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Home My WebLink AboutAGENDA BACKUP 08-02-90 . Central Contra Costa Sanitary lJistrict BOARD OF DIRECTORS PAGE 1 OF 2 POSITION PAPER BOARD MEETI!t'?[ust 2, 1990 SUBdSNTINUE THE PROCESS TO ESTABLISH LOCAL IMPROVEMENT DISTRICT (LID 57). OPEN AND CONTINUE THE PUBLIC HEARING TO THE NEXT SCHEDULED BOARD MEETING NO 4. HEARINGS a. DATE July 30, 1990 TYP6~E:~TmD CONTINUE PUBLIC HEARING SUEDE!ffiIilflts Hall Associate Engineer INITIA TIN!:RifIJ1lE!'er ing Department/ Construction Division ISSUE: The Board of Directors set August 2, 1990, as the date for a public hearing on LID 57. The hearing must be continued to a later date because of a vehicular access issue which will not be resolved by the date of the scheduled public hearing. BACKGROUND: A public hearing has been set for August 2, 1990, to hear and consider public testimony regarding the resolution of intention and engineer's report for Lid 57 which was approved by the Board in June of this year. Various actions can be taken by the Board after the hearing including adopting various resolutions, setting assessments, and awarding a contract to the apparent low bidder for the construction of sewers in LID 57. A concerned property owner, Mr. J. Findleton, 1200 Brown Avenue, has made an issue of the potential lack of vehicular access to be provided during the LID 57 construction along Brown Avenue. Board Member Rainey and District staff met with Mr. Findleton on July 25, 1990. At the request of Mr. Findleton, he was given an opportunity to acquire adequate rights for an alternate access to bypass the work area. The rights for the alternate access will be established through the use of an agreement. Because the alternate access is a private road through private parcels, sufficient rights for the Brown Avenue residents affected by the construction project and prudent liability releases for the District are required as part of the agreement. A homeowner's organization and the owners of the six private properties across which the alternate access is located will have to grant rights for the temporary use of the private roads. Mr. Findleton was allowed until August 3, 1990, to provide the required executed agreement to the District. If the rights are obtained and if Mr. Findleton can show that additional access for the Brown Avenue residents is justified, the additional costs for compensation of the access rights must be included in the assessment district costs. Thus, changes in the engineer's report and assessment amounts for the assessment district properties will be required. Since the Public Hearing was scheduled for August 2, 1990, the hearing must be held as intended. However, because the access issue has not been resolved, the Board will be unable to take final acti t thi REVIEWED AND RECOMMENDED FOR BOARD ACT/ON INITIA TING DEPT iDIV ~ liiO?A 98~, DH SUBJECT POSITION PAPER CONTINUE THE PROCESS TO ESTABLISH LOCAL IMPROVEMENT DISTRICT (LID 57). OPEN AND CONTINUE THE PUBLIC HEARING TO THE NEXT lO'n PAGE DATE 2 OF 2 July 30, 1990 time, and the hearing will have to be continued at the next scheduled Board meeting. At that time, staff will be available to make a presentation on the delays which motorists may experience during the LID 57 construction. All project proponents and interested parties have been advised of the change in schedule. RECOMMENDATION: Staff recommends that the Board of Directors take the following action: . Open Public Hearing . Take public testimony only if desired by the Board . continue Public Hearing to the next scheduled Board meeting 13028-9/85 . Central Contra Costa Sanitary LJistrict BOARD OF DIRECTORS PAGE 1 OF 2 POSITION PAPER BOARD MEERt1~ffst 2, 1990 NO 5. CONSENT CALENDAR a. SUBJECT DATE APPROVE AGREEMENT RELATING TO REAL PROPERTY WITH MAYNARD MUNGER, ET UX, JOB 731, WALNUT CREEK July 25, 1990 TYPE oAW~l1VE REAL PROPERTY AGREEMENT SUBMO~ls Hall Associate Engineer INITI"Eftiqi!ffi!EftVing Department/ Construction Division ISSUE: The property owner has proposed the construction of a wooden deck over a District easement. BACKGROUND: The proposed deck will span over a portion of the existing sewer easement, which is ten feet wide, within the Munger's property. There is an existing six-inch cast iron sewer in this easement. The existing sewer pipe is approximately eight feet deep. The vertical clearance from the bottom of the deck to the ground will vary from six feet to ten feet. The deck will be constructed using bolts and screws as fasteners to facilitate its removal and all piers will be five feet clear of the pipe centerline. The property owner has cooperated with District staff by changing their plans and providing revised construction drawings of the deck. The owner has paid the District's fee for processing the subject agreement. Staff has determined that the improvements will not interfere with the present use of our sewer i however, if the need should arise, the agreement requires the property owner to move the deck at his/her expense within 30 days of notice to do so. This project (the proposed agreement) has been evaluated by staff and determined to be exempt from the California Environmental Quality Act (CEQA) under District CEQA Guidelines Section 18.6, since it involves a minor alteration in land use limitations. RECOMMENDATION: Approve the Agreement relating to real property with Maynard Munger, et ux, Job 731, and authorize the President of the Board of Directors and the Secretary of the District to execute said agreement, and authorize the agreement to be recorded. REVIEWED AND RECOMMENDED FOR BOARD ACTION I :{02A 9'8() RAB ~ DH ~"" ~S "" JSM :] ~i," ~ -I ~~ >_:Vf1 ......~e.a t~~~~~~~ -..;u~ DUi'i'i~ l . ~~or- ~ 6 .. /~.! '''''0 UA...... ,.... ~::..::) .:.".J, -;-:2-~ O'"i' e...\~ t51"'~ ll>c.<\'(I::Ei 1...e~ "- M.~ -r''''Vt:lZ> -'b ~c. e.,\-r..l () 1>.11 17",:\<.wL-"lo &,,, 7<..(f;,wefl , J - {,.} F'"l"~ E r='f1H:.."" i I .' r~~.f~ G/e BO\\-5 ~6p~~~~ .y~:::...;.. ----- -.-== .-::--::.... .. :,.-- - . == ~..:::-::.;....:~..-... \..0 , \ .----..1I "0 ~ -IDt'5ij c..~~~ =~L.1J:..t:.~t:J:- WI ,p.'..... ~. ~ ~~ '(,"()L-, T'(r, ';~,~:~;lj\ti~'ii:~:~~~:i:: ,;..;:/: i11;hi~:::' V 6" CAST IRON SEWER MAIN HOUSE ~ ,- I ~ T r,,'" /J I ' I f I I - "'''1 ...'- ~~~ ~~ ! J L :~rr ~ ISE; weJ MAIN ~ 6" C.l., i .J!.. "_ .' ,i , Ii ~ .r "'j . _.....~....J~.,.:::. .~:..:.i- - ~--:-:-:-- 'C-:-~-~ _ _ -?:oc ~u_ -- . -f-f-f- t , Ii L ~ 't \ ~~t6.:.-.J.~:~~~ ~ : ~ f \ ~ ~ ; ;t Th'--i' ~'i r r'~ III l 11 !'_j~'~~ I , ! j: f f. i.!! ,I ~cr~1fL ~~ , <u ! : ~ ~ f":' I ! I II; i' I ! : ~ J , . ~~ f. \! II I ft ! I:::-'~::~.p- - klj _~-o:j h--.-. '(.' " ' ~ :: j'~' ".! !: : I, I I -:! ., I ~ 11 ,..?.......... l' I _ __ I; ~ r l l! ~"," r.-- J ' I. ~ ::;, : i .;i!:/" ',~' ~ ' i!:!i~'.r':,; G.u\. Ij.~ : ; ~ :1T.;; t ~ '~'"! ~~ ,I "i ' ~ ,i; ; II . 1 I ! i . ~ ~ " " i::":"-+- '; ij II; ~. i . , :..'