HomeMy WebLinkAbout2005-06-15; City Council; MinutesSPECIAL MEETING OF:
DATE OF MEETING: June 15,2005
TIME OF MEETING:
PLACE OF MEETING:
CITY COUNCIL WORKSHOP
11 :OO a.m. - 5:OO p.m.
1635 Faraday Ave, Room 173A
The Mayor called the meeting to order at 11:OO A.M. Mayor Pro Tem Hall, Council
Members Packard, and Sigafoose present, Council Member Kulchin absent, who was
out of town on City business at the transforming local government conference hosted by
the Innovation Groups.
The Mayor called for regional reports. Council Member Sigafoose reported on NCTD
affairs and the upcoming NCTD board of directors meeting which will be dealing with
the Sprinter Commuter Railroad and considering and approving the 2005/2006 fiscal
year budget.
The Mayor called for discussion of possible regulation of parking of oversized vehicles
on City streets. Traffic Engineer Bob Johnson presented the report and explained the
background and history of complaints of the parking of oversized vehicles on public
streets. Lieutenant Rawson prepared and delivered a report on complaints. (See
attached). Oversized vehicles would need to be defined by the City Council. Several
California cities are now trying to regulate oversized vehicles. The Second District
Court of Appeal issued an opinion that would allow cities to regulate oversized vehicles.
Under the Courts opinion, cities can very narrowly tailor the regulation of oversized
vehicles where necessary. However, in the court case, signage was a problem in the
City of Santa Barbara. Traffic Engineer Johnson distributed a photo of signs in Vista
(attached). The Mayor inquired whether or not the City had the power to absolutely
prohibit the parking of oversized vehicles. The City Attorney will research that issue and
then report to the Council at a future date.
Mr. Johnson further explained the permit system in use by several California cities.
Mayor Pro Tern Hall asked for a review of the history of complaints and whether the
Council should entertain a remedy distinguishing between residents and non-residents.
Lieutenant Rawson joined the Council and passed out a one-page diagram entitled
“Carlsbad Police Department Recreational Vehicle-Related Calls for Service December
2003 to November 2004” (copy attached). Mr. Johnson explained the usual exceptions
in ordinance schemes. Mayor Pro Tem Hall inquired whether or not this was a severe
and pervasive problem. Lieutenant Rawson responded that his department received
four to five calls per week and that those are distributed throughout the City and
involves neighborhood complaints, involving vehicles driven by citizens and visitors.
The Mayor inquired about striping of parking spaces to indicate the size of the vehicle
that could be parked. Council Member Sigafoose remarked on the practice by some
oversized vehicle drivers who place traffic cones on the streets in order to “reserve” the
parking space. Lieutenant Rawson explained that this violates state law and can and is
Note: Exhibits Referenced in Minutes are
On File in the City Clerk’s Office.
being enforced. Council Member Sigafoose continued inquiring whether or not some
striped parking places, if this is the selected option, could be reserved for the parking of
oversized vehicles. Mr. Johnson indicated that staff would need to research this option.
Mr. Johnson further explained the 1/10” of mile rule as it pertains to the 72-hour
limitation on parking and pointed out that some cities couple this requirement with a
500-foot restriction on re-parking from the space from which the vehicle was removed.
Chief Zoll joined the discussion and explained that his department had received
complaints of oversized vehicles parking from one neighborhood to another. Mayor Pro
Tem Hall explained that this is because there are insufficient RV parking storage sites
within the City. Mr. Johnson then explained the policy options before the City Council
with the aid of a one-page handout. (Copy attached). Council Member Sigafoose felt
there was a need to consider an ordinance regulating oversized vehicles since there
was a need for this regulation. Council Member Packard indicated a willingness tb look
at a focused solution to the beach area oversized vehicle parking issue but otherwise
felt that a citywide prohibition on oversized vehicles was in effect a prohibition on
owning them. Mayor Pro Tem Hall felt a need to carefully define oversized vehicles in a
proposed ordinance and did not feel the need to prohibit oversized vehicles throughout
the City.
The Mayor expressed a need to protect the beach area by increasing the fines for
violation of the 72-hour parking restriction and consider other means and methods of
enforcement. Mr. Johnson indicated that he will look at the best city ordinances
available and return to a City Council Workshop in September 2005.
The Mayor then called for a discussion of the solid waste report. The issue was
presented by Public Works Manager Linda Kermott with the assistance of Laith Ezzet,
Senior Vice President, Hilton Famkopf & Hobson LLC. Public Works Manager Kermott
introduced the item with the aid of a power point presentation and a report entitled
“Review of Existing and Desired Solid Waste Services and Contract Terms” (both on file
in the office of the City Clerk). The Mayor called for a lunch break at 12:15 and working
through lunch the Council continued its discussion and was rejoined by Public Works
Manager Kermott and Mr. Ezzet for continued discussion. Mayor Pro Tem Hall
mentioned the possibility of a pilot program, favored continuing unlimited trash collection
even with an automated collection option. Mr. Euet summarized the workshops
objectives as follows:
Maintain the existing contract, renegotiate with the current contractor or seek
competitive proposals?
