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Home My WebLink About1992-09-30 - AGENDA REPORTS - SOLID WASTE FEES (2)CITY OF SANTA CLARITA INTEROFFICE MEMORANDUM TO: Honorable Mayor and City Council FROM: Jeff Kolin, Deputy City Manager, Public DATE: September 30, 1992 SUBJECT: SOLID WASTE FEES At the City Council Study Session on May 12, 1992, Council approved staff's recommendation to hire the firm of Hilton, Farnkopf and Hobson (HF&H) to perform a rate review study of the existing residential refuse and recycling collection service provided by the City's three franchised haulers. The scope of the study was to analyze the impacts on the residential refuse rate structure due to landfill tipping fee increases and changes in the Producer Price Index (PPI); to include a comparison of the various options currently practiced in municipal government that manage the commercial sector wastestream; to estimate franchise fees retained since January 1992 by the City's three franchised haulers; estimate the cost of implementing rail haul remote disposal systems on individual rates; and to develop an approach to assist the City in selecting the best available option for the monitoring of commercial refuse disposal and waste diversion, REFUSE RATE ANALYSIS The residential refuse franchise agreement provides for rate modifications based on changes in landfill tipping fees and the Producer Price Index (PPI). Increased landfill tipping fees of up to 25 % may be passed on to customers through rate increases following a written request to the Public Works Director; increasing more than 25% requires City Council approval. PPI adjustments are required by the terms of the franchise agreement to occur annually in January and also require City Council approval. Single Family The results of the rate review study demonstrates that tipping fees at Laidlaw/Chiquita Canyon landfill increased by $4.44 per ton on May 1, 1992. This translates to a 4.4% increase in monthly rates which equals $0.79 per household per month. In addition, the increases in the PPI since the inception of the franchise are projected to increase the monthly rate by 1.9% as of December 31, 1992, representing an increase of $0.34 per household per month.. These incremental changes distributed over the total waste disposal tonnages and operational expenses for single family households represents an increase of $1.13 per household per month. Agenda Item: Solid Waste Fees September 30, 1992 Page 2 Multi -Family Similarly, multifamily accounts will be affected by an increase of 4.7% in monthly rates due to landfill disposal fees and a 1.9% increase for the PPI adjustments (see Attachment). The adjustments are proposed to take effect as of January 1, 1993. The next annual rate adjustment would occur in January of 1994. However, increased landfill tipping costs assessed the haulers can be passed on to customers in the interim period. The haulers' contracts expire in May, and could quite likely result in increased costs for disposal. Rate adjustments based on an index such as the PPI present ambiguity since the indices can be interpreted in various ways. To avoid future uncertainty in determining the adjustments, the study recommends that the City develop an annual rate adjustment procedure that will afford a more defined set of factors based on projected revenues and costs, and conduct periodic rate reviews to assure that the.rates charged are reasonable. An additional recommendation was to conduct a follow-up rate review next year. The franchised haulers have agreed with the recommendations outlined in the study and to a discounted rate for service to senior citizens of $3.00 off the normal rate with a reduced capacity container. FRANCHISE FEES Under the provisions of Section 7 of the Franchise Agreement, the haulers were required to pay the City a franchise fee of 10% of their gross revenues 15 days after the end of each calendar month to have begun on January 7, 1992. To date, the City has not received payment of these fees from the haulers since a pass-through of the increased costs due to the landfill tipping fees and the PPI has not been approved. The haulers had indicated that increases in costs incurred by them would offset the fees due to the City. A thorough comparison analysis of the haulers disposal expenses resulting from increased tipping fees and the PPI for a period of 20 months (May 1991 - December 1992) versus the total franchise fees owed to the City over the same time interval clearly shows that a total of $452,000 in franchise fees are due to the City from the three haulers. COMMERCIAL COLLECTION OF REFUSE AND RECYCLABLES In order to fully comply with the mandates of AB939, the California Waste Management Act of 1989, it is important that the City effectively track the commercial sector waste disposal and diversion. The study performed by HF&H provides an overview of the various options available to the City for managing its commercial wastestream, and outlines the disadvantages and advantages associated with each option. Also identified is a list of criteria which can be ranked in the order of priorities . determined by Council so that a commercial system can be implemented to meet their objectives. Laith Ezette of Hilton Farnkopf and Hobson will be present at the September 30 Study Session to provide an overview of the Study and its findings. Solid Waste Fees September 30, 1992 Page 3 Direct the City Manager to place the action items listed below on the October 13, 1992 City Council Meeting Agenda: • Direct staff to return to Council with a resolution amending schedule of rates to reflect an increase of 6.3% on single family households and 6.6% on multifamily accounts, and to include a discount rate for senior citizens. • Direct the City Manager to collect from the haulers the balance of $452,000, based on the analysis of the hauler's disposal expenses versus franchise fees due to the City. • Direct the City Manager to execute a Memorandum of Understanding (MOU) between the City and the franchised haulers to collect franchise fees 15 days after the end of each calendar month to begin in January, 1993, with the first payment due February 15, 1993. Establish the date of the next annual rate review as January 1994. • Direct staff to return to Council with a resolution amending the franchise agreement to include an annual rate adjustment procedure based on projected revenues and costs and to add provisions for a senior citizen discounted rate. • Direct staff to develop the Council's rankings and priorities into a systematic approach for managing commercial disposal and waste diversion. ATTACHMENT Hilton, Farnkopf & Hobson Study JK:hj:gmm fees.sw CITY OF SANTA CLARITA Refuse Collection Cost of Service Study September 30, 1992 Executive Overview ❑ Residential refuse collection and recycling service ❑ The single