HomeMy WebLinkAboutCC Resolution 14619 (MSS Rates 2019) RESOLUTION NO. 14619
A 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 JANUARY 1, 2019
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
“Franchise Agreement”); and
WHEREAS, Section 3 (B) of the Franchise 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 Franchise 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 Franchise 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, on December 17, 2018 the City Council held a duly noticed public hearing to
consider the rate application request and receive public testimony thereon; 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 Franchise Agreement.
I, Lindsay Lara, 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 Monday, the 17th of December 2018, by the following vote, to wit:
AYES:
NOES:
ABSENT:
Councilmembers: Bushey, Colin, Gamblin, McCullough & Mayor Phillips
Councilmembers: None
Councilmembers: None
__________________________
LINDSAY LARA, City Clerk
Rate 9.39%
Effective 1/1/2019
Weekly Service Rates (Billed Quarterly)
Monthly Rate Quarterly Rate Monthly Rate Quarterly Rate
20 gallon cart $35.16 $105.48 $39.82 $119.46
32 gallon cart $41.36 $124.08 $46.85 $140.55
64 gallon cart $82.72 $248.16 $93.70 $281.10
96 gallon cart $124.08 $372.24 $140.56 $421.68
Low income - 20 gal* cart $28.11 $84.33 $31.87 $95.61
Low income - 32 gal* cart $33.04 $99.12 $37.50 $112.50
Low income - 64 gal* cart $66.07 $198.21 $75.01 $225.03
Senior rate**Discontinued $29.20 $87.60 $37.18 $111.54
Additional Organics Cart Rental (35 or 64
gallon cart)
$2.20 $6.60 $2.20 $6.60
Additional Split Cart Rental (64 or 96 gallon
cart)
$2.20 $6.60 $2.20 $6.60
Additional Monthly Charges Monthly Fee (per
cart, each way)Quarterly Fee
Distance 5' - 50'$5.37 $16.11
Distance Over 50'$10.86 $32.58
Additional Service Fees per Occurrence 2019 Fee
Return Fees - Off day $25.00
Return Fees - Same day $10.00
Resume Service/Late Fee $35.00
Contamination (cart) any size cart $30.00
Overload/Overweight (cart)$25.00
Extra bag garbage $15.00
Extra bag yard waste $10.00
Steam Clean (cart)$15.00
Special Collection $35.00
Special Handling (Bulky items)$30.00
Bulky item fees per item Fees Vary
Cart Strap Set-up Admin Fee $25.00
20 Gal Cart Replacement Fee $55.00
32 Gal Cart Replacement Fee $60.00
64 Gal Cart Replacement Fee $65.00
96 Gal Cart Replacement Fee $75.00
64 Gal Split Cart Replacement Fee $90.00
96 Gal Split Cart Replacement Fee $100.00
*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.ONE TIME SERVICE FEESMAGS/MASR RESIDENTIAL REFUSE COLLECTION RATES REOCCURING CHARGESResidential Service (Bundled service includes 1 landfill (garbage) cart, 1 organics cart, & 1 recycling split cart )
2019 Flat rate 2019 Hill Rate
NOTE: We may not be able to accommodate any collection requests NOT at the curb due to a variety of factors including safety, accessibility, and
efficiency. Requests to be assessed and approved by Route Manager.
COMMERCIAL CARTS, BINS, ROLL-OFFS
Garbage 1 2 3 4 5 6
20 gallon cart*$35.16 $70.32 $105.47 $140.63 $175.79 $210.95 $8.12
32 gallon cart $41.08 $82.15 $123.23 $164.30 $205.38 $246.46 $9.48
64 gallon cart $82.15 $164.30 $246.46 $328.61 $410.76 $492.91 $18.97
96 gallon cart $123.23 $246.46 $369.68 $492.91 $616.14 $739.37 $28.45
1 yard bin $266.98 $539.10 $816.33 $1,098.76 $1,386.24 $1,678.86 $61.61
2 yard bin $392.54 $901.91 $1,368.24 $1,844.83 $2,331.67 $2,828.77 $99.61
3 yard bin $510.95 $951.47 $1,450.34 $1,964.52 $2,494.16 $3,039.17 $122.27
4 yard bin $728.92 $1,347.49 $2,051.94 $2,777.01 $3,325.57 $4,288.63 $178.96
5 yard bin $788.49 $1,585.78 $2,417.25 $3,274.23 $4,156.97 $5,065.28 $190.81
6 yard bin $936.08 $1,902.94 $2,900.67 $3,929.11 $4,988.32 $6,078.34 $217.48
10 yard roll-off $1,319.35 $2,699.97 $4,143.54 $5,647.89 $7,213.84 $8,841.32 $309.89
18 yard roll-off $2,369.70 $4,850.31 $7,441.70 $10,143.88 $12,956.90 $15,880.77 $557.83
20 yard roll-off $2,633.08 $5,389.22 $8,268.53 $11,270.95 $14,396.56 $17,645.26 $619.85
25 yard roll-off $3,683.25 $7,538.93 $11,113.77 $15,149.16 $19,350.26 $23,716.90 $774.77
Organics (F2E or Compost)1 2 3 4 5 6 Additional One
Time Empty
32 gallon $17.03 $34.06 $51.09 $68.12 $85.15 $102.18 $3.93
64 gallon $34.06 $68.12 $102.18 $136.24 $170.30 $204.36 $7.86
1 yard $119.22 $238.44 $357.66 $476.88 $596.10 $715.32 $27.51
2 yard $238.44 $476.88 $715.32 $953.76 $1,192.20 $1,430.64 $55.02
3 yard $357.66 $715.32 $1,072.98 $1,430.64 $1,788.30 $2,145.96 $82.54
10 yard roll-off $923.55 $1,847.10 $2,770.65 $3,694.20 $4,617.75 $5,541.30 $213.13
18 yard roll-off $1,662.39 $3,324.78 $4,987.17 $6,649.56 $8,311.95 $9,974.34 $383.63
20 yard roll-off $1,847.10 $3,694.20 $5,541.30 $7,388.40 $9,235.50 $11,082.60 $426.25
25 yard roll-off $2,308.88 $4,617.75 $6,926.63 $9,235.50 $11,544.38 $13,853.25 $532.82
Roll-off Compactor Tipping fee per ton $113.39 $254.87
Stationary FL (Per Compacted Yard)$98.48 Rates Vary
Service Fee
Lock $25.00
Box rental Fees Vary
Distance <
50ft
$5.37
Distance >
50ft
$10.86
NOTE: Roll-offs for organics available on request at 30% discount on above garbage rates.
Commercial Service Fees Fee
Return Fee - BIN $75.00
Return Fee - CART -same day $10.00
Return Fee - CART -off day $25.00
Late Fee/Resume Service Fee $35.00
Contamination (BIN)$50.00
Contamination (CART)$30.00
Overload/Compaction (BIN)$60.00
Overload/Compaction (CART)$25.00
Extra Bag Garbage $15.00
Additional Empty BIN Fees vary
Extra Bag Yard Waste $15.00
Steam Clean (1-6 yard BIN)$95.00
Steam Clean (CART)$15.00
Steam Clean (COMPACTOR/ROLL-OFF)$225.00
Lock Set-up Admin Fee $25.00
Lock Single Use Fee $5.00
Lock Purchase Fee $20.00
Lock Bar Bin Set-up Fee $75.00
Overweight Charge Per Ton*$205.00
20 Gal Cart Replacement Fee $55.00
32 Gal Cart Replacement Fee $60.00
64 Gal Cart Replacement Fee $65.00
96 Gal Cart Replacement Fee $75.00
64 Gal Split Cart Replacement Fee $90.00
96 Gal Split Cart Replacement Fee $100.00
Bin Repair/Replacement Fee**Fees vary by
size up to
$1,200
*(Boxes exceeding 300lbs/yard)
**Fees vary by size not to exceed current replacement value.
Roll-off Compactor Special handling
Garbage Compactors (Per empty)
MAGS/MASR
* Customers must have a sufficient level of service for the volume of material generated. Requests for 20gal carts require assessment and approval of a Route Manager.
