upon amounts reducing operating costs. The
amount of revenue required from the rates is partially offset by one item: a $48,875 agreed
upon amount to reduce the cost of collection services for the Dublin Unified School District;
therefore, $48,875 is credited against required revenue in Fiscal Year 2019-2020. An
additional credit of $838 was included in the rate compensation model to offset less than
anticipated costs in the timing of landfill fee increases, which have been paid by AVI and
were not included in the FY 2018-2019 rate model.
The final step in developing the rates is to test the total annual expected revenue to the
Company, when the rates are increased by different amounts. It is necessary for the
adjustment to be at a level so that the total annual projected compensation to the Company
will equal $15,844,561. The calculation for Fiscal Year 2019-2020 is performed using the
customer subscription figures as of December 2018.
Once the annual rate adjustment was calculated, the extrao rdinary adjustment was then
added to the rate calculation. The total cost associated with the adjustment was $3,356,446
and is comprised of both the cost from Fiscal Year 2018-2019 and projected costs for Fiscal
Year 2019-2020 as well as the City’s fees.
METHODOLOGY USED FOR FISCAL YEAR 2019-2020 ANNUAL GARBAGE RATE
ADJUSTMENT IN ACCORDANCE WITH AGREEMENT BETWEEN
CITY OF DUBLIN AND AMADOR VALLEY INDUSTRIES
Report Submitted To: City Council June 18, 2019
Prepared By: Jay Baksa, Financial Analyst
ATTACHMENT 1 7
Historical Comparison of Compensation Elements FY 2017-2018 – FY 2019-2020
Compensation
Element
2017/2018
Comp
2018/2019
Comp
Absolute
Change
Percent
Change
2019/2020
Comp
Absolute
Change
Percent
Change
Collection $8,701,903 $9,351,421 $649,518 7.46% $10,007,091 $655,670 7.01%
Commercial
Recycling $543,951 $598,951 $54,341 9.99% $607,266 $8,974 1.50%
Disposal $1,150,329 $1,220,381 $70,052 6.09% $1,295,959 $75,578 6.19%
Container $245,238 $258,603 $13,365 5.45% $272,645 $14,042 5.43%
Fee $3,241,711 $3,481,540 $239,829 7.40% $3,710,356 $229,773 6.60%
Extraordinary
Adjustment $0.00 $0.00 $3,356,446 $3,356,446 100.00%
TOTAL $13,883,132 $14,910,237 $1,027,105 7.40% $19,246,621 $4,340,483 29.11%
Attachment 2
Proposed vs. Current Rates
(Selected Service Levels Representing Most Common Subscriptions)
COMPARISON OF SELECTED RATES
Current (2018/19) vs Proposed (2019/20)
Proposed
Increase over
2018/2019
Current Proposed
Residential -Monthly Rates Rate 2019/2020 $ %
Minimum Residential (32) Gallon $26.09 $28.82 $2.73 10.46%
64 Gallon Residential $47.93 $52.95 $5.02 10.47%
96 Gallon Residential $69.76 $77.07 $7.31 10.48%
Sample rate categories represent 100% of residential customers
Commercial -Monthly Rates
32 Gallon Cart $29.59 $32.69 $3.10 10.48%
64 Gallon Cart $54.34 $60.03 $5.69 10.47%
96 Gallon Cart $79.04 $87.32 $8.28 10.48%
1 Yard - 1 time / wk $126.59 $139.86 $13.27 10.48%
2 Yard - 1 time / wk $253.18 $279.72 $26.54 10.48%
3 Yard - 1 time / wk $379.77 $419.58 $39.81 10.48%
3 Yard - 2 times / wk $791.04 $873.96 $82.92 10.48%
4 Yard - 1 Time / wk $506.36 $559.44 $53.08 10.48%
4 Yards - 2 times / wk $1,044.22 $1,153.68 $109.46 10.48%
Represents 79% of 2018 commercial customers
Drop Box - Rates Per Service
20 Yard Loose $712.40 $787.00 $74.60 10.47%
30 Yard Loose $1,068.60 $1,180.50 $111.90 10.47%
40 Yard Loose $1,424.80 $1,574.00 $149.20 10.47%
Represents 84% of 2018 non-compacted Drop Box Subscriptions
30 Yard Compacted $2,137.20 $2,361.00 $223.80 10.47%
Represents 23% of the 2018 compacted Drop Box Subscriptions
Handy Hauler Available To Residents $165.63 $182.99 $17.36 10.48%
ATTACHMENT 3 - TRI-VALLEY RATE COMPARISON
2019 Garbage Rate Comparison Survey (Prepared: June 3, 2019)
Proposed
Dublin % Proposed Current % Increase
Residential Livermore Pleasanton San Ramon Average Basic Rate From Avg Rate over Prior FY
1 Can Residential (32-35 Gallon)38.85$ 26.06$ 32.20$ 32.37$ 28.82$ -10.97%26.09$ 10.46%
1 Can Residential (64-70 Gallon)58.18$ n/a 55.57$ 56.88$ 52.95$ -6.90%47.93$ 10.47%
1 Can Residential (90-96 Gallon)91.42$ 45.48$ 88.53$ 75.14$ 77.07$ 2.56%69.76$ 10.48%
Residential Notes:
Dublin: Basic rate includes 32-gallon garbage can (weekly pick-up);Weekly 64-gallon organics can; Weekly 64-gallon curbside recycling can;
lager size and/or additional organic and recycling carts available free upon request; compost give-back and 3 on-call bulky waste clean-ups per
year including items such as electronic waste, household batteries, tires, white and brown goods.
