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BUDG£r 91-92
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Hay 30 .. 1991
THE HONORABLE CITY COUNCIL
Palo Alto, california
Refuse Rate Increase And contract Amgndment
Attention: Finance and Public Works committee
Members of tbe council!
RePOrt in Brie:
DUring FY 1991-92, the Palo Alto Refuse Enterprise Fund financial
obligations will increase significantly. In order to meet these
requirements, a refuse rate increase is warranted. This report
requests a 30 percent increase in the refuse collection rates,
effective July 1, 1991. Th~ last refuse collection rate increase
was on July 1t 1989. This report also recommends that council
approve And authorize the Mayor to eX"ecute an all'lendlnent to the
compensation section of the elCisting contract with Palo Alto
Sanitation company (PASCO}_
BacJcqround
In Karch 19a7, the present Contract No_ 4698 ~as neqotiated between
PASCO and the city to provide refuse collection services, operation
of the Recycling center, operation of the curbside recycl-ing
program, and the empt:fin9 and 'Maintenance of tr-ash receptacles
located in various areas of t. ... e City, includinq the Unh7 ersity and
California Avenue business districts. This contract provides for
a percentage of Refuse revenue to be paid to PASCO for its
services a The contract also allows annual renegotiation of the
percentage of revenue payment under the contract, in order to
protect PASCO aqainst escalating costs and to avoid excessive
profits by PASCO.
The balance of the Refuse revenue finances will be used for: (1)
the operation of the Refuse Disposal Area including the compost
program, materials recovery program, household hazardous waste
program, street sweeping, and disposal operations; (2) project& to
comply with local, state, and federal requirements and operating
permits; (3) long-term environmental care; (4J capital improvement
projects, including the landfill/park conversion; and (5) rental
payments to the General Fund for the use of the landfill site by
Refuse. Staff has incorporated the associated costs into the
proposed rate increase.
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Proposed ChAnges in R.tUBC Rotes
It is City polley that the Refuse Fund be operated on a cost
recovery basis, including any costs related to solid vaste
proqrams f landfill closure and park development.
It is recommended that the collection rates be increased by
30 percent, or $2,902,159 ovar 1990-91 rates. The rate increase
will cover payments to PASCO to cover its operatfnq expenses and
earn an aqreed upon rate of return. PASCO's operating e~nses for
FY 1991-92 are projected to increase about 6 percent, due to hiqher
gasoline ar~ vehicle maintenance costs and new equipment purchases
agreed to durinq the City-PASCO annual revi __ w. The new equipment
includes two additional trucks tor cardboard collection, and
additional l::Iins and toters to improve efficiency for materials
handling in the Recycling program. Other expenses are to comply
with regulatory programs. Tbese include landfill gas system
maintenance, leaChate collection and disposal~ funding tor City
qenerated hazardous waste disposal l and additional state and local
regulatory fees and programs. rhe incr&ase ~lso finances capital
improvements related to landfill oper-ation and closure. This
inelUdu state-required 15 to 30 ·year post-closure care~ and
conversion of phase 2 of the landfill to Byxbee Park.
Attached to this report is a revised utility rate schedule, which
recommends that the rate for the collection and disposal of one can
of refuse at standard residential dwellings be increased from $9.25
per month to $12.05 per-month ,two cans: $12.10 to $15.75 per
month). A 30 percent rate increase is recommended for all refuse
rates and collection frequencies.
Tbe proposed rate co~pares with rates in surrounding communities as
shown below:
City contractox
Stanford I
Peninsula Sanitary
Los Altosl
Los Altos Garbage
Los Altos Hillsl
Los Al to s Garbaqe.
SUMj'Valel
Spe.c1alty Garbaqe
MOUntain View}
Foothills Disposal
• Surveyed May 1991
(I) Sunnyvale proposin
(2) Mt. Viev proposing
CMR:287:91
Typical service
metered/backyard
2 can/~ x per ~eek
2 cans/back yard
1 x per 'Week
1 cans/back yard
1 x per week
unl imi ted curb
unlimited curb
1 x per 'Week
rate increase of 5 percent
rate increase of 25 percent
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Qost of Service~
$38.84 per mon~~
$13.96 per month
$15.40 per month
$ 9.79 per month
( 1)
$ 8.16 per month
(2)
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[iyA-Year Projections
Staff reviewed financial obliqations for the ~eruse Fund for fiscal
years 1991-~2 throuqh 1995-96 to esti~ate the increase for service
(2 cans/back yard). Projections assume that the PASCO budget and
the Refuse operating budqet would increase at approximately 5
percent per year. Other impacts include the costs for lonq·term
disposal (including PASCO's increased haulinq costs) starting in
1993. New programs and additional regulatory requirements l or neW
refuse utility capital improvement projects will require: additional
increases.
