HomeMy WebLinkAbout1997-03-11 - AGENDA REPORTS - CONSULTANT FOR RESIDENTIAL (2)AGENDA REPORT
City
Item to be presented by:
Lynn M. Harris
CONSENT CALENDAR
DATE: March 11, 1997
SUBJECT: AUTHORIZING A CONSULTANT TO CONDUCT A STUDY OF A
RESIDENTIAL UNIT PRICING SYSTEM
DEPARTMENT: Public Works
BACKGROUND
At the City Council Meeting on July 9, 1996, Council directed staff and the franchised haulers to
research a residential unit pricing system and prepare recommendations as a way to meet the City's
goals of stabilizing residential refuse rates and increasing diversion. During the midyear budget
cycle, Council appropriated funds to account number 5300-8120 for a residential unit pricing system
in Santa Clarita. Subsequently, staff prepared a Request for Proposal (RFP) that was sent to
approximately sixty consultants from Santa Clarita, Southern California and across the Nation.
Staff invited the three proposers, Skumatz Economic Research Associates (SERA), EcoNomics and
Hilton Famkopf and Hobson to interview for final selection (Attachment A). Their proposals were
evaluated on their experience, responsiveness to the RFP and cost (Attachment B). Additionally,
staff conducted individual interviews with each consultant to discuss their proposal. Based on the
results of the panel's evaluation and the individual interviews, SERA is recommended as the most
qualified consultant to conduct the Unit Pricing Study in Santa Clarita. SERA strengths include a
high degree of experience in implementing unit pricing programs in California and nationwide, the
most extensive data base of informational resources, excellent financial analysis ability and they
were very responsive to the City's RFP. Finally, their services were offered at a competitive price
and within the amount of funds appropriated at the midyear budget cycle.
RECOMMENDATION
City.Council approve, and authorize the mayor to execute a contract with SERA in the amount of
$29,990 plus a 20% contingency fee to conduct a study of a residential unit pricing system in Santa
Clarita.
ATTACHMENTS
A. List of Competing Consultants
B. Unit Pricing Panel Recommendations Table
C. Contract Agreement for Consultant Services Between the City of Santa Clarita and SERA "In
Reading file in City Clerk's Office."
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TABLE OF COMPETING CONSULTANTS
Company
Location
CA Unit Pricing_ Experience
SERA*
Seattle, Washington
Sacramento, Gilroy/Morgan
Hill, Pasadena, Ventura and
Berkeley (a half dozen other
cities outside of California)
HFH**
Newport Beach, California
Glendale, Long Beach, Quad
Cities, Sunnyvale, and West
Valley Cities
EN***
Solana Beach, California
Napa
*Skumatz Economic Research Associates
**Hilton Farnkopf and Hobson
***EcoNomics
ATTACHMENT B.
UNIT PRICING PANEL RECOMMENDATIONS
CRITERIA
COMPANY
*SERA
*HFH
*ECONOMICS
Understanding of the project
and the objectives. (25pts.)
22.6
16.3
19.5
Methodology and management
approach. (10pts.)
8
9.3
7.83
Experience and history of firm
performing unit pricing and
rate studies. (25pts.)
25
18.6
11.3
Qualifications and experience
of principles and staff.
(20pts.)
21.6
18.3
13.3
Cost of proposal. (20pts.)
17.6
9.6
17.6
TOTAL
94.8
72.1
69.53
Panel Recommendation
FIRST
SECOND
THIRD
Skumatz Economic Research Associates of Seattle, Washington
Hilton Famkopf and Hobson of Newport Beach, California
EcoNomics of Solana Beach, California
rv0rT406IN�.a
CONTRACT
AGREEMENT FOR CONSULTANT SERVICES
BE,
THE CITY OF SANTA CLARITA
AND
SKUMATZ ECONOMIC RESEARCH ASSOCIATES
This AGREEMENT FOR CONSULTANT SERVICES BETWEEN THE CITY OF
SANTA CLARITA AND SKUMATZ ECONOMIC RESEARCH ASSOCIATES
("AGREEMENT") is entered into this day of March 1997, by the City of Santa Clarita,
("City"), and, Skumatz Economic Research Associates ("CONSULTANT").
WHEREAS, City has determined that while Municipal Solid Waste diversion must
be increased to comply with the Integrated Waste Management Act (AB939), the City must also
attempt to stabilize rapidly increasing refuse collection rates; and
WHEREAS, City anticipates that both Municipal Solid Waste diversion and refuse
rate stabilization could be achieved through the implementation of a unit -based pricing system; and
WHEREAS, City desires to engage the services of CONSULTANT to perform a
study of unit -based pricing options for the City; and
WHEREAS, CONSULTANT has represented to City that it has the qualifications
and experience to perform a study of unit -based pricing options for the City; and
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
F -10189J1111:8
CONSULTANT shall perform services specified in EXHIBIT "A" "REQUEST
FOR PROPOSAL" and EXHIBIT "B" "CONSULTANT'S RESPONSE TO THE RFP"
The term of this AGREEMENT shall be from the date of execution of this
AGREEMENT shall be in effect until the tasks outlined in Section 2 are complete; the term will
not exceed (1) one year.
I
The services of CONSULTANT are to be completed according to the schedule set
out in EXHIBIT "A " "REQUEST FOR PROPOSAL": Time is of the essence in this
AGREEMENT.
A. Subject to the limitations contained in SECTION 9, "TERMINATION" and
EXHIBIT "B" ("CONSULTANT'S RESPONSE TO THE RFP") CONSULTANT shall be paid
TWENTY-NINE THOUSAND NINE HUNDRED AND NINETY DOLLARS ($29,990)
according to the core project tasks 1,3,4,5,6,7,9 listed in the proposal budget located in EXHIBIT B
CONSULTANT is an independent contractor and not an agent or employee of the
City of Santa Clarita. As an independent contractor, CONSULTANT shall obtain no rights to
retirement, health care or any other benefits which accrue to City of Santa Clarita employees.
CONSULTANT expressly waives any claim CONSULTANT may have to any such rights.
The expertise and experience of CONSULTANT are material considerations for
this AGREEMENT. CONSULTANT shall not assign or transfer any interest in this
AGREEMENT or the performance of any of CONSULTANT's obligations without the prior
written consent of City. Any attempt by CONSULTANT to assign or transfer any of
CONSULTANT's rights, duties or obligations arising under this AGREEMENT shall be void.
City acknowledges its understanding that CONSULTANT, in the performance of its duties
pursuant to this AGREEMENT, may utilize subcontractors.
moolfferIZ&A mi
General Liability and Property Damage Insurance. During the entire term of this
Agreement, Consultant agrees to procure and maintain general liability and property damage
insurance at its sole expense to protect against loss from liability imposed by law for damages on
account of bodily injury, including death therefrom, suffered or alleged to be suffered by any
person or persons whomsoever, resulting directly from any act or activities of City, or Consultant,
its subcontractors or any person acting for City, or Consultant or under its control or direction, and
also to protect against loss from liability imposed by law for damages to any property of any person
caused directly or indirectly by or from acts or activities of City, or Consultant, or its
subcontractors, or any person acting for City or Consultant, or under its control or direction. Such
public liability and property damage insurance shall also provide for and protect City against
incurring any legal cost in defending claims for alleged loss. Such general liability and property
damage insurance shall be maintained in full force and effect throughout the term of the Agreement
and any extension thereof in the following minimum limits: A combined single limit policy with
coverage limits in the amount of $1,000,000 per occurrence will be considered equivalent to the
required minimum limits.
All of such insurance shall be primary insurance and shall name City of Santa
Clarita as an additional insured. If the operation under this Agreement results in an increased or
decreased risk in the opinion of the City Manager, then Consultant agrees that the minimum limits
herein above designated shall be changed accordingly upon request by the City Manager.
Consultant agrees that provisions of this paragraph as to maintenance of insurance
shall not be construed as limiting in any way the extent to which Consultant may be held
responsible for the payment of damages to persons or property resulting from Consultant's
activities, the activities of its subcontractors, or the activities of any person or persons for which
Consultant is otherwise responsible.
Worker's Compensation Insurance. Consultant shall procure and maintain, at its
sole expense, Worker's Compensation Insurance in such amount as will fully comply with the laws
of the State of California and which shall indemnify, insure, and provide legal defense for both
Consultant and City against any loss, claim, or damage arising from any injuries or occupational
diseases happening to any worker employed by Consultant in the course of carrying out the within
Agreement
Automotive Insurance. Consultant shall procure and maintain, at its sole expense,
throughout the term of this Agreement any extension thereof public liability and property damage
insurance coverage for automotive equipment with coverage limits of not less $500,000 combined
single limit. All such insurance shall be primary insurance and shall name City of Santa Clarita as
an additional insured. If Consultant does not own automobiles, Consultant shall provide a waiver
releasing City from all liability resulting from Consultant's use of personal vehicles on project.
Professional Liability Insurance. Consultant shall maintain professional liability
insurance which provides coverage for negligent professional acts, errors, or omissions for which
Consultant is legally liable, in the amount of $1,000,000 per claim and in aggregate which arises
from the performance of professional services by Consultant under this Agreement. The policy
shall provide for coverage of claims occurring during the term of the policy.
Miscellaneous Insurance Requirement. A Certificate of Insurance, or an
appropriate insurance binder, evidencing the above insurance coverage with a company acceptable
to the City's Risk Management Officer shall be submitted to City prior to execution of this
Agreement on behalf of the City.
The terms of the insurance policy or policies issued to provide the above insurance
coverage shall provide that said insurance may not be amended or canceled by the carrier, for non-
payment of premiums otherwise, without 30 days prior written notice of amendment or
cancellation to City. In the event the said insurance is canceled, Consultant shall, prior to the
cancellation date, submit new evidence of insurance in the amounts heretofore established.
If Consultant at any time during the term of this Agreement should fail to secure or
maintain any insurance required under this Agreement, City shall be permitted to obtain such
insurance in Consultant's name and shall be compensated by Consultant for the cost of the
insurance premiums upon receipt of Consultant of written notice that the premiums have been paid.
The naming of an additional insured shall not affect any recovery to which such
additional insured would be entitled under the policy if not named as an additional insured, and an
additional insured shall not be held liable for any premium or expense of any nature on the policy
or any extension thereof solely because they are as additional insured thereon.
Santa Clarita's Risk Manager is hereby authorized to reduce the requirements set
forth above in the event he or she determines that such reduction is in Santa Clarita's best interest.
FYRI�G7►E:_ SII a � 11
CONSULTANT does hereby agree to defend, indemnify, and hold harmless the
City of Santa Clarita and the respective appointed and elected officers, boards and commissions,
pursuant to this Agreement. Such costs and expenses shall include, but not be limited to,
reasonable attorney fees.
CONSULTANT does hereby agree to defend, indemnify and hold harmless
Indemnified Parties from and against any damages, liability, loss, costs or expenses which arise out
of Consultant's negligent performance of the work under this Agreement provided that such
liability, loss, cost or expense is caused by the act or omission of CONSULTANT, or any of its
officers, employees, servants, agents, or subcontractors in performance of this Agreement.
CONSULTANT's obligation to the Indemnified Parties shall include reasonable attorney fees,
costs and expenses incurred by the Indemnified Parties in such defense, if CONSULTANT is
found to have been negligent or otherwise below the standard of care in performance of work
under this Agreement.
U5181 I ei MN I '►l U I►
A. City may terminate this AGREEMENT at any time by giving ten days'
written notice of termination to CONSULTANT. If City gives such notice of termination,
CONSULTANT shall cease immediately all work in progress.
B. If CONSULTANT or City fails to perform any material obligation under
this AGREEMENT, then, in addition to all other remedies, City or CONSULTANT may terminate
this AGREEMENT immediately upon written notice.
C. Upon termination by either City or CONSULTANT, CONSULTANT shall
deliver to City all property of the City in CONSULTANT's possession and copies of all reports,
documents, and other work prepared by CONSULTANT under this AGREEMENT.
CONSULTANT shall furnish to City a final statement of the work performed for compensation.
The statement shall indicate the task to which the work performed is to be charged, according to
the categories shown in EXHIBIT `B" of this AGREEMENT. Such statement shall also include a
detailed record of actual reimbursable expenses, such as but not limited to copying costs, long
distance telephone charges and computerized research. City will prepare a warrant payable to
CONSULTANT in the amount approved by City. City will then make final payment to
CONSULTANT for services performed and reimbursable expenses incurred, subject to the
limitation on reimbursement set forth in this Agreement.
D. CONSULTANT may terminate this Agreement at any time upon thirty (30)
days' written notice of.termination to City.
M*V to] ►9[11111;\5'II CIZK/II/ Diw1kA�'LIIL"l
The law of the State of California shall govern this agreement. In the event of
litigation between the parties, venue in state trial courts shall lie exclusively in the county of Los
Angeles. In the event of litigation in a U.S. District Court, exclusive venue shall lie in the Central
District of California, in Los Angeles.
CONSULTANT shall comply with all applicable laws, ordinances, codes and
regulations of the federal, state and local government.
CONSULTANT shall not discriminate, in any way, against any person on the basis
of age, sex, race, color, religious creed, national origin, ancestry, physical handicap, medical
condition or marital status in connection with or related to the performance of this AGREEMENT.
All reports, documents, floppy discs, diskettes or other materials developed or.
discovered by CONSULTANT during the course of this AGREEMENT shall be solely the
property of City.
17►f.'1:I�
Waiver by City or CONSULTANT of any breach of any of the provisions of this
AGREEMENT shall not constitute a wavier of any other provision nor a waiver of any subsequent
breach or violation of the same or any other provision of this AGREEMENT. Acceptance by City
of any work or services by CONSULTANT shall not be a waiver of any of the provisions of this
AGREEMENT.
MUTIMMWINKII swoRm"
CONSULTANT shall at all times avoid conflict of interest or appearance of conflict
of interest with the interests of the City in the performance of this AGREEMENT.
12 i ► I"e 1
EXHIBITS "A" through "B" are attached to and incorporated in this
AGREEMENT by this reference. Additional language describing specific duties and
responsibilities are outlined in the exhibits and are inclusive to contract.
All notices required or permitted to be given under this AGREEMENT shall be in
writing and shall be personally delivered, or sent by telecopier or certified mail, postage prepaid
and return receipt requested, addressed as follows:
To CITY: City Manager
City of Santa Clarita
23920 Valencia Boulevard, Suite 300
Santa Clarita,. CA 91355
and to: City Attorney
City of Santa Clarita
611 West Sixth Street, Suite 2500
Los Angeles, California 90017
Tel: (213) 236-0600
Fax: (213) 236-2700
to CONSULTANT: Ms. Lisa Skumatz
Skumatz Economic Research Associates
1511 Third Avenue, Ste 1000
Seattle, WA 98101
Tel: (206) 624-8508
Fax: (206) 624-2950
Notice shall be deemed effective on the date delivered or transmitted by facsimile
or, if mailed, three (3) days after deposit in the mail.
A. All disputes concerning the interpretation, performance, breach or
termination of this AGREEMENT shall be decided by binding arbitration before a retired federal
or California judge, according to the provisions of Section 1280 et seq. Of the California Code of
Civil Procedure, through the Los Angeles County offices of the Judicial Arbitration and Mediation
Service ("JAMS"). The parties shall attempt to agree upon a retired judge from the JAMS panel,
but if they are unable to agree within thirty (3) days after commencement of a proceeding, JAMS
will provide alist of three available judges and each party may strike one. If for any reasons JAMS
is unavailable, the dispute shall be decided by a retired federal or California judge, sitting as an
arbitrator, and selected by the parties. If the parties are unable to agree upon a retired judge within
30 days after receipt of written notice, a retired judge shall be appointed by the Presiding Judge of
the Los Angeles County Superior Court. The arbitrator shall render a written decision stating
reasons therefor in reasonable detail within sixty (60) days after his appointment. The arbitrator's
award shall be final and enforceable and may be confirmed by the judgment of a court of
competent jurisdiction. The prevailing party shall be entitled to recover its costs of arbitration, as
well as costs and attorneys' fees, and expert witness fees, as determined b the arbitrator, as well as
costs and attorneys' fees in any proceedings to enforce an award. The parties reserve their rights to
obtain provisional remedies from the courts, and no application for any such remedy shall be
deemed inconsistent with the obligation to arbitrate disputes.
B. Except for nonpayment of any portion of a statement presented to City by
CONSULTANT, if any dispute arises between the parties to this AGREEMENT, CONSULTANT
shall continue to perform pending resolution of the dispute.
This AGREEMENT, including the EXHIBITS, embodies the entire understanding
of the parties with respect to the matters addressed in this Agreement and the EXHIBITS and
supersedes all other agreements entered into between the parties prior to the execution of this
Agreement. No amendment of this AGREEMENT shall be valid unless in writing duty executed
by the parties or their authorized representatives.
ATTACHMENT C.
CONTRACT
AGREEMENT FOR CONSULTANT SERVICES
BETWEEN
THE CITY OF SANTA CLARITA
AND
SKUMATZ ECONOMIC.RESEARCH ASSOCIATES
This AGREEMENT FOR CONSULTANT SERVICES BETWEEN THE CITY
OF SANTA CLARITA AND SKUMATZ ECONOMIC RESEARCH ASSOCIATES
("AGREEMENT") is entered into this day of March 1997, by the City of Santa Clarita,
("City"), and, Skumatz Economic Research Associates ("CONSULTANT").
WHEREAS, City has determined that while Municipal Solid Waste diversion must
be increased to comply with the Integrated Waste Management Act (AB939), the City must also
attempt to stabilize rapidly increasing refuse collection rates; and
WHEREAS, City anticipates that both Municipal Solid Waste diversion and refuse
rate stabilization could be achieved through the implementation of a unit -based pricing system; and
WHEREAS, City desires to engage the services of CONSULTANT to perform a
study of unit -based pricing options for the City; and
WHEREAS, CONSULTANT has represented to City that it has the qualifications
and experience to perform a study of unit -based pricing options for the City; and
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
CONSULTANT shall perform services specified in EXHIBIT "A" "REQUEST
FOR PROPOSAL and EXHIBIT "B" "CONSULTANT'S RESPONSE TO THE RFP"
The term of this AGREEMENT shall be from the date of execution of this
AGREEMENT shall be in effect until the tasks outlined in Section 2 are complete; the term will
not exceed (1) one year.
•► 1111 a DKO)at t
The services of CONSULTANT are to be completed according to the schedule set
out in EXHIBIT "A " "REQUEST FOR PROPOSAL". Time is of the essence in this
AGREEMENT.
A. Subject to the limitations contained in SECTION 9, "TERMINATION" and
EXHIBIT `B" ("CONSULTANT'S RESPONSE TO THE RFP") CONSULTANT shall be paid
TWENTY-NINE THOUSAND NINE HUNDRED AND NINETY DOLLARS ($29,990)
according to the core project tasks 1,3,4,5,6,7,9 listed in the proposal budget located in EXHIBIT
B
11 D1 2 D1011 D10 I► O f
CONSULTANT is an independent contractor and not an agent or employee of the
City of Santa Clarita. As an independent contractor, CONSULTANT shall obtain no rights to
retirement, health care or any other benefits which accrue to City of Santa Clarita employees.