Monthly fee per cart, each
way
Monthly fee
Details
Monthly fee per cart, each
way
Min. Bimonthly fee
NOTE: All container types and sizes may not be available at all locations depending on a variety of factors including safety, accessibility, and
efficiency. Requests to be assessed and approved by Route Manager.ONE TIME SERVICE FEESCOMMERCIAL REFUSE COLLECTION RATES 9.39% Increase Effective 1/01/19 REOCCURING CHARGESCollections per Week
Additional One
Time Empty
Roll-off Compactor Hauling charge
Other Charges
MFD CARTS, BINS, ROLL-OFFS
Garbage 1 2 3 4 5 6
20 gallon cart*$35.16 $70.32 $105.47 $140.63 $175.79 $210.95 $8.12
32 gallon cart $41.36 $82.72 $124.08 $165.44 $206.80 $248.16 $9.55
64 gallon cart $82.72 $165.44 $248.16 $330.88 $413.60 $496.32 $19.09
96 gallon cart $124.08 $248.16 $372.24 $496.32 $620.41 $744.49 $28.64
32 gallon - hill $46.85 $93.70 $140.56 $187.41 $234.26 $281.11 $10.81
64 gallon - hill $93.70 $187.41 $281.11 $374.81 $468.52 $562.22 $21.63
96 gallon - hill $140.56 $281.11 $421.67 $562.22 $702.78 $843.33 $32.45
1 yard bin $257.27 $518.64 $784.16 $1,053.76 $1,327.47 $1,605.25 $59.38
2 yard bin $392.54 $899.83 $1,362.08 $1,832.50 $2,311.16 $2,798.01 $90.59
3 yard bin $510.95 $936.45 $1,423.17 $1,922.17 $2,433.49 $2,957.07 $117.91
4 yard bin $728.92 $1,343.40 $2,039.60 $2,752.35 $3,417.67 $4,227.04 $168.21
5 yard bin $788.49 $1,560.75 $2,371.89 $3,203.55 $4,055.77 $4,928.50 $181.96
6 yard bin $924.13 $1,872.91 $2,846.28 $3,844.27 $4,866.91 $5,914.15 $213.26
10 yard roll-off $1,319.35 $2,699.97 $4,143.54 $5,647.89 $7,213.84 $8,841.32 $309.89
18 yard roll-off $2,369.70 $4,850.31 $7,441.70 $10,143.88 $12,956.90 $15,880.77 $557.83
20 yard roll-off $2,633.08 $5,389.22 $8,268.53 $11,270.95 $14,396.56 $17,645.26 $619.85
25 yard roll-off $3,683.25 $7,538.93 $11,113.77 $15,149.16 $19,350.26 $23,716.90 $774.77
Organics 1 2 3 4 5 6 Additional One
Time Empty
Additional Organics Cart Rental (35 gallon
cart) after 4 TOTAL carts per cart per
month
$2.20 NA NA NA NA NA NA
Additional Organics Cart Rental (64 gallon
cart) after 4 TOTAL carts per cart per
month.
$2.20 NA NA NA NA NA NA
1 yard $119.22 $238.44 $357.66 $476.88 $596.10 $715.32 $27.51
2 yard $238.44 $476.88 $715.32 $953.76 $1,192.20 $1,430.64 $55.02
3 yard $357.66 $715.32 $1,072.98 $1,430.64 $1,788.30 $2,145.96 $82.54
Roll-off Compactor Tipping fee per ton $113.39 Roll-off Compactor Hauling charge $254.87
Stationary FL (Per Compacted Yard)$98.48 Roll-off Compactor Special handling Rates Vary
Service Fee
Lock $25.00
Box rental Fees Vary
Distance < 50ft $5.37
Distance > 50ft $10.86
MFD One Time Service Fees Fee
Return Fee - BIN $75.00
Return Fee - CART -same day $10.00
Return Fee - CART -off day $25.00
Late Fee/Resume Service Fee $35.00
Contamination (BIN) Per Yard $50.00
Contamination (CART)$30.00
Overload/Compaction (BIN)$60.00
Overload/Compaction (CART)$25.00
Additonal Empty Bag $15.00
Extra Bag Yard Waste $10.00
Additional Empty Garbage Fees vary
Steam Clean (BIN)$95.00
Steam Clean (CART)$15.00
Steam Clean (COMPACTOR/ROLL-OFF)$225.00
Lock Set-up Admin Fee $25.00
Lock Single Use Fee $5.00
Lock Purchase Fee $20.00
Lock Bar Bin Set-up Fee $75.00
Overweight Charge Per Ton*$205.00
20 Gal Cart Replacement Fee $55.00
32 Gal Cart Replacement Fee $60.00
64 Gal Cart Replacement Fee $65.00
96 Gal Cart Replacement Fee $75.00
64 Gal Split Cart Replacement Fee $90.00
96 Gal Split Cart Replacement Fee $100.00
Bin Repair/Replacement Fee**Fees vary by size up
to $1,200
*(Boxes exceeding 300lbs/yard)
**Fees vary by size not to exceed current replacement value.
Additional One
Time Empty
Other Charges
Details
ONE TIME SERVICE FEESMonthly fee
Min. Bimonthly fee
Monthly fee per cart, each
Monthly fee per cart, each
NOTE: All container types and sizes may not be available at all locations depending on a variety of factors including safety, accessibility, and efficiency. Requests to be assessed and approved by Route Manager.
NOTE: Minimum service level is 32 gallons per unit or equivalent volume. Decrease to 20 gallon per unit is subject to company review and approval.
NOTE: Up to four (4) Organics carts provided at no additional charge. Additional carts may be rented for a nominal monthly fee.
MAGS/MASR 9.39% Increase Effective 1/01/19 REOCCURING CHARGESCollections per Week
Garbage Compactors (Per empty)
FINAL REPORT
Review of Marin Sanitary Service’s 2019
Rate Application
SUBMITTED TO:
Marin Franchisors’ Group
December 4, 2018
PDF SUBMITTAL
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Table of
Contents
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
TOC - i
Table of Contents
Cover Letter
Section 1: Background ............................................................................... 1
Section 2: Rate Review Approach .............................................................. 3
Section 3: Recommended 2019 Rate Increases ......................................... 5
Attachments
1 Marin Sanitary Service Proposed 2019 Rate Application Summary
2 R3 Adjusted 2019 Rate Application Summary
3 Bay Area Rate Survey
4 Chart of 2019 Residential 32-Gallon Rates
5 Chart of 2019 Commercial 3 Cubic Yard Rates
Table of
Contents
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 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
December 4, 2018
Ms. Cristine Alilovich
Assistant City Manager
City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94919
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 2019 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 (MSS’s) 2019 rate application for the Marin Franchisors’ Group. This
Report summarizes results from a detailed base year review of MSS’s 2019 rate application and the results
of the negotiated outcomes from the recently completed “meet and confer” between the Marin
Franchisors’ Group and MSS.
Marin Sanitary Application for 2019 Rate Adjustment
On August 15, 2018, Marin Sanitary Service (MSS) submitted its application for an 13.98% increase to its
solid waste rates, to be effective January 1, 2019. Per the Franchise Agreements between MSS and the
members of the Marin Franchisors’ Group, 2019 is a “base year rate adjustment” meaning that MSS
prepares its 2019 projections of expenses and revenues based on actual prior, current, and expected
future expenses and revenues. This differs from the “indexed rate adjustment” used in other years, which
primarily projects MSS expenses based on external market indices.
