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SR-503-001-02 (17) - ~A 1B FtC/3- 00/- Oz q 4- M. C 1 'f . 'JUN 1 0 1980 onlca, a 1 ornla, May 20, 1980 e / 'V u/>t (.:? -/ ; J Santa TO: Mayor and City Council FROM: City Staff SUBJECT: Recommendation for Refuse Rate Increase Introductlon ThlS report presents informatlon regard1ng revenues and expenses for the Clty'S Refuse Collectlon and Disposal actlvitles and recommends the adoptlon of a refuse service rate increase. Background Descrlption of the SerVlces Residential refuse collection and dlsposal serVlce lS provided by the Clty Sanitation D1vlsion of the General Services Department. It provides a high level of service with tWlce weekly collection (except durlng hOliday weeks) for slngle-family residences, and either tWlce weekly or daily collection (six tlmes per week) for multi-family residential unlts, depending on thelr needs. Dally collectlon is crarged at an increased amount for the 1ncreased I level of service. There are ~8,OOO resldential stops, lncluding 19.600 alley i stops and 8,400 curb stops. Commercial/Industrial refuse collectlon is performed In open competition with several prlvate collectors. The C1ty provides service to about 70 percent of the commercial/industrial firms. The several private collectors provide service to the remainder of the firms, This competitive situation encourages efflciency and cost effectlveness on the part of the Clty Servlce as well as the private collectors. SA 88 JUN 1 't 198D - e To: Mayor and City Council -2- May 20, 1980 Service 1S provided by 14 trucks per day, including 11 two-man rear loading trucks serviclng b1ns and contalners in the multi-familYlcommerc1al/industrlal areas, and three one-man slde loadlng trucks serving the slngle-family residen- t1al areas. All workers, except supervisors, have been on the incentlve system since 1974. They may leave work when they finish their route -- except when there is an equlpment breakdown~ in which case all trucks finlsh1ng early must help In collectlng the route where the breakdown occurred. Disposal methods include the operation of a transfer station at the City Yard. This fac111ty was bU11t ln 1960 to replace the inClnerator WhlCh was removed because of air po1lut1on problems. The Council recently awarded a contract to upgrade the statlon. Approximately 200 tons of refuse per day are compacted, loaded, and hauled to the County Mlssion Canyon landfill. The Mlsslon Canyon Slte may be closed in approxlmately three years, In WhlCh case a site in Monterey Park or West Covina wlll be used. Increased costs will be lncurred because of the greatly increased haul distance and resultant increase in fuel consumption and haul time. Progress ln MakJng Productivlty Increases The staff has continually strlved to make changes in collection and dlsposal methods to reduce costs and manpower and provlde for constantly changing serV1ce demands. In additlon, several new types of speclal serVlces are now offered at rates whlch pay for these services. Some of the changes In the last six years have been: 1. The use of one-man trucks in single-family areas. resultlng ln a net reductlon of four collectors. 2. The use of the lncentlve system prevlously descrlbed. - - To: Mayor and City Council - 3 - May 20, 1980 3. The converSlon to an all dlesel fleet of trucks~ resulting 1n less mainte- nance and greater fuel economy at a lower prlce per gallon. 4. The requirement that all apartment/condominlum complexes in excess of 10 unlts be required to have bin serV1ce. resulting in faster pickup. 5. Providing special bin service for homeowners who are remodeling or cleaning house. 6. The conversion to new trucks with faster cycl1ng time (the tlm€ required for compacting withln the truck). 7. The purchase of a second small "bin truck" to haul the b1ns out of the basements up to the alleys, in the multi-family districts. ~uture plans for Col1ectlon and Disposal The staff is studYlng several additlonal plans for changes In the future for collection and disposal. These include the following: 1. Use of mechanized one-man trucks with special containers in the single- family residential areas which wlll result 1n reduction in employee back lnJuries and WhlCh may increase productlvity. 