family rate was $16.85 on April 15, is provided by three franchise haulers to residential 1991. customers. ❑ The single family rate was increased to $17.81, ❑ Commercial refuse collection service is and multi -family rates were increased by unregulated. approximately 5%, on July 1, 1991. ❑ The franchise agreements allow for a rate adjustment each January 1 for changes in the PPI, however, the haulers did not receive such a rate adjustment on January 1, 1992. ❑ The haulers have not yet paid.franchise fees to the City that have accrued since January 1, 1992. ❑ Landfill fees increased in April and May of 1992, but collection rates have not been raised. Hnton Farnkopf & Hobson _t CITY OF SANTA CLARITA Refuse Collection Cost of Service Study September 30, 1992 Executive Overview (continued) ❑ Evaluate the reasonableness of current approved rates. ❑ Estimate rate impacts of recent landfill fee increases. ❑ Estimate rate impacts of changes in the PPI. ❑ Estimate rate impacts of remote disposal via rail haul. ❑ Conduct a workshop for the City Council on alternative rate setting methodologies, and alternative service arrangements for commercial collection. ❑ Estimate the amount of franchise fees retained by the haulers since January 1;1992. ❑ Estimate the increased cost of disposal due to landfill tipping fee increases since the start of the franchise. ❑ Estimate the increase in hauler revenues resulting from the rate increase effective July 1, 1991. ❑ Estimate the increase in hauler revenues that would have been earned if a PPI adjustment had been implemented on January 1, 1992. N Hilton Barnkopf & Hobson 0� CITY OF SANTA CLARITA Refuse Collection Cost of Service Study September 30, 1992 Executive Overview (continued) ❑ Met with City staff and the haulers to discuss the study scope and objectives. ❑ Developed data collection forms for the haulers to submit financial information. ❑ Conducted site reviews at each hauling company to review source documentation supporting the financial submittal. ❑ Reviewed draft formats of the report exhibits with the haulers and City staff. ❑ Met twice with the haulers and City staff to review the draft report. Hilton Fornkopf & Hobson �� CITY OF SANTA CLARrrA Refuse Collection Cost of Service Study September 30, 1992 Executive Overview (continued) ❑ The haulers did not increase their rates to approved levels at the start of the franchise.` ❑ The City's approved rates have been reasonable, based on the haulers operating costs. ❑ The July 1, 1992 rate increase exceeded the haulers' increased disposal costs. ❑ The haulers owe the City an approximately $452,000 in estimated franchise fees after adjustments for hauler cost increases -that were not passed through and the rate increases implemented on July 1, 1992. ❑ The estimated cost to transfer waste via rail haul would increase collection rates by 23% for disposal, and by 35% if processing costs are included. Hilton Farnkopt & Hobson �� -4- CITY OF SANTA CLARITA Refuse Collection Cost of Service Study September 30, 1992 Executive Overview (continued) ❑ The City should start collecting franchise fees from the haulers. ❑ In order to maintain the reasonableness of current rates, the City should increase single family rates on January 1, 1993, by $1.13, and multi -family rates by 6.6%, to pass through hauler cost increases for dispo- sal and the PPI. ❑ The City should consider implementing a "wheelout" charge that should be accompanied by a reduction in the basic bin charges. ❑ The City should establish formal rate review procedures for future rate changes. Hilton Farnkopf & Hobson �� City of Santa Clarita September 30,1992 RATE SETTING ALTERNATIVE • Markets with effective competition where operational efficiency can be achieved without • Short-term adjustments in a stable, predictable environ- ment. • Dynamic environments with significant economics of scale. • Long-term re-evaluation of rates, service levels, and contract terms and condi- tions. 6 • No administrative costs • Should not be used in mon- opoly or oligopoly situa- tions. Rates may be adjusted with • Rate adjustments may not minimal time and study reflect underlying costs. costs. . Weightings of index com- ponents change over time. • Cannot accommodate ser- • Allows for introduction of new services or service changes. • Ensures reasonable fates forratenavers and reason - • Bid process identifies gdal- ity service providers offer- ing most cost effective and innovative solutions. Modest administrative costs. • May reduce incentive to minimize costs if not imple- mented properly. • Bid process is time con- suming and requires signifi- cant resources. • Changes in service provid- ers may involve significant change in operations and customer relations. Hilton Farnkopf & Hobson H EH City of Santa Clarita September 30,1992 FEATURES OF THE COMMERCIAL REFUSE COLLECTION MARKET • Rapidly increasing landfill fees • New equipment to collect recyclables • Revised collection patterns to separate "clean" and "dirty" loads • New reporting requirements • Costs can be reduced by reducing the distance between customer locations. • Trucks are noisy • Trucks cause wear and tear on roads, and add to traffic on streets Hilton Farnkopf & Hobson 7 ` City of Santa Clarita September 30,1992 ALTERNATIVE SERVICE ARRANGEMENTS • Rate setting is left to market forces, and the City does not have to administer a fran- chise agreement. • Existing companies may continue to serve their customers. 8A • More trucks on City streets causing noise, pollution, and congestion. • Difficult to coordinate recycling programs with many companies. • Difficult to monitor safety and environmental standards. • Scattered customer locations increases operational costs. 'A Hilton Farnkopf & Hobson City of Santa Clarita September 30, 1992 ALTERNATIVE SERVICE ARRANGEMENTS • City may require service pro- • viders to offer specific recy- cling services, and to comply with other permit conditions. • Rate setting is left to market forces, and the City does not have to administer a fran- • chise agreement. • Existing companies may continue to serve their customers. Future competition may be reduced if industry consolidation occurs un- less additional permits are issued. More trucks orf City streets causing noise, pollution, and congestion. Must coordinate recycling programs with many companies. • Difficult to monitor safety and environmental standards. • Scattered customer locations increases operational costs. Hilton Farnkopf & Hobson SB �` y City of Santa Clarita September 30,1992 ALTERNATIVE SERVICE ARRANGEMENTS • Collection efficiencies may • Must coordinate recycling programs reduce the cost to provide and regulate rates for three different service. companies rather than one. • Fewer number of service • Other companies may offer lower providers makes coordination rates and improved services. of recycling