CONSULTANT expressly waives any claim CONSULTANT may have to any such rights.
The expertise and experience of CONSULTANT are material considerations for
this AGREEMENT. CONSULTANT shall not assign or transfer any interest in this
AGREEMENT or the performance of any of CONSULTANT's obligations without the prior
written consent of City. Any attempt by CONSULTANT to assign or transfer any of
CONSULTANT's rights, duties or obligations arising under this AGREEMENT shall be void.
City acknowledges its understanding that CONSULTANT, in the performance of its duties
pursuant to this AGREEMENT, may utilize subcontractors.
General Liability and Property Damage Insurance. During the entire term of this
Agreement, Consultant agrees to procure and maintain general liability and property damage
insurance at its sole expense to protect against loss from liability imposed by law for damages on
account of bodily injury, including death therefrom, suffered or alleged to be suffered by any
person or persons whomsoever, resulting directly from any act or activities of City, or Consultant,
its subcontractors or any person acting for City, or Consultant or under its control or direction, and
also to protect against loss from liability imposed by law for damages to any property of any
person caused directly or indirectly by or from acts or activities of City, or Consultant, or its
subcontractors, or any person acting for City or Consultant, or under its control or direction. Such
public liability and property damage insurance shall also provide for and protect City against
incurring any legal cost in defending claims for alleged loss. Such general liability and property
damage insurance shall be maintained in full force and effect throughout the term of the Agreement
and any extension thereof in the following minimum limits: A combined single limit policy with
coverage limits in the amount of $1,000,000 per occurrence will be considered equivalent to the
required minimum limits.
All of such insurance shall be primary insurance and shall name City of Santa
Clarita as an additional insured. If the operation under this Agreement results in an increased or
decreased risk in the opinion of the City Manager, then Consultant agrees that the minimum limits
herein above designated shall be changed accordingly upon request by the City Manager.
Consultant agrees that provisions of this paragraph as to maintenance of insurance
shall not be construed as limiting in any way the extent to which Consultant may be held
responsible for the payment of damages to persons or property resulting from Consultant's
activities, the activities of its subcontractors, or the activities of any person or persons for which
Consultant is otherwise responsible.
Worker's Compensation Insurance. Consultant shall procure and maintain, at its
sole expense, Worker's Compensation Insurance in such amount as will fully comply with the laws
of the State of California and which shall indemnify, insure, and provide legal defense for both
Consultant and City against any loss, claim, or damage arising from any injuries or occupational
diseases happening to any worker employed by Consultant in the course of carrying out the within
Agreement
Automotive Insurance. Consultant shall procure and maintain, at its sole expense,
throughout the term of this Agreement any extension thereof public liability and property damage
insurance coverage for automotive equipment with coverage limits of not less $500,000 combined
single limit. All such insurance shall be primary insurance and shall name City of Santa Clarita as
an additional insured. If Consultant does not own automobiles, Consultant shall provide a waiver
releasing City from all liability resulting from Consultant's use of personal vehicles on project.
Professional Liability Insurance. Consultant shall maintain professional liability
insurance which provides coverage for negligent professional acts, errors, or omissions for which
Consultant is legally liable, in the amount of $1,000,000 per claim and in aggregate which arises
from the performance of professional services by Consultant under this Agreement. The policy
shall provide for coverage of claims occurring during the term of the policy.
Miscellaneous Insurance Requirement. A Certificate of Insurance, or an
appropriate insurance binder, evidencing the above insurance coverage with a company acceptable
to the City's Risk Management Officer shall be submitted to City prior to execution of this
Agreement on behalf of the City.
The terms of the insurance policy or policies issued to provide the above insurance
coverage shall provide that said insurance may not be amended or canceled by the carrier, for non-
payment of premiums otherwise, without 30 days prior written notice of amendment or
cancellation to City. In the event the said insurance is canceled, Consultant shall, prior to the
cancellation date, submit new evidence of insurance in the amounts heretofore established.
If Consultant at any time during the term of this Agreement should fail to secure or
maintain any insurance required under this Agreement, City shall be permitted to obtain such
insurance in Consultant's name and shall be compensated by Consultant for the cost of the
insurance premiums upon receipt of Consultant of written notice that the premiums have been paid.
The naming of an additional insured shall not affect any recovery to which such
additional insured would be entitled under the policy if not named as an additional insured, and an
additional insured shall not be held liable for any premium or expense of any nature on the policy
or any extension thereof solely because they are as additional insured thereon.
Santa Clarita's Risk Manager is hereby authorized to reduce the requirements set
forth above in the event he or she determines that such reduction is in Santa Clarita's best interest.
CONSULTANT does hereby agree to defend, indemnify, and hold harmless the
City of Santa Clarity and the respective appointed and elected officers, boards and commissions,
pursuant to this Agreement. Such costs and expenses shall include, but not be limited to,
reasonable attorney fees.
CONSULTANT does hereby agree to defend, indemnify and hold harmless
Indemnified Parties from and against any damages, liability, loss, costs or expenses which arise out
of Consultant's negligent performance of the work under this Agreement provided that such
liability, loss, cost or expense is caused by the act or omission of CONSULTANT, or any of its
officers, employees, servants, agents, or subcontractors in performance of this Agreement.
CONSULTANT's obligation to the Indemnified Parties shall include reasonable attorney fees,
costs and expenses incurred by the Indemnified Parties in such defense, if CONSULTANT is
found to have been negligent or otherwise below the standard of care in performance of work
under this Agreement.
A. City may terminate this AGREEMENT at any time by giving ten days'
written notice of termination to CONSULTANT. If City gives such notice of termination,
CONSULTANT shall cease immediately all work in progress.
B. If CONSULTANT or City fails to perform any material obligation under
this AGREEMENT, then, in addition to all other remedies, City or CONSULTANT may terminate
this AGREEMENT immediately upon written notice.
C. Upon termination by either City or CONSULTANT, CONSULTANT shall
deliver to City all property of the City in CONSULTANT's possession and copies of all reports,
documents, and other work prepared by CONSULTANT under this AGREEMENT.
CONSULTANT shall furnish to City a final statement of the work performed for compensation.
The statement shall indicate the task to which the work performed is to be charged, according to
the categories shown in EXHIBIT 'B" of this AGREEMENT. Such statement shall also include a
detailed record of actual reimbursable expenses, such as but not limited to copying costs, long
distance telephone charges and computerized research. City will prepare a warrant payable to
CONSULTANT in the amount approved by City. City will then make final payment to
CONSULTANT for services performed and reimbursable expenses incurred, subject to the
limitation on reimbursement set forth in this Agreement.
D. CONSULTANT may terminate this Agreement at any time upon thirty (30)
days' written notice of termination to City.
0 Kam I\ I ;► ►
The law of the State of California shall govern this agreement. In the event of
litigation between the parties, venue in state trial courts shall lie exclusively in the county of Los
Angeles. In the event of litigation in a U.S. District Court, exclusive venue shall lie in the Central
District of California, in Los Angeles.
61KNVIGNMIKKIMMUR :►
CONSULTANT shall comply with all applicable laws, ordinances, codes and
regulations of the federal, state and local government.
80►1►1) WWI ILI I RAN W o►
CONSULTANT shall not discriminate, in any way, against any person on the basis
of age, sex, race, color, religious creed, national origin, ancestry, physical handicap, medical
condition or marital status in connection with or related to the performance of this AGREEMENT.
r,TCi ► ►34 14.301 IW 0 ON ki FAIV IN ; :
All reports, documents, floppy discs, diskettes or other materials developed or
discovered by CONSULTANT during the course of this AGREEMENT shall be solely the
property of City.
Waiver by City or CONSULTANT of any breach of any of the provisions of this
AGREEMENT shall not constitute a wavier of any other provision nor a waiver of any subsequent
breach or violation of the same or any other provision of this AGREEMENT. Acceptance by City
of any work or services by CONSULTANT shall not be a waiver of any of the provisions of this
AGREEMENT.
CONSULTANT shall at all times avoid conflict of interest or appearance of
conflict of interest with the interests of the City in the performance of this AGREEMENT.
EXHIBITS "A" through `B" are attached to and incorporated in this
AGREEMENT by this reference. Additional language describing specific duties and
responsibilities are outlined in the exhibits and are inclusive to contract.
All notices required or permitted to be given under this AGREEMENT shall be in
writing and shall be personally delivered, or sent by telecopier or certified mail, postage prepaid
and return receipt requested, addressed as follows:
To CITY: City Manager
City of Santa Clarita
23920 Valencia Boulevard, Suite 300
Santa Clarita, CA 91355
and to: City Attorney
City of Santa Clarita
611 West Sixth Street, Suite 2500
Los Angeles, California 90017
Tel: (213) 236-0600
Fax: (213) 236-2700
to CONSULTANT: Ms. Lisa Skumatz
Skumatz Economic Research Associates
1511 Third Avenue, Ste 1000
Seattle, WA 98101
Tel: (206) 624-8508
Fax: (206) 624-2950
Notice shall be deemed effective on the date delivered or transmitted by facsimile
or, if mailed, three (3) days after deposit in the mail.
A. All disputes concerning the interpretation, performance, breach or
termination of this AGREEMENT shall be decided by binding arbitration before a retired federal
or California judge, according to the provisions of Section 1280 et seq. Of the California Code of
Civil Procedure, through the Los Angeles County offices of the Judicial Arbitration and Mediation
Service ("JAMS"). The parties shall attempt to agree upon a retired judge from the JAMS panel,
but if they are unable to agree within thirty (3) days after commencement of a proceeding, JAMS
will provide alist of three available judges and each party may strike one. If for any reasons JAMS
is unavailable, the dispute shall be decided by a retired federal or California judge, sitting as an
arbitrator, and selected by the parties. If the parties are unable to agree upon a retired judge within
30 days after receipt of written notice, a retired judge shall be appointed by the Presiding Judge of
the Los Angeles County Superior Court. The arbitrator shall render a written decision stating
reasons therefor in reasonable detail within sixty (60) days after his appointment. The arbitrator's
award shall be final and enforceable and may be confirmed by the judgment of a court of
competent jurisdiction. The prevailing party shall be entitled to recover its costs of arbitration, as
well as costs and attorneys' fees, and expert witness fees, as determined b the arbitrator, as well as
costs and attorneys' fees in any proceedings to enforce an award. The parties reserve their rights to
obtain provisional remedies from the courts, and no application for any such remedy shall be
deemed inconsistent with the obligation to arbitrate disputes.
B. Except for nonpayment of any portion of a statement presented to City by
CONSULTANT, if any dispute arises between the parties to this AGREEMENT, CONSULTANT
shall continue to perform pending resolution of the dispute.
This AGREEMENT, including the EXHIBITS, embodies the entire understanding
of the parties with respect to the matters addressed in this Agreement and the EXHIBITS and
supersedes all other agreements entered into between the parties prior to the execution of this
Agreement. No amendment of this AGREEMENT shall be valid unless in writing duty executed
by the parties or their authorized representatives.
CITY OF SANTA CLARITA
DEPARTMENT OF PUBLIC WORKS
WASTE MANAGEMENT DIVISION
REQUEST FOR PROPOSAL
UNIT PRICING STUDY
TO: Prospective Consultants
DATE: December 16, 1996
SUBJECT: Request for Proposal (RFP) for a Unit Pricing Study
TABLE OF CONTENTS
I. Purpose of the Study
if. Explanation of the Project and Special Aspects of the Scope of
Work
III. Proposal Requirements
IV. Attachments
1. PURPOSE OF THE STUDY
The purpose of the Unit Pricing Study is to provide options for a residential unit
pricing system and set a residential base rate for January 1998, for the City of
Santa Clarita (City) with a new set of residential refuse collection rates based
on individual units of waste.
IL EXPLANATION OF THE PROJECT AND THE SPECIAL ASPECTS OF THE SCOPE
OF WORK
The City of Santa Clarita is located in North Los Angeles County, situated within
the "V" formed by Interstate 5 and State Route 14. The City is approximately
35 miles northwest of the City of Los Angeles Civic Center. Current municipal
boundaries encompass approximately 42.8 square miles of land, primarily on the
1
floor of the Santa Clarita Valley and the lower reaches of the surrounding
canyons. The Santa Clarita Valley is separated from the San Fernando Valley
ridge lines of the San Gabriel and Santa Susanna mountains. Ridge lines of the
Sierra Pelon Mountains define the Valley's northern reach.
The Santa Clarita planning area extends beyond the boundaries of the City and
is approximately 256 square miles. Communities within the City include
Newhall, Valencia, Saugus, and Canyon Country and the subcommunities of
Sand Canyon and Placerita Canyon. The communities of Castaic and Val Verde
are currently located within unincorporated portions of the planning area.
Data provided from the 1990 U.S. Census on population and households shows
that the total population of the City in April 1990 was 110,794 people. Several
large annexations brought an additional 9,681 residents into the City after April
1990. The California Department of Finance Population and Housing Estimates
released in April 1996, show the population of the City to be 129,800
residents.
I r1=0 6117 6=1 IM
The City's Waste Management Division (WMD) is responsible for overseeing
three residential franchised waste and recycling haulers (haulers). The haulers
provide collection service and billing to 27,500 single family homes in three
separate zones within the City. Residents are charged a monthly collection rate
of $22.13 which includes Los Angeles County tax and the City's 10% franchise
fee. The collection rate includes: one 90 -gallon cart for refuse and a 64 -gallon
cart for yard trimmings collected weekly; a 34 -gallon cart for recyclable material
collected twice a month; annual Christmas tree collection; and an annual
community cleanup program. Residents are allowed to put out. an unlimited
amount of recyclables and any refuse or yard trimmings in excess of the 90 and
64 gallon containers will be collected for an additional fee.
The goal of providing quality refuse and recyclable collection service at a
reasonable cost to residents and businesses while meeting the state mandated
goals of the California Integrated Waste. Management Act of 1989 (AB 939),
remains the central mission of the City's WMD. AB 939 mandates
municipalities to reduce the amount of waste being sent to landfills by 50
percent by the year 2000 or face fines of up to $10,000 a day. According to
the City's AB 939 Solid Waste Mawgement Compliance August 1996 Annual
Report (Attachment 1), the City is diverting 34.5% of its waste. Beyond 50
Percent Waste Reduction by 2000, (Attachment 2), anticipates that the City's
Yard Trimmings Recycling Program will provide. 10% diversion and the
0�
remaining diversion coming from waste prevention encouraged through a unit
pricing system and enhanced programs for commercial recycling.
On August 27, 1996 at the regular City Council Meeting, the City Council
approved Resolution 96-113 (Attachment 3 including corresponding Agenda
Report). Resolution 96-113 expanded the recycling services to include yard
trimmings collection, added an increase to the existing rates of $1.50 for
standard single-family; weekly service while maintaining the existing multi-
family rates; suspended the rate adjustment provisions in the agreements
between the haulers and the City until January 1998. Council directed staff to
investigate options to stabilize refuse rates. One of the options is to look into
charging residents based on the amount of refuse they put out at the curb. A
second option is to analyze the recent commercial rate increases to help offset
future costs resulting from Resolution 96-100 (Attachment 4).
The objectives of the Unit Pricing Study are: 1) establish unit -based pricing
options to provide economic incentives for residents to reduce the amount of
waste they set out at the curb; 2) reduce residential collection rates as a result
of this incentive; 3) establish options for the residential base rate for January
1998 including, but not limited to further exploration of a possible relationship
between residential and commercial rate structures; 4) provide additional service
levels to City residents.
The City expects the Consultant to advise staff on options and
recommendations for the two (2) primary and one secondary task described
below. The City reserves the option to select a contract with the Consultant
for all or part of the tasks presented below.
1) Recommend options for restructuring the rates and developing
other incentive programs that are designed to motivate recycling
and waste reduction, including:
A. Variable Container Rates
minimum elements
• Determine a base rate or "drive by rate" for sending
9
the refuse vehicle to the house and delivering the
waste.
• Determine the cost to dispose of one gallon of refuse
fully compacted for the disposal portion of the rate.
• Determine the steepness of rates between service
levels. Examine the advantages and disadvantages
of multiple service levels and indicate an expected
solid waste diversion based on the financial
difference between the levels.
• Examine the advantages/disadvantages and feasibility
of subsidizing rates to provide greater incentives.
• Develop and implement a public participation plan to
involve the public in public education and discussion
on the findings of the report.
B. Hybrid System Rates
minimum elements
• Determine the feasibility of utilizing the City's
existing 90 gallon containers as the only means to
measure volume. For example, one technique is to
create a service line consisting of painted or
reflective marks in the middle and outside of the
container and require that residents that choose the
lower service are not allowed to fill the barrel past
the marked line.
2) Provide and present final Unit Pricing Study and meet with City
Staff and agents of the City at five (5) separate meetings in Santa
Clarita . including, but not limited to, a briefing to City Staff,
presentation at a City study session and a presentation at a City
Council meeting and two other meetings as needed with City
Staff. Additionally, be available for an unspecified number of
telephone or teleconference working meetings.
.IM
2) Establish a residential base rate for January 1998
4
• Analyze information from Roman Numeral II.
Introduction/Background including but not limited to
Attachments 3 and 4 and subsection A and B below. Upon
obtaining all relevant data and information, develop options
for the residential base rate for January 1998 including, but
not limited to further exploration of a possible relationship
between residential and commercial rate structures.
III. PROPOSAL REQUIREMENTS
A. Criteria for Proposal Acceptance
Primary consideration will be given to the general appropriateness of the
proposal for the project, the technical competence and creative ability of
the Consultants las described in the proposal) qualifications and ability to
meet the City's time schedule and the firm's willingness to work closely
with City staff. The City reserves the right to reject all proposals that are
inappropriate or inadequate.
The City will select one firm with whom to negotiate a contract for the
services requested. If a contract cannot be reached with the top rated
firm, the City may negotiate with one of the other qualified firms.
The City reserves the right to extend the time allotted for the proposal,
interview the Consultant in person, and request a best and final offer,
should the City deem that it is in its best interest to do so.
The City reserves the right to select a consultant based on review of the
proposals, or request the top candidates to participate in an oral interview
for this project. All respondents will be notified of the results of the
selection process.
This RFP does not commit the City to award a contract, or to pay any
amount incurred in the preparation of the proposal. The City reserves the
right to accept or reject any or all proposals received as a result of this
request, to negotiate with any qualified consultant, or to cancel this RFP
in part or in its entirety. The City may require the selected consultant to
participate in negotiations and to submit such technical, price, or other
revisions of their proposals as may result from negotiations.
5
The proposal may be awarded in its entirety, however, the City reserves
the right to award primary and/or secondary tasks of the work described
above to the chosen consultant. The selected consultant will be required
to enter the City's standard contract agreement (see Attachment 5).
The contract will be awarded only to a responsible consultant. In order
to qualify as responsible, a prospective contractor must meet the
following standards, as they pertain to this Request for Proposal.
