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HomeMy WebLinkAboutBOARD MINUTES 12-17-92 220 MINUTES OF THE REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON DECEMBER 17, 1992 The Secretary of the District administered the Oath of Office to William C. Dalton, Barbara D. Hockett, and Mario M. Menesini who were elected to the Board of Directors at the election held on November 3, 1992. At the conclusion of the ceremony the Secretary was joined by Board Members and District staff in congratulating Member Dalton on his reelection to the Board of Directors and welcoming newly elected Board Members Hockett and Menesini. The District Board of the Central Contra Costa Sanitary District convened in regular session at its regular place of meeting, 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 3 p.m. on December 17, 1992. President Pro Tem Dalton called the meeting to order and requested that the Secretary call roll. 2. ROLL CALL PRESENT: Members: Menesini, Clausen, Hockett, Rainey, Dalton ABSENT: Members: None a. ELECTION OF DISTRICT BOARD PRESIDENT AND PRESIDENT PRO TEM It was moved by Member Hockett and seconded by Member Menesini, that Member Dalton be elected to serve as President Pro Tem of the District Board of Directors for 1993. Member Dalton was elected by unanimous acclamation. It was moved by Member Rainey and seconded by Member Menesini, that Member Clausen be elected to serve as President of the District Board of Directors for 1993. Member Clausen was elected by unanimous acclamation. President Pro Tem Dalton turned the meeting over to newly elected President Clausen. 3. PUBLIC COMMENTS None 4. AWARDS AND COMMENDATIONS ADOPT RESOLUTION COMMENDING DIRECTOR JOSEPH M. STARITA FOR HIS OUTSTANDING SERVICE TO CENTRAL CONTRA COSTA SANITARY DISTRICT a. ADOPT RESOLUTION COMMENDING DIRECTOR PARKE L. BONEYSTEELE FOR HIS OUTSTANDING SERVICE TO CENTRAL CONTRA COSTA SANITARY DISTRICT b. It was moved by Member Dalton and seconded by Member Rainey, that Resolution No. 92-092 and Resolution No. 92-093 be adopted commending Directors Joseph M. Starita and Parke L. Boneysteele for their outstanding service to Central Contra Costa Sanitary District. Motion unanimously approved on the following roll call vote: AYES: Members: Dalton, Rainey, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None 12 17 92 221 5. CONSENT CALENDAR It was moved by Member Rainey and seconded by Member Dalton, that the Consent Calendar, consisting of Items a. through f., be approved as recommended, resolutions adopted as appropriate, and recordings duly authorized. a. Resolution No. 92-094 accepting work and Offer of Dedication from Peter Cole Jensen, et ux, Subdivision No. 7331, Job No. 4833, Parcel I, was adopted and recording was authorized. Motion unanimously approved on the following vote: AYES: Members: Rainey, Dalton, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None b. Grant of Easement from Contra Costa County, Job 4888, Parcel Nos. 2, 3, and 4, was approved, the President of the District Board of Directors and the Secretary of the District were authorized to execute said Grant of Easement, authorization was given that the Grant of Easement not be recorded, and Resolution No. 92-095 was adopted to that effect. Motion unanimously approved on the following vote: AYES: Members: Rainey, Dalton, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None c. Grant of Easement from the McPeak Family, Job 1541, was approved, the President of the District Board of Directors and the Secretary of the District were authorized to execute and records said Grant of Easement, and Resolution No. 92-096 was adopted to that effect. Motion unanimously approved on the following vote: AYES: Members: Rainey, Dalton, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None d. Resolution No. 92-097, a Resolution of Application for the annexation of ten separate areas to Central Contra Costa Sanitary District under the title of District Annexation 124, was adopted. Motion unanimously approved on the following vote: AYES: Members: Rainey, Dalton, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None e. Quitclaim Deed to Mr. Stephen A. Dunning, et ux, Job Nos. 2609 and 4476, Lafayette area, was approved, the President of the District Board of Directors and the Secretary of the District were authorized to execute and record said Quitclaim Deed, and Resolution No. 92-098 was adopted to that effect. Motion unanimously approved on the following vote: 12 17 9~ 222 AYES: Members: Rainey, Dalton, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None f. A Leave of Absence Without Pay was authorized for Ruth Bennett, Engineering Applications Technician II, effective December 2, 1992 through March 31, 1993. Motion unanimously approved on the following vote: AYES: Members: Rainey, Dalton, Menesini, Hockett, Clausen NOES: Members: None ABSENT: Members: None 6. HEARINGS a. CONDUCT PUBLIC HEARINGS TO CONSIDER THE APPLICATIONS FOR REFUSE COLLECTION RATE INCREASES SUBMITTED BY VALLEY WASTE MANAGEMENT AND ORINDA-MORAGA DISPOSAL SERVICE. INC. EFFECTIVE JANUARY 1. 1993 Mr. Roger J. Dolan, General Manager-Chief Engineer, briefly explained the refuse collection rate-setting process and indicated that a workshop was conducted on December 3, 1992. Mr. Dolan described new environmental regulations impacting solid waste collection rates. The cost of landfill disposal is going up both because of environmental costs and increased fees. Recycling, green waste composting, household hazardous waste, and home composting programs implemented to comply with new state regulations have increased costs. The proliferation of bureaucracies responsible for solid waste regulatory and planning activities has increased, multiplying costs. Finally, the present state of the economy has resulted in diminished construction and commercial drop box use and the recycling program has allowed many residential customers to decrease the number of cans. Both of these factors have resulted in a decline in revenues. Mr. Dolan introduced Mr. Paul Morsen, Deputy General Manager, who described the refuse collection and disposal process and costs from 1984 through 1992. The process has become more complex and costs have escalated from 1984 when the total one-can residential rate was $8.50 to 1992 when the one-can residential rate is $18.30. Mr. Morsen summarized extraordinary increases in garbage costs as follows: 1 ) Landfill disposal-related costs for environmental controls, royalties/finder fees, allowed profit, and transfer costs; 2) Waste diversion-related costs for recycling, green waste, and household hazardous waste; 3) State-mandated costs for preparation of household hazardous waste, source reduction and recycling plans; and 4) Local fees including Contra Costa County and Central Contra Costa Sanitary District fees. Mr. Walter N. Funasaki, Finance Officer, stated that Valley Waste Management (Valley) and Orinda-Moraga Disposal Service, Inc. (Orinda-Moraga) have filed timely rate applications for the 1993 calendar year. Copies of the rate applications and staff analyses were distributed to the affected cities of Orinda and Lafayette and towns of Danville and Moraga with requests that City and Town Council comments be provided for Board consideration at today's public hearings. Mr. Funasaki reviewed the issues common to both rate applications; namely, disposal expense, the Acme landfill closure cost assessment, uniform refuse collection rates, and the revenue and expense balancing account. 