programs easier. • Existing service providers are not • Commercial rates may offset allowed to bid on exclusive contract. residential rates. ' , G, • Rate setting may be more complex • City may collect franchise than with a single franchisee. fees. r Hilton Farnlcopf & Hobson City of Santa Clarita September 30,1992 ALTERNATIVE SERVICE ARRANGEMENTS • Competitive bidding • Most existing service providers will promotes cost effective no longer be able to service their service. customers. • Coordinate recycling • More difficult for commercial rates programs and monitor activi- to offset residential rates. ty of a single hauler. • Operational efficiencies may not be • All haulers will have the as great as if franchises awarded to opportunity to bid. existing residential franchise holders., • City may collect franchise fees. ' Hilton Farnkopf & Hobson City of Santa Clarita September 30,1992 WHAT ARE THE CITY COUNCIL'S REFUSE SYSTEM PRIORITIES? Low rates for quality service. Relative ease of monitoring and managing the system. Relative ease of implementing and monitor- ing waste diversion and recycling programs. Concern for collection companies currently providing collection service, and giving cus- tomers a choice among service providers. Minimization of noise, traffic, pollution, grid safety and environmental risks. Hilton Farnkopf & Hobson 9• City of Santa Clarita September 30,1992 EVALUATION OF ALTERNATIVE SERVICE ARRANGEMENTS ' Rating for tit with evaluation criteria A = Excellent; B = Good; C = Fair Hilton Farnkopf & Hobson 10 ��! RegulatoryCommercial Alternative Commercial AB 839 Sernce . Commixmty ' �I. Adirimistraton Rates Com Banca: If1 OYlders € Im' acts X. ExrstangSystern I]nregula%sI B A C A C Competition �` 2: Non Exedus�ne Permtt,5ystem B B BIC A C f'orE.zsttng �etvu�eProniders ilegottafed �rancletses guarded'= B B B B A to current resrdent�at franchise holders .t-ancTttses nu�artled f*y " A B A C B �mpetitaue bui to a single r frarrchxsee M ' Rating for tit with evaluation criteria A = Excellent; B = Good; C = Fair Hilton Farnkopf & Hobson 10 ��! CITY OF SANTA CLARITA Refuse Collection Rate Review Final Report September 24, 1992 Hilton Farnkopf & Hobson 39350 Civic Center Drive, #100 Fremont, CA 94538-2331 5101713.3270 3990 Westerly Place, 0195 Newport Beach, CA 92660-2311 714/251-8628 This report is printed on recycled paper and copied on two sides to reduce waste HILTON FARNKOPF & HOBSON II ' �.. HILTON FARNKOPF & HOBSON Advisory Services to =E� Municipal Management ■ 3990 Westerly Place, Suite 195 Newport Beach, California 92660.2311 Telephone: 714/251-8628 ' Fax: 714/251-9741 September 24, 1992 I' Mr. Jell' Kolin Director of Public Works City of Santa Clarita ' 25663 Avenue Stanford Santa Clarita, CA 91355 REFUSE COLLECTION RATE REVIEW REPORT Dear Mr. Kolin: Fremont Newport Beach This report documents Hilton Farnkopf & Hobson s (HF&H) review of franchise collection rates for the City of Santa Clarita (City). This report: • Summarizes the project objectives; • Describes the activities we performed; ' Discusses key data issues and limitations; and, • Documents our findings and recommendations. ■ This report reflects our consideration of the comments from our draft report dated ' July 30, 1992 that we received from City staff and the haulers. STUDY GOALS & OBJECTIVES ' The City had two primary goals for.this study. ' The first goal was to evaluate the reasonableness of existing rates and estimate the impact of recent disposal cost increases on these rates. ' The second goal was to estimate the amount of franchise fees retained by the haulers, and to compare this to hauler cost increases not passed through and other rate adjustments during the 20 -month period ending December 31,'1992. I 1 recycled -J woe, r � =E` -E HILTON FARNKOPF & HOBSON September 24, 1992 Mr. Jeff Kolin Page 2 Specific objectives for each of these two goals are summarized below. Coal Versus Disposal Cost Increase.-, Goal iJbjecilvesME C)ltjectrr ❑ Evaluate reasonableness of current rates ❑ Estimate the amount of franchise fees by reviewing approved revenues, costs, retained by the haulers from January 1, and profits, for the three franchise 1992, to December 31, 1992. haulers serving the City of Santa ❑ Estimate the increased cost of disposal Clarita, for the 12 months ending April due to landfill tipping fee increases af- 30,1992. ter May 1,1991. ❑ Estimate the impact of the recent ❑ Estimate the increase in hauler reve- landfill tipping fee increase on franchise nues resulting from the rate increase collection rates; and effective July 1, 1991. ❑ Estimate the impact of proposed rail ❑ Estimate the amount of revenue the haul projects on single family refuse haulers would have earned if a rate ad - collection rates. justment had been implemented on January 1, 1992, for changes in the Producer Price Index. Additionally, as part of this study we will conduct a workshop for the City Council on alternative arrangements for commercial collection service. This workshop will ' be conducted after this report is delivered to the City. PROJECT ACTIVITIES HF&H performed the following tasks: ' • Confirmed the project goals and objectives with the City Manager, the Director of Public Works, the Solid Waste Coordinator, and representatives from the three franchised hauling companies; ' • Developed data collection forms for the three haulers to submit their financial information; • Reviewed the data collection forms with City staff and representatives from the three hauling companies; • Reviewed and tabulated the data submitted by the three hauling companies; ' recycled (j paper =E� HB.TONFARNKOPF&HOBSON September 24, 1992 Mr. Jeff Kolin Page 3 • Visited each hauling company to review source documentation for the submitted data and to clarify responses; • Revised, where appropriate, the initial hauler responses based on data collected during our site visits; • Compared the total revenues and costs for each hauling company to its audited financial statement or a tax return; ' Developed exhibit formats to summarize the study results, and reviewed these formats with City staff' and the three hauling companies before summarizing the financial information; • Aggregated the financial data submitted by the three hauling companies, and completed the report exhibits; • Reviewed the preliminary results with City staff; • Developed our draft report; • Met twice with City staff and representatives from the franchise haulers to discuss the report; and, • Revised our draft report based on comments from City staff and the haulers. KEY ISSUES & LIMITATIONS Data Sources The financial data used in the enclosed exhibits were provided by the three franchised haulers, and aggregated by Hilton Farnkopf & Hobson. While we have . reviewed the submitted information for reasonableness, and reviewed some of the ' source documentation