HomeMy WebLinkAbout03-24-1971 AGENDA BACKUPBOARD OF DIRECTORS
CHARLES J. GIBBS, President
DON L. ALLAN
PARKE L. BONEYSTEELE
RICHARD J. MITCHELL
GEORGE A. RUSTIGIAN
NT AL CONTRA CO
SANITARY DIST ICT
1250 SPRINGBROOK ROAD
MAILING ADDRESS: P.O. BOX 5266
WALNUT CREEK, CALIFORNIA 94596
TEL. 934-6727 AREA CODE 415
March 18, 1971
MEMORANDUM FOR: THE HONORABLE BOARD OF DIRECTORS
G. A. IIORSTKOTTE, JR.,
General Manager—Chief Engineer
ERNEST K. DAVIS
Secretary
VIA; Mr. G. A. Horstkotte, Jr., General Manager -Chief Engineer
SUBJECT: Staff Report on Garbage Rate Increase by Lafayette Garbage
Disposal Service, Inc.
REF: a, Basic Staff Report Dated 17 March 1971
1. Attached is a corrected Enclosure "p" to reference "a".
Staff inadvertantly showed $2.45 to be the New Rate for 1971 instead
of $2.85 which rate was actually employed in the report.
2. Attached are additional data on the operations of Lafayette Garbage
which are pertinent to the basic report.
3. In the basic report, staff assumed the franchisee fee of $1,000.00
per year was applicable for the period 1971 through 1973. In view
of the increased cost to the District to monitor the operations of
each franchisee, the Board Members may wish to take into considera-
tion an increase in the franchisee fee in their determination of a
rate increase.
Respectfully submitted:
E. K. Davis
Administrative Assistant/Secretary
Ap
4(
. A. Horstkotte, Jr.
General Manager -Chief Engineer
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New customers for the period 1968 - 1971 increased an estimated 35%
New customers for the same period generated an additional estimated $53,847.29 in revenue.
BOARD OF DIRECTORS
CHARLES J. GIBBS, President
DON L. ALLAN
PARKE L. BONENSTEELE
RICHARD J. MITCHELL
GEORGE A. RUSTIGIAN
MEMO
VIA:
SUBJECT:
NT
SA
AL CONTRA CO
!TAY ISTRJCT
1250 SPRINGBROOK ROAD
MAILING ADDRESS: P.O. BOX 5266 ERNEST K. DAVIS
G. A. HORSTKOTTE, JR.,
General Manager—Chief Engineer
WALNUT CREEK, CALIFORNIA 94596
TEL. 934-6727 AREA CODE 415
March 17, 1971
FOR: THE HONORABLE BOARD OF DIRECTORS
Secretam
Mr. G. A. Horstkotte, Jr., General Manager -Chief Engineer
Staff Report on Garbage Rate Increase by Lafayette Garbage
Disposal Service, Inc,
1. GENERAL: The staff wishes to express their sincere appreciation to
Mr. Louis A. Repetto and to his accountant, Mr. Eugene E.
Brown for their complete cooperation and assistance in the
preparation of this report.
2. FACTS: See
a.
b.
c.
d.
e.
f.
g.
Letter of Mr. Repetto, dated 25 February requesting rate increase.
Letter of Mr. Brown, dated 25 February with enclosures specifying
justification and amount of rate increase requested.
List of Lafayette Garbage Disposal personnel with dates of em-
ployment affected by the new labor agreement.
List of customers serviced by Lafayette Garbage Disposal as of
31 December 1970.
Financial Statements (Balance Sheet for 1970 and Income Statements
for 1969 and 1970) of Lafayette Garbage, prepared without audit.
Copy of Labor Agreement between Lafayette Garbage and Teamsters
Union Local #315 for the period 1 January 1971 through 31 December
1973.
Copy of previous Labor Agreement between same parties for period
1 January 1968 through 31 December 1970, expired.
h. Analysis of cost involved with new labor agreement.
i. Analysis of Lafayette Garbage Balance Sheet and related statistics.
j. Analysis of Lafayette Garbage Income Statement and related statistics.
k. Analysis of Lafayette Garbage Expenses.
1. Analysis of Lafayette Garbage list of customers with Lafayette pro-
posed rate revenue.
Analysis of Lafayette Garbage projected income statements based on
rates proposed by
n. Lafayette Garbage
o. Lafayette Garbage
by staff.
p. Rate structure as
Lafayette.
list of customers with staff utilized rate revenue,
projected income statements based on rates utilized
utilized by staff to project future income.
Honorable Board of Directors -2-
3/17/71
3. GENERAL COMMENTS: it is recognized that analysis based ou financial
and operating statements spanning at least five years
instead of two or three as in this case is more mean-
ingful. Subject to that
a. In preparing the analysis on cost involved with the new labor agree-
ment (see "h" above) the figures reflect the senority of individual
labor personnel of Lafayette Garbage projected through 1973. The
cost for labor for the year 1970 also includes "sick leave" as re-
quired by the 1968 agreement, Provision for "cast of living increase"
is based on .08 per hour per employee for six months in 1971 and
six months in 1972.
b. Analysis of the Lafayette balance sheet (see "i" above) indicates
the amount of working capital is increasing, though for 1970 it still
is on only a 1:1 ratio with accounts receivable. In 1970, the major
(72%) application of funds reflect additions to other than working
assets of the company or the retirement of loans. Fixed assets
depreciated greater than replacement.