Include a contract provision for an option for automated solid waste collection.
Consider a multiple year solid waste collection contract if enhanced services
could be provided or rates reduced.
1.
2.
3.
The Mayor inquired why any change was necessary since citizen satisfaction is at a
high level? The City Manager explained the need for increased recycling efforts since
the statewide goal under AB 939 is 50% and the City has recently dipped below that
Note: Exhibits Referenced in Minutes are
On File in the City Clerk’s Office.
standard. No Council Member was interested in a multi-year contract and was satisfied
with the existing evergreen annual contract term.
The proposed operating budget for fiscal year 2005/2006 will be considered by the City
Council in its meeting of June 21, 2005 and contains a proposed increase of 6.1 % over
current rates for residential solid waste services and 7.2% increase over current rates
for commercial solid waste services.
Staff will return to the City Council at a future workshop in the next 90 days.
The Mayor called for public comment and there being none, he thanked staff for their
fine presentations and Council Members for their thorough and complete participation
and adjourned the meeting at 1254 P.M.
Respectfully submitted, n
RONALD R. BALL
City Attorney
as Clerk Pro Tem for the meeting
January 27,2005
Memorandum
TO: Bob Johnson
FROM: Don Rawson
RE: RV-RELATED CALLS FOR SERVICE
I looked at total calls for service involving RV's from December 1, 2003 to
November 30, 2004. I defined RV's as a motor home, recreational vehicle,
camper, camping trailer, or fifth wheel trailer. Calls for service included all citizen
complaints to dispatch as well as officer initiated contacts in the field.
During the study period I found:
J 128 Citizen complaints about RV's parked longer than 72 hours
J
J
J
J
58 Citizen complaints of illegally parked RV's
19 Citizen complains about suspicious RV's
3 Citizen complaints about abandoned RVs
18 Officer initiated contacts about abandoned RVs
226 TOTAL RV-RELATED CALLS FOR SERVICE
These averaged approximately 4.3 calls for service every week for the entire
year (and this did not include CAD information not available for December 2003).
Some of the calls included repeat calls for service on the same RV. I then
discounted the RV's involved in multiple calls for service and still had 182
different RV's in the study period.
Hope this information helps in defining the scope of the problem.
Respectfully, -=z w
Lieutenant Don Rawson
Traffic Commander
Carlsbad Police Department
Carlsbad Police Department
RV-Related Calls for Service
December 2003 - November 2004
REGULATION OF OVERSIZE VEHICLES
CITY COUNCIL POLICY DECISIONS
1. PURSUE AN ORDINANCE REGARDING THE REGULATION OF
OVERSIZE VEHICLES?
2. LOCATION - SHOULD ALL CITY STREETS BE INCLUDED?
CITYWIDE REGULATION? MORE SIGNS - MORE COSTLY.
LIMITED REGULATION? FEWER STREETS - LESS
VEHICLE MOVES TO NON-REGULATED STREET.
COSTLY -
3. WHAT TYPES OF VEHICLES TO REGULATE? INCLUDE ALL
OVERSIZE VEHICLES?
4. PERMIT ISSUANCE - DURATION AND NUMBER PER YEAR?
5. GUEST PERMITS?
6/19/05
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HILTON FARNKOPF & HOBSON, LLC Northern California
Advisory Services to Southern California
Municipal Management Central California
Robert D. Hilton, CMC
John W. Farnkopf, PE Laith B. Ezzet, CMC
-.(.-
3990 Westerly Place, Suite 195
Newport Beach, California 92660
Telephone: 949/25 1-8628
w. hth-cons~ltants.com
I
Fax: 9491251-9741
June 8,2005 -
Ms. Linda Kermott
Public Works Manager
City of Carlsbad
Carlsbad, California 92008
.-
- 1635 Faraday Avenue
Review of Existing and Desired Solid Waste Services and Contract Terms
Dear Linda:
We have completed our review of the City’s solid waste programs and contract terms.
The enclosed report describes the study’s background, objectives and findings. An
executive summary of the study findings is provided below.
Generally, we found that:
Current services are not fully described in the agreement. . Key contract requirements are not addressed, such as the bench marking procedure
that he City uses to evaluate rate adjustment requests. . There is not an AB 939 indemnification that would protect the City against fines
levied by the California Integrated Waste Management Board (CIWMB) for failure
to meet the AB 939 50% waste diversion requirement.
The rate adjustment procedure is open and unstructured.
The insurance limit of $1 million is unreasonably low.
The scope of roll-off box services is unclear.
