HomeMy WebLinkAboutCM MSS Refuse Rates____________________________________________________________________________________
FOR CITY CLERK ONLY
File No.: 4-3-32
Council Meeting: 1/16/2018
Disposition: Resolution 14454
Agenda Item No: 7.a
Meeting Date: January 16, 2018
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: CITY MANAGER
Prepared by: Cory Bytof,
Sustainability & Volunteer Program Coordinator
City Manager Approval: __________
TOPIC: ANNUAL REFUSE RATE SETTING FOR MARIN SANITARY SERVICE
SUBJECT: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL ESTABLISHING
MAXIMUM RATES COLLECTED BY MARIN SANITARY SERVICE FOR REFUSE AND
RECYCLABLE MATERIAL COLLECTION AND DISPOSAL SERVICES, TO BE EFFECTIVE
RETROACTIVELY TO JANUARY 1, 2018
RECOMMENDATION:
Adopt the Resolution establishing maximum rates collected by Marin Sanitary Service for Refuse and
Recyclable Material Collection and Disposal Services, to be effective retroactively to January 1, 2018.
EXECUTIVE SUMMARY:
This report details the rate adjustment proposal for 2018 necessary for Marin Sanitary Service (MSS) to
provide refuse, recycling, and organic materials composting, hauling, and processing for customers (“rate
payers”) in San Rafael. Rate payers include residential homeowners, apartment owners, commercial
property owners, and other businesses and tenants. The proposed rate adjustment would increase rates
by 5.57% over 2017 levels for all rate payers. It includes adjustments based on an agreed-upon rate
setting methodology the City has with Marin Sanitary Service and is based upon an independent third -
party review of expenses and revenues by R3 Consulting Group, Inc. (R3).
BACKGROUND:
Each year, the City Council holds a public hearing to set the maximum collection rates that can be
collected by MSS in the City of San Rafael. This background section of the staff report will illustrate the
overall context for the rate setting process. In general, the context includes I) the Franchise Agreement
and rate-setting methodology with MSS, II) environmental initiatives, goals and regulations, and III) MSS’s
services and programs.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
I. Franchise Agreement between City of San Rafael and Marin Sanitary Service
California cities are allowed to regulate local refuse and recycling services under Article XI of the
California Constitution and the California Public Resources Code and to collect a franchise fee. The City of
San Rafael has a Franchise Agreement with MSS for refuse, organic materials, and recycling collection
and services. The revenue-based methodology used to set the annual rates is contained in the Second
Amendment to the Amendment and Restatement of Collection Agreement of the City of San Rafael with
Marin Sanitary Service (Franchise Agreement) approved by the City Council on October 1, 2012. The
Franchise Agreement sets forth the services to be provided by MSS, the rate setting methodology and
the franchise fee paid to the City of San Rafael. Our Franchise Agreement calls for reviewing the contract
every five years and revising as necessary, which will take place in the coming year.
As required under the current Franchise Agreement, the City Council holds an annual public hearing to
set the maximum collection rates that can be charged by MSS for services outlined in the agreement.
The Franchise Agreement provides for a detailed, base year review of MSS’s operations every three
years. Annual summary reviews using modified indices are conducted for the next two years. The last
detailed review was conducted for the 2016 rate year. The proposed rate levels for 2018 are based on a
summary review and next year the 2019 rates will be set using the detailed review.
Several jurisdictions in Marin that have contracts with MSS utilizing a similar rate setting methodology
have joined together as a Franchisors’ Group to share information and reduce costs: San Rafael, Larkspur,
Ross, the Las Gallinas Valley Sanitary District, and the County of Marin, including within the Ross Valley
Sanitary District boundaries. The Franchisors’ Group meets several times per year to oversee MSS’s
operations, to review MSS’s rate proposals, and to oversee the work of the consultant conducting the
annual rate review. R3 Consulting Group, Inc. was selected by the Franchisors’ Group to conduct the
2018 rate review. The results are presented in the “Analysis” section of this report.
II. Environmental Initiatives and Goals
While perhaps the original purpose of refuse service had to do with public health and safety around
sanitation, it is increasingly geared more toward making progress on waste reduction and climate change
goals, which are also forms of public health and safety. The State of California has adopted several pieces
of legislation mandating significant reductions of waste to landfill, recognizing the embedded
environmental impacts and greenhouse gas emissions associated with them.
San Rafael is a member of the Marin Hazardous and Solid Waste JPA (JPA), which is charged with
complying with the California Integrated Waste Management Act of 1989. The goal of the Act is to
reduce the flow of materials to landfills. The JPA Board is made up of city and town managers and the
County Administrator. The JPA prepared a Zero Waste Feasibility Study in December 2009 which
identified a goal of achieving “zero waste in the next five to 17 years.” Zero waste has been defined as
94% diversion of materials from landfill, taking into account the need for producer responsibility and
product stewardship, which is beyond local control.
The City of San Rafael adopted a Zero Waste Resolution in August 2011 intended to be consistent with
the JPA’s goals. In addition, the City’s Climate Change Action Plan (CCAP) adopted in 2009, and
subsequent Sustainability Element of the City’s General Plan, included in 2011, identified several specific
measures within the program “Reduce Material Consumption and Increase Resource Re-Use.”
In summary, the overall industry has moved from “bringing garbage to the landfill” to “resource hau ling”
including transport to recyclers and re-users to find the next highest and best use of materials, with the
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
landfill being the last option. MSS has been a leader in this movement, as they have invested in facilities
and technologies to divert materials from the landfill, including the construction of the Marin Resource
Recovery Center, Marin Recycling Center, and investments in the food-to-energy (F2E) program with
Central Marin Sanitation Agency.
III. Marin Sanitary Services and Programs
MSS provides residential, commercial and multi-family refuse services, including garbage, recycling and
organics collection and processing. MSS also provides trash and recycling pick -up for City facilities, parks,
and all sidewalk receptacles downtown and throughout San Rafael.
Residential service includes single-family units and three or fewer units in a single structure. San Rafael
residential customers receive weekly trash, recycling, and organics composting collection services.
Residential customers also receive twice yearly residential curbside collections of up to 14 additional
bags/cans of yard waste, recycling, and/or garbage; and twice yearly residential on -call collection of up to
two large items each time.
Commercial service includes all businesses and residential apartment buildings with four or more units.
Commercial customers receive separate trash and recycling containers as well as cardboard pickup, and
may choose from a variety of carts, bins, and commercial compactors. In addition, customers ar e offered
the choice of two commercial organics diversion programs. Customers with significant amounts of pre-
consumer food waste may participate in the F2E program. Commercial customers with post-consumer
food waste, food soiled papers, and yard waste may participate in the commercial composting program.
All commercial services can be picked up from one to six times per week.
Multi-family buildings are considered commercial services since they are a business enterprise and
operate differently than single family homes. They receive separate trash, recycling, and organics
containers depending on the area available for can storage. MSS works with apartment managers and
tenants to develop ‘green teams’ to increase recycling and composting at their complexes.
In addition, MSS does the majority of the outreach for the City for the State’s Mandatory Commercial
Recycling and Mandatory Composting laws (AB 341 and AB 1826), which place requirements on
businesses to recycle and compost, and also requires the City to provide for annual monitoring and
notifications to non-compliant businesses. MSS has also assisted with illegal dumping abatement along
Jacoby Street at a minimum of once per month. Finally, MSS has a robust community outreach and
education program, which provides free resources to customers and schools to encourage recycling and
other zero waste activities. They conduct numerous programs and community offerings, including an
annual free compost giveaway and customer education event.
ANALYSIS:
Rate Review and Methodology
Over the past ten years rate adjustments have ranged from less than one percent to over 10% with an
average of 5.03%. Last year’s adjustment was 5.71%. Waste haulers around the state are experiencing
recycling losses and increases in labor and benefits expenses, among other things. In the past year other
Bay Area jurisdictions have experienced rate adjustments ranging from approximately 15% in San
Francisco to more than 50% in Piedmont, with similar adjustments in many other Bay Area jurisdictions.
This is the result of many factors, including a growing amount of solid waste, recycling and compostables,
increasing requirements to divert waste from landfill, increasing costs of processing recyclables and
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
compostables, decreasing value of recyclable materials, and the cost of capital and equipment to
implement new standards and requirements.
In April 2017, the Franchisors’ Group conducted an RFP and selected R3 Consulting Group, Inc. to assist
with evaluating and revising the rate setting methodology in order to meet the following goals:
1. Develop a new process to address fluctuations in recycling revenues, and address ongoing
recycling losses
2. Streamline and simplify the rate setting process in order to spend less time and consultant cost
annually
3. Achieve more transparency for rate payers in the annual rate setting process
A new methodology is intended to address rate fluctuations, while maintaining an emphasis on
responsible solid waste management, good value to customers, and reduction of waste to landfill. In
addition to evaluating a new methodology for rate setting, the Franchisors’ Group has been negotiating
with MSS about how best to address financial losses due to a dramatic downturn in the recycling
commodities market. Our current methodology calls for a meet-and-confer once the recycling revenue
fund reaches a deficit of $250,000 which it did in 2016.
R3’s scope of work also includes assisting the Franchisors’ Group with this meet-and-confer process. In
August 2017, staff and R3 hosted a multi-jurisdictional meeting of interested elected representatives
from each governing body of the five franchising agencies. Councilmembers Colin and Bushey
represented San Rafael at this meeting. This was an opportunity to lay out the issues and concerns with
the current methodology, the state of recycling markets, the intentions behind a new, revised
methodology, and to get input from elected officials on what they thought would be valuable in a new
methodology. Feedback received included making sure we use the correct indices for rate setting,
exploring performance metrics and incentives to reduce costs, and considering caps, among other things.
Initially, the Franchisors’ Group requested that MSS submit a detailed, base year rate application in order
to try to adopt the methodology this year along with the 2018 rates. MSS was agreeable to doing so as
they are also supportive of implementing a new methodology that accomplishes the above stated goals.
However, the task proved too complex to be completed in time to set the rates for 2018 so the
Franchisors’ Group decided to revert to the simpler summary rate application, which was originally called
for in the contract for this year. This was done in order to ensure that the rate adjustment remained on
schedule and rate payers wouldn’t have to incur large retroactive rate increases.
Adjustments
MSS submitted their 2018 summary rate application in November with a proposed 8.06% increase over
2017 rates. R3 reviewed the application and all relevant documents and financial schedules with MSS,
and recommends at 5.57% rate adjustment for 2018.