The Marin Franchisors’ Group retained R3 to conduct a detailed review of MSS’s rate application to review
the basis of MSS’s projections, and to recommend adjustments in keeping with the terms and conditions
of the Franchise Agreements. In parallel, MSS, R3 and the Marin Franchisors’ Group worked to streamline
the rate setting methodology and complete the contractually required meet and confer process to
determine means of resolving $1.15 million in prior accumulated losses from the processing and sale of
recyclable materials and address funding of ongoing recyclables processing costs, starting in 2019.
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2019 Rate Application, Final Report
December 4, 2018
Cover Letter Page 2 of 6
Appropriately, MSS’s 2019 rate application did not include rate impacts from resolution of the prior
recycling losses or future recyclables processing costs, as these costs are not currently included in rates
charged to customers. Had MSS included those impacts in 2019, R3 calculates that the 2019 rate increase
would have been 21.40%. A summary of MSS’s original 2019 rate application is included in Attachment 1.
R3 conducted a thorough review of the rate 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, 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, included a verification
of the mathematical accuracy and logical consistency of the supporting schedules, and involved multiple
on-site meetings and phone calls with MSS management and staff. MSS staff and management were very
cooperative and responsive throughout the review, providing R3 with all requested information necessary
for our review of the rate application.
Based on our review of the rate application, R3 determined that an overall rate increase of 8.20% (for the
Franchisors’ Group as a whole) is appropriate to compensate MSS for its projected 2019 expenses before
any treatment of prior recycling losses or future recyclables processing costs and any consideration of
negotiated outcomes of the meet and confer process. With these included the recommended overall rate
increase is 9.56%, with varying increases for each Franchisors’ Group agency, which vary slightly
depending on the amounts and types of franchise and other fees set by each agency. These findings have
been reviewed with MSS, and they are in agreement with the proposed adjustments to their rate
application and the recommended overall rate increase of 9.56% for 2019. Individual increases by
Franchisors’ Group agency shown in Table 2, below. Attachment 2 provides the rate adjustment
calculations and the specifics of the recommended increases by agency.
Table 1
Summary of Adjustments to 2019 Rate Increase Request
MSS Original Rate Increase Request 13.98%
R3 Adjustments -5.96%
Recyclables Net Processing Costs 2.20%
Total Prior Recycling Losses 5.22%
Negotiated Outcomes -5.88%
Recommended Rate Increase 9.56%
Table 2
Recommended 2019 Rate Increases by Agency
Marin Franchisors' Group Agency Recommended 2019 Rate Increase
City of San Rafael 9.39%
City of Larkspur 8.52%
County of Marin 8.90%
Las Gallinas Valley Sanitary District 14.33%1
Town of Ross 9.60%
Overall 9.56%
1 The recommended rate increase for Las Gallinas Valley Sanitary District is higher based on the District adopting a
5% franchise fee on gross revenues in place of the current $25,000 annual franchise fee. Without this change, the
increase to the District would be 9.60%.
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2019 Rate Application, Final Report
December 4, 2018
Cover Letter Page 3 of 6
Summary of 2019 Recommended Rate Increase
Table 3, below, shows the main components affecting the recommended 2019 rate increase, including
the components proposed by MSS, the impacts of prior recycling losses and recyclables processing costs,
the results of R3’s review, and the negotiated outcomes of the meet and confer process. Note that
individual breakdown of factors will vary by agency but are generally proportionate to the below.
Table 3
Summary of Factors Affecting 2019 Recommended Rate Increase
Rate Components MSS Original
Application
Breakdown of 2019
Recommended Increase
Labor 5.98% 4.63%
Franchise Fees 0.96% 3.20%
Recyclables Processing and Prior Losses - 3.02%
Fuel and Oil 0.76% 1.10%
Maintenance 0.81% 0.81%
Benefits 0.79% 0.55%
Operating Profit 1.15% 0.54%
Garbage Landfilling and Organics Processing 0.36% 0.04%
Interest 0.93% -0.37%
General and Administrative 1.16% -0.54%
Depreciation and Leases 1.00% -0.56%
Zero Waste Marin Fees 0.08% -0.60%
Revenue Projections - -2.24%
Total 13.98% 9.56%
A summary of the final 2019 rate impacts, including adjustments recommended by R3 and the negotiated
outcomes of the meet and confer process are discussed below and in Section 3 of this Report.
Labor (4.63%)
The labor component contributes 4.63% to the overall recommended 9.56% rate increase. The increase
is due to normal cost-of-living increases in base labor costs, new MSS positions including a Director of
Human Resources and a Route/Contamination Auditor, impacts of aging workforce turn-over, and
reconciliation of actual labor costs compared to prior allowed increases via indexed adjustments.
Franchise Fees (3.20%)
Franchise fees for the Franchisors’ Group are set based on a percentage of gross rate revenues charged
and received by MSS. The increase in 2019 is due to increasing rate revenues as well as a change to the
franchise fee amount set by Las Gallinas Valley Sanitary District, which the District wishes to increase from
$25,000 per year to 5% of gross rate revenues (and which will only increase rates for Las Gallinas Valley
Sanitary District rate-payers). Franchise fees were understated in MSS’s rate application, and R3 updated
the methodology for projecting franchise fees during the rate review, which is the reason that this
component appears as large as it is. It is important to note that the magnitude of this component is not
set by MSS, and the adjustments to this component made by R3 are to ensure transparency and accuracy
of the franchise fee amounts paid by MSS and collected via the rates.
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2019 Rate Application, Final Report
December 4, 2018
Cover Letter Page 4 of 6
Recyclables Processing and Prior Losses (3.01%)
The recyclables processing and prior losses component contributes 3.01% to the overall recommended
9.56% rate increase. As discussed above, MSS’s rate application did not include rate impacts related to
prior recycling losses of up to $1.15 million and similarly did not include net costs to process recyclables;
this was appropriate, because these costs are not currently part of the rates or the annual rate setting
process.
During the meet and confer process that paralleled review of MSS’s rate application, MSS and the
Franchisors’ Group negotiated resolution of those prior recycling losses, with MSS waiving 2/3 of the $1.15
million in accumulated losses; the remaining ~$350,000 in losses is included in the rates over three years
from 2019 to 2021, comprising 0.44% of the 2019 rate increase. Net recyclables processing costs (total
processing costs less revenues from sale and redemption of recyclables) comprise 2.57% of the 2019 rate
increase and are set based on a negotiated net processing cost of $40/ton. Net recyclables processing
costs do not count towards the calculation of MSS’s profit.
Fuel and Oil (1.10%)
The fuel and oil component contributes 1.10% to the overall recommended 9.56% rate increase.
Approximately 3/4 of this increase is due to the increases in the cost of fuel projected for 2019 above the
price in 2018, which increased 42% from 2017 to 2018. The remaining 1/4 is due to true-ups reconciling
prior fuel and oil expenses for 2017 (actual) and 2018 (projected) compared to prior projections in those
years; these true-ups will be included in the rates over the next three years from 2019 to 2021, comprising
0.23% of the 2019 rate increase. True-ups in prior year expenses for fuel and oil are allowed under the
current rate adjustment methodology but are proposed for removal as a part of the new rate adjustment
methodology discussed in this report.
Maintenance (0.81%)
The maintenance component contributes 0.81% to the overall recommended 9.56% rate increase. This
increase is due to normal increases in the cost of vehicle and equipment maintenance.
Benefits (0.55%)
The benefits component contributes 0.55% to the overall recommended 9.56% rate increase. This
increase is due to normal increases in the cost of personnel benefits, including workers compensation.
Operating Profit (0.54%)
MSS’s profit component, which is an agreed upon “operating margin” of 90.5% (the equivalent of 10.5%
profit on operating expense) contributes 0.54% to the overall recommended 9.56% rate increase. This
increase is entirely due to the overall increase in MSS’s operating expenses.