-
_..-
I
LTON FARNKOPF & HOBSON, LLC
Linda Kermott
June 8,2005
Page 2 of 3
Additional findings regarding specific objectives are described below.
Objective
1. Evaluate contract term lengths which
might best benefit the City.
2. Iden* alternative rate adjustment
methods.
3. Compare the advantages of
automated cart service versus the
advantages of manual can service for
residential customers.
4. Compare flat rates for residential
refuse service to cart rates based
upon the number and/or size of the
refuse cart distributed.
5. Compare the advantages of
providing exclusive versus non-
exclusive roll-off box services.
6. Compare the City of Carlsbad’s rates,
net of jurisdiction fees, to those in
other San Diego County cities.
7. Contrast the re-negotiation of the
current contract with the competitive
procurement of proposals.
~ ~ ~~ Finding
would be a fixed five to seven year term
with a 12-month extension option at City’s
sole discretion.
review procedure would provide the City
with a suitable rate adjustment method. A
combination of these two methods would
provide the benefits of both, while limiting
required staff effort.
3. Automated cart service would improve
the City’s appearance and increase
diversion. Customers would need to
adapt to new waste generation
urocedures.
1. The preferred term length for the City
2. Either a rate adjustment index or a rate
I 4. Charging customers based on the number
and/or size of their refuse carts provides
an incentive to recycle. Some customers
would receive rate increases while others
would receive rate decreases.
customers with a choice of service
5. Non-exclusive roll-off service provides
providers, but is more difficult to monitor.
5. Based on September 2004 survey data, the
City of Carlsbad’s residential rate, and
commercial rate for a 3-yard bin collected
once per week (a common service level),
are the lowest in San Diego County.
7. The City may attempt to negotiate a
competitive, comprehensive contract with
its current hauler, and still seek
competitive proposals if desirable contract
terms are not achieved through
negotiations.
TON FARNKOPF & HOBSON, LLC
Linda Kermow
June 8,2005
Page 3 of 3
Next Steps
We are ready to proceed with the preparation of the City’s new comprehensive
integrated solid waste collection and recychg agreement. The basic parameters are
summarized 1JI Attachment 1 and are based on our discussions with City Staff and our
understand-g of the solid waste industry and may be further modified based on
Council direction. Based upon direction regarding the Council‘s desired contracting
strategy, we will either begin negotiations with Waste Management or prepare for a
competitive procurement.
*****
We have enjoyed working with the City of Carlsbad and look forward to preparing the
ciq’s new, comprehensive integrated solid waste collection and recycling agreement.
Please contact me at 949/251-8902 if you have any questions.
Very truly yotlrs,
Laith Ezzet, CMC
Senior Vice President
CITY OF CARLSBAD
I1
I11
Review of Existing and Desired
Services and Contract Terms
Solid Waste Services Agreement Review
Findings 4
3
TABLE OF CONTENTS
I Section I Contents 1-1 1 I I Background and Study Purpose 111
Attachment 1:
Attachment 2:
Existing and Desired Services and Contract Terms
County of San Diego Rates
SECTION 1
BACKGROUND AND STUDY PURPOSE
Background
The City of Carlsbad (”City”) contracts with Waste Management for exclusive
residential and commercial waste hauling services. The Waste Management
agreement automatically renews annually for another year unless terminated by
written notice by January 1 for termination on June 30 (“evergreen contract”).
California Assembly Bill 939 requires all jurisdictions to divert 50% of their solid
waste. The City’s preliminary diversion rate for the year 2003 is 48%.
Residential refuse and green waste are collected manually using customer provided
barrels. Residential recycling is provided using two crates for separated materials.
me City is interested in securing an agreement with improved recycling and other City
services, and updated contract terms to be consistent with those contained in a
comprehensive agreement.
Study Purpose
The general purpose of the study was to review the existing solid waste agreement and
to idenbfy improvements that would make it consistent with terms and conditions of a
comprehensive agreement. Those findings are described in Section 2 of this report with
details provided in Attachment 1.
During our review of the City’s current and desired services, several areas of interest
required further evaluation. The following seven objectives are addressed in more
detail in Section 3 of this report:
Objective #1: Evaluate contract term lengths which might best benefit the City.
Objective #2: Identrfy alternative rate adjustment methods.
Objective #3: Compare the advantages of automated cart service versus the
advantages of manual can service for residential customers.
Objective #4: Compare flat rates for residential refuse service to cart rates based upon
the number and/or size of the refuse cart distributed.
Objective #5: Compare the advantages of providing exclusive versus non-exclusive
roll-off box services.
June 8,2005 1 city of Carlsbad
Objective #6: Compare the City of Carlsbad’s rates, net of jurisdiction fees, to those in
other San Diego County cities.
Objective #7: Contrast the re-negotiation of the current contract with the competitive
procurement of proposals.