The full rate review and proposed adjustments are contained in the R3 Report (Attachment C). The
following table (Table 3 from the R3 Report) contains a summary of the rate increase components, which
reflect projected costs for 2018 utilizing the current agreed upon rate setting methodology in the
Franchise Agreement.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
Table 3
Summary of Rate Increase Components by Category
Rate Adjustment Factor Component Percentages
Category
Adjustment
Factor
Related to
2016 and
2017
Adjustment
Factor
Related to
2018
Total
Wages 0.00% 0.87% 0.87%
Benefits (including workers comp) 0.00% 0.44% 0.44%
Fuel & Oil 0.09% 0.89% 0.98%
Disposal 0.24% 0.00% 0.24%
Depreciation and Interest 0.00% 0.93% 0.93%
Maintenance 0.00% 0.13% 0.13%
Other Operating Costs1 0.00% 0.74% 0.74%
Subtotal Operations 0.33% 4.00% 4.33%
Revenue Shortfall Net of Changes in Total Expenses 0.00% 1.24% 1.24%
Rate Adjustment Factor 0.33% 5.24% 5.57%
1 Includes profit and general & administrative costs (e.g., public education, customer service, etc.).
The following is a summary of the reasons underlying the rate request broken out by major rate
categories. Much of this year’s adjustment relates to agreed upon indices stipulated in the current rate
setting methodology, Exhibit B1 in the Franchise Agreement.
WAGES: This is adjusted by an agreed upon index, the Consumer Price Index (CPI), which is 3.1%, yielding
a total .87% increase to the overall rate.
BENEFITS: This is adjusted based on actual workers compensation insurance costs as well as the
applicable CPI, which is 1.9%, yielding a total .44% increase to the overall rate.
FUEL AND OIL: Most of this is due to the applicable CPI of 9.1% for this category. However, a small
portion was due to the annual “true-up” of costs looking back to 2016 and 2017 actuals. Together they
yield a .98% increase to the overall rates.
DISPOSAL: This is due to a “true-up” of real costs accumulated in 2016 and 2017 compared to projections
of amounts of waste taken to landfill and the charges incurred, yielding an increase to the overall rates of
.24%
DEPRECIATION AND INTEREST: These two categories are composed of allocated costs associated with
financing facilities and equipment, including upgrading and modernizing MSS’s fleet, which are more fuel
efficient and use cleaner technology. Together they yield a .93% increase to the overall rates.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6
MAINTENANCE: This is adjusted by the applicable CPI, which is 1.9%, yielding a total .13% increase to the
overall rate.
OTHER OPERATING COSTS: This is primarily due to an adjustment to the applicable CPI for general and
administrative expenses (G&A), which is 3.1%, but also includes a very small increase in projected JPA
fees. These fees are based on amount of waste delivered to the landfill. G&A includes costs such as public
outreach, professional fees, and computer hardware/software. This category yields an increase to the
overall rates of .74%.
REVENUE SHORTFALL NET OF CHANGES IN TOTAL EXPENSES: This is primarily the result of the under
realization of projected 2017 revenues which were part of the 2017 rate application process. In addition,
a portion of the increase is also attributed to additional projected revenue shortfall in 2018. This yields an
increase to the overall rates of 1.24%.
Rate Payer Categories and Comparisons
With the above recommendation, the cost of a 32 gallon residential landfill cart would be increased
approximately $1.99 per month, from $35.81 to $37.80. The cost of commercial service for a 3 yard
landfill dumpster picked up once per week would be increased by approximately $2 4.64 per month, from
$442.45 to $467.09. Recycling is included in all accounts. Businesses with a vigorous recycling progr am
can reduce their regular container size or pickup schedule resulting in lower rates.
R3 conducted a survey of Bay Area refuse haulers as part of the rate review, included in Attachment C. It
summarizes the survey data for residential 30-35 gallon can weekly service with curbside recycling and
organics pickup. Note though, that proposed 2018 rates are not available for other jurisdictions yet, so
this comparison is proposed San Rafael 2018 rates to other jurisdictions’ 2017 actual rates, which will
most likely increase.
The 2018 proposed rate of $37.80 in San Rafael is similar to the Marin County average of $37.83, and
slightly higher than the Bay Area average, which is $34.83. Attachment C also compares the City’s three-
yard commercial bin (once a week) service to those of all Bay Area cities and agencies with similar
services. The San Rafael rate of $467.09 is slightly lower than the Marin County average which is
$501.43, and higher than the Bay Area average, which is $419.36. However, it is important to note that
all jurisdictions provide different services and levels of services, making apples -to-apples comparisons
problematic. San Rafael’s rates have typically been comparable with rates in other Bay Area jurisdictions,
while often providing more services.
As in previous years, staff is recommending that the rate adjustment be applied across the board to all
residential, multi-family and commercial service accounts. Actual rates for all services are provided as an
attachment to the Resolution included with this report.
Next Steps
Subsequent to adopting new rates for 2018, the Franchisors’ Group will continue to work with R3 and
MSS to complete the meet-and-confer process to determine the resolution of the recycling revenue fund
losses and to propose a new rate setting methodology in 2019.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7
The tentative timeline follows:
March-June 2018 Rate setting methodology and meet-and-confer completed
August 2018 MSS 2019 base-year rate application due
August-November 2018 Base-year rate application review completed
November-December 2018 New methodology and 2019 rates brought to Councils/Boards
COMMUNITY OUTREACH:
Notice of the public hearing was published twice in the Marin Independent Journal (Attachment B) and
mailed to all names on file with the City Clerk. Information on the maximum annual rate that MSS can
collect is available at the City Clerk’s office during the 10 days prior to the public hearing. The proposed
rate information is also provided directly to the San Rafael Chamber of Commerce, the Business
Improvement District, Marin Builder’s Association, and other interested parties.
FISCAL IMPACT:
The attachment to the Resolution (marked Exhibit C) contains the complete rate request. As shown, the
5.57% overall increase is applied to all customer types and service options. If approved, these rates are
projected to satisfy the City’s contractual obligations to meet the MSS revenue requirement to cover San
Rafael refuse and recycling service costs, including franchise fees.
OPTIONS:
The City Council may choose to:
1. Accept the staff recommendation to institute the maximum MSS rate increases and allocations
recommended in the R3 Report pursuant to the rate setting methodology set forth in the current
Franchise Agreement and shown in the attachment to the Resolution effective retroactively to
January 1, 2018.
2. Not accept the findings of the R3 Report and the staff recommendation and provide additional
direction to staff.
RECOMMENDED ACTION:
1. Open the public hearing and accept public testimony;
2. Close the public hearing;
3. Accept the report and adopt the resolution as presented
ATTACHMENTS:
Attachment A: Resolution with Rate Schedule (marked as Exhibit C)
Attachment B: Affidavit of Publication
Attachment C: R3 Review of MSS Rate Application, including Bay Area Rate Survey
RESOLUTION 14454
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL ESTABLISHING MAXIMUM RATES
COLLECTED BY MARIN SANITARY SERVICE FOR REFUSE AND RECYCLABLE MATERIAL COLLECTION
AND DISPOSAL SERVICES, TO BE EFFECTIVE RETROACTIVELY TO JANUARY 1, 2018
WHEREAS, the City of San Rafael and Marin Sanitary Service have entered into an
“Amendment and Restatement of Collection Agreement of the City of San Rafael and Marin Sanitary
Service,” dated September 4, 2001 and amended by a written first amendment dated March 1, 2005
and a written second amendment dated November 14, 2012 (hereafter the “Collection Agreement”);
and,
WHEREAS, Section 3 (B) of the Collection Agreement provides for maximum rates allowed to
be collected by Marin Sanitary Service, to be amended from time to time by the City Council; and,
WHEREAS, Exhibit "C" of the Collection Agreement provides for approved rate schedules, as
amended by the City Council from time to time, to be included as part of the Collection Agreement;
and,
WHEREAS, Marin Sanitary Service has submitted a rate application request using the
methodology outlined under Section 3 (A) of the Collection 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.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES RESOLVE,
DETERMINE AND ORDER AS FOLLOWS: The schedule of maximum rates and fees attached hereto as
"Exhibit C" and incorporated herein by reference, is hereby approved to be collected by Marin Sanitary
Service for refuse and recyclable material collection and disposal services, to be effective retroactively
to January 1, 2017. Said “Exhibit C” shall be incorporated as the revised Exhibit "C" to the Collection
Agreement.
I, Lindsay Lara, Interim City 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, January 16, 2018, by the following vote, to wit:
AYES: Councilmembers: Bushey, Colin, Gamblin & Mayor Phillips
NOES: Councilmembers: McCullough
ABSENT: Councilmembers: None
__________________________
LINDSAY LARA, Interim City Clerk
City of San Rafael - Exhibit C
Effective 1/01/2018: 5.57% Rate Increase
Residential Service (Bundled service includes 1 cart for garbage, 1 cart for organics and 1 split cart for recycling)
Weekly Service Rates 2018 Flat Rate 2018 Hill Rate
Monthly Rate (Billed Quarterly)Monthly Rate (Billed Quarterly)
20 gallon cart $32.14 $36.40
32 gallon cart $37.81 $42.83
64 gallon cart $75.62 $85.66
96 gallon cart $113.43 $128.49
Low income - 20 gal* cart $25.70 $29.13
Low income - 32 gal* cart $30.20 $34.28
Low income - 64 gal* cart $60.40 $68.57
Senior rate**$26.69 $33.99
Additional Organics Cart Rental (35 or 64 gallon cart)$2.01 $2.01
Additional Split Cart Rental (64 or 96 gallon cart)$2.01 $2.01
*Must meet PG&E CARE program eligibility requirements
**Customers with these rates prior to 2005 will keep the existing rate type. No new customers will be added with this rate type.
Distance Charges Per cart, Each way
Distance 5' - 50'$4.91
Distance Over 50'$9.93
Additional Residential Service Fees per Occurrence
Cart Replacement Fee Not to exceed $90.00
Return Fees - Off day $18.50
Return Fees - Same day $6.00
Resume service/late fee $35.00
Compaction fee (cart)$10.00
Contamination (cart)$10.00
Overload (cart)$10.00
Cart Exchange $15.00
Extra bag/can garbage $10.00
Extra bag/can yard waste $5.00
Steam Clean (cart)$15.00
Special Collection $25.00
Special handling $20.00
Bulky item fees per items Enquire for prices
Refuse Collection Rates
City of San Rafael - Exhibit C
Effective 1/01/2018: 5.57% Rate Increase
COMMERCIAL CARTS, BINS, ROLL-OFFS,
COMPACTORS Collections per Week
Garbage 1 2 3 4 5 6 Additional one
time empty
20 gallon $32.14 $64.28 $96.42 $128.56 $160.70 $192.84 $7.42
32 gallon $37.55 $75.10 $112.65 $150.20 $187.75 $225.30 $8.67
64 gallon $75.10 $150.20 $225.30 $300.40 $375.50 $450.60 $17.34
96 gallon $112.65 $225.30 $337.95 $450.60 $563.25 $675.90 $26.01
1 yard $244.06 $492.82 $746.26 $1,004.44 $1,267.25 $1,534.75 $56.32
2 yard $358.84 $824.49 $1,250.79 $1,686.47 $2,131.52 $2,585.95 $91.06
3 yard $467.09 $869.80 $1,325.84 $1,795.89 $2,280.06 $2,778.29 $111.77
4 yard $666.35 $1,231.82 $1,875.80 $2,538.63 $3,040.10 $3,920.50 $163.60
5 yard $720.81 $1,449.66 $2,209.75 $2,993.17 $3,800.14 $4,630.48 $174.43
6 yard $855.73 $1,739.59 $2,651.68 $3,591.84 $4,560.12 $5,556.58 $198.81
10 $1,206.10 $2,468.21 $3,787.86 $5,163.08 $6,594.61 $8,082.38 $283.29
18 $2,166.29 $4,433.96 $6,802.91 $9,273.13 $11,844.68 $14,517.57 $509.95
20 $2,407.06 $4,926.61 $7,558.76 $10,303.46 $13,160.76 $16,130.60 $566.64
25 $3,367.08 $6,891.79 $10,159.77 $13,848.76 $17,689.24 $21,681.05 $708.26
*Sizes may not be available at all locations depending on a variety of factors including safety, accessibility, and efficiency.