upon which the submitted data was based, our work did not constitute an audit in accordance with Generally Accepted Auditing Standards. . ' Historical data was collected from the hauling companies for the 12 months ending April 30, 1992. The City later requested that the analysis of franchise fees re- tained by the haulers be extended to the 20 -month period ending December 31, ' 1992. Estimates of franchise fees, disposal quantities, and hauler cost increases not passed through for the 8 -month period ending December 31, 1992, were based ' reryUed %J paper 1 HILTONFARNKOPF& HOBSON ■ September 24, 1992 Mr. Jeff Kolin ' Page 4 on average monthly data for the 12 months ending April 30, 1992. Actual data for ' the 8 months ending December 31, 1992, may be different than estimated, and this difference may be material. ' Franchise Versus Non -Franchise Costs The haulers' franchises include all residential refuse collection services within the City's jurisdiction. The three franchise haulers, and other hauling companies, compete to provide commercial refuse collection service and roll -off box service. In order to determine the cost of services provided in accordance with the franchise agreement, it was necessary to segregate those costs which are attributed to residential refuse collection service within the City, from costs associated with non- franchised services within the City and all services outside the City. Since the haulers did not typically track data exclusively for franchise operations inside Santa Clarita during the study period, the analysis of franchise operations includes certain assumptions regarding the allocation of revenues and costs be- tween the City's franchise and non -franchise services. For example, since the haul- er s collection routes often cross City boundaries, route costs had to be allocated between customers inside and outside the City. Additionally, bin service routes within the City usually include both multi -family residential and commercial customers on the same route. Therefore, the costs of bin service routes were allocated between franchise (residential) and non -franchise (commercial) services, usually on the basis of bin capacity. Availability of Historical Data In some instances, the haulers did not maintain historical data for the entire 12 - month period ending April 30, 1992, which would allow for the identification of revenues and allocation of costs to the franchise services. In these instances, it was necessary to estimate some categories of annual revenues and costs based on a recent sample period. The revenue and cost allocations were complicated by two changes associated with implementation of the new franchises on April 15, 1991: The haulers did not immediately increase all customer rates to the rate levels authorized by the franchise agreement. This is particularly true for multi- family bin service customers, many of whom were still being charged less than recycled Ci Oe,er IY N _E -E HILTON FARNKOPF & HOBSON September 24, 1992 Mr. Jeff Kolin Page 5 the fully authorized franchise rates as of April 30, 1992; and, The haulers were trading franchise customers among themselves during the initial months of the franchise so that each hauler would have a contiguous service area. The factors identified above affected all three companies. Additionally, Blue Barrel was acquired by Western Waste in mid-November, 1991, resulting in new record keeping and accounting policies for that company. It appears that the new record keeping procedures utilized by Blue Barrel will provide improved information in the future. Reported Revenues Blue Barrel (Western Waste) and Atlas Refuse maintained monthly logs of revenues from franchise customers. Santa Clarita Disposal reportedly did not maintain records which would allow it to specifically identify monthly revenues from franchise customers during the reporting period. Therefore, the revenues for Santa Clarita Disposal during the 12 -month reporting period were allocated based largely on the May 1992 billing. While this approach may be the best available method given the lack of historical detail, the actual revenues may be different and the difference may be material. Santa Clarita Disposal lids implemented new record keeping procedures which should allow it to more accurately track franchise revenues in the future. Additional Approved Revenues Many of the exhibits in this report reference "additional approved revenue' which is defined below: 'Additional approved revenue" is the amount of additional revenue the haulers would have earned had they charged the full amounts authorized by the franchise agreement during the 12 -month period ending April 30, 1992. The franchise rates authorized by the City are in some cases higher than the refuse rates the City's rate payers were being charged prior to implementation of the franchise. When the franchises began on May 1, 1991, the haulers did not immediately increase all of their rates to the full amounts authorized by the City. Therefore, in cases where we have identified customers who were not charged the full franchise rates during the 12 months ending April 30, 1992, we have ",Cw tj P.P., =ems HILTONFARNKOPF&HOBSON September 24, 1992 Mr. Jeff Kolin Page 6 categorized the difference between the approved and actual rates as additional approved revenue. Additional approved revenues were estimated for all multi -family bin customers by estimating the annual revenue at approved rates based on customer lists provided by the franchise haulers, and subtracting actual reported revenues. Additional approved revenues for single family customers were estimated for individual accounts in cases where it was brought to our attention that the full franchise rates were not being charged. If there are significant numbers of single family customers that were paying less than the approved rates during the reporting period that were not brought to our attention, then the estimated and actual amount of additional approved revenue may be different than shown and this difference may be material. Producer Price Index The franchise agreements authorize a rate adjustment for changes in the Producer Price Index (PPI) each year on January 1. The City did riot implement a rate ad- justment for changes in the PPI on January 1, 1992. City staff requested HF&H to estimate the rate impact for a PPI adjustment to be effective January 1, 1993, re- flecting changes in the index from April 1991 to December 1992. The result of this analysis is shown in Exhibit 15. The most recent available data for the PPI is for August 1992. Therefore, we have estimated the PPI for December 1992 based on the average monthly change for the 16 months ending August 1992. The PPI is subject to revision by the Labor Depart- ment's Bureau of Labor Statistics for up to 4 months after initial publication. Therefore, we