1. The consultant must have adequate technical and financial
resources for performance, as well as adequate equipment, or has
the ability to obtain and to manage such resources and equipment
as required during the performance period of the proposed
contract.
2. The consultant must have the necessary experience, organization,
technical qualifications, skills, and facilities, or have the ability to
obtain and to manage them (including any subcontractor
arrangements).
3. The consultant must have demonstrated experience performing
unit pricing, franchise analysis and/or rate adjustment studies for
local government. Please provide a list of at least three references
(Local government name, address, telephone number and. contact)
and a description of the work completed including completion
dates.
4. The consultant must be able to comply with the proposed or
required performance schedule for this project.
5. The consultant must have a satisfactory record of contractual
performance.
6. The consultant must be otherwise qualified and eligible to receive
an award under all applicable laws and regulations.
B. Submittal Deadline and City Response to Proposal
The following is the anticipated schedule for consultant selections:
RFP Released December 16, 1996
6
Pre -Proposal Conference
Proposals Due by 5:30 p.m.
RFP Finalist Interviews
City Council Approval
Presentation "work-in progress"
at Study Session
Final Report Due/Required
Staff Briefing
Presentation at City Council Meeting
January 8, 1997
January 24, 1997
February 7-13, 1997
March 11, 1997
May 6, 1997
May 26, 1997
TBD
A Pre -Proposal Conference will be held to present additional information
and answer questions. It is strongly encouraged that all prospective
bidders attend this conference or to send representatives.
Date: January 8, 1997
Time: 10:00 a.m. to 12:00 Noon
Location: City Council Chambers, 23920 Valencia Blvd., Santa Clarita
The following materials will be available at the Pre -Proposal Conference:
• Residential and Commercial Franchise Agreements
• Source Reduction and Recycling Element
• Additional items as deemed necessary
NOTE: ALL QUESTIONS WILL BE ANSWERED AT THIS MEETING. NO PHONE
CALLS OR ADDITIONAL MEETINGS WITH PROPOSERS WILL TAKE
PLACE BEFORE OR AFTER THE PRE -CONFERENCE MEETING.
1. All reports and pertinent data or materials shall be the sole
property of the City of Santa Clarita, and may not be used or
reproduced in any form without the explicit written permission of
the City.
2. The Consultant should expect to have access to only the public
records and files of the City and agents of the City in accordance
with Santa Clarita Residential Franchise Agreement in preparing
the proposal or reports. No City staff assistance should be
anticipated by the consultant in the preparation of this study.
Good business practices such as the use of formal letters or
requests, and the making of appointments should be followed.
h
D. Organization of the Proposal
The organization of the Scope of Work proposed is described in this
section of the RFP. This format must be followed by all potential
consultants.
1 . Executive Summary
Summarize the important elements of the report including but not
limited to findings and recommendations.
2. Introduction
A general introduction and description of the proposal and
demonstration of the Consultants understanding of the project
shall be provided. The format of the introduction is at the
discretion of the Consultant.
3. Work Statement
Describe the work program. Explain the proposed technical
approach that addresses the work statement in this Request for
Proposal. Provide a description of the relationships between these
activities. The organization of the plan of study should be as
follows:
TASK: An overview of a related group of subtasks or
activities. Normally only one or two sentences.
SUBTASK: A detailed description of the work, including the
methodology to be performed. Generally one to ten
paragraphs depending upon the complexity of the
activities described in the subtask.
OUTPUT: A description of what the result of this -particular
activity or subtask is. Generally one sentence.
The task, subtask, output format should be repeated throughout
the plan of study until all the proposed work has been described.
3
4. Schedule
Describe the time schedule for each proposed task and subtask
described in above. Propose work periods and completion dates,
as well as those dates anticipated for staff, public and Council
meetings incorporating the established meeting dates.
5. Program Management
Indicate which method of program management will be used to
internally manage and direct this project. Provide the proposed
project schedule on a time line chart according to the selected
system.
6. Costs
List the costs for all tasks and subtasks described in the plan of
study. Specify any pricing assumptions, including the differences
in cost associated with the different public participation package
options detailed in the scope of work. Include a budget describing
total cost and/or billing rates for staff time and materials.
7. Personnel, Equipment and Facilities
Describe the activities of the designated Project Manager, and lead
and supporting personnel. Provide a resume for each person
named, including their qualifications (education and experience),
and their relationship and cost to the proposed project activities.
Provide a description and reference information for three recent
projects managed by the proposed Project Manager. It should be
noted that the project manager is the person who will serve as the
key point of contact with the City. Any change in Project Manager
cannot be made without written authorization from the City. Any
changes in Project Manager without prior City approval will be
grounds for termination of,the contract.
8. Subcontractors
List all subcontractors proposed for this project. Include their
qualifications and specific responsibilities.
9
9. Statement of Offer and Signature
The proposal shall be signed by an individual authorized to bind the
Consultant, shall contain a statement to the effect that the
proposal is a firm offer for a 60 -day period, and shall contain a
statement that the proposed work will be performed at "not -to -
exceed" price. The statement should indicate whether the City's
standard contract (see Attachment "5") is acceptable, and identify
any requested deviation therefrom.
10. Products
• Provide or develop a "user friendly" (city staff can operate
with less than two hours of consultant provided training)
computer program for Microsoft Windows for future rate
adjustment for single-family and multi -family rates.
• Provide three (3) original, bound, double -sided final reports
and three (3) copies, double -sided, based on the
recommendations and from the Work Statement. Also
provide fifteen (15) bound executive summaries. All final
documents should be on recycled paper.
• Provide one (1) camera ready copy of the report
• Provide one (1) copy of the report on 3.5 floppy disk,
compatible with Microsoft Windows and Word or Word
Perfect
11. Evaluation
An evaluation panel comprised of representatives from the City
will evaluate all proposals to determine responsiveness to the RFP.
The panel will recommend the selection of a contractor to the City
Manager/City Council for final approval and negotiation of a
contract.
E. CONTRACT MANAGER
Contract Manager for the City of Santa Clarita is Jon Emerson, Waste
Management Analyst in the Public Works Department.
10
F. PROPOSAL EVALUATION AND CONTRACTOR SELECTION
Proposals will be evaluated on the following criteria:
1. Understanding of the project and the objectives.
2. Methodology and management approach.
3. Experience and history of firm performing unit pricing and rate
studies.
4. Qualifications and experience of principles and staff.
5. Cost
6. During the selection process, the evaluation panel may interview
bidders with scores above a natural break, for clarification
purposes only. No new material will be permitted at this time.
11
IV. ATTACHMENTS
1. AB939 Solid Waste Management Compliance August 1996 Annual
Report
2. Beyond 50 Percent Waste Reduction by 2000,
3. Resolution 96-113 and Agenda Report
4. Resolution 96-100
5. Sample City Contract
6. Indemnification Agreement
7. Compliance with Law
8. Conflict of Interest
12
Attachments 6 and 7
The proposer guarantees and agrees to indemnify, defend and hold harmless the
City and its elected and appointed officers, agents and employees against any
or all loss, liability, damages, claims or costs arising out of defective material
and products,: faulty work performance, negligent or unlawful acts, and
noncompliance with any applicable local, state or federal codes, ordinances,
orders or statutes including the Occupational Safety and Health Act (OSHA) and
the California Industrial Safety Act. This guarantee is an addition to and not
intended as a limitation on any other warranty, expressed or implied.
Vendor warrants that it will comply with all federal, state, and local laws,
ordinances, rules and regulations applicable to its performance under this
Contract, including, without limitation, the Fair Labor Standards Act of 1938,
as amended, the Equal Employment Opportunity Clause prescribed by Executive
Order 11246 dated September 24, 1965 as amended, and any rules, regulations
or orders issued or promulgated under such Act and Order. Vendor shall
indemnify and save and hold City from and against any and all claims, damages,
demands, costs and losses which the City may suffer in the event that vendor
fails to comply with said Act, Order, rules, regulations or orders. Vendor further
warrants that all goods sold hereunder will comply with and conform in every
respect to the standards applicable to the use of such goods under the Williams -
Steiger Occupational Safety and Health Act of 1970, as amended, and any
regulations and orders issued thereunder. Any clause required by any law,
ordinance, rule or regulation to be included in a contract of the type evidenced
by this document `shall be deemed to be incorporated herein.
13
Attachment 8
CONFLICT OF INTEREST DISCLOSURE FORM
(Proposer)does hereby certify that no conflict of
Company Name
interest exists between the Proposer, it's owners, principles, employees or
subcontractors and any of the City of Santa Clarita's three franchised haulers, Alias
Refuse Removal Co., Blue Barrel Disposal Co. and Santa Clarita Disposal Co., or if a
conflict may exist it is fully detailed in attached sheets. Failure to disclose a conflict
may be grounds for disqualification. Such conflict may include but is not limited to
any financial or other interest (including employment) in any of the three franchised
haulers by the Proposer, it's owners, principles, employees or subcontractors or a
financial or other interest (including employment) in the Proposer, it's owners,
principles, employees or subcontractors by • any of the three franchised haulers.
By signing I certify the above information and any attached disclosures to be truthful
and that I am authorized by the company to execute this statement.
Date
14
Signature
Printed Name
Title
i
Sw U M Ag Z y'`sE+C�OiNNO� M C E S EaA Ry C H A'S -S o C yA TxE S�rfi f �A3
EXHIBIT B
Residential Unit Pricing System
for the City of Santa Clarita
Submitted to:
Mr. Jon Emerson
Waste Management Analyst
City of Santa Clarita
25663 West Avenue Stanford
Santa Clarita, California 91355
SE1*7
206 624 2950
TEL No.206-624-2950 Mar 5,97 11:49•Nc.002 P.01
PROJECT SCHEDULE AND BUDGET
SERA commits to conducting this project within the time frame needed by Santa ciarits, with
the following assumptions: needed data from the client will be provided promptly (for data
that are available » we recognize difficulties getting data from franchised haulers), and review
of documents and responses to key questions by the client will also be prompt. The table
below summarizes the anticipated schedule. Note that Week 1 is March 11 and Week 11 Is
May 26. We put week 12 to indicate whatever week the city council meeting is hold. The
Project schedule can be adjusted to meet Santa Clarite's needs.
F21W
Time-
line
Wseka
Staff Hours
LAS HYD Supp,
496 486 435
Travel
&Erg's
Eat. Budget
4
sr p1-2
is
e
8
4260
42,830
J24nt
ay/D1-4
20
24
10
0450
4,390
Task B:Ravlaw of lnform
1.4
1,170
Task 4:Current Ratas/Now
2-0
24
18
3,320
Task S:Cretemer Advisorpy
Paradpadon
4 8
40
20
10
4700
8,160
Task S:R000mnwW Rssftwt rod Rat"
4-8
30
10
a
3,710
Task 7:Cakaiato Rsoommended Rau*
7-10
54
20
4250
8.880
Task 8flmplamerrution lssues/pim
8.12
12
20
18
3,000
Task 9:Prolwt Oommunfwtlon/PporU
Task IO.On9okr9 Tod#4W Asaistanas
1.12
+0 mo
48
307
18
30
4600
at coat
7,160
2,860
"LAUNDRY LIST• PROJECT TOTAL
1-12
282
140
08
42,160
441.060
CORE PROJECT: rr"ks 1,3,4.5,6,7,91
1.12
220
94
40
41,700
$29,990
SERA proposes to conduct this project based on time and materials to a project maximum
"not to exceed" budget listed In the table above. The estimated staff hours and budget by
task are provided in the table. Expenses include airfare, car rental, hotel/meals (if needed),
and overnight mail, visual aids, and telephone expenses. Fully -loaded hourly rates are:
Skumatz, 895/hour, Van Dusan S65/hour, Analyst/support, S35/hour. Airfare from Seattle
to the Los Angelea area at the time of project proposal is about 6200 round trip. We assumed
Proposal to Santa Clarlte - I
approximately $50 to rent a car for a day.
We assume Santa Clarita will be responsible for all meeting rooms (including public meetings)
and any refreshments. As with all of our projects, we intend to provide follow-up technical
assistance and accessibility for City questions regarding the model and analysis. However,
if further modifications to the model are needed, or significant additional scenarios are needed,
we would be available at cost, as shown. The hours listed in Task 10 are "dummy" numbers
based on a hypothetical model modification.
Note that Task 9 incorporates preparation and revision of reports, hence its relatively large
budget. Other potential budget discussion points include the following:
Adding HLA to project for Task 5 and assistance elsewhere, net impact is to increase
the budget by $2,500.
■ Eliminating the customer advisory group reduces the budget by $2,000 (because of
economies of scale and overlap of tasks). Holding only one public meeting in the most
bare -bones manner would lead to a budget for Task 5 of about $3,000.
■ If data from the City is particularly difficult to get (accounting department has
difficulty, etc.), we have found it usually costs us about 51,50042,000 more to work
with the departments or find alternative data sources. We assume this will not be a
problem in Santa Clarita.
We believe we provide significant economies to the City in several ways. The City saves
significant funds on tasks 3, 6, and 7 because of in-house expertise already held by SERA,
or models that are already developed and adaptable. Throughout the project we have kept
our eye on the City's needs but budgeted to provide the services at the lowest possible cost.
Our base project (not including the mentioned modifications) is provided for a "not to exceed"
budget of 529,990.
SERA warrants that the staff identified in the budget and proposal will be available for the
amount of time shown. No substitution of staff will be made without the clear knowledge and
consent of the City. There are, of course,. costs and benefits to strong reliance on a small
number of key staff. These are our most experienced staff, but the City may be concerned
in case of injury or illness. SERA has never failed to deliver the product, and have never run
into this contingency, but do have other experienced staff qualified to do the work.
We are very interested in this work. We can provide this project on a more accelerated
schedule if needed. SERA is willing to take limited risk in kicking off some aspects of the
project prior to an official contract if that is allowed by the City.
Proposal to Santa Clarita - ii
ORGANIZATION OF PROPOSAL
I. EXECUTIVE SUMMARY
II. INTRODUCTION
A. OUR UNDERSTANDING OF SANTA CLARITA'S CURRENT
SOLID WASTE PROGRAMS AND SERVICES
B. ACHIEVEMENTS, CONCERNS, AND NEXT STEPS
C. SANTA CLARITA NEEDS
D. WHY SERA?
III. WORK STATEMENT .
A. DISCUSSION AND TECHNICAL DESCRIPTION OF
CITY'S KEY TASKS
B. ABBREVIATED TASK DESCRIPTIONS
IV. SCHEDULE
V. PROGRAM MANAGEMENT
VI. COSTS
VII. PERSONNEL, EQUIPMENT, AND FACILITIES
A. BIOGRAPHIES OF KEY STAFF
B. LOCATION CONSIDERATIONS
C. EQUIPMENT AND FACILITIES
VIII. SUBCONTRACTORS
IX. STATEMENT OF OFFER AND SIGNATURE
X. REVIEW OF PRODUCTS
XI. REFERENCES
XII. QUALIFICATIONS, RESUMES, AND EXAMPLES OF PAST WORK
Attachment A: Overview of Technical Issues in Variable Rates and Ratesetting
Other Attachments: Statement of Qualifications and Resumes
Other Documents prepared by SERA
3
3
4
5
6
6
iL
10
17
30
31
32
32
33
35
36
36
37
37
38
39
Proposal to Santa Clarita - 2
I. EXECUTIVE SUMMARY
The City of Santa Clarita has implemented a number of programs and actions in its solid waste
system to try to provide a well-managed and cost-effective system, and to meet the goals
established in AB939. The City exceeded the first round of goals, but recognizes that moving
from 35% to the 50% goal will require some additional programs or changes to lead provide
that "shot in the arm". In its planning documents, the City identified a range of options for
improving diversion. One of the key recommendations is potential implementation of a
variable rates or unit pricing program. In addition, the City notes that their residential rates
are relatively high, and they are interested in revising rates to allow customers options to pay
lower rates.
The City has provided guidance on several preferred systems, and has considered some of the
key issues affecting the potential effectiveness and success of these systems. The City is
interested in using the services of a qualified consultant to provide analysis and
recommendations to the City and:
■ examine a range of alternatives for variable rates systems, rate design,
and components,
■ develop rates based on the outcomes of the first activities,
■ provide a method for incorporating input from customers on the
programs and recommendations.
The following sections address these issues in more detail, addressing needs and methods for
accomplishing the project.
Note: Please note that throughout the document, we use several terms interchangeably: unit
pricing, variable rates, and user pay. We find using one term can make reading boring, and
all terms convey the same system.
H. INTRODUCTION
This introduction to the proposal includes several key sections:
a brief introduction to our understanding of Santa Clarita's current solid
waste system
Proposal to Santa Clarita - 3
■ Santa Clarita's achievements and concerns
■ needs and next steps for the City, including our understanding of the
project objectives
■ a summary of key capabilities needed to perform the work successfully,
incorporating key SERA qualifications.
This introduction provides the background necessary to demonstrate SERA's understanding
of the project and its objectives, and to summarize SERA's technical capability for the project.
A. Our Understanding of Santa Clarita's Current Solid Waste Programs and Services
The City of Santa Clarita (population of about 125,000) has implemented an aggressive
service of programs and services designed to provide effective management of its solid waste
system, and to attempt to meet the goals and requirements of California's AB939 legislation.
The city provides an array of services for its customers including:
■ weekly residential garbage collection, provided via semi -automated collection. "Baggy"
service is available in mobile home parks for about 75% of rates.
■ twice -monthly recycling collection, provided manually on a twice -monthly basis in 36
gallon bins. The program collects the normal array of containers and materials
(aluminum, glass, news, OCC, mixed paper, bi-metal cans, PET, and HDPE, and #6),
and collection occurs on the same day as the yard trimmings and garbage collection.
Within the last three years, the curbside program added collection of milk cartons, juice
containers, magazine, catalogs, and office paper. Service is provided to units up to
four-plexes.
■ a yard trimmings program, begun in 1996. This weekly collection program uses semi -
and full -automated collection methods, collects grass, limbs, brush, and leaves, and
collects on the same day as garbage and recycling. The program uses 64 -gallon
containers, and is available largely to single family customers.
The City's collection and programmatic services are provided by three franchised haulers. The
agreements have been in place for a number of years, and opportunities are provided in the
relatively near future to revisit these agreements should the City desire.
Customers are billed monthly, every other month, or quarterly depending on their hauler. Their
bills reflect two potential levels of usage: 90 gallon containers cost $22.13, and 180 gallon
service costs $32.93. For occasional extra waste, customers are charged $1 for an extra
one-time set out. The yard trimmings program is also line-itemed on the bill with a fee of
$1.50 (some exemptions are allowed), and no fee is shown for recycling.
Commercial rates are structured as minimum/maximums based on volumes and service;
separate recycling rates are shown for those dumpster services. The maximum charge is
assessed to new customers opting for no recycling. Recycling is city wide, not mandatory,
Proposal to Santa C/arita - 4
and includes no green waste. Haulers are required to offer commercial recycling, but there
the incentives for this service are not strong.
Franchise fees are set at 10% of gross receipts, leading to about $700K in revenues in 1996.
