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CC 2016-03-22_10a Solid Waste Collection Rates PresentationSolid Waste Collection Service Rates March 22, 2016 1 July 30, 2015 City received “base year” rate increase request of 3.25% and proposal for two “interim year” increases. October 13, 2015 Public Hearing to consider the rate increases was held. Discrepancy in Proposition 218 notice Concern about calculation that determines if rate increases have exceeded cumulative CPI Continued until tonight to provide noticing with the correct rates 2 Components of the Base Year rate increase 1.34% is based on increased costs for fuel, vehicles, ongoing maintenance and labor. 0.81% is based on a $2.25 per ton increase in tipping fees at the landfill. 1.10% is based on implementing an Organics Program. 3 Interim Year Increases SCSS proposes a 3-year rate increase. Interim years (2017 and 2018) would increase by: Change in CPI (unknown at this time) Known changes in tipping fees at the landfill (0.79% for 2017 and 0.77% for 2018) Approval eliminates need for Interim Year reviews 4 Organics Program AB 1826 requires diverting organic waste from landfills to an authorized composting facility. Long-term plan would build an anaerobic digestion plant that would service San Luis Obispo County This would begin Mid-2017 Located on Waste Connections yard in San Luis Obispo 5 Rate increase safeguards The Franchise Agreement governs rate increases It provides language that gives the Council the option to terminate the Agreement if rate increases are too high It defines this as exceeding the cumulative change in CPI Not all costs are included in the calculation to determine if the rates have exceeded the change in CPI 6 Amendment to the Agreement Council considered an Amendment to the Franchise Agreement that would exclude the increases in tipping fees associated with the landfill expansion project from the calculation. (Item 9c tonight). 7 Consultant Review City contracted with Bill Statler to review the rate application Presented findings October 13, 2015, which have not changed 8 Allowed Revenue Increase 9 Consultant Report Conclusion Costs are reasonable Proposed rate increase meets “reasonable return” criteria Requested rate increase of 3.25% is slightly less than allowable increase of 3.67% 10 Recommendation Adopt a Resolution establishing integrated solid waste collection service rates to become effective April 1, 2016, January 1, 2017 and January 1, 2018 11 12 Rate History 2.4% annual increase 13 CPI Threshold Calculation 14