HomeMy WebLinkAboutMinutes - November 24, 1987CITY COUNCIL, CITY OF LODI
CITY HALL COUNCIL CHAMBERS
TUESDAY, NOVEMBER 24, 1987
7:00 A.M.
ADJOURNED MEETING
ROLL CALL
Present: Council Members - Hinchman, Pinkerton,
Reid, Snider and Olson (Mayor)
Absent: Council Members - None
Also Present: City Manager Peterson, Assistant City
Manager Glenn, Finance Director Holm, City
Attorney Stein, and City Clerk Reimche
REFUSE RATE
City Manager Peterson advised the Council that early last
STUDY
year the County of San Joaquin advised all haulers and
agencies in the County that it would be uniformly imposing
CC -22(b)
a $2.00 per cubic yard gate fee on all refuse brought to
CC -54
the Harney Lane Sanitary Landfill. The $2.00 charge went
into effect for the City of Lodi industrial customers in
July, 1985. At the request of the City Council in the
spring of last year, the County agreed to delay the
imposition of the $2.00 gate fee for the commercial and
residential customers in the City of Lodi until January 1,
1987. Since then the gate fee has been increased to $2.45
per cubic yard effective September 1, 1987. The reason for
the request was to allow the City time to conduct an
in-depth evaluation of the City's refuse service and rate
structure. On the staff recommendation, and with Mr.
Vaccarezza in agreement, the City retained the firm of
Eljumaily-Butler Associates, of Santa Rosa, recognized
experts in the field of waste management, to perform this
review and evaluation. The project leader was Mr. Duane
Butler, a senior partner, well respected in this
specialized field. The firm came highly recommended. This
undertaking was a ponderous one, and as a result, extremely
frustrating to all those involved. The assignment was not
an easy one and the development of the necessary
information was very time consuming. The report was
distributed to the City Council earlier this year.
The purpose of this meeting is to provide the City Council
with an opportunity to discuss policy issues and of the
various elements that go into development of a rate
structure. A number of policy items will have to be
addressed in the process. Among these are:
Do we bring the industrial community under the franchise?
(at the present time it is not)
There are advantages and disadvantages to this action. On
the plus side is the fact it gives the City Council greater
flexibility in setting the rate schedule throughout the
residential, commercial and industrial communities now and
in the years to come. It also provides uniformity of
service and prevents "rate wars" in that segment of our
community. The down side is that it eliminates the freedom
of choice of hauler for the industrial segment. But that
freedom does not now exist in the residential and
commercial segments. The matter of reusable materials and
by-products will also have to be addressed.
What should be the term of the franchise? Five years?
Ten? Twenty? Should it be a rolling seven-year
franchise with the ability to extend year -by -year to a
maximum of 15 years?
J O
Continued November 24, 1987
The advantages of a shorter franchise period is that it
gives the City Council the opportunity to review the refuse
operation at more frequent intervals and has a tendency to
hold any hauler more accountable for his operation. The
disadvantage is that it does not foster the kind of
stability one would like to see in this type of operation.
Obviously, the reverse can be said of the longer franchise
period. The stability is there, but is it in the best
interest of the City and its citizens to enter into very
long-term commitments? Of course, contracts can always be
terminated for cause, but that is usually a laborious and
complex legal undertaking. The consultant's report
recommends a rolling seven-year Franchise.
Should the residential rates be partially underwritten
by commercial and/or industrial service?
If there is to be some support for the residential rate,
what should be the level of that support?
Should we continue with rear yard service (current
service levels) or should we consider the implementation of
mandatory curbside automated or semi -automated service?
It is easy to look at "the going rate" in other communities
in the area and establish a rate structure based on that
approach. In some cities its done primarily in that
fashion and that is not necessarily all bad. In fact, when
all is said and done, there must be some consideration for
what will be acceptable to the community, sophisticated
formulae notwithstanding. However, the various components
of the rate structure will vary from one city to another
and a direct comparison can be misleading.
For the City Council's information, the following rate
information is presented:
Residential Refuse (one -can service)
1981 $3.85
1982 4.05 + 5.2%
1983 4.45 + 9.9%
1984 4.87 + 9.4% -
The current rate for residential refuse (one -can service)
is that which was established by the City Council in 1984.
It should be noted that the rate for a commercial one -yard
bin was adjusted during the years noted above at
approximately the same percentages.
City Manager Peterson reiterated that the purpose of this
meeting is to review the overall operation and to devote
some time to the consideration of what are key policy
issues.
REIMBURSEMENT OF DUMP FEES FROM CITY OF LODI
Month Amount
January 1987 $26,854.00
February 1987 $25,110.00
March 1987 $27,136.00
April 1987 $29,474.00
May 1987 $28,168.00
Continued November 24, 1987
June 1987 $28,344.00
July 1987 $28,992.00
August 1987 $25,270.00
September 1987 $32,626.65
October 1987 $34,175.05
Total $286,149.70
Policy Items
The following are policy items which reflect on the
recommendations contained in this report.
1. Execution of the draft Franchise Agreement, provided
separately, brings industrial waste disposal under the rate
setting aegis of the City.