recommend that when the City develops a new rate adjustment mechanism, the index used should be published at least 5 months prior to the date of any rate adjustment so that final revised figures may be used in future rate ad- justment calculations. FINDINGS ■ Pass -Through of Disposal Fee Increase Effective May 1, 1992 ' Landfill tipping fees were increased from $24.45 to $28.89 per ton at Laidlaw's Chiquita Landfill on May 1, 1992, for Santa Clarita Disposal and Atlas Refuse, and April 1, 1992 for Blue Barrel. A pass through of this cost appears justified based on total franchise revenues and costs. Current single family rates would need to be increased by approximately 4.4%, and multi -family bin rates by 4.7%, as shown in the Exhibits 12 and 13. trecycled (J paper ....... N FARNKOPF & HOBSON September 24, 1992 Mr. Jeff Kolin Page 7. Current Rates If the City increases current rates to pass through the hauler cost increases, sum- marized in Exhibit 14, and begins to collect the franchise fee based on 10% of gross revenues, the new rates would be reasonable based on revenues, costs, and service levels reported by the haulers for the 12 -month period ending April 30, 1992. Ex- hibits 1 and 2, and Exhibits 4 through 8 present information regarding hauler reve- nues, costs, and profits for the 12 -month period ending April 30, 1992. Compara- tive information regarding profitability in other jurisdictions is shown in Exhibit 3. Financial Results of Informal Agreements to Waive Franchise Fees in Lieu of Rate Increases ' We have been asked by City staff to calculate the estimated amount of franchise fees that have accrued at 10% of gross revenues from January 1, 1992, through De- cember 31, 1992, and to compare this amount to disposal cost increases that were ' not passed through, and other rate adjustments, during the 20 -month period end- ing December 31, 1992. The result of this analysis is summarized in Exhibit 9A, with supporting analysis shown in Exhibits 9B, 9C, and 9D. Information regarding ' disposal quantities is shown in Exhibits 10 and 11. The description of the events shown in Exhibit 9A are based on representations from City staff and we express no opinion as to the accuracy of these representations. Based on the assumptions described in Exhibit 9A, the haulers would collectively owe the City approximately $452,000 in retained franchise fees, net of disposal cost increases and other adjustments for the 20 -month period ending December 31, 1992. The $452,000 is based on aggregated data and common estimation tech- niques for the three franchise haulers, and may vary by a small amount from the sum of the individual totals that will be separately calculated for each hauler due to rounding. Rail Haul A summary describing four major rail haul projects proposed for Southern Califor- nia is shown in Exhibit 16. Based on disposal cost information from the rail haul project sponsors, refuse collection rates in Santa Clarita would increase by approxi- mately 21% in order to pass through the higher cost of rail haul disposal, excluding material processing costs. The rail haul rate analysis is shown in Exhibit 17. RECOMMENDATIONS Franchise Fees The City should start collecting its franchise fees immediately, concurrent with a rtcyt�ae (�) Daper HILTON FARNKOPF & HOBSON ' September 24, 1992 Mr. Jeff Kohn Page 8 rate increase to pass through disposal cost increases and changes in the PPI, shown ' in Exhibit 14. Based on revenues and costs for the 12 months ending April 30, 1992, current rates plus the proposed adjustments are sufficient to allow the City to collect its franchise fee while allowing the haulers to cover their. operating costs ' and make a reasonable profit. Future Reviews We recommend that the City develop an annual rate adjustment process that considers the haulers projected revenues and costs, and conduct periodic rate reviews, to assure that the rates charged are reasonable. We also recommend that the City consider performing a follow-up rate review next year, based on the 12 months ending December 31, 1993, now that the franchise boundaries have been ' settled and since the haulers have improved their record keeping practices. The City should be aware that the hauler's landfill contracts with Laidlaw expire in ' April and May of 1993. Landfill tipping fees may significantly increase at that time and it is likely that the haulers will request another rate adjustment to pass through any additional disposal cost increases at that time. ' We look forward to presenting our study results to the City Council on September 30, 1992. In the meantime, if you have any questions, please call Laith Ezzet at 7141251-8628 or me at 510/713-3270. ' Very truly yours, Robert D. Hilton, CMC Managing. Partner t cc: Mr. Charles Caspary, Atlas Refuse Removal Co. ' Ms. Sandra Kalemkiarian, Blue Barrel Disposal Co. Mr. Dennis Verner, Santa Clarita Disposal ' Enclosures: As stated ' recycled 0 paper CITY OF SANTA CLARITA Refuse Collection Rate Review Final Report LIST OF EXHIBITS 1. Franchise Revenues, Expenses, and Profit Z Potential Operating Profit at Approved Rates 3. Comparison of Profitability of Refuse Collection Operations in Santa Clarita With Other Jurisdictions 4. Estimated Annual Billed Rate Revenue by Hauler 5. Residential Revenues Within Santa Clarita 6. Annual Revenues Within Santa Clarita 7. Potential Franchise Fees S. Comparison of Multi -Family and Commercial Service Revenues Per Ton 9A. Estimated Franchise Fees Accrued Versus Hauler Cost Increases Not Passed -Through 9B.. Estimated Franchise Fees and Disposal Cost Increase Hilton Farnkopf & Hobson 0-11 VI N • 3.9m I U-3 9C.- Estimated Impact of PPI Adjustment Not Implemented on Hauler Revenues 9D. Comparison of Single Family Rate Increase Implemented Versus Increased Cost of Dispo- sal as of April 30,1992 10. Monthly Disposal Cost Increases 11. Annual Tons Within Santa Clarita Disposed by Franchise Haulers 12. Impact of Tipping Fee Increase on Single Family Rates 13. Impact of Tipping Fee Increase on Multi -Family Rates 14. Estimated Rate Adjustments 15. Estimated Rate Impacts of PPI Adjustments 16. Summary of Proposed Rail Haul Projects 17. Estimated Rate Impact of Rail Haul Disposal on Single Family Refuse Rates Hilton Farnkopf & Hobson i• i• i• f• f• r f• f• i• f• i• ii, � i• i• fi, i• i• f• City of Santa Clarita September 24,1992 Exhibit 1 FRANCHISE REVENUES, EXPENSES, AND PROFIT Residential Service Within Santa Clarita For the 12 Months Ending April 30, 1992 (a) Subject to Franchise Fee. (b) Compensation over $125,000 er year for proprietors managing their own business has been re-classified as profit. c Before payment of franchise fes. (d) Additional revenues that could have been earned if the haulers billed the amounts authorized by the franchise agree- ment. (e) Calculated at 10% of annual revenues