CC Resolution 8762
;.
RESOLUTION NO. 8762
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAMPBELL
MODIFYING RATES FOR SOLID WASTE SERVICES
WHEREAS, the City of Campbell has contracted with the Green Valley Disposal
Company, Inc. for the collection of garbage and rubbish in the City; and
WHEREAS, Green Valley Disposal Company, Inc. has requested a rate base revision for
refuse collection services in the City of Campbell; and
WHEREAS, the City Manager has examined the proposed rate base revision and
recommended that the rate base should be modified in accordance with the attached Schedule of
Rates, Exhibit A; and
WHEREAS, the City Council makes findings as shown on the attached Solid Waste Rate
Adjustment Findings, Exhibit B; and
WHEREAS, the City Council has elected to incorporate the costs for implementation of
all solid waste services in the solid waste rates.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CAMPBELL DOES
HEREBY RESOLVE AS FOLLOWS:
1. The rates for residential solid waste services in the City of Campbell shall
increase as shown on Exhibit A effective February 1, 1995.
2. The rates for commercial solid waste services in the City of Campbell shall
increase as shown on Exhibit A effective February 1, 1995.
3. The rates for drop-off box solid waste services in the City of Campbell shall
increase as shown on Exhibit A effective February 1, 1995.
BE IT FURTHER RESOLVED that Resolution No. 8367 be repealed.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Campbell, California, held on the third day of January, 1995, by the following roll call vote:
AYES:
NOES:
ABSENT:
Councilmembers:
Councilmembers:
Councilmembers:
Watson, Dougherty, Conant, Wilkinson, Burr
None
None
APPROVED:
AZ. ;',
;/ ,.... , ."
j '7'-'" i )lCL<-_
Anne Bybee, City Clerk
-.:-.._-_.~--~
.-::-- DONALD R. BURR: ~OR
h:sldwst.res(mp)
EXHIBIT A
SCHEDULE OF RATES
SOLID WASTE COLLECTION
EFFECTIVE FEBRUARY 1, 1995
CII)' of Campbell
Proposed Solid W..IC! Rlla II of Feltnllary 1,1"5
~l\Irio 4 - IS'" of Cualomen Sa ltIcrl be to 1-c1ft ServICt,1I'" to 2<an Service; Sr. Citlun Rille. 2IS.. of Regular Rile;
llC!duce July 1, 1996 Rile Incn:ue
llaldC!nUal
Totll C\UTlI\t PropoHd Monthly Pro)lcted RaiIlW Tolll
.of Rale RafUM Cretn CurbIIcle Jaw Feb .J 11M tIS Raw Rate!
Rei'll., CaN eenau. (1111192) Rat. W..le RecydIna CI1J95) Revenue 0wIae OI~e
Can 0-5' 5324 5324 12.05 8.791 4,69 2.27 15.75 C19,176.40 -21" 31"
Can c..3O' 163 163 13.76 11.~ 4,69 2.27 lU8 It,98Z.69 -17" 34"
1 Can 31.130' 112 112 15.58 15.31 C.69 2.27 22.34 12.509.N .1" a"
2 Cana 0-5' 1178 939 12.05 17.58 7.03 UO 2I.ll2 131.5:11-" "" 132"
2 Cana c..3O' 58 29 13.76 22.15 7.G3 UO 53.29 ...26,91 "" lU"
2 Cans 31-130' 40 20 15.58 30.71 7.03 3.40 U20 U20.CIO '"" 164"
3 CaN 0-5' 0 0 12.05 26.37 937 4.54 con 0.00 11"' 234"
3 Cans c..3O' 0 0 13.76 3UB 937 C.54 ".19 0.00 lC", 250"
3 Cans 31.130' 0 0 15.58 66.15 9.37 4.54 60.06 0.00 196'" 2.85"
Sublotal 7,575 6.587 587,146
Tolal ClI1Tml Proposed Monthly Projected RaiulC Toll!
