HomeMy WebLinkAboutMS MSS Rates 2011CITY OF
SAN RAFAEL
AGENDA ITEM NO.: 15m
MEETING DATE: February 7, 2011
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Management Services
Prepared by: Stephanie Lovette Interim City Manager Approval
Economic Development Coordinator
SUBJECT: CONSIDERATION OF THE MAXIMUM RATES THAT CAN
BE COLLECTED BY MARIN SANITARY SERVICE FOR
REFUSE AND RECYCLABLE MATERIAL COLLECTION
AND DISPOSAL SERVICES, TO BE EFFECTIVE
RETROACTIVELY TO JANUARY 1, 2011.
RECOMMENDATION: ACCEPT RATE RECOMMENDATIONS AND ADOPT
RESOLUTION ESTABLISHING MAXIMUM RATES
COLLECTED BY AND SERVICES PROVIDED BY MARIN
SANITARY SERVICE EFFECTIVE RETROACTIVELY TO
JANUARY 1, 2011.
BACKGROUND:
Each year, the City Council holds a public hearing to set the maximum collection rates that can be
collected by Marin Sanitary Service in the City of San Rafael. The "Background" section of this
staff report will illustrate the overall context for the rate setting process. In general, the context
includes 1) the Franchise Agreement with Marin Sanitary which includes the methodology for rate
setting, 2) the environmental initiatives and goals of the City, and 3) Marin Sanitary's services and
programs.
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 CA Public Resources Code and to collect a franchise fee. The City
of San Rafael has a franchise agreement with Marin Sanitary Service ("MSS") for refuse collection
and recycling services. The revenue -based methodology used to set the annual rates is contained
in the Amendment and Restatement Agreement ("Franchise Agreement") approved by the City
Council on September 4, 2001. 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. The City
and MSS first entered into a written agreement in 1966. The latest Amendment and Restatement
Franchise Agreement occurred in 2001. The Franchise Agreement also contains provisions for
automatic annual extensions if certain conditions are met.
FOR CITY CLERK ONLY
File No.: —14.3 - 3�-
City Council Meeting: 20/
Disposition: f g-50 `1111DA) a /S/0 y
Page 2
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
said Agreement. Notice of the public hearing is published twice in the Marin Independent Journal
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, and other interested parties.
The refuse collection rates are based on the contractor's costs of operations for wages and
benefits, disposal, fuel, equipment and lease expenses and certain allowable miscellaneous
expenses. The Franchise Agreement provides for a detailed review of MSS' operations every
three years. In the interim two-year period, annual summary reviews are conducted based on the
last detailed analysis. Summary reviews also incorporate the use of indices, analyze key expense
components such as disposal costs and make sure revenue requirements are satisfied. The
proposed rate levels for 2011 are based on a summary review. The last detailed review occurred
in 2010.
Several of the surrounding cities and special districts also have contracts with MSS that utilize a
similar rate setting methodology. Therefore, San Rafael, Larkspur, Ross, the County of Marin
including within the Ross Valley Sanitary District boundaries, and the Las Gallinas Sanitary District
("the Franchising Agencies") have joined together in a Franchisors Group to share information and
reduce costs. San Anselmo and Fairfax have participated in meetings of the Franchisors Group
and are considering joining the group in the future.
The Franchising Agencies met on three occasions over the last few months to review MSS's rate
proposals and the work of the consultant conducting the rate review. The results of the rate review
are presented in the "Analysis" section of this report.
Environmental Initiatives
San Rafael is a member of the Marin Hazardous and Solid Waste JPA, which is the group 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 is staffed by the Marin County Public Works
Department. The JPA also has a local task force made up of representatives from industry, the
environmental community and Marin's cities, towns and special districts. The City Council recently
appointed Elissa Giambastiani to serve as the City's representative to the local task force. The
JPA is funded by tipping fees at Redwood Landfill.
The JPA funds the Hazardous Waste Facility located at the Marin Resource Recovery Center in
San Rafael. The JPA also sponsors bulb and battery recycling programs and medical sharps
disposal programs. The JPA has recently released its final Zero Waste Feasibility Study and is in
the process of undertaking implementing actions from Phase One of the Study. These actions are
being undertaken on a countywide basis.
The City's Climate Change Action Plan also included policies to reduce material consumption and
increase resource reuse. City staff is in the process of implementing the initial programs in the
Climate Change Action Plan. Programs and strategies from both Plans have been discussed at
City Council meetings and study sessions and are therefore not included in this report on collection
rates.
Page 3
MSS has achieved full compliance with the California Air Resources Board requirements to reduce
public exposure to diesel smoke and particulates by replacing and retrofitting the equipment fleet,
thereby reducing air pollution in San Rafael.
Marin Sanitary Services and Programs
MSS's services and programs are best described by presenting residential and .commercial
services separately. The following provides information on recycling, refuse container sizes, and
food waste for each.
Residential Customers
MSS accepts all numbered plastics, glass, metals and paper from all customers. San Rafael
residential customers receive weekly recycling collection services. Single family households are
provided a dual sort recycling can. Multi -family buildings can receive dual sort cans or separate
recycling containers depending on area available for can storage.
MSS offers San Rafael single-family residential customers a variety of can sizes 20 gallon, 32
gallon, 64 gallon, and 96 gallon. The majority of residential customers (71 %) utilize a 32 gallon
can. Smaller households, seniors and intense recyclers benefit from the 20 gallon can which costs
about 85% of the 32 gallon rate. 478 of San Rafael residential customers (3.92%) have switched
to the 20 gallon can. This is an increase from 3.44% of 20 gallon can customers in 2011. The
remainder of the residential customers in San Rafael use 64 gallon cans (23.41%), a slight
decrease from 25% in 2010 or 96 gallon cans (1.94%), a slight decrease from 2.99% in 2010. The
percentages also reflect a total decrease of 37 residential accounts in 2011.
MSS codes 1-4 units as residential households so some of the customers with larger cans may be
apartments and other multi family residences such as group homes.
Currently all multi family units in the City are required to have a minimum 32 gallon service for
each unit. MSS is proposing a pilot program to provide for an intensive recycler rate in multi -family
buildings of 10 or fewer units. One of the restrictions of the program will be that the building
contains only studio or one bedroom units.
MSS estimates that 12% of the local waste stream is made up of organic waste including food
waste. MSS is proposing to institute a residential food waste collection program in 2011.
Southern Marin refuse haulers instituted a residential food waste program in 2010 and MSS
conducted a pilot program in the Ross Valley North (County) in 2010. MSS made a presentation
on the proposed program at the January 3, 2011 City Council meeting. The program would only
be available to customers in single family residences for this first year. Customers would be
encouraged to place residential food waste in the green waste cans. Due to the addition of food
waste in the green can, the pick up schedule would be increased from bi-weekly to weekly.
The mixed yard and food waste collected by MSS would be delivered to Northern Recycling
Compost -Zamora Facility for composting. The Zamora facility currently receives and composts the
contents of the green cans collected in the Franchise area. The Zamora facility is located in Yolo
County and is owned by MSS and three other partners. The facility is fully permitted to compost
both food and green waste. The compost is sold to the surrounding agricultural uses. There are
no closer permitted and available composting locations for this material (See Exhibit D). The
permitted composting allocation at Redwood landfill has some composting but the permit limits the
amount of material and the site is at full permit capacity. The tipping fee at the Zamora facility is
slightly lower that the cost at Redwood. MSS is not charging customers additional fees for
transporting the material to Zamora.
Page 4
Edgar & Associates prepared a Greenhouse Gas Emissions Comparison between Redwood
Landfill and Zamora in December 2010. MSS estimates the franchise area produces 11,484 tons
of green waste per year and will produce 1,044 tons of food waste with the new program. The
current Redwood Landfill permit limits the amount of food waste accepted for composting and
cannot accept an additional 1,044 tons of food waste. Therefore, the study assessed the impact
of introducing an additional 1,044 tons of food waste into the Redwood landfill. The study found a
net greenhouse gas benefit from composting food waste at Zamora due to avoided emissions,
even when considering the fuel emissions expended on the round trip from San Rafael to Zamora.
Commercial Customers
Commercial customers receive separate recycling containers. MSS also provides free cardboard
pickup. The frequency of the cardboard pickup schedule is tailored to meet the needs of the
individual customer.
MSS has introduced an enhanced commercial recycling program to increase the commercial
diversion rate. The program includes a staff member dedicated to working with businesses and
annual waste audits to help identify additional diversion opportunities. Increased recycling can
also assist in reducing refuse bills by diverting more into recycling containers and reducing the size
of the regular refuse container. MSS also offers commercial customers a variety of container
options ranging from 32, 64 and 96 gallon cans to yard bins. The yard bin options are 2, 4, 5, 18,
20, and 25 yards. The bins can be picked up from one to six times per week.
Staff and MSS anticipate instituting a commercial food waste to energy program in 2012 in
conjunction with the Central Marin Sanitation Agency (CMSA). This proposed program is a result
of a Methane Capture study that evaluated the feasibility of adding processed food waste into the
CMSA digesters to produce power for the plant. The study was funded by a grant from PG&E,
which was matched by CMSA funding. The City of San Rafael also provided a small amount of
funding.
The study showed that the project was technically feasible, had a reasonable capital cost payback
period (5-7 years), and provided tangible benefits to CMSA and MSS and their customers, the
local landfill, and the environment. The significant benefits identified included: a reduction of food
waste being disposed at the local landfill thus reducing the generation and release of greenhouse
gases; utilization of CMSA existing infrastructure's unused treatment capacity; increase in CMSA's
energy self-sufficiency with the extra power production; and a cost savings to CMSA and its
customers due to CMSA purchasing less natural gas and electricity.
The study results were presented to the CMSA Board, the County of Marin, the San Rafael City
Council, and the five other cities and towns in the CMSA service area. Overall, the project has
received unanimous support from the elected representatives, with the six cities/towns passing
resolution of support for continued exploration. The Marin Hazardous and Solid Waste JPA Zero
Waste Report and the City's Climate Change Action Plan also included initiatives to convert
organic waste to energy.
Commercial food recycling is being evaluated by many Bay Area cities. However, San Francisco
is the only City that has fully instituted a commercial food waste program. East Bay MUD is the
leader in the food waste to energy arena. EBMUD has been accepting food waste from
commercial producers and using it to power the sanitation plant for a number of years.
Page 5
ANALYSIS:
While the "Background" section set the general context of the rate setting process, this section will
specifically examine this year's rate recommendations. Over the past ten years, the approved
annual increase in Marin Sanitary rates have ranged from less than one percent to over 8%.
The Franchising Agencies have utilized the services of HF&H Consultants, LLC, (HFH) for several
years to review the MSS rate proposal. MSS reimburses the City for the consultant's fees for the
rate review. Additional consultant services, requested by the local jurisdictions, are paid by the
Franchisors' Group.
The MSS submitted a rate proposal for 2011 with a proposed 9.55% increase over 2010 rates.
