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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: DIRECTOR OF PUBLIC WORKS
DATE: APRIL 20, 2004
SUBJECT: RESIDENTIAL SOLID WASTE AND RECYCLING RATE ADJUSTMENTS FOR
UNIVERSAL WASTE SYSTEMS, INC. dba IVY RUBBISH DISPOSAL
FOR FY 04-05
Staff Coordinator: Lauren Ramezani, Sr. Administrative Analyst
$8 per household) from the City's Waste Reduction fund. This is to offset 50% of the rate increase as a "thank you" to customers for the City meeting the State's 50% diversion mandate.
In February 2004, the City council approved the assignment of Ivy Rubbish Disposal's residential solid waste and recycling hauling contract to Universal Waste Systems, Inc. (UWS) dba Ivy Rubbish Disposal. UWS and Waste Management of Los Angeles are currently in the fourth year of their seven-year exclusive residential agreements that have been in effect since July 2000. Per the terms of the agreements, the City must be notified of annual adjustments by April 1st for possible rate changes to be effective each July 1st. A Notice of this Public Hearing was published in the Palos Verdes Peninsula News on April 8 and April 15, 2004.
RATE INCREASE: UWS services approximately 600 customers in the Portuguese Bend Community and the area southerly of PVDS. Per their agreement with the City, UWS is eligible for a maximum rate increase of 3.0% for FY 04-05. The maximum amount of the increase is spelled out in the agreement and is a function of the percentage change in the disposal tipping fee per ton, the percentage change in the Producer Price Index (PPI) and UWS's actual service revenue and disposal expense. Staff finds the calculations accurate and per the agreement's formula. This requested rate adjustment is the second rate increase since July 2000. This rate increase is approximately $1.33 a month, or an annual increase of $16 for the majority of customers (backyard twice a week).
Rate calculations for UWS's most popular services are as follows:
COLLECTOR FEE: UWS currently pays the City an annual Collector Fee of $12,324. The agreement also allows the Collector Fee to increase by the same percentage as rate increases. If staff's recommendations are approved, the City's Collector Fee will increase from $12,324 to $12,694 (or by $370) in FY 04-05. Approximately 56% of the collector fee will be deposited in the General Fund- various programs ($7,109), 12% in the Beautification Fund ($1,523), and 32% in General Fund- Stormwater Quality Program ($4,062). The City Council approved this Collector Fee distribution in May 2003.
CREDIT TO CUSTOMERS: In February 2004, the City submitted its 2002 annual AB 939 report with a reported diversion rate of 51%. This is the first year the City met and exceeded the State's 50% diversion mandate. The City's projected FY 03-04 ending balance for Waste Reduction fund is $591,500. The Waste Reduction fund (or AB 939 fund) is an accumulation of AB 939 fees paid to the City by residential and commercial customers. This fund is restricted and its use is limited to activities and expenses related to implementing various waste reduction, recycling and reuse programs, and public education. Staff recommends the issuance of a one-time credit as a "thank you" to residents for recycling and helping the City reach this milestone. The one-time credit will total approximately $3,390 (or about $8 per household) from the City's Waste Reduction funds and will offset 50% of the rate increase. This recycling credit is an eligible AB 939 expense.
The maximum monthly rates will not be affected by this credit. i.e. UWS customers will receive an invoice with the adopted FY 04-05 monthly rates. The invoice will then have an additional line item showing a "One-time Recycling Credit". That credit will reduce the total due and customers will save money. The City will then issue a check and reimburse UWS for the credit given customers.
SENIOR CITIZEN DISCOUNT: Ivy Rubbish offered a 5% senior citizen discount while Waste Management offers a 10% discount. UWS has agreed to increase the senior citizen discount to 10% starting July 1, 2004. Customers will be notified of this change in their upcoming billing.
Approving the staff recommendations will increase the maximum residential rate for UWS customers. The maximum monthly rates for FY 04-05 will increase by 3.0%. This will be the second rate increase for UWS customers since July 2000. The increase will be effective July 1, 2004. The FY 04-05 City Collector Fee will increase by $370 and will be distributed among several City funds similar to Waste Management of Los Angeles. Customers will receive a one-time credit equaling 50% of their rate increase as a "thank you" for their recycling efforts and helping the City meet and exceed its' 50% diversion mandate. The City's Waste Reduction fund will fund the credit totaling approximately $3,390. Customers will be entitled to a 10% senior citizen discount.
Approving the staff recommendations will:
The City's projected Waste Reduction Fund FY 04-05 year-end balance is $591,500.
Dean E. Allison, Director of Public Works
Les Evans, City Manager
RATE ADJUSTMENT FORMULA EXPLANATION
The adjustment is based on a formula involving these factors: