Staff Report Report Regarding Charging of Residential Curbside Recycling FeesEXHIBIT A2
COUNCIL AGENDA
DATE: 1/16/90
ITEM NO:
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
DATE: January 11, 1990
TO: MAYOR AND TOWN COUNCIL
FROM: DEBORAH ACOSTA, TOWN MANAGER
SUBJECT: REPORT REGARDING CHARGING OF RESIDENTIAL CURBSIDE
RECYCLING FEES
RECOMMENDATION:
That the cost of providing curbside recycling services, $0.82 per
household, be charged uniformly to each customer.
BACKGROUND:
This report is presented in response to Council's request for
alternative fee structures for charging of the cost of the
residential curbside recycling program.
DISCUSSION:
There are a total of 7,614 residential customers that will receive
curbside recycling services through the program recently adopted
by Council. The cost of services to be provided by Green Valley
Disposal Company (GVDC) is $0.82 per household per month. Based
on these figures, the total cost of providing services will be
$6,244 per month.
(Continued on page 2)
PREPARED BY: Regina A. Falkner, Mana
Community Services Divi
RAF:dr
CSD05:A:\cnclrpts\curbrscy.f.s
Reviewed by: Attorney
TOWN COUNCIL ACTION DIRECTED TO:
ACTION OF COUNCIL: /),110p7,0„ � f
PAGE THREE
MAYOR AND TOWN COUNCIL
REPORT REGARDING CHARGING OF RESIDENTIAL CURBSIDE RECYCLING FEES
JANUARY 16, 1990
Alternatives I through III are provided in Exhibit 1 should Council
wish to select an alternative fee structure.
FISCAL IMPACT:
The cost of the recycling program will be borne by the households
served.
EXHIBIT:
1. Alternative Rate Structures
DISTRIBUTION:
1. Sue Marki, Div. of Recycling, 1025 "P" St., Sacramento 95814
2. David Wolf, First United Methodist Church of Los Gatos,
19 High School Court, Los Gatos 95032
3. Nancy Cardinet, 221 Jones Road, Los Gatos 95032
4. Claudette Lynch, 108 Cherrystone Court, Los Gatos 95032
5. Mrs. Campbell, 17020 Los Cerritos Drive, Los Gatos 95032
6. Mrs. Williams, First United Methodist Church of Los Gatos,
19 High School Court, Los Gatos 95032
7. Dr. Irving Olender, 178 Long Meadow Drive, Los Gatos 95030
8. Ms. Linger, 312 Harding, Los Gatos 95032
9. Ms. Delores Simone, 248 Old Adobe Road, Los Gatos 95030
10. Mr. John Snelham, 247 Old Adobe Road, Los Gatos 95030
11. Mr. Gerard Wen, GVDC, P.O. Box 1227, Los Gatos 95031
12. Barbara Lee, City of Campbell
13. Todd Argow, City of Saratoga
14. Rosemary Pierce, City of Monte Sereno
15. Marilyn Basham, 108 Teresita Way, Los Gatos 95032
16. Ms. Sara Stephenson, League of Women Voters, Los Gatos,
Saratoga Monte Sereno, 12491 Jolene Court, Saratoga 95070
17. Ms. Cynthia Dettner, LGS, 770 "L" Street, Suite 960,
Sacramento 95814
18. Dick Gaines, 340 Johnson Avenue, Los Gatos 95032
19. Mrs. Albert Blake, 17511 Pine Street, Los Gatos 95032
20. Janet Foreman, City of Palo Alto, Public Works Dept., P.O. Box
10250, Palo Alto, CA 94303
21. Mark Bowers, City of Mountain View, Solid Waste Program
Manager, P.O. Box 7540, Mountain View, CA 94039
Unlimited; Curbside 0' - 5
Unlimited; 6' - 30'
Unlimited; 31' - 130'
1 can; Senior Citizen; 0' - 5'
1 can; Senior Citizen; 5' - 30'
1 - 5 cans Walk/Drive over 130'
1 can; 0' - 5'
1 can; 6' - 30'
1 can; 31' - 130'
1 can; over 130'
CSD05:A:\memos\wastmgmt.exh
EXHIBIT A3
RESIDENTIAL FEES
CURRENT VARIABLE UNLIMITED
$ 4.20
$ 4.60
$ 5.65
$12.75
$ 4.96
$ 5.43
$ 6.67
$15.05
$10.30
$11.50
$12.85
$ 4.96
$ 5.43
$22.00
EXHIBIT A4
DATE: March 2, 1990
MEMO TO: Mayor and Town Council
FROM: Debra Figone, Interim Town Manager
SUBJECT: REFUSE COLLECTION COSTS
RECOMMENDATION:
Approve variable can collection and curbside recycling services at the single -
can base rate of $4.96 per month per household.
BACKGROUND:
The rates for refuse collection services in the community are based on the cost
of collecting refuse by Green Valley Disposal Company. Annually, the rate review
committee comprised of representatives of Los Gatos, Campbell, Saratoga and Monte
Sereno, reviews financial documents supplied by Green Valley and discusses cost
savings measures as well as the need to increase revenues when necessary to meet
the cost of operations.
The conclusion from the rate review discussions since 1986 has been that the
Town's rates required no adjustment. As Council is aware, beginning in the early
1980's a census of the amount of refuse collected by Green Valley Disposal
Company was conducted by an independent firm. The firm's task was to determine
the total refuse collected and determine the refuse collected in each community.
This census was conducted based on concerns of the Campbell and Los Gatos repre-
sentatives that Saratoga and Monte Sereno may not have been paying for their fair
share of the cost of refuse collection in their communities. As a result of that
census, the proportionate share of refuse from each community was established
and a policy was adopted that each community would establish a separate rate
structure to collect enough revenue to support the cost of providing services
in their community. By 1986, that policy was fully implemented by all the West
Valley Cities mentioned above.