subject to franchise fee, including billed rate revenue plus additional approved revenue. (f) Contributions, Goodwill, Amortization of Non -Compete Agreements; and Acquisition Interest Expense. Hilton Farnkopf & Hobson' 1 ` A-RuMMidential Revenues Billed Rate Revenues (a) $698959000 98.2% Other Residential Revenues $123,000 1.8% Total Actual Revenues $7,018,000 100% Actual Operating Expenses Route Costs ($29943,000) -41.9% Tipping Fees ($1,635,000) -23.3% Overhead Costs (b) ($1.631.000) -23.2% Total Operating Costs ($6.209.000) -88.5% Operating Profit (c) $8099000 11.5% Additional Approved Revenue (a) (d) $423,000 6.0% Calculated Franchise Fee (e) ($732,000) -10.4% Potential Profit at Current Rates $5002000 7J% Non -Operating Expenses (f) ($364,000) -5.2% (a) Subject to Franchise Fee. (b) Compensation over $125,000 er year for proprietors managing their own business has been re-classified as profit. c Before payment of franchise fes. (d) Additional revenues that could have been earned if the haulers billed the amounts authorized by the franchise agree- ment. (e) Calculated at 10% of annual revenues subject to franchise fee, including billed rate revenue plus additional approved revenue. (f) Contributions, Goodwill, Amortization of Non -Compete Agreements; and Acquisition Interest Expense. Hilton Farnkopf & Hobson' 1 ` City of Santa Clarita September 24,1992 Exhibit 2 POTENTIAL OPERATING PROFIT AT APPROVED RATES For the 12 Months Ending April 30,1992 """Il-Fainily rim a An Service I 60. Approved Revenues (a) $5,471,000 100% $1,970,000 100% $7,441,000 100% Franchise Fees (b) ($538,000) -10% ($194,000) .10% ($732,000) -10% Operating Costs ($49768,000) -87% ($1,441,000) -73% ($6,209p000) -83% Potential Operating Profit at Approved Rates $165,000 3% $335,000 17% $500,000 7% Includes recycling costs. (a) Includes actual revenues plus additional approved revenue. The haulers did not collect $423,000 in additional ap- proved revenue. (b) Franchise fees were not paid during, the reporting period; this is a theoretical value, based on 10% of franchise reve- nues subject to the fee, including billed rate revenues plus additional approved revenues. 1 Hilton Farnkopf &Hobson01� i i i i'"i i i i i• i i i i i tl i i i i City of Santa Clarita September 24, 1992 Exhibit 3 COMPARISON OF PROFITABILITY OF REFUSE COLLECTION OPERATIONS IN SANTA CLARITA WITH OTHER JURISDICTIONS '(a) Based on 12 California jurisdictions reviewed by HF&H and other consultants. (b) Source: Robert Morris Associates, Annual Statement Studies, 1991, Standard Industry Code 4953, Refuse Systems. Average for all companies = 7%. (c) 1991 pre-tax profit for selected major waste services firms listed on U.S. stock exchanges. These firm's businesses include refuse collection and other solid waste services and some non -related services. (d) Individual franchise companies may have earned more or less than this amount. 3 Hilton Farnkopf & Hobson e Range of Pre -Tax Profits California Regulated Jurisdictions (a) 5 to 10% Privately Held Companies (b) . 6 to 8% Publicly Traded Companies (c) -5% to 15% Average for City of Santa Clarita Haulers (d): • Actual results, 12 months ending 4/30/92 • Adjusted for Franchise Fee and Additional 11.5% 7% Approved Revenues (d) '(a) Based on 12 California jurisdictions reviewed by HF&H and other consultants. (b) Source: Robert Morris Associates, Annual Statement Studies, 1991, Standard Industry Code 4953, Refuse Systems. Average for all companies = 7%. (c) 1991 pre-tax profit for selected major waste services firms listed on U.S. stock exchanges. These firm's businesses include refuse collection and other solid waste services and some non -related services. (d) Individual franchise companies may have earned more or less than this amount. 3 Hilton Farnkopf & Hobson e City of Santa Clarita September 24,1992 Exhibit 4 ESTIMATED ANNUAL BILLED RATE REVENUE BY HAULER* For the 12 Months Ending April 30;1992 Blue Barrel (Western Waste) Atlas Transport Santa Clarita Disposal TOTAL * Excludes additional approved revenue. $3,3509400 48.6% $1998,900 18.8% $2,245,300 32.6 % $698949600 100% Hilton Farnkopf & Hobson 4 ` f• f• i• f• i• M Will M it, M M M fiiir iiiiiiiiti i• M sii3isA M City of Santa Clarita September 24,1992 Exhibit 5 s. RESIDENTIAL REVENUES WITHIN SANTA CLARITA For the 12 Months Ending April 30,1992 (a) Includes other residential service revenue not subject to the franchise fee (such as cart delivery fees)and non -service revenue. Hilton. Farnkopf & Hobson 5 Percent of Total Revenues Subject to Franchise Fee Single Family Billed Rate Revenue $5,297,000 71.2% Multi -Family Billed Rate Revenue $1,598,000 21.5% Subtotal Billed Residential Revenues $6,8959000 92.7% Additional Approved Revenues $423,000 5.7 To Total Franchise Revenues $7,3181000 98A% Revenues from the Sale of Recyclables $98,000 1.3% Other Revenues (a) $25,000 0.30/c Total Approved Residential Revenues $79441,000 100.0% (a) Includes other residential service revenue not subject to the franchise fee (such as cart delivery fees)and non -service revenue. Hilton. Farnkopf & Hobson 5 City of Santa Clarita September 24,1982 Exhibit 6 ANNUAL REVENUES WITHIN SANTA CLARITA For the 12 Months Ending April 30,1992 Type o(Service Annual Revenues Percent of Total Residential (a) $71318,000 72% Commercial Bin Service (b) $198852000 19% Roll -Off (b) $956,000 90/0 TOTAL $1091599000 100% (a) Revenues from single family and multi -family customers, including billed rate revenues plus additional approved revenue; excludes revenue not subject to franchise fee such as revenue from sale of recyclables and non -service revenue. (b) Does not include revenues from non -franchise haulers providing these services within the City. Excludes non -service revenues. Hilton Farnkopf & Hobson 6 ` M M M T it M M M iiia M M M M it M M M T M City of Santa Clarita September 24,1992 Exhibit 7 POTENTIAL FRANCHISE FEES Estimated Revenues Potential Type of Service 12 Months Ending Franchise Fees April i 10% of Existing Residential Franchises Billed Rate Revenues $69895,000 $6899500 Additional Approved Revenues $423,000 $42,300 Total Existing Franchise $7,3189000 $731,800 Commercial Service Revenues (a) $2,094,000 (b) $209,400 Roll -Off Box Service Revenues (a) $1,0629000 (b) $1069200 TOTAL $10,474,000 $1L_047 ,400 (a) Revenues reported by the three residential franchise haulers plus the increased cost of passing through the franchise fee. Excludes revenues from other companies providing commercial and roll- off box service. (b) Reported revenues were increased by 11.1% to pass the franchise fees through to the rate payer. Hilton Farnkopf & Hobson 7 ` City of Santa Clarita September 24,1992 Exhibit 8 COMPARISON OF MULTI -FAMILY & COMMERCIAL SERVICE REVENUES PER TON* Midti-Faillily Commercial Percent Statistic Bin Service, Bin Service Difference Gross Service Revenue Per Ton $104 $62 68% Less Franchise Fee at 10% ($10) $0 N/A Less Recycling Cost Per Ton (a) 11 LO Net Service Revenue Per Ton $83 $62 34% Refuse Service Cost Per Ton i$6 63 5% Profit Per Ton $17 ($1) N/A * Based on data submitted for the 12 months ending April 30, 1992. (a) Based on the total costs of franchise recycling programs divided by the number of refuse tons disposed. Hilton Farnkopf & Hobson �■ 8 ` ® i♦ i♦ tib i1♦ i♦ f♦ � i♦ fi♦ i♦ i♦ i♦ i♦ i♦ f1♦ f♦ i♦ i♦ City of Santa Clarita September 24,1882 Exhibit 9A ESTIMATED FRANCHISE FEES ACCRUED VERSUS HAULER COST INCREASES NOT PASSED THROUGH For the 20 Months Ending December 31, 1992 City Credits Hauler Credits Net Due ' RPM aucriiseRcicityrtfed to Cl by Reuters, ko Uket t 1ncrases NotXtttp�exn t rttei�': D,s WO ast7ncrba§es un.Jana 1:15►9 May 1, 1991 to April 30,1992 $230,000 (a) $241,000 (c) ($312,000) (b) ($11,000) (g) $212,000 $640000 (d) May 11 1992 to Dec. 310 1992 $460,000 (e) $0 ($198,000) (f) ($22,000) (g) $2402000 Total $6900000 $305,000 ($510,000) ($339000) $452,000 (a) Based on 10% of reported revenues from January 1, 1992 to April 30, 1992. Revenues estimated based on average monthly revenues during 12 months ending April 30, 1992. (b) Based on an initial disposal fee of $19.75 per ton, and the increases shown in Exhibit 10. (c) Rates were increased from $16.85 to $17.81 per single family unit per month, or 5.7%. (d) Multi -family bin rates increased by 4.6% to 5.6%, depending on service level. An average multi -family increase of 5.0% is assumed in this analysis. (e) Estimated based on average monthly revenue reported for 12 months ending April 30, 1992. See Exhibit 9B. (f) Based on tipping fee increase from $24.45 to $28.89 per ton. See Exhibit 9B. (g) Based on 0.7% change in PPI between April 1991 and December 1991. See Exhibit 9C. 9 Hilton Farnkopf & Hobson City of Santa Clarita September 24,1992 ESTIMATED FRANCHISE FEES & DISPOSAL COST INCREASE For the 8 Months From May 1, 1992 to December 31, 1992 Estimated monthly revenues subject to franchise fee (a) $574,583 Franchise fee percentage x 10% Estimated monthly franchise fees $57;458 Number of months from 5/1/92 to 12/31/92 8 Estimated franchise fees for the 8 months ending 12/31/92 $4599664 Tipping fee per ton as of 5/1/92 $28.89 Tipping fee per ton as of 4/30/92 (b) $24.45 Increase in tipping fee per ton $4.44 Average monthly residential tons disposed (c) x 5,583 Monthly disposal cost increase not passed through $249789 Number of months between 5/1/92 and 12/31/92 x 8 Estimated_ disposal cost increase for 8 months ending 12/31/92 $198 12 Exhibit 9B (a) Based on $6,895,000 in billed annual rate revenue subject to the franchise fee for the 12 months ending 4/30/92. Actual revenues af- ter May 1, 1992 may be higher due to rate increases implemented after the start of the franchise period. (b) For Atlas and Santa Clarita Disposal. The tipping for Blue Barrel increased to $28.89 per ton on 4/1/92. (c) Based on 67,000 annual tons for the 12 months ending 4/30/92, including single family and multi -family customers. Hilton Farnkopf & Hobson 10 ` City of Santa Clarita September 24,1892 Exhibit 9C ESTIMATED IMPACT OF PPI ADJUSTMENT NOT IMPLEMENTED ON HAULER REVENUES For the 12 Months Ending December 31, 1992 Producer Price Index - December 1991* 121.9 Producer Price Index at start of franchise, April 1991* 121.1 Percent change in PPI for 8 months ending December 1991(a) = 0.7% Estimated annual revenue net of disposal fees (b) x $5,260,000 Estimated increase in annual revenue that would have been earned for the = $379000 12 months ending 12/31/92 from a PPI adjustment Franchise fee percentage x 10% Deduction for franchise fees ($39700) Net increase in hauler revenue after franchise fee I $339300 * Produce Price Index for "Finished Goods". (a) This is the amount that rates could have been adjusted on January 1, 1992. (b) Billed residential revenues totaling $6,895,000 less $1,635,000 for disposal for the 12 months ending April 30, 1992. Hilton Farnkopf & Hobson 11 ` City of Santa Clarita September 24,1892 Exhibit 91) COMPARISON OF SINGLE FAMILY RATE -INCREASE IMPLEMENTED VERSUS INCREASED COST OF DISPOSAL AS OF APRIL 30,1992 Tipping fee per ton as of 4/30/92 (a) Tipping fee per ton at signing of franchise agreement in February 1991 Increase in tipping fee per ton Annual tons disposed per residence (b) Increase in annual disposal cost per single family residence Factor to gross up for franchise fee Increase in annual cost per residence for disposal and franchise fee Number of months per year Increase in monthly cost for disposal and franchise fee Rate increase per month implemented on 7/1/91(c) Amount that monthly rate increase exceeds cost increase for disposal and franchise fee $24.45 $19.75 $4.70 X 1.87 $8.79 + 90% $9.77 + 12 $0.81 $0.96 $0.15 (a) At Laidlaw Chiquita landfill for Atlas and Santa Clarita Disposal the tipping fee increased for Blue Barrel from $24.45 to $28.89 on 4/1/92. (b) Based on data submitted by the three franchise haulers for the 12 months ending 4/30/92, excluding bin customers. (c) The single family rate was increased from $16.85 to $17.81 per month on July 1, 1991. 12 Hilton Farnkopf & Hobson c City of Santa Clarita September 24,1992 Exhibit 10 MONTHLY DISPOSAL COST INCREASES .. �.. Disposal Cost May 1991 $24.15 $19.75 $4.40 5,58333 $24,567 June 1991 $24.15 $19.75 $4.40 51583.33 $249567 July 1991 $23.75 $19.75 $4.00 5,583.33 $22,333 August 1991 $23.75 $19.75 $4.00 59583.33 $222333 September 1-15,1991 $23.55 $19.75 $3.80 29791.67 (b) $10,608 September 16-30,1991 $24.41 $19.75 $4.66 29791.67 (b) $139009 October 1991 $24.45 $19.75 $4.70 59583.33 $26,242 November 1991 $24.45 $19.75 $4.70 5,583.33 $269242 December 1991 $24.45 $19.75 $4.70 5,583.33 $26,242 January 1992 $24.45 $19.75 $4.70 5,583.33 $269242 February 1992 $24.45 $19.75 $4.70 59583.33 $262242 March 1992 $24.45 $19.75 $4.70 5,583.33 $26,242 April 1992 $26.48 (d) $19.75 $6.7355, 83.33 $37,576 TOTAL 2 MONTHS N/A N/A N/A 67,000.00 $312,445 (a) Reported by landfill operator (Laidlaw) in letter to Santa Clarita Disposal (b) Average semi-monthly tonnage (c) $18.00 per ton for landfill operator plus $1.75 in State fees (d) Weighted average to reflect increase in Blue Barrel tip fee to $28.89 per ton on 4/1/92 13 . Hilton Farnkopf & Hobson c City of Santa Clarita September 24, 1992 Exhibit 11 ANNUAL TONS WITHIN SANTA CLARITA DISPOSED BY FRANCHISE HAULERS For the 12 Months Ending April 30,1992 (a) Including single family and multi -family customers (b) Does not include tonnage from non -franchise haulers providing these services within the City limits Hilton Farnkopf & Hobson 14 ` Residential: • Single Family 489400 43% • Multi -Family 18,600 17% Subtotal Residential (a) 67,000 60% Commercial Iain Service (b) 30,000 27% Roll -Off (b) 15.000 13010 TOTAL 112,000 100% (a) Including single family and