Initial projections are that rate increases ~ill be needed over the
next five years~ Staff is recommending ~ 30 parcent increase for
~991-92. Increases will be required in succeedinq years to meet
additional solid waste requirements, including haulin9 to a
transfer station site l disposal at Xirby Canyon landfill in San
JOse.., and closure of the landfill~ The actual rate increases will
be determined each year during the budqet process.
compensation Amendment to PASCO fer .Collectiqn Services
Tbe collection contract provides for a percent of refUse service
billings revenue to be paid to PASCO for its services. City staff
has carefully analyzed PASCO's cost data to project the operating
cost requirements for FY 1991-92~ For the purpose of rate setting
and PASCO profits, the pre-tax rate. of return .on undepreciated
fixed assets will be targeted at 5 percent~ Any pre-tax profit
exceeding 8 percent 'Jill be divide::! equally with the City~ The
City's share .ill be credited against the 5ucceedinq year's revenue
requirement for PASCO~ If PASCO were to receive more profit than
the e.greed rate of return in any particular fiscal year, the
disallowed excess would be applied as an offset to next year's
revenue requirement., and the percentage of refuse service billing
paid to PASCO would be reduced. This ensu.res against excessive
profits by PASCO~
The percentage of revenue to he paid to PASCO will be decreased
from 50.85 to 38.13 percent for FY 1991-92. The main reason for
this decrease is that the recommended 30 percent rate increase will
bring in approxi~ately $2.8 million in additional revenues, most of
which will tund Refuse Fund expenses, such as landfill rent.
Inyerted Rate Structure
Last fiscal year during tbe budget revie~ process, the Finance and
Public Work.s committee directed staff to prepare an inverted refuse
rate schedule. An inverted rate structure increases the cost of
service by at least tha same aDount as the base unit~
DUe to the Significant effort required: by staff to complete the
Source Reduction and Recycling Element (SRRE) required by
Asse~ly Bill 939, staff has not revised the current rate schedule
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to an inverted rate structure. Starr will return to council in
early fall with a proposed inverted rate structure.
£Dxirqnpont.l AI.a§Imgnt
The »od.if.1ca.tions to the re.tuse collection ratES under the attached
resolution are exempt from the California Environmental Quality Act
(CEQA). under Public Resources Cooe Section 21080 (b) (8) • The
~t to contract No. 4588 for refuse collectior. services is
not a project under CEQA.
staft recommends that Council~
1.. Approve the attached resolution amending the RefUse collection
utility Rate SChedule tor refuse collection and disposal to
become effective July 1, 1991.
2. Approve and authorize the Mayor to execute AmEndment No .. 4 to
Contract No. 4688 to provide additional compensation to
Palo Alto Sanitation Company., effective with the first billing
cyc~. of July 1991.
Respectfully submitted,
';P2;&'/74~'
IUCHAEL H. MILLER
Deputy Director, Pub11c Works Operations
(;2~~JJjlJ}~-~
OAvro G. ADAMS
Director of Pcblic Works
wrLLUH ZANER
city Manager
Attachments:
CIIR:287: 91
Resolution
Utility Rate ScheQule
AlIIendment
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RESOLUTION NO.
RESOLlJ'l'ION OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDINC UTILITY" RATE SCHEDULE'S R-l, R-I-FA, R-2,
R-3 AND R-4
!:FFECTIVE JULY 1, 1991
WHEREAS, the City Council has considered the need for an
increase in refuse collection rates;
NOW, THEREFORE, the Council of the city of Palo Alto does
hereby RESOLVE as follows:
SECTION l~ pursuant to Section 12.20.010 ot the Palo
Al to Municipal Code, Schedules R-l, R-l.-FA, R-2, ji.-3 and R-4 of the
Palo Alto Utilities Rates and Chargas are amended to read as shown
on Sheets Nos. R-l-l, R-l-FA-l, R-2-1, R-J-l., R-)-2 and R-4-1, all
dated July 1, 1991, attached hereto and incorporated herein by this
reference~
SECTION 2~ The Council finds that the revenue derived
from th~ authoriz.ed l!\odifications of said collection rates shall be
used only for the pu~ses set forth in the Palo Alto City Charter,
Arti-cle VII, Section 2, entitled ·public utilities revenue-.
