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Home My WebLink AboutCC Resolution 11700 (MSS Rates 2005)RESOLUTION 11700 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL TO SET MAXIMUM RATES AND FEES FOR MARIN SANITARY SERVICE REFUSE AND RECYCLABLE MATERIAL COLLECTION AND DISPOSAL SERVICES, TO BE EFFECTIVE RETROACTIVELY TO JANUARY 1, 2005. WHEREAS, the City of San Rafael and Marin Sanitary Service have entered into a written Amendment and Restatement Agreement dated September 4, 2001; and WHEREAS, Section 3(B) of the Amendment and Restatement Agreement provides for rates to be amended from time to time by the City Council; and; WHEREAS, Exhibit "C" of the Amendment and Restatement Agreement provides for approved rate setting tables, as amended, to be included as part of this Agreement; and; WHEREAS, Marin Sanitary Service has submitted a rate application request using the methodology outlined under Section 3(A) of the Amendment and Restatement Agreement; and WHEREAS, the City of San Rafael has conducted a review of said rate application and produced a report, recommending rate and fee adjustments, and WHEREAS, the City of San Rafael has determined that such rate and fee adjustments are proper, in the best interest of all citizens, and will promote public health, safety and welfare. 0R0G0 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: The following schedule of maximum rates and fees, as identified as "Table One", are hereby approved for Marin Sanitary Service refuse and recyclable material collection and disposal services, to be effective, retroactive to January 1, 2005. Said Table One shall be incorporated as the revised Exhibit "C' and shall be included as part of the Amended and Restated Agreement dated September 4, 2001. I, Jeanne M. Leoncini, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael, held on Tuesday, the 18th of January, 2005, by the following vote, to wit: AYES: Councilmembers: Miller, Phillips and Vice -Mayor Heller NOES: Councilmembers: None ABSENT: Councilmembers: Mayor Boro Je.-ffine M. Leoncini, City Clerk WAManagement Services- WorkFile\Finance- WorkFile\Council Material\Resolutions\2005\City\MSS Refuse Rates reso 05.doc Exhibit A Marin Sanitary Service City of San Rafael Low Income Rate Guidelines January 10, 2005 • Discontinue the Senior Rate for new customers. Existing customers would be grandfathered in. • Offer a Low Income Rate equal to a 20% discount on base rates only. Eligible customers could receive a 32, 64, or 96 gallon can at 20% off the existing base rate. All other charges (extras, distance, etc) would be at the normal rates. • Low Income eligibility would be determined using P.G. & E. guidelines. Customers would prove eligibility by providing a copy of the P.G. & E. bill showing the low income rate for the same address that is receiving garbage service. • Offered to Residential customers only. Customer must receive bill at the service address. All of our multi family customers are billed to the property owner, not the individual resident. WAManagement Services- WorkFile\Finance- WorkFile\Refuse-waste service\2005 rate setting\San Rafael Low Income guidelines.doc 2005 2005 Service level Standard Proposed Low Rate Income Rate 32 gallon can — flat $19.90 $15.90 64 gallon can — flat $39.80 $31.80 96 gallon can — flat $59.70 $47.70 32 gallon can — hill $22.55 $18.05 64 gallon can — hill $45.10 $36.10 96 gallon can — hill $67.65 $54.15 WAManagement Services- WorkFile\Finance- WorkFile\Refuse-waste service\2005 rate setting\San Rafael Low Income guidelines.doc EXHIBIT B FRANCHISORS OF MARIN SANITARY SERVICE .............................................................................. „........................................................... REVIEW OF MARIN SANITARY SERVICE'S 2005 RATE APPLICATION HILTON FARNKOPF & HOBSON, LLC „ ............. ........ ........................ December 6, 2004 AEhk HILTON FARINKOPF & I iOBSON, LLC Advisory Services to - • •• Municipal Management 2175 N. California Boulevard, Suite 990 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax: 925/977-6955 www.hfh-consultants.coni December 6, 2004 Mr. Kenneth Nordhoff Finance Director City of San Rafael 1400 Fifth Avenue San Rafael, CA 94915-1560 Mr. Alan H. Petrie District Manager Las Gallinas Sanitary District 300 Smith Ranch Road San Rafael, CA 94903 Northern California Southern California Central California Robert D. Hilton, CA4C John W. Farnkopf, PE Laith B. Ezzet, CMC Mr. Gary Broad Administrator Town of Ross 31 Sir Francis Drake Blvd. Ross, CA 94957 Mr. Barry K. Hogue Mr. Jeff Rawles Ms. Jean Bonander District Manager Manager, Special Projects City Manager Ross Valley Sanitary District County of Marin City of Larkspur 2000 Larkspur Landing Circle 3501 Civic Center Drive, Rm. 404 420 Magnolia Avenue Larkspur, CA 94939 San Rafael, CA 94903-4155 Larkspur, CA 94939 Review of Marin Sanitary Service's 2005 Rate Application Dear