HFH evaluated the MSS rate proposal and recommended several adjustments resulting in an
overall 6.50% increase for the Franchising Agencies. MSS is also proposing a new program to
collect residential food waste. This program, discussed below, results in an additional 4.39% rate
increase. The total proposed increase is 10.89%.
The full rate review and proposed adjustments are contained in the HFH Report ("Exhibit B"). The
table below contains a summary of the rate increase components.
Current Operations
Benefits
0.71%
Fuel
0.79%
Disposal
3.05%
Other Operating Costs
0.16
Revenue shortfall from 2010
2.11%
Franchise Fees and projected
2011 Revenue Shortfall
6.50%
Residential food waste
4.39%
Total
10.89%
MSS does not anticipate an increase in disposal tonnage. The increase in disposal expense
shown above is due to an increase of disposal fees at Redwood Landfill in 2010, which occurred
after the 2010 rate review. This adjustment is consistent with previous years' methodology.
The revenue shortfall, shown above, is due to a reduction in the number of commercial accounts
and customers moving to smaller can sizes. The rate review utilizes the actual number of
customers and service levels as of September to establish the rates for the following year. MSS
assumes both the positive and negative fluctuations in the revenue projections. MSS is not
compensated for losses due to decreases in the number of accounts or service levels after the
September date. Conversely, increased revenues due to reduced operating costs are held by
MSS until the next rate adjustment. In recent years, revenues have been less than projected and
MSS has not achieved the profit projected in the rate review.
Also shown above is the recommended increase for the proposed residential food waste program.
This program is part of a larger strategy to move towards zero waste. MSS's current diversion
rate is about 75%. The City's construction recycling requirements and MSS carpet recycling
program are expected to boost the rate to about 78%. Enhanced commercial recycling,
introduced, in 2010, would increase the rate to about 84%. The proposed residential food waste
program would increase it to about 87% (and more over time as the program is fully established).
The future proposed commercial food waste program with the CMSA could raise the overall rate to
90% or beyond.
Page 6
The City's consultant estimates that an 85% diversion rate by 2020 will result in an emissions
decrease of 22,500 metric tons of CO2. Reaching an 85% diversion rate by 2015 would result in
an additional emissions reduction of 11,200 metric tons.
With the above recommendation, the cost of a 32 gallon can would be increased less than three
dollars per month, from $24.95 to $27.67. The cost of commercial service for a 96 gallon can
picked up twice a week would be increased from $148.83 to $165.03. Businesses with a vigorous
recycling program could reduce their regular can size or pickup schedule resulting in lower rates.
As part of conducting the rate application review, the franchising agencies asked HFH to conduct a
survey of Bay Area refuse haulers. The actual survey results from our neighboring communities
are presented on Attachment 4 of the HFH Report. It summarizes the survey data for residential
30-35 gallon can weekly service with weekly curbside recycling and bi-weekly green waste pickup.
Attachment 4 shows that the 2011 proposed MSS rates of $27.67 in San Rafael is slightly higher
than the Marin County average of $26.95. There are proposed rate increases in San Anselmo and
Fairfax, which, if approved, would increase the Marin County average by about $2.00. The San
Rafael rates have traditionally been in line with rates in other Bay Area jurisdictions.
Attachment 4 of the HFH Report also identifies the City's three -yard commercial bin, (once a
week) service to those of all Bay Area cities and agencies with similar services. San Rafael is
lower than the average of other Bay Area jurisdictions with similar services.
As in previous years, staff is recommending that the 10.89% increase be applied across the board
to all residential, multi family and commercial service accounts. Actual rates for all customers are
provided as "Exhibit "C" to this report and to the MSS Amended Agreement.
The above recommended rate increase has already been presented to the governing boards of
others in our Franchising Group. The Las Gallinas Sanitary District discussed the rates on
January 6th and will hold their public hearing on February 10th. The Town of Ross discussed the
rates on January 13th and continued the item to the next Town Council meeting on February 10tH
The Town of Fairfax discussed the rates on January 12th and has scheduled the public hearing for
March 2"d. Larkspur has scheduled their public hearing for February 16tH. San Anselmo and the
County of Marin's public hearings are expected to take place this month.
FISCAL IMPACT: Exhibit C contains the complete rate request. As shown in Exhibit C, the
10.89% 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 HFH Report pursuant to the rate setting methodology set forth in the
current Franchise Agreement and shown in Exhibit C retroactive to January 1, 2011.
2. Not accept the findings of the HFH Report and the staff recommendation and establish
different maximum rates. The rates ultimately adopted must meet the requirements of the
Franchise Agreement.
Page 7
ACTION REQUIRED: Staff recommends the Council accept the report and adopt the Resolution
as presented.
ATTACHMENTS
Exhibit A:
City Council Resolution
Exhibit B:
HFH Consultants, LLC, Review of MSS 2011 Rate Application
Exhibit C:
2011 Rate Schedule
Exhibit D:
Composting Facilities serving the Bay Area
Exhibit E:
Affidavit of Publication
RESOLUTION NO. 13104
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, 2011.
WHEREAS, the City of San Rafael and Marin Sanitary Service have entered into a written
Amendment and Restatement Agreement dated September 4, 2001; and
WHEREAS, Section 3(B) of the Amendment and Restatement Agreement provides for
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 Amendment and Restatement Agreement provides for
approved rate setting tables, as amended, to be included as part of this Agreement; and;
WHEREAS, Marin Sanitary Service has submitted a rate application request using the
methodology outlined under Section 3(A) of the Amendment and Restatement Agreement; and
WHEREAS, the City of San Rafael has conducted a review of said rate application and
produced a report recommending some rate and fee adjustments, and
1
RESOLUTION NO. 13104
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, 2011.
WHEREAS, the City of San Rafael and Marin Sanitary Service have entered into a written
Amendment and Restatement Agreement dated September 4, 2001; and
WHEREAS, Section 3(B) of the Amendment and Restatement Agreement provides for
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 Amendment and Restatement Agreement provides for
approved rate setting tables, as amended, to be included as part of this Agreement; and;
WHEREAS, Marin Sanitary Service has submitted a rate application request using the
methodology outlined under Section 3(A) of the Amendment and Restatement Agreement; and
WHEREAS, the City of San Rafael has conducted a review of said rate application and
produced a report recommending some 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 following schedule of maximum rates and fees, attached hereto as "Exhibit C' are
hereby approved to be collected by Marin Sanitary Service for refuse and recyclable
material collection and disposal services, to be effective, retroactive to January 1, 2011.
Said "Exhibit C" shall be incorporated as the revised "Exhibit C' and shall be included as
part of the Amendment and Restated Agreement dated September 4, 2001.
I, Esther C. Beirne, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution
was duly and regularly introduced and adopted at a regular meeting of the City Council of the
City of San Rafael, held on Tuesday, the 7th of February, 2011, by the following vote, to wit;
AYES: Councilmembers: Brockbank, Connolly, Heller, Levine & Mayor Boro
NOES: Councilmembers: None
ABSENT: Councilmembers: None
�5 G , 4e,
ESTHER C. BEIRNE, City Clerk
EXHIBIT C
MARIN SANITARY SERVICE
CITY OF SAN RAFAEL RATE SCHEDULE
Rates Effective: 01/01/2011
Rate Increase: 10.89%
$ 22.10
$ 19.93
$ 2.17
10.89%
2011
2010
2011
2011
4.34
10.89%
Rates are per month unless otherwise specified.
Proposed
Rate
RATE
INCREASE
% [NCR.
Low Income - 64 gallon can - hill
50.18
45.26
Residential
10.87%
*Must meet Federal HUD Voucher Standards.
Standard Base Rates
1.32
0.14
10.61%
Residential customers only
20 gallon can - flat*
$ 23.52
$ 21.21
$ 2.31
10.89%
32 gallon can - flat
27.67
24.95
2.72
10.90%
64 gallon can - flat
55.34
$ 17.61
49.90
$ 1.92
5.44
10.90%
10.90%
96 gallon can - flat
83.01
22.43
74.85
2.44
8.16
10.88%
10.90%
20 gallon can - hill*
26.64
24.02
2.62
10.91%
32 gallon can - hill
31.34
28.26
3.08
10.90%
64 gallon can - hill
62.68
56.52
6.16
10.90%
96 gallon can - hill
94.02
84.78
9.24
10.90%
*New rate in 2008. For single family residential
$ 24.95
$ 2.72
10.90%
64 gallon can - flat
customers. Subject to account review by MSS.
49.90
5.44
10.90%
96 gallon can - flat
Low Income Rates*
Low Income - 32 gallon can - flat
$ 22.10
$ 19.93
$ 2.17
10.89%
Low Income - 64 gallon can - flat
44.20
39.86
4.34
10.89%
Low Income - 32 gallon can - hill
25.09
22.63
2.46
10.87%
Low Income - 64 gallon can - hill
50.18
45.26
4.92
10.87%
*Must meet Federal HUD Voucher Standards.
1.46
1.32
0.14
10.61%
Residential customers only
Other Services
Compacted 32 gallon
$ 55.34
$ 49.90
$ 5.44
10.90%
Compacted 64 gallon
110.68
99.80
10.88
10.90%
Distance 5-50'
3.60
3.25
0.35
10.77%
Distance over 50' (per 50' each can)
7.27
6.56
0.71
10.82%
Additonal Yard Waste Cart Rental*
1.46
1.32
0.14
10.61%
*One (1) additional company -provided cart per customer
Discontinued Rates**
Senior rate - flat** (Bi -weekly service)
$ 19.53
$ 17.61
$ 1.92
10.90%
Senior rate - hill** (Bi -weekly service)
24.87
22.43
2.44
10.88%
**Customers with these rates prior to 2005 will keep
existing rate type. No new customers wil be added
with this rate type.
Apartments
32 gallon can - flat
$ 27.67
$ 24.95
$ 2.72
10.90%
64 gallon can - flat
55.34
49.90
5.44
10.90%
96 gallon can - flat
83.01
74.85
8.16
10.90%
32 gallon can - hill
31.34
28.26
3.08
10.90%
64 gallon can - hill
62.68
56.52
6.16
10.90%
96 gallon can - hill
94.02
84.78
9.24
10.90%
***Rates are per container, per # of pickups/wk
***Minimum of one can per unit
1/7/2011 1 of 5 San Rafael - Exhibit C Rate Sheet -20 EXHIBIT C
EXHIBIT C
MARIN SANITARY SERVICE
CITY OF SAN RAFAEL RATE SCHEDULE
Rates Effective: 01/01/2011
Rate Increase: 10.89%
2011
2010
2011
2011
Rates are per month unless otherwise specified.
Proposed
Rate
RATE
INCREASE
% INCR.
Apartments (cont.)
