Item 49 Staff Report Green Valley Disposal Rate StructureCouncil Agenda
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Date:5/18/87
Item No.71041r L{
TOWN OF LOS GATOS
Council Agenda Report
DATE: MAY 13, 1987
TO: MAYOR AND TOWN COUNCIL
FROM: DEBORAH SWARTFAGER, TOWN MANAGER Tb
SUBJECT: GREEN VALLEY DISPOSAL RATE STRUCTURE
RECOMMENDATION
For Information
DISCUSSION
As indicated on June 2, 1986 the Town will not be required to increase refuse
collection rates for 1987-88. As you know Campbell, Monte Sereno, Saratoga and Los
Gatos jointly monitor through a joint powers agreement (J.P.A.) collection and
disposal of refuse by Green Valley Disposal. For the last three years the J.P.A.
has been attempting to equate the revenues collected in each municipality to cost of
service. This year marks the successful completion of that concept.
To facilitate this idea, the Cities of Monte Sereno, and Saratoga have recently
adopted rate increases for 1987-88. Neither Campbell nor Los Gatos, however, are
required to increase revenues. As a result of reaching equity, in 1988-89 any rate
increase should be very comparable between the jurisdictions.
FISCAL IMPACT
None
PREPARED BY: DEBORAH SWARTFAGER, Town Manager
cc: Regular Distribution
Reviewed by:
TOWN COUNCIL ACTION DIRECTED TO:
ACTION OF COUNCIL:
COMMENTS:
Council Agenda
Date: 6/2/86
Item No. 3
TOWN OF LOS GATOS
Council Agenda Report
DATE: JUNE 2, 1986
TO: MAYOR AND TOWN COUNCIL
FROM: DEBORAH SWARTFAGER, TOWN MANAGER
SUBJECT: JOINT POWERS AGREEMENT WITH GREEN VALLEY DISPOSAL
Recommendation:
Adopt resolution authorizing 5.8% increase in refuse collection revenues.
Discussion:
The attached report was prepared jointly by the Manager's of Campbell, Monte Sereno,
Saratoga, and Los Gatos. The increase in revenues covers a two year period from
1985-86 to 1986-87.
PREPARED BY: DEBORAH SWARTFAGER, Town Manager
cc: Regular Distribution
Reviewed by:
TOWN COUNCIL ACTION DIRECTED TO: Deborah Swartfaer
ACTION OF COUNCIL:
Adopted resolution subject to Saratoga's rates
being no lower than Los Gatos.
COMMENTS:
RESOLUTION NO.
BEING A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MONTE SERENO MODIFYING RATES FOR REFUSE
COLLECTION SERVICES
WHEREAS, the Green Valley Disposal Company has requested a rate
modification for refuse collection services in the City of Monte Sereno;
and
WHEREAS, the City Administrator has examined the proposed
modification and determined that it is in fact reasonable; and
WHEREAS, the Cities of Campbell, Monte Sereno, Saratoga and the
Town of Los Gatos agree that rates for refuse collection services should
be based upon the actual cost of service within each jurisdiction at the
commencement of the 1987-88 fiscal year;
NOW, THEREFORE, BE IT RESOLVED that the rates for refuse
collection services shall be increased in the City of Monte Sereno
effective July 1, 1986 by the amount necessary to produce a 11.5% increase
in revenues.
BE IT FURTHER RESOLVED that adoption of this resolution is
contingent upon execution of compatible resolutions in the Cities/Town of
Los Gatos, Campbell and Saratoga.
PASSED AND ADOPTED this day of June, 1986 by the following
vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
APPROVED:
ATTEST:
TO:
Campbell City Council
Los Gatos Town Council
Monte Sereno City Council
Saratoga City Council
MEMORANDUM
FROM: Kevin C. Duggan, City Manager
Deborah Swartfager, Town Manager
Don Wimberly, City Administrator
Harold Peacock, City Manager
SUBJECT: Green Valley Disposal - Rate Increase Request
RECOMMENDATION:
DATE: May 20, 1986
That the Campbell City Council and Los Gatos Town Council adopt the attached
resolution authorizing a 5.8% increase in refuse collection revenues; and that
the Monte Sereno and Saratoga City Councils adopt the attached resolution
authorizing an 11.5% increase in refuse collection revenues for the 1986-87
fiscal year.
HISTORY:
In March, 1983, the cities of Campbell, Los Gatos, Monte Sereno and Saratoga
executed a joint franchise agreement with Green Valley Disposal for refuse
collection services. In prior years, each city had independent agreements with
Green Valley, and rates were consistent among jurisdictions. It was determined
that many advantages existed to the joint franchise approach including
consistency of service standards, improved landfill planning ability, and
increased effectiveness in monitoring financial records and cost accounting
procedures. During negotiation of this agreement, each city acknowledged that
inequities existed in the consistent rate schedule which was in place at that
time, recognizing differences in the number of commercial accounts, and
variations in residential density levels among the four cities. At that time
it was agreed that progress should be made toward equity in refuse collection
rates. In response to this, the Rate Review Committee (composed of one
representative from each city) developed a cost accounting system in
conjunction with Green Valley accounting staff. This system was refined and
formalized with the Main Hurdman Cost Accounting Study of 1984. The
methodology set forth in this document was utilized successfully in the 1984-85
rate review. In 1986, field studies were conducted to update the assumptions
and cost figures which are applied to this methodology.
Tremendous progress has been made during the past three years toward
establishing revenue requirements and rates based upon actual costs -to -serve
within the individual jurisdictions. This report will recommend an•approach to
reaching full self-sufficiency by the 1987-88 fiscal year, thereby eliminating
the need for substantial subsidies between cities.