Garbage Landfilling and Organics Processing (0.04%)
The garbage landfilling and organics processing component contributes 0.04% to the overall
recommended 9.56% rate adjustment. This component is a calculated based on the number tons
collected, processed and composted or disposed by MSS, and the cost per ton for processing and/or
disposal of those tons. Only minor increases were proposed by MSS, including prior true-ups reconciling
prior landfilling and processing expenses for 2017 (actual) and 2018 (projected). Prior true-ups will be
included in the rates over the next three years from 2019 to 2021, comprising 0.05% of the increase in
2019, and are proposed for removal as part of the new rate adjustment methodology.
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2019 Rate Application, Final Report
December 4, 2018
Cover Letter Page 5 of 6
Interest (-0.37%)
The interest component contributes a negative 0.37% to the overall recommended 9.56% rate increase.
Interest expense does not count towards calculation of MSS’s profit. Amounts applicable to the
Franchisors’ Group were reduced based on updated projections provided by MSS.
General and Administrative (-0.54%)
The general and administrative component contributes a negative 0.54% to the overall recommended
9.56% rate increase. Amounts applicable to the Franchisors’ Group were reduced based on updated
projections provided by MSS.
Depreciation and Leases (-0.56%)
The depreciation and leases component contributes a negative 0.56% to the overall recommended 9.56%
rate increase. Amounts applicable to the Franchisors’ Group were reduced based on updated projections
provided by MSS.
Zero Waste Marin Fees (-0.60%)
The Marin County Zero Waste Marin fees component contributes a negative 0.60% to the overall
recommend 9.56% rate increase. Zero Waste Marin fees are adjusted to reflect anticipated charges by the
Zero Waste Marin Joint Powers Authority, which are projected to decrease in 2019 for MSS expenses
applicable to the Franchisors’ Group. MSS learned of this decrease subsequent to submitting its rate
application. Furthermore, this component was removed from the MSS profit calculation.
Revenue Projections (-2.24%)
MSS’s projections of revenues were determined to be low given the new rate methodology anticipated
for adoption by the Franchisors’ Group. R3 recalculated projected rates at current revenues and the result
was a negative 2.24% reduction to the MSS proposed rate increase.
Summary of Other Outcomes
As discussed above, in parallel with the review of the 2019 rate increases, R3, the Franchisors’ Group and
MSS met and conferred to set a new methodology for annually adjusting rates starting in 2020 and to
resolve prior recycling losses and future recycling costs. The parties successfully agreed to resolve prior
recycling losses, including recycling net processing costs in the rates, and adopt a new rate setting
methodology, with key outcomes and benefits outlined below:
Achieved streamlining and simplification in all future rate adjustments;
Achieved rate transparency via rate review and verification processes;
Achieved rate payer predictability and protection via rate and revenue controls;
Incentivized efficiencies via indexed rate adjustments, not “cost plus profit”;
Achieved sustainable funding of solid waste and recycling programs into future;
Reduced annual staff time and costs for rate adjustments;
Secured sustained commitment to processing recyclable materials in Marin County;
Secured continued annual reporting of operational metrics, and new provisions for review of
operations; and
Marin Franchisors’ Group
Review of Marin Sanitary Service’s 2019 Rate Application, Final Report
December 4, 2018
Cover Letter Page 6 of 6
Secured greater approval authority in potential assignment and MSS commitment to serve Marin
well into the future.
* * * * * * *
R3’s appreciates the opportunity to be of service to the Marin Franchisors’ Group. We wish to thank the
Franchisors’ Group staff for their participation, leadership and direction in this process. We further wish
to thank MSS management and staff – in particular Kim Scheibly, Roger Williams, and Patty Garbarino –
for their active cooperation and responsiveness during this process. Should you have any questions
regarding this Report or need any additional information, please contact me by phone at (510) 647-9674
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 2019 Rate Application | FINAL REPORT
Page 1 of 10
Background
Description of MSS 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, collectively known as the Franchisors’ Group.
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, 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.
MSS also provides outreach, education, compliance, technical assistance, and other high-
diversion 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. All services provided by MSS remain unchanged as a result of this
review.
Rate Adjustment Methodology
The current Rate Adjustment Methodology was developed in cooperation with MSS, approved
by the Franchisors’ Group in 2001, and revised in 2012. The individual Marin Franchisors’
Group agencies 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's 2019 Rate Application.
The Franchisors’ Group and R3 have worked to revise the rate setting methodology with MSS
to meet the following goals:
Streamline and simplify the rate setting process in order to spend less time and
consultant cost annually;
Achieve more transparency for rate payers in the annual rate setting process; and
Develop a new process to address fluctuations in recycling revenues and address
ongoing recycling losses.
Section 1
Background
Page 2 of 10
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
2019 2020 2021 2022
MSS Operations 27,353,613 28,368,168 29,420,560 30,421,401
Processing 4,764,811 4,945,600 5,141,482 5,352,990
Government Fees 5,573,167 5,760,188 5,952,782 6,104,201
Other 135,072 135,072 331,117 204,230
Total 37,826,662 39,209,027 40,845,941 42,082,822
Annual Rate Adjustment 9.39%3.65%4.17%3.03%
2019 2020 2021 2022
MSS Operations 27,353,613$ 28,717,010$ 30,148,594$ 31,560,970$
Processing 4,764,811$ 5,143,164$ 5,540,696$ 5,957,777$
Government Fees 5,573,167$ 5,824,584$ 6,085,993$ 6,310,525$
Other 135,072$ 135,072$ 334,171$ 210,547$
Total 37,826,662$ 39,819,831$ 42,109,453$ 44,039,820$
Annual Rate Adjustment 9.39%5.27%5.75%4.58%
Example Rate Adjustments - Middle Scenario
MSS Operations @ 3.7%/year - Minor Improvements to Recycling Markets
Example Rate Adjustments - High Scenario
MSS Operations @ 5%/year - No Improvements to Recycling Markets
The new methodology has been completed and is detailed in a separate Amendment to
Franchise Agreement. The new methodology will provide for stable and predictable rate
increases, while maintaining an emphasis on responsible solid waste management and good
value to customers. The new methodology provides for indexed rate adjustments from 2020
through 2024 based on:
Index-adjusted changes MSS operating costs (72% of rates) based on CPI market index
for Water, Sewer, Trash (WST) with a floor of 2.5% and a ceiling of 5%;
Actual changes in garbage landfilling, organics processing and recyclables net
processing costs (13% of rates) based on actual changes in tonnages and tipping fees;
Actual changes to government fees (15% of rates);
Annual reconciliation of the difference between gross amounts billed by MSS vs. the
total rate revenue requirement calculated via the annual rate adjustment process; and
Additional rate revenues for new programs/services as agreed to and adopted by MSS
and the Franchisors’ Group.
Example projections of future increases via the new methodology are shown in Table 4, below.
As shown, the “middle scenario” (which R3 considers to be likely given historical performance
of the WST index and other factors) assumes that MSS operations increase at the recent
historical average rate of change in the WST index (3.7% per year) and modest increases to
recycling revenues ($250,000 per year). Under this scenario, rates are projected to increase
between 3.03% and 4.17% from 2020 through 2022, with similar increases in 2023 and 2024.
The “high scenario” assumes that MSS operations increase at the maximum allowed ceiling of
5% and that there are no changes to recycling revenues. Under this scenario, which is
considered an extreme case, rates are projected to increase between 4.58% and 5.75% from
2020 through 2022, with similar increases in 2023 and 2024.
Table 4
Projections of Rate Increases via New Methodology
Section 2
Rate Review
Approach
Page 3 of 10
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 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 current adopted rate adjustment methodology and including negotiated outcomes of the
meet and confer process. 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, 2017, and 2018;
Comparing the results to MSS's audited financial statements for 2017 and year-to-date
revenues for 2018, 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 2019 expenses and comparing
them to the calculated expenses for 2018;
Reviewing MSS management's projection of other expenses including but not limited
to:
o Labor
o Benefits and workers’ compensation;
o Garbage landfilling and organics processing, including prior year true-ups;
o General and administrative;
o Depreciation and leases;
o Maintenance;
o Fuel and oil, including prior year true-ups;
o Recyclables processing costs net of revenues and redemption;
o Interest;
o Zero Waste Marin fees; and
o Franchise and other government fees.