Requests will be assessed and approved by Route Manager.
Garbage Compactors Per Empty
Roll-off Compactor Tipping fee per ton $103.66
Roll-off Compactor Hauling charge $232.99
Roll-off Compactor Special handling rates vary by job
Stationary Front Loader (Per compacted yard)$90.03
Collections per Week
Organics( F2E or Compost)1 2 3 4 5 6 Additional one
time empty
32 gallon $15.57 $31.14 $46.71 $62.28 $77.85 $93.42 $3.59
64 gallon $31.14 $62.28 $93.42 $124.56 $155.70 $186.84 $7.19
1 yard $108.99 $217.98 $326.97 $435.96 $544.95 $653.94 $25.15
2 yard $217.98 $435.96 $653.94 $871.92 $1,089.90 $1,307.88 $50.30
3 yard $326.97 $653.94 $980.91 $1,307.88 $1,634.85 $1,961.82 $75.45
10 yard $844.27 $1,688.54 $2,532.81 $3,377.08 $4,221.35 $5,065.62 $194.83
*Roll-offs for organics available on request at 30% discount on above garbage rates
City of San Rafael - Exhibit C
Effective 1/01/2018: 5.57% Rate Increase
Additional Commercial Service Fees per
Occurrence Fee
Cart Replacement Fee $90.00
Bin Repair/Replacement Fee Varies by size not to
exceed current
replacement value.
Return Fee - Cart -same day $6.00
Return Fee - Cart -off day $18.50
Return Fee - Bin $30.00
Resume service/late fee $35.00
Compaction fee (cart)$10.00
Compaction fee (bin)$37.00
Contamination (cart)$10.00
Contamination (bin)$37.00
Overload (cart)$10.00
Overload (bin)$37.00
Cart Exchange $15.00
Bin Exchange $93.00
Extra bag/can garbage $10.00
Extra bag/can yard waste $5.00
Steam Clean (cart)$15.00
Steam Clean (bin)$93.00
Steam Clean (compactor/roll-off)$200.00
Lock Set-up Admin Fee $20.00
Lock/Key pad Fee $5.00
Gate/Enclosure Fee $20.00
Special Service Fee Not to exceed
$125.00 per service
Overweight Charge Per Ton (Comm'l boxes
exceeding 300lbs/yard)$203.05
Box Rental Fee fee varies per size
Distance Charges Per cart/bin, Each way
Distance 5' - 50'$4.91
Distance Over 50'$9.93
City of San Rafael - Exhibit C
Effective 1/01/2018: 5.57% Rate Increase
Multifamily Dwellings CARTS, BINS, ROLL-OFFS, COMPACTORS
Collections per Week
Garbage 1 2 3 4 5 6 Additional one
time empty
20 gallon $32.14 $64.28 $96.42 $128.56 $160.70 $192.84 $7.42
32 gallon $37.81 $75.62 $113.43 $151.24 $189.05 $226.86 $8.73
64 gallon $75.62 $151.24 $226.86 $302.48 $378.10 $453.72 $17.45
96 gallon $113.43 $226.86 $340.29 $453.72 $567.15 $680.58 $26.18
32 gallon - hill $42.83 $85.66 $128.49 $171.32 $214.15 $256.98 $9.88
64 gallon - hill $85.66 $171.32 $256.98 $342.64 $428.30 $513.96 $19.77
96 gallon - hill $128.49 $256.98 $385.47 $513.96 $642.45 $770.94 $29.66
1 yard $235.19 $474.12 $716.85 $963.31 $1,213.52 $1,467.46 $54.28
2 yard $358.84 $822.59 $1,245.16 $1,675.20 $2,112.77 $2,557.83 $82.81
3 yard $467.09 $856.07 $1,301.01 $1,757.17 $2,224.60 $2,703.24 $107.79
4 yard $666.35 $1,228.08 $1,864.52 $2,516.09 $3,124.30 $3,864.19 $153.77
5 yard $720.81 $1,426.78 $2,168.29 $2,928.56 $3,707.62 $4,505.44 $166.34
6 yard $844.80 $1,712.14 $2,601.96 $3,514.28 $4,449.14 $5,406.48 $194.95
10 See Commercial rates
18 See Commercial rates
20 See Commercial rates
25 See Commercial rates
Recycling and Organics carts provided at no additional charge.
Minimum service level is 32 gallons per unit or equivalent volume
Garbage Compactors Per Empty
Roll-off Tipping fee per ton $103.66
Roll-off Special handling Rates vary by job
Hauling charge $232.99
Stationary Front Loader (Per compacted yard)$90.03
*Sizes may not be available at all locations depending on a variety of factors including safety, accessibility, and efficiency. Requests will be
assessed and approved by Route Manager.
City of San Rafael - Exhibit C
Effective 1/01/2018: 5.57% Rate Increase
Multifamily Dwellings CARTS, BINS, ROLL-OFFS, COMPACTORS
Additional MFD Service Fees per
occurance Fee
Cart Replacement Fee $90.00
Bin Repair/Replacement Fee Varies by size not to
exceed current
replacement value.
Return Fee - Cart -same day $6.00
Return Fee - Cart -off day $18.50
Return Fee - Bin $30.00
Resume service/late fee $35.00
Compaction fee (cart)$10.00
Compaction fee (bin)$37.00
Contamination (cart)$10.00
Contamination (bin)$37.00
Overload (cart)$10.00
Overload (bin)$37.00
Cart Exchange $15.00
Bin Exchange $93.00
Extra bag/can garbage $10.00
Extra bag/can yard waste $5.00
Extra bin empty Varies depending
on bin size. Based
on monthly rate and
single empty.
Steam Clean (cart)$15.00
Steam Clean (bin)$93.00
Steam Clean (compactor/roll-off)$200.00
Lock Set-up Admin Fee $20.00
Lock/Key pad Fee $5.00
Gate/Enclosure Fee $20.00
Special Service Fee Not to exceed
$125.00 per service
Overweight Charge Per Ton (Comm'l boxes
exceeding 300lbs/yard)$203.05
Box Rental Fee Fee varies per size
Distance Charges Per cart/bin, Each way
Distance 5' - 50'$4.91
Distance Over 50'$9.93
CITY OF SAN RAFAEL
NOTICE OF PUBLIC HEARING
The City Council of the City of San Rafael will hold a public hearing:
PURPOSE: Public Hearing: To consider a request by Marin Sanitary
Service for a rate increase for refuse collection and recycling
services and adoption of a Resolution amending the agreement
setting maximum rates for the year 2018.
DATE/TIME/PLACE: Tuesday, January 16, 2018, at 7:00 p.m.
City Hall Council Chambers, 1400 Fifth Avenue, San Rafael
WHAT WILL HAPPEN: You may comment on the proposed Resolution. The
City Council will consider all public testimony and will
then decide whether to approve the Resolution.
IF YOU CANNOT ATTEND: You may send a letter to City Clerk, City of San Rafael,
P.O. Box 151560, San Rafael, CA 94915-1560. You may also
hand deliver a letter to the City Clerk prior to the meeting.
FOR MORE INFORMATION: You may contact Cory Bytof, Sustainability and Volunteer
Program Coordinator, at (415) 485-3407. Office hours are
Monday through Friday, 8:30 a.m. to 5:00 p.m.
SAN RAFAEL CITY COUNCIL
/s/ ESTHER C. BEIRNE
ESTHER C. BEIRNE, City Clerk
(Please publish in the Marin Independent Journal on Thursday, January 4, 2018 and
Thursday, January 11, 2018)
FINAL REPORT
Review of Marin Sanitary Service’s 2018
Rate Application
SUBMITTED TO:
Marin Franchisors’ Group
January 2, 2018
PDF SUBMITTAL
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Table of
Contents
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
TOC - i
Table of Contents
Cover Letter
Section 1: Background ................................................................................ 1
Section 2: Rate Review Approach .............................................................. 3
Section 3: MSS Projection Methodology (Index Year) ............................... 5
Section 4: Proposed Adjustments to MSS Rate Application ....................... 9
Section 5: Recommended Rate Adjustment ............................................. 13
Attachments
1 Marin Sanitary Service Rate Application Summary
2 R3 Adjusted Rate Application Summary
3 Bay Area Rate Survey
4 Chart of 2018 Residential 32-Gallon Rates
5 Chart of 2018 Commercial 3 Cubic Yard Rates
Table of
Contents
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
TOC - ii
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www.r3cgi.com
1512 Eureka Road, Suite 220, Roseville, CA 95661
Tel: 916-782-7821 | Fax: 916-782-7824
2600 Tenth Street, Suite 424, Berkeley, CA 94710
Tel: 510-647-9674
627 S. Highland Avenue, Suite 300, Los Angeles, CA 90036
Tel: 323-559-7470
January 2, 2018
Ms. Cristine Alilovich
Assistant City Manager
City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94919-1560
Mr. Ernest Klock
Assistant Director
County of Marin
Department of Public Works
3501 Civic Center Drive, Suite 304
San Rafael, CA 94903
Ms. Susan McGuire
Administrative Services Manager
Las Gallinas Valley Sanitary District
300 Smith Ranch Road
San Rafael, CA 94903
Mr. Dan Schwarz
City Manager
City of Larkspur
400 Magnolia Avenue
Larkspur, CA 94939
Mr. Joe Chinn
Town Manager
Town of Ross
31 Sir Francis Drake Blvd
Ross, CA 94957
Subject: Review of Marin Sanitary Service’s 2018 Rate Application, Final Report
Dear Ms. McGuire, Ms. Alilovich, Mr. Klock, Mr. Schwarz and Mr. Chinn,
R3 Consulting Group, Inc. (R3) is pleased to submit the attached Final Report detailing the results of our
review of Marin Sanitary Service’s 2018 Rate Application for the Marin Franchisors’ Group. For consistency
and comprehension, the form and content of this Report and associated Attachments mirror that of prior
rate adjustment reports prepared for the Franchisors’ Group by others in prior years.
Marin Sanitary Application for 2018 Rate Adjustment
On November 26, 2017, Marin Sanitary Service (MSS) submitted its application for an 8.06% increase to
its solid waste rates, to be effective January 1, 2018, with an included option to adjust that increase
downwards by 0.83% for a 7.23% increase based on a proposal to lengthen depreciation schedules for
new capital equipment (trucks) from seven to ten years. A summary of the 8.06% rate adjustment request
is included in Attachment 1.
R3 conducted a review of the application based on the rate methodology agreed to via the Franchise
Agreements between MSS and the cities of San Rafael and Larkspur, the Town of Ross, the County of
Marin, and the Las Gallinas Valley Sanitary District (LGVSD), collectively referred to as the "Franchisors’
Group". Our review included a thorough assessment of all relevant documents for completeness and
compliance with the procedures agreed upon by MSS and the Franchisors’ Group, and verified the
mathematical accuracy and logical consistency of the supporting schedules.