Page two
Green Valley Disposal
Rate Increase Request
May 20, 1986
DISCUSSION?:
The proposed 1986-87 fiscal year budget presented by Green Valley Disposal
includes a total increase of 3% over the prior year. The rate review committee
has reviewed this budget and finds the adjustment to be appropriate, in light
of dramatic increases in insurance rates and a modest increase to employee
costs.
When distributed by jurisdiction in accordance with the Main Hurdman cost
accounting plan, this budget yields the following total costs for the 1986-87
fiscal• year for all services:
Campbell $2,498,985
Los Gatos - 1,946,833
Monte Sereno - 196,422
Saratoga - 2,048,678
The following breakdown details the respective total revenues being generated
by jurisdiction, and illustrates the dollar amount and percentage difference
which presently exists between revenues and expenditures:
Total Revenues Shortfall
Campbell $2,420,304 $ 78,681 (3.3%)
Los Gatos 1,913,514 33,319 (1.7%)
Monte Sereno 169,711 26,711 (15.7%)
Saratoga 1,719,783 328,895 (19.1%)
On May 14, 1986 the City Managers from each jurisdiction met to review this
issue and to formulate a consensus recommendation to be presented to each City
Council. It was the recommendation of the group that revenue requirements be
established in each City based upon the actual cost of service beginning in the
1987-88 fiscal year, and that substantial progress be made in the upcoming
fiscal year toward that goal. As revenue projections and cost estimates can
vary from actual figures, it was suggested that a tolerance be permitted,
should the gap between actual costs and revenues produced fall 2% short or 2%
in excess of projections.
Exhibit A projects the level of increases which may be anticipated over the
upcoming three years, should Green Valley limit budget adjustments to three
percent in each fiscal year. Although these figures are based upon
conservative assumptions, they will allow cities to anticipate the magnitude of
increases which may be required in future years. For example, should the City
of Campbell authorize a 5.8% revenue increase in 1986-87 as recommended, and
should a 3% budget increase be requested in 1987-88, the City of Campbell would
be required to increase revenues by .5%. Assuming another 3% budget increase
in 1988-89, Campbell would be required to increase revenues by 3%. Should
Saratoga increase revenues by 11.5% in 1986-87 as recommended, and should a 3%
budget increase be requested in 1987-88, Saratoga would be required to increase
1
Page three
Green Valley Disposal
Rate Increase Request
May 20, 1986
revenues by 10%. This action would result in Saratoga producing revenues which
are equivalent to expenditures within that jurisdiction. Should a 3% budget
increase be requested in 1988-89, Saratoga would require a 3% increase in
revenue production. In Los Gatos, the 5.8% increase in 1986-87 will result in
no required increase in 1987-88, assuming.a budget increase of only 3%. A
modest amount of excess revenue may be available in that year which would be
utilized to offset increases required in other jurisdictions. It is
anticipated that in future years, consistent percentage increases will be
levied in all four jurisdictions, assuming that each city remains within the 2%
allowance of their revenue requirement.
Exhibit B provides examples of resulting rates for the 1986-87 fiscal year,
should the proposed revenue increases be adopted in each city, and should these
increases be spread evenly between all types of residential and commercial
services. It should be noted that the distribution of increases will be at the
discretion of the jurisdiction as long as the revenue requirement is achieved.
For example, an agency may choose to increase commercial rates by a larger
percentage than residential rates. As seen in the exhibit, if spread evenly
among service classes, the recommended increase would result in a $1.20
adjustment to unlimited residential curbside service in Saratoga and a $.93
adjustment to their two can "hard -to -serve" rate. Campbell's unlimited
curbside residential rate would be increased by $.36, while the Los Gatos two
can flatland rate would increase by $.39. In Monte Sereno, an increase of $.58
would result in the one can flatland collection rate, and $1.50 in the curbside
unlimited rate.
In an attempt to maintain the present joint franchise agreement and to make a
firm commitment and progress toward meeting each jurisdictions financial
obligation, the proposed formula is being recommended to each affected City
Council. It must be recognized that this is a compromise approach, and that
action by each agency is contingent upon approval by each of the other three
parties. Should this approach not be adopted, it is anticipated that each
agency will be required to negotiate individually with Green Valley Disposal,
and possibly face litigation should full financial obligations not be
satisfied. As such, it is recommended that each agency adopt this approach at
their respective meeting during the week of June 1, 1986.
/js
f:greenval (pg.3)
EXHIBIT A
REVENUE REQUIREMENT PROJECTIONS
SARATOGA MONTE SERENO
1986-87 Revenue (Increased by 11.5%) 1,917,558 189,228
1986-87 Expense 2,048,678 196,422
Deficit (131,120) (7,194)
1987-88 Revenue (before increase) 1,917,558 189,228
1987-88 Expense (3% budget increase) 2,110,138 202,315
Deficit (increase required) (192,580) = 10.0% (13,087) = 6.9%
1988-89 Revenue (before increase) 2,109,314 202,285
1988-89 Expense (3% budget increase) 2,173,442 208,385
Deficit (increase required) (64,128) = 3.0% (6,100) = 3.0%
CAMPBELL LOS GATOS
1986-87 Revenue (increased by 5.8%) 2,560,682 2,024,498
1986-87 Expense 2,498,985 1,946,833
Surplus +61,697 +77,665
1987-88 Revenue 2,560,682 2,024,498
1987-88 Expense (3% budget increase) 2,573,955 2,005,238
Surplus/Deficit (13,273) = .5% +19,260
1988-89 Revenue 2,573,485 2,024,498
1988-89 Expense (3% budget increase) 2,651,174 2,065,395
Deficit (increase required) (77,689) = 3.0% (40,897) = 2.0%