Reviewing MSS management's projection of other revenues at current rates;
Compiling rates currently in effect in other municipalities in Marin County, as well as
neighboring agencies in other counties; and
Preparing this Report that documents 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
Section 2
Rate Review
Approach
Page 4 of 10
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
unqualified opinion of MSS's 2017 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's 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 3
Recommended
2019 Rate
Increases
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
Page 5 of 10
Recommended 2019 Rate Increases
This section provides a summary of the R3 recommended adjustments to the MSS 2019 rate
application, and the rationale for those adjustments, including negotiated outcomes.
Base Year Projection Methodology
Projected costs for 2019 are based on costs developed during the last indexed review which
occurred in 2017 setting rates for 2018. In projecting the 2019 costs, MSS included the direct
costs for the Franchisors’ Group garbage, organics and recycling collection, costs for transfer,
processing and disposal of garbage, organics and recycling, and costs of administering
diversion programs including outreach, education and technical assistance.
Some costs are allocated between agencies served by MSS 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 based upon actual time spent by
management related to that department. R3 reviewed and recommended adjustments to
allocation methodologies as part of this review, with the results reflected in the recommended
2019 rate increases.
All recommended 2019 amounts by category stated below are inclusive of the results of R3’s
review of MSS’s rate application and the negotiated outcomes of the meet and confer process.
Summary of Adjustments
Labor
R3 reviewed and recommends adjustments to MSS’s proposed labor expenses. MSS proposed
$9,990,097 in labor expenses and R3 recommends labor expenses of 9,708,297. R3
recommended adjustments based on R3’s assessment that additional labor expenses for new
organics routes were not needed in 2019, and that allocated maintenance labor was not
applicable to the Franchisors’ Group. The Franchisors’ Group further negotiated an additional
reduction in labor expenses for a total reduction to labor expenses of $281,800, and the result
is a 2.8% decrease from MSS rate application for these expenses.
Benefits
R3 reviewed and recommends adjustments to MSS’s proposed benefit expenses. MSS
proposed $4,887,393 in benefit expenses and R3 recommends benefit expenses of $4,833,947.
The $53,446 reduction is based on updated estimates for 2019 workers compensation costs
provided by MSS, and the result is a 1.1% decrease from MSS’s rate application for these
expenses. Note that decreases in benefit expenses for labor adjustments are included in the
labor category, above.
Section 3
Recommended
2019 Rate
Increases
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
Page 6 of 10
Garbage Landfilling and Organics Processing
R3 reviewed and recommends adjustments to MSS’s proposed garbage landfilling and organics
processing expenses. MSS proposed $4,172,106 in garbage landfilling and organics processing
expenses and R3 recommends expenses of $4,102,408. The $69,698 reduction is based on
updated projections provided by MSS and amortization of $52,791 in true-ups for prior landfill
expenses over three years from 2019 through 2021 ($17,597 per year and to be removed from
rate base starting in 2022). The result is a decrease of 1.7% from MSS’s rate application for
these expenses.
Recyclables Processing and Prior Losses
As discussed above, MSS’s rate application did not include rate impacts of prior recycling losses
of up to up to $1.15 million and did not include net costs to process recyclables. MSS and the
Franchisors’ Group negotiated resolution of prior recycling losses, with MSS waiving 2/3 of the
$1.15 million in accumulated losses, and the remaining ~$350,000 in losses being included in
the rates over three years from 2019 to 2021, comprising 0.44% of the 2019 rate increase.
Net recyclables processing costs are a new ongoing expense that will be included in the rates
starting in 2019. Net recyclables processing costs (total processing costs less revenues from
sale and redemption of recyclables) comprise 2.57% of the 2019 rate increase and are set
based on a negotiated net processing cost of $40/ton. This net processing cost per ton includes
a fixed cost per ton that will be escalated by WST (with a floor of 2.5% and cap of 5%) in future
indexed adjustment years starting in 2020, and a revenue per ton that will change with
changing recycling revenues received from MSS’s related-party recyclables processing
operation.
Fuel and Oil
R3 reviewed and recommends adjustments to MSS’s proposed fuel and oil expenses. MSS
proposed $1,339,825 in fuel and oil expenses (including $1,098,395 in costs for 2019 and
$241,430 in prior true-ups) and R3 recommends expenses of $1,178,872. The $160,953
reduction is based on amortization of the $241,430 in prior true-ups over three years from
2019 through 2021 ($80,477 per year and to be removed from rate base starting in 2022). The
result is a decrease of 14.7% from MSS’s rate application for these expenses (after inclusion of
true-up expenses).
Maintenance Expense
R3 reviewed and does not recommend an adjustment to MSS proposed maintenance expenses
of $2,153,259.
Depreciation and Leases
R3 reviewed and recommends adjustments to MSS’s proposed depreciation and leases
expenses. MSS proposed $3,124,318 in depreciation and leases expenses and R3 recommends
expenses of $2,780,176. The $344,142 reduction is based on R3’s assessment that additional
expenses for new organics routes were not needed in 2019 and based on MSS providing
updated calculations of these expenses. The result is a 11.0% decrease from MSS’s rate
application for these expenses.
Section 3
Recommended
2019 Rate
Increases
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
Page 7 of 10
General and Administrative
R3 reviewed and recommends adjustments to MSS’s proposed general and administrative
expenses. MSS proposed $4,126,706 in general and administrative expenses and R3
recommends general and administrative expenses of $3,221,016. The $905,690 reduction is
based upon the removal of Zero Waste Marin fees from this category ($532,713), removal of
bad debt expenses that will no longer be applicable under the new rate setting methodology,
removal of consulting costs for annual rate reviews that are no longer applicable under the
new rate setting methodology, and R3’s determination that certain costs for new organics
routes were not needed. MSS also updated its calculations for these expenses. The result is a
21.9% decrease from MSS’s rate application for these expenses.
Operating Profit
R3 reviewed and recommends adjustments to MSS’s proposed operating profit, which is
calculated based on allowed expenses and a 90.5% operating ratio (the equivalent of 10.5%
profit on operating expenses). MSS proposed $3,102,172 in profit based on allowed operating
expenses included in their application; based on all other adjustments described in this Report,
R3 recommends profit of 2,936,915. The $165,257 reduction is due to net decreases in
operating costs described above and is a 5.3% decrease from MSS’s rate application for
operating profit.
Interest Expense
R3 reviewed and recommends adjustments to MSS’s proposed interest expenses. MSS
proposed $827,678 in interest expenses and R3 recommends interest expenses of $541,131.
The $286,547 reduction is based updated amounts provided by MSS. The result is a 34.6%
reduction from MSS’s rate application for these expenses.
Zero Waste Marin Fees
R3 reviewed and recommends adjustments to MSS’s proposed Zero Waste Marin fees. MSS
proposed $532,713 Zero Waste Marin fees as part of general and administrative expense and
R3 recommends interest expenses of $381,250. Additionally, R3 recommends removing these
expenses from the general and administrative category (which is subject to operating profit)
to its own category and not subject to operating profit calculation (i.e. MSS will no longer earn
profit on these expenses). The $151,463 reduction is based updated amounts provided by MSS.
The result is a 28.4% reduction from MSS’s rate application for these expenses.
Projected Revenue at Current Rates
R3 reviewed and recommends adjustments to MSS’s forecast 2019 revenues at current rates.