June 8, 2005 2 City of CarZsbad
SECTION 2
SOLID WASTE SERVICES AGREEMENT REVIEW
Attached is our Solid Waste Services 4greement Review (Attachment l), in which we
detail contract and service issues in the current agreement. HF&H prepared a draft
document comparing industry standards and various options available for key contract
requirements to the current service arrangements. After reviewing the options with
City staff, HF&H updated the document to reflect the appropriate option or options for
the City of Carlsbad to consider, considering the City’s unique needs. Funding
suggestions for particular services have been noted within this document. In summary,
we have made the following observations regarding the overall agreement:
= Current services are not fully described in the agreement. Some services currently
being provided are inadequately described or not mentioned in the agreement. The
City’s rate schedule references services, such as residential and commercial green
waste and backyard services, that are not described in the agreement.
= Key contract requirements are not addressed, such as the bench marking procedure
that the City uses to evaluate rate adjustment requests.
There is not an AB 939 indemnification that would protect the City against fines
levied by the California Integrated Waste Management Board (CIWMB) for failure
to meet the AB 939 50% waste diversion requirement.
The rate adjustment procedure is open and unstructured. The hauler may request
increases for any costs it considers unforeseen and can terminate the agreement if it
is not satisfied with the City’s response. A more structured rate adjustment
procedure could provide more long-term stability.
The insurance limit of $1 million is unreasonably low.
The scope of roll-off box services is unclear. The agreement does not exclude roll-off
box services from its scope, but neither does it describe the service nor idenw
maximum service rates.
June 8,2005 3 City of Carlsbad
SECTION 3
FINDINGS
Objective #I: Evaluate contract term lengths which might best benefit the City.
Finding #1: The preferred term length for the City would be a fixed five to seven
year term with a 1Zmonth extension option at City’s sole discretion.
The City currently has a contract with a one-year ”evergreen” term that automatically
renews mually. This contract may be terminated upon 180 days’ notice, which can
inhibit the hauler’s investment in programs and equipment intended for long-term use.
The depreciation period for collection vehicles is typically ten years. Automated carts
have a useful life of seven to ten years. Terms shorter than five years provide
inadequate time to amortize equipment costs and can lead to higher rates. Terms
longer than the depreciation period may not offer sigruficant cost savings, may result in
the hauler using older equipment, and may delay the City from updating services with
each new agreement. A typical fixed term is from five to ten years.
Automatic renewal features with evergreen terms longer than one or two years severely
limit a city’s contracting flexibility and bargaining position. When new services or
improved contract terms are desired, there will always be si@cant time left under the
agreement term, weakening the City’s bargaining position. The City must either come
to terms with the hauler, or go to Council to terminate the automatic renewal feature
and wait out the remaining term. Fixed term contracts ensure that the City periodically
has the opportunity to update the contract.
Objective #2: IdentLfy alternative rate adjustment methods.
Finding #2: Either a rate adjustment index or a rate review procedure would provide
the City with a suitable rate adjustment method. A combination of these
two methods would provide the benefits of both, while limiting required
staff effort.
The primary goal in any rate adjustment methodology is to develop rates that will allow
the contractor to recover changes in the cost of service and earn a reasonable profit. The
method of adjustment selected depends on the requirements of the contracting city.
The factors used in determining the method used include, but are not limited to: . . . . Ease of explanation; . Accuracy; and, . Results
Ease of use and time required;
Cost of review and evaluation;
Effort required by city staff;
lune 8,2005 4 City of Carlsbad
Benchmarking Method
The City of Carlsbad and a small number of other cities use benchmarking to evaluate
rate adjustment requests by comparing their rates to rates in other cities. In a sample
benchmarking procedure, total residential rates in surrounding communities are
compared. In more sophisticated bemhmarking procedures, contractor rates for similar
services are compared. Because of the unique collection characteristics in each city, and
sigruficant differences in contract requirements, benchmarking on an “apples to apples”
basis can be very difficult.
The City of Carlsbad uses a form of the benchmarking method to place a cap on its
contractor’s rate increase requests. The current agreement allows for the contractor to
request adjustments for cost increases that it may incur, subject to approval of the City.
City policy is to maintain City rates among the lowest third of the rates in the County.
This benchmarking policy is not included in the agreement, but is used by the City
when evaluating a request for a rate increase.
There are two other primary adjustment methods used in California:
1. Rate Adjustment Index Method
2. Rate Review Method (cost of service plus profit)
There are jurisdictions that apply a combination of these methods.