The City's total solid waste budget is about $300,000, covering the salaries of 3 in-house
administration/outreach /education folks; about $75,000 was spent on education in 1996.
For disposal, the City uses private facilities. Garbage and yard trimmings facilities are located
about 3-4 miles away (the current landfill has only about 2 years left), and landfill fees are
526/ton (projected to rise about 25% over 5 years), and the yard trimmings can be disposed
at $18. The MRF used is about 20 miles away, and "markets" are about 75 miles away.
B. Achievements, Concerns, and Next Steps
These programs, in combination with education and other efforts, have helped the City
achieve a laudable 34.5% diversion by 1995 (as reported to the State), exceeding the
mandated goal by over 9 percentage points. However, the legislation's next goal of 50% by
the year 2000 will likely require additional efforts.
The City of Santa Clarita is interested in implementing a residential unit pricing/variable rates
program. The City's history has been to use cooperative/voluntary approaches, and the
variable rates initiative falls neatly within this overall policy. The City's direction and planning
documents include a number of initiatives including RMDZ and incentives. Some concerns
identified by the City have to do with the franchisees; including services and rates, reporting,
incentives, and other issues. A biennial systems and service review conducted by the haulers
(comparing rate/services of 10 LANentura County., communities) found that Santa Clarita's
residential rates were higher, even though most of the cities had comparable programs.
The City is examining changes to franchise agreements, franchisee accountability/incentives.
However a primary concern is to find ways to offer citizens lower rates. Strategies noted by
the City include:
■ city identified pass-through provisions are perhaps too automatic and
generous. In fact, these provide no incentives for cost reductions or
efficiency improvements by the- franchised haulers. (e.g., other
communities have evaluated modifications including cost-sharing, etc.
for better benefits.)
■ rate adjustment methodology is based on obsolete factors; modifications
could better reflect the actual changes in costs, service mix, etc. (for
example, inflation for appropriate/updated weighted mix of proper cost
centers)
■ commercial rate band and bin service changes, modifications to covered
markets, etc.
Proposal to Santa Clarita - 5
unit -based pricingto allow lower fees for those recycling and diverting
more.
Priority approaches identified by the City for trying to meet upcoming goals include:
■ RMDZ for business expansion, increased use of recycled materials, and
better local markets.
■ unit pricing and rate stabilization
■ new programs and improved utilization of existing programs (SR,
recycling, composting, significant commercial sector efforts)
The City is preparing to implement strategies to help meet the 50% goal.
C. Santa Clarita Needs
The City has outlined several tasks designed to help them meet two basic objectives:
to provide better incentives to residential customers and increase the
City's diversion by implementing variable rates
explore options to help the City lower (and stabilize) rates for residential
customers, including options for a base rate, refinement of the
relationship between commercial and residential rates, and through
additional customer service levels.
The outlined tasks, derived and rearranged from the RFP, are designed to achieve these
objectives. The detailed task descriptions are included in Section III.
D. Why SERA?
SERA, Inc. has a number of distinct advantages to provide to Santa Clarita in the conduct of
this project. These include:
Unique data: SERA collected a unique, detailed database (hundreds of variables) on
all rates, services, programs, costs and revenues, demographics, and other key
information from over 1/3 of the communities in California — with over -representation
in the LA area. These data include the residential, commercial, and multifamily
sectors. We have similar data for a sample of 500 communities nationwide for broader
comparisons if needed.- No other firm has these types of data, or has conducted the
analysis we have using these data.
Rates Information: SERA conducts annual surveys and maintains data on rates for all
Proposal to Santa Clarita - 6
variable rates communities in the state of California, and on rates for 2/3 of all
communities in the State.
Franchise information: SERA recently conducted an extensive survey of franchise fees
and other related information across the state of California. SERA has experience
reviewing and evaluating program proposals and costs from franchised haulers;
designing RFPs and reviewing agreements for hauler incentives; and working with
franchised or contracted haulers to examine alternatives and modify and integrate
services to improve diversion.
■ Variable Rates: We believe that no firm or individual in the nation has more experience
or expertise in the topic of the design, calculation, analysis, or implementation of
variable rates than our project manager, Dr. Skumatz. Her work is widely used and
cited by communities and other consultants. Her experience is not only as a
consultant — she has "hands on" experience running these programs within
communities, and has assisted scores of communities evaluate, design, implement, and
refine these programs, including numerous programs in California. We have worked
successfully with large and small communities; nearby and distant; with municipal,
franchised, and contracted collection staff; and with a range of other characteristics
on variable rates projects. This is our key business practice focus.
■ Existing, Flexible Variable Rates Models: SERA has developed a working, well -tested,
flexible, user friendly model to support both variable rates calculation and detailed
scenario analysis. This model also incorporates calculation of multi -family and
commercial dumpster rates, incorporating alternative incentives for these sectors.
SERA's model has supported analysis of alternatives for communities from Florida to
California. We have used it to determine impacts of different base rates, base
container sizes, levels of aggressiveness of rates, different set out and compaction
assumptions; program fee assumptions and alternatives; low income/multi-family
alternatives and "fee for service" premiums and discounts and alternatives; alternatives
regarding franchise fees, budget alternatives, class subsidization issues and dozens of
other scenarios and options. A tailored version of this model would be provided to
Santa Clarita (with training) at the end of the project for the City's use in future rates
calculations and scenario analysis.
■ California Expertise: In addition to the California data and experience mentioned
elsewhere, Dr. Skumatz was selected. by the State to develop and write the State's
successful manual on variable rates, conduct case studies of communities across the
state, and to design and deliver numerous day -long workshops on unit pricing across
the state. She has provided seminars to Waste Board staff on volume- and weight -
based rates, and was asked to testify on variable rates/unit pricing before the California
legislature's committee at the recent AB939 hearings. Most important, she is
conducting a California-based study, sponsored by a consortium of cities and counties
across the state and by the:California Chapters of SWANA. This study is examining
Proposal to Santa Clar/ta - 7
the impacts of variable rates (and incentives) and of different recycling and other
program designs on diversion, the costs and cost-effectiveness of achieving higher
levels of diversion, and other similar issues. The study covers the residential,
multifamily, and commercial sector, and provides quantitative estimates of the impacts
from program and rates alternatives across the State.
Outreach information: SERA has systematically surveyed variable rates communities
across the US and within California on outreach methods, successful strategies,
unsuccessful experiences, and lessons learned regarding customer education, public
meetings, and outreach strategies. SERA has collected and maintains an extensive file
on specific outreach materials from over 60 variable rates communities across the
country. We use these materials to help cities avoid "reinventing the wheel" in terms
of outreach, and to identify techniques that have worked successfully in "similar"
communities. We have conducted projects where we were specifically hired to
develop outreach strategies, including two projects in California.
■ Working with Citizen Groups / Outreach: SERA staff have worked with dozens of
citizen committees across the country on variable rates, as well as with City councils,
and stakeholder committees. We have run workshops with all the major types of
stakeholders concerned with variable rates, including citizens, press, haulers, elected
officials, and a range of solid waste officials. We have served in a variety of roles on
public hearings, outreach, or stakeholder groups, including: organizing, facilitated, and
being available for technical questions.
■ Haulerconcerns and strategies: SERA has conducted two extensivesurveysof haulers
to identify concerns, strategies, issues, and suggestions/solutions related to variable
rates. One of these surveys was California based.
■ Strategies for "Problems": SERA staff have literally "written the books" on a range of
potential problems associated with variable rates, including special documents on
illegal dumping, low income rates, and hauler issues, as well as writing manuals
covering issues on "selling" rates, workload and budget issues, implementation, and
other technical/ political/ operational/ perception problems that can be associated with
variable rates. Our information on workable solutions come from extensive interviews
with hundreds of communities and from our key staff all having "lived with" variable
rates programs.
■ Rate Calculation Expertise: SERA staff have conducted residential variable rates and
commercial rate studies for numerous communities across the country, including
clients in California. We have served as expert witnesses in variable rates cases at the
state level. We have worked closely with communities to analyze alternatives to
develop rates that cover revenue requirements, but also will meet other community
requirements like avoiding "rate shock", providing sufficient (but not too draconian)
incentives, are politically acceptable, and a range of other real world criteria.
Proposal to Santa Clarita - 8
■ Incentives and Program Fees: SERA has conducted extensive technical work in the
area of gauging customer reactions to different rates and incentive levels, and issues
regarding "thresholds" required to induce customer reactions. Dr. Skumatz has been
asked to discuss her elasticity and related work at special seminars for the Washington
Utilities and Transportation Commission and other forums. SERA has conducted
numerous studies and written extensively on rate design -- in particular examining the
pros and cons, as well as impacts, of unit pricing incentives vs. separate program fees
(using subscription, line -item, per -bag, recycling incentive and other techniques). Some
of this work has been published; she has also examined these alternatives extensively
for clients, examining the impacts of these options on rates, customers, bills, city
revenues, and "acceptability". She maintains a database of communities with a variety
of combinations of fees and funding source alternatives for comparison. She has
conducted unique and much -cited work estimating the impact of variable rates on
recycling and yard waste program diversion for communities with different types of
program and community characteristics.
■ Strategies for Increasing Diversion Cost -Effectively: With partial funding from a variety
of sources (including EPA Region 9) Dr. Skumatz conducted a cutting edge study
estimating the particular impacts of recycling, yard waste, and variable rates program
features and choices on the percentage of diversion realized by communities. This
allows us to go far beyond the usual consultant estimate based on a few "case study
communities" in estimating the impact of unit pricing (and even types of unit pricing
systems) on the City's diversion programs. We can use our unique models to help the
City determine some of the most cost-effective tradeoffs for increasing diversion.
■ Multifamily and Commercial Sectors: We have extensive experience with rates and
recycling incentives for the multi -family and commercial sector. We have designed and
calculated rates to provide improved incentives for dumpster service for a number of
communities, and for several cities, we have met with commercial sector customers
to understand and solve problems and concerns. We have been deeply involved in
issues related to cost of service, and how to deal with existing (or anticipated)
subsidies between sectors. Because of her extensive knowledge in this area, Dr.
Skumatz was selected by the California Resource Recovery Association to deliver
special lectures on commercial rates and incentives in 3 state workshops put on by the
CRRA. Dr. Skumatz has developed rates for both small and larger. multifamily
buildings, and in examining the alternatives for eligibility for variable rates.
■ California Projects: SERA has had more projects and clients in California than in any
other state; the state has long been a prime focus for us. Our California work includes
variable rates projects for the Cities of Berkeley, Morgan Hill, Gilroy, Ventura, and
Pasadena; Sacramento County; and work for the Waste Board and California Chapters
of SWANA (with sponsorship by over 15 communities within the State). We have also
conducted extensive work on non -variable rates issues for other clients across the
state (Local Government Commission, and numerous utilities across the state). Weare
Proposal to Santa Clarita - 9
very familiar with conditions,, regulations, and concerns related to solid waste in
California. We know the programs implemented in LA and the state. We know
variable rates within the state very well. For'our clients, we travel frequently to
California, and flights to the LA area take about 2-1/2 hours; so one day down and
back for meetings is easily (inexpensively, and routinely) arranged. We provide for
Santa Clarita the best blend of both national and California-based expertise on the
precise topics of concern for this project.
Option to Involve Local Firm: Should Santa Clarita feel that a local presence and local
experience would be useful for this project, we have arranged for that as an option for
the City to consider. We have made an arrangement with Harding Lawson Associates,
based in Novato with an office in Irvine, to work together on this project should the
City desire. Their have excellent experience in solidi waste rates, planning, and
outreach across the state.
III. WORK STATEMENT
A. Discussion and Technical Description of City's Key Tasks
The City is interested in particular in an examination focusing on two of the 5 major types of
variable rates systems:
■ variable cans, and
■ hybrid system.
Options, Analysis and Tradeoffs (City's RFP Primary Tasks 1A, and Bl:
Each of these systems has distinct advantages, both for customers and for the City. Variable
cans are widely used across the state, and work well with semi- and fully -automated
collection systems (we have identified that. concerns that smaller cans cannot be used by
fully -automated systems is no longer true). The system is clear, and strong rate incentives
can be accommodated more easily than with pure bag systems, and in some cases, more
aggressive incentives can be provided than those provided by hybrid programs. This is
because with a can system, each can is "distinct" in some sense — a three can customer is
known and can be billed as such. However, with a bag/tag or hybrid system, "a bag is a
bag", and after the ,"base" level of the hybrid, increasing block rates cannot really be
implemented. If a City tries to charge higher levels for larger bags, sensible customers would
use multiples of the smaller bags, avoiding the "stepped up" incentive. Hybrid systems
Proposal to Santa Clarita - 10
provide easy implementation, no change to billing systems, and work well with semi -
automated collection systems. Fully automated collection programs can have more difficulties
with this system because bags outside containers require drivers to get out of the cab to
handle these bags. Should the City (or its haulers) be thinking of fully automated collection
in the future, these considerations must be included in the analysis. There are numerous other
pros and cons of these systems (addressed in a number of our publications), and we would
expect to take these items into account, including operational concerns, convenience for
customers, distribution issues, billing issues, as well as the very important container and rate
issues that were requested in the proposal.
We have examined options for the "base" service level, both in terms of alternatives for
modifying containers, and in setting the appropriate service level for the "base" service. In
one community we were asked to set the base level of the hybrid system such that 51 % of
households would be able to use only the base level and not have to pay out of pocket.
Others have been interested in providing even stronger incentives, and we have proposed a
declining base service level over time.
We understand that the City's program is currently based on 90 -gallon containers, and we
strongly believe this is too large fora hybrid "base" (not to mention the variable can). We will
use a combination of our databases (and some communities we know that have tried different
modification methods ("sticks", lines, etc.) as well as interview the major container
manufacturers to identify solutions they may have identified. For one community, we found
manufacturers that provided "inserts" for the containers that reduced their effective size.
There are pros and cons with each of these alternatives, including cost, "fit" with current
disposal and collection equipment, lifespans, etc. An analysis of these issues and alternatives
will be provided as part of this project.
In determining rate levels and base service amounts, we find it is particularly helpful to gather
data on current disposal habits, including number and fullness of containers disposed
currently, and the remaining potentially recyclable/compostable materials in the containers.
For this reason, we have proposed an optional set out survey. This provides greater certainty
for our analysis of expected set outs after the program is in place. It also helps set an
appropriate "base" service level that will be acceptable, achievable, and meet other objectives.
Rates and Incentives:
In the rate design work, the City has asked for information that will support analysis of
structural alternatives. This includes decomposition of the City's costs into the key rate
elements:
a "drive by" base rate
a per gallon disposal charge.
Proposal to Santa Cladta - 11
In fact, this closely mimics the structure of the first rates that Dr. Skumatz set for the City
of Seattle. That example actually included three parts — a drive by rate, a "stopping" charge,
and a "collection" or disposal charge. The first represented the rate charged to a small
number of "exempt' customers; the second two were added to the first can rate;'and
additional proportions of the third section was used as the marginal rate for additional cans.
The illustration.of this system is included in the graphics below. As you can see, our staff
have many years using this type of approach (decomposing elements to allow better
justification of rate levels and establishing equity), and we would be happy to work with the
City to conduct this type of analysis.
RATE BREAKDOWN
F/10,010 MEMO',
WE W ftX V too CE" R
Although all rates are set as "cost of service" in the interpretation of classes of customers
providing revenues needed to provide service to their class, the nature of solid waste
collection makes it difficult to establish one set of numbers as "true cost of service" for
differentials between service levels within a class. We often use both aggressive and less
aggressive allocation assignments to examine the range of "justifiable" steepness between
rate levels.. We use our judgment, experience, our information on necessary "thresholds", and
information from effects from other communities as one input to establishing cost of service.
However, this needs to be balanced with information from the City on acceptability, political
issues, and other issues to evaluate tradeoffs to.determine recommended rate increments.
One other way to affect incentive and differential levels (besides modifying cost allocation
assignment methodologies) is to incorporate "subsidies We will examine a variety of
subsidy alternatives for the City. This can include subsidizing low service level customers by
high service customers, or subsidies can occur between classes. We will clearly lay out
options and the pros and cons, and make recommendations, with feedback from the City.
When.setting rate differentials, it is necessary to determine the effective balance between:
Proposal to Santa Clarita - 12
steeper rates, which provides stronger incentives for recycling and diversion AND allow
lower service levels to receive greater rate reductions, BUT lead to (1) greater risk of
not covering revenues, (2) provide stronger incentives for illegal dumping, etc. and (3)
can lead to negative feedback from larger families, etc.
less aggressive incentives, with smaller differentials, help solve the difficulties
mentioned in terms of 1,2, and 3 above, BUT less steep rates make rates look more
similar to flat rates from the past (and may not provide options to reduce customer
rates much), and provide low rewards for those willing to recycle or those trying to
save money (e.g., single retired households, etc.).
In-house data will help us estimate the differences in diversion impacts from different levels
of "aggressiveness" of rates. This will help us evaluate the benefits of steeper rates. We will
use our expertise on balancing the listed tradeoffs to provide viable alternatives, but hope to
work with City staff and their feedback on political, financial risk, importance of recycling, and
other issues in refining the final recommendations. We also have conducted extensive work
on illegal dumping and other negative impacts of rates, which will be integrated into the work.
We have conducted these types of analyses for all our variable rates clients. We use the rates
model to run scenarios based on costs, estimated set outs, and otherassumptions to identify
alternative "steepnesses" and rate levels. Our model allows us to calculate rates based on
one set of assumptions, but then look at the revenue risk (potential shortfall) that would result
if the real world differed from our assumptions. As the clearest example, if we set can costs
based on an average of 1.5 set.outs per household, but in fact customers only set out 1.2
bags or cans per week, we would anticipate a revenue shortfall; and we will quantify that
difference for the City and work with the City to balance this risk against other priorities like
increasing diversion, etc.
Rate Setting (City's Secondary Task):
As discussed, the work proceeds in two stages:
■ analysis of the options (pros and cons, workability, etc.), and then
■ actual calculation of the rate levels resulting from the policy decisions.
In most of our work, we have found that policy decisions can rarely be made in the absence
of the potential rate levels and impacts we're talking about. Therefore, although pros and
cons and feasibility can be analyzed up front, we anticipate collecting the data and
incorporating it into the model beginning at the start of the project. Discussion of the needed
scenarios will be included in the kick-off meeting, so that we can make sure to incorporate
any necessary structural changes in the model early on.
Rate setting (City's "Secondary task") will require analysis of current budget; estimating
Proposal to Santa Clarita - 13
changes due to implementing variable rates; allocating costs; calculating set outslimpacts/and
modeling key assumptions and rate design choices; and allowing the computer to calculate
rates. This will include calculation of both variable rates, as well as changes to multifamily,
commercial, or other rates based on decisions regarding subsidies (for example).
As discussed, scenarios will be analyzed and key alternatives and theirimpacts on rates, risk,
recycling, etc. will be presented to the City for review in our meetings. Feedback will be
solicited and used to refine the model, incorporate other necessary scenarios, and revise the
calculations and options. The model (with appropriate instruction) will be provided to the City
at the close of the project.