FL 2 yd bin 1 x/week
$ 262.61
$ 236.82
$ 25.79
10.89%
FL 2 yd bin 2 x/week
601.93
542.82
59.11
10.89%
FL 2 yd bin 3 x/week
911.15
821.67
89.48
10.89%
FL 2 yd bin 4 x/week
1,225.83
1,105.45
120.38
10.89%
FL 2 yd bin 5 x/week
1,546.04
1,394.21
151.83
10.89%
FL 2 yd bin 6 x/week
1,871.71
1,687.90
183.81
10.89%
FL 3 yd bin 1 x/week
$ 341.81
$ 308.24
$ 33.57
10.89%
FL 3 yd bin 2 x/week
626.43
564.91
61.52
10.89%
FL 3 yd bin 3 x/week
952.01
858.52
93.49
10.89%
FL 3 yd bin 4 x/week
1,285.81
1,159.54
126.27
10.89%
FL 3 yd bin 5 x/week
1,627.84
1,467.98
159.86
10.89%
FL 3 yd bin 6 x/week
1,978.12
1,783.86
194.26
10.89%
FL 4 yd bin 1 x/week
$ 487.63
$ 439.74
$ 47.89
10.89%
FL 4 yd bin 2 x/week
898.66
810.41
88.25
10.89%
FL 4 yd bin 3 x/week
1,364.38
1,230.39
133.99
10.89%
FL 4 yd bin 4 x/week
1,841.17
1,660.36
180.81
10.89%
FL 4 yd bin 5 x/week
2,286.24
2,061.72
224.52
10.89%
FL 4 yd bin 6 x/week
2,827.67
2,549.98
277.69
10.89%
FL 5 yd bin 1 x/week
$ 527.46
$ 475.66
$ 51.80
10.89%
FL 5 yd bin 2 x/week
1,044.05
941.52
102.53
10.89%
FL 5 yd bin 3 x/week
1,586.67
1,430.85
155.82
10.89%
FL 5 yd bin 4 x/week
2,143.00
1,932.55
210.45
10.89%
FL 5 yd bin 5 x/week
2,713.08
2,446.64
266.44
10.89%
FL 5 yd bin 6 x/week
3,296.87
2,973.10
323.77
10.89%
FL 6 yd bin 1 x/week
$ 618.18
$ 557.47
$ 60.71
10.89%
FL 6 yd bin 2 x/week
1,252.86
1,129.82
123.04
10.89%
FL 6 yd bin 3 x/week
1,903.99
1,717.01
186.98
10.89%
FL 6 yd bin 4 x/week
2,571.61
2,319.06
252.55
10.89%
FL 6 yd bin 5 x/week
3,255.70
2,935.97
319.73
10.89%
FL 6 yd bin 6 x/week
3,956.24
3,567.72
388.52
10.89%
RL 1 yd bin 1 x/week
$ 172.10
$ 155.20
$ 16.90
10.89%
RL 1 yd bin 2 x/week
346.95
312.88
34.07
10.89%
RL 1 yd bin 3 x/week
524.57
473.05
51.52
10.89%
RL 1 yd bin 4 x/week
704.91
635.68
69.23
10.89%
RL 1 yd bin 5 x/week
887.98
800.78
87.20
10.89%
RL 1 yd bin 6 x/week
1,073.81
968.36
105.45
10.89%
(No longer offered to new customers)
1/7/2011 2 of 5 San Rafael - Exhibit C Rate Sheet -,201 I
EXHIBIT C
MARIN SANITARY SERVICE
CITY OF SAN RAFAEL RATE SCHEDULE
Rates Effective: 01/01/2011
$ 66.63
$ 60.09
$ 6.54
10.88%
Rate Increase: 10.89%
262.61
236.82
25.79
10.89%
2011
2010
2011
2011
59.25
10.89%
Rates are per month unless otherwise specified.
Proposed
Rate
RATE
INCREASE
% INCR.
FL 2 yd bin 4 x/week
1,234.07
1,112.88
Apartments (cont.)
10.89%
FL 2 yd bin 5 x/week
RL 2 yd bin 1 x/week
$ 263.31
1,406.59
$ 237.45
153.18
$ 25.86
10.89%
10.89%
RL 2 yd bin 2 x/week
526.79
1,706.46
475.06
185.83
51.73
10.89%
10.89%
RL 2 yd bin 3 x/week
798.44
$ 73.77
720.03
$ 8.03
78.41
10.89%
10.89%
RL 2 yd bin 4 x/week
1,075.57
308.24
969.94
33.57
105.63
10.89%
10.89%
RL 2 yd bin 5 x/week
1,546.04
573.99
1,394.21
62.51
151.83
10.89%
10.89%
RL 2 yd bin 6 x/week
1,871.71
874.90
1,687.90
95.28
183.81
10.89%
10.89%
FL Compacted Rate Per Yard
$ 65.87
per yard
$ 59.40
129.06
$ 6.47
10.89%
10.89%
Commercial
1,504.61
163.85
10.89%
FL 3 yd bin 6 x/week
2,033.02
1,833.37
32 gallon can
$ 27.50
10.89%
$ 24.80
$ 119.72
$ 2.70
$ 107.96
10.89%
64 gallon can
55.00
10.89%
49.60
487.63
5.40
439.74
10.89%
96 gallon can
82.50
10.89%
74.40
901.41
8.10
812.89
10.89%
Compacted 32 gallon
55.00
10.89%
49.60
1,372.62
5.40
1,237.82
10.89%
Compacted 64 gallon
110.00
10.89%
99.20
1,857.65
10.80
1,675.22
10.89%
Bags (32 gallon)
27.50
10.89%
24.80
2,224.61
2.70
2,006.14
10.89%
""Rates are per container, per # of pckups/wk
10.89%
FL 4 yd bin 6 x/week
2,868.87
2,587.13
FL 2 yd bin per pickup
$ 66.63
$ 60.09
$ 6.54
10.88%
FL 2 yd bin 1 x/week
262.61
236.82
25.79
10.89%
FL 2 yd bin 2 x/week
603.31
544.06
59.25
10.89%
FL 2 yd bin 3 x/week
915.27
825.39
89.88
10.89%
FL 2 yd bin 4 x/week
1,234.07
1,112.88
121.19
10.89%
FL 2 yd bin 5 x/week
1,559.77
1,406.59
153.18
10.89%
FL 2 yd bin 6 x/week
1,892.29
1,706.46
185.83
10.89%
FL 3 yd bin per pickup
$ 81.80
$ 73.77
$ 8.03
10.89%
FL 3 yd bin 1 x/week
341.81
308.24
33.57
10.89%
FL 3 yd bin 2 x/week
636.50
573.99
62.51
10.89%
FL 3 yd bin 3 x/week
970.18
874.90
95.28
10.89%
FL 3 yd bin 4 x/week
1,314.16
1,185.10
129.06
10.89%
FL 3 yd bin 5 x/week
1,668.46
1,504.61
163.85
10.89%
FL 3 yd bin 6 x/week
2,033.02
1,833.37
199.65
10.89%
FL 4 yd bin per pickup
$ 119.72
$ 107.96
$ 11.76
10.89%
FL 4 yd bin 1 x/week
487.63
439.74
47.89
10.89%
FL 4 yd bin 2 x/week
901.41
812.89
88.52
10.89%
FL 4 yd bin 3 x/week
1,372.62
1,237.82
134.80
10.89%
FL 4 yd bin 4 x/week
1,857.65
1,675.22
182.43
10.89%
FL 4 yd bin 5 x/week
2,224.61
2,006.14
218.47
10.89%
FL 4 yd bin 6 x/week
2,868.87
2,587.13
281.74
10.89%
FL 5 yd bin per pickup
$ 127.63
$ 115.10
$ 12.53
10.89%
FL 5 yd bin 1 x/week
527.46
475.66
51.80
10.89%
FL 5 yd bin 2 x/week
1,060.82
956.64
104.18
10.89%
FL 5 yd bin 3 x/week
1,616.99
1,458.19
158.80
10.89%
FL 5 yd bin 4 x/week
2,190.29
1,975.19
215.10
10.89%
FL 5 yd bin 5 x/week
2,780.77
2,507.68
273.09
10.89%
FL 5 yd bin 6 x/week
3,388.40
3,055.64
332.76
10.89%
1/7/2011 3 of 5 San Rafael - Exhibit C Rate Sheet -201 I
EXHIBIT C
MARIN SANITARY SERVICE
CITY OF SAN RAFAEL RATE SCHEDULE
Rates Effective: 01/01/2011
Rate Increase: 10.89%
2011
2010
2011
2011
Rates are per month unless otherwise specified.
Proposed
Rate
RATE
INCREASE
% INCR.
Commercial (cont.)
FL 6 yd bin per pickup
$ 145.51
$ 131.22
$ 14.29
10.89%
FL 6 yd bin 1 x/week
626.20
564.70
61.50
10.89%
FL 6 yd bin 2 x/week
1,272.98
1,147.97
125.01
10.89%
FL 6 yd bin 3 x/week
1,940.38
1,749.82
190.56
10.89%
FL 6 yd bin 4 x/week
2,628.35
2,370.23
258.12
10.89%
FL 6 yd bin 5 x/week
3,336.90
3,009.20
327.70
10.89%
FL 6 yd bin 6 x/week
4,066.07
3,666.76
399.31
10.89%
RL 1 yd bin 1 x/week
$ 178.60
$ 161.06
$ 17.54
10.89%
RL 1 yd bin 2 x/week
360.61
325.20
35.41
10.89%
RL 1 yd bin 3 x/week
546.09
492.46
53.63
10.89%
RL 1 yd bin 4 x/week
734.99
662.81
72.18
10.89%
RL 1 yd bin 5 x/week
927.31
836.24
91.07
10.89%
RL 1 yd bin 6 x/week
1,123.08
1,012.79
110.29
10.89%
(No longer offered to new customers)
RL 2 yd bin 1 x/week
$ 270.49
$ 243.93
$ 26.56
10.89%
RL 2 yd bin 2 x/week
547.85
494.05
53.80
10.89%
RL 2 yd bin 3 x/week
832.06
750.35
81.71
10.89%
RL 2 yd bin 4 x/week
1,123.16
1,012.86
110.30
10.89%
RL 2 yd bin 5 x/week
1,559.77
1,406.59
153.18
10.89%
RL 2 yd bin 6 x/week
1,892.29
1,706.46
185.83
10.89%
FL Compacted Rate Per Yard
$ 65.87
per yard
$ 59.40
$ 6.47
10.89%
RO 10 yd box per pickup
207.30
$ 186.94
$ 20.36
10.89%
RO 10 yd box 1 x/week
882.56
795.89
86.67
10.89%
RO 10 yd box 2 x/week
1,806.12
1,628.75
177.37
10.89%
RO 10 yd box 3 x/week
2,771.82
2,499.61
272.21
10.89%
RO 10 yd box 4 x/week
3,778.14
3,407.11
371.03
10.89%
RO 10 yd box 5 x/week
4,825.66
4,351.75
473.91
10.89%
RO 10 yd box 6 x/week
5,914.34
5,333.52
580.82
10.89%
RO 12 yd box per pickup 1 $ 248.77 1 $ 224.34 1 $ 24.43 1 10.89%
1/7/2011 4 of 5 San Rafael - Exhibit C Rate Sheet -20 11
EXHIBIT C
MARIN SANITARY SERVICE
CITY OF SAN RAFAEL RATE SCHEDULE
Rates Effective: 01/01/2011
Rate Increase: 10.89%
2011
2010
2011
2011
Rates are per month unless otherwise specified.