MSS proposed $33,843,002 in revenues at current rates and R3 recommends revenues at
current rates of $34,337,374. The $494,372 increase is based on not forecasting revenue
shortfalls from migration (as was done in prior years but will no longer be necessary via the
new rate adjustment methodology) and due to estimates of increased revenue from the new
Route/Contamination Auditor proposed by MSS. The result is a 1.5% increase from MSS’s rate
application for projected revenues at current rates, yielding a lessor overall necessary 2019
rate increase.
Section 3
Recommended
2019 Rate
Increases
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
Page 8 of 10
Franchise Fees
R3 reviewed and recommends adjustments to MSS’s forecast of 2019 franchise fees. MSS
forecasted $3,485,266 in franchise fees R3 recommends a forecast of $3,978,060. The
$492,794 difference is due the prior rate application format understating amounts of franchise
fees for the coming rate year. The new calculation more accurately forecasts the amounts of
franchise fees owed to the Franchisors’ Group agencies by MSS and does not otherwise
represent an adjustment to the fees or any MSS operating expenses. The result is a 14.1%
increase from MSS’s rate application for these expenses.
Other Government Fees
R3 reviewed and recommends adjusting the amount of street sweeping fees (resulting in a
decrease in available revenues) by $24,000 to show pass-through street sweeping fees for
Marin County. MSS’s forecasted $1,189,857 in other government fees and R3 recommends
$1,213,857 based on actual amounts of fees due from MSS. The result is a 2.0% increase from
MSS’s rate application for these expenses.
Non-Regulated Revenues
R3 reviewed and does not recommend an adjustment to MSS's projected non-regulated
revenues of $207,272. These revenues offset the amount to be recovered by the rates.
2019 Rate Increase Calculation
Based on a total recommend 2019 adjusted rate revenue requirement of $37,826,662 (see
Attachment 2) and projected 2019 revenues at current rates of $34,337,374, R3 calculated and
recommends an overall 9.56% rate increase for the Franchisors’ Group, effective January 1,
2019, and with individual increases by agency as shown in Table 2 and Attachment 2. Table 5
summarizes, by agency, the current and proposed 32-gallon residential rates, which is the the
most common subscription level in the Franchisors’ Group service area.
Table 5
Residential 32-Gallon Rate Summary
Jurisdiction Current 2018
Rate ($/mo.)
Proposed 2019
Rate ($/mo.) $ Difference
City of San Rafael $37.81 $41.36 $3.55
City of Larkspur $43.42 $47.12 $3.70
County of Marin $43.32 $47.18 $3.86
Las Gallinas Valley Sanitary District $33.05 $37.79 $4.74
Town of Ross $36.13 $39.60 $3.47
Survey of Comparable Rates
Attachment 3 shows the results of R3's survey of solid waste rates as of November 2018 for
agencies located throughout the Bay Area. For the purpose of comparing the Franchisors’
Group rates to other agencies in Attachments 3, 4, and 5 we have applied the 2019 rate
increases for Franchisors’ Group agencies only and compare those 2019 rates to the current
2018 rates for all other agencies.
Section 3
Recommended
2019 Rate
Increases
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
Page 9 of 10
$-
$10
$20
$30
$40
$50
$60
Monthly RateIt is anticipated that rates for other agencies will also increase significantly in 2019, and since
this comparison uses 2019 rates for the Franchisors’ Group, the rate comparison will become
more favorable as other entities adopt increased rates.
Figure 1, below, shows a summary of Marin County rates for residential customers with 30-35
gallon garbage service. Bars shown in blue are 2018 rates for Mill Valley Refuse Service; purple
is the 2018 rate for Tamalpais Community Services District; red are 2018 rates for Recology
Marin (and are artificially low because of prior contract with the Ratto Group and proximity to
Redwood Landfill); orange are 2018 MSS rates for non-Franchisors’ Group agencies, which are
also expected to increase in 2019, and; green are proposed 2019 MSS rates for Franchisors’
Group agencies. Overall, the Franchisors’ Group 2019 rates compare favorably to the Marin
County average, especially for the levels of high-quality services provided by MSS.
Figure 1
Marin County Rates: Franchisors’ Group 2019 Residential 32-gal Can compared to Current
2018 30-25-gal Can Rates and Marin County Average of $41.23
The Franchisors’ Group 2019 residential rates for a 32-gallon container (the most frequent
residential service level) will range from $37.79 (Las Gallinas Valley Sanitary District) to $47.18
(County of Marin). 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.
Section 3
Recommended
2019 Rate
Increases
Marin Franchisors’ Group | Review of Marin Sanitary Service’s 2019 Rate Application | FINAL REPORT
Page 10 of 10
The Franchisors’ Group commercial rates for a 3-cubic yard bin serviced 1 time per week (the
most requested commercial service level) range from $508.39 (Town of Ross) to $600.83 (City
of Larkspur). The average rate for the Franchisors’ Group is $542.63 while the average for
Marin County is $495.66. Attachment 5 compares the Franchisors’ Group commercial rates for
a 3-cubic yard bin serviced one time per week to the average Marin County rate and all other
agencies' average rate for similar service levels.
These survey results are presented as an indication of the reasonableness of the resulting rates
for 2019. Conclusions should not be immediately drawn from this information because rate
comparisons are intrinsically difficult and often misleading. This results from differences in
issues such as those listed below:
The types and ranges of services provided;
The level of subscription to solid waste services by residential, commercial, and
industrial customers;
The ratio of residential to commercial and industrial customers;
The terrain in which the service is performed;
Disposal, transfer and process costs, and amounts per capita;
Rate structures; and
Governmental fees (e.g., franchise fees, vehicle impact fees, etc.).
