SR - RES-10781 - REVISED RATES SOLID WASTE COLLECTION & DISPOSAL SERVICESAGENDA ITEM
June 10, 2014
TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: Joe DeFrancesco ,c
Public Works D' ector
Reviewed /Veri ed By•
City Manager
Finance Direc r
To Be Present ':
o DeFrancesco
Cons Calendar .
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Plan/Environ
1. SUBJECT
Resolution No. 10781 — A Resolution of the City Council of the City of Orange approving
revised rates for solid waste collection and disposal services.
2. SUMMARY
On July 14, 2009, the City of Orange entered into an Integrated Solid Waste Services Agreement
(Agreement) with CR &R Environmental Services (CR &R). The Agreement became effective on
February 1, 2010. The franchise agreement stipulates that CR &R may request a rate adjustment
provided that their request is submitted in writing and received by March 30 of each calendar
year. The franchise agreement also stipulates that specified residential and commercial rates be
within the lowest one third of all cities in Orange County which provide a comparable solid
waste service. If approved, the rates recommended in Resolution No. 10781 will become
effective on July 1, 2014.
3. RECOMMENDED ACTION
Adopt Resolution No. 10781.
4. FISCAL IMPACT
Since CR &R is now responsible for receivables and payables of residential and commercial
accounts, there is no fiscal impact to the City.
5. STRATEGIC PLAN GOAL(S)
2d) Be a fiscally healthy community — Analyze future fiscal needs and potential revenue
opportunities.
4b) Provide outstanding public service — Provide facilities and services to meet customer
expectations.
ITEM / /,& 1 06/10/14
6. GENERAL PLAN IMPLEMENTATION
Infrastructure Element Goal 2.0 Reduce the amount of waste material entering regional landfills
with an efficient and innovative waste management program.
Policy 2.1: Provide sufficient levels of solid waste service throughout the community.
Policy 2.2: Expand outreach and education regarding recycling opportunities to all city
customers.
Policy 2.3: Develop programs that encourage residents to donate or recycle surplus furniture, old
electronics, clothing, and other household items rather than disposing of such
material in landfills.
Policy 2.4: Expand outreach and education to all city customers regarding residential collection
of household hazardous wastes including paint containers, electronics, household
chemicals, motor oils, and pesticides
7. DISCUSSION AND BACKGROUND
Introduction
In accordance with the Agreement between the City of Orange and CR &R, CR &R submitted a
request with supporting documentation for a July 1, 2014 rate adjustment. The Agreement
between the City and CR &R stipulates that CR &R is entitled to an annual rate adjustment
provided they submit their request in writing by March 30 and such adjustment is in accordance
with the Residential and Commercial Rate Adjustment Model (Model). CR &R submitted their
request for a rate adjustment on March 25, 2014. Based on their March 25 submittal and staff
review, CR &R's rate adjustment request is correct and in compliance with the Agreement and
congruent with the parameters of the Model.
Rate Request Analysis
The rate adjustment request that CR &R submitted to the City is based upon their application of
the Model. The Model utilizes changes in hourly labor rates, landfill disposal fees, and changes
in the PPI and CPI to calculate a multiplier that can be applied to all residential and commercial
solid waste service rates. Ultimately, the Model was created to establish criteria that the City and
CR &R have agreed to for the verification, recommendation and establishment of equitable solid
waste service rates.
Essentially CR &R is requesting an adjustment of residential and commercial solid waste
collection rates at 0.78% and 0.69% respectively. Listed below and on Attachment B are a series
of depictions that convey the effect of CR &R's proposed rate adjustment request.
ITEM 2 06/10/14
CR &R Monthly Rate
Service
Current
Requested Rate
Residential Cart
$12.30
$12.62
Commercial Bin
$49.46
$50.75
1 3- yard trash bin collected once per week
ITEM 2 06/10/14
Lowest One -Third Rate Stipulation
In addition to the utilization of the Model to calculate rates, the franchise agreement stipulates
that CR &R's residential rates for residential curbside and commercial service must be in the
lowest one -third of all Orange County cities providing comparable solid waste services. For
residential service, cities that provide fully automated collection using three carts, one each for
trash, recyclables, and green waste, are considered comparable.