Proposed
Rate
RATE
INCREASE
% INCR.
Commercial (cont.)
RO 18 yd box per pickup
$ 373.17
$ 336.52
$ 36.65
10.89%
RO 18 yd box 1 x/week
1,585.22
1,429.54
155.68
10.89%
RO 18 yd box 2 x/week
3,244.59
2,925.95
318.64
10.89%
RO 18 yd box 3 x/week
4,978.07
4,489.20
488.87
10.89%
RO 18 yd box 4 x/week
6,785.69
6,119.30
666.39
10.89%
RO 18 yd box 5 x/week
8,667.45
7,816.26
851.19
10.89%
RO 18 yd box 6 x/week
10,623.35
9,580.08
1,043.27
10.89%
RO 20 yd box per pickup
$ 414.62
$ 373.90
$ 40.72
10.89%
RO 20 yd box 1 x/week
1,761.37
1,588.39
172.98
10.89%
RO 20 yd box 2 x/week
3,605.10
3,251.06
354.04
10.89%
RO 20 yd box 3 x/week
5,531.19
4,988.00
543.19
10.89%
RO 20 yd box 4 x/week
7,539.64
6,799.21
740.43
10.89%
RO 20 yd box 5 x/week
9,630.50
8,684.73
945.77
10.89%
RO 20 yd box 6 x/week
11,803.70
10,644.51
1,159.19
10.89%
RO 25 yd box per pickup
$ 518.27
$ 467.37
$ 50.90
10.89%
RO 25 yd box 1 x/week
2,463.91
2,221.94
241.97
10.89%
RO 25 yd box 2 x/week
5,043.12
4,547.86
495.26
10.89%
RO 25 yd box 3 x/week
7,434.50
6,704.39
730.11
10.89%
RO 25 yd box 4 x/week
10,133.93
9,138.72
995.21
10.89%
RO 25 yd box 5 x/week
12,944.23
11,673.04
1,271.19
10.89%
RO 25 yd box 6 x/week
15,865.29
14,307.23
1,558.06
10.89%
RO Compacted Rate Per Yard
$ 65.87
$ 59.40
$ 6.47
10.89%
Lock Charges - single pickup
$ 4.01
$ 3.62
$ 0.39
10.77%
Lock Charges - weekly pickup
18.25
16.46
1.79
10.87%
Compacted refuse w/o recyclables
65.87
per yard
59.40
6.47
10.89%
Compacted refuse with recyclables
54.27
per yard
48.94
5.33
10.89%
Refuse per yard - per pickup
25.45
22.95
2.50
10.89%
Box Rental - 1 yard
53.88
48.59
5.29
10.89%
Box Rental - 2 yard
60.65
54.69
5.96
10.90%
Box Rental - 3-5 yard
67.08
60.49
6.59
10.89%
Box Rental - 6 yard
75.80
68.36
7.44
10.88%
Box Rental - 10 yard
89.44
80.66
8.78
10.89%
Box Rental - 18 yard
179.23
161.63
17.60
10.89%
Box Rental - 20 yard
181.87
164.01
17.86
10.89%
Box Rental - 25 yard
189.50
170.89
18.61
10.89%
Return Trip Charge
39.44
35.57
3.87
10.88%
Steam Clean Bin Charge
79.03
71.27
7.76
10.89%
Overweight Charge Per Ton***
148.59
134.00
14.59
10.89%
"'Comm'I boxes exceeding 300lbs/yard
1/7/2011 5 of 5 San Rafael - Exhibit C Rate Sheet -20i 1
December 29, 2010
This document is printed on 100% post consumer content recycled paper
201 N. Civic Drive, Suite 230
Walnut Creek, California 94596
Telephone: 925/977-6950
Fax: 925/977-6955
www.hfh-consultants.com
December 29, 2010
Mr. Jim Schutz
Interim City Manager
City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94915
Mr. Mark Williams
District Manager
Las Gallinas Valley Sanitary District
300 Smith Ranch Road
San Rafael, CA 94903
Mr. Gary Broad
Mr. Daniel Schwarz
Town Manager & Planning Director
City Manager
Town of Ross
City of Larkspur
31 Sir Francis Drake Blvd.
420 Magnolia Avenue
Ross, CA 94957
Larkspur, CA 94939
Managing Tomorrow's Resources Today
Robert D. Hilton, CMC
John W. Farnkopf, PE
Laith B. Ezzet, CMC
Richard J. Simonson, CMC
Marva M. Sheehan, CPA
Mr. Michael Frost
Deputy Director of Public Works
County of Marin
65 Mitchell Blvd Suite 200-B
San Rafael, CA 94903
Reference Number: 53793
Subject: Review of Marin Sanitary Service's 2011 Rate Application
Dear Messrs. Schutz, Williams, Schwarz, Frost, and Broad:
This report documents HF&H Consultants, LLC's (HF&H) findings and recommendations from our review
of Marin Sanitary Service's (MSS) application for a 9.55% increase to its solid waste rates, effective
January 1, 2011 (Application), submitted to 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".
Findings
Current Services
Based on our review of the Application, we determined that a total increase of 6.50% to current rate
revenues is necessary to compensate MSS for its expenses and provide it the agreed-upon level of profit
for its current operations. This lower -than -applied -for increase is based on several adjustments to MSS'
rate calculation (agreed upon by MSS management and HF&H) as described in Section IV of the report
and reflected in Attachments 2 and 3. The 6.50% rate increase is primarily due to the net increase in
operating costs resulting from the application of the changes in the applicable Consumer Price Indices
(CPI), increases in workers compensation benefits resulting from new premium rates, and an increase in
disposal/processing costs resulting from a significant one-time downward adjustment in prior year due
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December 29, 2010
Page 2 of 4
to over projecting disposal tons in the rate setting process for 2009. Disposal projections for 2010 did
not require a similar adjustment.
New Services
The Franchisors desire to continue increasing the volume of materials diverted from the landfill.
Therefore, the Franchisors requested that MSS submit a cost proposal to include collection of foodwaste
from its residential customers. MSS presented a program where the residents place foodwaste in the
green waste container and the combined foodwaste and green waste container would be collected on a
weekly basis and delivered to the composting site at Zamora. MSS projected the net additional costs in
2011 to be $1,056,000 which would require an additional 5.02% increase to rates.
Based on our review of the cost proposal, we determined an increase of $922,268 is necessary to
compensate MSS for its expenses and provide it the agreed-upon level of profit. The decrease results
primarily from the reduction of one route offset by a revision to truck maintenance costs and the
omission of franchise fees in its original calculations.
Historically, MSS's compensation adjustments have been spread over the entire Franchisors' customer
base (residential and commercial customers). If the adjustment for the collection of residential
foodwaste follows historical procedures, a 4.32% adjustment to all rates is required. If the adjustment is
applied to only the residential and apartment customers, then a 9.75% to the residential and apartment
rates is required.
The following table summarizes the recommended rate increase:
Aghk
Managing Tomorrow's Today
Marin Franchisors Group
December 29, 2010
Page 3 of 4
Rate Increase Components
Foodwaste Collection
Foodwaste
Adjustment to Residential &
Collection
Apartment Customers Only
Residential &
Adjustment to
Entire
Apartment Commercial
Customer Base
Rates Rates
Current Services
Benefits
0.71%
0.71% 0.71%
Fuel
0.79%
0.79% 0.79%
Disposal
3.05%
3.05% 3.05%
Other Operating Costs*
-0.16%
-0.16% -0.16%
4.39%
4.39% 4.39%
Franchise Fees and Projected
2011 Revenue Shortfall
2.11%
2.11% 2.11%
6.50%
6.50% 6.50%
New Services
Residential Food Waste Collection
4.39%
9.75% 0.00%
Total Rate Increase
10.89%
16.25% 6.50'
' Includes wages, depreciation, other vehicle -rel ated costs, general &administrative costs (e.g.,
public education, customer service, etc.) and various otheroperating costs.
Survey of Coanparable Rates
Attachment 4 shows the results of HF&H's survey of solid waste rates as of September 2010 for
jurisdictions located throughout the Bay Area. We have applied the increase for current services
(6.50%) and the additional increase of 4.39% for the residential foodwaste collection for a total of
10.89% to the existing rates for purposes of comparing the Franchisors' rates to other jurisdictions.
Agencies noted with an asterisk (*) will be considering rate adjustments to be effective January 1, 2011.
The percentage changes for these agencies are not known at this time. Consequently, their rates have
not been adjusted. It should be noted many of the jurisdictions listed do not have residential organics
programs.
The Franchisors' residential rates for a 32 -gallon container range from $24.58 (LGVSD) to $27.97
(Larkspur). The survey shows the Franchisors' average residential rate for 32 -gallon service ($26.83) is in
the middle of the other Marin County jurisdictions. Of the eight Marin County jurisdictions, four of the
jurisdictions 32 -gallon container rates are higher than the Franchisors' average and four jurisdictions are
lower. The rates for Fairfax and San Anselmo do not reflect an increase for 2011 at this time.
Attachment 5 compares the Franchisors' residential rates for a 32 -gallon container to the average Marin
County rate and all other jurisdictions' average rate for similar service.
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Managing Tomorrow's Resources Today
Marin Franchisors Group
December 29, 2010
Page 4 of 4
The Franchisors' commercial rates for a 3 cubic yard bin serviced one time per week range from $341.81
(San Rafael) to $356.63 (Larkspur). The average rate for the Franchisors is $352.05 which is the median
of the other four Marin County jurisdictions that have this level of service. Two jurisdictions have higher
rates and two jurisdictions have lower rates. The rates for Fairfax and San Anselmo do not reflect an
increase for 2011 at this time. Attachment 6 compares the Franchisors' 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.
We caution the Franchisors that this survey is presented for information only. They should not draw
conclusions from this information because rate comparisons are intrinsically difficult and often
misleading. This difficulty results from differences in issues such as:
1. The services provided;
2. The terrain in which the service is performed;
3. Disposal costs;
4. Rate structures; and,
5. Governmental fees (e.g., franchise fees, vehicle impact fees, etc).
We would like to express our appreciation to the MSS management and staff for their assistance. In
addition, we express our appreciation to each of you for assistance and guidance during the course of
the review. Should you have any questions, please call me at 925-977-6952.