CO Analysis of the Lafayette income statements (see "j" above) indicate
a trend of revenue increasing at a greater rate than current assets,
fixed assets and accounts receivable.
d. Analysis of the Lafayette Expense statement (See "k" above) indicate
dump expense is becoming a major cost. Cost for rental of truck
and equipment has been constant throughout the reporting period.
With the signing, of the new labor agreement, it is possible that
management Income will be in some cases less than employee.
e. Analysis of the Lafayette customer/service list (See "1" above),
conversation with management, and the income statements indicate
that all the service provided by Lafayette is not covered by
District Ordinance No. 70. Specifically: School "7ervice(at pre-
sent negotiated by arrangement between Lafayette and the School
District); Drop Box Service at present $27.50 per use of 20
cubic yard box and $19.50 for 14 cubic yard box), and lastly addi-
tional weekly service to Multi -family units (At present, Lafayette
Charges an additional •30Q for each weekly pick-up for regularly
scheduled Multi -family customers). Froin the list of customers
serviced by Lafayette, application of current rates produce revenue
generally comparable to actual 1970 reported income in all but one
category. Commercial customers on the 1970 income statement pro-
duced over $10,000,00 more income than that generated by applying
current rates to number of customers and service,
f. The projected Lafayette income statements for 1971 through 1973 (See
"le above) reflect 7.1.n general the application of rates as proposed
by Mr, Brown (See "h" above) with no increase in costs other than
for labor and labor benefits. The exceptions to Mr. Brown's pro
posals are; the statements reflect staff estimate of cost for the
Uonorable Board of Directors 3/17/71
g.
new labor agreement; dividend of $3,000.00 (other income)
was assumed from Acme Fill.Corp; on revenue, application of
the proposed rate increase was applied to Drop Box Service;
and lastly, also on revenue, staff applied the proposed rates
only on Commercial customers shown on Lafayette's list (See
"1" above). Accordingly, even with the proposed rate increase,
commercial customer revenue for 1971 is less than 1970.
The Lafayette customer/service list (See un above( reflects
the'application of staff proposed rates for the period 1971-1973
a d the revenue generated for the customers reported. It should be nol
Lafayette reported 3203 "Specials" for the six month period 1 July -
31 December 1970. Staff assumed this figure as reported on
Lafayette's customer list to be one half of the normal year service
and therefore doubled it to reflect the one year total.
h. The projected income statements for 1971 - 1973 (See "0" above)
reflect the application of rates utilized by staff and the allo-
cation of costs as appears reasonable at this time. Primary,
source for revenue estimates was the list of customers serviced
by Lafayette. In the case of Drop ox Service, revenue was pro-
jected for 1971 at 137., 1972 at 11% and 1973 at 9%. Projected
revenue for Commercial Service reflects the inclusion (shown
separately) of revenue generated by Commercial customers not
shown on the Lafayette list of customers. Columns 4, 6, and 8
reflect percentage increases of the year 1970.
4. DISCUSSION: Formulation of a rate charge for a large number of customers
requiring different types of service and projected over a
period of three years is not an easy task when the object
is to he equitable between customers and garbage firm. The
rates utilized as applied by staff are to provide the Board
Members with a range of rates that may be applicable.
Management of Lafayette Garbage Disposal has verbally re-
quested that the Board make new rates retroactive to 1 March
1971. The justification for this request is the additional
financial burden imposed by the new labor agreement without
compensating Income. Lafayette's billing procedure is com-
patable with this request. (Twelve billings per year, each
encompassing three months).
5. RECOMMENDATIONS:
a. The Board of Directors express their appreciation for the coopera-
tion and assistance extended to the staff4 J'At. Repetto and Mr.
Brown,
Honorable Board of Directors
-4-- 3/17/71
b. The Board of Directors consider determining rate. Charges to
include all 'service provided by franchisee's to customers
of the District Such determination to be reflected in. District
Ordinance.
c. The Board of Directors deny the proposed
Garbage as being not fully justified.
d. The Board of Directors request a Public Hearing for 1 April 1971
to determine rate charges for residents of Lafayette Garbage.
e charges by Lafayette
Respectfully,
.4. • • ••-•
Y. X, Davis
Administrative Asslatant/Sesret4rY
Recommendation Approved;
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MartB 23, 1991
MEMORANDUM DOE, 1E8 HONORABLE MEDIUM OF THE BOARD. OT DIRECTORS,
VIA Ni. C. A, Uoretkotte, jr., General Manager -Chief Engineer
UBJEHT:
Staff Repurt on Lafayette Farbage Disposal Service, Intu
Rate Request -
la Aft abed is a. corrected. P:ge 2 for insertion tne ataff memnrandUm
of: 18, Beath 1971.
Respe7:,:t fully submitted:
E. LE Bevis
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