-. ,;jllf1itW .-~j~~. I' j. .,'\ j : T*w -~R EA.;MENT · L 10' SE C.";- :-.... ....c-."",.\"'.1 __ __ 1 /-_. - :-....vo c.- :..~...~ , "'':><- ~"'(-e~1 1 .. REAL PROPERTY AGREEMENT JOB 731 WALNUT CREEK AREA 1 . '- PIERS(TVP) ----: r - .JIll -.AI' -,~ i II ~ I -J ~ Ii I! _ll 1 - :J f.e.^H'O"" <1"" t'~rs '1't....,.e ..., ~ e. 6a>- -E \ Jo,.1,... J", ; - i . . Central "ontra Costa Sanitary ~ .strict BOARD OF DIRECTORS PAGE 1 OF 1 POSITION PAPER BOARD MEETING OF 1990 NO. S. CONSENT CALENDAR b. SUBJECT EXECUTE EASEMENT AGREEMENT AT NO COST WITH THE DANVILLE COMMUNITY DEVELOPMENT AGENCY RELATED TO THE SAN RAMON VALLEY INTERCEPTOR SEWER, DP 4224 DATE Jul 31 1990 TYPE OF ACTION APPROVE EASEMENT AGREEMENT SUBMITTED BY Curtis W. Princi al Department Division ISSUE: Board of Directors' approval is required to execute an easement agreement with other public agencies. BACKGROUND: Phases A and B of the San Ramon Valley Interceptor Project were constructed during 1987 and 1988 within the former Southern Pacific Railroad right of way through the San Ramon Valley. Contra Costa County purchased almost all of the ra i 1 road ri ght of way in fee and in turn sold easements to the District for installation of the main trunk sewer. One exception to this case is the former Southern Pacific train station site within downtown Danville. Southern Pacific Railroad retained fee ownership of this parcel. Southern Pacific granted the County a utility and transit easement through this property. As part of the agreement to purchase sewer easements from the County, the District was allowed to use the County's utility and transit easement for construction of sanitary sewers. The Danville Community Development Agency has acquired the northern half of the former train station property through condemnation. Southern Pacific is now attempting to sell the remaining half of the property for commercial development. To strengthen the District's property rights, the District has negotiated an easement agreement with the Danville Community Development Agency. This agreement, based on the easement agreements between Contra Costa County and the District, grants the District a 15-foot wide easement along the alignment of the new trunk sewer through the northern half of the former train station property. The Danville Community Development Agency is granting the easement at no cost to the Di stri ct. This project has been evaluated by staff for compliance with the California Environmental Quality Act (CEQA) and District CEQA guidelines. Staff has determined that this project was addressed in the San Ramon Valley Trunk Sewer Improvement Project EIR certified by the District in 1986. RECOMMENDATION: Approve the execut i on of the easement agreement with the Danville Community Development Agency and authorize the easement to be recorded. REVIEWED AND RECOMMENDED FOR BOARD ACTION 1302A-9/85 CWS DRW j)rf2w :f=()Y' RAB INITIAT~~V fJliu . Central "ontra Costa Sanitary '"- ~strict BOARD OF DIRECTORS PAGE 1 OF 1 POSITION PAPER BOARD MEETING OF Au ust 2 1990 NO. S . CCJN'SENT CALENDAR c. APPROVE AND EXECUTE A PIPELINE LICENSE WITH THE ATCHISON, TOPEKA, AND SANTA FE RAILWAY COMPANY FOR CONSTRUCTION OF SEWER FORCE MAINS, DP 4610 DATE Jul 31, 1990 TYPE OF ACTION SUBJECT APPROVE AND EXECUTE PIPELINE LICENSE Assistant INITIATING DEPT./DIV. Engineering Department Engineering Division ISSUE: An agreement must be reached for installation of the M-2 parallel force main and the M-2 replacement force main crossing the Atchison, Topeka, and Santa Fe Railway Company (AT&SF) right of way between the IT Baker site and the treatment plant property. AT&SF typically grants such an easement as a Pipeline Li cense. BACKGROUND: The District annexed the City of Martinez sewer system in 1967 and placed three pump stations and force mains into service in 1970 to convey wastewater from Martinez to the District treatment plant. The M-2 force main, which runs from Maltby Pumping Station to Junction Structure Number 1, is a key component of this conveyance system. District Project No. 4610, M-2 Parallel Force Main Project, includes construction of approximately 4,200 feet of 20-inch HDPE force main in an alignment parallel to the existing M-2 force main and replacement of approximately 1,500 feet of the existing M-2 force main. The alignment crosses the AT&SF railroad between the IT Baker site and the treatment plant. The AT&SF Pipeline License will provide the District with the rights to install the two force mains crossing under the railroad. The construction is to be accomplished by boring and jacking the two pipelines and carrier pipes beneath the railroad, a distance of 55 feet. This project has been evaluated by staff and determined to be exempt from the California Environmental Quality Act (CEQA), District CEQA Section 18.3, since it includes replacement of 1,500 feet of an existing public facility involving negligible or no expansion of capacity, and under CEQA Statute Section 21080.21, since it involves new construction of less than one mile in length (4,200 feet). A Notice of Exemption has been filed with the County Clerk. RECOMMENDATIONS: 1. Approve the Pipeline License from Atchison, Topeka, and Santa Fe Railway Company for DP 4610, at a cost of $400; 2. Authorize the President of the District Board of Directors to execute said Pipeline License; and 3. Authorize the Pipeline License to be recorded. EVIEWED AND RECOMMENDED FOR BOARD ACTION IJ~ ~ :h....... 1302A-9/85 KVA CWS DRW RAB . Central Contra Costa Sanitary LJistrict BOARD OF DIRECTORS PAGE 1 OF Au st 2 1990 NO. 5. CONSENT CALENDAR d. POSITION PAPER BOARD MEETING OF SUBJECT DATE DIRECT STAFF TO SECURE THE SERVICES OF AN ARBI- TRATOR IN ACCORDANCE WITH STEP FOUR OF THE GRIEVANCE PROCEDURE Jul 31 1990 TYPE OF ACTION PERSONNEL SUBMITTED BY INITIATING DEPT IDIV Paul Horsen, De ut General Hana e Administrative Personnel ISSUE: In accordance with the Memorandum of Understanding (M. o. U. ) between the District and the Central Contra Costa Sanitary District Employees' Association, Public Employees Union, Local No. One, the Board must employ an arbitrator to render a recommendation when grievances are appealed to the Board level. BACKGROUND: Public Employees' Union, Local No. One filed a grievance on behalf of Ms. Beth Maples, Engineering Technician I. Ms. Maples' grievance alleges that: . Proper procedures were not followed in Ms. Maples' most recent performance appraisal. . Ms. Maples has been the victim of discrimination for her Union activities. . Ms. Maples has been denied an opportunity to take a personnel advancement exam. This grievance was heard by the Department Manager and the General Manager-Chief Engineer who rendered decisions in this matter. The Union has appealed this grievance to the Board. Details of this grievance have been provided to the Board under separate cover. In matters that are appealed to the Board of Directors (Step 4), the M.O.U. reads as follows: "Step Four In the event such differences are not settled and the grievant desires the grievance to be considered further, it shall be presented, in writing, to the Secretary of the District within five (5) days of receipt of the General Manager-Chief Engineer's decision. The Secretary shall calendar the meeting for closed session at the next regularly scheduled Board Meeting in keeping with established guidelines for calendaring an agenda item. * REVIEWED AND RECOMMENDED FOR BOARD ACTION 130~/8o SUBJECT POSITION PAPER DIRECT STAFF TO SECURE THE SERVICES OF AN ARBI- TRATOR IN ACCORDANCE WITH STEP FOUR OF THE PAGE 2 OF 2 GRIEVANCE PROCEDURE DATE July 25, 1990 The Board shall employ a neutral third party to hear the matter and recommend action to the Board. The District and the Union shall equally share the cost. If the parties cannot agree on a neutral third party, then a list of five (5) neutral individuals shall be requested from the state Conciliation Service and the parties shall use the alternate elimination method to determine who shall conduct the hearing. The Board may adopt, reject, or modify the recommendation of the appointed neutral third party. The decision of the Board is the final action of the District... *(The language above was written prior to changes in the Ralph M. Brown Act. It is no longer appropriate as a result of these changes to consider grievances in closed session). RECOMMENDATION: Authorize staff to secure the services of an arbitrator in accordance with Step Four of the Grievance Procedures in the matter of the appealed grievance of Ms. Beth Maples. 130?8 ~l'BI'j . Central ~ontra Costa Sanitary aJistrict BOARD OF DIRECTORS PAGE 1 OF 32 POSITION PAPER BOARD MEETING 01mgust 2, 1990 NO. 6 . SOLID WAS'IE a. DATE July 31, 1990 SUBJECT RECEIVE ADDITIONAL INFORMATION TO CONSIDER THE APPLICATIONS FOR REFUSE COLLECTION RATE INCREASES SUBMITTED BY VALLEY WASTE MANAGEMENT AND ORINDA-MORAGA DISPOSAL TYPE OF ACTION ESTABLISH REFUSE COLLECTION RATES SUBMITTED BY Walter N. Funasaki, . INITIA TING DEPT IDIV Administrative/Finance & . ISSUE: At the public hearings conducted on July 12, 1990 to consider the applications for rate increases effective July 1, 1990 submitted by two of the District's three franchised refuse collectors, additional information was requested by the Board of Directors for receipt on August 2, 1990. BACKGROUND: Rate setting issues raised for future consideration included: o Charge for the use of capital; o Profit calculation; o Allowable expenses; o Commercial recycling increment; and o Rate restructuring to implement uniform charge per can. Two Attachments, I, for Valley Waste Management, and II, for Orinda-Moraga Disposal, are provided to show the detail of the staff calculations. Charqe for the Use of Capital The current rate-setting procedure provides for the setting of a gross profit figure which includes net profit, interest on capital, and taxes. This procedure, while rational, is often confusing to the public, and does not provide an adjustment in operating income to cover the interest expense associated with incremental capital expenditures such as those related to equipment for recycling. In the future , capital expenditures for automated collection equipment is anticipated. These expenditures and others which could result in overall cost savings could be encouraged if a means of compensating the collector for the use of capital could be introduced into the District's rate-setting process. Specifically, it is recommended that a sum of money be included in the calculation of the rate adjustment to compensate the Franchisee REVIEWED AND RECOMMENDED FOR BOARD ACTION INITIATING DEPT/DIV 1302A.9/80 PM SUBJECT RECEIVE ADDITIONAL INFORMATION TO CONSIDER THE APPLICATIONS FOR REFUSE COLLECTION RATE INCREASES SUBMITTED BY VALLEY WASTE MANAGEMENT AND ORINDA-MORAGA DISPOSAL SI<:k'V ('I<: TN'l"' POSITION PAPER PAGE 2 32 OF DAT'truly 31, 1990 for the use of capital. It is referred to as the Caoital Use Charqe. This sum would be calculated by multiplying an interest rate times the depreciated value of the Franchisee's net Tangible Fixed Assets (NTFA). The NTFA would be computed on the basis of the original acquisition cost to avoid mark-ups resulting from changes in franchise ownership being passed on to the rate paying public. It is recommended that the average yield over the previous year for 2-year Treasury Notes be used as the interest rate. This rate is not proposed on the basis of the cost of borrowed capital. Rather, it is proposed as a realistic rate of income which the Franchisee could expect to realize from an al ternati ve secure investment. Return on capital greater than this amount would be considered to be part of the owner's profits. with this new approach, the Franchisee would realize an income stream directly related to his capital purchases. This change would respond directly to requests made by the Franchisees as part of the current rate process for compensation for interest-related expenses. It is proposed that rented or leased equipment continue to be added to the NTFA (capitalized) and that both a depreciation allowance and an imputed interest allowance (use of capital charge) be included in calculating the rate adjustment. Rent paYments would be disallowed. This approach would be consistent with current District practice and should be continued as a means of putting owners and renters on a common economic basis. Profit Calculations The long-standing District practice for calculating the profit due to the Franchisee lumps profit, interest expense, and income taxes into a single amount referred to as the gross profit. The lump sum gross profit amount is determined as a percentage (generally 5 percent to 6 percent) of allowable operating expenses. This approach is rational and has served the District well for many years. It has deficiencies which have been discussed within the District and which have become major complications in recent years. Substantial increases in operating expenses would have led to huge windfall profits had the Board not eliminated disposal charges from the expenses which make up the profit calculation. Other adjustments had to be made to the operating ratio to compensate for the disposal charge change. Each such adjustment, while appropriate, undermines the basic rationale of the Operating Ratio procedure. A further difficulty is that setting the profit as a percentage of operating expenses provides a disincentive for the Franchisees to cut expenses. 13028-9/85 SUBJECT RECEIVE ADDITIONAL INFORMATION TO CONSIDER THE APPLICATIONS FOR REFUSE COLLECTION RATE INCREASES SUBMITTED BY VALLEY WASTE MANAGEMENT AND ORINDA-MORAGA DISPOSAL sIn..