Livermore: Proposed Rates Effective July 1, 2019 - Basic rate includes 32-gallon garbage can (weekly pick-up); Weekly 96-gallon organics can; Weekly 96-gallon curbside recycling can.
San Ramon: As of January 1, 2019, Basic rate includes 32-gallon garbage can (weekly pick-up); Weekly 64-gallon green waste can supplied by Company. ;
Additional 64-gallon can is available at no extra cost; Weekly 64-gallon curbside recycling can or 96-gallon can available at no extra cost, and 3 special clean-ups per year.
Pleasanton: As of July 1, 2018 - 35 Gallon Service includes 35 gallon trash cart, 96 gallon green/food scrap cart and 96 gallon recycling cart.
96 Gallon service inlcudes a 96 gallon trash cart, 96 gallon green/food scrap cart and a 96 gallon recycling cart. Both services have weekly pick up.
3 City Proposed % Proposed Current % Increase
Commercial Livermore Pleasanton San Ramon Average Dublin From Avg Rate over Prior FY
1 Yard - 1 time / wk 116.72$ $116.72 156.19$ 129.88$ 139.86$ 7.69%126.59$ 10.49%
2 Yard - 1 time / wk 233.43$ $233.43 290.10$ 252.32$ 279.72$ 10.86%253.18$ 10.49%
3 Yard - 1 time / wk 350.16$ $350.16 401.91$ 367.41$ 419.58$ 14.20%379.77$ 10.49%
3 Yard - 2 times / wk 729.44$ $729.44 803.36$ 754.08$ 873.96$ 15.90%791.04$ 10.49%
4 Yard - 1 Time / wk 466.88$ $466.88 490.91$ 474.89$ 559.44$ 17.80%506.36$ 10.49%
4 Yards - 2 times / wk 972.59$ $972.59 981.83$ 975.67$ 1,153.68$ 18.24%1,044.22$ 10.49%
Dublin's charges 50% of the regular commercial rate for Organics and 25% for commercial recycling
San Ramon's rate does not include the cost of commercial recycling as the amount varies depending on the hauler used.
Livermore charges for recycling and organics at 75% of the regular commerical rate.
Drop Box
20 Yard Loose 702.63$ $627.80 1,081.48$ 803.97$ 787.00$ -2.11%712.40$ 10.48%
30 Yard Loose 1,021.69$ $941.70 1,243.62$ 1,069.00$ 1,180.50$ 10.43%1,068.60$ 10.48%
40 Yard Loose 1,340.76$ $1,255.60 1,405.73$ 1,334.03$ 1,574.00$ 17.99%1,424.80$ 10.48%
30 Yard Compacted 2,707.48$ $1,883.40 1,968.79$ 2,186.56$ 2,361.00$ 7.98%2,137.20$ 10.48%
Livermore rates do not include the cost of disposal/processing, which is assesed after collection. Staff has included an estimate cost with the above for comparison.
San Ramon charges for the first two tons of disposal, and Staff has included a probable disposal cost for comparison purposes.
Every effort has been made to assure the accuracy of the information and comparison of similar levels of service according to our understanding of other agency rates.