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2018 Rate Application, Final Report
January 2, 2018
Cover Letter Page 2 of 4
Based on our review of the application, we have determined that a rate increase of 5.57% is appropriate
to compensate MSS for its projected 2018 expenses. We have reviewed our findings with MSS, and they
are in agreement with the proposed adjustments to their rate application and the recommended 5.57%
rate increase for 2018, as shown in Attachment 2.
2018 Rate Adjustment Components
Table 1, below, shows the rate components based on the change in expenses and net revenue between
the 2017 approved rate application and the 2018 recommended rate adjustment. Table 1 is referenced in
the following description of adjustments.
Table 1
Comparison of 2017 Approved Expenses to 2018 Recommended Expenses
Category
2017
Approved
Rate
Application
2018
Recommended
Rate
Application
Change Component
Percentage
Wages 7,816,029 8,058,326 242,297 0.87%
Benefits (including workers comp) 4,508,989 4,631,180 122,191 0.44%
Disposal Fees 3,987,388 4,054,315 66,927 0.24%
Fuel & Oil 582,323 853,982 271,659 0.98%
Maintenance Expense 1,857,599 1,892,893 35,294 0.13%
Depreciation 2,640,288 2,801,360 161,072 0.58%
Other Operating Costs (1) 3,626,681 3,726,395 99,714 0.36%
Total Operating Expenses 25,019,297 26,018,451 999,154 3.60%
Operating Profit 2,626,335 2,731,218 104,883 0.38%
Interest Expense 429,390 525,881 96,490 0.35%
Total Expenses/Revenue
Requirement 28,075,022 29,275,550 1,200,528 4.33%
$343,034 in Projected Revenue Shortfall Net of Changes in Total Expenses 1.24%
Recommended 2018 Rate Adjustment Factor 5.57%
(1) Includes general & administrative costs (e.g., public education, customer service, etc.).
R3 reviewed MSS’s calculations for each of the categories summarized in Table 1 and is recommending
specific corrections to certain categories, which are discussed in more detail in Section 4 of this Report.
The recommended 2018 rate adjustments by category (including R3’s corrections) are further described
below, with more specifics included in Sections 3 and 4 of this Report.
Wages (0.87%)
The wages expense component contributes 0.87% to the overall recommended 5.57% rate adjustment.
The increase in wages is due to applying the applicable CPI index (3.1%) to the 2017 approved wage base.
It should be noted that the 2017 wage base included an adjustment for an accounting position that was
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2018 Rate Application, Final Report
January 2, 2018
Cover Letter Page 3 of 4
approved in 2013 as part of the operations improvement plan but remained unfilled until 2016; this
adjustment remains in 2018.
Benefits (0.44%)
The benefits expense component contributes 0.44% to the overall recommended 5.57% rate adjustment.
The increase in benefits is the sum of two adjustments: an increase in workers compensation expense
(6.5%) and, for other employee benefits (excluding workers compensation), an increase in the applicable
CPI index (1.9%) as applied to the 2017 approved benefit base. It should be noted that this benefits
component also included a prior 2017 adjustment for the accounting position that remained unfilled until
2016.
Disposal (0.24%)
The disposal expense contributes 0.24% to the overall recommended 5.57% rate adjustment. The increase
is entirely due to the difference in actual expenses for 2016 and 2017 vs. projected expenses for those
years, and is a “true-up” of those prior expenses. The projection for 2018 is slightly less than the projection
for 2017, and is the product of the annual change in disposal cost per ton (by the applicable CPI or contract
price, depending upon waste stream) and projected 2018 tonnage. Adjustments reducing the amount of
disposal that were identified in 2017 will also be continued into 2018.
Fuel and Oil (0.98%)
The fuel expense component contributes 0.98% to the overall recommended 5.57% rate adjustment. The
increase is mostly (91%) attributable to increases in the applicable CPI index (9.4%), yielding a higher
amount of forecasted fuel expense in 2018 compared to 2017. The remaining 9% of the increase is related
to “true-ups” in forecasted vs. actual fuel and oil expenses in 2016 and 2017, as allowed under the rate
adjustment methodology.
Maintenance (0.13%)
The maintenance expense component contributes 0.13% to the overall recommended 5.57% rate
adjustment. The increase is due to applying the applicable CPI index (1.9%) to the 2017 approved
maintenance costs.
Depreciation (0.58%)
The depreciation expense component contributes 0.58% to the overall recommended 5.57% rate
adjustment. The increase is due to added depreciation costs for replacement vehicles, equipment, and
building repairs in 2016 and 2017, along with forecasted expenses for 2018.
This amount reflects $374,184 in adjustments to depreciation expense compared to MSS’s 2018 rate
application, which are attributed to the deferred purchase (to 2019) of two collection vehicles originally
scheduled for 2018, adjustments to the allocation of depreciation expenses between MSS jurisdictions,
and the change from a seven-year to a ten-year depreciation period for assets purchased on or after
January 1, 2017.
Other Operating / G&A (0.36%)
The "other operating costs" component contributes 0.36% to the overall recommended 5.57% rate
adjustment. General and Administrative (G&A) costs other than Marin County JPA fees were increased by
the change in CPI (3.1%). G&A includes costs such as public outreach, professional fees, and computer
hardware/software.
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2018 Rate Application, Final Report
January 2, 2018
Cover Letter Page 4 of 4
The Marin County JPA fees are adjusted to reflect anticipated charges by the County, which are projected
to increase by $4,856 over 2017.
Profit (0.38%)
MSS’s profit component, which is an agreed upon “operating margin” of 90.5%, contributes 0.38% to the
overall recommended 5.57% rate adjustment, which is entirely due to the overall increase in expenses
noted above. This is calculated as a function of total operating expenses (recommended at $26,018,450)
divided by 90.5%, less total operating expenses, yielding $2,731,218 in 2018. This value has been adjusted
downward from MSS’s original application by $41,236 as a result of adjustments to operating expenses
which are discussed in this Report.
Interest (0.35%)
The interest expense component contributes 0.35% to the overall recommended 5.57% rate adjustment,
and is not an expense that is subject to the calculation of MSS’ profit.
This amount reflects $123,863 in adjustments to interest expense compared to MSS’ 2018 rate
application, which are attributed to the deferred purchase of two collection vehicles originally scheduled
for 2018 ($11,156 of the adjustment) as well as adjustments to the allocation of interest expense between
MSS franchising agencies ($77,450 of the adjustment) and a refinement of MSS’s calculation of the original
forecasted 2018 interest expense ($35,257 of the adjustment).
Projected Revenue Shortfall Net of Changes in Total Expenses (1.24%)
MSS’ total expenses – including operating expenses, profit, and interest – are projected to increase by
$1,200,526 from 2017 to 2018, after accounting for the adjustments included in this Report. The projected
revenue shortfall at current rates is $1,543,560; net of increased expenses, there is a revenue shortfall of
$343,034 projected for 2018, accounting for 1.24% of the overall recommended 5.57% rate adjustment.
This revenue shortfall is the result of revenue shortfalls in 2017 that are expected to continue into 2018,
as well as modest assumptions for new revenue shortfalls in 2018.
* * * * * * *
We appreciate the opportunity to submit our Final Report to the Marin Franchisors’ Group. Should you
have any questions regarding this Report or need any additional information, please contact me by phone
at (510) 292-0853 or by email at gschultz@r3cgi.com.
Sincerely,
R3 CONSULTING GROUP
Garth Schultz | Principal
Section 1
Background
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 1 of 16
Background
Description of Current Services
Marin Sanitary Service (MSS) provides franchised refuse, recyclable materials, and organics
collection and processing services to the residents and businesses in the cities of San Rafael
and Larkspur, the Town of Ross, the County of Marin, and the Las Gallinas Valley Sanitary
District (LGVSD). MSS and its non-franchised related entities – Marin Recycling and Resource
Recovery Association (MRRRA) and the Marin Resource Recovery Center (MRRC) – also provide
solid waste, recyclable-materials, and organics collection and processing services to the
residents and businesses of the towns of San Anselmo and Fairfax. MSS also provides
non-franchised debris box, street sweeping, and document shredding 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’ Group service
area to the MSS transfer station and then transports it to the Redwood Sanitary Landfill, which
is an unrelated party. MSS delivers recyclable materials to the non-franchised MRRRA where
materials are processed and marketed. MSS delivers recyclable-rich loads of refuse (typically
commercial) and separated organics loads (collected from residents) along with public self-
haul loads to the non-franchised MRRC where recyclable materials are separated from the
waste stream, processed, and marketed.
The MRRC delivers the residual waste to the MSS transfer station. This residual waste was
transferred to Keller Canyon Landfill through June 2016. MSS signed a new agreement with
Potrero Hills Landfill beginning July 2016 for disposal of the residual material. MSS delivers
franchised organics to the MRRC for processing before transferring to Redwood for
composting. MSS provides other programs to the Franchisors’ Group, including a Food-to-
Energy program, outreach and education to commercial and multi-family customers (to meet
the obligations of State Laws AB 341 and AB 1826, which require commercial recycling and
organics collection) and other related services.
Current Rate Adjustment Methodology
The Rate Adjustment Methodology was developed in cooperation with MSS, approved by the
Franchisors’ Group in 2001, and revised in 2012. The individual jurisdictions amended their
agreements with MSS to include this methodology as Exhibit B - Contractors Revenue
Requirement and Rate Adjustment. Section 3 of this Report describes the current methodology
in more detail and includes findings from the application of the methodology to MSS' 2018
Rate Application.
Anticipated Changes to Rate Adjustment Methodology
The Franchisors’ Group and R3 have been working to revise the rate setting methodology with
MSS to meet the following goals:
1. Streamline and simplify the rate setting process in order to spend less time and
consultant cost annually;
2. Achieve more transparency for rate payers in the annual rate setting process; and
Section 1
Background
Page 2 of 16
Marin Franchisors Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
3. Develop a new process to address fluctuations in recycling revenues, and address
ongoing recycling losses.
A new methodology is intended to address rate fluctuations, while maintaining an emphasis
on responsible solid waste management, good value to customers, and reduction of waste to
landfill. This is all part of a meet-and-confer negotiation process triggered by a deficit in the
“recycling revenue fund” which has an accumulated deficit of over $800,000 since established
in 2013.
Because of the anticipated new methodology, the Franchisors’ Group and MSS had planned to
complete a complex cost-based rate adjustment for 2018 rates (one year ahead of schedule)
so that the new streamlined rate setting methodology could take effect for 2019 rates.
However, as review of the cost-based adjustment proceeded, it was determined that results
of the review would not be available in time for 2018 rate setting. As a result, the Franchisors’
Group and MSS agreed to revert to the (less complex and scheduled) index-based rate
adjustment process for 2018 rates in order to stay on schedule for the 2018 rate adoption
process.