12 17 92 223 Mr. Funasaki stated that disposal expense is currently the largest single operating expense for refuse collectors operating in the County. Mr. Funasaki summarized the disposal expense for each collector by tonnage, disposal facility, and cost per ton. On November 24, 1992, the Board of Supervisors reduced the Acme Interim Transfer Station fee from $77.07 per ton to $75.97 per ton effective November 1, 1992. All of the charts used in Mr. Funasaki's presentation reflect the lower transfer station fee. Contra Costa County fees comprise 20 percent of the transfer station fee and are projected to be $5.3 million in 1993. In the last rate-setting, the Board of Directors was dissatisfied with the County documentation for the County fees included in the interim transfer station fee and so set the collection rates for 1 80 days on an interim basis, and the refuse collectors were directed to seek alternative disposal facilities. Mr. Funasaki stated that the County has discontinued its efforts to assess Acme landfill closure and post closure costs against the refuse collectors because the necessary agreements could not be obtained. No provision was included in the District staff analyses for the closure and post closure assessments. On December 5, 1991, a civil suit was filed by Acme against the County, franchising jurisdictions (including Central Contra Costa Sanitary District), refuse collectors, and commercial companies to close the hazardous waste section of the Acme Landfill. Legal expenses related to the lawsuit were claimed by Valley and Orinda-Moraga in 1992, and major legal expenses are projected for 1993 by both companies. In the 1990-1991 rate setting, the Board implemented a phased restructuring to achieve uniform residential refuse collection rates over a three-year period. The final achievement of uniform automated collection rates will not occur until this rate-setting process is concluded. A significant shortfall in 1992 revenues was experienced by both collectors, as customers decreased their numbers of containers. The revenue and expense balancing account was implemented during the last rate-setting process. The difference between the actual and forecasted operating income is carried forward in setting the following year's rates, final adjustment is made to the balancing account based on audited financial statements in the year following. The balancing account provides a disincentive to the collector to overestimate expenses and underestimate revenues. Significant shortfalls in revenues in 1992 have produced large deficits in the balancing accounts for both collectors. The application of the entire deficit to the 1993 revenue requirement will require a major increase in collection rates. Application of the balancing account deficit over two years to the 1993 and 1994 revenue requirements was presented for Board consideration. Mr. Funasaki proceeded to review the Valley Waste Management rate application. Valley applied for a 22.91 percent increase in its service area, excluding the City of Lafayette, and a 45.05 percent increase in the City of Lafayette. As the City of Lafayette declined to participate in the automated residential curbside collection program implemented in the rest of the Valley service area, it was necessary to establish the City as a separate rate- setting entity with a separate service level and schedule of collection rates. A significant rate increase resulted as expected. Mr. Funasaki stated that Valley has requested that the drop box rates be restructured, since disposal expense now exceeds drop box rate for certain container sizes. Mr. Funasaki stated that Valley has requested that the allowable profit be calculated by return to the operating ratio method used by the District two years ago. Staff believes that the current method provides adequate profit and reduces the incentive to distort forecasted operating results. Mr. Funasaki stated that Valley has claimed $275,000 in intercompany charges in the 1993 rate application for services the company obtained from its corporate and regional offices. This Board has required, in the absence of supportable documentation, measurable offsetting expense reductions each time the refuse collector requests intercompany charges. The collector claims savings due to discounts in capital purchases, reduced depreciation expenses, and reduction in insurance expenses. In the rate adjustment calculation, District staff has computed rate increases both including, and excluding, the $275,000 as an allowable expense. District staff recommends that it would be appropriate to include intercompany charges in the amount of $250,000, or 12 17 92 224 perhaps slightly less than that amount. At President Clausen's request, Mr. Funasaki described the study commissioned by the Alameda County Joint Refuse Rate Review Committee and joined by the Cities of San Ramon and Walnut Creek and the District. The study was conducted by Price Waterhouse to assess the reasonableness of intercompany charges included in the rate application of another subsidiary of Waste Management, Inc. The opinion of Price Waterhouse was qualified but the consultant found that approximately 75 percent of the intercompany charges was supportable. Mr. Funasaki stated that 7,400 residential customers successfully completed the automated residential curbside collection pilot program in 1991 and the Board authorized full-scale implementation, except in Lafayette, in 1992. Implementation was completed last month. The $9.90 favorable rate at Waste Fibre Recovery was limited to the pilot area and did not accrue to the expanded area. An issue before this Board is whether nonautomated separate green waste collection should be implemented in the City of Lafayette. By the year 1995, approximately 60 percent of the green waste must be com posted to meet diversion requirements mandated by Assembly Bill 939 for 25 percent waste diversion. As a result of the expanded automated program, rear end loader trucks are now available that can be used in Lafayette. Were the decision to be made in 1994- 1995, the cost for the trucks would undoubtedly be higher. In October 1992, Valley advised the Board there were customers in difficult-to-access areas that were not being charged the rate for such service. The Board directed Valley to notify those customers and draft letters have been included in the agenda packet for consideration by the Board. Mr. Funasaki reviewed the rate adjustment calculations, the computations of allowable profit, and the Capital Use Charge calculations both including, and excluding, the City of Lafayette. Mr. Funasaki stated that the interest rate used in the Capital Use Charge calculations is the Ten-Year High Quality Corporate Bond Rate, a decision which was agreed upon between the District and Valley. Mr. Funasaki reviewed the decision points for the Board for the January 1, 1993 rate-setting for Valley Waste Management as follows: 10) 11 ) 12 1 ) If a mid-year disposal fee increase, or decrease, occurs in 1993, determine whether a mid-year collection rate adjustment should be made. 2) Determine the allowability of the Contra Costa County fees included in the disposal fee. 3) Direct that continued efforts be made by Valley to obtain alternative disposal sites. 