. 01 Rate RerUM Crwn Cun.lde Rat. Feb . J u.ne tIS Rale Rate
Sr. CltllC!n Cans Census (1111192) Rale! Wllte Recycling QI1.I9S) Revenue ChanaC! OI~e
1 Can 0-5' 1014 1014 US 5,89 3.14 1$2 1055 53,489.17 .2K 26"
1 Can c..3O' 124 124 8.89 7.66 3.14 152 12.32 7.636.58 -U" 39"
1 Can 31-130' 121 121 9.66 10.31 3.14 152 14097 P,QS5.18 '" .55"
2 Cans 0-5' 358 179 8.35 11,78 C.71 2.28 18.7'1 16,m.20 CJ" 125"
2 Cans c..30' C4 22 8.89 15.31 C.7J 2.28 22.30 2,4S3.CO m 151"
2 Cans 31.130' C2 21 9.66 20.61 C.71 228 'Z7JJJ 2MlU2 113" 186"
3 Cana o.S 0 0 I.3S 17.67 6.28 3.D4 26.99 0.00 11".. 223"
3 Cans c..30' 0 0 8.119 22.97 6.28 3.D4 32.29 0.00 1_ 263"
3 Cans 31-130' 0 0 9.66 30.92 6.28 3.D4 C024 0.00 220.. 317"
Subtotal 1700 1481 9U13
Tollll R.ldC!nUal 9,278 8,D68 679,479
Tille! Revenue 564,000
Variance llS,479
Page 1 of 3
City of Campbell
rropoMCl SoUd Wule Rata.. of Febnaal)' 1,1_
Scenario 4 . IS" of Cvstomers 5ubtcrlbe lit l-an ServIce, 1 S" 10 2-an SeIYIa; 5,. ClU.... Rale . 2IJ'a of ltapl., RMe;
Reduce July 1, 1996 Rate Incre_
CommerdaJ
Current MonJh\y I"rojedecl
Bin Service Rate Raw ftb -June lIS Rate
Pickups/Week CenauI (1111921 anJ9S) RWlI\ue O\anae
1 1/3 Yards
1 m 59.117 72.111 157,616.16 21.6..
2 32 102.19 125.11 20,0 18.28 21.6..
3 7 145.82 17'7.32 6,206.10 21.6..
4 0 188.81 228.59 0.00 21.6..
5 0 232.12 212.26 0.00 21.6..
6 0 275.05 334046 0.00 21.6..
elltra dump' 0 1652 2D.D9 0.00 21.6..
Saturday dumps 0 18.18 22.n 0.00 21.6..
2 Yards
1 250 82.25 100.02 125,020.00 21.6..
2 66 166.&5 2D2.1I9 66,95357 21.6..
3 24 267.84 325.69 39.0a321 21.6"
4 4 311.73 379.06 7,581.27 21.6"
5 4 384.26 "726 9,36.20 21.6"
6 1 569.36 02.34 3;461.71 21.6"
extra dumpe 0 23.34 28.38 0.00 21.6..
Saturday dumps 0 25.7 31.25 0.00 21.6..
3 Yards
1 227 138.4 t 168.31 191.027.95 21.6"
2 122 242.5 t 291119 17'l1,IIC22 21.6"
3 82 351.53 m.46 175,258.80 21.6"
4 14 483.1 581.18 41,17154 21.6"
5 17 5695 692.51 58,86352 21.6"
6 6 703.12 1501.99 2$,649.82 21.6"
extra dumps 0 38.34 46.62 0.00 21.6"
Saturday dumps 0 42.16 51.27 0.00 21.6"
6 Y lTd.
1 27 239.27 m.lIS 3ll.278.56 21.6..
2 18 437.07 531.48 47,132.94 21.6..
3 6 67U4 824.518 24.7451.49 21.6"
4 2 921.02 1.119.96 11.199.60 21.'"
5 3 1.137.65 1,383.38 20,750.14 21.6"
6 3 1,356.82 1,"9.89 24,141.40 21.6..
extra dumpe 0 74.18 90.20 0.00 21.6"
Saturday dumps 0 81.58 99.20 0.00 21.6"
Subtotal 1348 1,275,702
Can Service
1 33 8.81 10.11 1,767.64 21.6..
2 16 17.62 21.43 1,714.07 21.6"
3 34 26.403 nu 5,4&1.61 21.6"
4 8 35.24 42.15 1,714.07 21.6"
5 . 52.86 64.28 2.511.11 21.6"
., 1 61.67 74,99 374,95 21.6"
9 1 79.29 116.42 Cl2.0I 21.6"
14 1 123.34 149.111 749.91 21.6..
22 I 193.82 23S.6lI 1.178.43 21.6..
259 1 2281.79 2.774.66 tS.I73.28 21.6..