With these considerations in mind, the Franchisors’ Group requested that MSS submit its
indexed rate application for the 2018 rate year instead. MSS submitted the application on
November 26, with a requested rate adjustment of 8.06% (with an offer to extend the
depreciation schedule for new trucks resulting in a 7.23% increase).
Next Steps for 2018 and 2019
In 2018, MSS will prepare, and R3 and the Franchisors’ Group will review, a cost-based rate
application for a 2019 rate adjustment. Simultaneously, MSS, R3 and the Franchisors’ Group
will finalize updates to the rate setting methodology (which would take effect for 2020 rate
setting) and complete the meet and confer process to determine means of resolving the deficit
in the recycling revenue fund. The recycling revenue fund will continue to remain in place in
2018. It is possible that further deficits could accrue in 2018, though MSS has reported that
the recycling deficit did not grow in 2017.
Anticipated Timeline
January-February 2018 2018 Rates brought to Councils/Boards
March-June 2018 Rate setting methodology and meet-and-confer completed
August 2018 MSS 2019 base-year rate application due
August-November 2018 Base-year rate application review completed
November-December 2018 New methodology and 2019 rates brought to Councils/Boards
Section 2
Rate Review
Approach
Page 3 of 16
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Rate Review Approach
R3 Scope of Review
The Franchisors’ Group engaged R3 to perform a review of the Application in accordance with
the Rate Adjustment Methodology. These procedures included the following activities:
Reviewing MSS management's actual achievement of, and projections for, revenues
for the 12-month periods ending December 31, 2016, and 2017.
Comparing the results to MSS's audited financial statements for rate year 2016 and
year-to-date revenues for 2017, and requesting explanations for variances.
Reviewing the appropriateness of MSS management's classification of expenses into
the various expense categories.
Reviewing MSS management's calculation of rate year 2018 indexed expenses and
comparing them to the calculated expenses for 2017, and the calculated changes to
the indices.
Reviewing MSS management's projection of other expenses including:
o Workers' Compensation, which has been reviewed by determining if the base
wages, established as part of the prior year detail review, were properly
multiplied by the applicable premium rates from MSS' insurance carrier.
o Disposal Expense for solid waste tons transferred at MSS' transfer station,
which has been reviewed by evaluating MSS' projection for 2018 disposal
expense and MSS adjustments for the previous projections for Rate Years 2016
and 2017 based on historical trends, management's plans, and adjustment to
the disposal rates.
Compiling rates currently in effect in other municipalities in Marin County, as well as
neighboring jurisdictions in other counties.
Preparing a written report that documents our findings and recommendations.
Limitations
This 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 McMullin + McGuire, An Accountancy Corporation, issued an
unqualified opinion of MSS' 2016 financial statements. The unqualified opinion denotes that
the financial statements of MSS were presented fairly in all material respects.
Our conclusions are based in part 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.
Section 2
Rate Review
Approach
Page 4 of 16
Marin Franchisors Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
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Section 3
MSS Projection
Methodology
(Index Year)
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Page 5 of 16
MSS Projection Methodology (Index Year)
Projected costs for 2018 are based on costs developed during the last indexed review which
occurred in 2016 setting rates for 2017. In projecting the 2018 costs, MSS included the direct
costs for the Franchisors’ Group garbage collection, the transfer station, and recycling
collection.
Some costs are allocated between MSS jurisdictions based on performance metrics. For
example, maintenance and administrative costs are allocated among the agencies served by
MSS using truck route hours and an average of projected revenue, annual customer counts,
and department's percentage of wages, respectively. Depreciation and interest costs are
allocated similarly. Management salaries are allocated to departments based upon actual time
spent by management related to that department.
R3 reviewed and recommended adjustments to allocation methodologies for depreciation and
interest as part of this review, and found other allocations to be calculated accurately and
appropriate for the purposes of the 2018 rate application.
Expense Projections
MSS projected its 2018 expenses (less non-allowable costs such as: donations, fines for
penalties, certain attorney's fees, goodwill, etc.) for each expense category by:
Basing wage and salary expenses on 2017 expenses increased by the percentage
change in the average annual San Francisco-Oakland-San Jose Metropolitan Area
Consumer Price Index (Urban Wage Earners; 1982-1984==100) for June 2016 and
2017;
Basing benefits expense, excluding Workers' Compensation expense, on the projected
2017 benefits expense increased by the percentage change in the annual average
Employment Cost Index - Benefits (Private Industry Workers; 1982-1984=100) for June
2016 and 2017;
Calculating Worker's Compensation expense by multiplying the 2017 wage projection
by the applicable premium rates from the Contractor's insurance carrier for 2018;
Forecasting projected 2018 disposal expense using projected tons multiplied by the
applicable disposal/processing rate for 2018, plus adjustments for 2016 actual disposal
expenses, and estimated 2017 disposal expenses calculated based on actual 2016
results and year-to-date 2017 results;
Forecasting projected 2018 fuel and oil expense as follows:
o Projected Year (2018) Fuel Expense - gallons established in the most recent
detail year review (2016) at the average price per gallon based on actual year
to date purchases; plus,
o Current Year (2017) Expense Adjustment -gallons established in the most
recent detail year review (2016) at the average price per gallon based on actual
year to date purchases less the 2017 fuel expense established during the
previous review; plus,
o Revised Prior Year (2016) Expense Adjustment - gallons established in the prior
detail year review (2016) at the average price per gallon based on actual fuel
Section 3
MSS Projection
Methodology
(Index Year)
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 6 of 16
purchases for 2016 less the 2016 fuel expense established during the previous
review.
Forecasting projected 2018 equipment and vehicle maintenance expense was based
on the projected maintenance expense for 2017 increased by the percentage change
in the annual average Motor Vehicle Related Index (All Urban Consumers, U.S. City
Average; 1982-1984=100) for June 2016 and 2017;
Forecasting projected 2018 depreciation and lease expense based on MSS's actual
depreciation expense plus projected depreciation on anticipated purchases in the Rate
Year (allocation of depreciation of trucks to the Franchisors’ Group and other
operations was based on truck usage metrics);
Forecasting projected 2018 JPA Fees based on tons collected for the Franchisors’
Group by MSS for the period determined and rate established by the JPA;
Forecasting projected 2018 other operating / general and administrative expense
based on projected 2017 expense increased by the percentage change in the annual
average San Francisco-Oakland-San Jose Metropolitan Area Consumer Price Index (All
Urban Wage Earners; 1982-1984=100) for June 2016 and 2017; and
Forecasting projected 2018 interest expense based on MSS's actual interest from its
loan amortization schedules for actual and projected capital, and adjusting 2017
expenses for any projected asset purchases from the prior rate year which were not
purchased in the projected time period.
Revenue Projections
In order to mitigate significant differences in the forecasted and actual revenues received R3
applied a 99.75% revenue achievement factor to the projection of 2018 revenues at current
2017 rates, meaning that the anticipated revenues for 2018 (without rate adjustment) are
projected to be 0.25% less than forecasted based on year-to-date 2017 trends.
MSS has not achieved forecasted revenues in most prior years, which is primarily due to
customer “migration” from larger and more expensive solid waste subscription levels (larger
container sizes and/or greater collection frequency) to smaller and cheaper service levels
(smaller container sizes and/or lesser collection frequency) as a result of increased recycling
and/or composting participation. This ongoing trend reduces revenue to MSS without
necessarily reducing expenses.
The recommended 0.25% reduction in revenue achievement modeled in the recommended
2018 rate adjustment is less than has been recorded in prior years, and forecasts less of a
revenue shortfall than has actually been realized in prior years. This is the result of
expectations that economic growth and lessened migration will offest larger differences in the
forecasted and actual revenues that MSS may receive in 2018. R3 has reviewed the
recommended revenue achievement factor with MSS, and MSS has agreed to it.
Profit Projections
MSS calculated its 2018 profit by applying the agreed-upon 90.5% pre-tax operating ratio to its
2018 total projected expenses that are eligible for profit. This calculation automatically
recalculated MSS profit after accounting for adjustments to expenses as noted elsewhere in
this report.
Section 3
MSS Projection
Methodology
(Index Year)
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 7 of 16
Calculated Rate Adjustment Factor
The Rate Adjustment Factor equals the Total Contractor's Revenue Requirement for the
coming Rate Year divided by the Gross Rate Revenues. Gross Rate Revenues mean the
statements of charges for services rendered by Contractor, to owners or occupants of
property, including residential and commercial premises, for the collection of materials
pursuant to the Agreement, net of a reasonable allowance for uncollectible accounts, and
adjusted for the anticipated 99.75% revenue achievement.
MSS calculated the 2018 Rate Adjustment to be a 7.23% increase, including a MSS proposal to
increase the depreciation period of recent (on or after January 1, 2017) and planned 2018
vehicle purchases from seven to ten years (without this change, the requested rate adjustment
would have been 8.06%). R3 recommends the ten-year depreciation period option as it is
consistent with depreciation of vehicles in other operations that we have reviewed, and also
reduces the necessary rate increase in this and future rate years (if the new depreciation term
continues to be applied in the future).
Please note that the adjustments related to the change from seven to ten-year depreciation
are included as recommended adjustments in this Report. Likewise, the MSS proposed 2018
rate adjustment is shown at the seven-year depreciation amount of 8.06% in the following
tables and in Attachment 1. After accounting for the adjustments recommended by R3 and
agreed to by MSS, the recommended rate 2018 rate adjustment is 5.57%, 1.66% less than
MSS’s requested adjustment of 7.23% (and 2.49% less than the 8.06% increase without the
change in depreciation).
Section 3
MSS Projection
Methodology
(Index Year)
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Section 4
Proposed
Adjustments to
MSS Rate
Application
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 9 of 16
Proposed Adjustments to MSS Rate
Application
This section provides a summary of the R3 recommended adjustments to the MSS 2018 Rate
Application, and the rationale for those adjustments. R3's recommended projections for MSS'
operations are shown in Table 2 below, and are discussed in more detail following the table.
Please note that the MSS application includes depreciation at seven years; the adjustment to
ten-year depreciation is addressed in the “Recommended Adjustments” column of Table 2.
Table 2
Summary of Adjustments to 2018 Rate Application
Expenses: Current MSS Operations MSS
Application
Recommended
Adjustments
R3 Adjusted
Application
1 Wages 8,058,326 - 8,058,326
2 Benefits 4,607,674 23,506 4,631,180
3 Disposal Fees 4,096,468 (42,153) 4,054,315
4 Fuel & Oil 853,982 - 853,982
5 Maintenance Expense 1,892,893 - 1,892,893
6 Depreciation/Leases 3,175,545 (374,185) 2,801,360
7 Other Operating/G&A 3,726,395 - 3,726,395
8 Total Operating Expenses 26,411,283 (392,832) 26,018,451
9 Operating Profit 2,772,454 (41,236) 2,731,218
10 Interest Expense 649,744 (123,863) 525,881
11 Revenue Requirement 29,833,481 (557,930) 29,275,550
12 Projected Revenue (at current rates) 31,763,512 165,010 31,928,522
13 Less: Franchise Fees (3,160,455) (16,289) (3,176,744)
14 Less: Street Sweeping (72,000) (24,000) (96,000)
15 Less: Refuse Vehicle Impact Fee (1,117,857) - (1,117,857)
16 Add: Non-Regulated Revenues 194,066 - 194,066
17 Net Revenues (at current rates) 27,607,266 96,867 27,731,988
18 Total Surplus/ (Deficit) (Line 17 - Line 12) (2,226,217) 682,655 (1,543,562)
19 Rate Adjustment Factor (-Line 18 ÷ Line 17) 8.06% (2.49%) 5.57%
Section 4
Proposed
Adjustments to
MSS Rate
Application
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 10 of 16
Adjustments to 2017 Projected Expenses for Current
Operations
Wages
R3 reviewed and does not recommend an adjustment to MSS' projected 2018 Wages expense
(Table 2, Line 1).