SECTION 3. The Council further finds that the Callfor--
nia Environmental Quality Act does not app~y to the adoption of
this resolution, under Public Resources Code section 21080,
subdivision (b) (8). in that the modification to the collection
rates are for the following purposes:
(a) Meeting ope~atinq expenses of the refuse collection
program, landfill gas system roaintenance, leachate collection and
disposal program and City-qenerated hazardous waste disposal
proqram:
(b) Meetinq financial reserve requirements of the System
IlIIprovement Reserve Fund: and.
(cJ Obtaininq funds for capital proj ects necessary to
maintain service within eXisting service areas for the City's
landfill operation, closure and post-closure maintenance.
INTROOOCED AND PASSED:
AYES:
NOES:
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ABS~:
ABSrENTIOJlS :
APPROVED:
City Clerk Mayor
1-.PPROVED AS TO FORM:
City g"naqer
Assistant cIty Attorney
Director of Public Works
Director of Finance
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r::x:»n::STIC REFUSE COLLECTION
APPLICABILITY:
This schedule applies to each occupied. domestic dwelling as
required by city ordinance~
TDUUroRY:
within the incorporated limits of the city of Palo Alto and on
land owned or lea$ed by the city locat~d in Service Area 1.
RATES:
Separate single-ra~ily domestic dwelling and apartment dwellings.
MINIMUM CHARGE ___ _ _ ~'1.t15
The minimum charge is based upon the cOllection of refuse from one
32-qallon container.
Number of Cans
1
2
3
~
S
6
SPECIAL NOT.t:S~
One
S ~L?.05
~1S.'1S
~~.I.r:.
~30.t.
~37.SC
J •• is44.55
Per Mont.h __ _
Collections Per Week
$39.6839.\0
~39.BO
~S4.Z0
Three
·An occupied d~elling unit is defined as ~ny home, apartment uni~.
cottage~ fh:t, duplex unit. t:.a:vi:lg J.:itche.'"l, bath. and sleeping
facilities" and to ... ·hieh gas or e!ec'tric sen.'ice is being
re.ndered.
S.B5
A ~~ service charge 1o.·ill be r.ade if at ret..,;.rn ·call is necessary
in order to pick up containers. p::-evio',.1.s1y JT:issed by reason of
locJ:ed gate, or other reasons .... ·:t".ic!1 prevented service.
CITY OF PALO ALTO UTILITIES
Issued by the city council
7-1-8'/
Supercedes Sheet No. R-l-l cated i 11 BB
7· ,-q,
Effective 7 1 89
Sheet No. R-l-l
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REFtlSE COLLECTION
UTiLITY RaTE SCHEDULE R-I-FA
APPLICABiLITY :
This schedule applies to all refuse collection service.
'rERRI'I'ORY:
within the incorporated limits ot the City ot Palo Alto and on
land owned or leased by the City# located in service Area 2~
RATES:
SERVICE AREA 2:
Minimum Monthly Charqe. • • •••. $~Z\.70
Minimum charge provides for the COllection of refuse from
two 32-qallon cont&lne~s# one collection per week. Containers
m~st be located within 150 feet or public s~reet or road.
Each 40<1itional 32-gallon container, per month~ •••• $ ~8.!O
SPECZAL CONDITIONS:
1. The contractor vill determine the charge for service
wbere refuse containers ~re located more than 150 feet
trOD a public street or road or for refuse which requires
a special handlinq.
2. The City Engineer will Qe~ermine the charges when the~e
is a disagreement between the customer and contractor.
) 'l'fl:e Fate ';"1:;,;1'101;105 ? .~Rtl=lly rna;-;o ot $" 5 Q peE' El:'e!~
tap t::Ae G1:lHsi;;ie Iii'~lli;u;=t': gR af ~ei6a 'Tal!! I t±b:e':!Ih
will ~! ~~118~tQ~ ~~ t~. Elm, dry ,~ t~, ~oll~s~i~~ ~f
!!'e:fa:S8.
CITY OF PALO ALTO UTILITIES
Issued by the City council
7· \.8'!
Super~edes Sheet No. R-2-FA-l dated 7 11 B8
E.ffective.
Sheet No.
7· 1·'11
'7 1 99
R-I-FA-l
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• COMMERCIAL REFUSE COLLECTION
,,) UTILITX RATE SCHErnlLE B-2
f APPLICABILIn',
~.: This schedule appl ieg to all occupied· establishments other tha.n
n domestic dwellinqs as required by City ordinance ..