Comparison With Proposed Rates
ATTACHMENT 3
ATTACHMENT 4
1
RESOLUTION NO. XX - 19
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * * *
AMENDING THE SCHEDULE OF SERVICE RATES
FOR INTEGRATED SOLID WASTE SERVICES
WHEREAS, the City of Dublin executed a Collection Service Agreement with
Amador Valley Industries (AVI) on January 12, 2005; and
WHEREAS, the Agreement requires the City Council to adopt a rate schedule,
which is estimated to produce a specified revenue amount as identified in the
Agreement; and
WHEREAS, the City Council adopted the initial rate schedule with Resolution 68-
05 at a noticed public hearing on May 3, 2005 and the Agreement provides that the City
Council is responsible for establishing all rates; and
WHEREAS, the Agreement with AVI provides for an adjustment to the rates each
July 1st in accordance with specified formulas; and
WHEREAS, the Agreement allows for Extraordinary Adjustments to be made if
specific criteria are meet as identified in the Agreement; and
WHEREAS, AVI requested and the City granted an Extraor dinary Adjustment
due to the nationwide decline in the recycling commodities market; and
WHEREAS, the City has calculated the required rate adjustme nt necessary to
generate the agreed-upon compensation, including the Extraordinary Adjustment, and
applied not more than a 10.48% adjustment to the residential, commercial, roll-off,
construction and demolition debris, and other collection service rates excluding
commercial recycling; and
WHEREAS, to generate the necessary revenue from commercial recycling, the
City is introducing a new commercial fee to be set at 25% of the comparable garbage
rate; and
WHEREAS, on June 18, 2019, the City Council conducted a noticed public
hearing prior to the adoption of the new rate schedule.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Dublin does hereby adopt the Rate Schedule attached hereto, marked Exhibit A and by
reference made a part hereof.
2
BE IT FURTHER RESOLVED that, while AVI may not charge a rate for these
services in excess of the established rates, nothing shall prohibit AVI from charging a
rate less than the established amount.
BE IT FURTHER RESOLVED that, upon the effective date, July 1, 2019, this
resolution shall supersede all previous resolutions adopting rates for solid waste
services, and the rates adopted by this resolution shall continue from year to year.
PASSED, APPROVED AND ADOPTED this 18th day of June, 2019, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
Affected Parcels
Minimum Monthly Rate :28.82$ (Rate includes $0.45 retained by City for preparing tax roll / collection.)
Residents may select a larger garbage container for an additional fee which is shown below:
64 Gallon Garbage Container:$24.13 per month (Total = 52.95$ per month)
96 Gallon Garbage Container:$48.25 per month (Total = 77.07$ per month)
Second Container:
Additional Large Item Collection: $ 18.95
32 Gallon Container:$32.69 64 Gallon Container:$60.03 96 Gallon Container:$87.32
Commercial Bin Service Rates
2019/2020 PROPOSED ADJUSTMENT TO GARBAGE COMPANY RATES
Chapter 5.32 of the Dublin Municipal Code requires for the protection of the health safety and welfare of the community that all parcels obtain minimum weekly
garbage service. Amador Valley Industries, Inc. is the authorized garbage collection and disposal firm operating within the City. The agreement between the City of
Dublin and Amador Valley Industries, Inc. provides that the City shall adopt a rate schedule which is estimated to allow the Company to achieve a fixed amount of
annual revenue. Therefore, the adoption of these fees will affect all parcel owners. Rates are effective July 1, 2019.
Basis of Fees
The City has negotiated a multi-year agreement with Amador Valley Industries, Inc. The Company may request a change in rates based upon a formula which
includes: changes in the Refuse Rate Index; Increased Regulatory Fees; and changes in the total tons delivered to the Landfill. In addition the Company may under
specifc criteria request an extraordinary adjustment. The additional costs of each of these components has been allocated to the three classes of service: Residential;
Commercial Bin Service; and Drop Box/Compactor.
per Cubic Yard
Rates shown on the following page are monthly rates based upon bin size and frequency of service. Rates include collection, disposal, and bin
rental.
Residents may request additional large item collection services for a fee of :
RESIDENTIAL RATES
Commercial Can Service: Offered at locations unable to accommodate a commercial bin or with volumes deemed insufficient to utilize a commercial bin. Monthly
rate includes bin rental and once per week collection and disposal.
Company Minimum Residential Collection Rate: Applies separately to each single family unit as well as each unit within a duplex or other attached housing, which
receives individual garbage collection services. The rate applies to the initial 32 gallons of garbage capacity, including once per week collection and disposal;
Weekly Curbside Residential Recycling; and Weekly Curbside Green Waste Recycling; Large Item Collection Service; and access to an Annual HHW drop-off event.
All containers are provided by the Company.
COMMERCIAL AND MULTI-FAMILY BIN SERVICES (FRONT-END-LOADER)
Minimum Cost Plus
Minimum Cost Plus
Residents may request a second garbage container which will be charged at the same rate as a first container based on the size
requested.