\! C''': TNt" POSITION PAPER 3 32 PAGE OF DA T3u I y 31, 1990 An al ternati ve approach is recommended. The staff has analyzed the actual Gross Profit for each Franchisee for the last six years. The Capital Use Charge has been calculated for each year using the approach outlined in the preceding section, using the 2 year Treasury note interest for the year under consideration multiplied by the book value of the net fixed tangible assets in that year. The Capital Use Charge has been subtracted from the actual gross profit leaving a net profit before income taxes. It is proposed that the practice of setting before-tax profit be continued. Hence, no allowance needs to be made for income taxes. As shown on Attachment I-D and II-D, the six years of net profit have been adjusted by the Consumer Price Index to inflate them to 1990 dollars. They were divided by the total customer count to produce a net profit per customer per year in 1990 dollars. To arrive at the Customer Count the total revenue from all customers, including commercial customers, was divided by the average revenue per residential customer to arrive at a residential customer equivalent. The averaging method used was to reject the high year and the low year and use an arithmetic mean of the remaining four years. The resulting figure, $11.87, was then used for calculating the allowable net profit for Valley Waste Management. While the staff approach was based on the use of historical averages, the Board has the latitude to further consider other, more subjective factors in setting an appropriate net profit level. It is recommended that the Board consider the responsiveness of the Franchisee, the degree of control the Franchisee has over disposal charges, collection cost control, quality of service and other related factors. When performing the same calculation on the Orinda-Moraga Disposal financial records, the annual net profit per customer comes to $8.09. This lower figure is primarily the result of underrealization of profit goals by Orinda-Moraga Disposal in recent years. As the customer satisfaction with the quality of service appears quite high in the Orinda-Moraga Disposal service area, it would appear reasonable to use the same per customer net profit figure as had been used for Valley Waste Management. Therefore, as can be seen on Attachment II-D, the $11.87 figure was used in the staff calculation of net profit for Orinda-Moraga Disposal. 1302B-9/85 -".--.-...-.-,---.-----.--- SUBJECT POSITION PAPER RECEIVE ADDITIONAL INFORMATION TO CONSIDER THE APPLICATIONS FOR REFUSE COLLECTION RATE INCREASES SUBMITTED BY VALLEY WASTE MANAGEMENT AND ORINDA-MORAGA DISPOSAL st<:I<V I :t<: TN'~. 4 32 PAGE OF DAT.!uly 31, 1990 Allowable Expense The allowable expenses are presented as provided for in the July 12 position Paper except that the total has been reduced by the amount of the intercompany charges. These sums are presented separately. A letter explaining the charges has been provided by Valley Waste Management and is referenced as an attachment (Attachment I-B) to the Valley Waste Management Rate Calculation table. Also, an allowance has been included to cover expenses related to a recent change in State law concerning gasoline tax and vehicle registration fees. The Orinda-Moraga Disposal allowable expenses have been incremented pursuant to discussion with the Board to include a comparable allowance for gas tax and vehicle registration. Also, the cost of re-labeling the equipment has been allowed, as has an incremental increase for Mr. Navone' s salary. A number of claimed added expenses have not been included in the staff calculations; these are tabulated on Attachment II-B and explained on Attachment II-F. Commercial Recyclinq Increment Both Valley Waste Management and Orinda-Moraga Disposal will be implementing commercial recycling in the up-coming year. The estimated annual cost has been discounted to provide for a phase-in period: Incremental Commercial Revenue Required Approximate Single Conunercial Can Surcharqe Orinda-Moraga Disposal $187,400 $ 43,000 $1. 35 $1. 40 Valley Waste Management Rate Restructurinq to ImDlement Uniform Charqe Der Can At the July 12, 1990 hearing, the Board chose the three year phase- in option for implementing the uniform rate structure for residential service. The alternatives presented were (1) no restructuring, (2) restructure to uniform rate in one year, or (3) three year phase-in. District staff will be prepared to present a table showing the effects of the rate adjustment calculated on Attachments I-A and II-A on the rate restructure alternatives at the August 2 Board Meeting. Following the Board action, staff will calculate a table of rates on the preferred rate structure option. 13026-9/85 SUBJECT RECEIVE ADDITIONAL INFORMATION TO CONSIDER THE APPLICATIONS FOR REFUSE COLLECTION RATE INCREASES SUBMITTED BY VALLEY WASTE MANAGEMENT AND ORINDA-MORAGA DISPOSAL SERVICE. INC. POSITION PAPER 5 32 PAGE OF DAT3'uly 31, 1990 RECOMMENDATION: For each Franchisee under consideration, it is recommended that the Board: o Approve the inclusion of a Capital Use Charge in the calculation of the rate adjustment. o Confirm the use of 8.0 percent interest and the Net Tangible Fixed Asset as the basis for the Capital Use Charae. o Approve the use of a Net Profit sum exclusive of Capital Use Charge for calculation of the rate adjustment. o Determine an appropriate Net Profit for both Franchisees, taking into consideration historical profit levels, quality of service, and other factors deemed appropriate. o Direct staff as to which expense amounts claimed by the Franchisees are allowable for inclusion in the calculation of the rate adjustment. o Direct staff to include the sums designated as Incremental Commercial Revenue Reauired in the position Paper as allowable for inclusion in an incremental adjustment of the commercial rate to cover commercial recycling expenses. o Confirm Board conclusion that the residential rates should be restructured to a uniform per can rate over a three year period. SSS/Position Papers #l/Rtincapp.PP 13028-9/85 Attachment I-A VALLEY WASTE MANAGEMENT RATE ADJUSTMENT CALCULATION Forecasted Fiscal Year Ending June 30, 1991 Allowable Exoenses o Per July 12, 1990 position Paper, less Inter-company charges Inter-company charges (See Attachment I-B for Valley Waste Management justification) Gasoline tax and vehicle registration fee increase o o Total ca~ital Use Charae (See Attachment I-C) Profit based on recent average of 11.87 per customer per year. (See Attachment I-D) Total Revenue Required Forecasted Revenue without Rate Increase Reauired Revenue Increase Percent Increase in Revenue Required Percent Increase Ad;usted to Collect Increased Revenue in Eleven Months A summary of rates showing the effect of the 3.13% rate increase is shown on Attachment I-E SSS/PP#l/Attach.IA $10,986,000 232,000 20.000 11,238,000 179,000 574.000 11,991,000 11.657.000 S 334.000 2.87% 3.13% Valley Waste Management P.O. Box 4007 2658 N. Main Street Walnut Creek, California 94596 415/935-8900 A'lTACHMENT I.