Ms. Bonander and Messrs. Nordhoff, Hogue, Petrie, Rawles, and Broad: TI -ds report documents Hilton Fa rtkopf & Hobson LLC's (HF&H) findings and recommendations from our review of Marin Sanitary Service's (MSS) application for a 4.5% increase to its solid waste rates, effective January 1, 2005 (Application), submitted to the Cities of San Rafael and Larkspur, the Town of Ross, the County of Marin, and the Las Gallinas and Ross Valley Sanitary Districts (collectively referred to as "Franchisors")? Findings Based on our review of the Application, performed in accordance with the Rate Index Methodology, we determined that a total increase of 3.4% to current rate revenues is necessary to compensate MSS for its expenses and provide it the agreed-upon level of profit. This lower increase is based on several adjustments to MSS' rate calculation (agreed-upon by MSS Management and HF&H) that are described in Section IV of the report and reflected in Attachment 2. 1 Refer to Attachment 1. om -- I-IILTON FARNKOPF & I-IOBSON, LLC Marin Franchisors Group December 6, 2004 Page 2 Survey of Comparable Rates Attachment 4 includes HF&H's survey of solid waste rates at various residential and commercial service levels for jurisdictions located throughout the Bay Area. A bar graph illustrating how the Franchisors' 32 -gallon residential rates compare to the average 32 -gallon residential rates of other Bay Area jurisdictions is included as Attachment 5. A bar graph illustrating how the Franchisors' 3 cubic yard commercial rates compare to the average 3 cubic yard commercial rates of other Bay Area jurisdictions is included as Attachment 6. We caution the Franchisors that this survey is presented for information only. They should not draw conclusions from this information, because rate comparisons are intrinsically difficult. This difficulty results from differences in items such as: 1. The services provided 2. The terrain in which the service is performed; 3. Disposal costs; 4. Rate structures, and 5. Governmental fees We would like to express our appreciation to Company management and staff for their assistance. In addition, we express our appreciation to each of you for assistance and guidance during the course of the review. Should you have any questions, please call me at 925-977-6952. Very truly yours, HILTON FARNKOPF & HOBSON, LLC X7� 't�a W4�V4� Robert D. Hilton, CMC President cc: Mr. Rick Simonson, Hilton Farnkopf & Hobson, LLC Mr. Joseph Garbarino, Marin Sanitary Service Mr. Joseph J. Garbarino, Marin Sanitary Service Ms. Patricia Garbarino, Marin Sanitary Service Mr. Ray Holmes, Marin Sanitary Service S:\ Clients j S, San Rafael � 2004 \ S3698 XISS 2005 Rate App \ Report \ Final Report T 20604.doc Franchisors of Marin Sanitary Service Table of Contents Reznewo of Marin Sanitary Service's 2005 Rate Application — Final Report TABLE OF CONTENTS SECTIONI. BACKGROUND........................................................................................................................ 1 DESCRIPTION OF SERVICES ................................................................................................................... 1 SECTION II. RATE REVIEW APPROACH................................................................................................... 2 SCOPEOF WORK.................................................................................................................................... 2 LIMITATIONS.......................................................................................................................................... 2 SECTION III. MARIN SANITARY SERVICE'S PROJECTION METHODOLOGY ....................................... 4 REVENUES.............................................................................................................................................. 4 EXPENSES............................................................................................................................................... 4 PROFIT.................................................................................................................................................... 5 SECTION IV. PROPOSED ADJUSTMENTS................................................................................................. 6 ADJUSTMENTS TO 2005 PROTECTED REVENUES.................................................................................. 7 ADJUSTMENTS TO 2005 PROJECTED EXPENSES.................................................................................... 7 SECTION V. RATE ADJUSTMENT............................................................................................................ 