2. Use of on-site compactors at large multl-residential/commercialjindustrial complexes. 3. Use of heuristic routing methods to flnd the theoretically shortest route for each area. (At present there are differencesofoplnion among the collectors as to the shortest Method of cOllectlng each route.) Heurlstlc routing would establish a predetermlned set of rules that, lf followed, provlde the most efficient collection route for each area. 4. Establlshlng a program whereby veteran collectors can be trained and placed in other Jobs in the Clty. The nature of the work of a refuse collector is qUlte physical. This program will encourage refuse collectors to trans- fer to other positlons in the Clty in order to help prevent additlonal physlcal disabilities and to provide productive opportunities for the longer term collectors. Any or all of these programs should lncrease productivity and provide a safer and more efficient operation. - e To: Mayor and City Council -4- ~1ay 20. 1980 F1nancial Status of Refuse Collection and Disposal Operat10ns The present ~efuse rates were adopted on November 14, 1978. DUflng City Councl1 dellberations 1t was noted the increase of $l/month (from S3/month to $4/month for slngle-famlly resldentla1 and slmilar lncreases for multl-family un1ts) waul d be suffi clent "for three or fou~ years." Si nce that time, 1 t has become deslrable to lnclude street cleanlng as part of the refuse service. It is a closely related functlon both 1n operatlon and purpose. This change wlll reduce General Fund expendltures by approxlmately $300,000 and increase Refuse expenditures by the same amount. The City1s new cost allocat1on system wlll be put in effect wlth the new budget. ThlS plan allocated workers' compensation and general 11ablllty costs to each enterprise department based on actual costs incurred instead of a per employee basls as prevlously used. ThlS change 1ncreases workers' compensation costs from $10,000 to $184,636 and general llability costs from $25,000 to $78,533. A portion of the above increase lS due to the fact the estimated future cost for workers' compensation will be funded in the self-lnsurance fund for the 80/81 year. Past practice has been to reserve approximately 50 percent of all outstanding future workers' compensation costs. This one-tlme payment of nearly $100,000 (the proportlon allocated to refuse and street sweeplng) will be a catch up payment for this year only and will not be repeated in subsequent years. Also, the new allocation system adds $171,800 of indlrect adminlstratlve overhead costs to the refuse operatlon that were not prevlously lncluded. . e To: Mayor and Clty Council - 5 - May 20 ~ 1980 The rate of lncrease of certaln operatlng costs such as fuel and replace- ment parts for refuse equlpment has far exceeded the 7 percent estlmated infla- tlon factor that was used ln projectlng costs In 1978. Diesel fuel alone has gone up by more than 300%. If the refuse collection and disposal operation, comblned with street cleaning, 15 to be self sustain1ng, a rate increase 15 requlred. (A smaller rate increase wlll be required even if street cleaning 15 not included.) A proJec- tion of estlmated costs and revenues for refuse collection and disposal (including street sweeplng) is listed below. Total proJected costs uS1ng prevlous budgetary methods . . . . . . . . Increased Workers' Compensatlon cost $ 1~850,088 184~636 78,533 308,406 171,800 $ 2,593,463 2,100~000 ($ 493,463) Increased liabil1ty costs. . . . Cost related to street clean1ng. Indirect admlnistrative (based on new cost allocatlon formula). . TOTAL PROJECTED COSTS FOR 1980/81 TOTAL PROJECTED REVENUES (Wlth Current Rates) PROJECTED DEFICIT Proposed Rate Increase The proposed rate increase lS as follows: Type of Service $1 ngl e Family Amount of Increase Apartment Units Sl.00 per month $ .75 per month Commerclal Accounts 25% per month Exhibit A lndicates the revenues that wlll be generated from the proposed rate lncrease. - e To: Mayor