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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 .c, e; z 9 U 8 ?G .c, 2 cd k .A 2 .c, m cd d .d 8 .c, 8 2 IC, w 0 8 w s 0 In 3 U h d d 2 e; e; cd m a Q) .c, 5? n 8 m z .c, 2 m .d .d m 3 d m 0 0 @J 8 w # m Q) .c, U 2 8 w 8 .c, 2 .c, E bn 51 .c, x B e; 0 h U 2 d d 0 U 8 w Q) .c1 2 Q) .c, 7 a 4 a e; cd Q) .c, m 5 IG .c, '5 rn m rn e; Q) ti m .d d s td * e; td bn c: IG Q) .c1 E d .d td 3 ti 0 U m .c1 3 51 0 U 8 z 1 w ti z .d d n m b .d W 3? i3 2 b Q) .c, E 2 b Ph Q) Iy 2 u 5 s m d 2 4 m Y m aJ bi aJ .c, *A G m b *A 2 Y W m Y U aJ .c, 0 L Y 2 Y 0 w 0 0 0 0 0 m aJ Y (d bi 0 Ti El Y z z & aJ 4 w G (6 z Y z & aJ 4 m aJ Y 2 m aJ m 0 a 0 & m (d m 0 a 0 d i: .c, *rl W *d d 0 m c\i gg u .d c, 2 3 G 0 HW E g w m tu m k (d aJ h E aJ 0 E Y .c, aJ m w 0 aJ w 'rl & . 3 w aJ m 3 (d aJ * 2 m Y U aJ 2 q Y 2 4 0 Y 0 0 Y E k aJ Y k 83 8 E 0 (d w - Td aJ 2 2 Y Y aJ m 0 Td 3 0 8 - V m Y U 2 3 2 0 0 0 Ebb ag bc 5 G rb * G Q) 5 W w 0 rb- G rb rb r 3 2 r 3 Q) 'Pi * 2 i/j Q) 3 m m 'Pi 4.0 4 k 'Pi ry w G 0 W e G rb 2 m Q) W 'E Q) m & 6 c, tm h 9 3 a, > a, k 'rl a, > .- i3 a, x a, c, tm a, a, rd a, * 'E" .rl 4 k .rl 3 a, s a, k tm a, tm 0 c, tm a, % 2 2 .* Td $ 0 * 3 tm a, 0 0 04 c, E a a, c, E a, 6 E? Fw 8 0 c, tm 3 0 tQ c *rl c., tm .rl k CEl c .4 0 a a 0 c, Fw 3 h a, x a, 0 c, Y 'c3 E .rl c, d 0 d 3 a, 0 0 m 2 Td c 6 e e 4 (d .d d) z c, 0 G d) d) e k 8 8 0 c, CA 3 0 d) c, 0 c, a 3 d) 0 k % e d) 9 Td 3 0 d 3 .C\ c, CA ..-.I x d) Td 3 0 d 3 a a 0 0 a E 3 d) k e E 0 + cl 8 8 E4 y-c cn cn Q) 3 !i (d + G Q) Q) Q) (d E b Tb a X 0 0 3 Td Y El Fj H e 0 3 c, m 0 .r( 3 c, m .r( (d cn a 0 k aJ a '4 m d) Q) 8 d a A a aJ X ;il 0 d 'a A 0 .c, c, 8 a 2 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 -- 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 -- 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 1 P 4 U 0 Fk c i3 m 0 0 cu m aJ WJ aJ V .d 5 k aJ rn d) .;i E13 m 9, U .r( L, d .rl m U a E E 6 u 3 a2 m .w U aJ n m a 5 aJ c, 2 Y % & W Y El %XXX%i< wwwwww c- CI v1 e, v1 .r( I u 'E Q) cn I I Y 5 m C m I 3 I I ?4 (6 c1 (6 bl aJ 8 I- - 0 Y I aJ a % El rn aJ V PI Q) ro 0 Y -!i 0 X 0 P 8 0 A d d El 3 aJ .3 1 n rr Lo 0 0 hl 00' i2 x h I _-- -- - .I . .- - L .- I I r- 00' I I # I ! i 1 4 4 4 I 1 3 c G 0 *d 4d U C I F d 2 a r: 0 -I L- I- - c .--- I .- I Y a 2 0 .c, 00' _- I- -- W 95 I -- U I 6xxx 4T-lc4m 2 A k V v) b I 2 .r( rn 9) U 'E 9) cr) N r( I l-4 n I-- -- I d I I -- I -- I I ,.,- I 90' I c- I -- I .P a, (6 0 2 4 .r Y IO 0 0 0 G3 s s 2 I e I - I aJ Y v) s we ..5 F;a VJ c, 0 .r( .r( 0 z G U 00' K b c ..- I I L1 0, 5 .I? ak '2- rd rl -- ui Y 0 N I 3 I- -- I I c I -- I-. --.- I n r\l I I 6 I r4 r4 I 3 0 M I -. I P E E W d a c3 z 5 2 M k E 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