10 ATTACHMENTS Attaclunent 1- Marin Sanitary Service Rate Application Summary Attachment 2 - Hilton Farnkopf & Hobson Adjustment Summary Attachment 3 - Adjusted Rate Application Summary Attachment 4 - Rate Survey Attachment 5 - Chart of Residential 32 -Gallon Rates Attachment 6 - Chart of Commercial 3-CY Rates i December 6, 2004 Franchisors o/ Marin Sanitary Service Background Reviero of Marin Sanitary Service's 2005 Rate Appliralion — Final Report SECTION I. BACKGROUND Description of Services Marin Sanitary Service (Company) provides solid waste, recyclable materials, and yard waste collection and processing services to the residents and businesses of the Cities of San Rafael and Larkspur, the Town of Ross, the County of Marin, and the Las Gallinas and Ross Valley Sanitary Districts (collectively referred to as "Franchisors'). In addition, MSS and its related entities (Marin Resource and Recovery (MRR) and Marin Resource Recovery Center (MRRC)), provide solid waste, recyclable materials, and yard waste collection and processing services to the residents and businesses of San Anselmo, the north area of the Ross Valley Sanitary District, Fairfax, and San Quentin prison. MSS also provides non -franchised debris box services to residents and businesses throughout the County of Marin that contract for their services. MSS delivers refuse collected from waste generators within the Franchisors' service area to MSS' transfer station (Marin Sanitary Service Transfer Station) then transports it to the Redwood Sanitary Landfill. MSS delivers recyclable materials to MRR, where materials are processed and marketed. MSS delivers recyclable -rich loads of refuse (typically commercial) and separated yard waste loads (collected from residents), along with public self -haul loads, to the MRRC facility where recyclable materials are extracted from the waste stream, processed, and marketed. MRRC delivers residual waste, remaining after the recyclable materials are extracted, to the transfer station. December b, 2004 Franchisors of Marin Sanitary Service Rate Review Approach Review of Marin Sanitary Service's 2005 Rate Application - Final Report SECTION II. RATE REVIEW APPROACH Scone of Work Rate Adjustment Methodology The Rate Index Methodology was developed and approved in 1995. This method was used to determine 2005 rates, based on the projected results of operations from the 2004 rate review adjusted by change in certain indices (e.g., consumer price index) and new projections of certain costs (e.g., disposal expense) and revenues (e.g., collection rate revenues). The Franchisors engaged HF&H in September 2004 to perform a limited review of the Application in accordance with the Rate Index Methodology. The scope of this review is described in our engagement letter dated September 13, 2004. Distribution of Las Gallinas "City" and "county" Accounts In 2004, the City of San Rafael adopted a refuse vehicle impact fee, which would be paid by all City accounts. The Las Gallinas Sanitary District includes accounts located within San Rafael city limits and unincorporated county accounts. In order to assess the refuse vehicle impact fee on all City of San Rafael accounts, MSS split the Las Gallinas accounts into "City" and "County" accounts. To verify this was done correctly, HF&H tested a random sample of accounts and found an error rate of approximately 0.8% (3 accounts divided by 367 accounts tested). HF&H's testing methodology is described below. MSS has been notified to change the nusclassified accounts and any accounts located on those streets which were independently verified and found to also be incorrect. Due to the low error rate, the distribution of Las Gallinas accounts appears to be reasonable. Test Methodology MSS supplied HF&H with an electronic spreadsheet, which included a list of all 8,231 Las Gallinas accounts (residential, commercial, and apartments). Using a sample size calculator, HF&H determined that an appropriate sample size, to be 95% confident, would be 367 accounts. HF&H randomly chose the 1011, account listed and chose every 22nd account from that point in order to get 367 randomly selected accounts. To verify the correct classification of the accounts, F F&H visited the Marin County Assessor's office and researched each account to determine the account's Tax Rate Area (TRA). The TRA indicates whether the account is located within the City of San Rafael or within the County Unincorporated area. Any TRA which begins with "08" is located within the City of San Rafael, and any TRA which begins with "11" or greater is located within the Unincorporated County area, based on discussions with an appraiser at the Assessor's office. December 6, 2004 Franchisors of Marin Sanitary Service Rate Revie-ev Approach Reznero of Marin Sanitary Service's 2005 Rate Application — Final Report HF&H identified three accounts which MSS had incorrectly classified and four accounts which MSS had not classified. HF&H found that the accounts which were not classified were accounts which had stopped service after the reclassification; therefore, they did not appear on the active reclassified account lists. HF&H contacted the Assessor's office to confirm our findings that the remaining three accounts had been misclassified; the Assessor's office confirmed our findings. HF&H printed a list of all accounts on the three streets where the three accounts are located. HF&H individually verified each account and found a number of additional accounts had been misclassified. MSS has been notified of the findings and will reclassify the accounts. Limitations Our review was substantially different in scope than an examination in accordance with Generally Accepted Auditing Standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. However, Chiao Smith and Associates, who has issued such an opinion, audited MSS' financial statements. Our conclusions are based on the review of MSS' projections of its financial results of operations. Actual results of operations will usually differ from projections, because events and circumstances frequently do not occur as expected, and the difference may be significant. December 6, 2004 Franchisors of Marin Sanitary Service Marin Sanitary Service's Projection A9ethodoloVI Reznezv of Marin Sanitary Service's 2005 Rate Application — Final Report SECTION III. MARIN SANITARY SERVICE'S PROJECTION METHODOLOGY On October 18, 2004, MSS submitted a rate application to the Franchisors requesting that solid waste collection rates be increased by 4.5%, effective Januaiv 1, 2005. (A summary of MSS' rate application is included as Appendix A). The following describes MSS' methodology in projecting 2005 revenues and expenses. Revenues Route Revenues MSS projected its net 2005 rate revenues ($18,654,047) by annualizing the revenues received through September 2004 and reducing franchise fees payable to each jurisdiction in accordance with the franchise agreements. Non -Regulated Revenues MSS projected 2005 non-regulated revenues of $197,489 by annualizing revenues received through June 2004. The non-regulated revenues are disposal fees received at the transfer station for the transfer, transport, and disposal of solid waste from MSS' recycling facility (MRR), Mill Valley Garbage, and San Quentin Prison. Expenses MSS projected its 2005 expenses by: • Wages. Multiplying 2004's estimated wages and salaries expense by 1 plus the 1.4% percentage change in the San Francisco -Oakland -San Jose Metropolitan Consumer Price Index (Urban Wage Earners) from August 2003 to August 2004. • Benefits. Multiplying 2004's estimated benefits expense by 1 plus the 7.3% percentage change in the Employment Cost Index- Benefits (Private Industry Workers) from June 2003 to June 2004, which is published quarterly and therefore not published in August. • Disposal Fees. Multiplying 2004's estimated disposal expense by 1. MSS does not anticipate a change in its per -ton tip fee at Redwood Landfill. • Fuel. Multiplying 2004's estimated fuel expense by 1 plus the 16.5% change in the Consumer Price Transportation Index - Motor Fuel (All Urban Consumers) from August 2002 to August 2003. • Maintenance. Multiplying 2004's estimated maintenance expense by 1 plus the 2.6 % percentage change in the Consumer Price Transportation Index - Motor Vehicle Maintenance and Repair (All Urban Wage Earners) from August 2003 to August 2004. December 6, 2004 Franchisors of Marin Sanitary Service Marin Sanitary Service's Projection Methodology Review of Marin Sanitary Service's 2005 Rate Application — Final Report • Depreciation/Lease. Adding current asset values to the values of replacement vehicles, replacement containers, and computer equipment MSS is planning to acquire, and capital expenses related to retrofitting vehicles to be in compliance with California's new CARB regulations Other Operating(G&A. Multiplying 2004's estimated other operating/G&A expense by 1 plus the 1.2% percentage change in the San Francisco -Oakland -San Jose Metropolitan Consumer Price Index (All Urban Consumers) from August 2003 to August 2004. • Interest. Interest expense was calculated using amortization tables to calculate the actual interest portion of future debt payments. Profit MSS calculated its 2005 profit of $1,688,640, applying a 90.5% pre-tax operating ratio, to its 2005 total projected expenses eligible for profit. December 6, 2004 Franchisors of Marin Sanitary Service Proposer! Adjustments Retnew of Marin Sanitary Service's 2005 Rate Application - Final Report SECTION IV. PROPOSED ADJUSTMENTS The following is a summary of HF&H's proposed adjustments to MSS' projected 2005 revenues, expenses, and profit. Exhibit 1 Marin Sanitary Service - Rate Adjustment Calculation As Adjusted By HF&H ($000's Unless Otherwise Indicated) Projected YE 2005 REVENUES 1. Route Revenue Projected By MSS 18,654 2. Route Revenue Adjustment 144 3. Adjusted Gross Route Revenues 18,798 4. Less: Franchise Fees Projected By MSS (1,239) 5. Recalculation of Franchise Fees Based Fn Revenue Adj. Above (14) 6. Adjusted Franchise Fees (1,253) 7. Less: Vehicle Impact Fees Projected by MSS (196) 8. Adjusted Net