It should be noted that prior adjustments in 2017 (reduction in wages of $17,642 to limit the
wages for the accounting position to the amount approved as part of the Operations
Improvement Plan that remained unfilled until 2016) are automatically carried forward to the
2018 projection, as the 2018 projection escalated the 2017 approved wages expense (including
the prior reduction) by CPI. CPI for this expense category yields an increase of 3.1% for 2018.
Benefits
R3 reviewed and recommends increasing benefit expense by a net of $23,506 due to the
following (Table 2, Line 2):
Increase benefits, other than workers' compensation, by $3,712. MSS’ application
calculated these costs based on an annual average change in the Employment Cost
Index (ECI) (yielding a 1.8% increase) instead of the year over year change as
prescribed by the agreement (yielding a 1.9% increase) an error that also occurred in
2017 and of which MSS has been made aware; and
Increase workers' compensation by $19,794 due to an updated (and final) insurance
quote that was higher than MSS initially expected.
Disposal Fees
R3 reviewed and recommends reducing disposal fees by $42,153 for the following (Table 2,
Line 3):
Reduce disposal by $27,901 for projected growth in F2E tonnage as the program adds
new customers and the second route, which is a continuation of an adjustment made
in 2017; and
Reduce disposal by $14,252 to eliminate an extra scale charge and Non-Franchisor
areas for bulky waste and illegal dumping charges, which is also a continuation of an
adjustment made in 2017.
Fuel & Oil
R3 reviewed and does not recommend an adjustment to MSS' projected 2018 fuel expense
(Table 2, Line 4).
Maintenance Expense
R3 reviewed and does not recommend an adjustment to MSS' projected 2018 maintenance
expense (Table 2, Line 5).
Section 4
Proposed
Adjustments to
MSS Rate
Application
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 11 of 16
Depreciation/Leases
R3 reviewed and recommends reducing depreciation by $374,185 for the following (Table 2,
Line 6):
Reduce depreciation by $176,921 to account for the change in depreciation period
from seven to ten-years for recently purchased and planned 2018 truck purchases;
Reduce depreciation by $26,250 to account for the deferral of the purchase of two
trucks originally planned for 2018 but which MSS has agreed to defer until 2019; and
Reduce depreciation by $171,014 due to updated calculations for allocating
depreciation between MSS contracting agencies.
Other Operating / G&A
R3 reviewed and does not recommend an adjustment to MSS' projected 2018 Other Operating
/ G&A expense (Table 2, Line 7).
Operating Profit
R3 reviewed and recommends reducing MSS' projected operating profit by $41,236 (Table 2,
Line 9) which is a result of net decreases in operating costs described above.
Interest Expense
R3 recommends reducing MSS' projected interest expense by $123,863 due to the following
(Table 2, Line 10):
Reduce interest by $11,156 to account for the deferral of the purchase of two trucks
originally planned for 2018 but which MSS has agreed to defer until 2019;
Reduce interest by $77,450 due to updated calculations for allocating interest
between MSS contracting agencies; and
Reduce interest expense by $35,257 due to MSS updating calculations for the amount
of overall 2018 interest.
Adjustments to Projected Revenue at Current Rates
Projected Revenue at Current Rates
R3 recommends increasing projected revenue at current rates by $165,010 due to an updated
99.75% revenue achievement projection for 2018, as compared to MSS’s original proposal of
a revenue achievement factor of 99.23% (Table 2, Line 12).
Franchise Fees
R3 reviewed and recommends an increase to MSS' projected Franchise Fees (Table 2, Line 13)
in the amount of $16,289, which is due to the increase in projected revenue and current rates
noted above.
Section 4
Proposed
Adjustments to
MSS Rate
Application
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 12 of 16
Street Sweeping Fees
R3 reviewed and recommends correcting the amount of street sweeping fees (resulting in a
decrease in available revenues) by $24,000 to show pass-through street sweeping fees for Ross
Valley North (RVSD-N) that MSS inadvertently did not include in the rate application (Table 2,
Line 14). Rates for Ross Valley North customers already include these pass-through costs
(meaning costs not subject to MSS profit), which are not paid by other Franchisor’s Group rate-
payers. This same correction was made in the 2017 rate application.
Vehicle Impact Fees
R3 reviewed the Vehicle Impact Fees noted in MSS’s rate application (Table 2, Line 15), and
finds them to be appropriate for rate setting purposes, with no adjustment necessary.
Non-Regulated Revenues
R3 reviewed and does not recommend an adjustment to MSS' projected Franchise Fees (Table
2, Line 16).
Section 5
Recommended
Rate
Adjustment
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 13 of 16
Recommended Rate Adjustment
2018 Recommended Adjustment
Based on a recommend revenue requirement of $29,275,550 (Table 2, Line 11) and projected
net revenues of $27,731,988 (Table 2, Line 17) for the calendar year 2018 resulting from our
recommended adjustments to MSS' application, a 5.57% Rate Adjustment Factor has been
calculated, to be effective January 1, 2018.
The approved rate setting methodology allows for certain expenses to be revised each year
when more accurate information is known. The difference between the original projections
and the revised projections are allowed to be included in the current year rate adjustment.
Table 3 shows the components of the rate increase based on adjustments related solely to the
2018 projections and the adjustments related to revised projections from 2016 and 2017.
Table 3
Summary of Rate Increase Components by Category
Rate Adjustment Factor Component Percentages
Category
Adjustment
Factor
Related to
2016 and
2017
Adjustment
Factor
Related to
2018
Total
Wages 0.00% 0.87% 0.87%
Benefits (including workers comp) 0.00% 0.44% 0.44%
Fuel & Oil 0.09% 0.89% 0.98%
Disposal 0.24% 0.00% 0.24%
Depreciation and Interest 0.00% 0.93% 0.93%
Maintenance 0.00% 0.13% 0.13%
Other Operating Costs1 0.00% 0.74% 0.74%
Subtotal Operations 0.33% 4.00% 4.33%
Revenue Shortfall Net of Changes in Total Expenses 0.00% 1.24% 1.24%
Rate Adjustment Factor 0.33% 5.24% 5.57%
1 Includes profit and general & administrative costs (e.g., public education, customer service, etc.).
As shown, the recommended rate increase of 5.57% includes components that result from
revised projections related to 2016 and 2017 as well as components that relate to the current
application, as shown in Table 3. The impact of prior year “true-ups” to this 2018 rate
application is minimal, with only 0.33% of the overall rate adjustment being attributed to
change in expenses in prior years. This is primarily due to the difference between the 2016
actual disposal expense as compared to the projected 2016 disposal expense included in the
2017 rate application, which accounts for 0.24% of the recommended 2018 adjustment. A
small 0.09% of the adjustment is due to “true-ups” for fuel and oil related to actual vs.
projected expenses in 2016 and 2017.
Section 5
Recommended
Rate
Adjustment
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 14 of 16
Proposed 2018 Rates
The following table summarizes, by jurisdiction, the current and proposed 32-gallon residential
rates, the most common subscription level. Note that rates for the County of Marin are
estimated based on the recommended 5.57% rate adjustment applied to the 2017 rates for
County area; actual County rates will be determined by a separate process, using the approved
2018 rate adjustment factor.
Table 4
Residential 32-Gallon Rate Summary
Jurisdiction
Current
Rate
($/mo.)
Proposed
Rate
($/mo.)
$ Difference
San Rafael $35.81 $37.80 $1.99
Las Gallinas Valley Sanitary District $31.31 $33.05 $1.74
Larkspur $41.13 $43.42 $2.29
Ross $34.22 $36.13 $1.91
County of Marin - RVSD-S* $38.54 $40.69 $2.15
County of Marin* $38.00 $40.12 $2.12
County of Marin - RVSD-N* (Sleepy Hollow) $41.01 $43.29 $2.28
County of Marin - RVSD-N* (Oak Manor) $40.28 $42.52 $2.24
Survey of Comparable Rates
Attachment 3 shows the results of R3's survey of solid waste rates as of December 2017 for
jurisdictions located throughout the Bay Area. For the purpose of comparing the Franchisors’
Group rates to other jurisdictions in Attachments 3, 4 and 5 we have applied the 5.57% rate
adjustment for 2018 to the current Franchisors’ Group rates.
The Franchisors’ Group residential rates for a 32-gallon container (the most frequent
residential service level) will range from $33.05 (LGVSD) to $43.42 (Larkspur). The survey
shows the Franchisors’ Group average residential rate for 32-gallon service $39.63 with RVSD-
N included (and $38.53 without) is within the range of normal when compared to other Marin
County jurisdictions. Attachment 4 graphically compares the Franchisors’ Group residential
rates for a 32- gallon container to one another as well as to the average of Marin County rates
for similar service.
The Franchisors’ Group commercial rates for a 3-cubic yard bin serviced 1 time per week (the
most requested commercial service level) range from $463.86 (Town of Ross) to $695.15
(RVSD-N). The average rate for the Franchisors’ Group is $550.76 with RVSD-N, and $502.63
without. The average rate is higher when compared to the other three Marin County
jurisdictions that have this level of service. Attachment 5 compares the Franchisors’ Group
commercial rates for a 3-cubic yard bin serviced one time per week to the average Marin
County rate and all other jurisdictions' average rate for similar service levels.
These survey results are presented as an indication of the reasonableness of the resulting rates
for 2018. Conclusions should not be immediately drawn from this information because rate
comparisons are intrinsically difficult and often misleading. This results from differences in
issues such as those listed below. At the direction of the Franchisors’ Group, R3 would be
happy to prepare additional background information on how these factors may change for
Section 5
Recommended
Rate
Adjustment
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 15 of 16
comparison agencies in the future, and provide addition context regarding the rates shown
(for example, as a result of recent acquisitions as with the recent Recology acquisition of
Novato Disposal).
The types and ranges of services provided;
The level of subscription to solid waste services by residential, commercial, and
industrial customers;
The ratio of residential to commercial and industrial customers;
The terrain in which the service is performed;
Disposal, transfer and process costs, and amounts per capita;
Rate structures; and,
Governmental fees (e.g., franchise fees, vehicle impact fees, etc.).