Very truly yours,
HF&H CONSULTANTS, LLC
Robert D. Hilton, CMC
President
Marva M. Sheehan, CPA
Vice President
cc: Mr. Joseph Garbarino, Marin Sanitary Service
Mr. Joseph J. Garbarino, Marin Sanitary Service
Ms. Patricia Garbarino, Marin Sanitary Service
Mr. Neil Roscoe, Marin Sanitary Service
HF&H Client Files
Franchisors of Marin Sanitary Service Table of Contents
Review of Marin Sanitary Service's 2011 Rate Application
TABLE OF CONTENTS
SECTION I. BACKGROUND.........................................................................................1
Description of Current Services................................................................................. 1
New Service - Residential Foodwaste Collection....................................................... 1
SECTION II. RATE REVIEW APPROACH.................................................................... 3
Scopeof Work........................................................................................................... 3
Limitations................................................................................................................. 4
SECTION III. MARIN SANITARY SERVICE'S PROJECTION METHODOLOGY —
CURRENT SERVICES............................................................................ 5
Revenues................................................................................................................... 5
Expenses................................................................................................................... 5
Profit.......................................................................................................................... 6
SECTION IV. PROPOSED ADJUSTMENTS — CURRENT SERVICES ........................ 7
Adjustments to 2011 Projected Revenues................................................................. 8
Adjustments to 2009 and 2010 Projected Expenses—, ..... ...... ...... ...... ..... 8
Adjustments to 2011 Projected Expenses................................................................. 9
SECTION V. NEW SERVICES - RESIDENTIAL FOODWASTE COLLECTION .........11
MSSCost Proposal................................................................................................... 11
HF&H Review Steps................................................................................................ 12
HF&H Adjustments.................................................................................................. 12
SECTION VI. RATE ADJUSTMENT............................................................................14
Rate Adjustment........................................................................ 14
ATTACHMENTS
Attachment 1— Marin Sanitary Service Rate Application Summary
Attachment 2 — HF&H Consultants Adjustment Summary
Attachment 3 — Adjusted Rate Application Summary
Attachment 4 — Rate Survey
Attachment 5 — Chart of Residential 32 -Gallon Rates
Attachment 6 — Chart of Commercial 3 Cubic Yard Rates
HF&H Consultants, LLC i December 29, 2010
This Page Intentionally Left Blank
Franchisors of Marin Sanitary Service Section I. Background
Review of Marin Sanitary Service's 2011 Rate Application
SECTION I. BACKGROUND
Description of Current Services
Marin Sanitary Service (MSS) provides solid waste, recyclable materials, and yard waste collection and
processing services to the residents and businesses of the Cities of San Rafael and Larkspur, the Town of
Ross, the County of Marin, and the Las Gallinas Valley Sanitary District (LGVSD) collectively referred to as
"Franchisors". In addition, MSS and its related entities (Marin Resource and Recovery (MRR) and the
Marin Resource Recovery Center (MRRC)), provide solid waste, recyclable materials, and yard waste
collection and processing services to the residents and businesses of San Anselmo, the north area of the
Ross Valley Sanitary District (RVSD), Fairfax, and San Quentin prison. 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' service area to the MSS
transfer station then transports it to the Redwood Sanitary Landfill (Redwood). MSS delivers recyclable
materials to the MRR, where materials are processed and marketed. MSS delivers recyclable -rich loads
of refuse (typically commercial) and separated yard waste loads (collected from residents), along with
public self -haul loads to the MRRC where recyclable materials are extracted from the waste stream,
processed, and marketed. The MRRC delivers residual waste, the materials remaining after the
recyclable materials are extracted, to the transfer station. This residual waste is transferred to
Redwood. Yard waste is delivered to Northern Recycling Compost — Zamora (Zamora), located in Yolo
County, for composting.
New Service .- Residential Foodwaste, Collection
In early 2010, MSS introduced a pilot composting collection program allowing certain residential
customers to include foodwaste with their yard waste. The pilot has been well received and MSS plans
to extend this service to its remaining customers beginning in March 2011.
State regulations mandate that this comingled material be collected weekly, therefore MSS is required
to expand its weekly yard waste service to the areas it serves.
MSS currently uses four full size rear load packer trucks and one small rear load packer truck for yard
waste collection in LGVSD, San Rafael, Ross, Kentfield, the County of Marin, and Larkspur. The current
every other week yard waste collection has each truck operating an even route one week and an odd
route the following week.
Customers will be informed of the acceptable list of food items allowed in the yard waste carts by
distributing can hangers, which will include the list in the Quarterly newsletter and the MSS website. The
customer service department will temporarily increase its resources to help customers during the roll
out of this new program.
1 December 29, 2010
Franchisors of Marin Sanitary Service Section I. Background
Review of Marin Sanitary Service's 2011 Rate Application
This comingled material will be processed in the same way as regular yard waste and will be delivered to
Zamora for composting.
December 29, 2010
Franchisors of Marin Sanitary Service Section II. Rate Review Approach
Review of Marin Sanitary Service's 2011 Rate Application
SECTION II. RATE REVIEW APPROACH
Scope of Work
Rate Adjustment Methodology
The Rate Index Methodology was developed and approved in 2001. This method was used to determine
2011 rates. The results from the 2010 rate review are adjusted by changes in certain indices (e.g., CPI,
employment cost index and the transportation index). Also, new projections of certain costs (e.g.,
disposal expense, fuel expense, workers' compensation expense, depreciation, interest expense, and
fees imposed by the Marin County Hazardous and Solid Waste Management Joint Powers Authority
(JPA)) and revenues (e.g., collection rate revenues) are made to adjust the results from the 2010 review
to determine the 2011 rates.
The Franchisors engaged HF&H in August 2010 to perform a limited review of the Application in
accordance with the Rate Index Methodology. The scope of this review is described in our engagement
letter dated August S, 2010. These procedures included the following activities:
• Reviewing MSS' Application to determine completeness, mathematical accuracy, and
reasonableness and logical consistency of the assumptions supporting the projected revenues
and expenses;
• Reviewing and testing projected revenues to ensure that they are consistent with past trends
and anticipated conditions;
• Reviewing MSS' calculation of rate year 2011 indexed expenses by comparing them to the
calculated expenses for 2010 which were established in HF&H's prior report, and the calculated
changes to the applicable indices;
• Reviewing other projected expenses including depreciation, interest, disposal and
recyclables/yard waste processing expenses by evaluating the reasonableness of MSS' estimates
for these expenses based on historical trends and MSS management's plans;
• Reviewing MSS' calculation of projected profit for compliance with the procedures and
mathematical accuracy;
• Reviewing the appropriateness of MSS' allocation of revenues and expenses among the
Franchisors and other service areas;
• Reviewing our recalculation of MSS' projected results of operations and our recommendations
with MSS and the Franchisors representatives; and,
3 December 29, 2010
Franchisors of Marin Sanitary Service Section II. Rate Review Approach
Review of Marin Sanitary Service's 2011 Rate Application
• Preparing a written report that documents our findings and recommendations.
I imitations
Our review was substantially different in scope than an examination in accordance with Generally
Accepted Auditing Standards, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an opinion. However, Chiao
Smith and Associates has issued an unqualified opinion of MSS' 2009 financial statements.
There are related party transactions included in MSS' 2011 projections at rates that have been discussed
and allowed by the Franchisors in previous reviews and therefore we did not review the underlying basis
for such rates.
Our conclusions are based on the review of MSS' projections of its financial results of operations. Actual
results of operations will usually differ from projections because events and circumstances frequently do
not occur as expected and the difference may be significant.
4 December 29, 2010
Franchisors of Marin Sanitary Service Section III. MSS' Projection Methodology — Current Services
Review of Marin Sanitary Service's 2011 Rate Application
SECTION III. MSS' PROJECTION METHODOLOGY — CURRENT
SERVICES
On September 30, 2010, MSS submitted the Application to the Franchisors requesting that solid waste
collection rates be increased by 9.55%, effective January 1, 2011 (Application). The following describes
MSS' methodology for projecting 2011 revenues and expenses.
Reirenues
Route Revenues
MSS initially projected its 2011 route revenues in the amount of $23,575,932 by annualizing the
revenues received through June 2010 and calculating franchise fees payable to each jurisdiction in
accordance with the franchise agreements. Additionally, MSS included a 2.32% ($546,962) reduction to
the projected route revenues. MSS based the percentage reduction on its analysis of the previous four
year period (2007 through projected 2010) of the actual revenue billed vs. the revenue requirement. In
MSS' opinion route revenues will continue to decline and the existing projection methodology does not
reflect the anticipated decline.
Under the accrual method of revenue accounting, bad debt is recorded when it has been determined an
account is uncollectible. MSS has collection procedures in place to attempt to collect the past due
accounts. MSS projected a reduction of $55,190 to the accrued route revenues for bad debts from
uncollectible accounts. This amount was determined by annualizing the actual write-off of uncollectible
accounts for the seven months ending June 2010.
Non -Regulated Revenues
MSS projected 2011 non-regulated revenues of $11,544 by annualizing revenues received for the six
months ending June 2010. The non-regulated revenues are disposal fees received at the transfer station
for the transfer, transport, and disposal of solid waste from the MRRC and Household Hazardous Waste
facility.
Expenses
MSS projected its 2011 expenses for each expense category by:
• Wages. Multiplying 2010's allowed wages and salaries expense by 1 plus the 1.4% change in
the San Francisco -Oakland -San Jose Metropolitan Consumer Price Index (Urban Wage
Earners) from June 2009 to June 2010.
• Benefits. Multiplying 2010's allowed benefits expense by 1 plus the 2.5% change in the
Employment Cost Index -Benefits (Private Industry Workers) from June 2009 to June 2010.
5 December 29, 2010
Franchisors of Marin Sanitary Service Section III. MSS' Projection Methodology — Current Services
Review of Marin Sanitary Service's 2011 Rate Application
• Disposal Fees. Annualizing the June 2010 YTD disposal expense. MSS does not anticipate a
change in disposal tonnage. However, it has included a 1.1% increase in its per -ton disposal
fee at Redwood in accordance with the agreement between MSS and Redwood, effective
January 1, 2011.
Consistent with prior years, an adjustment is made to the 2009 disposal expense to reflect
the difference between the projected and actual disposal expense for 2009 and the
difference between the 2010 projections done in 2009 and the revised 2010 projections
done as part of the current rate application process. HF&H has recommended these
adjustments in prior years. For the 2011 Application, MSS calculated the adjustments and
included them in their initial Application. MSS proposed an increase of $19,834 to adjust
the 2009 disposal expense to actual and an increase of $127,651 to update its projection of
2010 disposal expense.
• Fuel. Multiplying 2010's allowed fuel expense by 1 plus the 7.7% increase in the Consumer
Price Transportation Index — Motor Fuel (All Urban Consumers) from July 2009 to July 2010.
• Maintenance. Multiplying 2010's allowed maintenance expense by 1 plus the 1.9% change
in the Consumer Price Transportation Index — Motor Vehicle Maintenance and Repair (All
Urban Wage Earners) from July 2009 to July 2010.