Route Revenue (Line 3 + Line 6 + Line 7) 17,349 9. Non -Regulated Revenues Projected by MSS 197 10. Non -Regulated Revenue Adjustment (126) 11. Adjusted Non -Regulated Revenues 72 12, Total Projected Net Revenues (Line 8 + Lute 11) 17,421 EXPENSES 13. Operating Expenses Elibible for Profit Projected by MSS 16,087 14. FIF&I I Operating Expense Adjustments 15. Fuel Expenses 82 16. Depreciation (33) 17. Workers Compensation (64) 18. Disposal Fees (151) 19. Adjusted Operating Expenses 15,921 20. Profit at 90.5% Operating Ratio Projected by MSS 1,689 21. Recalculation of Profit Based on 90.5% Op Patio (18) 22. Adjusted Profit 1,671 23. Interest Expense Projected by MSS 415 24. HF&H Interest Expense Adjustment 5 25. Adjusted Interest Expense 420 26, Total Revenue Requirement (Lines 19 + Line 22 + Line 25) 18,013 27. Surplus/ (Deficit) (Line 12 - Line 26) (592) 28. Rate Adjustment (-Line 27 / Line 8) 3.4% 6 December 6, 2004 Franchisors of Marin Sanitary Service Proposed Adjustments Review of Marin Sanitary Service's 2005 Rate Applicatian — Final Report Adiustments to 2005 Protected Revenues Route Revenue Adjustments (Line 2): HF&H recommends a $144,000 net increase in projected route revenues. MSS' projection methodology of annualizing September 2004 YTD route revenues resulted in 2004 estimated revenues being approximately 1.7% less than expected based on the rate increases effective January 1, 2004. HF&H found December 2003 revenues were uncharacteristically high while January 2004 revenues were uncharacteristically low. To calculate an accurate estimate of 2005 revenues based on current subscription levels and current rates, HF&H and MSS agreed on restating projected revenues by using actual revenue through October 2004 and projecting November and December 2004 by multiplying November and December 2003 actual revenues by the percentage change in actual revenue from January through October 2004 compared to January through October 2003. In addition, HF&H tested rates before and after the rate increase for each member agency to verify MSS implemented the correct rate adjustment. The rate adjustments were made between May 2004 and August 2004 and were effective January 1, 2004; therefore, MSS applied a one- time retroactive adjustment to each account. HF&H also tested accounts from each member agency to verify the correct calculation of the retroactive adjustment and to verify the retroactive adjustment was billed. HF&H found only minor immaterial discrepancies, which are not systematic, and is confident MSS correctly implemented the required rate increase and retroactive adjustments. Franchise Fee Adjustment (Line 5): HF&H recommends a $14,000 increase in projected franchise fees as the result of the revenue adjustment described above. Non -Regulated Revenue Adjustment (Line 10): HF&H recommends a $126,000 decrease in non-regulated revenue to exclude the loss of revenue at the Transfer Station because San Quentin no longer collects and self -hauls its solid waste to MSS' Transfer Station. Beginning in July 2004, MSS collects San Quentin solid waste and delivers the materials to the Transfer Station. The San Quentin tonnage is now handled like any other non-regulated MSS -hauled tonnage (e.g., tonnage from San Anselm or Fairfax). MSS' non-regulated operations compensate the regulated Transfer Station operations for the transfer, haul and disposal of all non-regulated tonnage by reducing the Transfer Station disposal costs by a transfer/haul rate of $10.92 per ton and a disposal fee of $44.37 per ton This decrease in non-regulated revenue corresponds to a $126,000 decrease in regulated disposal expense and the loss of profit on the disposal expense, therefore, the loss of the non-regulated revenue does not have an impact on Franchisor rates. Adiustments to 2005 Proiected Emenses Fuel Expenses: HF&H recommends an $82,000 increase in fuel expenses. Based on the following: A $38,000 increase due to a one-time adjustment for the difference between actual 2004 fuel expenses and projected 2004 fuel expenses resulting from the 2004 rate review. During the 2004 rate review, due to the volatility of fuel prices, the Franchisors and MSS agreed to make a one-time adjustment in the 2005 index review to reimburse MSS for greater than projected fuel expenses if the price per gallon December 6, 2004 Franchisors of Marin Sanitary Service Review of Marin Sanitary Service's 2005 Rate Application — Final Report Proposed Adjustments increased greater than the 14.4% CPI used to project the 2004 fuel expenses. The actual percentage increase in the price per gallon of fuel was 23.5%. A $44,000 increase in projected 2005 fuel expense due to the adjustment of the base fuel expense (2004 actual expense) described above. For the rate application, MSS calculated projected 2005 fuel expense based on the base fuel expense calculated in last year's review and multiplied the base amount by 1 plus the