Section 5
Recommended
Rate
Adjustment
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application | FINAL REPORT
Page 16 of 16
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Expense Allocation (Percentage of Total Revenues)44.24% 19.26% 8.55% 15.79% 2.56% 2.12% 6.20% 1.27% 100.00%Las Gallinas- Las Gallinas-Expenses: Current MSS ServicesSan Rafael City of S.R. County Larkspur RV-NRossRVSD County Total1Rate Application Operating Expenses:2Wages8,058,326$ 3,565,227$ 1,552,275$ 689,257$ 1,272,671$ 206,030$ 170,555$ 499,688$ 102,623$ 8,058,326$ 3Benefits4,607,674$ 2,038,563 887,576 394,111 727,701 117,806 97,522 285,717 58,679 4,607,675 4Disposal Fees4,096,468$ 1,812,391 789,103 350,385 646,965 104,736 86,702 254,017 52,169 4,096,468 5Fuel & Oil853,982$ 377,825 164,502 73,044 134,871 21,834 18,075 52,954 10,876 853,981 6Maintenance Expense1,892,893$ 837,468 364,628 161,906 298,949 48,396 40,063 117,376 24,106 1,892,892 7Depreciation/Leases3,175,545$ 1,404,949 611,705 271,616 501,522 81,190 67,210 196,912 40,441 3,175,545 8Other Operating/G&A3,726,395$ 1,648,661 717,815 318,732 588,519 95,274 78,869 231,070 47,456 3,726,396 9- 10Total Operating Expenses26,411,283 11,685,084 5,087,604 2,259,051 4,171,198 675,266 558,996 1,637,734 336,350 26,411,283 11Operating Profit90.5% 2,772,455 1,226,611 534,058 237,138 437,861 70,884 58,679 171,917 35,307 2,772,455 12Interest Expense649,744 287,465 125,160 55,575 102,616 16,612 13,752 40,290 8,275 649,745 13 Revenue Requirement29,833,481 13,199,160 5,746,822 2,551,764 4,711,675 762,762 631,427 1,849,941 379,932 29,833,483 Revenues 14Route Revenues (2018 Projected at 2017 Rates) 13,816,309 6,019,873 2,369,748 5,442,038 874,162 671,179 2,131,251 438,952 31,763,512 15- 16Adusted Route Revenues 13,816,309 6,019,873 2,369,748 5,442,038 874,162 671,179 2,131,251 438,952 31,763,512 17Less: Franchise Fees (1,381,631) (601,987) (25,000) (544,204) (131,124) (90,978) (319,688) (65,843) (3,160,455) 18Less: Street Sweeping(48,000) (24,000) (72,000) 19Less: Vehicle Impact Fee (306,318) (137,282) (568,400) (42,155) (63,702) (1,117,857) 20Net Regulated Revenues 12,128,360 5,280,604 2,344,748 4,329,434 700,883 580,201 1,699,861 349,109 27,413,200 21Non-Regulated Revenues 194,066 85,860 37,383 16,599 30,649 4,962 4,107 12,034 2,472 194,066 22 Adjusted Total Revenues (At Current Rates)12,214,220 5,317,987 2,361,347 4,360,083 705,845 584,308 1,711,895 351,580 27,607,266 23Revenue Surplus/(Shortfall) (984,940) (428,835) (190,417) (351,592) (56,917) (47,119) (138,046) (28,352) (2,226,217) 24Calculated Rate Adjustment 8.06% 8.06% 8.06% 8.06% 8.06% 8.06% 8.06% 8.06% 8.06%Marin Sanitary Service2018 Rate Application - Franchisors' GroupMSS Proposed Rate CalculationR:\+Projects\Marin Franchisor's Group Indexed Rate Review 21018 Rate Setting - 117064\++ R3 Adjustments to MSS 2018 Rate Application\R3 Adjustments to MSS 2018 Rate Calculation - 122117 FINAL / MSS ProposedMarin Franchisors Group | Review of Marin Sanitary Service’s 2018 Rate ApplicationAttachment 1
Marin Franchisors Group | Review of Marin Sanitary Service’s 2018 Rate ApplicationAttachment 2Expense Allocation (Percentage of Total Revenues) 44.28% 19.28% 8.56% 15.81% 2.47% 2.12% 6.21% 1.27% 100.00%Las Gallinas- Las Gallinas-Expenses: Current MSS ServicesSan Rafael City of S.R. County Larkspur RV-N Ross RVSD County Total1Rate Application Operating Expenses:2Wages 8,058,326$ 3,567,982$ 1,553,481$ 689,738$ 1,274,353$ 199,203$ 170,664$ 500,179$ 102,726$ 8,058,326$ 3Benefits 4,631,180$ 2,050,546 892,797 396,398 732,380 114,484 98,082 287,456 59,037 4,631,180 4Disposal Fees 4,054,315$ 1,795,128 781,589 347,022 641,154 100,223 85,865 251,650 51,683 4,054,315 5Fuel & Oil 853,982$ 378,117 164,630 73,095 135,050 21,111 18,086 53,006 10,886 853,982 6Maintenance Expense 1,892,893$ 838,116 364,911 162,019 299,344 46,793 40,089 117,491 24,130 1,892,893 7Depreciation/Leases 2,801,361$ 1,240,358 540,045 239,777 443,010 69,250 59,329 173,880 35,711 2,801,360 8Other Operating/G&A 3,726,395$ 1,649,935 718,373 318,954 589,296 92,117 78,920 231,297 47,503 3,726,395 9- 10Total Operating Expenses 26,018,452 11,520,182 5,015,826 2,227,003 4,114,587 643,181 551,035 1,614,959 331,676 26,018,451 11Operating Profit 90.5% 2,731,218 1,209,301 526,523 233,774 431,918 67,516 57,843 169,526 34,817 2,731,218 12Interest Expense 525,881 232,844 101,379 45,012 83,163 13,000 11,137 32,641 6,704 525,881 13 Revenue Requirement 29,275,551 12,962,327 5,643,728 2,505,789 4,629,668 723,697 620,015 1,817,126 373,197 29,275,550 Revenues 14Route Revenues (2018 Projected at 2017 Rates) 13,888,084 6,051,146 2,382,059 5,470,309 878,704 674,666 2,142,323 441,232 31,928,522 15- 16Adusted Route Revenues 13,888,084 6,051,146 2,382,059 5,470,309 878,704 674,666 2,142,323 441,232 31,928,522 17Less: Franchise Fees (1,388,808) (605,115) (25,000) (547,031) (131,806) (91,451) (321,348) (66,185) (3,176,744) 18Less: Street Sweeping - - - - (24,000) - (48,000) (24,000) (96,000) 19Less: Vehicle Impact Fee (306,318) (137,282) - (568,400) (42,155) - (63,702) - (1,117,857) 20Net Regulated Revenues 12,192,957 5,308,750 2,357,059 4,354,878 680,743 583,215 1,709,272 351,047 27,537,921 21Non-Regulated Revenues 194,066 85,926 37,412 16,611 30,690 4,797 4,110 12,046 2,474 194,066 22 Adjusted Total Revenues (At Current Rates)12,278,883 5,346,162 2,373,670 4,385,568 685,540 587,325 1,721,318 353,521 27,731,988 23Revenue Surplus/(Shortfall) (683,444) (297,566) (132,119) (244,100) (38,157) (32,690) (95,808) (19,676) (1,543,562) 24Calculated Rate Adjustment5.57% 5.57% 5.57% 5.57% 5.57% 5.57% 5.57% 5.57% 5.57%Marin Sanitary Service2018 Rate Application - Franchisors' GroupR3 Adjusted Rate CalculationR:\+Projects\Marin Franchisor's Group Indexed Rate Review 21018 Rate Setting - 117064\++ R3 Adjustments to MSS 2018 Rate Application\R3 Adjustments to MSS 2018 Rate Calculation - 122117 FINAL / R3 Adjustments
1 YD Bin 1 YD Bin 3 YD Bin 3 YD Bin
20 Gal. 30‐35 Gal. 60‐64 Gal. 90‐96 Gal. 1x/Week 3x/Week 1x/Week 3x/Week
City of Alameda Alameda 7/1/2017 31.38$ 39.60$ 65.07$ 90.88$ 150.87$ 461.63$ 452.60$ 1,384.90$
City of Albany Alameda 5/1/2017 37.53$ 42.03$ 72.64$ 103.24$ 167.47$ 502.41$ 502.41$ 1,507.23$
City of Berkeley (District 1 & 2)Alameda 7/1/2017 25.43$ 40.68$ 81.31$ 121.92$ 161.89$ 456.15$ 448.02$ 1,330.75$
City of Berkeley (District 3)Alameda 7/1/2017 26.53$ 42.35$ 84.66$ 126.96$ 161.89$ 456.15$ 448.02$ 1,330.75$
City of Dublin Alameda 7/1/2017 N / A 22.06$ 40.52$ 58.98$ 140.44$ N / A 354.50$ N / A
City of Emeryville Alameda 1/1/2017 11.17$ 18.49$ 36.97$ 55.46$ 110.10$ 330.30$ 330.30$ 990.90$
City of Fremont Alameda 1/1/2017 31.21$ 31.89$ 34.99$ 51.47$ 93.09$ N / A 209.26$ N / A
City of Livermore Alameda 7/1/2017 28.46$ 37.67$ 57.54$ 90.41$ 116.72$ 364.16$ 350.16$ 1,115.62$
City of Newark Alameda 1/1/2016 27.32$ 30.37$ 53.79$ 77.19$ 123.09$ 383.96$ 325.58$ 887.88$
City of Oakland Alameda 7/1/2017 39.41$ 44.93$ 80.08$ 120.88$ 224.80$ 674.32$ 535.32$ 1,605.90$
City of Piedmont Alameda 7/1/2017 52.39$ 55.11$ 65.02$ 76.90$ 171.06$ 482.54$ N / A N / A
City of Pleasanton Alameda UNKNOWN N /A 33.80$ N / A 45.48$ 168.23$ 440.27$ 480.43$ 1,296.55$
City of San Leandro Alameda 9/1/2017 10.20$ 20.46$ 40.86$ 61.32$ 133.47$ 346.94$ 355.54$ 995.95$
City of Union City Alameda 7/1/2016 27.86$ 34.82$ 69.69$ 104.51$ 144.66$ 399.57$ 379.10$ 1,033.18$
Castro Valley Sanitary District Alameda 7/1/2017 25.94$ 40.23$ 69.86$ 99.49$ 285.93$ 857.92$ 760.74$ 2,131.76$
Oro Loma Sanitary District (L1)Alameda 9/1/2017 8.84$ 17.64$ 35.32$ 52.95$ 115.40$ 299.95$ 307.36$ 860.99$
Oro Loma Sanitary District (L2)Alameda 9/1/2017 8.84$ 17.64$ 35.32$ 52.95$ 115.40$ 299.95$ 307.36$ 860.99$
Oro Loma Sanitary District (L3)Alameda 9/1/2017 10.20$ 20.46$ 40.86$ 61.32$ 133.47$ 346.94$ 355.54$ 995.95$
City of Richmond Contra Costa 1/1/2017 28.31$ 34.35$ 65.25$ 97.02$ 234.79$ 597.40$ 538.47$ 1,477.85$
City of San Pablo Contra Costa 1/1/2017 24.45$ 29.73$ 57.69$ 86.46$ 234.74$ 594.88$ 544.06$ 1,491.48$
City of El Cerrito Contra Costa 1/1/2018 35.54$ 47.14$ 94.61$ N / A 319.07$ 892.97$ N / A N / A
City of Hercules Contra Costa 1/1/2017 30.39$ 35.62$ 62.79$ 90.77$ 265.67$ 669.24$ 609.41$ 1,663.98$
City of Pinole Contra Costa 1/1/2017 28.82$ 34.12$ 60.70$ 88.09$ 223.60$ 565.92$ 507.04$ 1,385.82$
Unincorporated West Contra Costa Contra Costa 1/1/2017 25.81$ 31.56$ 60.44$ 90.04$ 223.60$ 565.92$ 507.04$ 1,385.82$