-B ~ . A Waste Management Company <- July 24, 1990 Walter Funasaki Central Contra Costa Sanitary District 5019 Imhoff Place Martinez, CA 94553-4392 Dear Walt, Enclosed for your review is a comparison of coverages between the Waste Management Corporate Insurance Program (WMCIP) and the Schroder Insurance Agency, the previous insurance company of Valley. Please note that the WMCIP coverage is three times greater than the Schroder Insurance Agency at considerably less cost. The cost savings between the 1987 base year and 1989 was $328,400 and is supported by the attached audited financial statements. ( Also enclosed is an Analysis of Corporate Discounts for the fiscal period ending June 30, 1990. The total cost savings from Waste Management's Corporate Discounts for this fiscal period were $162,000. A copy of a letter from Jo laSpina, Fleet Account Manager of White GMC Trucks of Chicago, Inc. to Marcia Yanos of Waste Management Corporate Purchasing is enclosed to provide support for the 15% discount used in this analysis. As you can see from these analyses, the combined savings of these Corporate programs is $49.0,500 for the period ending June 30, 1990. This translates to a .cost savings of approximately $.75 for a one can customer. I hope this provides the sufficient detail necessary to support Valley's request for Management and Services and Development Fees. If you or the Board has any further questions, please let me know. Sincerely, mes E. Landa Controller sl ( enc a division of SAWDCO (. <-- ( ( Valley Waste Management Analysis of Corporate Discounts Fiscal Period Ending June 30, 1990 Vehicles: Recycle Side Loader 3 Recycle Front-End Loader 3 Net After Discount Purchase Discounts @ 15% Containers: Commercial FEL Bins Automated Pilot 9O-gallon Residential Recycle Net After Discount Purchase Discounts @ 10% Total Corporate Discounts for the fiscal period ending 6-30-90 $ 390,900 160.800 ~ 551.700 $ 55,000 49,700 477.800 ~ 582.500 $ 97,400 64.700 ~ 162.100 Valley Waste Management l Insurance Coverage Comparison 1989 Waste Management 1987 Corporate Schroder Variance Insurance Insurance Favorable / Program Agency Unfavorable Comprehensive General Liability - Bodily Injury & Property Damage: Per Occurrence $5,000,000 $1,000,000 $4,000,000 Annual Aggregate $10,000,000 $1,000,000 $9,000,000 Comprehensive Auto Uability - Bodily Injury & Property Damage Per Occurrence $ 5,000,000 $1,000,000 $4,000,000 Umbrella - ( Per Occurrence $15,000,000 $5,000,000 $10,000,000 Workers' Compensation - Bodily Injury by Accident: Per Accident $1,000,000 $1,000,000 $0 Bodily Injury by Disease: Policy Limit $5,000,000 $1,000,000 $4,000,000 Bodily Injury by Disease: Per Employee $1,000,000 $1,000,000 $0 Deductible Program: $10,000 $1,000 ($9,000) Annual Premiums: ~47.1oo (A) f975.500 (B) ~328.400 ( (A) See attached audited financial statement (B) See attached audited financial statement l ( ( V) z o i= <: ~ UJ 0.. ...0 z~~ UJooo ~~~ UJ u.. .. tjUJ- <:~'" Zo'" <: C) ~~E UJ-C) ...u..u V)O~ <:u:l"O ~...!C) >::>"0 UJOc ...!u:lu:l ...!:I::U <:ucu >V)> c o c;E >.CIS ...~ UC CIS V) 'H"'~ ogC) >._ cu . ....-&.0 uiiu - >..... 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N-I"-NC"'\C"'\- ~N~O'\O~O .::t- ..... .... -.. .... - uJ :E o U Z - tj Z - ... c( ~ uJ 0.. o V) V) o ~ tj V) UJ V) Z UJ 0.. X uJ UJ > VI i= ~ <: C)C ,.,; toO C) .... ct!o. ... ....X ~ ~CU Z tIC 0.. C) - .S -0 ~ ~ ....C....VI o 9ClSEcuC) ~ OVl....CUVl .... UC)VI'HC o ~::::.2""8. Z ." 0..... C x -oQ.EC)C) <:Vlc~"OE.... ...lC)CIS ClSC)VI <: .... _ 8 ... tIC C) ,.,;:UClS_C)~t w;o.... tIC.....c: CIS .... ~~~OO:E..5 uJ tj ~ " ~ N .;t- o :1 N - " - ~ - 0(/)0 " o " o '" " 0(/)0 r-.. It'\ N o N - - UJ ~ o u z - tj z i= < ~ UJ 0.. o . . . V ALLEY DISPOSAL SERVICE. INC~. SUPPLEMENTAL SCHEDULE OF INCOME FROM 0PERA nONS Year ended December 31, 1987 ( Central City of Sanitary City of San District Walnut Creek Ramon Total Revenue $ 7.121 .862 $ .5.783.937 $ 1.724.96.5 $14.630,764 Operating expenses: Salaries and wages 2,428,094 1,667,790 296,97.5 4,392,8.59 Payroll taxes 216,436 1.52,.531 26,430 39.5,397 Employee benefits (Note .5) 699,620 487,464 131,823 1,318,907 ... Worker's compensation 1417 t 9921 insurance 291,.598 80,4.54 790,044 Dumping charges (Note 6) 1,.5.51,117 1,198,33.5 439,22.5 3,188,677 Box rent (Note 6) 2,080 1,386 3,466 Yard rent 7,026 4,904 1,32.5 13,2.5.5 Supplies . 2.5,862 19,662 .5,891 .51,41.5 Franchise fee 26,69.5 219,478 170,287 416,460 Telephone and utilities 17,142 11 ,891 3,20.5 32,238 Box repairs 91,313 62,100 17,38.5 170,798 ( Gas, oil and diesel 187,192 129,312 .54,621 371,12.5 Tires and tubes 79,900 .54,612 1.5,.590 1.50,102 Truck repairs 427 247 33.5,264 88,047 8.50,.5.58 > Insurance ).5.57 :.511 J 391,.520 110,603 1,0.59,634 Property taxes 14,368 10,027 2,710 27,10.5 Interest on boxes 2,11.5 2,11.5 Interest on trucks .50,911 28,213 42,731 121,8.5.5 Truck rent (Note 6) 69,.502 92,293 161,79.5 Other truck expenses 77,1.54 .59,6.50 21,4.51 1.58,2.5.5 Office supplies and postage. 4.5,194 30,028 10 ~.540 8.5,762 Legal and accounting 148,266 11.5,182 22,.5.58 286,006 Directors' fees 1,749 1,221 330 3,300 Depreciation and amortization 391,.511 337,33.5 273,976 1,002,822 Office and yard repairs 17,988 12,738 3,.599 34,32.5 Other administrative expenses 107,873 69,477 13,691 191,041 Compactor expense 1 ,940 1 , 940 Resource recovery 62.981 62,981 7,663,798 .5,846,992 1,833,447 1.5.344,237 Loss from operations S (.541,936) $ (63,0.5.5) $ (108.482) ~ (713,473) 10m! ,qS7 :IN.5.JJtA''~&' &~..t 1> '7~{o.!J ( SCHEDULE 1 The accompanying notes are an integral part of the financial statements. // It /' //WHITEGMC TRUCKS OF CHICAGO, INC. 5300 West Plattner Drive, J ), Illinois 60658 (312) 371.7010 _1-1 April 7, 1989 Waste Managenent, Inc. 3003 Butterfield Road Oak Brook, Illinois 60521 Attn: . Marcia Yanoa Dear Marcial RICEIVD APR 1 0 1989 B'lI!URCHASt18 Per our conversation today and for your information, a typical WMI East Coast Xpeditor or Lc:1w Entzy Xpeditor or Autocar chassis is discounted an average of 30% of list price to w.iI. '!his discount, approximately 15% over small fleets, is offered to WMI due to corporate purchasing volunn disco\mts. We hope this is the information you were looJdng for. Very truly yours, ( c:r- Joe Laspina Fleet Account Manager JL;ld I I I :1' . i I 1 i ( Attachment I-C VALLEY WASTE MANAGEMENT CAPITAL USE CHARGE Forecasted Fiscal Year Ending June 30, 1991 Net Tangible Fixed Assets, June 30, 1990 Commercial Recycling Program Capital Additions One-half of Net Capital Additions in 1990-1991 Captal Use Base Interest Rate capital Use Charge SSS/PP#l/Attach.IC $ 828,000 852,000 561. 000 $2,241,000 8% S 179.000 ATTACHMENT 1-0 VALLEY WASTE MANAGEMENT COMPUTATION OF ALLOWABLE PROFIT, NET OF CAPITAL USE CHARGE FORECASTED FISCAL YEAR ENDING JUNE 3D, 1991 EQUIVALENT UNITS -------------_...- RESIDENTIAL CUSTOMERS ------------...