Rate Adjustment Index Method
The rate adjustment index method generally uses one or more published price indices
or a weighted average of a group of selected indices. The contractor’s cost is segregated
into the major components, such as: a) disposal cost; and b) service costs (usually
adjusted by the Consumer Price Index or Producer Price Index). However, the
contractor’s cost factors above can be segregated into more detailed components, such
as:
Disposal cost;
Labor;
Fuel;
Insurance; . . Equipment; and,
All other costs
Truck operating costs (maintenance, parts, repairs, etc.);
The cost components can then be matched with appropriate indices, like a sanitary
labor index, a diesel fuel or natural gas index, an equipment index for heavy trucks, and
other price indices published by the U.S. Bureau of Labor Statistics. The various indices
......
June 8, 2005 5 City of Carlsbad
--
can be used individually or developed into a weighted-average index based on the
contractor’s actual cost components.
The disposal cost adjustment is generally based on the actual changes in the tipping fees
at the specific disposal facilities used by the contractor. If the contractor owns the
disposal facility, then disposal cost adjustments are usually capped based on changes in
the CPI or set based on published prices at other third-party disposal sites.
Advantages of the Rate Adjustment Index Method . . Minimal review effort; . Low review cost;
9
The availability of the indices;
Easily understood and explained; and,
A popular methodology throughout California municipalities.
. Disadvantapes of Using the Rate Adjustment Index Method
The resulting rate adjustment may not reflect the contractor’s actual costs;
This method does not allow a review of the contractor’s costs or operational
efficiency; and,
May overstate rate increases over time, particularly if growth in the customer base
allows fixed costs to be spread over a larger number of customers.
Rate Review Method (Cost of Smice Plus Profit)
The rate review method uses the contractor’s actual or projected cost of service, plus an
agreed-upon percentage for contractor profit. The contractor submits a rate adjustment
application reflecting the contractor’s actual and projected costs and calculated profit.
This method requires a review of the contractor’s rate adjustment application either by
city staff or by an outside representative.
Advantages - of the Rate Review Method . . . .
The adjustment is based on the contractor’s actual costs of operation;
Periodic review of the contractor’s costs of operation;
An opportunity to review and evaluate the contractor’s operational efficiency;
Ability to recover cost increases, which may result in more flexibility to mod*
operations to meet city service goals; and,
A popular rate adjustment methodology in Northern California. .
Disadvantages of the Rate Review Method . A substantial effort to review rate adjustment applications;
A substantial time requirement and higher review cost; and,
Potentially reduced incentive for contractor to minimize operating costs.
Some jurisdictions use a blend of the rate adjustment index and rate review methods.
This generally involves the use of the rate review method every two to three years and
June 8,2005 6 city of CarZsbad
the rate adjustment index method in the intervening years. This approach has the
advantage of having an opportunity to review the contractor, s actual cost of service
periodically and the ease and low cost of the rate adjustment index method for the years
in between.
Time Requirement
Easily Understood and Explained
Reflects Contractor’s Cost
Periodic Review of Contractor’s Cost of
Operations
Periodic Review of Contractor’s Operational
Efficiencies
Possibility of Overstating Rate Increases
Over Time
Ability to Recover Cost Increases Resulting
in More Flexibility to Modify Operations to
Meet City Service Coals
Popular Methodology
Low High
Yes No
Not Necessarily Yes
No Yes
No Yes
Yes No
No Yes
Yes, throughout Yes, particularly in
California Northern California
June 8, 2005 7 city of Carlsbad
A summary of the advantages and disadvantages of the alternative methods is
provided in the table below.
Method
Existing
Method
Rate
Adjustment [ndex
Rate Review [Cost Plus
Profit)
Index
combined with Rate
Review
Alternative
Description
Adjust upon hauler
request based on
increased costs; no
specific time period to
submit request;
benchmark rates to
other cities
Adjust rates annually
by the change in a
published index, such
as the CPI, or a
combination of indices
weighted to reflect
cost changes such as
labor, equipment, fuel
and disposal
Adjust rates to recover
actual costs, plus an
agreed upon level of
profit
Rate review every few
years, with an annual
index-based
adjustment in the
intervening years
.ate Adiustment Method!
Advantaees
No automatic annual
Fewer number of rate
Benchmarking policy
increases
adjustments
keeps rates low
compared to other cities
Simple calculation
based upon published
statistics
individual cost
categories in a weighted
index can limit
extraordinary rate
increase requests
Including indices for
Aligns rate increases
with cost increases
Prevents hauler from
reaping a profit windfall
Easily accommodates
service changes without
complex rate
negotiations
Simple calculations in
Aligns costs and rate
the index years
adjustments over long
term
required every two to
three years
reduce costs to capture
savings in between rate
reviews
Rate review only
Hauler incentive to
Disadvantages
No cap on number or
amount of increases
Staff must review
each request
Often results in large
increases
Benchmarking may
not compare similar
services
Actual costs are likely
to fluctuate by
different amounts
than the indices,
particularly over long
periods of time
Greater staff effort to
review and veflfy
hauler request
Reduced incentive for
hauler to minimize
costs
“reasonable and
necessary costs”
Disputes over
Greater staff effort to
review and verify
hauler request in rate
review years
Disputes over
”reasonable and
necessary costs” in
rate review years
June 8,2005 8 City of Curlsbad
Objective #3: Compare the advantages of automated cart service versus the advantages
of manual can service for residential customers.
