HomeMy WebLinkAbout03. CalMet Study
AGENDA MEMO
DATE:
April 22, 2008
TO:
Mayor and Members of the City Council
FROM:
Office of the City Manager
By: Lee Powell, Assistant City Manager
SUBJECT:Solid Waste Disposal—Cost Study and Rate Adjustment
RECOMMENDATION
That the City Council (1) authorize staff to contract with HF&H for a cost analysis of
CALMET’s operation and (2) approve a 3.3% adjustment in solid waste fees.
DISCUSSION
This report is a follow up to a February 12, 2008 report wherein the City Council approved
a Solid Waste Disposal Subcommittee to review a rate adjustment and other items with
regard to the City’s Solid Waste contract with CALMET.
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Since February 12, the Subcommittee has received a report from HF&H (a municipal
solid waste consultant) that provides an overview of various issues with regard to the
City’s Solid Waste contract with CALMET (see attachment A). During a March 26, 2008
meeting with the consultant, the sub-committee reviewed the consultant’s findings and
discussed the next step in the process. The sub-committee decided that HF&H should
prepare a proposal to complete a cost study of CALMET in order to determine a fair and
reasonable rate structure given the various disputes that exist between CALMET and the
City. Such a study will provide a quantitative basis for a revised rate structure.
The proposal for a cost study is shown as attachment B. The estimated cost is $50,000.
This cost would be charged to CALMET and will be part of their costs for providing solid
waste service to the City. The proposal also includes optional services, which the City will
address in the future. Staff is recommending that the City Council authorize staff to
contract with HF&H for the cost study. The results of this study will be available within four
months. The sub-committee will review these results and report back to the City Council
with a recommendation.
A second part of this situation involves the need to address a rate adjustment. The current
contract commenced on January 1, 2006 (30 months ago). The contract calls for a rate
adjustment to be processed in January/February of each year, which means a rate
adjustment could have been processed in early 2007 and early 2008. Neither rate
adjustment has been processed. The current agreement provides a complicated
procedure to process a rate adjustment, but the basic concept is an annual adjustment
based on the Los Angeles metropolitan area Consumer Price Index (CPI) as of December
of each year. The CPI for December 2006 was 3.3% and for December 2007 was 4.2%.
CITY OF DOWNEY, CALIFORNIA
Agenda Memo
April 22, 2008
Page 2 of 2
Staff’s recommendation is to approve the 3.3% adjustment that could have been
processed in early 2007. In order to show the impact of this adjustment, the history of
residential rates is shown below:
January 2000 $13.96
January 2001 $14.52
January 2002 $14.69
January 2003 $15.16
January 2004 $15.44
January 2005 $15.44 (no adjustment made)
January 2006 $11.50 (new contract)
April 2008 $11.88 (proposed 3.3% adjustment)
With a 3.3% adjustment, residential rates would still be below the level of January 2000.
Also, making an adjustment now could avoid the potential for making a larger adjustment
in the future to make up for the 30 month period with no adjustment.
The situation with commercial bin service is more complicated because there are a
number of different service levels (see Attachment C). Using the example of a 3 yard bin
that is picked up once a week, the history of the basic rate is as follows:
January 2000 $86.44
January 2001 $89.91
January 2002 $90.96
January 2003 $93.87
January 2004 $95.61
January 2005 $95.61 (no adjustment made)
January 2006 $82.00 (new contract)
April 2008 $84.71 (proposed 3.3% adjustment)
Similar to the situation with residential rates, a 3.3% adjustment now could avoid the
potential for making a larger adjustment in the future.
Financial Impact:
There is no direct impact to the City, because the City will be
reimbursed for the cost of the study, and the City is not required to pay for solid waste
collection.
S:\Agenda Memos CC 2008\04-22-08\calmet.study.doc