percentage change in the fuel index (16.5%). As described above, HF&H reconciled the base calculated in last year's review and has increased the base by $38,000 (from $480,000 to $518,000). Applying the percentage change in the fuel index (16.5%) to the new base requires an increase in projected 2005 fuel expenses. Again, due to the volatility of diesel fuel prices, the 16.5% projected increase may materially over- or under -project actual fuel expenses. MSS and Franchisors may agree to make a one-time adjustment in the 2006 index review for the difference between projected 2005 fuel expenses and actual 2005 fuel expenses. Depreciation/Lease (Line 16): HF&H recommends a $33,000 decrease in depreciation expense, due to the following: A $8,000 decrease to remove 6 months of depreciation for assets budgeted for replacement in June 2005 for which MSS mistakenly included 12 months of depreciation in its rate application; A $25,000 decrease to remove depreciation expense related to non-regulated operations mistakenly include in the regulated operations rate application. Workers Compensation (Line 17): HF&H recommends decreasing workers compensation by a net $64,000 due to the following: A $43,000 increase due to a one-time adjustment for the difference between MSS' actual 2004 workers compensation Mod Rate of 85 and the projected Mod Rate of 80 used to project workers compensation during the review of MSS' 2004 rate application. The 2004 rate adjustment was calculated based on a projected Mod rate of 80. The Franchisors and MSS agreed to make a one-time adjustment in the 2005 index review to reimburse MSS for greater than projected workers compensation expenses if the Mod rate was higher or lower than the projected 80. The actual Mod rate was 85. • A $107,000 decrease to reflect 1) a decrease in MSS' 2005 workers compensation Mod rate to 81, and 2) a decrease in its premiums. Disposal Fees/Yard Waste Processing (Line 18): HF&H recommends decreasing solid waste disposal expense and yard waste processing fees by $151,000, due to the following: A $36,000 decrease to remove non-regulated disposal/yard waste processing expenses. MSS calculated its projected 2005 disposal/yard waste processing equal to the same disposal/yard waste processing expense projected last year because the per - ton tip fee for solid waste and the per -ton processing fee for yard waste are not expected to change in 2005. However, the franchise agreement requires disposal and yard waste processing expenses to be projected based on the projected 2005 tonnage December 6, 2004 Franchisors of Marin Sanitary Service Proposer! Adjustments Reriezv of Marin Sanitary Service's 2005 Rate Application — Final Report multiplied by the then -current disposal and processing fees. HF&H projected solid waste disposal and yard waste processing costs by annualizing the actual August YTD disposal and processing fees and excluded all non-regulated (i.e., San Anselm, Fairfax, and RVSD-North) expenses. A $114,000 decrease to remove MSS -hauled tonnage collected from San Quentin and delivered to the regulated Transfer Station. Beginning in July 2004, MSS' non- regulated operations began collecting solid waste from San Quentin. The San Quentin tonnage is now handled like any other non-regulated MSS -hauled tonnage (e.g., tonnage from San Anselmo or Fairfax). MSS' non-regulated operations are charged back for the transfer, haul and disposal of all non-regulated tonnage by reducing the Transfer Station disposal costs by a transfer/haul rate of $10.92 per ton and a disposal fee of $44.37 per ton. Profit (Line 21): HF&H recommends decreasing MSS' profit by $18,000 due to the adjustments recorrunended above. Interest Expense (Line 24): HF&H recommends increasing interest expenses by $5,000 to add back franchise related interest and interest expense for projected capital purchases mistakenly excluded from the rate application. December 6, 2004 Frrnreldsors of Marin Sanitary Service Rate Adjustment and Other Recommendations RMew of Marin Sanitary Service's 2005 Rate Application - Final Report SECTION V. RATE ADJUSTMENT Rate Adiustment Based on a revenue requirement of $18,013,000 for the calendar 2005 resulting from our recommended adjustments to MSS' projected revenues, expenses, and profit (calculated based on a 90.5% operating ratio) and the inclusion of the City of San Rafael's vehicle impact fee, we recommend a rate increase of 3.4%, effective fanuaiy 1, 2005. 