City Participation and Meetings (City's RFP Task B2):
We were concerned about the statement on Page 7 of the RFP that we should not assume
any City assistance. We hope that refers to "deep digging" for data for the project. We
believe it is absolutely crucial to incorporate input from City staff throughout the conduct of
the project. City staff are best positioned to understand political issues, notify us of "hot
buttons" to avoid, etc. Further, these rates and alternatives need to be the "City's", and the
City must understand the process so that the staff will be able to use the model and the
methodology in the future and not be dependent on consultants in the future. Finally, the
analytical process must be understood by City staff so they can answer questions from
citizens, elected officials, and management. We will work with the City staff to organize the
input so it is efficient for the City and mindful of their busy schedules. However, we believe
that the project must have this input to be successful.
We anticipate focusing this input from the City through the (minimum of) five separate
meeting with staff. We will provide agendas and any materials for review/ discussion/
comment in advance of the meeting so the time spent will be most productive for all.
Preferences about meetings include:
■ include a kickoff meeting, preceded by a data request from us. At this meeting we
would hope to transfer data, meet key staff associated with the project, reexamine the
work plan,- verbalize priorities, discuss work that has preceded this project, clarify
expectations and working relationships, and other issues.
■ it would be very nice to have a meeting that can include input from operational staff
(presumably haulers). Being aware of their concerns and barriers that they see upfront
might help us allay concerns or design a system that takes account of the most crucial
concerns. Their cooperation is pretty essential to a successful program. We recognize
there may be limits to the City's ability to generate cooperation, depending on the
agreements.
■ working meetings with key technical staff prior to presentation to high management
Proposal to Santa Clarita - 14
or elected officials for review to assure the document is appropriate, and doesn't
include "hot buttons" or other problems that only the City can catch.
As noted in the cost proposal, we have included budget to support at least 6 meetings. In
addition, the staff time for the tasks assume telephone and teleconference working meetings.
Meetings are incorporated within the budgets of the tasks involved. We find frequent
feedback is the best way to keep the project moving efficiently, and we encourage feedback
and communication. We can also communicate via e-mail, and anticipate use of fax,
overnight mail, and other methods to assure good coordination of the project.
Public Participation Plan !City's RFP last bullet under Primary Task 1A1:
The task itself will be to develop and refine a plan with deliverables and deadlines, incorporate
feedback from the City; revise and implement the plan. Although the task will be designed
to develop and implement the public participation plan, we will provide our initial thoughts
based on experience in past work. Our preference in the public participation plan is to include
two parts:
up -front designation of a small citizen advisory committee, with representatives of a
number of sensitive groups. This will provide a sounding board for policy choices,
reflection of citizen priorities and acceptability of potential alternatives. Examples
might be subsidy issues, differentials, etc. SERA staff and/or City staff would provide
short, concise briefings on key questions that need feedback and discussion. In
additions, the sessions should be used to understand key aspects of the solid waste
system that customers strongly like, to try to retain popular features.
We enjoy working with these citizen groups because we have found it is very helpful
in learning of strong concerns and being able to have justifications prepared ahead of
time should the policy be important. Including citizens who tend to be "nay -sayers"
can sometimes help get them heard and win their support for the ultimate
recommendations. This must be considered on a case by case basis, though. If the
process for establishing a formal committee of this nature is onerous, we may not be
able to implement it. Other options are informal committees, or small focus groups,
both of which we are prepared to help implement. These types of committees are
often helpful in facilitating approval of the recommendations from elected officials. In
some cities, "buyoff" by a citizens advisory committee is a prerequisite before these
types of recommendations can be brought before councils.
■ public hearings process. We will work with the City to organize and staff a public
meeting on the study, its results, and recommendations. Outreach / notification can
be achieved through notices in the local newspaper, as well as neighborhood shopping -
type newspapers, and by notices at community centers. We find that using
community center facilities is usually a non -confrontational place for the meetings, and
Proposal to Santa Clarita - 15
is convenient for citizens. We would anticipate bringing sample containers and/or
bags, have tables set up with posters explaining key system changes, and provide brief
presentations on the new proposed system. This includes many of the aspects
recommended in our writings and manuals on public education including: what the
system is like, why the change, how it works for them, what the options are, how to
reduce costs and what choices lead to higher vs. lower rates, tips for working with the
system, where they get/order/change bags; containers, etc., and other topics. City
staff should be there to answer questions, explain the City's priorities and why it
wanted to move in this direction, the success the City has realized thus far, etc.
Feedback, comments, and questions should can be responded to in a number of ways
including: in the group as a whole, one-on-one for customers who are more shy (they
can walk up to individual staff around the room), and others can write questions or
comments on comment cards provided.
An example of the types of outreach materials that we have prepared for other clients
includes:
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The report, analysis, and recommendations will be re -visited and refined as needed as a result
of these input processes. Our budget supports this basic design of the public participation
plan, but we expect to refine it based on the City's input and based on the City's normal
responsibilities in these areas.
Proposal to Santa Clarita - 16
B. Abbreviated Task Descriptions
A detailed discussion of our understanding of key variable rates -related issues is included as
Attachment A. We would encourage review of this 10 page section to provide the City with
an understanding of our background and understanding of key considerations of design and
ratesetting with variable rates.
Based on the tasks potentially needed.by the City, SERA has outlined its key activities and
deliverables in the section below. Some of the tasks listed below are OPTIONAL for this
project (we have found them to be helpful on past projects). We provide a budget for a core
set of tasks and the City can elect other tasks if desired.
Task 1: Kickoff Meeting/Gather Data on Santa Clanta's System
Task: Kickoff meeting and data review to provide background information on the City's
, programs and needs.
Subtasks: The Consultant discuss agenda items with the City and provide and agenda and
preliminary data request prior to the first on-site meeting. Key consultant staff will visit the
City to meet with key staff, understand the solid waste system, operations, and financial
situation, and the City's plans for changes. The on-site meeting will make it clearer to the
consultant the most appropriate sources for potential data needs, and understand programs
and needs from an "on-site" perspective. The consultant will review the data and conduct
extensive discussions with the city regarding priorities, tradeoffs, system alternatives and
perceptions, political and customer "hot buttons" and other issues- The City and the
consultant will develop clear direction about the types of alternatives to be focussed on in the
remainder,of the study and develop priorities to be applied in later tasks.
Activities:
■ client provides background materials on City's solid waste system, programs, and
budget. Consultant reviews materials in preparation for project kickoff meeting.
■ kickoff meeting to discuss project scope, objectives, and approach. Meet with key
City staff to discuss programs, services, and plans; proposed services, costs, and
recommendations. Consultant gathers information from client regarding priorities and
objectives, operational issues, program alternatives, and plans. Consultant and
attendees discuss questions, concerns, issues regarding proposed tasks.
Proposal to Santa Clarita - 17
■ to the extent appropriate, collect data on customers and sectors, rates, budgets; set
outs, programs, service options, operations, billing system, ordinances, etc. to prepare
for rates calculations tasks.
■ consultant will prepare list of questions, if any remain, for clarification by the City..
Output:
■ preliminary data request
■ kick-off meeting agenda
■ draft list of criteria for client to prioritize for consultant to use in evaluating rates and
funding alternatives for later tasks
■ list of questions, if any, regarding programs, operations, rates or financial issues, or
otherissues
Task 2: Set Out Survey and Illegal Dumping Monitoring
Task: To develop an estimate of the amount of waste currently set out and the potential for
reduction when user pay programs are introduced. To identify the current level of
illegal dumping and establish an appropriate enforcement and on-going monitoring of
illegal dumping.
Subtasks: The consultant would conduct an abbreviated set out survey. This task would help
refine the garbage set out, recycling, and budget impacts estimates and help assess the likely
subscriptions and diversion program tonnage impacts as the variable. rates program is
introduced. We have found surveys of this nature to be useful in identifying impacts (and
differences in impacts) on the wide range of customers in the system. These surveys are less
necessary if communities have good quality set out and composition data available. Thistype
of task can be accomplished in a week.
Both pre- and post- user -pay inspections are needed to monitor illegal dumping. We will use
photographic methods as well as simplified monitoring efforts to examine the effects of user
pay programs on illegal dumping. These surveys would be very abbreviated efforts, mainly
meant to help address concerns of elected officials, citizens and operational staff. The
surveys would include the following activities.
Activities:
■ gather information on neighborhoods, routes, and timing to develop a well-designed
sample of target households in lower, medium, and higher income neighborhoods for
the survey
■ on-site inspection of the selected households to identify: weight of waste set out as
Proposal to Santa Clarita - 18
garbage, recycling, and yard waste; approximate volume of services used; approximate
volume of recyclables or yard waste set out as garbage that might be removed when
programs or incentives become available;
analyze current and projected distribution of service use and potential service needs
for use in estimating starting subscription rates under the new variable rates system.
■ work with City solid waste inspection staff or roads personnel to identify a sample of
illegal dumping sites in the city. Photograph the sites over a period prior to
implementation of the program, and visually note the primary composition of the waste
illegally dumped.
■ work with City staff to determine the size of the potential problems from illegal
dumping after the implementation of a user pay program. Briefly assess the suitability
of a range of enforcement options for implementation in the City.
Output.
■ data request
■ results of the set out survey
■ survey of illegal dumping sites
Task 3: Review of Information from Other Communities
Task. Analyze available information from other communities on rates and services to evaluate
Santa Clarita's system and rate options, likely impacts, and implementation issues.
Subtasks: Use in-house data, quantitative work, and if necessary, a small phone survey on
City -specified cities to gather information about variable rates programs from other
communities, including operations, administration, rate levels and differentials, subscriptions,
efficiencies and programs, implementation, and other issues, for use in comparison and
analysis for Santa Clarita's proposed system.
Activities:
■ Use consultant information/experience and recommendations from the City on relevant
communities and programs from which to gather data on variable rates programs,
administration, impacts, outreach, enforcement, and implementation.
Analyze information on rates, services, subscriptions, and impacts from key
communities, and incorporate the information into the rates analyses for the project.
Gather information on containers, sizes, options used by communities for "extra"
waste; relation to recycling and other programs, and other key issues.
Proposal to Santa Clarita - 19
■ Analyze information on public education strategies used to successfully introduce,
explain, and implement variable rates programs and funding changes. Collectexamples
of outreach materials from communities. Information from communities with
unsuccessful programs will also be collected to the extent possible to help the City
avoid problematic materials and/or outreach techniques. This is for use in the public
information task.
Output.,
summary of key lessons from other communities.
Task 4: Review of Current Rates and Expected Budget Impacts
Task: To examine current rate structures and incentives, equity and other issues, and
estimate budget impacts expected from program changes and user pay implementation
for use in rates calculations.
Subtasks: We will review the City's current rates and embedded incentives (and subsidy and
equity issues). After discussions with the City on issues related to subsidies (if any), we will
work with the City to develop estimates of the changes in budget expected from
implementation of a user pay system. This includes changes relative to: changes in tonnage
from garbage to recycling and other programs; billing and administration; customer service;
staffing; outreach; and other areas. We will use information from the City, from other case
studies, from the literature, and from SERA databases.
Activities:
■ review current rates, rate setting procedures, incentives, and subsidies
■ using consultant knowledge, data from other communities and other sources, work
with the City to develop estimates of the anticipated changes in budget needed for
implementation (one-time) and on-going operation of the user pay system.
■ incorporate results into rate study tasks.
Output.,
estimates of changes to be incorporated into rate study.
Proposal to Santa Clarita - 20
Task 5:. Customer Advisory Group and Public Participation
Task: To identify the relative acceptability of user pay alternatives and changes to the solid
waste system in Santa Clarita for consideration in developing system
recommendations. Develop and implement a public participation plan to involve the
public in public education and discussion of the findings of this report.
Subtasks: As discussed in the introduction, we would prefer to work with the City to
assemble a citizen advisory group including 6-12 customers. This group will be used to
identify key issues of concern to customers regarding solid waste system changes (including
user pay). The meetings will be used to provide briefings and progress and solicit feedback,
straw votes, and concerns relative to the issues being studied in the project. One objective
of the group might be to develop recommendation or recommendations for more user-friendly
names for Santa Clarita's ultimate user pay system. Our research has shown that Austin's
"Pay as you throw" program gained much greater customer recognition and acceptance after
developing a more user friendly name than would have bene the case with a more
cumbersome or less clear moniker. We anticipate that the City would provide the space for
the group's meetings.
Their agenda might include their opinions and preferences about user pay alternatives, rate
differentials, current and anticipated waste management behaviors, equity issues, favorite
solid waste services (to avoid elimination of key services), outreach approaches, and other
topics related to proposed system changes.
Our approach for the public hearing/ feedback portion of the project was described above, and
included developing a plan for advertising the meeting or meetings (depending on
neighborhood differences and considerations); content of the meetings; solicitation of
feedback, comments, and concerns; debriefing with the City staff; and incorporation of
identified comments into the revisions of the analysis and report.
Activities:
■ develop materials for the advisory group including briefing papers. Coordinate with city
on preferred roles for city staff vs. consultants.
work with the city to develop candidate attendees for an advisory group to discuss key
issues
develop plan for advertisement, location, staffing, content (including a script),
appropriate props and audiovisual materials, refreshments, and other issues for the
Proposal to Santa Clarita - 21
public hearing portion of the project.
implement the public hearing; debrief with City staff, and incorporate comments into
the revision of the analysis and recommendations for the variable rates report.
Output:
materials for advisory group
draft and final plan for public hearing (s)
comment cards and debriefing from hearing
Task 6: Recommend Options for Rates Restructuring
Task: Understand key barriers and system features of the Santa Clarita's system that
affect the choice between variable rates systems, with emphasis on variable
can and hybrid systems. Provide a review and evaluation of a range of options
for restructuring rates for residential, multifamily, and commercial garbage and
recycling depending on incentive and subsidy issues.
Subtasks: Using information from earlier task outputs, we will work with the City to fully
understand the system and needs associated with the new user pay system. We will examine
the principal pros and cons of alternative systems and funding options based on the City's
system. In selecting between program options, we will use a scoring method we have used
successfully with other communities. This method blends City priorities with implementation,
operation, acceptability, and other issues. It will be essential to evaluate the options based on
quantitative and qualitative criteria.
Criteria will include operational, equity, and other considerations. No option will score highest
on all types of criteria; inevitably, tradeoffs will be necessary in determining the gverall "best"
option for Santa Clarita. A key part of this project will be to work with the city (and the
Committee) to develop "weights" (percentages) or "priorities" (high/medium/low) for the
various criteria. These will be used to help select the finalist option(s) for consideration by
the City. Sample criteria include: equity, incentive provided, implementation cost/difficulty,
operational considerations, customer acceptability, billing system feasibility, effects on
programs, consistency with long-term objectives, rate shock, political and legal issues, and
other considerations. We will work with the City on both refining the list of criteria, and
prioritizing the criteria.
Activities:
■ work with City on priorities for the various criteria affecting selection between rate
Proposal to Santa Clarita - 22
options (discussed in kickoff meeting discussion)
■ incorporate information from earlier tasks (and from consultant sources) about variable
rates programs, commercial/multifamily rates and options, programmatic funding
options, and other issues requested by the City.
■ develop pros and cons of alternatives, review in relation to client's priorities and
considerations, and in relation to suitability to Santa Clarita's system. Evaluate the
options and choices, policy directions, and preferences for the variable can or hybrid
systems preferred.
■ provide a briefing to the client and/or Committee regarding recommendations
■ incorporate comments from client and finalize recommendations on restructuring rates.
Output:
list of key system and policy options for review by client, to allow review/ additions/
elimination by client
draft results/recommendations; briefing on draft results
summary of draft recommendations to be incorporated into rates analysis (they are
usually not final until rate results are able to be studied)
Task 7: Calculate Recommended Rates
Task. Develop an integrated set of proposed rates for residential variable rate, and to
the extent necessary, multifamily, and commercial services that will cover
revenue requirements.
Subtasks: The work for this task is discussed in the context of several key subactivities.
Demand: In order to develop a defensible rates study, we will need to determine current and
projected demand for each customer group. To support a rate study, further differentiation
by customer type is also necessary. For this project, we will need to be able to estimate
separately the amount of tonnage and services used by the residential, multi -family, and
commercial classes, (as well as any additional classes identified in this study).
We anticipate working closely with City in developing estimates of customer demand, rate
reaction, and other information. The output of this task will be short-term forecasts of the
demand for each of the customer classes. This work will be important in the development of
the overall rate study.
Revenue Requirements: In conducting the revenue requirements analysis, the process
Proposal to Santa C/arita - 23
examines the budget and develops the changes needed for future years. We will need to
work closely with the City to identify the types of costs and the cost relationships associated
with providing solid waste service. This includes identifying annual capital costs, and fixed
vs. variable costs will be needed for important cost categories.
We will work with the City to identify budget areas that may change because of changes in
program offerings or operational changes unrelated to the any change in rate structures. We
will need to identify the types of cost centers that will change related to changes in demand,
to inflation, to labor costs, etc. Our analysis will also need to identify operative guidelines,
targets, or policies that may govern financial operations, for example minimum days of cash,
debt/equity ratios, or net income requirements.
Cost Allocation: The purpose of this part of the task is to disaggregate the total cost of
providing utility service to each of the specific customer groups that use the services. The
task will evaluate alternatives in the way in which total revenue requirements for the system
can be borne by each of the groups of customers -- what share of revenue requirements will
be raised from different customer classes. We will work with the City to review the current
breakdown and detail of customer classes that will support the range of rates that the City
may wish to implement or examine.
Alternative allocations between customer groups, as well as within rate categories will be
examined. There are a variety of ways in which the costs may be apportioned. Examples
may be based on number of customer accounts, distance, historical usage, other assumptions,
contract stipulations, percentage of costs, and other methods.
Cost allocation involves a great deal of judgment and experience. Judgment is involved in
choosing the basis for allocation for a given cost item or in the manner in which we determine
financial responsibility for any special rates, such as low income or disabled subsidies among
customer groups. In addition, there may be discretionary and policy factors that the City may
wish to incorporate. The ultimate allocation for the City of Santa Clarita must reflect
information about the specific services and customer patterns as well as policy and rate
design objectives. We will work closely with the City to assure that these objectives are
understood and met.
Rate Design: The rate design analysis is designed to perform two major functions: to review
the form and components of rates for the various customer services and classes; and
determine the relationships between any rates or classes that will be equitable and provide
consistent incentives and meet policy goals. In conducting Santa Clarita's rate study, the
impact of a number of design alternatives need to be considered, including alternatives for
special subsidies if desired.
The objective is to develop rates that meet criteria related to achieving equity, economic
efficiency, simplicity, consistency with current practice, rate stability, political acceptability,
and other criteria. Tradeoffs and goals will need to be discussed with the City regarding
Proposal to Santa Clarita - 24
factors including the steepness of the rates, preferences for structures of programmatic
charges, and other design features.
We will develop alternatives that take into account tradeoffs in terms of important fiscal and
policy factors including:
■ variability/stability of rates
■ revenue reliability
■ equity and impact on specific customer segments
■ separate charges for diversion services (incentives, appropriateness, etc.)