Currently, there are 30 cities in Orange County that provide comparable cart service, and 32
cities that provide similar bin service. In order to meet the lowest one -third threshold, there must
be twice as many cities with higher rates as there are with lower rates. When CR &R's rate
adjustment request is compared against similar Orange County cities, the residential rates are the
third lowest and the commercial rates are the lowest. Over the last two decades, the City's
residential and commercial rates continue to rank among the lowest one -third of comparable
Orange County cities (Attachment D). Moreover, if the Model calculated a rate that was greater
than the lowest one - third, CR &R would have to reduce their residential and commercial rates to
equate with the lowest one - third.
When the franchise with CR &R began on February 1, 2010, the initial residential rate was
$11.42 /month. In the three years that CR &R has assumed the City's recycling and trash
collection operations, solid waste collection rates have increased by $0.88 (Note: If the $0.88
increase in the rate for CR &R's collection of residential solid waste were averaged over the first
three years of the agreement, the increase would amount to 2.3% annually).
Recommendation
If approved, Resolution No. 10781 (Attachment A) includes the approved residential and
commercial solid waste collection rate schedule for all services under the Agreement as an
attachment (Attachment C). The rates recommended in Resolution No. 10781 will become
effective on July 1, 2014 and will be incorporated into the City's Master Schedule of Fees and
Charges. The CR &R rate adjustment request has been reviewed by City staff and confirmed
with CR &R staff for its accuracy.
8. ATTACHMENTS
• Attachment A
— Resolution No. 10781
• Attachment B
— Proposed Rate Schedules for Solid Waste Collection.
• Attachment C
— Comparative Solid Waste Collection Rate Schedules
• Attachment D
— Orange County Residential Solid Waste Rate Comparison.
• Attachment E
— Orange County Commercial Solid Waste Rate Comparison.
• Attachment F —
2014 Residential and Commercial Solid Waste Collection Rate
Adjustment Model.
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N:\Public Works\ADMIN \ADMIN\LYoung \Council Items \COUNCIL\June - 2014 \6- 10 \CR &R Rate Adjustment Request.doc
ITEM 3 06/10/14
CUR Solid Waste Rate Adjustment Request
Summary of Attachments
Attachment Description
A Resolution No. 10781
B Proposed Rate Schedules for Solid Waste Collection
C Comparative Solid Waste Collection Rate Schedules
D Orange County Residential Solid Waste Rate Comparison
E Orange County Commercial Solid Waste Rate Comparison.
F Solid Waste Collection Rate Adjustment Model
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ITEM 4 6/10/14
RESOLUTION NO. 10781 Attachment A
A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF ORANGE APPROVING REVISED
RATES FOR SOLID WASTE COLLECTION AND
DISPOSAL SERVICES.
WHEREAS, the Orange Municipal Code and Public Resources Code Section 40059
authorize the City to revise rates for solid waste collection and disposal services by resolution;
and
WHEREAS, the Integrated Solid Waste Management Agreement (Agreement) between the
City of Orange and CR &R Incorporated (CR &R) provides for an adjustment based on a rate
adjustment formula, which is stipulated in the Agreement; and
WHEREAS, the Agreement requires CR &R to guarantee that the Company's comparable
rate for certain services will be in the lowest one -third of the rates being charged for similar services
in comparable cities in Orange County; and
WHEREAS, the rates listed on the attached schedule will be effective July 1, 2014.
NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Orange hereby
resolves as follows:
The attached solid waste rate schedule shall be approved and incorporated into the City's Master
Schedule of Fees and Charges, with all rates effective July 1, 2014.
Adopted this day of , 2014.
ATTEST:
Mary E. Murphy
City Clerk of the City of Orange
Teresa E. Smith
Mayor of the City of Orange
ITEM 5 6/10/14