Attachment 5 - Rate Resolution Exhibit A
Size # Times Size # Times
# Yards Per Wk # Yards Per Wk
1 1 4 1
1 2 4 2
1 3 4 3
1 4 4 4
1 5 4 5
1 6 4 6
2 1 6 1
2 2 6 2
2 3 6 3
2 4 6 4
2 5 6 5
2 6 6 6
3 1 7 1
3 2 7 2
3 3 7 3
3 4 7 4
3 5 7 5
3 6 7 6
OTHER COMMERCIAL SERVICES: Rates for additional requested services.
Container Push:12.74$
Lock & Key:7.65$
Excess Waste (Cu. Yd):41.75$ per Cubic Yard
Excess Cart Exchange:12.74$
Excess Bin Exchange:50.90$
Excess Bin Cleaning:63.58$
$182.99
Additional Bin Rental Per Week:$42.28 Per Week $132.66 Per Pick-up
Excess Per Yard If Filled Above Water Level $41.75 Per Cubic Yard
Rate Per Cubic Yard: $39.35 Compacted:$78.70
Organic material is charged at 50% of the non-compacted or compacted rate as appropriate.
MISCELLANEOUS DROP BOX CHARGES
Relocation of Drop Box $108.16 Per Request
Weekly Drop Box Container Rental - After 1st Week $42.28 Per Week
Cancel Auto Pick-up Without Notice $136.25 Per Event
Handy Hauler Extra Week Rental $42.28 Per Week
Standby Time $177.59 Per Hour
Base Monthly Rate Base Monthly Rate
$139.86 $559.44
DROP BOX / COMPACTOR RATES: Cost shown is on a per pick-up basis and is based upon the load not exceeding water level (Excess is charged the same rate).
Additional Miscellaneous charges may also apply.
$663.84
$838.50
Cost For Additional Dump:
SMALL COMPACTOR SERVICE: Rates for small compactors serviced as a commercial account on a regular route shall be billed by container size at the rate of two
times the stated rate above for loose garbage.
$1,852.32
$2,691.48
Non-Compacted:
HANDY HAULER:- One-time placement and collection of a 4
cubic yard bin, including one week container rental filled no higher
than water level:
$6,048.12
$1,992.84
$3,006.66
$4,020.48
$5,034.30
Organic material is charged at 50% of the Commercial Service rate.
Recycled Material is charged at 25% of the Commercial Service rate.
$314.52
$489.18
$1,782.72
$2,237.10
$873.96
$1,328.34
$1,013.16
$279.72
$594.24
$1,153.68
$1,747.92
$2,342.16
$2,936.40
$3,530.64
$419.58
$839.16
$1,713.12
$2,587.08
$3,461.04
$908.76
$1,223.28
$1,537.80 $4,335.00
$5,208.96
$979.02
Attachment 5 - Rate Resolution Exhibit A
C&D Debris Box Service: Costs shown are on a per pick-up basis
Material Type Cubic Yards Rate Material Type Cubic Yards Rate
Concrete & Asphalt Front End Loader
Per Yard Clean $90.51 Per Yard $35.52
Clean 6 $543.06 Mixed 4 (1/2 Full)$71.04
Mixed 6 $649.96 Mixed 4 $142.08
Mixed 6 (1/2 Full)$106.56
Cardboard Mixed 6 $213.12
Per Yard Clean $18.10 Mixed 7 (1/2 Full)$124.32
Clean 20 $362.00
Clean 30 $543.00 Metal
Clean 40 $724.00 Metal 20 $422.31
Metal 30 $482.65
Dirt Metal 40 $603.33
Clean 6 $542.76
Mixed 6 $649.96 Stucco
Per Yard Clean $90.51
Drywall Clean 6 $543.06
Per Yard Clean $43.32 Mixed 6 $649.96
Clean 20 $866.40
Mixed C&D
Wood Per Yard $37.41
Per Yard Clean $18.10 Mixed 15 $561.15
Clean 20 $362.00 Mixed 20 $748.20
Clean 30 $543.00 Mixed 30 $1,122.30
Clean 40 $724.00 Mixed 40 $1,496.40
CONSTRUCTION & DEMOLITION (C&D) DEBRIS BOX SERVICES
Attachment 5 - Rate Resolution Exhibit A
ATTACHMENT 6
1
RESOLUTION NO. XX - 19
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * * *
APPROVING AND ESTABLISHING THE COLLECTION OF MINIMUM
RESIDENTIAL GARBAGE AND RECYCLING SERVICE FEES FOR FISCAL
YEAR 2019-2020
WHEREAS, the City of Dublin is mandated by the State of California, under AB
939 and SB 1016, to reduce the amount of solid waste going into the landfill; and
WHEREAS, through the Mandatory Garbage Subscription Ordinance and other
means, the City of Dublin is taking a proactive st ance to meet the State Mandated
Goals; and
WHEREAS, the goal of the Mandatory Garbage Subscription Ordinance is to
protect the health and welfare of the community, to provide recycling services to all
residential property owners, and to equally share the costs of these programs by
mandating that every residence contributes towards the cost of the service made
available; and
WHEREAS, minimum service includes service described in the current
Agreement with the franchised waste hauler, Amador Valley Industries (AVI); and
WHEREAS, in accordance with California Constitution Article XIII C (Proposition
218) Section 6 (2), the City provided written notice to all affected property owners on
March 18, 2005 prior to adopting the Fiscal Year 2005-2006 rate structure which
included a provision for future increases based on changes in specified indices as
outlined in the agreement with AVI; and
WHEREAS, the Agreement allows for Extraordinary Adjustments to be made if
specific criteria are meet as identified in the Agreement; and
WHEREAS, AVI requested and the City granted an Extraordinary Adjustment
due to the nationwide decline in the recycling commodities market; and
WHEREAS, the City Council has considered this action as part of a noticed
public hearing on June 18, 2019; and
NOW, THEREFORE, BE IT RESOLVED that, the City Council of the City of
Dublin does hereby approve and establish the collection of minimum residential
services fees by the City on the property tax bill as shown in Exhibit A, which is attached
hereto and hereby incorporated by reference.