,}
~,i TE'RlUTORY:
RATE,
within tile incorporated limits of the city of Palo Alto and on
land owned or leased by the City of Palo Alto located in service
Area 1.
"INUIIJM CliARGE ••••••••••••••••••••• $11. 35 1~.75
The minimum charqe is based upon the collection of refuse from
~ J2-gallon standard containers.
The monthly charge for services no~ shown on the follovinq
schedule of rates will be determined by the contractor. In
the event that the customer and contractor cannot agree upon
the charge, the city Enqineer shall determine a charqe that he
considers to Le jU5t and re3sonable and the contractor, in such
event, shall provide the collection service at or below the
charqe determined by the city Engineer. The charge will be
based upon the average amount of refuse collected from the
establishment in containe~~ of 32-qal1on capacity.
Nwaber of
Cans
2
J
4
5 •
Per Month
Co11ections ~er week
One Two Three Five six
.........:HC.18 $~~.7S ~~.15$H.9~.U5 $~ $:e3.e31~3.'llI
~l.2..QS. +e-.-&&s.l.a~ ~MW.!12.J... iJ6.E9 ~l'IOIO 51. ':b7~ '0.1410.05 'a. 171 •. 80
~"AO
5 3.58 U .. !tSi
*1u; occupied establishment is de.fined as one to .'hich gas or electric
servIce is being rendered.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
'-I'S'! supercedes Sheet No. R-2-~ dated 7 11 89
_111
Effective
Sheet No.
1·1· 91
7 1 89
R-2-1
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COHMERCIAL REFtJSE COLLECTION
UTILITY RATE SCHEOOLE R-:1
APPLICAlIIUT't :
This schedule applies to commercial establishments and multi
unit apartment dwellings using special refuse containers rented
t~om the contractor.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and on
land owned or leased by the city locate~ in Service Area 1.
RATES:
The monthly charge for service$ not shown on the following
scbedule of rates will be determined by the contractor. In
the event that the customer and contractor cannot aqree ~pon
the charge, the city Engineer shall determine a charge that he
considers to be just and reasonable and the contractor, in
such event, shall provide the collection service at or belov
the charqe determined by the City Engineer. The charge will
be based on the average amount of refUse collected f~om the
establishment in containers of l2-gallon capacity.
To be billed by the City of Palo Alto:
Detachable Containers
CUbic Yards Per Month
CollectiGns Per Week
One O:-Wo Three Fjve Six
1 43.15
2 n.40
3 ilL 15
4 1"'.05
5 180.~
6 2.''-!iS
8 W.lS
CITY OF PALO ALro UTILITIES
Issued by the City council
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7-)-89
Supercedes Sheet Ne. R-J-l dated 7 11 88
Effective
Sheet Nc.
7-J-PI
7 1 B9
R-)-l
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COMKEli\CI:AL REFUSE COLLECTION
UTILITY RATE SCHEOOLE R-J (CONTINUEo)
Per Compacted
stationary Packing containers CUbic Yard
Qua~tity of refus@ (per compacted cubic yare)
prop Box contain@rs
Quantity of refuse (per cubic yard)
DETACHABLE CONTAINER R.ENTAI. (''HARGE:
Cub~c Yards
1
2
3-4
s-6
8-10
15
20
Optional container Cleaning Charqe • • • • • • • . •
SPECIAL PROVISION:
Per CUbic Yard
$~ 14.7Q
per Honth
$~ 22.r.o
~Zq.qO
~ i7 . .j(f
~ 45.20
~ 5'._5
~ 74.1il
~IIZ.OO
~~.?C
The monthly cbarqe to multi-unit apartment dwellings will
be billed to the owner. Minimum service to apartment dwellinqs
must be equal to one (1) thirty-two (32) gallon can per
apartment per week.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
7-1-II'!
S~rcedes Sheet No. R-J-2 d~ted 7 11 88
Effective
Sheet No.
1-1-91
7 1 B9
R-3-2
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S PECI.AL REFUSE COL.I..ECTION
RTII.ITX BATE SCHEOOLE R-4
APPLICABILITY •
This schedule applies to service rendered by the cont~actor
upon specific re~~est of an owner or tenant of premises for
the collection ot refuse that could not ba removed by the
regular collection service because of the quantity or quality
o~ the refuse. Building' materials an(f dirt are excluded from
this service.
TERRITORY.
Within the incorporated limits ot the City of Palo Alto and
land owned or leased by the City ot Falo Alto located in
service Area 1.