• Depreciation/Lease. Taking the sum of existing equipment depreciation plus depreciation
for the remaining 2010 capital expenditures less remaining adjustments for fully
depreciated assets plus projected depreciation on capital expenditures for 2011. MSS
included the amortization of financing fees associated with the California Pollution Control
Financing Bonds issued in 2006. MSS adjusted the truck depreciation for the non -franchised
use of vehicles based upon the trucks actual route hours spent in non -franchised areas. Also
included was the lease expense on existing equipment and an adjustment for G&A and
shop.
• Other Operating/G&A. Multiplying 2010's allowed other operating/G&A expense by 1 plus
the 1.1% change in the San Francisco -Oakland -San Jose Metropolitan Consumer Price Index
(All Urban Consumers) from June 2009 to June 2010.
• Interest. Interest expense was calculated using amortization tables to calculate the actual
interest portion of future debt (loan and bond) payments. MSS included the interest on
their working capital line of credit.
Profit
MSS calculated its 2011 profit of $2,115,321 by applying a 90.5% pre-tax operating ratio to its 2011 total
projected expenses that are eligible for profit.
6 December 29, 2010
Franchisors of Marin Sanitary Service Section IV. Proposed Adjustments — Current Services
Review of Marin Sanitary Service's 2011 Rate Application
SECTION IV. PROPOSED ADJUSTMENTS - CURRENT SERVICES
The following is a summary of HF&H's proposed adjustments to MSS' projected 2011 revenues,
expenses, and profit.
Exhibit 1
Marin Sanitary Service - Rate Adjustment Calculation
As Adjusted By HF&H
($000's Unless Otherwise Indicated)
Projected
YE 12/31/2011
REVENUES
1. Route Revenue at Current Rates Projected By MSS 23,029
2. Route Revenue Adjustment 504
3. Adjusted Gross Route Revenues 23,533
4. Less: Franchise Fees Projected By MSS (at current route revenue) (2,276)
5. Recalculation of Franchise Fees Based on Revenue Adj. Above (48)
6. Adjusted Franchise Fees (2,325)
7. Less: Vehicle Impact Fees Projected by MSS (196)
8.
Adjusted Net Route Revenue (Line 3 +Line 6 +Line 7)
21,012
9.
Plus: Non -Regulated Revenues Projected by MSS
12
10.
Total Projected Net Revenues (Line 8 +Line 9)
21,023
EXPENSES
11.
Operating Expenses Eligible for Profit Projected by MSS
20,151
12.
HF&H Operating Expense Adjustments
13.
Wages Expense
-
14.
Benefits Expense
83
15.
Fuel Expense
(91)
16.
Depreciation Expense
(111)
17.
Other Operating / G&A Expenses
(4)
18.
Adjusted Operating Expenses
20,028
19.
Profit at 90.5% Operating Ratio Projected by MSS
2,115
20.
Recalculation of Profit Based on 90.5% Operating Ratio
(13)
21.
Adjusted Profit
2,102
22.
Interest Expense Projected by MSS
266
23.
HF&H Interest Expense Adjustment
(7)
24.
Adjusted Interest Expense
259
25.
Total Revenue Requirement (Lines 18+ Line 21 + Line 24)
22,389
26.
Surplus / (Deficit) (Line 10 - Line 25)
(1,365)
27.
Rate Adjustment
6.50%
7 December 29, 2010
Franchisors of Marin Sanitary Service Section IV. Proposed Adjustments — Current Services
Review of Marin Sanitary Service's 2011 Rate Application
Adjustments to 2011 Projected Revenues
Route Revenue Adjustments (Line 2): HF&H recommends an adjustment of $503,750 to increase
projected route revenues. MSS' projection methodology of annualizing June 2010 YTD route revenues
less 2.32% for forecasted decline of revenue resulted in 2010 estimated revenues of $23,028,970. HF&H
projected future route revenues by using an additional three months of actual data. Annualizing
September YTD actual route revenues and projecting the remaining months of 2010 using the monthly
average of the third quarter 2010 actual revenues. Consistent with the methodology used in previous
rate applications, HF&H did not utilize any adjustment factor for MSS' forecasted decline of revenue.
Historically, MSS has assumed the risk of both positive and negative fluctuations in the revenue
projections. Rates are set for 2011 assuming the current year's (2010) level of subscription remains
consistent. In recent years the economic downturn has prompted customers to downsize subscription
levels in an effort to reduce their expenses thereby producing less than anticipated revenue to cover
MSS's cost and compensation for providing service. Conversely should the economy pick up and growth
occur, then revenue and compensation to MSS would be greater than projected until the next years
projections are reviewed.
In addition, HF&H tested rates after the 2010 rate increase for each member agency to verify that MSS
implemented the correct rate adjustment. The rate adjustments for the franchised jurisdictions were
effective January 1, 2010 with the exception of the County and the County RVSD accounts which were
effective February 9, 2010. HF&H tested accounts from each member agency as selected at random
from the August 31, 2010 billing information provided by MSS, to verify the correct rates were billed.
HF&H found no exceptions for the tested accounts.
Franchise Fee Adjustment (Line 5): HF&H recommends increasing Franchise Fees by $48,302 due to the
increase in route revenues recommend above.
Adjusbirnent's to 2009 and 2010 ProJected Expenses
Fuel Expense (Line 15): HF&H recommends decreasing 2009 and 2010 diesel fuel expense for a net
total decrease of $30,144, due to the following:
• A $14,499 decrease to reflect the over -reimbursement of 2009 diesel fuel expense
compared with the actual diesel fuel expense. The average diesel fuel price for 2009 of
$2.41 per gallon was less than the $2.45 per gallon projected at the time of the review of
the 2010 rate application; and,
• A $15,645 decrease to 2010 diesel fuel expense resulting from a downward revision in
projected average annual fuel cost to $2.90 per gallon from $2.95 per gallon. HF&H
multiplied the base gallons of 286,737 (determined in the detail year review completed in
2009) by the average price per gallon of $2.90. Even though the volatility of diesel fuel
prices has leveled off, the projected increase may over- or under -project actual diesel fuel
expenses for 2010. The most recent diesel fuel price was $2.91 per gallon at the end of
8 December 29, 2010
Franchisors of Marin Sanitary Service Section IV. Proposed Adjustments — Current Services
Review of Marin Sanitary Service's 2011 Rate Application
August 2010; however, in April the price per gallon reached $3.11. The actual price paid by
MSS will be reflected in the rate -setting process for 2012.
Adjustrrients to 2011, �Pirojected Expenses
Benefits Expense (Line 5): HF&H recommends increasing MSS's benefits expense by $82,743 due to an
increase in workers' compensation premiums for 2011. Subsequent to MSS submission of the
Application, the final premium quotes were made available by the insurance carrier. HF&H recalculated
the workers compensation expense using the updated premium information and experience
modification factor.
Fuel Expense (Line 15): HF&H recommends a $60,819 decrease in the 2011 projected diesel fuel
expense. The decrease results from HF&H and MSS using different methodologies for projecting fuel
expense. MSS projected the 2011 fuel expense by using the results from the 2010 review less any prior
period adjustments and multiplying by one plus the change (a 7.7% increase) in the Consumer Price
Transportation Index — Motor Fuel (All Urban Consumers) for the most recent 12 month period ending
July 2010. HF&H projected the 2011 diesel fuel expense by using the projected fourth quarter 2010
price of $2.96 per gallon (a 2.7% increase from the adjusted 2010 projected price of $2.90 per gallon)
multiplied by the base year gallon usage of 286,737. Even though the volatility of diesel fuel prices has
leveled off, the projected decrease may over- or under -project actual diesel fuel expenses for 2011. The
projections for 2011 will be reviewed as part of the rate -setting process for 2012.
Depreciation/Lease (Line 16): HF&H recommends a $111,054 decrease in depreciation expense, due to
the following:
• A $2,366 decrease to reflect the adjustment to the roll -off truck depreciation for the portion
of time used in the Non -franchised area;
• A $17,759 decrease to reflect the adjustment to residential and commercial truck depreciation
for the portion of time used in the Non -franchised area;
• A $23,813 decrease to reflect the adjustment of asset lives for trucks purchased with bond
proceeds to seven years (from the five years used in the MSS' fixed asset system);
• A $55,431 decrease to reflect the adjustment of asset lives for trucks purchased with
traditional bank financing to five years (from seven years to match the asset lives to the
financing term consistent with past practice);
• A $5,369 decrease for the non-regulated portion of depreciation for two G&A assets acquired
in 2006 that were included in error;
• A $1,018 increase for the inclusion of depreciation expense on a portion of the Soft -Pak billing
system's cost that was not included in MSS' fixed asset system; and,
• A $7,334 decrease for shop vehicle depreciation attributed to the Non -franchised areas.
9 December 29, 2010
Franchisors of Marin Sanitary Service Section IV. Proposed Adjustments — Current Services
Review of Marin Sanitary Service's 2011 Rate Application
Other Operating/G&A Expenses (Line 17): HF&H recommends decreasing the JPA expense by $4,373.
Utilizing the rate per ton of $6.59, as provided by the JPA, HF&H recalculated the amount due to the
JPA.
Profit (Line 20): Due to the adjustments recommended above, HF&H recommends decreasing MSS'
profit by $12,979 based on a 90.5% operating ratio.
Interest (Line 23): HF&H recommends a $6,776 decrease to interest expense, due to the following:
• A $23,646 increase to reflect the adjustment for a new line of credit/working capital that MSS
did not include this account in their Application;
• A $1,742 decrease for the department 500 allocation associated with the addition of the new
line of credit mentioned above;
• A $60,410 decrease for the change to the Non -Franchised interest allocation for Non -
Franchised Vehicles resulting from an error in MSS' Application; and,
• A $31,730 increase to the MSS projection of interest to be paid on new vehicle capital
purchases that will be financed during the remainder of 2010 and 2011.