multi -family customers (b) Does not include tonnage from non -franchise haulers providing these services within the City limits Hilton Farnkopf & Hobson 14 ` City of Santa Clarita September 240 1992 Exhibit 12 IMPACT OF TIPPING FEE INCREASE ON SINGLE FAMILY RATES* Tipping Fee Per Ton as of 5/1/92 (a) Tipping Fee Per Ton as of 4/30/92 Increase in Tipping Fee Per Ton (A -B) Total Single Family Tons Disposed (b) Total Disposal Cost Increase for All Residences (CxD) Gross Up of Disposal Cost Increase for Franchise Fee (E-0.9) Estimated Annual Revenue at Current Rates (c) Percent Increase in Monthly Rate for Disposal (F+G) I. Current Single Family Rate Single Family Rate with Increased Disposal Fee $28.89 $24.45 $4.44 48,400 $214,896 $238,773 $5,384,000 4.4% $17.81 $18.60 K. Increase in Monthly Single Family Rate for Disposal (J -I) 1 $0.79 (a) (b) (c) Includes semi -automated cart service and baggie service The tipping increased for Blue Barrel on 4/1/92, and for the other franchise haulers on 5/1/92 Total single-family tons disposed by all three franchise haulers during the 12 months ending 4/30/92 Billed rate revenues plus additional approved revenue from single-family customers during the 12 month period ending 4/30/92; excludes recycling revenues and non -service revenues. Hilton Farnkopf & Hobson 15 City of Santa Clarita September 24,1992 Exhibit 13 IMPACT OF TIPPING FEE INCREASE ON MULTI -FAMILY RATES Tipping Fee Per Ton as of 5/1/92 (a) Tipping Fee Per Ton as of 4/30/92 C. Increase in Tipping Fee Per Ton(A-B) Total Multi -Family Tons Disposed (b) Total Estimated Disposal Cost Increase (CxD) Gross Up of Disposal Cost Increase for Franchise Fee (E+0.9) Estimated Annual Revenue at Current Rates (c) Percent Increase in Monthly Rate for Disposal (F+G) Current 3 -Yard Bin Rate, Once Per Week Service 3 -Yard Bin Rate with Increased Disposal Fee K. Increase in Monthly 3 -Yard Bin Rate for Disposal (J-1) $28.89 24.4 $4.44 18.600 $82,584 $91,760 $1,934,000 4.7% $68.00 $71.23 $3.23 (a) The tipping increased for Blue Barrel on 4/1/92, and for the other franchise haulers on 5/1/92 (b) Total multi -family tons disposed by all three franchise haulers during the 12 months ending 4/30/92 (c) Billed rate revenue plus additional approved revenue from multi -family customers during the 12 month period ending 4/30/92; excludes recycling revenue and non=ser- vice revenues Hilton Farnkopf & Hobsonmss. 18 �` � � i>• � � � � � � � � � iii � � � !♦ � � = = = = = M M = = M M M = M M M = = M City of Santa Clarita September 24, 1992, Exhibit 14 ESTIMATED RATE ADJUSTMENTS Effective January 1, 1993 M SRI I Increase for Disposal $0.79 4.4% 4.7% Increase for PPI $0.34 1.90/0 1.90/0 Total Increase $1.13 6.3% 6.6% Current Monthly Rate $17.81 N/A N/A Adjusted Monthly Rate $18.94 N/A N/A 17 Hilton Farnkopf & Hobson ( al� City of Santa Clarita September 24,1992 Exhibit 15 ESTIMATED RATE IMPACTS OF PPI ADJUSTMENTS For the 20 Months From May 1, 1991 through December 31, 1992 1. PPI, August 1992 (most recent available data) 2. PPI, April 1991 (start of franchise period) 3. Percent change from April 1991 to August 1992 4. Number of months from April 1991 to August 1992 5. Average percent change in PPI per month 6. Number of months from August 1992 to December 1992 7. Estimated change in PPI from August 1992 to December 1992 based on average for previous 16 months 8. Estimated PPI, December 1992 9. Estimated percent change in PPI from April 1991 to December 1992 10. Estimated annual revenue net of disposal fees (a) 11. Estimated revenue increase for PPI 12. Estimated total annual revenue 13. PPI rate adjustment for January 1993 14. Current single family rate 15. Estimated monthly rate increase for PPI (a) $6,895,000 in billed rate revenue less $1,635000 for disposal. FJ U T 123.5 121.1 2.0% 16 0.13% 4 0.52% 124.1 2.5% $5,260,000 $132,000 $6,895,000 1.9%. $17.81 $0.34 Hilton Farnkopf & Hobson 18 ` City of Santa Clarita September 24,1992 Exhibit 16 SUMMARY OF PROPOSED RAIL HAUL PROTECTS 1. jumiN Project Sponsor(s) East Carbon Develop- Limited partnership of: Mine Reclamation Corp. artneishi p 0'* ment Corporation • Waste Management, • BFI • Gold Field Mining Co. Inc. • Itel Container • Western Waste • Santa Fe Pacific Corp. • Kaiser Steel • SP Environmental Sys- • Edco Disposal tems Landfill Location Carbon County, Utah Eastern San Bernardino Riverside County Eastern Imperial County County Desert Desert Reported Distance from Los 700 miles 225 miles 200 miles 200 miles Angeles Area Potential Landfill Start-up Fully permitted and op- 1994 1994 1994 Date (a) erational Anticipated Maximum Daily 20,000 (c) 20,000 20,000 20,000 Landfill Capacity Estimated Landfill Total 95 million tons (b) 360 million tons 700 million tons 500.million tons Capacity Projected Landfill Life 10-30 years 100 years 100 years 100 years Currently Planned or Permit- None publicly known None publicly known None publicly known None publicly known ted Transfer Stations in Santa Clarita Valley (a) Assuming timely approval of all permits. These dates are "best case scenarios" estimated by the project sponsors. It is very possible that these project will experience significant permitting hurdles that may delay or prevent project devel- opment. (b) Based on 190 million cubic yards at 2 cubic yards per ton. (c) Based on telephone conversion with project sponsor's staff. This is a "practical' limit, although there are no permit limits on material carried to the site via railhaul. Hilton Farnkopf & Hobson 19 City of Santa Clarita September 24,1992 Exhibit 17 ESTIMATED RATE IMPACT OF RAIL HAUL DISPOSAL ON SINGLE FAMILY REFUSE RATES Description of Rail Scenario: lli1 Trarnsfer emote 17isposa Pt�ocssing, Transfer; . &1Zelnote Ulsposal A. Assumed Rail Haul Cost Per Ton $50.00 (d) $65.00 (c) B. Current Tipping at Chiquita Landfill (a) $28.89 $28.89 C. Increase in Tipping Fee Per Ton (A -B) $21.11 $36.11 D. Percent Increase in Tipping Fee (C+B) 73% 125% E. Current Disposal Fee Per Home Per Month (b) $4.51 $4.51 F. Disposal Fee Per Home Per Month with Rail Haul (DxE) $7.81 $10.15 G. Increase in Disposal Fee Per Month Due to Rail Haul (F -E) $3.30 $5.64 H. Gross Up of Disposal Fee Increase for Franchise Fee (G+0.9) $3.67 $6.27 1. Current Single Family Collection Rate Per Month $17.81 $17.81 J. Estimated Single Family Rate Per Month with Rail Haul (H+I) $21.48 $24.08 K. Percent Increase in Total Rate Per Month for Rail Haul (H+I) 21% 35% �a) As of 5/1/92 at Laidlaw's Chiquita Landfill. b) Based on 72 pounds per household per week at $28.89 per ton for disposal. (c) Based on informal estimates by the rail haul project proponents, the range of costs for a system of material processing, rail transfer, and disposal are from $50 to $70 per ton. (d) Based on informal estimates from the project sponsors, ranging from $40 to $55 per ton. Hilton Farnkopf & Hobson • 20 `