RATES.
Minimum charge. • • • • •
Quantity of Refuse (CUbic Yards)
1
2
3
4
5
SPECIAL PROVISION.
~14,70
$~zto!!l
~4Z,DS
~59,3S
~l'Io.OS
~qs,oO
Rates tor tbe special collection of refuse in excess of five
(5) cubic yards will be established by the contractor.
Charges made under this schedule shall be added to the regular
monthly utilities bill cf the person receiving the service and
payment thereof will ~e subject to Rule No. e and Rule No. 10
of the utilities Rules and Regulations.
CITY OP PALO ALTO UTILITIES
Issue~ by the City council
7-1--89
Supercedes Sheet No. R-4-l dated 7 11 B9
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Effective
Sheet No.
7-1-~l
"1 1 as'
R-<-l
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AMENDMllN'I liD •• TO CONTRACT 110. 4688
BETWEEN THE CITY OF PALO ALTO AND
PALO ALTO SAlUTATION COMPANY FOR COLLECTIOII
AIID TRANSPORTATIOII O!' REFUSE PRODUCED, KEPT
AIID ACCUMULATED IN THE crr{ FISCAL YEAR 1991-1992
THIS AMENDMENT to Contract N04 4688 is made
into this day of t 1991, by an~ between
PA.IJ:) ALTO.. i!1 lIlunielpal corporation Qf California,
referred to as ·CITY,· I!!I.nd PALO ALTO SAN1TATION
corporation organized under the laws of the State of
hereinafter referred to as ·CONTRACTOR-;
and ente.red the crn OF
hereinafter
COMPANY, a
California,
R Eel TAL S:
~, contract No. 46&8 was previously entered into
between CITY and CONTRACTOR, under which CONTRACTOR crovides
certain s.pecifi6d services for the collection and transport-at ion of
refuse produced .. kept or accumulated in CITY; and
WHERZAS, the parties desire to modify said contract as
set forth below;
NOW, THEREFORE, in consideration of their mutual
covenants, the parties hereto agree that Contract No. 4688 shall be
amended as tollows:
SECTION 1. The first paragraph of Section 9 is amended
to read as follows:
g. CO!<FE!lSATIOII
As full and complete compensation for the services
to be provided by CONTRACTOR hereunder, CITY shall
pay CONTRACTOR as follows:
(1) Effective the first. billing cyr;.le of July,
1991. with respect to the revenue derived each
calendar month from CITY refuse service rates
described in section a, above, CITY shall
compute and pay to CONTRACTOR, on or before
the tenth of the following month. an amount
equal to thirty eight and ten one hundredths
percent (38.13\j of revenue ~illed under
refuse rate schedules, less any liquidated
damages assessed under Section 5(c) (3) of the
refuse colle.ction specifications. lIr.'itb
respect to tbe revenue derived each calendar
month fr-om the CITY collection bin rental
aescribed in Section 8 above, CITY ~ill
compute: and pay CONTRACTOR on or before the
tenth of the fcllo~in9 .onth an amount equal
to ninety-five percent (95\) of revenue billed
under refuse rate schedules for such
collection bins. CONTRACTOR shall credit CITY
with six percent (6t) of gross revenues of
CONTRACTOR, derived from activities associated
with or arising from this contract, but which
are not performed wi t-hin the scope of this
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contract (such as but net limited to portions
of the cleaning operation) . CITY is
authorIzed to deduct such credit from the
payments due CONTRACTOR in the next succeeding
year. Accounts and records from said
activities shall ~ made available to CITY
concurrently with the Annual Financial
Statements supplied pursuant to Section 7
above. From the above payment amounts, CITY
~ay deduct liquidated damaqes assessed
CONTRACTOR under section 33 of this contract~
SECTIQN 2. Except as herein modified, all other
provisions of, 1ncluding the exhibits aDd amendments to, Contract
No. 4688 shall remain in full force and effect.
~~~~~. The Council of the City of Palo Alto finds
that this ~ to Contract No. 4688 is not a project under the
requireJDents of the California Environmental Quality Act and,
therefore, no environmental assessment is necessary.
IN WITNESS WHEREOF .. the parties hereto have executed this
Amendment the day and year first above written4
A'M'EST:
City Clerk
APPROVED AS TO FORK:
Assistant City Attorney
Assistant City Manager
Director of Finance
Risk Manager
APPROVE;) AS TO CONTENT:
Director of Public Works
2
APPROVED:
Mayor
~?%iTATION ;!€ It~;S~
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