10 December 29, 2010
Franchisors of Marin Sanitary Service Section V. New Services - Residential Foodwaste Collection
Review of Marin Sanitary Service's 2011 Rate Application
SECTION V. NEW SERVICES - RESIDENTIAL FOODWASTE
COLLECTION
MSS Cost Proposal
MSS submitted a cost proposal for the collection of residential foodwaste in the franchised area. The
collection of foodwaste commingled with yard waste requires the yard waste collection to be performed
on a weekly basis. Yard waste is currently collected every other week in the franchised area, except for
a pilot program operating in the LGVSD. MSS estimated the new service expansion would require five
additional yard waste routes and additional capital cost of approximately $1.5 million. The services are
expected to begin March 1, 2011. MSS calculated the annual cost to provide the service and then
adjusted the revenue requirement to include ten months of costs. The impact on the rates would be an
additional 5.02% increase. MSS' cost proposal is shown below:
Marin Sanitary Service
Residential Yard Waste Collection
Proposed Costs
Operating Expenses
Wages
Benefits
Disposal Fees
Fuel & Oil
Maintenance Expense
Depreciation/Leases
Other Operating/ G&A
Operating Profit
Interest Expense
Franchise Fees (Average %)
MSS Annual Revenue Requirement
Ten Months Revenue Requirement
2010 Projected Route Revenues
CaVculated Rate Adjustment
90.5%
Exhibit 2
$ 362,531
266,359
93,000
96,250
183,384
112,000
$ 1,113,524
116,889
36,965
$ 1,267,378
$ 1,056,148
$ 21,023,467
5.02%
11 December 29, 2010
Franchisors of Marin Sanitary Service Section V. New Services - Residential Foodwaste Collection
Review of Marin Sanitary Service's 2011 Rate Application
I' F&.j° Review S,teps
HF&H reviewed MSS's cost proposal to determine if the costs were reasonable when compared to MSS
operations and industry standards. HF&H performed the following steps as part of the review:
1. Compared the proposed truck hours to the current truck hours to determine similar
productivity;
2. Recalculated labor costs based on wages and benefits per the current collective bargaining
agreement;
3. Requested quotes for new truck purchases ;
4. Recalculated interest based on truck costs and interest rates used in base review;
5. Compared the maintenance costs per truck hour to the similar costs from the detailed rate
review performed in 2009 for reasonableness;
6. Reviewed additional general and administrative costs for reasonableness;
7. Recalculated profit;
8. Recalculated the franchise fee component; and,
9. Recalculated the percentage increase.
HF&H Adjustments
HF&H proposes the following adjustments:
Wages and Benefits: Based on the current productivity levels, it was determined that only four
additional routes were needed. MSS proposed five additional routes. Therefore, the wages and benefits
have been reduced by $123,663 and $182,715, respectively.
Disposal Fees: MSS did not propose a reduction to disposal fees for the anticipated tonnage diverted
from the landfill. After discussions with MSS, a reduction of 915 tons (3%) is expected for 2011. The
percentage is lower than most programs in the Bay Area. However, the program is not for a full twelve
months and it will take some time for full participation. Additionally, the disposal and processing costs
for 2011 will be reviewed as part of the 2012 index rate review. The processing rate for green waste and
foodwaste is $3.14 less per ton than the MSW disposal rate. Therefore, disposal costs have been
reduced by $2,873.
Fuel and Oil: The reduction of one route created a reduction to fuel and oil expenses of $30,600.
Maintenance Expenses: MSS initially proposed maintenance expenses for five routes that cost an
average of $1,200 per month. Upon further review, MSS noted the $1,200 was incorrectly used and
proposed $2,875 per month. The costs include tire, parts and supplies, and the allocation of the shop
costs (personnel, equipment, etc). HF&H reviewed the new costs and compared them to the actual
costs from the 2009 detail rate review and found the additional costs to be reasonable, resulting in an
increase in maintenance costs of $100,500 for five routes. However, it was determined that only four
routes are required for the new service resulting in a reduction of $39,350. Therefore, maintenance
expense has been adjusted for a net increase of $61,150.
Depreciation/ Leases: Due to the reduction of one route, one fewer truck will need to be purchased.
Therefore, depreciation has been reduced by $36,677.
12 December 29, 2010
Franchisors of Marin Sanitary Service Section V. New Services - Residential Foodwaste Collection
Review of Marin Sanitary Service's 2011 Rate Application
Other Operating / G&A: MSS included costs for a part-time customer service / public education
coordinator, public education material, postage and a contingency for unanticipated costs. It is not
unusual for there to be unanticipated costs; however, since MSS was not able to specifically identify
such items, G&A has been reduced by 50% of the contingency or $12,500.
Profit: Due to the adjustments recommended above, HF&H recommends decreasing MSS' profit by
$24,018 based on a 90.5% operating ratio.
Interest: The reduction of one route results in one less truck to be financed. Therefore, interest has
been reduced by $7,393.
Franchise Fees: MSS did not include franchise fees in the compensation calculation. HF&H used an
average Franchisors' franchise fee percentage of 9.885% and increased franchise fees by $99,561.
The following is a summary of HF&H's proposed adjustments to MSS' projected expenses, and profit for
the additional services.
MSS Annual Revenue Requirement $ 1,267,378 _L_(160,656) $ 1,106,722
Ten Months Revenue Requirement $ 1,056,148 $ (133,880) $ 922,268
2010 Projected Commercial & Residential Route Revenues $ 21,023,467 $ 21,023,467
Calculated Rate Adjustment 5.02% 4.39%
Ten Months Revenue Requirement $ 922,268
2010 Projected Residential Route Revenues $ 9,459,395
Calculated Rate Adjustment - Residential Rates Only 9.75%
1.3 December 29, 2010
Exhibit 3
Marin Sanitary Service
Residential Yard Waste Collection
Adjusted
MSS Proposed
HF&H
Proposed
Costs
Adjustments
Costs
Operating Expenses
Wages
$ 362,531
$ (123,664)
$ 238,867
Benefits
266,359
(83,644)
182,715
Disposal Fees
-
(2,873)
(2,873)
Fuel & OK
93,000
(30,600)
62,400
Maintenance Expense
96,250
61,150
157,400
Depreciation/Leases
183,384
(36,677)
146,707
Other Operati ng / G&A
112,000
(12,500)
99,500
$ 1,113,524
$ (228,807)
$ 884,717
Operating Profit
90.5% 116,889
(24,018)
92,871
Interest Expense
36,965
(7,393)
29,572
Franchise Fees (Avera ge%)
-
99,561
99,561
MSS Annual Revenue Requirement $ 1,267,378 _L_(160,656) $ 1,106,722
Ten Months Revenue Requirement $ 1,056,148 $ (133,880) $ 922,268
2010 Projected Commercial & Residential Route Revenues $ 21,023,467 $ 21,023,467
Calculated Rate Adjustment 5.02% 4.39%
Ten Months Revenue Requirement $ 922,268
2010 Projected Residential Route Revenues $ 9,459,395
Calculated Rate Adjustment - Residential Rates Only 9.75%
1.3 December 29, 2010
Franchisors of Marin Sanitary Service Section VI. Rate Adjustment
Review of Marin Sanitary Service's 2011 Rate Application
SECTION VI. RATE ADJUSTMENT
Rate Ad
justmei,it
Current Services
Based on a revenue requirement of $22,388,647 for the calendar year 2011, resulting from our
recommended adjustments to MSS' projected expenses and profit for the current services, we
recommend a rate increase of 6.50%, effective January 1, 2011.
This rate increase of 6.50% results primarily from:
1) An overall net increase in operating costs, primarily from: benefits increase due to increased
workers compensation rates; fuel price increases; and increased disposal costs resulting from a
significant downward adjustment (approximately $330,000) in the prior year not repeating in
the current year. In setting the rates for 2010, reductions to the disposal expense were
primarily the result of the reconciliation of 2009 disposal expense projected in 2008 to the
actual 2009 disposal expense. Similar adjustments for declines in volume from prior years did
not occur in the current year review.
2) A decrease in projected revenue due to a decrease in actual subscription revenues vs. projected
2010 revenues.
New Services
Based on an additional revenue requirement of $922,268 for residential foodwaste collection services
resulting from our recommended adjustments to MSS' projected expenses and profit, we recommend
an additional rate increase of 4.39% if the revenue requirement is applied to both the residential and
commercial customer base. An additional rate increase of 9.75% to the residential and apartment
customer base is necessary if the costs for the new program are to be included solely in the residential
and apartment rates. The rate increase will provide the additional equipment, labor, public outreach,
and other costs necessary to implement the foodwaste collection program in the franchised area.
The following table shows the components of the rate increase:
1.4 December 29, 2010
Franchisors of Marin Sanitary Service Section VI. Rate Adjustment
Review of Marin Sanitary Service's 2010 Rate Application
Rate Increase Components
Foodwaste Collection
Foodwaste
Adjustment to Residential &
Collection
Apartment Customers Only
Residential &
Adjustment to
Entire
Apartment Commercial
Customer Base
Rates Rates
Current Services
Benefits
0.71%
0.71% 0.71%
Fuel
0.79%
0.79% 0.79%
Disposal
3.05%
3.05% 3.05%
Other Operating Costs*
-0.16%
-0.16% -0.16%
4.39%
4.39% 4.39%
Franchise Fees and Projected
2011 Revenue Shortfall
2.11%
2.11% 2.11%
6.50%
6.50% 6.50%
New Services
Residential Food Waste Collection
4.39%
9.75% 0.00%
Total Rate Increase
10.89%
16.25% 6.50%
*Includes wages, depreciation, other vehicle -related costs, general & administrative costs (e.g.,
public education, customer service, etc.) and various otheroperating costs.
15 December 29, 2010
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' 1 cu yd containers not available. Rates reflected hereare for 1.5 cu.Vds.
2 City has one rate for unlimited residential solid waste callection from customer -provided containers
'Largest residential can Is 45 gallon
4 Smallest Commercial Bin Is 2 yd.
'Largest commercial bin is 2 yards.
Attachment 4
Bay Area Rate Survey
- With Franchisors
Group Residential Foodwaste
Collection
Rn s. Sinele-Familu
Commercial
IYD Bin IYD Bin
3YD Bin
3YO 01.
Jurisdiction
County
30-35G.I. 60-6413al. 90.96G.I.
lx week 3v week
jd&ML..
3v week
City of Alameda
Alameda
5 3095 $
51,67 $
72 17
S
117.21
35EL66 $
35164 S
1,075,99
City of Albany
Alameda
5 2477 $
4182 $
6087
98.73 S
29619
296.21 S
BEIS 63
City of Berkeley (District 1 & 2)
Alameda
S 2756 $
55.10 $
8262
S
133.47 S
376,07 5
36938 5
1,097.15
City of Aa,kd.y (District 3)
Alameda
$ 29,09 $
58.14 $
0720
S
133..47 S
376,07
369.311 S
1,097.15
City of Dublin
Alameda
S 1799 $
33,04 S
4909
5
80.21 $
280,55
240.,63 5
761 B1
City of Emeryville
Alameda
S 1181 $
23.51 S
35.41
S
69.59 $
208,77 $
208.79 $
62637
City of Fremont
Alameda
S 25.71 S
28.16 $
41..44
73.89 S
21155 $
166.10 $
489,17
City of Uvermare-
Alameda
$ 19.29 S
42.40 S
70.36
9061 5
282.69 $
27162 S
866.03
City of Newark
Alameda
$ 20.89
36,99 $
53.08
$
8I.89 $
226,19 S
216,65 5
590.87
City of Oakland-
Alameda
S 27.68 S.
6036 $
93.00
$
129-95 $
41157 S
340.70 $
1,073.93
Cit y at Piedmont''
Alameda
S 47.71 $
55.70 $
65.26
S
149.64 S
421.81
N/A
WA
City of Pleasant..