----------------------- RESIDENTIAL AVERAGE TOTAL CUSTOMER TOTAL NUMBER OF ANNUAL ALL EQUIVALENT YEAR REVENUES CUSTOMERS REVENUE REVENUES UNITS ------.....--...-- ----...------ --------..-- ----------- ----------- ------............. 1990 $6,619,000 28, 179 5235 511,092,000 47,200 1989 5,500,000 27,349 201 8,700,000 43,284 1988 4,388,000 26,511 166 7,752,000 46,699 1987 3,591,000 25,457 141 6,370,000 45,177 1986 3,600,000 27,908 129 6,805,000 52,752 1985 3,465,000 26,224 132 5,873,000 44,492 FORECAST 1991 6,792,000 28, 179 241 11,654,000 48,357 <A> HISTORICAL PROFIT, NET OF INTEREST PROF IT, NET OF CAPITAL USE CHARGE PROFIT, NET OF CAPITAL USE CHARGE ADJUSTED BY CPI YEAR ACTUAL FORECASTED ACTUAL FORECAST ACTUAL PROFIT, NET OF CAPITAL USE CHARGE, PER RESIDENTIAL CUSTOMER EQUIVALENT UNIT 1990 $655,000 S463,000 1665,000 S463,000 513.88 1989 456,000 453,000 476,000 472,000 11.00 1988 476,000 295,000 522,000 323,000 11.18 1987 (119,000) 288,000 (136,000) 330,000 (3.01) 1986 513,000 287,000 603,000 338,000 11.43 1985 762,000 215,000 925,000 261,000 20.79 Average of four years after eliminating lowest and highest figures 511.87 ------------ ------------ COMPUTATION OF ALLOWABLE PROFIT, NET OF CAPITAL USE CHARGE 1990-1991 Forecasted Residential Customer Equivalent Units 48,357 <A> Allowable Profit, Net of Capital Use Charge, Per Equivalent Unit 511.87 Allowable Profit, Net of Capital Use Charge 5573,998 ATTACHMENT I-E VALLEY WASTE MANAGEMENT EFFECT OF 3.13 PERCENT INCREASE ON RESIDENTIAL COLLECTION RATES EFFECTIVE AUGUST 1, 1990 CURRENT RESIDENTIAL RATES NUMBER OF CANS CUSTOMER DISTRI.BUTlON 2 15,366 . 11,368 26,734 (93X) 3 4 5 6 7 8 1,244 174 19 4 28, 178 --------------- --------------- NEW RESIDENTIAL COLLeCTION RATES MONTHLY CHARGES UNRESTRUCTURED '17.45 25.20 '18.00 26.00 2 32.95 40.70 48.45 56.20 63.95 71.70 34.00 42.00 50.00 58.00 66.00 74.00 Attachment I-F VALLEY WASTE KAlfAGEMENT ISSUES AND REQUESTED INFORMATION Intercompany Charges - Additional information in support of the corporate and regional intercompany charges totaling $232,000 was requested. The refuse collector has provided further information describing reductions in insurance premium expense and cost of vehicles and equipment purchased through corporate programs. The information received is provided as Attachment I-B. The $232,000 intercompany charge is separately shown on Attachment I-A for consideration by the Board in determining the rate adjustment required. Gasoline Tax and Vehicle Registration Pee Increases - Subsequent to filing the rate application, the refuse collector requested that $20,000 of additional expenses be considered. The additional expense is the result of the passage of Proposition 111, which required increases in the state excise tax on motor vehicle fuel, and commercial vehicle registration fees on August 1, 1990. The $20,000 of additional expense is separately shown on Attachment 1- A for consideration by the Board in determining the rate adjustment required. Interest on Commercial Recycling Capital Cost - In accordance with current District policy, $76,000 of interest on vehicle and equipment to be acquired for the commercial recycling program was disallowed in determining the incremental charge to commercial customers. At the July 12 pUblic hearing, the refuse collector claimed that the interest on capital should be allowed to be recovered in the collection rates. Under the revised profit computation, the vehicles and containers to be acquired for the commercial recycling program have been included in the capital base for Net Tangible F~xed Assets used in computing the $179,000 of interest on capital allowed in determining the allowable profit before interest shown on Attachment I-D. SSS/P.P.#l/Rtincapp.v Attachment II-A ORINDA-MORAGA DISPOSAL SERVICE, INC. RATE ADJUSTMENT CALCULATION Forecasted Fiscal Year Ending June 30, 1991 Allowable Exoenses o o o o o Per July 12, 1990 position Paper Gasoline tax; Vehicle Registration Fee Corporate Identification Program Salary Increase for George Navone Additional items not included in staff analysis (See Attachment II-B) Total CaDita1 Ose Charae (See Attachment II-C) Profit (See Attachment II-D) Total Revenue Required Forcasted Revenue without Rate Increase Reauired Revenue Increase Percent Increase in Revenue Reauired Percent Increase Ad;usted to Collect Increased Revenue in Eleven Months A summary of rates showing the effect of the 13.73% rate increase is shown on Attachment II-E. A Discussion of Issues and Requested Information is Shown on Attachment II-F. SSS/PP/Attach.IIA $ 4,869,000 8,000 20,000 14,000 4,911,000 55,000 202.000 5,168,000 4.590.000 S 578..000 12.59% 13.73% Attachment II-B ORINDA-MORAGA DISPOSAL SERVICE, INC. ADDITIONAL EXPENSE ITEMS NOT INCLUDED IN STAFF ANALYSIS Forecasted Fiscal Year Ending June 30, 1991 Environmental Contingency Reserve $ 150,000 Aquisition-Related Costs Route Audit 140,000 30,000 Customer Relations 22,000 Unrecovered Recycling Expense .104,000 Facilities Expense Equipment Expense 18,000 18,000 staff Increase 36,000 Supervisors Vehicle Expense Total 12.000 S 530.000 SSS/PP#l/Attach.IIB Attachment II-C ORINDA-MORAGA DISPOSAL SERVICE, INC. CAPITAL USE CHARGE Forecasted Fiscal Year Ending June 30, 1991 Net Tangible Fixed Assets, June 30, 1990 Commercial Recycling Program capital Additions One~ half of Net Capital Additions in 1990-1991 Capital Use Base Interest Rate Capital Use Charge SSS/PP#l/Attach.IIC $ 547,'000 112,000 34.000 $ 693,000 8% S 55,000 ATTACHMENT II-D ORINDA-MORAGA DISPOSAL SERVICE, INC. COMPUTATION OF ALLOWABLE PROFIT, NET OF CAPITAL USE CHARGE FORECASTED FISCAL YEAR ENDING JUNE 30, 1991 EQUIVALENT UNITS ......-...--......------- RESIDENTIAL CUSTOMERS ......---------------------.........---------- RESIDENTIAL AVERAGE TOTAL CUSTOMER TOTAL NUMBER OF ANNUAL ALL EQUIVALENT YEAR REVENUES CUSTOMERS REVENUE REVENUES UNITS .........................---- ---------..... ...............------ ----------... ----------- -.............