■ degree of incentive offered
■ simplicity of fee structure
■ acceptability of level of rates.
The objective of these assumption alternatives would be to examine how far specific rate
design alternatives can be pursued while still achieving revenue objectives, and to perform a
risk analysis of the City's financial exposure with different incentive designs, assumptions
regarding customer reactions, changes in markets, etc.
Our approach will be to break the rates elements into a stopping charge and a per -gallon
disposal fee to facilitate analysis of alternatives.
Tailor Model and Calculate Rates: In this part of the task, the special relationships and data
identified for Santa Clarita are incorporated into the spreadsheet model, the model is verified,
and rates are calculated. The demand forecast, revenue requirements, and cost allocation
spreadsheets are used to calculate consistent rate levels.
The computer spreadsheet will allow analysis of the revenue impacts of alternative rate
structures as well as the ability to modify underlying assumptions about the solid waste
system (customer counts, growth, costs, etc). Scenario analysis on key variables is conducted,
and information is forwarded to the City summarizing the revenue and other risks associated
with rate design alternatives. The rate scenarios will provide the City with specific
information about a variety of policy issues as well as information about the level of financial
risk from various alternatives. This might include, for instance (as we modelled in detail for
the City of Seattle and others) the possible revenue shortfalls should customer subscriptions
react differently than anticipated to the rate levels. This type of information is useful for
policymakers to determine the level of risk they are willing to accept, the implications of
uncertain data, and the importance that should be placed on particular data collection
activities currently or in the future. These analyses can also help analyze equity issues, the
impact of financial policies, and other assumptions and estimations on the ultimate rates and
fiscal situation. We believe attention to this kind of analysis is a crucial element of a
comprehensive and prudent rate study.
The analysis of the rate alternatives will need to balance concerns related to recovering
Proposal to Santa Clarita - 25
needed revenues, while retaining adequate differentials to provide incentives for customers
to recycle. This analysis must also incorporate a number of crucial considerations including
orderly transition of rates (avoidance of "rate shock"), equity between (and within) customer
groups, incentives for the use of programs, incentives to help the City meet long term goals,
and consistency with the City's comprehensive plans. The rates must consider the structure
of costs, the relative level of the incentive provided, current rates and structures, program
options, and the risks and rewards. The rates will be calculated using data the consultant has
collected, the consultant's professional judgment, experience in other communities, the City's
priorities, and the tradeoffs the City is willing to accept in developing rates appropriate for
Santa Clarita's system, customers, and goals.
Activities:
■ assemble costs, customers, programs, tonnages, and other quantitative and structural
data and incorporated it into the spreadsheet model. Work with the City to develop
cost allocation relationships, and assumptions/alternatives/options.
■ use the results of previous tasks and the spreadsheet tool developed to calculate base
rates.
■ conduct scenario analyses; identify / check key scenarios related to stronger vs.
weaker customers subscription reactions and other scenarios to bracket revenue risk
issues
■ discuss preliminary results with the client; incorporate changes or concerns and
recommendations regarding tradeoffs, etc. as needed.
■ develop an integrated set of recommended rates for residential, multifamily, and
commercial customers in Santa Clarita.
Output.
■ draft results for City and Committee review, discussing uncertainties and scenario
results for review/decisions by client; meeting
■ memo to client summarizing recommended rates
■ electronic copy of model to City staff
Task 8: Implementation Issues and Recommendations
Task: Provide the City with strategies for addressing key implementation and
customer concerns related to the implementation of the types of system
changes envisioned by the City. Gather information about education and
Proposal to Santa C/arita - 26
outreach strategies for implementing variable rates programs from other
communities for use in designing options for Santa Clarita's user pay system.
Subtasks: Before a set of revenue structures or alternatives can be selected with confidence,
it will be crucial for the City to assure that major implementation barriers can be overcome.
Introducing the types of changes that the City is considering can be very useful in increasing
diversion, but can be disruptive to customers and operations. It is essential that the City (and
hauler, if necessary) be prepared with strategies to address some of the key concerns and
difficulties associated with these programs. We will include suggestions related to (at least)
the following issues:
■ - container deliveries/modifications
■ illegal dumping
■ low income customers
■ notification of customers regarding programs/ outreach strategies
■ briefing papers for elected officials to address key anticipated complaints from
customers, etc.
Activities:
■ identify .key issues that may affect successful implementation of the recommended
system, program, and rates changes.
■ review approaches to these problems and solutions that have been used successfully
in other locations
■ develop recommendations for Santa Clarita to address implementation concerns
■ using the information from Task 4 and SERA's in-house data, assess and review public
education strategies used in other communities with applicability to Santa Clarita.
■ develop a summary and discussion of public education strategies. for notifying
customers about the variable rates program, for customer to select their desired
container/size, and provide implementation and education lessons from other
communities.
■ provide Santa Clarita with suggestions regarding public information strategies that will
improve customer acceptance of the programs, and provide appropriate and efficient
customer information feedback regarding service choices, etc.
Output:
recommendations to the City regarding anticipated implementation challenges and
recommended approaches for solving them
Proposal to Santa Clarita - 27
samples of appropriate outreach materials from other communities
Task 9: Project Communication and Reporting
Task: Assure the project is on -track and that the client is aware of project progress
and problems; that the objectives, data, and approach are well -understood; and
the project is conducted efficiently and accurately. Attend meetings on-site to
assure the project is conducted efficiently and accurately, and to prepare and
give a presentation summarizing the project's results and recommendations.
Assure that the project's report and recommendations are clear, well-
documented,- and appropriate. Prepare a report presenting the approach,
findings, and recommendations of the study relative to the user pay program
and other issues addressed in the study.
Subtasks: The methodology and results of the previous tasks will be summarized into a rate
study report for the City of Santa Clarita. We will discuss with the City the outline of this
report and will prepare a final report for delivery to the City of Santa Clarita. Recommended
rate levels, as well as results of the range of policy analyses and other issues will be included.
The required number of bound and unbound draft, final report, and executive summary reports
will be provided (as well as an electronic copy). The final report will incorporate comments
by City and designated reviewers.
SERA will also be prepared to attend 6 on-site meetings with City staff, citizen groups, or
other designated groups, including presentation of the findings from the work to date or final
recommendations. In addition, SERA will maintain frequent contact with the City during the
conduct of this project. Twice -monthly written progress reports will be prepared. The format
for these reports includes sections addressing progress this period, anticipated progress next
period, and anticipated problems and proposed solutions.
In addition, we will update the City on project progress by phone at least twice monthly. We
believe that frequent contact with client project managers is essential to our work. We
anticipate providing numerous opportunities for the City.to review "work in progress" so the
City is kept informed on project direction and approaches, and to improve the quality of model
relationships and data.
The report will include a summary of the evaluation of the rate structure as well as
recommended changes for residential and commercial sector accounts, programs, and rates.
The report will summarize the key options that were considered and the recommended option,
strengths and weaknesses, including the costs and benefits, financial/policy/ customer/legal,
and other implications and performance; and the performance of each option on the range of
criteria identified with the City. The report will provide a summary of the preferred option and
implementation issues.
Proposal to Santa Clarita - 28
Subtask 10: Ongoing Technical Assistance
SERA will be available for technical assistance to the City of Santa Clarita related to this
project. We can provide assistance in running the model, preparing responses to the Council
or Solid Waste Management Commission, or information on implementing changes in rates.
The key staff providing the project assignment will remain available to Santa Clarita for a
period of up to six months after receipt of the report.
Activities:
■ project management calls to the client on at least a weekly basis, with other
communication anticipated related to data, discussions of options, etc.
■ prepare twice -monthly written progress report, documenting project progress,
accomplishments, problems and solutions or decisions, and anticipated progress in the
next period.
■ discuss the audience or audiences of the report with the client to identify the level of
detail and complexity of the content of the project report. Prepare a report outline for
review by client
■ prepare draft report for review by the client
■ after receipt of comments from the client, prepare a revised final report incorporating
the options, findings, and recommendations for rates and structures and related issues.
■ initial kick-off meeting, and interim progress/data meetings are incorporated in the
tasks listed above.
■ meetings to discuss findings, or draft report, as needed or desired by the City
■ final meeting, presenting the final results, to an audience of the client's choosing.
Output.
■ weekly calls regarding project progress
■ monthly written progress reports
■ computer spreadsheet tool for analyzing revenues and rate issues
■ draft report outline for review by client
■ draft report for review by client
■ final report
■ briefing paper, if needed, for final presentation.
Proposal to Santa Clarita - 29
What we need/expect from the City to assure the project is successful:
City will respond to data requests and review documents rapidly enough to make it
reasonable for the consultant to meet the project's anticipated deadline.
City will provide list of appropriate staff and other contacts (and phone numbers) for
questions related to programs, financial issues, billing system, and other key areas and
data.
■ City will arrange rooms and invitations for scheduled meetings, briefings, etc.
IV. SCHEDULE
Based on the guidelines provided in the RFP, the project is to be conducted over a period of
approximately 11 weeks. The schedule below assumes that Week 1 designates the week of
March 10 (the approved project start date is March 11), and Week 11 is May 26, the
scheduled week of the City Council meeting addressing the project. Tasks and key review
and meeting points are noted in the proposed schedule. The schedule also assumes bi-
monthly phone calls and faxes to update the City on project progress.
Project Schedule
The project schedule is provided as an attachment to the cover letter.
The project schedule is relatively comfortable; we have performed similar projects under
similar timelines (for example, Sacramento County). The only elements that provide any
degree of uncertainty include:
Proposal to Santa Clarita - 30
■ City's turnaround time for review of documents or response to key questions. We
assume that document review can be conducted within 2 weeks.
Establishment of a citizen group, an optional task. We believe that this group can be
useful and important, but if the process for establishing such a group in the City is
complex, the timeline might be compromised.
Data requests for public information from the haulers that might not be currently
available may require conduct of tasks in a different order. For example, information
on numbers of customer counts (preferably by service level for dumpsters), or
revenues by. customer class, and/or other such information is important to rate
modeling, and we would hope that whatever is agreed as the most suitable data
available per the franchisee reporting agreements, this information is available within
the first couple of weeks of the project. We would, of course, prepare a specific data
request very early in the process, and discuss availability of different types of data
with the City (and potentially the franchisees). Depending on computer and accounting
systems for cities and/or haulers, the reporting requirements and information provided
to the City per the franchisee or contractual agreements, we have been able to work
with. many different levels of data detail in preparing rate studies for other cities.
V. PROGRAM MANAGEMENT
Our project management methods are very straightforward and successful. This is possible
because we limit staff on projects to a few key members, who all work in the same physical
location and have easy access to each other and have clear and distinct assignments and
budgets for activities.
budget monitoring. SERA uses QuickBooks, and timesheets are entered twice per
month, monitoring hours per project or task over the period. These totals and staff
contributions are available for review by project managers the following day for review
and clarification, and to allow comparisons to the overall proposed project budget.
timeline. SERA puts all project deadlines/deliverables on a computerized calendar
program that assures all project staff are aware of upcoming deadlines for projects.
Revised deadlines are clarified in writing with client staff. Weekly meetings with staff
reconfirm deadlines and progress toward meeting objectives.
■ staff and input coordination. We have found that the keys to successful project
management for us are clear definition of staff roles toward project deliverables, and
specification of the critical path for project input and contributions, and involvement
of a limited, experienced core project team. The proposal work plan forms the core,
along with the project kickoff meeting, followed by a kickoff meeting within SERA.
Proposal to Santa Clarrta - 31
All staff on the project receive the work plan, schedule, and budget. A central file is
used so all information is accessible to all staff on the project. Our core _staff
(proposed for this project) have worked on a number of similar projects, and many
elements of this project will be similar, making coordination and matching of
expectations somewhat simpler. Again, weekly update meetings, which discuss all
tasks on the project, assure early identification of bottlenecks and clear up ambiguities.
■ overall project management. The project manager in charge is Lisa Skumatz, the
principal for the firm. She is a highly experienced project manager. As technical lead
and primary contact with the client, she is able to monitor progress and coordination
of the project efficiently. She is responsible for management of budget, staff, and
deliverables, and reviews on a weekly or twice -monthly basis. Dr. Skumatz is
responsible for review of all project deliverables for quality, completeness, and
suitability to meet client's needs/expectations.
■ optional subcontractor. Should HLA be brought in as contributors to this project, the
key guiding document will be the subcontract agreement. This specifies timeline,
budget, staff, and deliverables. The project manager is responsible for coordination,
review, and monitoring progress. We have worked successfully with this
subcontractor before and have an excellent relationship with the HLA project manager.
Key components of project management for the project are:
■ proposed (and potentially revised) work scope, schedule, budget, and
calendar
■ kickoff meting, and SERA kickoff meeting
■ weekly consultant meetings
■ twice monthly timesheets and budget reports
■ twice monthly calls and progress reports to client
■ subcontract agreement
■ project manager review of deliverables.
VI. COSTS
The budget is provided under separate cover.
VII. PERSONNEL,.EQUIPMENT, AND FACILITIES
Dr. Lisa Skumatz will be the project manager and "primary client contact for this project. She
will be responsible for communication, design and analysis of rates alternatives, development
of the spreadsheet tool, and preparation of reports and briefings. Dr. Skumatz will be
responsible for designing and calculating rates, spreadsheet analysis, and scenario analysis.
Proposal to Santa C/arita - 32
She will also be assisted by Hans Van Dusan in this work. He will be responsible for
conducting case studies on key issues, for assisting on key. commercial issues, and assisting
Lisa in pros and cons analysis, and similar assignments. If further assistance on phone data
collection is needed, some of this work may be completed by John Green and Erin Truitt,
analysts with SERA.
Rather than trying to be all things to all clients, SERA is a "niche" firm -- we specialize in
research related to economic issues as applied to solid waste, providing specialized "higher
level" services and expertise. We do not provide 'corporate quals" that cite experience from
"other offices" or other staff. We can assure that the Santa Clarita project will be assigned
the staff with the expertise relevant to your needs as detailed in the proposal. Finally, we
start each project anew, incorporating past work where it is relevant and saves the client
money, but each project starts with listening to client needs, and tailoring of project efforts
and developing specific recommendations to meet those needs. We never provide "cookie
cutter" reports or analyses.
A. Biographies of Key Staff
SERA staff represent a balance of a range of disciplines, working together to provide the best
solution for our clients' needs. Our staff include economists, engineers, quantitative, and
planning staff. Brief biographies of key staff follow.
Lisa A. Skumatz, Ph.D., Principal.
Dr. Skumatz has a nationwide reputation in the analysis of rates, revenue options,
program evaluation, and forecasting for solid waste agencies. Her interests include
both quantitative and policy issues in solid waste. Dr. Skumatz was responsible for
developing SERA's extensive in-house databases on variable rates, recycling and yard
waste program design and performance, collection efficiencies, and tonnage and
participation data. She has used these data to assess program performance, collection
efficiencies, and to develop and assess solid waste system or collection changes for
communities.
Dr. Skumatz has years of experience in rate studies (with special expertise in volume -
and weight -based rates) for residential, commercial, and transfer stationflandfill
sectors. She spent three years as a rates analyst for the City of Seattle's Solid Waste
Utility, and worked extensively designing and implementing the significant variable can
rate structure changes there. She has developed integrated rate models, incorporating
customer reactions to rate and program changes, and has served as an expert witness
in rate proceedings. She has assisted several score of communities in designing,
calculating, or implementing variable rates. She has written manuals for a number of
states, given dozens of workshops, and written widely -cited articles on variable rates
and other incentives.
Proposal to Santa Clarita - 33
Dr. Skumatz has.conducted extensive work in multifamily and commercial solid waste
rates. She was responsible for designing rates for all dumpster customers for the
Seattle Solid Waste Utility. The rates were based on a formula that reflected
incentives and cost structures, including rates varying non -linearly on collection
frequency, volume, and containers. For several clients, she examined alternative
structures to encourage recycling, balanced with City collection efficiency gains (e.g.,
for the City of Largo). Dr. Skumatz has reviewed program and cost submittals from
franchised haulers, examined and provided improvements for incentives, reviewed and
developed franchise fee level recommendations, and has examined alternatives for
generating revenues from the private commercial sector that would more equitably
recover revenues for City-wide environmental services. On other revenue -related
projects, Dr. Skumatz- has completed work for communities examining the
appropriateness and potential of over 30 different revenue options for communities and
county -level solid waste agencies, and recommending an appropriate mix of sources.
In the area of outreach and public meetings, Dr. Skumatz has organized, facilitated, or
was primary contributor at dozens of public meetings, stakeholder meetings, or other
public or elected official task forces or work groups. She wrote the majority of the
text and designed the graphics for Seattle's variable rate change; these materials were
also used directly by the press. She has collected outreach information from over 60
variable rates communities across the nation, and has conducted surveys of several
score of communities to identify successful outreach and customer information/
appropriate programs for variable rates. She has written well -cited manuals discussing
implementation and outreach plans, "selling" variable rates, and lessons learned. She
has developed implementation plans, including design (including customer input) for
a number of communities. She has provided hundreds of briefings and presentations
on these topics.
Dr. Skumatz has extensive experience in generation, disposal, and program tonnage
forecasting models for communities, including for variable rates applications. For a
number of clients, she has evaluated over 30 different potential revenue sources to
determine the most appropriate; tailored, mix of options for financing a range of solid
waste management activities and programs.
Her background in statistics and survey research has been applied in the design,
conduct, and analysis of solid waste surveys on attitudes, waste management
behavior, set -outs and waste composition for numerous variable rates clients. She has
worked in the area of source reduction programs and incentives for many years. Dr.
Skumatz has written widely cited manuals and articles on these topics, as well as
conducted multiple workshops across North America on solid waste issues. Her clients
include solid waste agencies from Alaska to Florida and Canada. Dr. Skumatz holds
a Ph.D. in Economics (econometrics) from the Johns Hopkins University.
Proposal to Santa Clarita - 34
Role: Project manager, technical lead, develop rate model, rate design alternatives, model
scenarios, jointly work on outreach, principal writer, primary client contact.
Hans Van Dusen, Senior Analyst.
Mr. Van Dusan has extensive experience in solid waste planning, rate system design
and analysis; and modeling and analysis of program and scenario options. He has
managed key tasks on rate studies, examining scenarios related to rate impacts and
assessing alternative methods for expanding contributions for "environmental" costs
across a broader customer base. His rate study work also includes numerous case
studies on rates policy and impacts. He co-authored a manual on solid waste rates.
Mr. Van Dusen has experience assessing the cost-effectiveness of solid waste
management alternatives, including managing numerous tasks in an evaluation of
recycling, collection, education, transfer/scalehouse, and hazardous waste
management programs. He was the primary engineer on the first field test of the
concept of weight -based rates, examining performance, reliability, costs, and other
effects. His experience includes analysis of cost structures, and assessment of fixed
and variable components. Mr. Van Dusan earned a B.S. in Mechanical Engineering
and a B.S. in Economics from Tufts University.