Finding #3: Automated cart service would improve the City’s appearance and
increase diversion. Customers would need to adapt to new waste
generation procedures.
The City of Carlsbad has suitable streets to accommodate automated cart collection in
most, if not all, of the City. According to City staff, a small area in the northwest
quadrant may be space constrained and may need to retain manual service. Other cities
have accommodated small areas with unique requirements in order to improve the
services throughout the rest of the city.
The current refuse containers, manual green waste barrel and small recycling crates can
be difficult to carry to the curb. Automated carts are wheeled, so despite being larger,
are easier to move.
Cities with automated programs usually have higher residential diversion rates than
cities with manual programs due to extra container capacity provided by the recycling
and green waste carts, and the ease of using the carts.
The City’s contractor currently diverts approximately 35% of the residential waste it
collects. Automation could increase residential diversion to as much as 50% by
diverting approximately 7,500 additional tons per year. Such an increase would
translate to a three percentage point increase in the City’s overall diversion rate. As of
2003, the City reported a 48% citywide diversion rate to the CIWMB. A three
percentage point increase in overall diversion wodd assist the City in reaching the 50%
diversion goal.
Advantages - of Manual Can Service:
No changes in existing customer practices
No cart storage problems
No street parking impacts from containers
No special accommodations required for customers with unique circumstances or
areas unsuitable for automation
Advantages - of Automated Cart Service:
Increased recycling container capacity will increase amount recycled and
improved diversion rate
High quality rolling carts at no additional charge to replace containers currently
purchased by residents
June 8,2005 9 City of Carlsbad
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I
One cart takes less space than two or three cans
Reduced litter from attached cart lids
Improved neighborhood appearance on collection day
Reduced worker injuries and associated cost savings
Increased productivity may result in potentially lower overall costs (cart costs are
sometimes offset by collection efficiency savings)
Automated Cart Purchase
The City has approximately $4 million in a transfer station rental fund, which may be
available for the purchase of carts. Cart costs would be approximately $3.2 &on,
based on an assumption of 26,637 households each with three carts at $40 per cart.
Using the City's Ic'wer capital costs to obtain the carts could result in lover overall costs
to ratepayers. The City has funds available and a refuse company would likely pay
higher financing r,ates than a public agency. A refuse company would amortize the cost
of the carts over the term of the agreement, which may be shorter than the useful life of
the carts. The shorter the contract term, the higher the amount that the company will
need to build into the monthly rate to recover it's costs before the end of the contract.
The City may chai ge a fee to fund the future replacement of the carts, and would be
able to recover its costs over the full cart life, resulting in lower rates and allowing the
City to enter into it shorter contract term.
Objective #4: Compare flat rates for residential refuse service to cart rates based upon
thc number and/or size of the refuse cart distributed.
Finding #4: Charging customers based on the number and/or size of their refuse
carts provides an incentive to recycle. Some customers would receive
rate increases while others would receive rate decreases.
There are three tyl3es of residential rate structures that the City may consider. The
specific rates are used for example purposes only, and the actual rates proposed may be
sigruficantly different.
1. Flat Monthly &:ate
A flat monthly rate may be charged to all residents, regardless of the size or number of
refuse containers -1sed. For example, all residents may be charged $16 per month for
unlimited refuse, recycling and green waste collection.
2. Base Rate Plus Incremental Charge for Additional Refuse Carts
Residents may be charged a fixed monthly rate for a basic service level, such as one
refuse cart, one reqdables cart and one green waste cart. An incremental charge may
be added to this base rate for each additional cart. For example, residents may pay $16
per month for onc refuse cart and an additional $5 per month for each additional refuse
June 8,2005 10 City of Curlsbad
cart. Residents may pay a smaller fee for more than one or two recyclables and green
waste containers, or they may be provided at no charge to encourage recycling.
3. Volume Based Rates
Residents may be charged different rates based on both the number and the size of their
refuse carts. Recyclables and green waste carts would be provided at no charge, or a
small charge per additional cart. For example, customers may pay $20 for each 90-
gallon rehse cart, $16 for each @-gallon refuse cart, or $12 for each 35-gallon refuse
cart. Additionally, special arrangements need to be made to accommodate extra refuse
that will not fit in the cart from time to time. For example, each customer may be
provided two free pickups per year of extra bagged refuse when the refuse cart is full.
Also, extra bagged waste may be collected at no additional charge for a two week
holiday period following December 25 to accommodate the anticipated increase. Each
additional pickup would then carry a charge of, for example, $5.00 per pickup.
Customers that frequently have extra pickups would be required to increase the
number or size of their carts.