10 December 6, 2004 EXHIBIT C MARIN SANITARY SERVICE CITY OF SAN RAFAEL RATE SCHEDULE Rates Effective: 01/01/2005 OP►Ld Rate Increase: 3.4% 2005 2004 2005 2005 Proposed RATE INCREASE % INCR. Rate Residential Standard Base Rates 32 gallon can - flat $ 19.90 $ 19.25 $ 0.65 3.4% 64 gallon can - flat 39.80 38.50 1.30 3.4% 96 gallon can - flat 59.70 57.75 1.95 3.4% 32 gallon can - hill 22.55 21.85 0.70 3.2% 64 gallon can - hill 45.10 43.70 1.40 3.2% 96 gallon can - hill 67.65 65.55 2.10 3.2% New Rate Tvges for 2005* Low Income - 32 gallon can - flat $ 15.90 N/A Low Income - 64 gallon can - flat 31.80 N/A Low Income - 96 gallon can - flat 47.70 N/A Low Income - 32 gallon can - hill 18.05 N/A Low Income - 64 gallon can - hill 36.10 N/A Low Income - 96 gallon can - hill 54.15 N/A 'Must meet PG&E eligibility requirements and provide copy of PG&E bill. Service must be billed to eligible customer at service address. Residential customers only. Other Services Compacted 32 gallon $ 39.80 $ 38.50 $ 1.30 3.4% Compacted 64 gallon 79.60 77.00 2.60 3.4% Distance 5'-50' 2.60 2.55 0.05 2.0% Distance over 50' (per 50' each can) 5.25 5.10 0.15 2.9% Discontinued Rates** Senior rate - flat** (Bi -weekly service) $ 14.05 $ 13.60 $ 0.45 3.3% Senior rate - hill** (Bi -weekly service) 17.90 17.35 0.55 3.2% "Customers with these rates prior to 2005 will keep existing rate type. No new customers will be added with this rate type. Apartments 32 gallon can - flat $ 19.90 $ 19.25 $ 0.65 3.4% 64 gallon can - flat 39.80 38.50 1.30 3.4% 96 gallon can - flat 59.70 57.75 1.95 3.4% 32 gallon can - hill 22.55 21.85 0.70 3.2% 64 gallon can - hill 45.10 43.70 1.40 3.2% 96 gallon can - hill 67.65 65.55 2.10 3.2% "'Minimum of one can per unit 01/11/2005 1 of 6 San Rafael - Exhibit C Rate Sheet 2005.xls EXHIBIT C MARIN SANITARY SERVICE CITY OF SAN RAFAEL RATE SCHEDULE Rates Effective: 01/01/2005 TABLE ONE Rate Increase: 3.4% 2005 2004 2005 2005 Proposed RATE INCREASE % INCR. Rate Apartments cont. FL 2 yd bin 1 x/week $ 187.65 $ 181.50 $ 6.15 3.4% FL 2 yd bin 2 x/week 426.20 412.20 14.00 3.4% FL 2 yd bin 3 x/week 639.30 618.30 21.00 3.4% FL 2 yd bin 4 x/week 852.40 824.40 28.00 3.4% FL 2 yd bin 5 x/week 1,065.50 1,030.50 35.00 3.4% FL 2 yd bin 6 x/week 1,278.60 1,236.60 42.00 3.4% FL 3 yd bin 1 x/week $ 244.25 $ 236.25 $ 8.00 3.4% FL 3 yd bin 2 x/week 441.80 427.30 14.50 3.4% FL 3 yd bin 3 x/week 639.30 618.30 21.00 3.4% FL 3 yd bin 4 x/week 836.80 809.30 27.50 3.4% FL 3 yd bin 5 x/week 1,034.15 1,000.15 34.00 3.4% FL 3 yd bin 6 x/week 1,231.70 1,191.20 40.50 3.4% FL 4 yd bin 1 x/week $ 348.45 $ 337.00 $ 11.45 3.4% FL 4 yd bin 2 x/week 634.30 613.45 20.85 3.4% FL 4 yd bin 3 x/week 951.40 920.15 31.25 3.4% FL 4 yd bin 4 x/week 1,268.55 1,226.85 41.70 3.4% FL 4 yd bin 5 x/week 1,555.20 1,504.10 51.10 3.4% FL 4 yd bin 6 x/week 1,902.85 1,840.30 62.55 3.4% FL 5 yd bin 1 x/week $ 376.90 $ 364.55 $ 12.35 3.4% FL 5 yd bin 2 x/week 702.10 679.05 23.05 3.4% FL 5 yd bin 3 x/week 1,027.35 993.60 33.75 3.4% FL 5 yd bin 4 x/week 1,352.60 1,308.15 44.45 3.4% FL 5 yd bin 5 x/week 1,677.80 1,622.65 55.15 3.4% FL 5 yd bin 6 x/week 2,003.10 1,937.25 65.85 3.4% FL 6 yd bin 1 x/week $ 411.40 $ 397.90 $ 13.50 3.4% FL 6 yd bin 2 x/week 822.80 795.75 27.05 3.4% FL 6 yd bin 3 x/week 1,234.20 1,193.65 40.55 3.4% FL 6 yd bin 4 x/week 1,645.65 1,591.55 54.10 3.4% FL 6 yd bin 5 x/week 2,057.00 1,989.40 67.60 3.4% FL 6 yd bin 6 x/week 2,468.45 2,387.30 81.15 3.4% RL 1 yd bin 1 x/week $ 121.70 $ 117.70 $ 4.00 3.4% RL 1 yd bin 2 x/week 243.75 235.75 8.00 3.4% RL 1 yd bin 3 x/week 365.45 353.45 12.00 3.4% RL 1 yd bin 4 x/week 487.50 471.50 16.00 3.4% RL 1 yd bin 5 x/week 609.25 589.25 20.00 3.4% RL 1 yd bin 6 x/week 730.85 706.85 24.00 3.4% (No longer offered to new customers) 01/11/2005 2 of 6 San Rafael - Exhibit C Rate Sheet 2005.xis EXHIBIT C MARIN SANITARY SERVICE CITY OF SAN RAFAEL RATE SCHEDULE Rates Effective: 01/01/2005 TABLE ONE Rate Increase: 3.4% 2005 2004 2005 2005 Proposed RATE INCREASE % INCR. Rate Apartments cont. RL 2 yd bin 1 x/week $ 188.15 $ 182.00 $ 6.15 3.4% RL 2 yd bin 2 x/week 338.65 327.55 11.10 3.4% RL 2 yd bin 3 x/week 489.55 473.50 16.05 3.4% RL 2 yd bin 4 x/week 640.50 619.45 21.05 3.4% RL 2 yd bin 5 x/week 1,065.50 1,030.50 35.00 3.4% RL 2 yd bin 6 x/week 1,278.60 1,236.60 42.00 3.4% FL Compacted Rate Per Yard $ 43.35 per yard $ 41.95 $ 1.40 3.3% 01/11/2005 3 of 6 San Rafael - Exhibit C Rate Sheet 2005.xls Rates Effective: 01/01/2005 Rate Increase: 3.4% Commercial 32 gallon can 2005 64 gallon can INCREASE 96 gallon can $ 18.50 Compacted 32 gallon 0.60 Compacted 64 gallon 19.10 Bags (32 gallon) 1.25 FL 2 yd bin FL 2 yd bin FL 2 yd bin FL 2 yd bin FL 2 yd bin FL 2 yd bin FL 2 yd bin FL 3 yd bin FL 3 yd bin FL 3 yd bin FL 3 yd bin FL 3 yd bin FL 3 yd bin FL 3 yd bin FL 4 yd bin FL 4 yd bin FL 4 yd bin FL 4 yd bin FL 4 yd bin FL 4 yd bin FL 4 yd bin FL 5 yd bin FL 5 yd bin FL 5 yd bin FL 5 yd bin FL 5 yd bin FL 5 yd bin FL 5 yd bin EXHIBIT C MARIN SANITARY SERVICE CITY OF SAN RAFAEL RATE SCHEDULE TABLE ONE 2004 2005 2005 Proposed INCREASE % INCR. $ 18.50 Rate 0.60 $ 19.10 1.25 38.25 55.50 57.35 3.3% 37.00 38.20 1.20 3.2% 76.50 2.50 19.10 per pickup $ 45.45 1 x/week $ 44.00 187.65 2 x/week 3.3% 426.20 3 x/week 6.15 639.30 4 x/week 852.40 5 x/week 618.30 1,065.50 6 x/week 3.4% 1,278.60 per pickup $ 55.80 1 x/week 244.25 2 x/week 1,236.60 441.80 3 x/week 3.4% 639.30 4 x/week 1.80 836.80 5 x/week 