Role: Backup Dr. Skumatz, organize model inputs from data supplied, assist in pros and cons
development, outreach planning, review hardware considerations of options.
Erin Truitt, John Green, Analysts.
Ms. Truitt and Mr. Green provide a range of analytical support services to SERA's
senior staff. This assures that the project can be conducted efficiently and cost-
effectively. These duties include phone surveys, where needed; data input, validation,
and manipulation; creation of graphics and assembly of documents.
Role: As stated.
B. Location Considerations
One concern that Santa Clarita may have relates to SERA's location. Our office is located in
Seattle, Washington. However, SERA successfully maintains a nationwide client base, and
currently has other clients in California. We have found that on-site time, combined with
phone,fax, overnight mail, and e-mail, allows us to maintain excellent project and client
communications. In fact, we have found that even with our local clients (one is 4 blocks
away), our most common methods of communication are phone and fax. We can make sure
that our location is no impediment to the conduct of .this work. Our budget incorporates
numerous on-site trips to accomplish this project.
Proposal to Santa C/arita - 35
C. Equipment and Facilities:
SERA maintains a suite of professional offices in downtown Seattle. Our facilities include all
equipment necessary to complete the project successfully, including computers and all
necessary software, telephones with three lines, copying machine, and faxes. We maintain
both e-mail and voice mail to assure clients can reach. us. Our rule is returning calls as
quickly as possible, but unless unavoidable, no later than same day. SERA was established
as a sole proprietorship in 1990, purchased the solid waste practice of SRC in 1994; and was
incorporated in 1995. We are a woman -owned firm, and have consistently maintained a staff
of 4-5 employees.
VIII. SUBCONTRACTORS
Should Santa Clarita desire participation of a firm with a local presence, we have prepared for
that contingency by offering the City the optional participation of Harding Lawson Associates
(HLA). SERA has had an excellent and productive working relationship with key staff at HLA.
In addition, HLA is performing as a subcontractor to SERA, Inc. on a project we are just
completing for another client.
As a full-service consulting firm, Harding Lawson Associates (HLA) provides the capability and
commitment to manage and conduct a variety of solid waste and environmental projects.
HLA is able to effectively utilize the resources of their nationwide organization in providing
effective solutions to local situations. HLA has agreed to provide assistance on this project
if the City is interested. We envision their possible assistance to SERA on this project
focussing in two areas:
■ franchise review, and
■ public hearings (local presence can be helpful).
HLA maintains headquarters offices in Novato, and has a regional office in Irvine. A list of
relevant project experience follows.
■ Franchise negotiations and rate review for the City of Astoria, Oregon.
■ Franchise and umbrella services design and implementation, Tri County Council,
Portland, Oregon. This project addressed development of collection district, hauler
representative, franchise establishment, and provision of incentives for superior
recycling services, as well as a number of other related issues.
IN Solid waste service elements analysis and recommendations,- for the City of Redondo
Beach, California. This project included preparing bid specifications, rate review, and
numerous other elements.
IN Organizing and running public hearings and public information for a landfill siting
project in Deschutes County, a state-wide project on recycling markets in the State of
Proposal to Santa Clarita - 36
Oregon, and for multiple rate reviews for Washington County, Oregon. This
Washington County work also included working with advisory committees.
■ Variable rates studies for Kauai, Hawaii; Redondo Beach, California; Marion County,
Oregon; and many others.
Should we involve HLA, the budget impact is described in the budget section. The impact is
small, because we will substitute some time from SERA staff to HLA as appropriate, but the
total hours of professional staff will increase slightly.
IX: STATEMENT OF OFFER AND SIGNATURE
Dr. Lisa Skumatz, Principal of SERA, Inc. states that SERA, Inc. is pleased to offer this
proposal as a firm offer for a 60 -day period, and that the proposed budget is developed as a
"not to exceed" price.
We have reviewed the City's standard contract. We can comply, with only the following
possible areas for modification:
■ SERA ,does not maintain separate corporate automobile insurance
because we do not maintain any automobiles.
■ We do not maintain workers compensation in the State of California, but
do meet these obligations for the State of Washington, in which we are
incorporated.
Upon award of this contract, our agent will immediately add the City as an additional insured.
Attachment 8, the Conflict of Interest statement is also included in this section
C
Signature of authorized agent for SER Inc.
Typed name: Lisa A. Skumatz, Ph.D., Principal
X. REVIEW OF PRODUCTS
To summarize the deliverable that will be provided as part of these project efforts, we provide
the following listing:
user-friendly, tailored, spreadsheet model (EXCELL or LOTUS under Windows
environment), supporting rate adjustments and scenario analysis for the single family
Proposal to Santa Clarita - 37
nd multifamily rates. Includes training (less than 2 hours of training will be required
to understand the model's use).
Three original, bound, double -sided final reports and three copies, double -sided, based
on the recommendations and from the Work Statement. Also fifteen bound executive
summaries. All documents to be provided on recycled paper.
One camera-ready copy of the report.
One electronic copy of the report on a 3.5 inch floppy disk, using either Word or
WordPerfect under a Windows environment.
Other deliverables include:
■ Results of set out surveys and other documents as described in the selected work
tasks.
XI.
SERA prides itself on working hard to satisfy clients. We encourage you to call the following
references to discuss our capabilities, qualifications, and work methods.
Victoria Runkle, Finance Director, City of Renton, Washington
(for variable rates, dumpster rates, public involvement work for the City of Seattle)
Phone: (206) 235-2558
Lisa Menacho, Recycling Coordinator, City of Gilroy, California
(for variable rates and multifamily rates and franchise work for the Cities of Gilroy/Morgan Hill)
Phone: (408) 848-0245
FAX: (408) 842-2409
Teresa Eturaspe, Superintendent, Solid Waste, City of Largo; Florida
(for knowledge/work on variable rates, automation, and commercial rates/incentives for the
City of Largo, Florida; for working successfully from a distance)
Phone: (813) 587-6760
FAX: (813) 587-6780
Other references if desired:
Lynn Scarlett, Vice President, Research, The Reason Foundation, Los Angeles, California
(for information on knowledgelexpertise in variable rates and incentives; conducting projects
Proposal to Santa Clarita - 38
successfully; understanding of real world implications; problems and solutions; product
quality; delivery of product within budget)
(310) 391-2245
Chris Ann Dickerson, Conservation Program Evaluation, Pacific Gas and Electric Company, San
Francisco, California
(for conducting work successfully in California, meeting client needs within budget)
(415) 973-4834
Dennis Meyers, California Integrated Waste Management Board, Sacramento, California
(for information on expertise in variable rates; incentives analysis; pros and cons of
alternatives; hauler survey and California case studies; workshop and manuals)
(916) 255-2266.
XIII. QUALIFICATIONS, RESUMESi AND EXAMPLES OF PAST WORK
Attached to this document are two items:
■ a summary of SERA's qualifications, previous project assignments and clients. Please
note that all of these projects were completed by the staff proposed for this project.
They are not "corporate qualifications" including work conducted by staff in some
other office.
■ an attachment of a sample of previous work by Dr. Skumatz and her staff related to
variable rates to provide evidence of understanding of the issues associated with this
project. In the interest of source reduction, we would appreciate return of these
materials.
Proposal to Santa Clarita - 39
Attachment 5
CONFLICT OF INTEREST DISCLOSURE FORM
(Proposer) does hereby certify that no conflict of
Company Name
interest exists between the Proposer, it's owners, principles, employees or subcontractors and
any of the City of Santa Clarita's three franchised haulers, Atlas Refuse Removal Co., Blue
Barrel Disposal Co. and Santa Clarita Disposal Co., or if a conflict may exist it is fully
detailed in attached sheets. Failure to disclose a conflict may be grounds for disqualification.
Such conflict may include but is not limited to any financial or other interest (including
employment) in any of the three franchised haulers by the Proposer, it's owners, principles,
employees or subcontractors or a financial or other interest (including employment) in the
Proposer, it's owners, principles, employees or subcontractors by any of the three franchised
haulers.
By signing I certify the above information and any attached disclosures to be truthful and that I
am authorized by the company to execute this statement.
'1Z`(t9�=
Date
Bid X PW-96-9MS
Signature
Printed Nam6
Qe�n�ctP,4L
Title
DOCUMENTS ON VARIABLE RATES AND RATESETTING AUTHORED OR
CO-AUTHORED BY SERA STAFF'
Variable Rates for Municipal Solid Waste: Implementation Experience, Economics and
Legislation
How Can Low Income Programs Work? Addressing Special Population Under Variable Rates
Systems
Illegal Dumping: Incidence, Drivers, and Strategies
Nationwide Diversion Rate Study --Quantitative Effects of Program choices on Recycling and
Green Waste Diversion: Beyond Case Studies
Various articles on Variable and Weight -based Rates in Solid Waste
MANUALS:
CaliforniaIntegratedWaste Management Board Unit Pricing Systems
Variable Rates in Solid Waste Handbook for Solid Waste Officials (Vol 1 &2)
US EPA Pay -As -You -Throw Lessons Learned About Unit Pricing
Variable Rate Pricing: A Practical Guide for Local Decisionmakers
'MATERIALS INCLUDED UNDER SEPERATE COVER
SUMMARY TABLE OF SERA QUALIFICATIONS:
RESUMES AND FULL QUALIFICATIONS UNDER SEPARATE ATTACHMENT
Skumatz Economic Research Associates Project Experience - 1
;AIER SO![p WASiE
PRO I CT EX!?SRIEIVC>
Type t�f. Pro[ect ?,
Pwotect'Aasigntnfirtts
,Clients
Rate Studies
Largo, FL
■ Res.. and comm'I rates
Sacramento County
is Variable can rates, yardwaste program charges
Gilroy, Morgan Hill, CA
■ Residential/Comm'I/MF rates, options for program charges .
Austin, TX
■ Res. variable can rates
Seattle, WA
■ Multiple years, variable can, detachable containers, transfer
stations
Berkeley, CA
is Res. and comm'I collection, transfer stations
Cincinnati, OH
■ New res. variable rate system - hybrid
Pasadena, CA
is Res. variable can and yard waste rates
Oak Park, IL
■ Res. variable can, yard waste, and recycling rates
King Courity, WA
■ Expert witness testimony on res. variable can rates
Seattle, WA
■ Analysis of optimal rate timing
Coll'n and Programs
SWANA (Calif.
■ Detailed analysis of program features, performance, costs,
Efficiency
Chapters)
cost-effectiveness of achieving different diversion levels
Largo, FL
■ Recycling, comm'I, yard, bulky, residential coll'n
efficiencies/ productivity; benchmarking; analysis of
automated collection.
Portland Metro
■ Efficiency of haz programs, scalehouse/transfer
Gilroy, Morgan Hill, CA
■ Evaluation of costs, efficiencies for yard waste, multi-
family, and commercial recycling programs -
King County, WA
■ Assessment of yard waste program
Akron, OH
■ Comparison/analysis of system disposal/ management
options; shortllong term cost analysis
Berkeley, CA
■ Assessment of comm'I competitiveness, cost. comparisons
Austin, TX
■ Comparison of coll'n efficiencies, options
Multiclient (including
is Detailed analysis of program designs, effects on capture
EPA, MN, others)
rates, cost-effectiveness
Rates and Incentives/
Sacramento County, CA
■ Feasibility, design of variable rate option, yardwaste charge
Program Fees/
Cincinnati, OH
■ Feasibility analysis and implementation plan, hybrid
Residential & Comm'I
Gilroy, Morgan Hill, CA
■ Variable rate and diversion charges feasibility/design
Oak Park, IL
in Variable rate feasibility analysis
Sunrise, FL
■ Development of recycling credits program
Largo, FL
is Analysis of variable rates and weight -based feasibility
Ft. Wayne, IN
■ Assistance for feasibility analysis
Victoria, CRD, BC
■ Detailed feasibility analysis and implementation plan
Anchorage, AK
■ Variable rate feasibility assessment
Orange County, CA
■ Case study comparisons for feasibility
Seattle, WA/EPA
■ Garbage by the Pound Study (pioneering weight -based
rates pilot program)
Ventura, CA
■ Implementation of variable rates, education
Integrated Program
Boulder, CO
■ Analysis of program options, design of cost-effective mix of
Planning, Economic
services and programs for solid waste management system
Analysis of
Seattle, WA
Is Cost -benefit analysis of program options
Alternatives
Grand Canyon National
■ Analysis of program options, cost-effective mix of recycling
Park
and garbage service options
King County, WA
■ Cost-effectiveness analysis of yard waste and other
program options
Skumatz Economic Research Associates Project Experience - 1
Skumatz Economic Research Associates Project Experience - 2
_Type
Project Ss 1: M11-
Recycling and
King County, WA
■ Compost market analysis, potential
Compost Markets
Bonneville Power
■ Analysis of regional markets, potential for standard
Analysis
Admin.
materials, compost, C&D, used equipment; procurement
practices
Regional SW Agencies
■ Assessment of market potential for cost-benefit analysis of
(Boulder, Nat'l Parks)
integrated program options
Implementation,
Multiple
■ Variable rates for Seattle, 5 CA cities, Largo, others
Implementation Plans
Largo
■ Automated collection
Iowa, Seattle
■ Weight-based rates
Multiple
■ Tracking/eval. for Seattle, Portland, Sea/KC Haz, LGC
Funding/Financing
Akron, OH
■ Economic alternatives to flow control; funding of now
Options Assessment
system; disposal options analysis
Portland Metro, OR
■ Analysis/design of two dozen funding options; case studies
for revenue replacement from shortfall
Boulder, CO
■ Analysis of dozens of revenue options for funding now
integrated county-wide programs; design/recommendations
Berkeley, CA
■ Options for new revenue sources, leveling playing field for
comm% 'environmental" fees
Sunrise, FL
■ Options for recycling charges/rebates. case studies; design
Seattle, WA
■ Revenue sources assessment, policies
Sacramento County, CA
■ Revenue options for program funding
King County, WA
■ Revenue options with new programs
Seattle, WA
■ Long term revenue options for comprehensive plan
Seattle, WA
■ Financial analysis for bond issue
Seattle, WA
■ Cash analysis for timing of rate change
Nat'l Assoc. of Counties
■ Presentation on funding options and analysis of appropriate
match of beneficiaries to payers
California Resource
■ Presentation on economic alternatives to flow control;
Recovery Assn
generator fees in communities, case studies, pros/cons
Texas Natural Resources
■ Case studies and appropriate funding options presentation
Conservation Commiss.
before task force
Largo, FL,* Berkeley, CA
■ Cash analysis, rate timing analysis/alternatives
Forecasting Waste
Seattle, WA
■ Forecast of residential and transfer station tonnages
Generation, Program
Oak Park, IL
■ Forecast residential garbage, yard waste, recycling tonnage
Tonnage
Cincinnati, OH
■ Forecast residential garbage, yard waste, recycling tons
Portland Metro, OR
■ Detailed forecast of Metro/non-Metro revenue and non-
revenue tons at facilities In three-county area
Austin, Berkeley. Largo,
.■ Forecast of sector and program tonnage for rates. models
others
■ Case studies of 12 communities' approaches to analyzing
Multi-client
forecasting, assessment, recommendations
Manuals on User
EPA, Region 10
■ Variable Rates..
Fees/Rates and
EPA Headquarters
■ Unit Pricing...
Funding Options
CA
■ CA Integrated Waste Management Board, Unit Pricing...
IL DNR
■ IL Dept of Energy and Nat'l Resources, Ouantfty-Based
Coalition of NE
Disposal Rates
Governors
■ Decision-Makers Guide...
Ontario Ministry of E&E
■ User Pay Demonstration Manual
Southern States Energy
■ Authored portions of handbook
I
Board, GA
Skumatz Economic Research Associates Project Experience - 2
Skumatz Economic Research Associates Project Experience - 3
EXPERIENCE
'Type of Project
Clients ,,, .;; ,<
;° 'Project AssSgnments ,Q
Workshops on Rates,
Nat'l Recyc.Coalit.(NRC)
R Variable Rates (VR) Workshop Ione -day)
Funding, Tracking
LGC, Cal Waste Board
■ Workshop on performance evaluation, measurement
Iowa DNR, 2 projects
■ Train the Trainer on VR, 10 community workshops
Greater Vancouver F.D.
■ Unit pricing workshop
CA Integ. Waste Board
■ Four workshops on unit pricing
Coalition NE Governors
■ Train the Trainer workshop on variable rates
BC Environment
■ Two workshops on variable rates
ICMA
■ Three workshops on variable rates/source reduction,
Yale
■ Integrated planning and incentives
Ontario MOEE, Halifax,
■ User Pay Workshops
Calgary, Edmonton
University of Wisconsin
■ Variable rates, collection efficiencies/automation
SWANA
■ Weight -based rates
EPA
■ Variable rates roundtable
Clemson University
■ Workshop on variable rates
Numerous Cities, Assns
CRRA
■ Workshops/presentation on comm'I rates; variable rates,
program efficiencies, reaching 50%, economic flow control
Surveys
Anchorage, AK
■ Residential customer survey
Clean WA Center
■ Survey of recycling potential in industrial sectors
Oak Park, IL
■ Mail survey, set -out survey and analysis
CA Waste Board
■ Hauler survey, case studies of residential coll'n
Fort Wayne, IN
■ Set -out survey and analysis
Cincinnati, OH
■ Set -out survey/analysis
Seattle, WA
■ Transfer station customer survey, residential customer
survey, pilot collection program survey
Berkeley, CA
■ Commercial customer survey, hauler survey
Austin, TX
■ Set -out survey
Renton, WA
■ Utilities, recycling, solid waste residential survey
Portland Metro, King
■ Surveys and case studies of haz programs, transfer/
County, many others
scalehouse, financing options, costs, efficiencies
Kittitas Co., Multi -client
■ Illegal dumping options survey
Detailed Program
Seattle/King County
■ Evaluation design for the LHWMP including 21 collection,
Evaluation
Health Dept.
education, and compliance programs for res. and comm'l.
Portland Metro
■ Program eval, performance eval. for haz programs and
scalehouse operations; >20 comparisons
CA Local Govt
■ Process, impact, performance evaluation of materials
commiss. & Cal Waste
exchange program
Board
.0 Process, impact, and performance evaluation of LHWMP
Seattle/King County
including 2 dozen programs for res. and comm'l sectors
■ Garbage by the Pound pilot test
Seattle, WA; St. of Iowa
■ Cost-effectiveness of recycling and yard waste; cost
Largo, FL
component analysis of solid waste management system
■ Detailed tracking of recycling, tonnage, revenue, and cost
Seattle, WA
performance vs. goals
■ Assessment of industrial solid waste regulations,
WA Dept of Ecology
sufficiency, practices, comparison to other states
■ Statistical analysis of diversion and cost-effectiveness of
Multi -client
alternative recycling, diversion, and incentive programs
■ Costs and benefits of weight -based systems; technical
Reason Foundation
alternatives
■ Impacts of variable rates; performance issues; methods to
Reason Foundation
evaluate programs
Skumatz Economic Research Associates Project Experience - 3
....... . .
1 No
x �1�
. . .. ......