Subtotal ID4 29.889
CO"'D\l'rclal Total 1452 11,30S,591
Page 2 of 3
City of Campbell
Proposed Solid Waste Rates as of February 1, 1995
Scenario 4 - 85% of Customers Subscribe to I-can Service, 15% to 2-can Service;
Sf. Citizen Rate = 2/3's of Regular Rate;
Reduce July 1, 1996 Rate Increase
DOB
Projected
Monthly Rate Feb-June 95 Rate
Census (e) Current Rate (2/3/95) Revenue Change
6 Yard 11 201.00 244.42 2,688.62 21.6%
18 Yard 533 304.00 369.66 197,028.78 21.6%
30 Yard 235 379.00 460.86 108,302.10 21.6%
40 Yard 154 443.00 539.69 82,958.26 21.6%
SUBTOTAL 933 390,977.76
COMPACTOR
10 14 184.20 223.99 3,135.82 21.6%
15 3 276.30 335.98 1,007.94 21.6%
16 22 294.72 358.38 7,884.35 21.6%
20 55 368.40 447.97 24,636,59 21.6%
25 63 460.50 559.97 35,277.94 21.6%
26 65 478.92 582.37 37,853.84 21.6%
28 14 515.76 627.16 8,780.30 21.6%
35 5 644.70 783.96 3,919.78 21.6%
36 43 663.12 806.35 34,673.22 21.6%
45 2 828.90 1,007.94 2,015.88 21.6%
SUBTOTAL 286 159,188
TOTAL DOB 1,219 550,165.76
GRAND TOTAL 2,535,236.00
(e) Annual Census divided by 12 mos. multiplied by 5 mos.
h:gvdcrates(mp)
Page 3 of 3
EXHIBIT B
The City Council for the City of Campbell finds as follows with regard to the rate base
and rates adopted under its franchise with Green Valley Disposal Company:
1. Green Valley Disposal Company submitted total 1993 -1994 budgeted expenses of
$12,518,230.
2. Of the $12,518,230 in budgeted expenses for fiscal year 1993-1994, $20,584 of
administrative expenses was allocable to services performed for the Green Team,
which does not provide service to the City of Campbell.
3. The sum of $3,067 in employee cost is also allocable to services provided for the
Green Team.
4. Approximately $6,974 in advertising and promotional expenses is unnecessary due
to the exclusive nature of Green Valley Disposal Company's franchise.
5. Green Valley Disposal Company expended a represented $141,347 in consultant
fees in connection with the present rate review. No more than $54,010 of these
fees can be attributed to services provided to Green Valley Disposal Company in
connection with the City of Campbell's rate review.
6. Interest on the cost of the performance audit in the amount of $333 should be
added to the fiscal year 1993-1994 expenses submitted by Green Valley.
7. The 1993-1994 expenses submitted by Green Valley understated franchise fees by
$47,874.
8. The total 1993-1994 operating costs for Green Valley Disposal, after considering
the foregoing adjustments, are:
Labor
Operating Cost
Depreciation and Interest
Administrative Costs
$3,960,451
1,642,745
655,024
530,396
9. In addition, Disposal Costs for 1993-1994 were $4,427,815.
10. Franchise fees for 1993-1994 were $1,338,881.
11. The total Adjusted Budget for 1993-1994 is $12,555,312.
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12. The total Projected Budget for Green Valley Disposal Company for the 1994-
1995 fiscal year is $12,941,500, broken out as follows:
Labor
Operating Costs
Depreciation and Interest
Administrative Costs
Disposal Costs
Franchise Fees
$4,038,425
1,700,241
655,024
503,951
4,664,081
1,379,778
13. Of the Projected Budget of $12,941,500, the sum of $1,104,945 is attributable
to areas outside the service areas of Campbell, Los Gatos, Monte Sereno,
Saratoga, and County Area 3.
14. The Projected 1994/95 Budget for the service areas of Campbell, Los Gatos,
Monte Sereno, Saratoga, and County Area 3 is:
Operating Costs
Labor
Operating Costs
Depreciation and Interest
Administrative Costs
$3,700,216
1,550,362
593,489
459,516
Other Costs
Disposal Costs
Franchise Costs
4,270,134
1,262,838
15. The projected operating costs attributable to the City of Campbell are $2,294,990.
16. The projected disposal costs attributable to the City of Campbell are $1,691,002.
17. The projected franchise fees attributable to the City of Campbell are $475,403.
18. Green Valley Disposal Company is not at risk for increases in disposal fees and
franchise fees, which costs are not associated with Green Valley's productivity,
efficiency or quality of service.