Town of Fairfax Marin 1/1/2107 26.64$ 31.93$ 63.86$ 95.79$ 187.74$ 444.68$ 440.13$ 1,152.10$
Town of San Anselmo Marin 1/1/2017 29.62$ 38.71$ 77.49$ 116.23$ N / A N / A 635.33$ 1,906.12$
City of Belvedere Marin 7/1/2015 37.42$ 46.25$ 78.47$ 110.69$ 205.43$ 567.46$ N / A N / A
City of Novato Marin UNKNOWN 12.21$ 19.53$ 39.03$ 58.57$ N / A N / A 254.44$ 631.33$
West Marin Marin 1/1/2015 17.87$ 27.09$ 50.81$ 81.23$ N / A N / A 309.25$ 701.50$
City of Sausalito Marin 1/1/2017 N / A 39.95$ N / A N / A 157.78$ N / A 473.33$ N / A
Tamalpais Com. Service Dist. 1 Marin 7/1/2017 N / A 47.78$ 72.13$ 97.87$ 316.52$ 949.56$ N / A N / A
Town of Tiburon Marin 7/1/2015 34.59$ 39.02$ 71.05$ 102.54$ 185.67$ 506.76$ N / A N / A
Town of Corte Madera Marin 7/1/2015 27.61$ 32.47$ 65.11$ 97.75$ 151.87$ 409.79$ N / A N / A
City of Mill Valley Marin 7/1/2016 37.39$ 41.23$ 68.85$ 96.41$ 182.64$ 491.52$ N / A N / A
RVSD ‐ N (Oak Manor)Marin 1/1/2018 26.58$ 42.52$ 86.35$ 130.72$ 231.67$ 695.15$ 695.15$ 2,085.49$
RVSD ‐ N (Sleepy Hollow)Marin 1/1/2018 27.44$ 43.29$ 89.12$ 134.93$ 231.67$ 695.15$ 695.15$ 2,085.49$
City of San Rafael Marin 1/1/2018 32.14$ 37.80$ 75.62$ 113.42$ N / A N / A 467.09$ 1,301.01$
Las Gallinas ‐ County Marin 1/1/2018 28.10$ 33.05$ 66.11$ 99.16$ 236.65$ 710.49$ 478.81$ 1,336.39$
City of Larkspur Marin 1/1/2018 36.92$ 43.42$ 86.84$ 130.26$ 275.69$ 826.80$ 553.66$ 1,451.76$
Town of Ross Marin 1/1/2018 30.70$ 36.13$ 72.25$ 108.37$ N / A N / A 463.86$ 1,391.45$
County (RVSD ‐ S)Marin 1/1/2018 24.46$ 40.69$ 84.26$ 131.40$ 338.65$ 858.58$ 523.73$ 1,375.28$
County ‐ Marin Franchisors' Group Marin 1/1/2018 24.11$ 40.12$ 83.10$ 129.60$ N / A N / A 528.59$ 1,380.24$
City of Campbell 1 Santa Clara 7/1/2017 20.74$ 27.15$ 54.29$ 81.44$ 135.60$ 410.71$ 271.21$ 821.43$
City of Cupertino Santa Clara 11/1/2017 N / A 25.49$ 20.99$ 76.49$ N / A N / A 250.51$ 751.52$
City of Los Altos Santa Clara 7/1/2017 30.98$ 33.36$ 66.74$ 100.10$ 130.91$ 392.75$ 392.74$ 1,178.27$
City of Milpitas Santa Clara 12/1/2017 32.22$ 35.02$ 41.19$ 47.32$ 116.21$ 286.19$ 263.93$ 747.15$
City of Monte Sereno 1 Santa Clara 7/1/2017 23.78$ 31.12$ 62.25$ 93.37$ 181.94$ 551.15$ 363.88$ 1,102.29$
City of Mountain View Santa Clara 7/1/2017 22.10$ 32.25$ 64.50$ 96.75$ 103.80$ 352.60$ 310.90$ 974.55$
City of Palo Alto Santa Clara 7/1/2017 27.81$ 50.07$ 100.15$ 150.22$ 178.54$ 549.36$ 437.20$ 1,388.28$
City of San Jose Santa Clara 7/1/2017 N / A 33.19$ 66.38$ 99.57$ 140.61$ 402.66$ 196.38$ 561.63$
City of Santa Clara Santa Clara 7/1/2017 20.63$ 26.17$ 38.82$ 51.47$ 81.44$ 235.65$ 228.10$ 647.41$
City of Sunnyvale Santa Clara 1/1/2017 N / A 39.38$ 47.03$ 54.69$ 173.80$ 485.00$ 416.21$ 1,209.37$
City of Saratoga1 Santa Clara 7/1/2017 22.58$ 29.54$ 59.09$ 88.63$ 193.82$ 587.37$ 387.64$ 1,174.75$
Town of Los Altos Hills Santa Clara 7/1/2017 29.86$ 41.63$ 83.28$ 124.90$ 104.82$ 220.76$ 164.03$ 383.57$
Town of Los Gatos1 Santa Clara 7/1/2017 20.91$ 27.47$ 54.94$ 82.41$ 159.77$ 484.05$ 319.54$ 968.10$
28.81$ 39.63$ 80.46$ 122.23$ 262.87$ 757.23$ 550.76$ 1,550.89$
27.92$ 36.40$ 65.20$ 95.23$ 198.24$ 561.63$ 422.50$ 1,097.76$
28.36$ 37.83$ 72.38$ 107.94$ 225.16$ 650.54$ 501.43$ 1,399.85$
26.70$ 34.83$ 63.32$ 92.21$ 179.64$ 513.41$ 419.36$ 1,209.79$
29.40$ 38.53$ 78.03$ 118.70$ 283.66$ 798.62$ 502.63$ 1,372.69$
1 1 CY not available, reflected here for 1.5 CY
All City Average
Marin Franchisors' Group Average without RVSD ‐ N
Bay Area Rate Survey
Effective Dates
Marin Franchisors' Average
Marin County Average without MFG
Marin County ‐ All
Commercial
Jurisdiction County
Residential Single Family
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate Application Attachment 3
Note: This table compares anticipated 2018 Marin Franchisors' Group rates to current 2017 rates for all other jurisdictions.
$37.80 $33.05 $43.42 $36.13 $41.66 $‐ $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00City of San Rafael Las Gallinas ‐ County City of LarkspurTown of RossCounty of Marin$ Per MonthJurisdictionRates for Residential 30‐35 Gallon Collection Service with Weekly Garbage, Recycling and Organics Collection ServiceMarin Franchisors' Group Simple Average:$39.16Marin Franchisors' Group Weighted Average:$38.51Average of Other Marin County Jurisdictions:$36.40All Jurisdiction Average: $34.83Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate ApplicationAttachment 4Note: This chart compares anticipated 2018 Marin Franchisors' Group rates to current 2017 rates for all other jurisdictions.
$467.09 $478.81 $553.66 $463.86 $610.65 $‐ $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00City of San Rafael Las Gallinas ‐ County City of Larkspur Town of Ross County of Marin$ Per MonthJurisdictionRates for Commercial 3 Cubic Yard, 1 Time per Week Collection ServicesMarin Franchisors' Group Simple Average: $530.13Marin Franchisors' Group Weighted Average: $485.93Average of Other Marin County Jurisdictions: $422.50 All Jurisdiction Average: $419.36Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2018 Rate ApplicationAttachment 5Note: This chart compares anticipated 2018 Marin Franchisors' Group rates to current 2017 rates for all other jurisdictions.
STAFF REPORT APPROVAL
ROUTING SLIP
Staff Report Author: Cory Bytof Date of Meeting: 01/16/2018
Department: City Manager
Topic: ANNUAL REFUSE RATE SETTING FOR MARIN SANITARY SERVICE
Subject: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL ESTABLISHING MAXIMUM RATES
COLLECTED BY MARIN SANITARY SERVICE FOR REFUSE AND RECYCLABLE MATERIAL COLLECTION AND DISPOSAL
SERVICES, TO BE EFFECTIVE RETROACTIVELY TO JANUARY 1, 2018
Type: (check all that apply) ☐ Consent Calendar ☒ Public Hearing
☐ Discussion Item ☒ Resolution ☐ Ordinance
☐ Professional Services Agreement ☐ Informational Report
*If PSA, City Attorney approval is required prior to start of staff report approval process
Was agenda item publicly noticed? ☐ Yes ☐No Date noticed: ☐Mailed ☐Site posted ☐Marin IJ
Due Date Responsibility Description Completed
Date Initial / Comment
DEPARTMENT REVIEW
FRIDAY
noon
Director Director approves staff
report is ready for ACM,
City Attorney & Finance
review.
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CONTENT REVIEW
MONDAY
morning
Assistant City Manager
City Attorney
Finance
ACM, City Attorney &
Finance will review items,
make edits using track
changes and ask questions
using comments. Items will
be returned to the author
by end of day Wednesday.
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1/4/2018
1/2/2018
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DEPARTMENT REVISIONS
FRIDAY
noon
Author Author revises the report
based on comments
receives and produces a
final version (all track
changes and comments
removed) by Friday at
noon.
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ACM, CITY ATTORNEY, FINANCE FINAL APPROVAL
MONDAY
morning
Assistant City Manager
City Attorney
ACM, City Attorney &
Finance will check to see
their comments were
adequately addressed and
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Finance
sign-off for the City
Manager to conduct the
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TUES
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City Manager Final review and approval Click here to
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San Rafael City Council
1400 Mission Avenue
San Rafael, CA 94901
8Bw B3[?3[3~
susta i na blesanrafael.org
January 16,2018
Re: Refuse and Recyclable Material Rate-Setting Methodology (Item 7a)
Honorable Mayor and Council Members,
We are heartened to see in the staff report that among the goals of the rate-setting methodology
being developed this spring is "reduction of waste to landfill." To that end, we request that staff
and consultants include two important elements in the methodology:
1. Follow Fairfax's lead in directing that all kitchen and other organic waste be put in the 'green
. carts' for composting, instead of going to the landfill where such waste decomposes into
methane, comprising 3% of San Rafael's climate-altering greenhouse gas emissions.
2. Level rates on a per gallon basis, so that all cart sizes pay the same amount per gallon, instead
of the smallest carts paying 36% more per gallon than all others ($1.60 per gallon for 20-ga. carts
vs. $1.18 per gallon for 32-ga., 64-ga., and 96-ga. carts).
These straightforward steps would encourage less waste and significantly advance our
community's climate goals. Thank you.
Sincerely,
William Carney
President, Sustainable San Rafael