4) Allow collection of legal expense related to the Acme lawsuit on an impound basis. 5) Determine whether the balancing account should be fully applied in 1993, or applied equally in 1993 and 1 994. 6) Determine whether intercompany charges of $275,000 should be allowed, or disallowed, in whole or in part. 7) Consider Valley's request to index intercompany charges using an annual inflation rate. 8) Implement nonautomated separate green waste collection in the City of Lafayette. 9) Deny request to restructure drop box rates, increasing drop box rates by the across-the-board increase. Retain the present rate-setting allowable profit calculation methodology, denying the request to return to the operating ratio methodolo.gy. Approve issuance of the draft letters for difficult-to-access customers. 17 92 12) 13) 225 Determine whether the Quality of Service modification factor of 1.00 is appropriate. Determine whether the Cost of Service modification factor of 1 .00 is appropriate. In response to a question from Member Rainey, Mr. Funasaki stated that the matter of whether to pay legal fees for the defense of the Acme lawsuit from the impound account, and, if so, how much, has yet to be determined. District staff would recommend that the Board approve the concept; and when more information is available, make a determination with regard to the procedure for approval of release of funds. Discussion followed concerning the percentage of disposal cost that is applicable to transfer, and the viability of incineration and cogeneration as an alternative to landfill disposal. At 4:48 p.m., President Clausen opened the public hearing to receive public comments regarding the application for increase in refuse collection rates submitted by Valley Waste Management. President Clausen noted receipt of the following correspondence and written comments: 10) 11 ) 12) 13) 14) 15) 16) 17) 18) 19) 20) 1 ) Mr. Robert F. D. Adams, City Manager of the City of Lafayette, dated October 16, 1992. 2) Mr. Mike Shimansky, Mayor of the Town of Danville, dated December 16, 1992. 3) Ms. Patricia M. Course, Danville, dated December 7, 1992. 4) Mrs. Carol Dana, Walnut Creek, dated November 27, 1992. 5) Mr. John R. Douglas, Danville, dated November 24, 1992. 6) Mrs. Bernice M. Ely, Lafayette, dated November 24, 1992. 7) Mr. Roger Jackson Evans, Jr., Danville, dated December 2, 1992. 8) 9) Mrs. E. B. Farhart, Danville, dated December 1, 1992. Mr. J.R. "Russ" Guild, Lafayette, dated December 4, 1992. Mr. Norman T.R. Heathorn, Danville, dated December 4, 1992. Ms. Cynthia Henmann, dated November 28, 1992. Mr. Fred Jaksche, Lafayette, dated December 4, 1992. Mr. and Mrs. Warren Marshall, Lafayette, dated December 1, 1992. Mr. Bob McDonald, Lafayette, dated December 4, 1992. B. K. Parady, Danville, received November 30, 1992. Ms. Miriam Pecherer, Lafayette, dated November 23, 1992. Mr. Jordan and Ms. Lynn Price, Lafayette, dated December 7, 1992. Mr. John C. Riordan, Lafayette, dated December 7, 1992. Mrs. W. Russell, Lafayette, not dated. Mr. James H. Schuppert, Alamo, dated November 24, 1992. 12 17 92 226 21 ) 22) 23) 24) 25) 26) 27) 28) 29) 30) 31 ) 32) 33) 34) 35) 36) 37) 38) 39) 40) 41 ) 42) 43) 44) 45) 46) 47) 48) 49) 50) 51 ) 52) 12 17 Mr. and Mrs. Jud Scott, Danville, dated November 25, 1992. Mr. and Mrs. Robert Shelton, Walnut Creek, dated November 23, 1992. Ms. Beulah Wilde, Walnut Creek, dated December 3, 1992. Mr. Samuel M. Abbott, Danville, not dated. Ms. Margaret Anderson, Lafayette, not dated. A. L. Axelson, Lafayette, not dated. Mr. and Mrs. L. Burkhart, Danville, not dated. Mr. John Cline, Danville, not dated. Mr. Will Cullen, Lafayette, not dated. Ms. Sally Devor, Lafayette, not dated. Ms. Linda Elwood, Danville, not dated. Mr. Robert Engelken, Alamo, not dated. Mr. and Mrs. Ken Hufford, Lafayette, not dated. Mr. David Lane, Lafayette, not dated. Ms. Edna Larke, Alamo, not dated. Mr. Roy E. Lee, Walnut Creek, not dated. Ms. Patricia B. Michels, Lafayette, dated November 22, 1992. Mr. Gerald Mitosinka, Lafayette, not dated. Mr. Phillip G. Mosley, Lafayette, dated December 1, 1992. Mr. James Paizis, Danville, not dated. Mr. Michael Payne, Danville, not dated. Mr. Frank R. Rinker, Danville, not dated. Ms. Susan Smith, Danville, not dated. J. Springer, Walnut Creek, not dated. Mr. George Tobias, Lafayette, not dated. Mr. Joseph Turkovich, Walnut Creek, not dated. Mr. Alexander Vraciu, Danville, not dated. Mr. Paul Wible, Alamo, not dated. Mrs. Jasper Woodruff, Lafayette, not dated. Mr. Robert A. Zeman, Alamo, not dated. Mr. Gordon L. Ziegler, Lafayette, not dated. Ms. LaVora D. Copley; Walnut Creek, dated December 4, 1992. 92 57) 58) 59) 60) 61 ) 62) 227 53) Mr. Claude P. Benedix, Danville, dated December 9, 1992. 54) Mr. Alan Fraser, Lafayette, received December 9, 1992. 55) Mr. Kathleen Goodrich, Lafayette, dated December 7, 1992. 56) Mr. and Mrs. Larry Leedham, Danville, dated December 10, 1992. Ms. Arlene Reed, Diablo, dated December 10, 1992. Ms. Catherine Scarborough, Danville, dated December 10, 1992. Mr. Richard O. Buxton, Alamo, dated December 16, 1992. Mr. William D. Olofson, Lafayette, dated December 10, 1992. Mr. and Mrs. John Heilbronner, Walnut Creek, dated December 13, 1992. Name Withheld Upon Request, dated December 1, 1992. Mr. Ivor Samson, City of Lafayette Councilmember, addressed the Board in opposition to the rate increase requested by Valley Waste Management, stating that the staff analysis does an adequate job in describing costs but does not explain the basis for allowing or disallowing the costs. Mr. Samson expressed the following areas of concern: 2) 3) 4) 5) 6) 1 ) General and administrative expenses of 1 9 percent are not justified or explained and there is no information in the rate application that would allow a third party to review the costs. The burden of proof is on the utility to justify the expenditures. A thorough operational review should be conducted to determine the reasonableness of costs. Allocation of intercompany charges is fundamentally improper and should be disallowed unless they are proven to be equal to or less than the service provided by others. Legal fees have not been justified and no litigation budget or justification for cost increases