As a result of that policy, Monte Sereno and Saratoga were required to raise
their rates dramatically to cover costs. Campbell and Los Gatos, however,
acquired a surplus of revenue over expenditures. Therefore, staff has not recom-
mended a rate increase in Los Gatos since 1986 and a surplus of revenues over
expenditures currently exists. In setting future rates, staff is proposing to
continue to utilize this surplus to normalize rates. That is, to set rates so
that any potential rate increases in the future match the rate of inflation and
do not result in significant double-digit increases.
During the rate review discussions in the fall of 1988, staff decided to again
defer the question of rate adjustment until the curbside recycling program was
reviewed and the request for unlimited service was analyzed.
DISCUSSION:
In reviewing the rate proposals developed by staff, it is important to recognize
that each alternative is developed with a goal of creating a total
Memo to Mayor and Town Council
March 2, 1990
Page 2
revenue stream in order to cover the cost of refuse collection in our community.
Rates are then set to collect the desired amount of revenue. Any individual rate
for a category of users, such as commercial versus residential, or curbside
service versus service for cans 30 or more feet from the curb, can be adjusted
up or down. Any adjustment, however, would have impact on the other categories
of users in order to maintain the same desired total revenue for the entire
community.
Making estimates for upcoming budgets are extremely difficult due primarily to
the increased numbers of taxes and charges being added to landfill costs. For
example, AB 939 has resulted in a charge of $0.50/ton of refuse dumped at the
landfill from January 1 through June 30 of this year to raise revenue for
administration on the State -run program. The fee will be $1.00 per ton beginning
July 1, 1990. Additionally, $0.15 per ton is charged for the County Solid Waste
Management Plan; $0.16 for the County Inspection Fee (this is expected to
increase $0.10 this fiscal year).
Guadalupe Rubbish Company is currently in the process of applying for annexation
into the City of San Jose. San Jose charges a $3.00/ton business tax to raise
revenue for its recycling programs. Guadalupe will apply to LAFCO for annexation
in March; a Public Hearing is expected to be held in April. The Rate Review
Committee will draft a letter for signature by the appropriate representative
from each West Valley City. The letter will request that the tax be waived, or
that the funds be returned to us for use for the West Valley recycling program.
Attached as Exhibit 4b is a spread sheet including costs of the San Jose Business
Tax. If Los Gatos is forced to pay this tax, a rate increase of approximately
five percent would be necessary this Fall.
The attached Exhibit A4a summarizes the current estimated revenues and expenses
for refuse collection in the community. The figures under the column headed
89/90 reflects the numbers reviewed and approved by the Rate Review Committee
during Spring of last year. The next two vertical columns reflect 10/12 and 2/12
of the 89/90 budgeted figures with two exceptions: 1) $70,000 has been deducted
from the first ten months for additional refuse collection services provided
after the earthquake; and, 2) the second column reflects expenses for the
curbside recycling program for five months of the year.
The budget for the Fiscal Year 1990-91 assumes a five percent increase in rates
over the current fiscal year, plus an increase of $150,000 for increased landfill
costs. The Rate Review Committee will be reviewing audited Fiscal Year 1988-
89 figures and the proposed Fiscal Year 1990-91 budget during the months of March
and April. As always, the future projections of revenue and expenses should not
receive much weight in your review. They are simply estimates provided for
information only.
As you begin to analyze the rate question closer, you can see from Attachment
4a that on an annualized basis the estimated expenses in Los Gatos exceed
estimated revenues by $156,313. This excess of expenses over revenues is offset
by the surplus mentioned above of $317,950 which has resulted from the policy
Memo to Mayor and Town Council
March 2, 1990
Page 3
of segregating revenues and expenses by community. This "surplus" has been
reduced significantly over the years by not increasing rates since 1986. Minor
impacts on the surplus include the cost of clean-up during the earthquake
($70,000) and the three-month subsidy of the recycling program ($22,475).
Staff looked at a number of alternatives for rate adjustment. Version 1,
Attachment A4a is the recommended alternative. It proposes an overall eighteen
percent increase in rates effective May 1, 1990; this includes the cost of $0.82
cents for recycling starting in February of this year. This version provides
equal increases to residential and commercial accounts.
As you know, historically, commercial refuse rates subsidize residential refuse
rates. Therefore, those communities with a larger commercial base have lower
residential refuse rates. Staff is recommending an overall 18 percent increase
to meet current and expected costs. It maintains the existing subsidy from
commercial, and raises all rates almost equally. If unlimited collection is
implemented and the volume increases significantly, requiring additional
adjustments, the staff would again analyze the split between residential and
commercial rates.
It is important to note that all the rate proposals are recommended for a May
effective date. If rate adjustments are deferred another year, the community
may be faced with even greater increases at that time.
If Council has an alternative philosophical approach, staff could be provided
with direction, to bring back to the Council or to the Council's Finance
Committee. If that occurs, staff recommends that the Hearing be continued, but
be limited only to rate review. In any case, it is recommended that the
decisions on curbside recycling and unlimited service versus a volume -based
collection system be decided during this Hearing.
FISCAL IMPACT:
An overall rate increase of 18 percent is recommended; this includes the cost
of recycling. If the Town is forced to pay the San Jose Business Tax, another
rate increase of approximately five percent would be required this Fall.
Prepared by:
DF:RAF:dr
Attachments:
Regina A. Falkner, Ma
Community Services Di
A. Los Gatos Rate Percent Projection
B. Los Gatos Rate Percent Projection Impact of San Jose Business Tax
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