and Clty Council - 6 - May 20, 1980 Ratlonale for Rate Increase It was determined that single-family dwelllngs recelve more d1rect benefit from street cleaning than individual apartment units. Therefore~ a larger per unit charge lS placed on slngle-family unlts. Also, the maJority of our commerclal accounts receive elther SlX day per week or three day per week street sweeplng service. Therefore, although a 25 percent lncrease represents a higher dollar amount of increase than residential unlts, the commerclal accounts rece1ve a higher level of serVlce. ApproXlmately 40 percent of the total increase lS for refuse collection and disposal costs and the remalning 60 perdent for street sweeping. ThlS rate structure, WhlCh wlll generate a 25 percent lncrease in annual reve- nues wll1 produce $560,000 of additlonal revenue. This level of revenue will cover the projected $493,463 deflcit 1n the Refuse/Street Cleaning budget and provlde a small surplus to be available for contlngencies or mltigate future rate increases. Decision Alternatives 1. Council may approve the concept of comblning Street Cleanlng with Refuse Collectlon and Disposal lnto a single enterprise budget. ThlS actlon plus the lnclusion of the other lncreased costs shown on page 5 will require a rate lncrease as described above of approximately 25 percent. ThlS actlon will release approximately $493,000 for General Fund purposes 2. Counc11 may elect not to flnance street cleaning serVlces with a serVlce fee. ThlS declsion wlll require the contlnuation of General Fund expendl- tures for street cleaning services. The increased costs for Workers' . -- To. Mayor and City Council - 7 - May 20, 1980 Compensation, liablllty costs, and admlnlstrative overhead for the refuse operation will require a rate increase of at least 10 percent. See Exhlbit B. Recommenda ti on Since it is a Clty goal to attempt to lmplement user fees for serVlces, staff recommends that Councl1 approve Alternatlve No.1. ThlS actlon wlll consoll- date related services and will implement a reasonable user fee that will cover all costs. Prepared by: Stan Scholl Nell Mi 11 er Attachments: Exhlbit A Exhlbit B /gw . - EXHIBIT A PROPOSED RATE INCREASE TO INCLUDE STREET SWEEPING TYPE OF SERVICE PRESENT PROPOSED ADDITIONAL MONTHLY MONTHLY ANNUAL RATE RATE REVENUE Slngle Family S 4.00 S 5.00 $ 92,064 Apartment Units (2-50 Units) 2.50 3.25 313 ,290 Apartment UOl ts (51-100 Units) 2.25 3.00 5,598 Apartment Units (100 or more) 2.00 2.75 23,022 1 cu. yd. Commerclal blns 2/wk. 10.00 12.50 870 1 cu. yd. Commercial bins 6/wk. 30.00 37.50 180 2 cu. yd. Commerclal bins 2/wk. 20.00 25.00 26.280 2 cu. yd. COl1l1lerclal blns 6/wk. 60.00 75.00 26.100 3 cu. yd. Commerclal blns 2/wk. 30.00 37.50 7,560 3 cu. yd. Commerclal bins 6/wk. 90.00 112.50 8,100 Commerclal Accounts wjo bins per ~ cu. yd. - 2jwk. 4.00 5.00 13.536 Commercial Accounts w/o bins per ~ cu. yd. - 6/wk. 12.00 15.00 12,168 Accounts not using Clty Refuse service 1.00 2.00 12,232 Other Refuse serVlces (Non-commerclal bins, bln roll-out charges, miscel- laneous services) Various 1O~~ increase 20.827 TOTAL ADDITIONAL ANNUAL REVENUE $561.827 . - EXHIBIT B PROPOSED RATE INCREASE WITHOUT STREET CLEANING TYPE OF SERVICE PRESENT ~1ONTHL Y RATE PROPOSED MONTHLY RATE ADDITIONAL ANNUAL REVENUE Single FamllY $ 4.00 $ 4.50 $ 46,032 Apartment Uni ts (2-50 units) 2.50 2.75 104,430 Apartment Unl ts (51-100 Unl ts) 2.25 2.50 1 ,866 Apartment Uni ts (100 or more) 2.00 2.25 7,674 1 cu. yd. Commercial bins 2/1'Jk. 10.00 11 00 348 cu. yd. Commercial bins 6/wk. 30.00 33.00 72 2 cu. yd. Commercial blns 2/wk. 20.00 22.00 10,512 2 cu. yd. Commercial bins 6hJk. 60.00 66.00 10,440 3 cu. yd. Commercial blns 2/wk. 30.00 33.00 3,024 3 cu. yd. Corrunerclal bws 6lwk. 90.00 99.00 3,240 Commerclal Accounts w/o blns per ~ cu. yd. - 2jwk. 4.00 4.50 6 ,768 Commerclal Accounts w/o blns per ~ cu. yd. - 6/wk. 12.00 13.50 6,084 Accounts not using City Refuse service 1.00 1.25 3,063 Other Refuse services (Non-commerclal bins, bin roll-out charges, mlscel- 1aneous services) Van OU5 10% increas 20,827 TOTAL ADDITIONAL ANNUAL REVENUE I $ 224,380 r