have been presented. The idea of paying all proposed legal fees is troublesome since it would eliminate the risk to the utility and transfer it to the ratepayers. The City of Lafayette requests that the balancing account deficit be applied in a one-year period rather than spread over two years. Approximately 45 percent of the proposed increase in Lafayette's rates is attributable to the Lafayette City Council's decision not to participate in the automated collection program. The City Council was aware that the subsidy from commercial to residential accounts would be lost and an increase in accounting and bookkeeping costs would result; however, insufficient information was provided to determine the magnitude of the increase. The cost plus method of rate setting without a detailed explanation of operating expenses and audit to ascertain the reasonableness of the costs is not appropriate. Mr. Samson stated that until and unless the Board can state that the costs are justified and reasonable, the Lafayette City Council requests that the rate application be 'denied. Mr. John Wolfe, representing the Contra Costa Taxpayers Association, addressed the Board, concurring with Mr. Dolan's introductory remarks that it is very difficult to change State mandates. The reason refuse collection rates have increased 11 5 percent in eight years is due to the increased complexity of the process and industry. Three trucks are now needed instead of one. Different categories of waste must be kept separate. The public should question whether or not these are really good programs in that the increased 12 17 92 228 costs may be producing diminished returns. Many of the regulations promulgated at the federal, state, and local levels are made with incomplete information. Mr. Wolfe stated that, we, the members of the public, all bear the responsibility when a new regulation is adopted. We should question whether the benefit to the environment justifies the cost. At 5: 12 p.m., President Clausen declared a recess, reconvening at the hour of 5: 19 p.m. with all parties present as previously designated. Mr. Ronald J. Proto, General Manager of Valley Waste Management, addressed the Board, stating that Valley would hope that the Board would pass through the Contra Costa County fees since disallowing the fees puts a burden on the collector. Mr. Proto stated that Valley will continue efforts to obtain alternative disposal sites. Mr. Proto requested that intercompany charges of $275,000 be allowed, that the Board consider indexing intercompany charges using an annual inflation rate, that consideration be given to restructuring drop box rates for the seven-yard container to allow recovery of disposal costs, and that the operating ratio method be used in calculating profit. Mr. Proto stated that although the garbage collection and disposal process is now much more complex, controllable costs (excluding disposal, legal fees, franchise fees, and recycling) have been kept under the level of inflation. Mr. Proto stated that additional profit is justified solely by the many additional programs and activities now done by the collector. Mr. Proto stated that Waste Management has taken a leadership role in the Acme lawsuit because of its expertise in this area. Mr. Proto asked that the legal fees be passed through and stated that the company has no objection to the use of an impound account. In closing, Mr. Proto requested that the Board consider the service provided by Valley Waste Management and approve a rate increase that reflects a fair and equitable rate of return for the effort put forth. Mr. Phil Weismehl, of Walnut Creek, expressed opposition to the requested rate increase, indicating that he believes the service does not justify an increase. Mr. Weismehl stated there are problems with collection, recycling, and the change in the billing cycle. Mr. Weismehl requested that the Board deny the requested rate increase. Mr. Weismehl suggested that the Board consider making extra cans more expensive than single cans and reducing the weekly recycling collection to twice a month. Mr. Dolan, General Manager-Chief Engineer, requested that Mr. Funasaki respond to comments made by Mr. Samson, Lafayette City Councilmember. Mr. Funasaki described the review of the rate applications and accounting records, and indicated that audited financial statements are required. Mr. Funasaki stated that he and his staff person conduct a very detailed review. The thrust of the review is to determine whether expenses are reasonably stated or not. If it is found that expenses are not reasonably stated, adjustments are made. Mr. Funasaki stated that he believes that the review is adequate and appropriate. In the City of Lafayette, there was close coordination with Mr. Dennis Krentz, of the Lafayette City Council Solid Waste Committee. After Mr. Krentz' initial involvement in establishing separate accounts for Lafayette, he has not been available to review the rate application, although he had been invited to do so. Ms. Caluha Barnes, Assistant to the Town Manager of the Town of Danville, submitted a letter dated December 16, 1992, from the Danville Town Council and signed by Mayor Shimansky. Ms. Barnes read the letter for the record. Mr. Ron Gatti, of Danville, addressed the Board, opposing the constant refuse collection rate increases and stating that the large rate increase requested just compounds the impact of the current recession. Mr. Gatti suggested that depreciation period for vehicles and equipment be extended since the useful life is normally longer than five years, that negotiations begin immediately for export of solid waste to East Carbon, Utah, that franchise agreements be negotiated for 20 years rather than 10 years, that maximum increases be tied to the Consumer Price Index, that the ratepayers not be required to subsidize garbage company legal fees, that no increase be granted unless all necessary documents are released for review, and that a discount rate of 3 percent be used to compute interest rather than the corporate bond rate which was used. There being no further comments from the public, President Clausen closed the public hearing at the hour of 6: 15 p.m. Board and staff discussion followed concerning the uniform refuse collection rate structure. 