Currently, the City has a flat monthly rate with a limit of 10 refuse barrels and 10 green
waste barrels that may be placed at the curb. For practical purposes, the existing "limit"
on &e number of barrels is high enough that residents effectively have unlimited
service. Unlirnted refuse collection does not provide an incentive to recycle.
Benefits of retaining the current flat residential rate structure:
Simplifiedbilling
Perceived rate equity
Avoids rate increase for large generators currently being subsidized by small
generators
Less costly, less difficult cart inventory
No changes in current practices
Benefits to utilizing - a variable rate structure:
Residents pay for the amount of service used based on number and size of carts
(similar to other utilities)
Financial incentive to recycle
Residents see how their generation habits affect solid waste costs
Small volume generators will feel rates are more fair
Volume based rates can provide a strong incentive for customers to recycle in order to
use smaller and less costly refuse containers. However, in practice there can be:
June 8,2005 11 City of CarZsbud
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A. Misuse/Abuse of Carts - Volume based rates do not necessarily result in lower
overall solid waste service costs. Customers may compact refuse into smaller
carts in order to reduce the size of the refuse cart needed, creating difficulties in
emptying out the cart upon collection. A sigruficant financial incentive to
dispose of less refuse may also! result in misuse of recycling carts and increased
contamination of the recycling cart used inappropriately to dispose of excess
refuse. Customers can often downsize one cart size without changing the actual
quantity of solid waste disposed.
B. Limited or No Rate Savings - The cost savings to the hauler from collecting a
smaller cart is less than the rate difference likely required to provide the
incentive for customers to change their behavior. Theoretically, those paying
higher rates for larger carts could supplement lower rates for those using 35-
gallon carts. In practice, the hauler may assume that the majority of customers
will downsize their container size and set rates accordingly, leading to higher
overall rates, with either high large cart rates or rates not sigmficantly different
enough to inspire a customer to recycle more.
C. Increased Costs - Increased cart inventory costs and cart exchange services will
increase hauler costs, due to the need to retain an inventory of, and exchange,
multiple cart sizes.
Objective #5: Compare the advantages of providing exclusive versus non-exclusive
roll-off box services.
Finding #5: Non-exclusive roll-off service provides customers with a choice of
service providers, but is more difficult to monitor.
Roll-off boxes are large containers, typically 10 to 50 cubic yards in size, and often
are used at construction sites. Approximately 23% of the contractor's tonnage is
collected in roll-off boxes. A truck will deliver a new roll-off box container to a site,
and remove the existing container for disposal. As each service requires a separate
truck trip, there are no routing efficiencies from having multiple customers on a
route. As a result, cities have chosen several different ways to have these services
provided. For these services, cities may:
Designate one exclusive service provider; or
Allow multiple service providers, often within the regulatory oversight of a
permit system.
The City of Carlsbads ordinance appears to indicate that the City's franchise hauler,
Waste Management, is the exclusive service provider of roll-off services. Section
6.08.160 of the Municipal Code states "It is unlawful for any person, other than an
employee of the authorized collector or an employee of the city to collect, remove, or
c
June 8,2005 12 City of Carlsbad
dispose of solid waste.. ..” However, outside haulers have been providing this
service as well. Waste Management pays the City a fee to perform these services
and provides the City with tonnage reports. Unpermitted haulers do not pay a
franchise fee or submit reports. This causes a decrease in City revenue and greater
difficulty in confirming proper disposal reporting. If haulers other than the City’s
franchise hauler are allowed to provide service in the City, then the City could issue
permits in order to track tonnage, collect fees due, and ensure that minimum
insurance and other requirements are met.
The City could then consider implementing an ordinance to confiscate containers,
both roll-off boxes and bins, belonging to unauthorized haulers. Unauthorized
haulers can sometimes offer lower rates because they do not pay City fees and meet
other City requirements. This not only impacts the City directly, but provides an
unfair competitive advantage over authorized haulers. Authorized haulers are often
eager to assist in policing and impounding bins of unauthorized haulers in order to
protect their right to provide services to customers.
The general advantages of exclusive versus non-exclusive roll-off box service are shown
in the table below:
Advantages of Exclusive
Roll-Off Box Services
Easier to monitor tonnage reported
though the disposal reporting system
Collection of franchise fees from only
one hauler
Fewer haulers to audit
Easier to idenbfy illegal haulers
Higher roll-off box rates often help keep
residential rates low
Advantages of Non-Exclusive
Roll-Off Box Services
Customer choice of service providers
Competition for rates and service on a
Potentially greater recycling and other
Additional roll-off haulers not likely to
case-by-case basis
specialized services available
increase truck traffic
Objective #6 Compare the City of Carlsbads rates, net of jurisdiction fees, to those in
other San Diego County cities.