----- 1990 $2,739,000 10,577 $259 $4,369,000 16,869 1989 2,232,000 10,808 207 3,502,000 16,918 1988 1,917,000 10,621 180 2,920,000 16,222 1987 1,835,000 10,377 177 2,818,000 15,921 1986 1,704,000 10,407 164 2,477,000 15,104 1985 1,587,000 10,258 155 2,244,000 14,477 FORECAST 1991 2,859,000 10,577 270 4,590,000 17 ,000 <A> HISTORICAL PROFIT, NET OF INTEREST PROFIT, NET OF CAPITAL USE CHARGE PROF IT, NET OF CAPITAL USE CHARGE ADJUSTED BY CPI YEAR ACTUAL FORECASTED ACTUAL FORECAST ACTUAL PROFIT, NET OF CAPITAL USE CHARGE, PER RESIDENTIAL CUSTOMER EQUIVALENT UNIT 1990 $99,000 $240,000 $99,000 $240,000 $5.87 1989 84,000 167,000 88,000 174,000 5.20 1988 64,000 111,000 70,000 122,000 4.32 1987 214,000 136,000 244,000 155,000 15.32 1986 77,000 108,000 90,000 127,000 5.96 1985 204,000 105,000 249,000 127,000 17.20 Average of four years after eliminating lowest and highest figures $8.09 ------------ ------------ COMPUTATION OF ALLOWABLE PROFIT, NET OF CAPITAL USE CHARGE 1990-1991 Forecasted Residential Customer Equivalent Units 17,000 <A> Allowable Profit, Net of Capital Use Charge, Per Equivalent Unit 511.87 Allowable Profit, Net of Capital Use Charge $201,790 ------------ ------------ Because of the low average profit, net of capital use charge, per equivalent unit of . S8.09, the amount computed for Valley Waste Management of $11.87 is being used. ORINDA-MORAGA DISPOSAL SERVICE, INC. EFFECT OF 13.73 PERCENT INCREASE ON RESIDENTIAL COLLECTION RATES EFFECTIVE AUGUST 1, 1990 CURRENT RESIDENTIAL RATES NUMB~R OF CANS CUSTOMER MONTHLY DISTRIBUTION<1> CHARGES <2> 2 4,781 3,731 $18.40 26.70 8,512 (93X) 3 4 5 6 510 75 9 35.00 43.30 51.60 59.90 9,107 --------------- --------------- <1> Full service customer distribution shown <2> City of Orinda full service rates shown ATTACHMENT II-E NEW RESIDENTIAL COLLECTION RATES UNRESTRUCTURED $20.95 30.40 39.85 49.30 58.75 68.20 Attachment II-F ORIHDA-KORAGA DISPOSAL SERVICE, IRC. ISSUES AND REQUESTED IHPORMATION Orinda-Moraga Disposal service, Inc. (the refuse collector) is in the process of being sold by the Navone family to W. Douglas Lomow, an individual who owns a refuse collection company in Idaho and who resides in Southern California. The consummation of the sale by Mr. Lomow is conditioned on the District's approval of sUbstantially all of the 1990-1991 rate application, as submitted. The rate application was prepared by Mr. Lomow to reflect numerous planned changes in the collector's operations under the new ownership. The District's long-standing practice of not accepting additional submissions of forecasted expense after the staff analysis has been completed was departed from during the July 12, 1990 public hearing in consideration of the unique conditions attendant to a change in ownership. However, because such late submissions affect the District staff's ability to perform a review of their support- ability, the description of the issues and forecasted expenses which follow are categorized as to time of submission. Issues and EXDenses Included in the Oriainal Rate A~Dlication Environmental continqency Reserve - A $150,000 contingency reserve for investigation of possible diesel fuel contamination at the collector's corporation yard is included in the rate application. However, the basis for the estimated expense is not adequately supported. District staff recommends that consideration of the site investigation expense be deferred until such time as a mid- period review of closure costs assessment and/or transfer station fee increase occurs. During the intervening period, supporting documentation for the expense of the site investigation should be developed by the refuse collector. Acquisition-Related Costs - In the course of preparing the staff analysis, District staff advised the collector that the consulting fees of $90,000 and covenant-not-to-compete fees of $50,000 payable annually for five years to the current owners would be disallowed as being part of the consideration pursuant to the pending sale agreement. In discussions held by District staff with Mr. Lomow and George ~avone regarding the nature of these fees, Mr. Lomow agreed that these fees were acquisition-related costs, and not operating expenses. In accepting the disallowance, Mr. Lomow requested consideration for additional expenses not included in the rate application. These four addi tional expenses were: route audit, $30,000; software modifications, $7,000; customer relations program, $22,000; and corporate identification program, $20,000. District staff accepted the $7,000 software modification and included it in the staff analysis by adjusting the rate application; the collector was notified that the other expenses would not be accepted as most seem to duplicate expenses already included in the rate application. Issues and EXDenses Submitted Subseauent to pilina Rate ApDlication At the July 12, 1990 public hearing, the three remaining expenses of the four expenses indicated above were , requested, in addition to Board consideration for allowance of the consulting fees ahd covenant-not-to-compete fees. Addi tionally , the collector requested consideration for fuel tax and vehicle registration fee increases, and unrecovered expenses of the residential recycling program. Route Audit - Board consideration for $30,000 to perform route audits by two auditors over a six-month periOd was requested at the July 12 public hearing. District staff recommends nonacceptance of this expense. Route audits should be performed on a routine, phased basis under the direction of the new Operations Manager, with features to accommodate route audits designed into the new computer system. Customer Relations - $22,000 was requested on July 12 to perform a customer survey, and to conduct community/school education programs concerning waste handling, recycling and household hazardous materials. District staff recommends nonacceptance of this expense. Details regarding the customer relations program would be required to assess its effectiveness, and to determine that it would not be duplicative of other programs within the County. Upon receipt of sufficient details, this program may be appropriate for future consideration. Corporate Xdentification proqram - $20,000 was requested on July 12 to paint and identify all containers, vehicles, and equipment to be in compliance with the franchise agreement terms. The collector attests that this is not duplicative of $20,000 included in the Container Repair account which is similarly described. District staff recommends acceptance of this expense; however, a review will be performed to insure completion during the rate year, with an adjustment to be made next year if the project is not completed. Gasoline Tax and Vehicle Reqistration P.e Xncr.a.e - The increased expense was requested on July 12; however, no amount of increase was provided. As of July 27, 1990, the refuse collector's accountant indicated that he was unable to provide the amount of increase. District staff recommends acceptance of this expense; an increase of $8,000 has been estimated by District staff based on the amount calculated for Valley Waste Management. Unrecovered Expenses of Residential Recyclinq proqram - At the July 12, 1990 public hearing, it was contended by the refuse collector that the major cause of the underrealized operating income for the fiscal year ending June 30, 1990 was higher than projected expenses of the residential recycling program. The refuse collector requested consideration by the Board for recovery of $104,000, which it attributed primarily to the higher than forecasted recycling program expenses. Expenses Submitted for Consideration on Julv 27. 