12 17 92 229 At this time, Mr. Funasaki proceeded to the staff analysis of the Orinda-Moraga Disposal Service, Inc. rate application, stating that the common issues in the public hearing on Valley Waste Management apply as well to the review of the application of Orinda- Moraga. Mr. Funasaki stated that Orinda-Moraga has applied for a 29.33 percent across- the-board rate increase. Mr. Funasaki reviewed the unique issues of the Orinda-Moraga rate application including automated residential curbside collection, request to reduce the frequency of seasonal cleanups, and affiliated entities transactions. Mr. Funasaki stated that Orinda-Moraga has proposed implementation of an automated residential curbside collection program, which would require capital expenditures in excess of $1.3 million. As the current franchise agreement terminates February 28, 1996, it would be customary to depreciate the capital equipment for the remaining length of the franchise agreement. This would have the impact of overstating expenses. Mr. Funasaki stated that Orinda-Moraga has requested that the frequency of seasonal cleanups be reduced from three times a year to two times a year. Mr. Funasaki stated that during review it was determined there were transactions with entities owned by the two stockholders of Orinda-Moraga that District staff regarded as inappropriate to be recorded in the company's books. Those transactions have been excluded as allowable expenses. The collector has agreed that in the future these types of transactions will not be processed through Orinda-Moraga books. Mr. Funasaki reviewed the rate adjustment calculation, computation of allowable profit, and the Capital Use Charge calculation. Mr. Funasaki reviewed the decision points for consideration by the Board with regard to the Orinda-Moraga Disposal Service, Inc. rate setting. 1 ) If a mid-year disposal fee increase, or decrease, occurs in 1993, determine whether a mid-year collection rate adjustment should be made. 2) Determine the allowability of the Contra Costa County fees included in the disposal fee. 3) Direct that continued efforts be made to obtain alternative disposal sites. 4) Allow collection of legal expense related to the Acme lawsuit on an impound basis. 5) Determine whether the balancing account should be fully applied in 1993, or applied equally in 1993 and 1994. 6) Defer consideration of automated residential curbside collection until the March 1, 1994 notification date, as to whether the franchise agreement will be extended for five years beyond the February 1996 termination date. 7) Direct that the current frequency of three seasonal cleanups be continued. 8) Direct that the company's operations and payments be separately maintained from those of affiliated entities. 9) Determine whether the Quality of Service modification factor of 1.00 is appropriate. 10) Determine whether the Cost of Service modification factor of 1 .00 is appropriate. Discussion followed concerning potential savings from elimination of one seasonal cleanup and implementation of bi-weekly recycling collection. At 6:28 p.m., President Clausen opened the public hearing to receive public comments regarding the application for increase in refuse collection rates submitted by Orinda- Moraga Disposal Service, Inc. 12 17 92 230 Receipt of the following correspondence and written comments were noted: 10) 11 ) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21 ) 22) 23) 24) 25) 26) 27) 1 ) Mr. William J. Dabel, Mayor of the City of Orinda, dated December 11, 1992. 2) Mr. Randall Kiser, attorney representing Orinda-Moraga Disposal Service, Inc., dated December 2, 1992. 3) Ms. Roz Edelstone, Moraga, dated November 15, 1992. 4) Dana Isherwood, Ph.D., Orinda, dated November 16, 1992. 5) Mr. Richard A. Nishkian, Orinda, dated November 9, 1992. 6) Dr. and Mrs. Brian Sheaff, Moraga, dated November 2, 1992. 7) D. C. Young, Orinda, dated November 26, 1992. 8) Ms. Phyllis Christopher, of Orinda, dated December 10, 1992. 9) Mr. Thomas R. Vinzent, Orinda, dated December 9, 1992. Mr. and Mrs. Wallace Dodson, Orinda, dated December 13, 1992. Mr. Terry Reichardt, Moraga, dated December 11, 1992. Mr. Gary G. Gallaher, Orinda, dated December 13,1992. Ms. Mary Slitzer (sp.), address unknown, dated December 15, 1992. J. P. Van Gelder, Orinda, not dated. Mr. and Mrs. Gary Gorman, Orinda, not noted. Mr. and Mrs. Mark W. Zuercher, Orinda, dated November 1, 1992. C. W. Bittner, address unknown, dated November 6, 1992. Mr. Kurtz, no address or date included. Mr. Allen Long, address unknown, dated December 5, 1992. Mr. George Buehler, Orinda, not dated. Mr. Don Wharton, Orinda, not dated. Mr. Charles Talerton, Orinda, dated October 31, 1992. Ms. Dolly Long, Orinda, dated December 9, 1992. Mr. Craig Peterson, Moraga, dated November 2, 1992. Ms. Sally Small, Orinda, not dated. Unknown, no address or date included. Unknown, no address or date included. Mr. Mike Medvedoff, of the Town of Moraga, addressed the Board on behalf of the Moraga Town Council. Mr. Medvedoff stated that the Moraga Town Council is concerned that any savings that may result from use of alternative disposal sites or export agreements be returned to the ratepayers. 12 17 92 231 President Clausen assured Mr. Medvedoff that any savings would be returned to the ratepayers. Mr. John Matheny, Controller of Orinda-Moraga Disposal Service, Inc., agreed that the Contra Costa County mitigation fees are high, but indicated that if the fees are not passed through, Orinda-Moraga will not be able to pay them. There may come a time when the company's trucks will not be able to dispose of garbage until an alternative disposal site is found. Orinda-Moraga is vigorously pursuing alternative disposal sites and would join with the District in trying to resolve this issue with the County. With regard to legal fees to defend the Acme lawsuit, Mr. Matheny stated that it is absolutely necessary that the company defend itself in this matter. Mr. Matheny expressed concern regarding the impound account for legal fees because of the lack of procedure for release of funds. Mr. Matheny requested that the balancing account deficit be applied in 1993 since these funds are needed to pay vendors. Mr. Matheny stated that Orinda-Moraga has cut costs. They are 25 percent below last year with the exception of disposal fees and legal fees. Controllable operating expenses are down over the last two years since the acquisition of the company. In closing, Mr. Matheny requested the Board's fair and objective consideration of the rate increase request. Discussion followed concerning reduction in the number of seasonal cleanups and recycling collection. Mr. Bill Brobeck, of Moraga, addressed the Board, stating that it is a sign of the times that everything is now stressed beyond capacity, land, water, roads, and now garbage. In a positive light, if the Board approves the requested rate increase, garbage will have a higher value and people will throw less away. On the negative side, more garbage will be dumped along the roads. Mr. Brobeck stated that the cost for one can service should remain the same, increasing at the rate of the Consumer Price Index (CPl). The cost for extra cans should be increased significantly. People must realize they cannot continue to waste water, gasoline, and precious landfill capacity. Open competition and alternative methods of garbage collection should be investigated and encouraged. Mr. Brobeck stated that he lives in Bollinger Canyon. He and 12 of his neighbors bring their garbage down to the bottom of the canyon. Since he and his neighbors do most of the work, Mr. Brobeck stated that he does not feel they should have to pay more. In closing, Mr. Brobeck stated that