Finding #6: Based on September 2004 survey data, the City of Carlsbads residential
rate, and commercial rate for a 3-yard bin collected once per week (a
common service level), are the lowest in San Diego County.
lune 8,2005 13 Cify uf CarZsbad
Service
Residential
Commercial
The City’s rates for residential service and for once-per-week 3-cubic yard bin service
were the lowest in the County at the time of the survey in September 2004. Waste
Management has requested a rate increase and the comparison in this report is based on
data prior to the rate increase which had not been considered by the Council at the time
of our study.
Cities in San Diego Carlsbad Rank in
County (Contractor Rates) ~ San Diego County
Low High Median (l=lowest)
city Of Contractor Rate i
$13.00 $13.00 $16.28 $15.10 1st *
$67.80 $67.80 $87.63 $79.10 1st **
It should be noted that the services, contract terms, disposal quantities, billing
arrangements and operating characteristics are different in each community. As a
result, if a city has a low rate, it does not necessarily mean that the city is getting a
”better deal.” It may mean that certain operating characteristics unique to that
community may enable the hauler to provide service at a lower cost.
Detailed data for each individual jurisdiction are included as Attachment 2.
Objective #7: Contrast the re-negotiation of the current contract with the competitive
procurement of proposals.
Finding #7: The City may attempt to negotiate a competitive, comprehensive
contract with its current hauler, and still seek competitive proposals if
desirable contract terms are not achieved through negotiations.
The City’s goal in procuring a new contract would be to obtain a comprehensive
contract with improved services and contract terms at competitive rates. Competitive
procurements are particularly desirable when a city has not opened its contract up to
competition for many years, or if it is making sigruticant changes in service. A city may
have difficulty determining whether or not the service changes were accurately
reflected in the new rate without seeking competitive proposals. For example, the
automation of residential services would increase a hauler’s container costs, but can
decrease its operating expenses due to collection efficiencies. If the City of Carlsbad
were to fund the carts, this would decrease costs as well. Proposers in a competitive
procurement would offer the City the lowest reasonable costs for the requested services.
June 8,2005 14 City of Carlsbad
Below is a chart competitive proposal
processes improved
by the hauler.
# of Contract
year Proposers T- Jurisdiction Old Contract New Contract Value+ Value' Total Savings ?h Savings
Imperial Beach 1999 4 7 years 13,692,000 13,153, 539,000 4%
Bellflower
* Over term of contract
2004 5 8 years $49,688,000 $38,400,000 $11,288,ooO 23%
Alternatively, if the City of Carlsbad is interested in continuing to work with the current
hauler, the City and customers may benefit from a smoother transition to new services,
To hitiate negotiations, we would first prepare the agreement language, including all
services and contract terms desired by the City. Our firm would be able to use our
expertise in auditing solid waste firms and negotiating new service contracts to
negotiate a competitive rate for the City's desired terms and services, possibly achieving
results sirmlar to those that might be procured through a competitive procurement.
Often, cities re-negotiating contracts lose the competitive edge if the current contract is
ready to expire and the city does not have sufficient time to negotiate with an
alternative hauler, should negotiations with the current hauler fail. The flexible renewal
feature of the current contract may enable the City to avoid this dilemma. If at any
point in the negotiations it becomes apparent that the City will not procure a
satisfactory agreement with the current hauler, the City remains in a competitive
position to allow the current agreement to extend another year and provide enough
time to conduct a competitive process. The current hauler would then have the
June 8,2005 15 City of Carlsbad
incentive to negotiate competitively in order to avoid the risk of losing the contract in
he event that the City chooses to conduct a competitive procurement.
In SmmarY, the benefits of renegotiating versus seeking competitive proposals are
summarized below:
~
Benefits of Renegotiating
Allows existing service provider to
continue providing service
Avoids transition issues associated with
a change of service providers
Fewer adjustments for customers
Ensures continued service from a
"known entity If
Benefits of a Competitive Procurement
Ensures that services are competitively
Maximizes likelihood of obtaining a
priced
comprehensive contract that protects the
City's interests
awarding large contracts
Public appearance of fairness in
June 8,2005 16 City of Carlsbd
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ATTACHMENT^
COUNTY OF SAN DIEGO RATES
MONTHLY RESIDENTIAL RATES - September 2004
Sorted from Lowest to Highest on Rates Net of City Fees
2-1
ATTACHMENT 2
10
11
COUNTY OF SAN DIEGO RATES
Poway $87.72 $80.27
Lemon Grove $86.22 $81.91
E- LL
~~~~
COMMERCIAL RATES - September 2004
Sorted from Lowest to Highest on Rates Net of City Fees
(Monthly rate for one 3-cubic yard bin serviced once per week)
I I Coronado I $85.67 I $79.67
* Excludes franchise fees, AB 939 fees, administrative fees, and other fees retained or paid to
the City.
2-2