Expense Allocation (Percentage of Total Revenues)44.10% 19.38% 8.50% 15.96% 2.51% 2.08% 6.14% 1.33% 100.00%Las Gallinas- Las Gallinas-FGSan Rafael City of S.R. County Larkspur RV-N Ross RVSD County TotalRate Application Operating Expenses:Wages 9,990,097$ 4,405,889$ 1,935,883$ 849,028$ 1,594,309$ 251,041$ 207,758$ 613,391$ 132,798$ 9,990,097$ Benefits 4,887,393 2,155,466 947,080 415,365 779,974 122,815 101,640 300,085 64,968 4,887,393 Disposal Fees 4,172,106 1,840,006 808,471 354,575 665,822 104,841 86,765 256,167 55,460 4,172,107 Fuel & Oil 1,098,395 484,420 212,847 93,349 175,292 27,602 22,843 67,441 14,601 1,098,395 Maintenance Expense 2,153,259 949,643 417,259 182,999 343,636 54,109 44,780 132,210 28,623 2,153,259 Depreciation/Leases 3,124,318 1,377,904 605,431 265,526 498,606 78,511 64,975 191,833 41,531 3,124,317 Other Operating/G&A 4,126,706 1,819,983 799,674 350,716 658,577 103,700 85,821 253,379 54,856 4,126,706 - Total Operating Expenses29,552,274 13,033,311 5,726,645 2,511,558 4,716,216 742,619 614,582 1,814,506 392,837 29,552,274 Operating Profit90.5% 3,102,172 1,368,138 601,140 263,644 495,072 77,954 64,514 190,473 41,237 3,102,172 Interest Expense827,678 365,027 160,388 70,342 132,088 20,799 17,213 50,819 11,002 827,678 Revenue Requirement33,482,124 14,766,476 6,488,173 2,845,544 5,343,376 841,372 696,309 2,055,798 445,076 33,482,124 Route Revenues (2019 Projected)14,633,446 6,432,710 2,503,889 5,803,633 945,262 701,703 2,320,253 502,106 33,843,002 Adjustment: - Adusted Route Revenues14,633,446 6,432,710 2,503,889 5,803,633 945,262 701,703 2,320,253 502,106 33,843,002 Less: Franchise Fees(1,463,345) (643,271) (25,000) (580,363) (170,147) (95,116) (417,645) (90,379) (3,485,266) Less: Street Sweeping(48,000) (24,000) (72,000) Less: Vehicle Impact Fee(306,318) (137,282) (568,400) (42,155) (63,702) (1,117,857) Net Regulated Revenues12,863,783 5,652,157 2,478,889 4,654,870 732,960 606,587 1,790,906 387,727 29,167,879 Non-Regulated Revenues207,272 91,412 40,165 17,615 33,078 5,209 4,311 12,726 2,756 207,272 Total Revenues12,955,195 5,692,322 2,496,504 4,687,948 738,169 610,898 1,803,632 390,483 29,375,151 Adjustment: - - - Less: Franchise Fees- - - Adjusted Total Revenues12,955,195 5,692,322 2,496,504 4,687,948 738,169 610,898 1,803,632 390,483 29,375,151 Revenue Surplus/(Shortfall)(1,811,281) (795,851) (349,040) (655,428) (103,203) (85,411) (252,166) (54,593) (4,106,973) Calculated Rate Adjustment13.98% 13.98% 13.98% 13.98% 13.98% 13.98% 13.98% 13.98% 13.98%Marin Sanitary Service2019 Rate Application - Franchisors' GroupMSS Original Rate Calculation Dated 8/15/18R3 ‐ FINAL MSS Rate Adj Calcs 12031812/3/2018ATTACHMENT 1
Final Recommended 2019 Rate Calculations12/4/201863.53%15.97%9.93%8.50%2.08%100.00%Current 2018 MFG Rate RevenueSan Rafael Larkspur County LGVSD RossMFG TotalMFG Rate Revenue at Current 2018 Rates 21,377,071$ 5,880,740$ 3,828,411$ 2,539,274$ 711,878$ 34,337,374$ Less: MFG Franchise Fees on 2018 Rate Revenue(2,137,707) (588,074)(689,114)(25,000)(96,495)(3,536,390) Less: MFG Vehicle Impact and Sweeping Fees(443,600)(568,400)(201,857)--(1,213,857) Operating Revenue at Current 2018 Rates18,795,764 4,724,266 2,937,440 2,514,274 615,383 29,587,127 2019 MSS Operating ExpenseLabor6,167,373 1,550,153 963,850824,998201,923 9,708,297 Benefits3,070,854 771,851479,919410,782100,541 4,833,947 Garbage Landfilling and Organics Processing 2,606,130 655,044407,291348,61785,326 4,102,408 General and Administrative2,046,209 514,309319,786273,71866,994 3,221,016 Depreciation and Leases1,766,157 443,919276,019236,25657,825 2,780,176 Maintenance1,367,897 343,817213,778182,98144,786 2,153,259 Fuel and Oil748,900188,234117,040100,17924,519 1,178,872 2019 MSS Operating Expense (Subject to Profit)17,773,520 4,467,327 2,777,683 2,377,531 581,914 27,977,975 2019 MSS Revenue Requirement2019 MSS Operating Expense (Subject to Profit)17,773,520 4,467,327 2,777,683 2,377,531 581,914 27,977,975 Operating Profit (90.5% Operating Ratio)1,865,729 468,946291,580249,57561,085 2,936,915 Recyclables Processing 506,610127,33579,17467,76816,587797,474Interest343,76386,40453,72445,98511,255541,131Zero Waste Marin Fees242,19660,87537,85132,3987,930381,2502019 MSS Revenue Requirement20,731,818 5,210,887 3,240,012 2,773,257 678,771 32,634,745 2019 MFG Pass Through CostsProjected 2019 MFG Franchise Fees2,338,487 638,199750,459145,154105,761 3,978,060 MFG Vehicle Impact and Street Sweeping Fees443,600568,400201,857--1,213,857 Projected 2019 MFG Pass Through Costs2,782,087 1,206,599 952,316 145,154 105,761 5,191,917 2019 MFG Revenue Requirement2019 MSS Revenue Requirement20,731,818 5,210,887 3,240,012 2,773,257 678,771 32,634,745 2019 MFG Pass Through Costs2,782,087 1,206,599 952,316145,154105,761 5,191,917 2019 MFG Revenue Requirement23,513,905 6,417,486 4,192,328 2,918,411 784,532 37,826,662 2019 Revenue Shortfall at Current 2018 RatesMFG Rate Revenue at Current 2018 Rates21,377,071 5,880,740 3,828,411 2,539,274 711,878 34,337,374 Non-Regulated Revenue129,03935,49823,11015,3284,297207,2722019 Revenue at Current 2018 Rates21,506,110 5,916,238 3,851,521 2,554,602 716,175 34,544,646 Less: 2019 Revenue Requirement(23,513,905) (6,417,486) (4,192,328) (2,918,411) (784,532) (37,826,662) 2019 Revenue less 2019 Rate Revenue Requirement (2,007,795) (501,248) (340,807) (363,809) (68,357) (3,282,016) 2019 Rate Increase Percentage9.39% 8.52% 8.90% 14.33% 9.60% 9.56%2019 Revenues After Rate AdjustmentCalculated 2019 Rate Revenue23,384,866 6,381,988 4,169,218 2,903,083 780,235 37,619,390 Non-Regulated Revenue129,03935,49823,11015,3284,297207,272Projected 2019 Revenue at Adjusted Rates23,513,905 6,417,486 4,192,328 2,918,411 784,532 37,826,662 2019 MFG Revenue Requirement23,513,905 6,417,486 4,192,328 2,918,411 784,532 37,826,662 Marin Sanitary Service2019 Rate Application - Marin Franchisors' Group (MFG)Expense Allocation (Percentage of Total Operating Revenue)Prepared by R3 Consulting Group, Inc. ‐ www.r3cgi.comATTACHMENT 2
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 7/1/2018 31.90$ 40.27$ 66.17$ 92.41$ 153.40$ 469.39$ 460.20$ 1,408.17$
City of Albany Alameda 5/1/2018 38.09$ 42.65$ 73.72$ 104.77$ 169.95$ 509.85$ 509.85$ 1,529.55$