2. The draft Franchise Agreement provides for a 7 -year
rolling franchise rather than for a set number of years,
with the ability to extend, year -by -year, for a maximum of
15 years.
3. Decide whether residential rates should be partially
underwritten by commercial and/or industrial service.
4. If the decision is to provide support to the
residential rates, the level of support must be selected,
and the degree of support to be provided by other users
must be determined.
5. A determination should be made concerning the
continuation of rear yard service (current service levels)
or whether mandatory curbside automated service is to be
selected.
RECOMMENDATIONS
Subject to the policy decisions which effect the matters
discussed in this report, the following is recommended:
1. Amendments to the municipal code be adopted enabling
the execution of a Franchise Agreement, and enabling the
City Council to adopt fees by resolution. A draft
amendment has been provided separately.
2. Execute a Franchise Agreement with Lodi Sanitary City
Disposal, Inc., to include residential, commercial and
industrial service. A draft agreement has been provided
separately.
3. Adopt per can rates at a selected level of contractor
profit before taxes. Rates may either be self-supporting
or receive support from elsewhere within the system. See
Table 2.
4. As an alternative, move to a flat rate of $9.50 per
month for mandatory curbside wastewheeier service.
Requires rate support. See Table 1.
5. Adopt commercial rates with the appropriate support of
the residential service. (Example is 10% Contractor's
profit before taxes.)
3
Continued November 24, 1987
6. Adopt industrial rates with the appropriate support of
the residential service. (Example is 10% = Contractor's
profit before taxes.)
TABLE 1
RECOMMENDED RESIDENTIAL RATES PER MONTH
Rear yard service
Recommended: Individual can rates. No rate support.
1 can $ 9.07 per month
2 cans $11.87 per month
3 cans $14.68 per month
Curbside wastewheeler service
Recommended: Flat rate, 90 gallon wastewheeler, $9.50 per
month. Requires rate support.
SUMMARY
The following is an evaluation of the several activities
which, together, comprise the solid waste collection and
transportation network for the City of Lodi. The
evaluation took the form of an operational survey of
residential, commercial and industrial waste collection,
review of the transfer operation, and of the wood fuel
composting and recycling operation. Rates for service
based on the Contractor's 1986-87 and 1987-88 budgets have
been calculated based on the costs of operation, profit,
disposal charge and municipal franchise fee.
Rates for each type of service are examined and discussed.
The report also contains a draft Franchise Agreement and a
draft update of the City Code which have already been
provided. The Agreement suggests a franchise which can be
extended year -by -year, thereby resulting in a "rolling"
multi-year agreement. The franchise may be terminated for
cause, or allowed to expire in a set period.
A key element of the recommendations for 1987-88 is the
inclusion of industrial refuse service in the franchise.
Commercial container rental is' also included in the
recommended 1987-88 rates. This would bring all solid
waste activities under franchise. The Draft Agreement
calls for all rates to be reviewed on a periodic basis with
intervening adjustments based on a cost of living factor.
Residential rates have been prepared for a continuation of
rear yard service, and alternatively, for curbside
wastewheelers.
Rates have also been computed for commercial container
collection service including container rental, and for
collection of industrial roll -off bins. The residential
rate may include support from other users.
It has not been recommended that the public support
continuation of either the composting project or the wood
fuel reclamation operation. The Contractor has terminated
both of these operations and does not plan to undertake
them unless economically and practically feasible. The
recycling center is proposed to stay in operation.
20
Continued November 24, 1987
All rates have been computed to indicate the amounts
required to cover actual costs, and the impact of 8%
franchise fees (15% as current, less 7% paid to the
County), various rates of profit, and $2.00 per cubic yard
dump fee (replaces the 7% formerly remitted to the County).
If per -can residential rates were adopted without support
from elsewhere in the system, the unsupported rates would
be $9.07, $11.87 and $14.68 respectively for 1, 2 and 3 can
service at a contractor's profit margin of 10% before taxes.
A curbside wastewheeler service is also examined.
Unsupported rates of $14.00 per month are justified at 105
profit before taxes. The report describes one sample of a
supported rate, $9.50 per month, and the resultant
commercial and industrial contributions which would be
necessary.
Commercial rates are recommended to about double including
provision for $2.00 per cubic yard dump fee at the landfill
and container rental. Rates vary based on the number of
containers and the frequency of collection.
It is likely that some policy decisions will be required to
establish allowable contractor's profit, type of
residential service to be rendered, and the amount and
manner of provision of any infusion of funds from other
users to help support residential rates. Sample
calculations are provided which, together with the
information contained in the various tables, can be used to
determine alternative rates to the specific examples shown.
A very lengthy discussion followed with questions being
directed to Staff and to Mr. Dave Vaccarezza of Sanitary
City Disposal Company.
Staff was directed to work up various scenarios including
proposed appropriate rate structures for Council review.
No formal action was taken by the Council on the matter.
ADJOURNMENT The meeting was adjourned at approximately 9:30 a.m. to
7:00 a.m. Wednesday, November .Z5, 1987.
ATTEST:
Alice M. Reimche
City Clerk