1,034.15 6 x/week 427.30 1,231.70 per pickup $ 81.65 1 x/week 21.00 348.45 2 x/week 634.30 3 x/week 1,000.15 951.40 4 x/week 3.4% 1,268.55 5 x/week 40.50 1,555.20 6 x/week $ 1,902.85 per pickup $ 87.05 1 x/week 3.4% 376.90 2 x/week 20.85 702.10 3 x/week 1,027.35 4 x/week 1,226.85 1,352.60 5 x/week 3.4% 1,677.80 6 x/week 51.10 2,003.10 TABLE ONE 2004 2005 2005 RATE INCREASE % INCR. $ 18.50 $ 0.60 3.2% 37.00 1.25 3.4% 55.50 1.85 3.3% 37.00 1.20 3.2% 74.00 2.50 3.4% 18.50 0.60 3.2% $ 44.00 $ 1.45 3.3% 181.50 6.15 3.4% 412.20 14.00 3.4% 618.30 21.00 3.4% 824.40 28.00 3.4% 1,030.50 35.00 3.4% 1,236.60 42.00 3.4% $ 54.00 $ 1.80 3.3% 236.25 8.00 3.4% 427.30 14.50 3.4% 618.30 21.00 3.4% 809.30 27.50 3.4% 1,000.15 34.00 3.4% 1,191.20 40.50 3.4% $ 79.00 $ 2.65 3.4% 337.00 11.45 3.4% 613.45 20.85 3.4% 920.15 31.25 3.4% 1,226.85 41.70 3.4% 1,504.10 51.10 3.4% 1,840.30 62.55 3.4% $ 84.20 $ 2.85 3.4% 364.55 12.35 3.4% 679.05 23.05 3.4% 993.60 33.75 3.4% 1,308.15 44.45 3.4% 1,622.65 55.15 3.4% 1,937.25 65.85 3.4% 01/11/2005 4 of 6 San Rafael - Exhibit C Rate Sheet 2005.xis EXHIBIT C MARIN SANITARY SERVICE CITY OF SAN RAFAEL RATE SCHEDULE Rates Effective: 01/01/2005 TABLE ONE Rate Increase: 3.4% 2005 2004 2005 2005 Proposed RATE INCREASE % INCR. Rate Commercial (cont.) FL 6 yd bin per pickup $ 99.25 $ 96.00 $ 3.25 3.4% FL 6 yd bin 1 x/week 411.40 397.90 13.50 3.4% FL 6 yd bin 2 x/week 822.80 795.75 27.05 3.4% FL 6 yd bin 3 x/week 1,234.20 1,193.65 40.55 3.4% FL 6 yd bin 4 x/week 1,645.65 1,591.55 54.10 3.4% FL 6 yd bin 5 x/week 2,057.00 1,989.40 67.60 3.4% FL 6 yd bin 6 x/week 2,468.45 2,387.30 81.15 3.4% RL 1 yd bin 1 x/week $ 121.70 $ 117.70 $ 4.00 3.4% RL 1 yd bin 2 x/week 243.75 235.75 8.00 3.4% RL 1 yd bin 3 x/week 365.45 353.45 12.00 3.4% RL 1 yd bin 4 x/week 487.50 471.50 16.00 3.4% RL 1 yd bin 5 x/week 609.25 589.25 20.00 3.4% RL 1 yd bin 6 x/week 730.85 706.85 24.00 3.4% (No longer offered to new customers) RL 2 yd bin 1 x/week $ 188.15 $ 182.00 $ 6.15 3.4% RL 2 yd bin 2 x/week 338.65 327.55 11.10 3.4% RL 2 yd bin 3 x/week 489.55 473.50 16.05 3.4% RL 2 yd bin 4 x/week 640.50 619.45 21.05 3.4% RL 2 yd bin 5 x/week 1,065.50 1,030.50 35.00 3.4% RL 2 yd bin 6 x/week 1,278.60 1,236.60 42.00 3.4% FL Compacted Rate Per Yard $ 43.35 per yard $ 41.95 $ 1.40 3.3% RO 10 yd box per pickup $ 145.45 $ 140.70 $ 4.75 3.4% RO 10 yd box 1 x/week 630.65 609.95 20.70 3.4% RO 10 yd box 2 x/week 1,261.15 1,219.70 41.45 3.4% RO 10 yd box 3 x/week 1,892.35 1,830.15 62.20 3.4% RO 10 yd box 4 x/week 2,523.15 2,440.20 82.95 3.4% RO 10 yd box 5 x/week 3,153.95 3,050.25 103.70 3.4% RO 10 yd box 6 x/week 3,784.75 3,660.30 124.45 3.4% RO 12 yd box per pickup $ 174.60 $ 168.90 $ 5.70 3.4% 01/11/2005 5 of 6 San Rafael - Exhibit C Rate Sheet 2005.xis EXHIBIT C MARIN SANITARY SERVICE CITY OF SAN RAFAEL RATE SCHEDULE Rates Effective: 01/01/2005 TABLE ONE Rate Increase: 3.4% 2005 2004 2005 2005 Proposed RATE INCREASE % INCR. Rate Commercial (cont.) RO 18 yd box per pickup $ 232.80 $ 225.15 $ 7.65 3.4% RO 18 yd box 1 x/week 1,009.00 975.85 33.15 3.4% RO 18 yd box 2 x/week 2,017.25 1,950.95 66.30 3.4% RO 18 yd box 3 x/week 3,026.95 2,927.45 99.50 3.4% RO 18 yd box 4 x/week 4,035.90 3,903.20 132.70 3.4% RO 18 yd box 5 x/week 5,044.85 4,879.00 165.85 3.4% RO 18 yd box 6 x/week 6,053.85 5,854.80 199.05 3.4% RO 20 yd box per pickup $ 258.70 $ 250.20 $ 8.50 3.4% RO 20 yd box 1 x/week 1,121.05 1,084.20 36.85 3.4% RO 20 yd box 2 x/week 2,242.10 2,168.40 73.70 3.4% RO 20 yd box 3 x/week 3,500.25 3,385.20 115.05 3.4% RO 20 yd box 4 x/week 4,667.05 4,513.60 153.45 3.4% RO 20 yd box 5 x/week 5,833.80 5,642.00 191.80 3.4% RO 20 yd box 6 x/week 7,000.55 6,770.40 230.15 3.4% RO 25 yd box per pickup $ 361.90 $ 350.00 $ 11.90 3.4% RO 25 yd box 1 x/week 1,568.20 1,516.65 51.55 3.4% RO 25 yd box 2 x/week 3,136.45 3,033.35 103.10 3.4% RO 25 yd box 3 x/week 4,704.70 4,550.00 154.70 3.4% RO 25 yd box 4 x/week 6,272.90 6,066.65 206.25 3.4% RO 25 yd box 5 x/week 7,841.15 7,583.35 257.80 3.4% RO 25 yd box 6 x/week 9,409.40 9,100.00 309.40 3.4% RO Compacted Rate Per Yard $ 43.35 $ 41.95 $ 1.40 3.3% Lock Charges - single pickup 2.75 $ 2.70 $ 0.05 1.9% Lock Charges - weekly pickup 12.45 12.05 0.40 3.3% Compacted refuse w/o recyclables 43.35 41.95 1.40 3.3% Compacted refuse with recyclables 34.65 33.55 1.10 3.3% Refuse per yard - per pickup 17.35 16.80 0.55 3.3% Box Rental - 1 yard 36.75 35.55 1.20 3.4% Box Rental - 2 yard 41.35 40.00 1.35 3.4% Box Rental - 3-5 yard 45.75 44.25 1.50 3.4% Box Rental - 6 yard 51.70 50.00 1.70 3.4% Box Rental - 10 yard 61.00 59.00 2.00 3.4% Box Rental - 18 yard 122.25 118.25 4.00 3.4% Box Rental - 20 yard 124.05 120.00 4.05 3.4% Box Rental - 25 yard 129.25 125.00 4.25 3.4% Return Trip Charge 26.90 26.05 0.85 3.3% Steam Clean Bin Charge 53.90 52.15 1.75 3.4% Overweight Charge Per Ton*** 101.35 98.05 3.30 3.4% ••*Comm'I boxes exceeding 300lbs/yard 01/11/2005 6 of 6 San Rafael - Exhibit C Rate Sheet 2005.xls