he believed that a rate increase is valid based on higher landfill costs. Mr. Duane Norgren, of Orinda, addressed the Board on behalf of the retired sector of the community in Orinda. Mr. Norgren stated that he lives modestly, producing approximately 43 pounds of garbage a month, which equates to $1.69 per month for disposal. Mr. Norgren stated that, using his garbage production figures, it costs 60 cents per pound for garbage collection and disposal. By comparison, it costs 60 cents per pound for cherries, 59 cents per pound for apples, 21 cent per pound including all taxes for gasoline, and 67 cents per pound for international air freight from the United States to Europe. Mr. Norgren stated that the collectors are well monitored but charges are very high because: 1 ) service is non-competitive; 2) the cost plus percentage price structure does not control costs; and 3) there is excess service frequency. Mr. Norgren stated that Orinda-Moraga's service has been excellent but there is too much of it. The frequency of pickups should be reduced and mandatory curbside collection should be implemented. If individual customers wish to have backyard service, they should pay for the service. Mr. Norgren stated that he observed operations at the recycling center in Moraga. The operation is inefficient. Good planning and some capital improvements would result in significant improvement to the operation. President Clausen thanked the members of the public for their comments. There being no further comments, President Clausen closed the public hearing at the hour of 7:02 p.m. At 7:02 p.m., President Clausen declared a recess, reconvening at the hour of 7: 13 p.m. with all parties present as previously designated. 12 17 92 232 At this time, President Clausen directed the Board's attention to the decision points relating to the Valley Waste Management rate application. Following discussion, it was the consensus of the Board that the resolution setting rates include language that would permit the Board of Directors to call a public hearing to consider a mid-year collection rate adjustment if and when a change in the disposal fee occurs. Discussion followed concerning the allowability of the Contra Costa County fees included in the disposal fee. Member Menesini requested that a matrix be developed showing the County fees and the purpose for which each is levied. It would then be possible for the Board to consider the fees in terms of some strategy of action. Member Rainey expressed serious concern with regard to the $55 charge for the Acme Demonstration Compost Project, indicating that justification of the charge has been requested repeatedly, but nothing has been received. Mr. Lee Walton, General Manager of Acme Fill Corporation, stated that the $55 per ton charge for green waste at the Acme Demonstration Compost Project is an estimate. It was reduced from $78 per ton to encourage recycling of green waste. Acme is working with the County and providing them with costs and figures. Following discussion, it was the consensus of the Board that the Contra Costa County fees included in the disposal fee be passed through, that the collector be directed to pay said fees under protest, and that District Counsel brief the entire Board in closed session in the near future on the legal issues relating to the various fees. It was the consensus of the Board that Valley Waste Management be directed to continue efforts to obtain alternative disposal and transfer sites. Discussion followed concerning the legal expense related to the Acme lawsuit, and the need for a coordinated defense. District Counsel will brief the Board on the Acme lawsuit in closed session in the near future. It was the consensus of the Board that collection of legal expense related to the Acme lawsuit be allowed on an impound basis. Based on the input from the Town of Danville and the City of Lafayette, it was the consensus of the Board that the balancing account should be fully applied in 1993. Following discussion of the state of the economy and its impact on business and ratepayers, it was moved by Member Rainey and seconded by Member Dalton, that intercompany charges of $150,000, rather than $275,000, be allowed. Motion approved on the following roll call vote: AYES: Members: Rainey, Dalton, Menesini, Hockett NOES: Members: Clausen ABSENT: Members: None It was the consensus of the Board that the request of Valley Waste Management to index the intercompany charges using an annual inflation rate be denied. Following discussion of the AB 939 source reduction and recycling requirements and the fines for not meeting the requirements, it was the consensus of the Board that nonautomated separate green waste collection be implemented in the City of Lafayette. It was the consensus of the Board that the rate for the seven-yard drop box be recalculated on a break even basis, to eliminate subsidy from other customer categories. It was the consensus of the Board that the request of Valley Waste Management to revert to the operating ratio methodology be denied and that present rate-setting methodology for calculation of allowable profit be retained. 12 17 92 233 It was the consensus of the Board that draft letters to the difficult-to-access customers be approved for issuance with minor modification. Following discussion, it was the consensus of the Board that the Quality of Service modification factor be set at 1.00. Member Menesini requested that staff develop alternative methods of measuring Quality of service for consideration at the next rate setting. It was the consensus of the Board that the Cost of Service modification factor be set at 1.00. In looking for opportunities for cost savings and reductions to the rates to pass through to the ratepayers, Member Rainey stated that the District's franchise fee came under consideration. Recognizing that the franchise fee is simply a pass through of actual costs and recognizing that some areas of savings have already been identified, Member Rainey requested that staff review the anticipated activities and expenditures for the coming year in an effort to cut expenditures further while meeting AB 939 requirements. Mr. Dolan stated this item will be reviewed and a recommendation presented to the Board at the January 7, 1993 Board meeting. President Clausen proceeded to the decision points with regard to the Orinda-Moraga Disposal Service, Inc. refuse collection rate application. It was the consensus of the Board that the resolution setting rates include language that would permit the Board of Directors to call a public hearing to consider a mid-year collection rate adjustment if, and when, a change in the disposal fee occurs. It was the consensus of the Board that the Contra Costa County fees included in the disposal fee be passed through, that the collector be directed to pay said fees under protest, and that District Counsel brief the Board in closed session in the near future on the legal issues relating to the various fees. The Board will