City of Berkeley Alameda 7/1/2018 26.25$ 41.98$ 83.91$ 125.82$ 167.07$ 470.74$ 462.36$ 1,373.34$
City of Dublin Alameda 7/1/2018 N / A 24.94$ 45.82$ 66.69$ 121.02$ 423.28$ 363.06$ 1,149.40$
City of Emeryville Alameda 1/1/2018 11.43$ 18.92$ 37.84$ 56.75$ 112.67$ 338.01$ 338.01$ 1,014.03$
City of Fremont Alameda 1/1/2018 34.04$ 34.77$ 38.12$ 55.93$ 100.71$ N / A 226.39$ N / A
City of Livermore Alameda 7/1/2018 29.03$ 38.42$ 57.54$ 90.41$ 116.72$ 364.16$ 350.16$ 1,115.62$
City of Newark Alameda 1/1/2018 28.39$ 31.55$ 55.89$ 80.20$ 127.86$ 398.93$ 338.28$ 922.51$
City of Oakland Alameda 7/1/2018 41.54$ 47.17$ 83.26$ 125.13$ 230.70$ 692.03$ 549.39$ 1,648.11$
City of Piedmont Alameda 7/1/2018 79.84$ 84.60$ 116.55$ 130.52$ N / A N / A N / A N / A
City of Pleasanton Alameda 7/1/2018 N /A 26.06$ N / A 45.48$ 116.72$ 370.53$ 350.16$ 1,091.18$
City of San Leandro Alameda 9/1/2018 10.50$ 21.06$ 42.05$ 63.10$ 137.37$ 357.08$ 365.93$ 1,025.04$
City of Union City Alameda 7/1/2018 29.49$ 36.87$ 73.79$ 110.65$ 153.17$ 423.06$ 401.39$ 1,093.91$
Castro Valley Sanitary District Alameda 7/1/2018 26.68$ 41.37$ 71.80$ 102.26$ 294.07$ 882.31$ 782.32$ 2,192.12$
Oro Loma Sanitary District (L1)Alameda 9/1/2018 9.10$ 18.15$ 36.35$ 54.49$ 118.76$ 308.67$ 316.30$ 886.04$
Oro Loma Sanitary District (L2)Alameda 9/1/2018 9.10$ 18.15$ 36.35$ 54.49$ 118.76$ 308.67$ 316.30$ 886.04$
Oro Loma Sanitary District (L3)Alameda 9/1/2018 10.50$ 21.06$ 42.05$ 63.10$ 137.37$ 357.08$ 365.93$ 1,025.04$
City of Richmond Contra Costa 1/1/2018 29.52$ 35.81$ 67.81$ 100.71$ 237.97$ 603.47$ 542.63$ 1,485.85$
City of San Pablo Contra Costa 1/1/2018 25.20$ 30.69$ 59.54$ 89.23$ 236.86$ 598.29$ 546.11$ 1,493.83$
City of El Cerrito Contra Costa 1/1/2018 34.80$ 45.44$ 91.23$ N / A 308.10$ 860.08$ N / A N / A
City of Hercules Contra Costa 1/1/2018 31.26$ 36.68$ 64.67$ 93.50$ 268.62$ 674.65$ 613.21$ 1,670.97$
City of Pinole Contra Costa 1/1/2018 29.67$ 35.18$ 62.59$ 90.84$ 266.58$ 675.79$ 618.10$ 1,694.51$
Unincorporated West Contra Costa Contra Costa 1/1/2018 27.08$ 33.10$ 63.39$ 94.43$ 225.97$ 569.89$ 509.24$ 1,388.38$
Town of Fairfax Marin 1/1/2018 28.38$ 34.02$ 68.04$ 102.06$ 200.02$ 473.76$ 468.92$ 1,227.45$
Town of San Anselmo Marin 1/1/2018 31.27$ 40.87$ 81.81$ 122.70$ N / A N / A 670.72$ 2,012.29$
City of Belvedere Marin 10/1/2018 47.13$ 58.26$ 98.84$ 139.43$ 258.76$ 714.86$ N / A N / A
City of Novato Marin 1/1/2018 12.83$ 20.51$ 41.00$ 61.52$ N / A N / A 267.26$ 663.15$
West Marin 1 Marin 5/1/2018 20.03$ 30.37$ 56.96$ 91.06$ 231.11$ 450.96$ 346.67$ 786.38$
City of Sausalito Marin 1/1/2018 N / A 41.35$ 82.70$ 124.05$ 163.28$ N / A 489.84$ N / A
Tamalpais Com. Service Dist. 1 Marin 7/1/2018 N / A 56.38$ 85.12$ 115.48$ 373.49$ 859.03$ N / A N / A
Town of Tiburon Marin 7/1/2018 39.33$ 44.37$ 80.79$ 116.60$ 211.13$ 576.01$ N / A N / A
Town of Corte Madera Marin 7/1/2018 31.41$ 36.94$ 74.08$ 111.21$ 172.79$ 466.35$ N / A N / A
City of Mill Valley Marin 7/1/2018 44.67$ 49.26$ 83.26$ 115.19$ 209.30$ 563.20$ N / A N / A
City of San Rafael Marin 1/1/2019 35.16$ 41.36$ 82.72$ 124.08$ 266.98$ 816.33$ 510.95$ 1,450.34$
Las Gallinas Valley Sanitary District Marin 1/1/2019 32.13$ 37.79$ 75.58$ 113.37$ 270.55$ 812.30$ 547.42$ 1,527.89$
City of Larkspur Marin 1/1/2019 40.07$ 47.12$ 94.24$ 141.36$ 299.18$ 897.24$ 600.83$ 1,575.45$
Town of Ross Marin 1/1/2019 33.65$ 39.60$ 79.20$ 118.80$ N / A N / A 508.39$ 1,525.02$
County of Marin Marin 1/1/2019 28.87$ 47.18$ 96.64$ 149.66$ 340.82$ 1,022.60$ 545.55$ 1,636.69$
City of Campbell 1 Santa Clara 7/1/2018 21.44$ 28.05$ 56.10$ 84.15$ 424.34$ 280.20$ 848.69$
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 7/1/2018 31.98$ 34.45$ 68.89$ 103.35$ 135.16$ 405.49$ 405.48$ 1,216.48$
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 7/1/2018 24.40$ 31.93$ 63.86$ 95.79$ 186.51$ 565.00$ 373.02$ 1,130.01$
City of Mountain View Santa Clara 7/1/2018 23.25$ 33.90$ 67.80$ 101.70$ 124.65$ 373.45$ 352.50$ 1,016.15$
City of Palo Alto Santa Clara 7/1/2017 27.81$ 50.07$ 100.15$ 150.22$ 219.49$ 590.31$ 504.40$ 1,455.48$
City of San Jose Santa Clara 7/1/2018 N / A 34.19$ 68.38$ 102.57$ 143.68$ 411.47$ 200.68$ 573.92$
City of Santa Clara Santa Clara 7/1/2018 21.76$ 27.77$ 41.48$ 55.19$ 88.28$ 255.44$ 247.26$ 701.79$
City of Sunnyvale Santa Clara 1/1/2018 N / A 41.65$ 46.88$ 53.96$ 177.27$ 494.70$ 424.53$ 1,233.55$
City of Saratoga1 Santa Clara 7/1/2018 23.10$ 30.23$ 60.45$ 90.68$ 198.18$ 600.62$ 396.37$ 1,201.23$
Town of Los Altos Hills Santa Clara 7/1/2018 30.74$ 42.85$ 85.73$ 128.57$ 107.90$ 227.25$ 168.85$ 394.85$
Town of Los Gatos1 Santa Clara 7/1/2018 21.86$ 28.70$ 57.40$ 86.10$ 166.19$ 503.52$ 332.39$ 1,007.03$
33.97$ 42.61$ 85.68$ 129.45$ 294.38$ 887.12$ 542.63$ 1,543.08$
31.88$ 41.23$ 75.26$ 109.93$ 227.49$ 586.31$ 448.68$ 1,172.32$
32.69$ 41.69$ 78.73$ 116.44$ 249.78$ 695.70$ 495.66$ 1,378.30$
29.02$ 36.76$ 66.61$ 96.27$ 190.70$ 532.87$ 420.05$ 1,208.96$
1 1 CY not available, reflected here for 1.5 CY
Commercial
Jurisdiction County Residential Single Family
All City Average
Bay Area Rate Survey
Effective Dates
Marin Franchisors' Average
Marin County Average without MFG
Marin County ‐ All
ATTACHMENT 3
$41.36 $37.79 $47.12 $39.60 $47.18 $‐ $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00City of San RafaelLGVSDCity of LarkspurTown of RossCounty of Marin$ Per MonthJurisdictionRates for Residential 30‐35 Gallon Collection Service with Weekly Garbage, Recycling and Organics Collection Service Showing Proposed 2019 MFG Rates in Comparison to 2018 Rate Averages in Marin County and Bay AreaMarin Franchisors' Group Average: $42.31Average of Other Marin County Jurisdictions: $41.23All Jurisdiction Average: $36.73ATTACHMENT 4
$510.95 $547.42 $600.83 $508.39 $545.55 $‐ $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00City of San Rafael LGVSD City of Larkspur Town of Ross County of Marin$ Per MonthJurisdictionRates for Commercial 3 Cubic Yard, 1 Time per Week Collection ServicesShowing Proposed 2019 MFG Rates in Comparison to 2018 Rate Averages in Marin County and Bay AreaMarin Franchisors' Group Average: $532.26Average of Other Marin County Jurisdictions: $448.68 All Jurisdiction Average: $420.05ATTACHMENT 5