1990 During the July 12, 1990 public hearing, the refuse collector was advised by the Board to consider revising certain expenses related to the compensation of George Navone in view of the Board's likely disapproval of the acquisition-related costs. Mr. Lomow advised District staff that the revised information would be submitted by July 23, 1990. In a letter dated July 27, 1990, provided as Attachment II-G, the refuse collector indicates that it is withdrawing its request for consulting fees and covenant-not-to-compete fees, conditioned upon acceptance of the following expense increases: Salary increase for George Navone from $76,000 annually to $90,400; facilities expense increase of $1,500 per month; and equipment expense increase of $1,500 per month. Additionally, the collector requests expenses for a new Commercial and Recycling Supervisor position at, $3,000 per month and two supervisor vehicles at $1,000 per month. District staff recommends allowance of the management salary increase. However, the facilities expense and equipment expense increases are not adequately explained or supported and should be disallowed; based on the size of this refuse collector's operation, the new management staff of President, General Manager, Operations Manager and current supervisory staff are considered sufficient to manage the commercial recycling program. .,.. ,\ .--. ~ .. c,...- .. "t" Attachment II-G LITrLE & SAPUTO ( PBI'ER T. SAPUTO OISELLB A. JUIUCANIN .KI!.N D. LI1TIA A'I'1OltJt/1!YI At loA'" 500 YONACIO VALLEY llOAD. SUITS 3110 WALNtrI' CRIlliK, CA 9459l'i (415) 944-5000 '"CS1MII.8 (415) '".\112 July 27, 1990 VIA FACSIMILE Walt.er Funasaki contra Coata Central sanit.ary District 5019 Imhoff Place Martinez, CA 94553 ReI Orinda-Moraqa Disposal Service, Inc.; Rate Application Fiscal Year Ending June, 1991 Dear Walter: ( Followinq the July 12 meetinq, Orinda-Moraqa Disposal Service, Inc. (th. "Company") has reanalyzed the Company I s current and proj ected financial pOlli tiona. Following is our proposal tor further and final revisions for the 1990/91 rat. application: 1. The Company withdraws its request to have the Consulting A9ree~ent. expens. ($90,OOO/year) and the Covenant Not To Compete expense ($50,000/year) considered as part ot the rate application. This is conditioned upon acceptance ot the modifications detailed in paragraph 3. 2. In addition to the staff report summary providing for a $492,048/10.72' increase (which the company previously requested of the Board) at the public discussions, the tollowing were also requested; Route audit CUstomer Relations Contractor Compliance (Contractor 1D) Truck Weight/Fuel Tax $50,000 $22,000 $20,000 $ 3. The Company alao requests the following modifications to various other expen...: a. Facilitie. expenses increase of $1, SOD/month to $108,000/year. b. Manaqement salary increase of $1,200/month to $90,400/year for George Navone. ( Vir wlr """V .. .. .. .. "'''''''...1..1..1.''' I.JI I ILtLt II. ~n,-vlV II/;lVVv . . ( Walter Funasaki Contra Coata Cen~ral Sanitary District July 27, 1990 Page 2 c c. Equipment expense increase of $l,SOO/month to $307,OOO/year. The Company also seeks the creation of a new supervisor poaition of "Commercial and Recycling Supervisor" at $3,OOO/month; and two supervisor vehicle. at a total cost of $l,OOO/month. As you will note, the difference between the total dollars withdrawn in paragraph 1. and those reque.ted in paragraph 3. is $62,000. Orinda-Moraqa ia prepared to give up this to help expedite the prooeas. 4. ll'he Compant' s reque.t to the Board for 1989/90 lost profits ot $104,000 due to the impleJDentation of the recycling proqram speaks for itself. Attached hereto are two (2) pages troJD the rate application (3-1 and 4-1). on 3-1 the difference (10..) between recycling revenue. and costs is $177,000. This is the loss attributable to the new recycling program mandated by the District. However, the overall loss for all operation. is only $104,000 as shown on 4-1. This lesser amount is what is requested. 5. Finally, OrlnCla-Moraqa believes ~hat the eorrect operatin9 ratio to be used to calculate profit for this Company should b. 90t without di.posal fees or 93% with disposal feas included. This is to otf..t the loss ot revenues that would otherwi.. result it the 94' u.ed by staff were applied to expenses excluding disposal faes. Very truly yours, LITTLE & SAPUTO 1~4ff .::?'::./ 'Li ttle lCDL/mk enclosure co: Orinda-Moraqa Di.posal Service, Inc. ( . . .. - . - CSt 3...1 (, ORU'DA..fIDIIA~ IISfIOSAL ..a, lit. FmCASTE' I~ ITA'JIM IIJfHOUT RATE laast 811f P"e.llt Forecalted Percent Doll,r Ye., of ,.., of Iller..1t '"unt 6/30190 Totll 6/30/tl TohJ (hcreu,] Iller'lIl AccOlnt Description (000'1) E.,t,.1t (000' ,) E'"HH (000',) tOterll1f "vlftll'-"fus. 4.194 9.. ,.. 4,378 ".'" 184 4.3~ lt~u"rtc1clin9 . "1""' 4.13 212 4.15 37 21.14 1."'111 [a"nl. 1,332 31.42 1,580 30.'1 248 18.62 r'...Chill rlf. 42 0.99 4' 0.88 3 7.14 lriVlt . H.l", E.,.n.. 1,15& 21.27 1,168 22.15 12 1.04 Truck Ind Equip-rilld, 215 5.07 170 J.33 -4' -2(1.93 Trvet and E.uip.Y,'iablt 423 9.ge 450 '.80 27 6.38 C .hlel. R.,air Er,'M! 93 1.19 111 2.17 IS 19.35 Otblr lir.ct ESPlftl' 239 5.64 361 7.06 122 '1.0~ .tertIi"D Es"n.,s (if~ '.30 545 10." 1'3 54.83 . ".nl Ind Ad.jnl.k,th. 387 9.13 682 13.34 2" 76.13 r, Tot.1 Op.r.tion exp.ns, 4,239 100.00 5,112 100.00 173 20.5' Oth.f IIICOII and EID.ns. (4B) -1.13 12 0.31 6(1 -12S. O~ P,ovision for InCOI, tl.'1 39 O.U 0 0.00 -3' -100.00 lit InCH' 43 1.01 (510) -13.20 .'~3 -1286.05 ......... ......... --. -.-.. ......... ........... Nt, F'.1d T.n,ibl. AIset5 (I 67 67 IIIMrs' (quity -31 II! J50 -483.87 b'.", 011 E~ity "138.71 -421.57 208.'7 C' '''11 Oft ht rhld Talli,bJt Allft' -751.19 ".rati,., RIHo 101.07 U,.771 15.53 :I' ....r .. . ...,. cs. ~-1 ( OtrNDA-ftORAGA D!SPosAl SERVICE. lit. PASE rEAR ACTUAL 1/. BAst YEAI! FORECASTED lu. V.., "'re,"t lu. VtI, flfrctnt Doll.r 6/30/90 of "3(119(1 of JntUu. '" (,n: F'orcuh~ Totd ActuJ! YoU! (hcrtlst) IIIUU! A(count Dtlcript;on (00"'5' (lOlnn (0{.I0'.' r.",nlf fOI)(l'I' rD,t,,.. R'Ylnu. ...14(1 107.14 4!3" )03.07 129 ~. 5: Oilpot.1 Ex,.nl. l.ne 3'.37 1.332 31.42 4 0.3\ r'lnch i il rlt. :~ ~l. ,s 42 {t.g~ 13 404.8: Ori'tr , HII"., E.p.III. J.n.. 31. 68 ! .394 3~.89 110 : ~.a~ Truet And Eouio-ril'~ 15' 3.'!1 265 ii.2S 111 72.0l Truck .nd Equip-~'~I'blt "S~ 12.53 473 11.16 -11 -2.2i VthicI. R,o.it [xDlns. 71 :.a.. ~3 ,. :~ ~2 3~. 9~ Othtr Dir.ct Ex..nl' 22' 5.B7 ')C'.. 5 ':;''' 26 J I. 4~ .:J~' . . ( ifn.,.1 and Ad.inistr.tj". 34i S. ~B 387 ~,!J 40 1 !.S~ rotll Oplr.tion EXD,n5' 3..'. 100.00 4.239 1(10. Oti 37~ ~. 7( . Oth.r In(DI. .n~ ErD.nS! (3(;: .~.'i (49; -1.:3 -r8 6". (Ie ,. 'r~~ilion for IntOI. T'J~t 9i ~.56 3' O.9~ -60 '. -:jO.61 . Htt 11\'011 I'"~ 3.80 ~3 1.0j -1(.4 -7..,. 7~ IIIIIIU. 1111....11 ......... 30&&...... .ZS:ZEII... 11'::::Z:: Mlt rix,d Tlnplbl. 4!s.ts .,.. 'j -4$4 -I O~. \1(' 1v",r5' (quity 114 -31 -145 -!27.:~ R,turn on EqUIty 128.95 -138.71 -='Oi.:; I.turn on Nft rilld T.nigbl. A'Ilts 32.38 o,luting lltl9 93.33 97.02 ~.,~ (