make a decision on future actions based on the matrix of the various fees to be developed by staff. It was the consensus of the Board that Orinda-Moraga Disposal Service, Inc. be directed to continue efforts to obtain alternative disposal and transfer sites. Member Menesini expressed concern with regard to accountability in terms of pursuing the Acme closure problem. Member Menesini requested that the legal establishment working on the Acme lawsuit pursue a joint approach and strategy and that the Board be kept informed of what is happening in terms of the strategies and the pursuit of the lawsuit. It was the consensus of the Board that collection of legal expense related to the Acme lawsuit be allowed on an impound basis. District Counsel will brief the Board on the Acme lawsuit in closed session in the near future. It was the consensus of the Board that the balancing account should be fully applied in 1993. It was the consensus of the Board that consideration of the proposed automated residential curbside collection program be deferred until the March 1, 1994 notification date, as to whether the franchise agreement will be extended for five years beyond the February 28, 1996 termination date. Following discussion, it was the consensus of the Board that the current frequency of three seasonal çleanups be reduced to two seasonal cleanups of the same total volume previously allowed for three. President Clausen requested that during the coming year, District staff review the current recycling program and frequency to determine whether it would be appropriate to restructure the recycling program during the next rate-setting process. 12 17 92 234 It was the consensus of the Board that Orinda-Moraga Disposal Service, Inc.'s operations and payments be separately maintained from those of affiliated entities. It was the consensus of the Board that the Quality of Service modification factor be set at 1.00. It was the consensus of the Board that the Cost of Service modification factor be set at 1.00. Member Rainey requested that the same review and reduction of the Orinda-Moraga Disposal Service, Inc. franchise fee be done as for Valley Waste Management. 7. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER None 8. BIDS AND AWARDS a. AUTHORIZE AWARD OF CONSTRUCTION CONTRACT TO MONTEREY MECHANICAL COMPANY. INC. FOR THE SLUDGE STABILIZATION PROJECT (DP 20098) Following explanation by Mr. Dolan, General Manager-Chief Engineer, it was moved by Member Menesini and seconded by Member Dalton, that award of a construction contract be authorized to Monterey Mechanical Corporation, Inc. in the amount of $498,500 for the Sludge Stabilization Project, DP 20098. There being no objection, the motion was unanimously approved. b. AUTHORIZE AWARD OF CONSTRUCTION CONTRACT TO GELCO SERVICES. INC.. AUTHORIZE $944.000 FOR THE COLLECTION SYSTEM PROGRAM CONTINGENCY ACCOUNT AND AUTHORIZE ALLOCATION OF FUNDS FOR THE CURED-IN-PLACE PIPE REHABILITATION PROJECT. DP 4889 Mr. Dolan, General Manager-Chief Engineer, recommended that award of contract in the amount of $768,034 be authorized to GELCO Services, Inc. Discussions with GELCO representatives have identified several areas where the overall cost of the project could be reduced. Discussions to date have produced an indication that the overall cost can be reduced as much as $200,000. Staff will negotiate a deductive change order which is expected to substantially reduce the cost of the project. It was moved by Member Dalton and seconded by Member Rainey, that award of contract be authorized to GELCO Services, Inc., the lowest responsible bidder, in the amount of $768,034 for the construction of the Cured-in-Place Pipe Rehabilitation Project, DP 4889; that $944,000 be authorized from the Sewer Construction Fund to the Collection System Contingency Account; and that the General Manager-Chief Engineer be authorized to allocate these funds for the project. There being no objection, the motion was unanimously approved. c. AUTHORIZE AWARD OF A CONSTRUCTION CONTRACT TO MANUEL C. JARDIM. INC.. AND AUTHORIZE ALLOCATION OF $87.000 FROM THE COLLECTION SYSTEM PROGRAM CONTINGENCY ACCOUNT FOR THE NEAR COURT SLlPLINING PROJECT. DP 4535A It was moved by Member Dalton and seconded by Member Rainey, that award of a contract be authorized to Manuel C. Jardim, Inc., the lowest responsible bidder in the amount of $51,356, for the construction of the Near Court Sliplining Project, DP 4535A and that the General Manager-Chief Engineer be authorized to allocate $87,000 from the Collection System Contingency Account for the project. There being no objection, the motion was unanimously approved. 12 17 92 235 9. ENGINEERING a. AUTHORIZE THE GENERAL MANAGER-CHIEF ENGINEER TO EXECUTE AN AGREEMENT WITH JOHN CAROLLO ENGINEERS FOR DESIGN OF THE ORINDA/MORAGA PUMPING STATIONS -WETWEATHER DIESELS PROJECT. DP ~ Mr. Dolan explained that this project will provide redundancy and wet weather capacity for the Orinda/Moraga Pumping Stations which are in a sensitive watershed area. It was moved by Member Menesini and seconded by Member Hockett, that the General Manager-Chief Engineer be authorized to execute a cost reimbursement agreement with a cost ceiling of $251,000 with John Carollo Engineers for design services related to the Orinda/Moraga Pumping Stations - Wet Weather Diesels Project, DP 4898. There being no objection, the motion was unanimously approved. 10. CORRESPONDENCE a. NOTE RECEIPT OF LETTER FROM MR. MICHAEL MENESINI. MAYOR OF THE CITY OF MARTINEZ. OPPOSING THE DISTRICT RECEIVING EFFLUENT FROM THE TRI- VALLEY AREA: CONSIDER DRAFT RESPONSE Mr. Dolan, General Manager-Chief Engineer, stated that this let~er is very similar to a letter received from the City of Concord and contains reference to city funds which is more applicable in the case of Concord. The City of Concord is actually billed for a portion of the cost of operating shared facilities, which is primarily the Treatment Plant. The City of Martinez, on the other hand, is part of the District service area and is treated in the same way as all the other areas within the District. A draft response has been prepared for the Board's consideration. Member Menesini expressed concern about the Tri-Valley Wastewater Authority (TWA) proposal to pass its sewage through the District's pipelines. In addition, Member Menesini expressed concern about the amount of planning and work the District is doing in terms of planning for the proposed TWA project. Member Menesini indicated that he would like to explore this matter further. Mr. Dolan stated that a presentation on the proposed TWA project will be made at the January 7, 1993 Board meeting. Staff will try to cover several of the critical issues. In response to a request from a member of the audience, President Clausen departed from the order of the agenda to consider Item 14.d.1). 