19. The Campbell City Council has authorized a base disposal fee at Guadalupe
Landfill of $26.60 per ton.
20. Guadalupe Rubbish Disposal Company, the owner of Guadalupe Landfill, is
owned and operated by the same four stockholders who own Green Valley
Disposal Company.
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21. In the 1994-1995 fiscal year, surcharges of $16.36 per ton will be assessed on the
solid waste over and above the approved disposal fee.
22. At the time Campbell entered its Franchise Agreement with Green Valley in
March of 1983, no surcharges existed on solid waste disposal.
23. The first surcharge on solid waste disposal was not initiated until the 1987-88
Fiscal Year, and the total of all surcharges remained de minimus at less than
$1.00 per ton until the 1990-91 Fiscal Year.
24. In the 1990-1991 fiscal year, the surcharges on disposal fees rose to $5.08 per
ton. In that fiscal year, the City disallowed profits on the increase in disposal
fees.
25. In the 1992-1993 fiscal year, surcharges on disposal of solid waste jumped to
$15.99 per ton; and in the 1994-1995 fiscal year, the surcharges are calculated
to be $16.36 per ton. In fiscal year 1992-1993 fiscal year, the West Valley Cities
applied an average before tax percentage profit from fiscal years 1986-1992 in
order to preclude a windfall on the increase in surcharges.
26. Franchise fees have remained a constant ten percent (10%) during the course of
the franchise.
27. 1994/95 disposal tonnage is anticipated to decline to 108,568 from the four West
Valley cities due to implementation of new recycling and yard waste services.
28. Campbell's share of the disposal tonnage is estimated to be 39,362 tons.
29. Green Valley Disposal Company is an S Corporation.
30. An S Corporation does not pay any Federal taxes, and pays only a one and one-
half percent (1 1/2%) State income tax. The effective tax rate on the
shareholders is thirty-five percent (35 %).
31. The adopted rates result in a pretax operating ratio of 93.8 % .
32. Pretax operating ratio for some 266 refuse companies surveyed by Robert Morris
Associates Refuse Systems for 1993 was 94.6 % .
33. The pretax operating ratios recently allowed by some twelve other California
jurisdictions range from 87 % to 93 %. Of these jurisdictions, the South Bay
Transfer Station Authority most closely resembles Campbell's franchise with
Green Valley Disposal Company in that it has a long term Franchise Agreement,
guarantees the return to its franchisee by a balancing account, and represents
relatively stable communities in San Mateo County.
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34. The South Bay Transfer Station Authority provides a 91 % Pre Tax Operating
Ratio, and excludes profits on disposal fees and franchise fees.
35. The City of Campbell is a relatively low risk, stable community to serve, not
prone to explosive growth or drastic changes in land use.
36. Green Valley Disposal Company has a long term, twenty year exclusive franchise
agreement for solid waste disposal in the City.
37. Green Valley Disposal Company's return is currently assured through use of a
balancing account.
38. Green Valley Disposal Company has not presented any documentation evidencing
that the operating ratio proposed by Hilton, Farnkopf and Hobson would not
provide a fair and reasonable profit.
39. In the twenty-seven (27) Bay Area jurisdictions surveyed, the rate for one can
ranged from $9.10 to $24.05, with an average of $17.71. The rate for two cans
ranged from $12.66 to $38.00, with an average of $28.85. The rates for
unlimited services ranged from $12.05 for weekly service to $23.44 for weekly
servIce.
BASED ON THE FOREGOING FINDINGS, the City Council further finds and
concludes:
1. The proper operating expenses for fiscal year 1994-1995 are: $6,303,583.
2. The appropriate rate base for fiscal year 1994-1995 is $12,628,375.
3. It is inappropriate to provide profits on disposal fee surcharges.
4. The rates adopted by the City Council will provide a five percent (5 %) after-tax
profit on operating costs, franchise fees and disposal costs (excluding surcharges).
5. The profit afforded by the adopted rates provides a just and reasonable rate of
return to the franchisee.
6. The adopted rates are comparable to those of other jurisdictions, and to those
afforded to Green Valley Disposal Company by the County of Santa Clara.
h:GrnValley(mp)
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