SR-503-001-02 (17)
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M. C 1 'f . 'JUN 1 0 1980
onlca, a 1 ornla, May 20, 1980
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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
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level of service. There are ~8,OOO resldential stops, lncluding 19.600 alley
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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.
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JUN 1 't 198D
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To:
Mayor and City Council
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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.
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To: Mayor and City Council
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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.
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To: Mayor and City Council
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~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.
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To: Mayor and Clty Council
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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.
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To: Mayor and Clty Council
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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'
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To. Mayor and City Council
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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
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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
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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
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