CITY COUNCIL: Resolution Implementing a Collection Rate Adjustment in Connection with Franchise Agreement between USA Waste of California, Inc. & City of Carmel-by-the-Sea

Meeting Date: June 7, 2011

Prepared by: John Goss

City Council

Agenda Item Summary

Name: Consideration of a Resolution implementing a collection rate adjustment in connection with an exclusive franchise agreement between USA Waste of California, Inc., and the City of Carmel-by-the-Sea.

Description: USA Waste of California, Inc. dba Carmel Marina Corporation, also known as

Waste Management, performs trash and recycling collection in the City of Carmel

through an exclusive franchise agreement. Per the terms of the agreement, Waste

Management submitted a letter dated March 4, 2011, requesting a collection fee

adjustment increase of 0.86% effective January 1, 2011.

There are two components of the requested rate increase. One is a pass-through rate

increase of 0.29% as a result of a disposal rate increase of $46.25 to $47.00 per ton

effective July 1, 2010. This is in accordance with Section 6.d. of the Amended Exclusive

Franchise Agreement. This section provides that the “Collector shall receive periodic

pass-through rate adjustments to cover the increased cost of dump fees at the Monterey

Regional Waste Management District site…” The notice requirements specified by the

Agreement have been met for both portions of the rate increase request.

The second component of the rate increase request is a cost-of-living adjustment

(COLA). This adjustment is based on three-quarters of the percentage increase in the

Consumer Price Index (CPI) for the San Francisco-Oakland Bay Area (All Items, All

Urban Consumers), “less the percentage of operating expenses attributable to dump fees

paid at the disposal site….” Using this formula, the CPI adjustment applying 75% of the

COLA increase is 0.57%.

This second component is not mandatory but can be granted at the discretion of the City

Council. Section 6 of the Agreement only states that the “Collector shall be entitled to

request an increase in such rates chargeable to customers” which they did through their

March letter. The conditions of filing this rate increase has been met such as providing

adequate written notice, not increasing its rate for 12 months, and providing regular

financial statements to the City.

Overall Cost:

City Funds: N/A

Grant Funds: N/A

Staff Recommendation: It is recommended that the City Council approve the mandatory

0.29% rate increase, and either defer the 0.57% discretionary rate increase, or give other

policy direction for this second part of the rate increase request.

Important Considerations: At the April 5, 2011, City Council meeting several suggestions


and questions were asked during the meeting. One suggestion was that Waste

Management submit a report card on how it is fulfilling its contractual commitment in

providing its service. Attached is a list of items/activities required by the agreement,

including frequency of service and the responsible party for providing the service. Waste

Management indicates that it completely fulfills each of these service items or activities.

This includes contributions for mutt mitts ($10,000 annually), purchase of an ATV for

the Police Department every two years ($8,400) and making contributions to adult and

youth organizations ($18,000 annually).

There is also a concern that residents in and out of Carmel do not realize that those living

and working in Carmel receive premium garbage collection service compared to areas

outside of the City. The company is committing to better communicate that fact to the

customers in this area.

Decision Record: At its March 2, 2010 meeting the Council approved a pass-through fee

adjustment of 0.54% and a cost-of-living increase of 2.48% (Resolution 2010-11). This

resolution was subsequently rescinded on April 6, 2010 and only the 0.54% pass-through

free adjustment was approved (Resolution 2010-33). Prior to that, Council approved a

Waste Management fee increase of 11.70% in April 2080 and a 5.93% increase in

January 2006.

Reviewed by:

______________________________________ _______________

John Goss, Interim City Administrator Date
CITY OF CARMEL-BY-THE-SEA


CITY COUNCIL

RESOLUTION 2011-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

CARMEL-BY-THE-SEA IMPLEMENTING A COLLECTION RATE

ADJUSTMENT IN CONNECTION WITH AN EXCLUSIVE FRANCHISE

AGREEMENT BETWEEN USA WASTE OF CALIFORNIA, INC.

AND THE CITY OF CARMEL-BY-THE-SEA

WHEREAS, Waste Management is the City’s trash and recyclable goods

collector; and

WHEREAS, the Monterey Regional Waste Management District increased the

disposal fees to take effect on January 1, 2011; and

WHEREAS, Waste Management is requesting a 0.57% cost-of-living adjustment

in addition to the requested 0.29% pass-through disposal cost; and

WHEREAS, Waste Management submitted a formal written request 60 days prior

to the effective date as required in its exclusive Franchise Agreement.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF

THE CITY OF CARMEL-BY-THE-SEA DOES:

1. Approve an annual rate adjustment of 0.29% for residential and commercial

customers to cover cost increases to disposal fees, as requested by the

Monterey Regional Waste Management District.

2. Approve a cost-of-living adjustment increase of 0.57% for 2011.

3. Authorize the effective date of January 1, 2011 for the above annual rate

adjustment.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF

CARMEL-BY-THE-SEA this 7th day of June 2011, by the following roll call vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

SIGNED:


SUE McCLOUD, MAYOR



ATTEST: _______________________


_____________________

Heidi Burch, City Clerk