Alameda
S 29.13
N/A S
3457
$
122,73 S
321,20 $
350.49 $
945.,69
City of San Leandro
Alameda
S 23.22 $
38..64 $
54.05
S
101,80 S
307,75 S
30775 S
92128
City of Union City
Alameda
5 36,58 S
64.19 S
91.110
$
114.15 $
31527.$
299,13 S
81522
Castro Valley Sanitary District
Alameda
30.89 S
56 65 S
76.45
S
218.54 $
65557 S
581,62 5
1,.630.29
Oro Loma Sanitary District (LI & 2) unincoris Alameda & Hayward-
Alameda
$ 12.15 $
2434 $
36.49
$
94.98 S
221,50 S
23130 S
611,27
Oro Loma Sanitary District 11.3) San Leandro'
Alameda
S 13.67 5
27.71 $
41.5131
$
108,17 S
252,27 5
26191 $
69612
City of Richmond
Contra Costa
S HAS 5
54,33 $
80.92
$
193.06 S
48932 S
439.83 5
1,ZCi3L97
City of San Pablo
Contra Costa
27.57 5
52,53 S
78.24
$
205,27 S
521.71 S
477,96 S
1312.82
City of El Cerrito
Contra Costa
S 34.04 5
68,08
N/A
$
200.08 S
546,49
N/A
WA
City of Hercules
Contra Costa
20.01 S
49,46 $
71.57
214,27 $
543,38 5
496.03 $
1,362,65
City of Pinole
Contra Cast.
28.80 S
51.20 $
74.27
219.29
555,26 S
55525 $
1,39030
UnInmri, -West Contra Costa
Contra Costa
29.36 $
5631 S
03.85
$
19940
505.84 S
45399 $
1,242,7B
Town of Fairfax-
Marin
22.53
45,06 $
67.59
$
132..40
313,65 S
310.45 $
812,60
Town of San Anselmm"
Marin
S 23.13 S
46,28 $
69.43
N/A
N/A
379,52 S
1,138,61
City of BelvedereMarIn
$ 32.67
N/A
N/A
S
161611 $
446.62
N/A
WA
City of NovatoMarla
17.22 $
3442 $
51.63
NIA
N/A S
22433 $
556.61
City of S.-Ift.
Marin
S 3Z 10 S
64.15 S
96.25
$
12665 S
379,96
379,96 5
1,139,87
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Marin
$ 3026
N/A
N/A
$
14390
39295
N/A
N/A
Town of Corte Madera".
Marin
5 2553
N/A
N/A
$
11942
32224
NIA
N/A
City of Mill Valley-
Marin
32.16
N/A
N/A
$
14246
363,45
N/A
WA
City of San Rafael
Maria
S 27.67 $
55,33 S
83.00
$
178,60
54609
341,82 S
970,18
Las Gallinas County
Maria
5 24.58 $
49 17
73.75
5
17603
52B 59
356,20 S
99420
City of Larkspur
Marin
S 2797 $
5593 S
83.90
$
17757
53256 5
356,63
935.10
Town of Ross
Marin
26.90 S
5380 $
80.71
NIA
N/A S
345.42 $
1,03615
County (RVSD.S)
Marin
S 27.30 S
5679 S
88.59
$
230.34
583.96 5
356.21 5
935.40
County - Marin Franchisors' Group
Marl.
S 26.54
55.20 $
86.12
N/A
NIA $
356.00
929.61
City of C..Pb.1 It
Santa Clara
5 21.08
42,16 S
63.24
S
105.55
319.64 5
211.10 S
63918
City of Cupertino"
Santa Clara
$ 21.33
4266 S
63.99
S
124.40 $
373.23 S
199.05
597,14
City of Los Altos
Santa Clara
S 28.11 S
5623 $
84.34
S
110.31 $
330.94 $
330.94 S
992.82
City of Mania Serena'
Santa Clara
$ 25.29 S
5057 5
75.86
$
144.56 5
437.85 $
289.12 S
875.70
Ci ty of Mountain Vi--
Santa Clara
$ 19.95
37.90 $
56.135
$
102.75 $
308.35 $
291.10 S
839..55
City of Pal. Alt.
Santa Clara
$ 32.96
67.84 $
101.76
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209.04® $
562.20® S
480.38 S
1,386.17
City of San Jose
Santa Clara
S 27.50 $
55,00 $
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N/A
NIA
N/A
N/A
City of Santa Clara
Santa Clara
20.65 S
30.W 5
39.55
S
60.86 $
176.08 $
170.45 5
483.76
City of Sunnyvale
Santa Clara
S 28.70 S
3505 $
41.40
5
115.00 S
34499 S
288.59 5
865.77
City of Saratoga'
Santa Clara
5 22.44 S
44.06 S
67.33
S
142.70 $
432.40 $
285.40 S
864.81
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Santa Clara
5 34.65 S
69,30 S
103.94
$
87.24 $
183.71 S
136.50 S
31918
Town of Los G.t.,t'
Santa Clara
S 20.62 S
4124 $
61.86
115.98 S
351.33 S
231.97
70267
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Marin Independent Journal
Legal No 0003825330
CITY OF SAN RAFAEL
150 Alameda del Prado
NOTICE OF Pt18LIC Wfll 6
PO Box 6150
Novato, California 94948.1535
The City Council of the City of S an Rafael will hold
a public hearing:
(415) 382-7335
PURP05E:
legals@marinij corn
Public Hearing: To consider a request by Marin
Sanitary Service for a rate increase for refuse col-
lection and recycling services and adaption of
Resolution amending agreement setting maximum
rates for the year 2011.
SAN RAFAEL,CITY OF
MondaYl FMebpuAr 7,2011,at8:00p.m.
PO BOX 151560/CITY CLERK, DEPT OF PUBLIC
%FifhAvenCouncil amber,
1400 Fifth Avenue, San Rafael
WORKS,1400 FIFTH AVE
WHAT WILL HAPPEN:
SAN RAFAEL CA 94915-1560
You may comment on the proposedResolution,
The City Council will consider all public testimony
and will then decide whether to approve the Res-
olution.
PROOF OF PUBLICATION
IF YOU CANNOT ATTEND:
You may send a letter to Esther C.Beirne,
City Clerk, Clty of San Rafael, P.O. Box 151560,
San Rafael, Cd 94915-1560. You may hand
2015.5 C.C.P.
also
deliver a letter to the City Clerk prior to the
meeting.
FOR MORE INFORMATION:
STATE OF CALIFORNIA
You may contact Stephanie Lovette, Economic
Development Coordinator, at (415) 485-3383. Office
hours are Monday through Friday, 8:30 am. to 5:00
County of Marin
pm.
SAN RAFAEL CITY COUNCIL
/s/ ESTHER C. BEIRNE
FILE NO. 0003825330
ESTHER C. BEIRNE, City Clerk
no. 27 Jan. 21, 28, 2011
I am a citizen of the United States and a resident of the County
aforesaid: I am over the age of eighteen years, and not a party to
or interested in the above matter. I am the principal clerk of the
printer of the MARIN INDEPENDENT JOURNAL, a newspaper of
general circulation, printed and published daily in the County of
Marin, and which newspaper has been adjudged a newspaper of
general circulation by the Superior Court of the County of Marin,
State of California, under date of FEBRUARY 7, 1955, CASE
NUMBER 25566; that the notice, of which the annexed is a printed
copy (set in type not smaller than nonpareil), has been published in
each regular and entire issue of said newspaper and not in any
supplement thereof on the following dates, to-wit
1/21/2011, 1/28/2011
1 certify (or declare) under the penalty of perjury that the foregoing
i5 true and correct
31t day of January, 2011.
Da?te'dy
Athis
14_s
Signature
PROOF OF PUBLICATION
EXHIBIT E
CITY OF SAN RAFAEL
ROUTING SLIP / APPROVAL FORM
INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT,
ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY.
11
SRRA / SRCC AGENDA ITEM NO.All—P
DATE OF MEETING: 2/7/2011
FROM: _Stephanie Lovette
DEPARTMENT: Economic Development
DATE
TITLE OF DOCUMENT:
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 RETROACTIVELY TO JANUARY 1,
2011.
Department Hea (signature)
*** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***
(LOWER HALF OF FORM FOR APPROVALS ONLY)
APPROVED AS COUNCIL / AGENCY APPROVED AS TO FORM:
AGENDA ITEM:
City Manag (signature) City Attorney (signature)
NOT APPROVED
REMARKS:
City of San Rafael
City Council
Contact Form
Thank you for visiting the City of San Rafael website. This form is available to facilitate
contacting our Mayor and Councilmembers concerning topics of interest to the community.
Please contact the City Manager's office at 415-485-3070 for any additional assistance.
* First Name
steve
* Last Name
ziman
Address 1
Address 2
City
san rafael
State
ca
Zip Code
94901
Phone Number
* Email Address
* Send email to (select one)
Mayor Albert J. Boro
* Please enter your questions/comments below
I am writing to support the item to approve the rate increase for MSS (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, 2011 (CM). As a
relatively new resident of San Rafael, I was surprised and disappointed that we did not have
such a program in place. Having lived in San Francisco for 35 years prior to my move, I can
speak first hand how their program reduced the overall waste going into my garbage can.
Moreover, given the size of my yard in San Francisco and my yard now, which is at least three
times as large, twice a month collection of our green cans just is insufficient. I urge you and
the Council to support this rate hike.
City of San Rafael
City Council
Contact Form
Thank you for visiting the City of San Rafael website. This form is available to facilitate
contacting our Mayor and Councilmembers concerning topics of interest to the community.
Please contact the City Manager's office at 415-485-3070 for any additional assistance.
* First Name
Lisa
* Last Name
Moskow
Address 1
Address 2
City
San Rafael
State
Zip Code
94901
Phone Number
* Email Address
* Send email to (select one)
Councilmember Barbara Heller
* Please enter your questions/comments below
We would like the "smart" meter issue to be on the city council agenda. We would like the city
council to officially endorse Huffman's AB 37 bill in the state legislature.
M
RESOLUTION NO. 13104
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, 2011.
WHEREAS, the City of San Rafael and Marin Sanitary Service have entered into a written
Amendment and Restatement Agreement dated September 4, 2001; and
WHEREAS, Section 3(B) of the Amendment and Restatement Agreement provides for
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 Amendment and Restatement Agreement provides for
approved rate setting tables, as amended, to be included as part of this Agreement; and;
WHEREAS, Marin Sanitary Service has submitted a rate application request using the
methodology outlined under Section 3(A) of the Amendment and Restatement Agreement; and
WHEREAS, the City of San Rafael has conducted a review of said rate application and
produced a report recommending some 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 following schedule of maximum rates and fees, attached hereto as "Exhibit C' are
hereby approved to be collected by Marin Sanitary Service for refuse and recyclable
material collection and disposal services, to be effective, retroactive to January 1, 2011.
Said "Exhibit C" shall be incorporated as the revised "Exhibit C' and shall be included as
part of the Amendment and Restated Agreement dated September 4, 2001.
I, Esther C. Beirne, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution
was duly and regularly introduced and adopted at a regular meeting of the City Council of the
City of San Rafael, held on Tuesday, the 7th of February, 2011, by the following vote, to wit;
AYES: Councilmembers: Brockbank, Connolly, Heller, Levine & Mayor Boro
NOES: Councilmembers: None
ABSENT: Councilmembers: None
ESTHER C. BEIRNE, City Clerk