2
BE IT FURTHER RESOLVED that City Staff are hereby authorized to undertake
all administrative tasks to implement the assessments, including, but not limited to an
agreement with Alameda County for collection, which may provide payment to Alameda
County of its reasonable costs of collection not to exceed 1.7% of the total amount
levied.
PASSED, APPROVED AND ADOPTED this 18th day of June, 2019, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
Exhibit A
3
Exhibit A
City of Dublin
RESIDENTIAL MINIMUM GARBAGE / RECYCLING SERVICES
(Collected With Residential Property Tax Bills)
Basis of Fees
The City has negotiated a multi-year agreement with Amador Valley Industries (AVI)
requiring a rate adjustment to the residential minimum garbage/recycling services
collected with the property tax bills. The current annual fee of $313.08 per year will
increase $32.76 for a total of $345.84 for Fiscal Year 2019-2020. The annual
assessment equates to a monthly increase of $2.73, from $26.09 to $28.82. The
Agreement with the AVI provides for annual adjustments to the rates based upon
annual changes in five separate indices, three of which are maintained by the Bureau of
Labor Statistics (Refuse Rate Index), plus pass-through disposal costs. The five indices
account for cost changes in the following categories: growth in services; labor; vehicle
replacement; vehicle maintenance; and all other costs. In addition, the Agreement
allows for Extraordinary Adjustments to be made if specific criteria are meet as
identified in the Agreement
In order to determine the fee, the City estimates the total revenue req uired to pay AVI
for the Minimum Service to all residential units that are eligible to use the service,
according to the terms of the agreement. The specific factors considered in this
calculation include the following components: the residential rate for Minimum Service;
estimated number of housing units affected by the fee; costs associated with the
collection of the fee as part of the Property Tax Bill; estimated delinquencies; estimated
revenues from late payments and interest earnings; and funds availa ble from collections
in a prior year.
Affected Parcels
Chapter 5.32 of the Dublin Municipal Code requires the protection of the health, safety,
and welfare of the community by requiring that all parcels obtain minimum weekly
garbage service. Residential housing units are billed for the cost of Minimum Garbage
Service, which is included with the annual property tax bill. This fee only applies to
residential units which have individual garbage containers and are not serviced by
central bins. This does include duplexes and other attached housing types, which
receive individual service.
Households subject to this fee, which only receive Minimum Service, will not be billed by
the Garbage Company. Amador Valley industries will bill customers each quarter for
additional services, if a household selects weekly garbage collection of a container
larger than the 32-gallon container included in the Minimum Service Level.
Services Provided By the Fee
Minimum service includes weekly curbside collection of: one 32 gallon garbage
container; up to two 96 gallon organic waste carts; up to two 96 gallon recycling carts;
4
used oil and filters; an annual household hazardous waste drop off event; and three on -
call bulky waste pick-ups per year.
Amount of the Fee
The annual amount of the assessment includes the cost of collection as well as the cost
of services over the entire year. The City makes the payment to Amador Valley
Industries based upon the current rate allowed for Minimum Residential Service.
TYPE OF HOUSING UNIT AN NUAL FEE
Each Single Family Residence $ 345.84
Each Condominium / Townhouse Unit $ 345.84
Each Duplex (2 Units) $ 691.68
Each Duplex (5 or More Units) $345.84 times the
number of units