14. REPORTS d. BOARD MEMBERS 1 ) Member Rainey summarized the Contra Costa County proposal relative to the County joining the Contra Costa Solid Waste Authority. This proposal was provided to the Board in the agenda packet. Ms. Avon Wilson, Executive Director of the Contra Costa Solid Waste Authority (CCSWA), stated that the tentative points of the agreement are currently being reviewed by the Board of Supervisors. They are scheduled to consider this matter on January 12, 1993. Ms. Wilson stated that it appears that the County does not wish to join the Authority but would rather enter into a contractual arrangement. Ms. Wilson requested input from the Board with regard to the elements of the proposed agreement. Member Rainey stated expressed concern that the County may wish to be considered a separate entity and equal partners with the Authority rather than one member of the Authority. Member Rainey requested direction from the Board on this issue. President Clausen stated that the County must face up to the fact that they must cooperate with other public agencies. Perhaps this agreement is a small step in that direction. 12 17 92 236 Following discussion, it was the consensus of the Board that it would be unacceptable if the County demands 50 percent representation. At this time, President Clausen reverted to the order of the agenda. 10. CORRESPONDENCE b. NOTE RECEIPT OF LETTER FROM MR. LEE WALTON. GENERAL MANAGER OF ACME FILL CORPORATION. REGARDING THE ACME DEMONSTRATION COMPOST PROJECT Mr. Paul Morsen, Deputy General Manager, stated that he will tour the Acme Demonstration Compost Project at 11 a.m. on Friday, December 18, 1992. Mr. Morsen invited Board Members to accompany him. 11. APPROVAL OF EXPENDITURES a. EXPENDITURE LIST DATED DECEMBER 17. 1992 Member Dalton, member of the Budget and Finance Committee, stated that he and President Clausen reviewed the expenditures and found them to be satisfactory. It was moved by Member Dalton and seconded by President Clausen, that the Expenditure List dated December 17, 1992, including Self-Insurance Check Nos. 100649-100652, Running Expense Check Nos. 72129-72587, and Sewer Construction Check Nos. 11807- 11885, be approved as recommended. There being no objection, the motion was unanimously approved. 12. BUDGET AND FINANCE a. RECEIVE NOVEMBER 1992 FINANCIAL STATEMENTS Mr. Dolan, General Manager-Chief Engineer, stated that expenditures for the five months ended November 30,1992 were 8.1 percent less than budget. Mr. Dolan referred to the Board to the report of temporary investments distributed to the Board with the November 1992 financial statements. President Clausen declared that the November 1992 Financial Statements were duly received. 13. EMERGENCY SITUATIONS REQUIRING BOARD ACTION None 14. REPORTS a. GENERAL MANAGER-CHIEF ENGINEER 1 ) Mr. Dolan, General Manager-Chief Engineer, stated that the 1992-1993 Capital Improvement Plan includes a program for the issuance of debt. There are a number of debt instruments to be considered, one of the most attractive of which is the Certificate of Participation (COP). Since the Capital Improvement Plan was adopted, major changes have occurred on both the revenue and expenditure sides of the ledger. Thirty-five percent of the District's ad valorem tax revenue, the largest single component of the capital revenue stream, has been lost. With the continuing state budget problems, there is reason to believe that the remainder is in jeopardy. On the expenditure side of the ledger, a significant number of large capital projects have been added to the Capital Improvement Plan. Staff is working diligently to cut and defer projects to enable the District to present a practical set of alternatives to the Board. Staff will be working with the Budget and Finance Committee and the Capital Projects Committee in that 12 17 92 b. c. d. 237 regard. The District will soon distribute a Request for Proposals for a financial advisor to work with staff to develop the options. 2) On December 16, 1992, Acme Fill Corporation was fined $126,300 by the Regional Water Quality Control Board (RWQCB) for failure to meet the RWQCB-imposed deadlines for cleanup of their leachate problem. One of Acme's defenses was that the District had not agreed to accept pretreated leachate into the District's system. The District's position has always been that Acme could treat their effluent to discharge standards and discharge into the District's outfall. However, the District objects to accepting Acme leachate into the plant because it is so saline it could adversely affect the District's reclamation activities. District staff is working with Acme to identify the lowest overall cost and best solution. 3) Mr. Dolan announced that Mr. Boyd Olney no longer has any connection with Pleasant Hill Bay Shore Disposal. It is clear that the franchise agreement has been breached. Staff will review the options and meet with the Board Solid Waste Committee. 4) Mr. Dolan announced that a Notice of Intent to Adopt Negative Declaration for the Collection System Operations Yard Reconfiguration Project will be published in the near future. 5) Mr. Dolan announced that the District is currently advertising for sale of surplus property. It is expected that $5,000 to $10,000 income to the District will be generated from this sale. 6) Mr. Dolan stated that a year ago he discussed with the Board the fact that he was being considered for candidacy for the Presidency of the American Academy of Environmental Engineers. At that time the Board supported that activity. If the Board has no objection, Mr. Dolan indicated that his name would be placed in nomination. The election will be in the spring of 1993. If elected, Mr. Dolan would become Vice President in November 1993. Mr. Dolan stated that there would be some work that goes along with this post, but the level of commitment will be far less than the Presidency of the Water Environment Federation. The Board endorsed Mr. Dolan's candidacy. COUNSEL FOR THE DISTRICT 1 ) Mr. Kenton L. Aim, Counsel for the District, announced that he has been asked to serve as Counsel for the Crockett Varona Sanitary District. The Board expressed their approval of Mr. Aim's appointment. SECRETARY OF THE DISTRICT None BOARD MEMBERS 1 ) This item was taken out of order earlier in the agenda. 2) President Clausen announced that the Central Contra Costa Solid Waste Authority interviewed candidates for the Authority's part-time Executive Director contract position. 3) Member Rainey announced that the Second Annual Fiscal Unity Conference will be held Saturday, January 1 7, 1 993. 15. ANNOUNCEMENTS President Clausen announced that he will send proposed committee assignments to the Board Members for their review prior to the next Board meeting. 12 17 92 238 16. CLOSED SESSION None 17. ACTIONS RESULTING FROM DISCUSSIONS IN CLOSED SESSION None 18. ADJOURNMENT Thèi"e being no further business to come before the Board, President Clausen adjourned the meeting at the hour of 9:24 p.m. ---~/ /2~/!/ , . .;Ø/!k::~-d -£ ' ~ <- -<.. ~. President6f the Board of Directors, Centra+-t:ontra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: 12 17 92