Type of Project.
Clam
Project Assignments..
,
......... ... ".
Testimony/Legisla-
GA legislaturelsubcmte
X Model legislation on variable rates
tion/ Policy Assistance
WA Util/Trans.
N Rate incentives
Commiss.
0 Expert witness testimony in residential. rate case
State of Florida
0 Legislative committee on ADFe vs. variable rates
Texas NRCC
0 Analysis for Task force on options for.statelvariable rates
Nat'l Conf. of State
0 State -level legislative initiatives on variable rates,
Legislatures (NCSL)
recommendations on model legislation to legislators
NCSL
a Update on legislative initiatives on variable rates
ALEC
0 Legislation on variable rates in states
Sunrise, Fl.
a Ordinances for incentives, rates
Multiple
n Report on model legislation on variable rates
Multiple
E Biannual update; analysis of state legislation on variable
rates
Model Development
Berkeley, Austin,
0 Spreadsheet model for variable rates; scenario analysis
Cincinnati, Largo,
model
Sacramento County,
Gilroy, Morgan Hill
Seattle, WA
K Spreadsheet model to evaluate rates timing, cash flow, etc.
Portland, Seattle,
N Cost -benefit model for program changes
Cincinnati
E Demand and revenue forecast models
Seattle, Berkeley
E Customer reaction/subscription models
Austin, TX, Iowa DNR
0 Cost -of -service and rates model
Other
WA Dept of Ecology
z Industrial solid waste survey and regulatory review
Summit -Akron
a Alternatives to flow control, economic evaluation of options
TNRCC;CRRA
x Economic alternatives to flow control
Seattle, WA
N Computer program mapping coll'n misses/gen. work orders
Sea"le;Easftown,PA
N Assistance in preparing RFPs, evaluation procedures
Multiple
N Biannual count of communities with variable rates/analysis
0 Annual survey of variable rates legislation at state level
0 Illegal dumping/experience/strategies/case studies
CWC, NRC, WSRA
E Survey/committees/workshops on future of recycling
Seattle, multiple
E Joint comm'l/res recycling/water/energy etc. audits
Skumatz Economic Research Associates Project Experience - 4
Attachment A
DISCUSSION OF KEY ISSUES RELATED TO VARIABLE RATES
Proposal to Santa Clarita
Attachment A.
TECHNICAL DISCUSSION AND UNDERSTANDING OF THE ISSUES
The following text summarizes some of SERA's expertise on user fees, structures, tradeoffs,
operational issues, and other topics related to the project in Santa Clarita. We believe that this
provides background for the City to understand the issues that SERA will take into account as it
conducts this project for Santa Clarita.
A. ISSUES RELATED TO VARIABLE RATES STUDIES
Background on Variable Rates:
Several major types of variable rates systems have been implemented in communities across the
US and Canada. These include: variable can systems; prepaid bag systems; prepaid tag or sticker
systems; "hybrid" systems; and weight -based systems. SERA recently updated its count of
communities across the nation with variable rates systems (published in Biocvcle, November 1995),
and found that nearly 3,000 communities have operating variable rates systems. Based on the
impacts found in communities adopting these programs, variable rates can provide an excellent and
equitable incentive to customers to reduce waste, recycle, and participate in diversion programs.
The programs are very flexible, and can be designed to take a variety of local conditions into
account. Variable rates programs have been called."their most effective recycling program" by
some communities, and as an added benefit, the programs can be significantly cheaper than those
requiring an additional truck going down the street.
However, variable rates can add complications. Besides the operational and administrative changes,
and the changes to the requirements on the part of citizens, the calculation of the rates to be
charged is more complicated. And of special concern to communities is the fact.that uncertainties
about the level of customer reactions can leave the community at risk for recovering the revenues
required to cover fixed and variable costs of providing service. The following paragraphs address
some of the concerns and considerations in calculating rates under a variable rate system.
Deriving Rates:'
Rates are derived balancing a wide array of criteria. On the basis of underlying rates principles (e.g.,
see Bonbright), rates should be fair, just, and reasonable. They should be sufficient to cover costs.
'Section B of this chapter provides further amplification of issues related to rate -setting.
Proposal to Santa Clarita - 1
They should follow a predictable path, and should be simple to understand. They should be related
to the level of service provided. And there are numerous other criteria that good rates should have.
However, in addition, we look for rates to provide "signals" for efficient use of resources.. In solid
waste we look for rates to:
provide incentives for waste reduction, recycling, composting, and other diversion
■ educate customers about the relative costs of waste management options
■ provide greater equity between customers who use little service vs. those who use a lot
■ be easy (and relatively inexpensive) to implement, monitor, administer, enforce/collect
■ not interfere too much with collection efficiency
■ cover revenue requirements
In making changes from current rates, we also consider issues like customer and political
acceptability. If rates change too much too rapidly for customers, negative reactions to ."rate
shock" might cause problems for the implementation of the variable rates system that could be
avoided through a well-planned, orderly transition from the current system. In addition, issues
related to revenue risk and "steepness" are seriously considered.
Prior to variable rates, calculating the fees to cover solid waste expenses was fairly straightforward.
Most solid waste agencies estimated next year's tonnage (usually a trend continuing from the last
several years), estimated cost of service or revenues required to provide that level of service, and
basically divided by the number of households or else adjusted the tax rate to recover these fees.
Under a variable rate system this becomes much more complicated.
The standard rate study has three basic steps:
1) Estimating demand for services: This step analyzes the demand for each type of service
offered for each customer class. It incorporates estimates of the number of ton(ne)s or
cubic yards (meters) disposed' (by program or customer type), customer counts by type,
and number of service units used (e.g., variable can subscription levels or bags/tags). The
calculations need to take into account reactions in service needs based on pricing and option
changes.
2) Calculating cost of service or revenue requirements: This step analyzes the costs that would
be incurred meeting the demand for services estimated in the demand module. The revenue
requirements calculations evaluate all the activities that would be required to provide the
services on a cost -center basis. This includes staffing and equipment requirements,
production and cost relationships, and estimates of the total costs. These, along with
financial considerations, provide an estimate of the total amount of revenues that needs to
be collected from all sources, including rate and non -rate revenues.
'Some jurisdictions measure waste based on tonnages and other use measures of volume like cubic yards.
To keep the wording of the discussion from getting awkward, a tonnage -based system is assumed. However, the
discussions are directly applicable to systems that use volume measure.
Proposal to Santa Clarita - 2
3) Cost allocation/rate design to calculate rate levels: This step analyzes how the revenue
requirements previously calculated are to be distributed between and within customer
classes. Relationships are developed that allow the jurisdiction to attribute the system's
costs (or revenue requirements) based on the type of service delivered and the customer
class served. In this step, the form and relationships of the rates to be charged are
determined. Then the levels of rates are calculated that will recover the amount of revenues
needed from each customer class and service type. These steps are re -run until rates,
ton(ne)s, costs, and services are consistent and equilibrated.
A detailed description of these steps appears in the EPA Manual Variable Rates in Solid Waste:
Handbook for Local Solid Waste Officials, written by one of our team.
In examining the feasibility of a variable can program, the rate analysis has several particular
complications.
Volume vs. tonnage: revenues now vary with volume; costs may vary with volume,
households, distances, tonnage, and other factors. Translating between the two is difficult,
and made more difficult because compaction is inherently encouraged by these systems.
Thus, estimating relationships is complicated, and assuring that costs will be covered is
difficult.
Anticipating effect on customers: A key purpose of variable rates is to provide incentives
for customers to change their waste management behavior. They do this through a number
of methods, including source reduction, recycling, illegal dumping, diversion, and other
methods. Estimating the changes in tonnage resulting from these combinations of actions,
and determining the results on cost of service will be a key issue on this rate study. Key
factors are affects on garbage/recycling/program ton(ne)s; set out and subscription effects;
illegal dumping; and reactions to rates.
Making policy decisions: Whether to provide assistance for disadvantaged customers, the
billing method, the structure of complementary programs, and the level of steepness of rates
that is acceptable are important components affecting the conduct of the rate study.
Administration: The effects on administration (billing, customer service, and other
administration changes) affect the conduct of the rate study.
These types of effects, and those mentioned in the following section on "impacts" must be
estimated, and their effects on tonnage; costs, and incentives balanced until a consistent set of
rates can be derived that cover revenue requirements. These steps are needed to calculate rate
levels designed to cover revenues and achieve Santa Clarita's objectives.
Proposal to Santa Clarita - 3
Impacts of Variable Rates:
The following summarizes research that one of our team members, Lisa Skumatz, has conducted
on the impacts of variable rates on customer set outs (see Reason Foundation Policy Paper 160).
This is the type of information we anticipate incorporating into our Task analyses, along with Santa
Clarita-specific information collected through on-site inspection; staff discussions; secondary city
data; and other methods as described in the detailed scope of work.
In reviewing the relative performance of variable-rate systems in the variety of communities,we
have found that the following impacts or concerns may be expected and must be addressed or
incorporated into the analysis.
■ tonnage reductions and shifts: The literature regularly notes reductions of 25% to over 60%
at the landfill or transfer station from the implementation of variable rates with recycling and
other diversion programs. Preliminary statistical research by SERA indicates that variable
rates may lead to an additional 8-13 percentage points of diversion even when communities
already have mandatory curbside recycling and diversion programs.
■ set out changes: Although few programs have collected both "pre" and "post" data, SERA
finds the available data indicates that reductions in set outs from more than 3 -30 -gallon
equivalents of service to between 1 and 1.5 service levels is a fairly common outcome for
communities implementing variable rates with recycling and other programs. This has
significant revenue stability implications.
■ changes in purchasing behavior/source reduction: Surveys show that customers definitely
incorporate the existence (and pocketbook implications) of variable rates when they make
purchasing decisions.
■ illegal dumping: SERA has published a report summarizing the impacts of variable rates on
illegal dumping, as well as a detailed list of strategies for reducing illegal dumping problems.
SERA's work indicates that illegal dumping is a greater "fear" during planning than "reality"
during implementation of variable rates. In addition, SERA's survey work has found that
illegal dumping has been a problem in 1/3 or fewer of communities adopting variable rates.
Most importantly, virtually all communities contacted indicated that it was a temporary
problem at worst, and that illegal dumping should not be considered a barrier to variable
rates. SERA's research has also found that the composition of illegally dumped waste in
variable rates communities indicates that the vast majority of material is C&D, organic, or
commercial in origin, and that the most common residential constituent is white or bulky
goods. This indicates that residential variable rates programs should incorporate a bulky
program to minimize these problems.
■ other effects and considerations: SERA has studied low income options, and has written
extensively on charging for recycling or green waste programs and "premium" service
options. SERA also has examined ways to incorporate programs when communities have
Proposal to Santa Clarita - 4
billing system limitations, as well as other operational or administrative concerns.
These types of impacts and issues are .very important to incorporate into the calculation of
consistent, credible rates. SERA staff have studied these issues in great detail, and have published
numerous treatments of these issues and options for addressing them.
Subscription Elasticities
SERA has collected extensive case studies from communities with variable rates programs. In
addition, SERA staff have derived statistical estimates of the reaction of customer subscriptions to
changes. in rate structures for variable rates. This work provides some guidance on the starting
subscription distribution between 30/60/90 gallon containers. Our work estimates the amount by
which we expect set outs to decline and redistribute among can sizes based on the rate incentives
provided. We have collected pre and post set out information for communities we have worked
with that first implemented variable rates. We haveexperience providing cities with estimates of
the number of cans of each size they should order at program start-up based on these types of
analyses.
However, although SERA has conducted extensive analyses of elasticities, it is important to
recognize that elasticities and reactions are dependent on a number of community -specific factors,
including: level of the rates; the relative size of the rate differentials; design and convenience of
the recycling and green waste programs; and numerous other local factors. Therefore, judgment
and expertise must be applied in addition to results from data -based sources.
Revenue and Risk Concerns -- Steepness of Rates
Given the manner of service delivery, the largest cost associated with residential service is getting
the trucks and staff to the house, independent of the amount of solid waste collected at the
residence. Therefore, the "fixed" costs of service are high, and the "variable" cost (largely based
on tonnage collected) is relatively low. Traditional funding methods -- fixed bills for unlimited
collection or tax -based funding systems -- emphasize the fixed costs of collection, and assure that
costs will be covered by customer payments. However, these systems provide no incentive for
customers to reduce the amount of waste set out for collection. Variable rates systems provide the
communities with a way to provide incentives for customers to modify their behavior to reduce the
amount of waste set out for collection. But in order to provide differentials that meet "thresholds"
sufficient to cause. customers to change their behavior, the rates structure must generally deviate
from the structure indicated by the relative fixed cost/variable cost components. Generally, the
higher the "per can" or "per bag" rate, the greater the incentive for recycling, but the greater the
revenue risk for the community.
Communities concerned about unit -pricing often focus on this issue of revenue streams and their
predictability under variable-rate systems. Will they be adequate to cover fixed and variable costs?
The issue is an important one, since much is often made of the concept of "avoided costs" in
Proposal to Santa Clarita - 5
evaluating waste management programs. For waste management programs, fixed costs represent
a larger portion of total costs than do variable costs (for example, 85 percent versus 15 percent in
some instances). With residential diversion rates of 4 to 25 percent (typical of many recycling and
composting programs), there may be little or, no reduction in residential collection costs. For
example, if the average household reduces waste from two bags per week to 1.7 bags per week—a
15 percent reduction—waste haulers can only remove one truck from service in such a case in cities
with populations over 80,000.
One of the concerns that affects revenues and risk is the difficulty in balancing revenue security
with the desire to provide an incentive. The further that rates deviate from the high front-end
loading (reflecting pure cost of service), the more risky revenue recovery becomes.. However, it is
under these conditions that you provide high incentives for recycling (with the additional balancing
concern that if you provide too aggressive an incentive, unacceptable levels of illegal dumping may
result).
Therefore, it is essential to take into consideration the reactions of customers in other locations, the
types of program options available to the citizens, and the balance between risk and incentive that
the community is willing to bear when setting variable rates.
Concerns about cash-flow predictions can be overcome, particularly through careful rate and
program design. And in fact, the selection of a variable can (or hybrid system) over a pure bag or
pure tag system provides communities with greater revenue assurance. And the variable can's (or
hybrid system's) feature of requiring at least some level of service to be paid works to reduce the
incentives for illegal dumping.
We have conducted case studies of communities across the nation that have implemented variable
rates, and maintain a proprietary list of almost 3,000 communities with these systems. We have
information on the subscription distributions for communities with rates that provide low
differentials between cans (closer in structure to cost of service) all the way to communities that
charge very aggressive rates in the form of "a can is a can" and even more aggressive (where a 60 -
gallon container costs more than twice as much as a 30 -gallon container). We have conducted
numerous variable can rate studies, including estimating appropriate pricing for "extra waste"
stickers. We have also provided expert witness testimony on issues related to incentives,
steepness, "thresholds" for differentials, cost of service, and revenue concerns at the state and
local level.
Our work has included an analysis of the balance between cost of service and incentives in
adjusting the steepness of rates. We believe it is important to run multiple scenarios to bracket the
risks associated, and then use a balance of professional judgment and policy to fine tune the rate
levels and differentials. Cost allocation is not a pure science, and the balancing requires some part
judgment and policy to augment the quantitative information.
Proposal to Santa Clarita - 6
Other Incentives for Recycling
SERA has conducted numerous studies examining the strengths and weaknesses, and feasibility of
variable rates and numerous other options for providing incentives for recycling. Although variable
rates have a number. of unique advantages, there can be operational, political, or customer
acceptance issues that make them difficult to implement. Alternatives include recycling credits and
several other options. We have gathered information from numerous other communities regarding
alternative options that can provide incentives for. recycling.
Charges for Diversion Programs
Solid waste agencies have moved away from garbage collection and management agencies toward
agencies that offer a wide array of solid waste and recycling/diversion services. Under a variable
rates system, as incentives lead customers to use more recycling services, system revenues need
to be raised through charges from fewer and fewer units of garbage service. This can lead to a
system with constantly increasing rates, and unstable/uncertain revenues. Instead, it may be
prudent for agencies to consider raising revenues from a variety of sources. Diversified revenue
streams are a way of reducing risk. This may be especially appropriate for agencies to consider
because _they now deliver clear and distinct services that could potentially be charged (e.g., curbside
recycling or curbside yard waste programs) -- and the programs are not inexpensive to provide.
One other rationale for these types of charges is that providing "free" recycling or yard waste
program (or embedding charges in the garbage rates or assessing both users and non-users)
provides customers with no incentive for source reduction or composting -- both of which are higher
on the waste management hierarchy. Of course, the rates must be structured to provide a clear
incentive that makes diversion alternatives cheaper than garbage disposal costs. This addressees
concerns that charges will "kill" participation in recycling or yard waste programs. When SERA
staff designed yard waste fees for Seattle's curbside program, we found that more than 600/0 of
customers signed up for the program, because it was clear that a $2 monthly yardwaste program
was much more cost-effective than extra cans of garbage service at $9 each. A more detailed
discussion of these options, their pros and cons, structural issues (subscription vs. variable fees and
other alternatives), and operational concerns is included in the "Variable Rates..." manual and other
documents written by Dr. Skumatz.
However, the appropriateness of these types of fees depends crucially on the City's rate structure,
acceptability and political issues, fiscal considerations, and numerous other issues. Recent work
by SERA indicates that "line item" program charges may have led to statistically -detectible lower
diversion rates in some communities (holding other program design and community factors
constant). And line item charges may also penalize low service users, requiring them to pay a larger
share of program costs than if the costs are spread more evenly across all service levels.
Proposal to Santa Clarlta - 7
Commercial Sector Issues
Some communities provide dumpster service using very simple fee structures -- for example, linear
fees based almost exclusively on the total cubic yards collected per week. These types of rate
structures provide very little incentive for customers to use service inefficiently, and the solid waste
agency's commercial collection costs will be more costly and less efficient than necessary. We
have worked with agencies to modify rate structures to incorporate incentives for commercial
customers to recycle, use service less frequently and allow more efficient collection. This can
provide significant cost (and staff/equipment) savings for the City. We have developed new
revenue neutral rates for communities that incorporate these types of changes. We have examined
commercial rate structures, both public and private, from communities across the nation, identifying
patterns of frequency premiums and volume discounts that can lead to effective incentives and
efficient use of service. We have examined rates structures for both garbage and recycling, and
attempted to construct rates that provide savings from increased recycling. However, in the
commercial sector, a number of real-world limitations can complicate cities' efforts in this direction,
including space limitations, competitive pressures, and other issues.
SERA staff have also worked with cities to identify appropriate methods to better spread the costs
of litter and other environmental services in communities to all beneficiaries. This can be
complicated if the city only provides solid waste service to residential customers. We have worked
with communities to develop appropriate revenue sources. This has included looking at fees,
surcharges, and in particular, franchise fees, among other options.
B. RATES CALCULATION AND ANALYSIS
The basic approach to developing rates for any utility service, including solid waste, is essentially
the same. The system must collect sufficient revenues to cover costs, save for future anticipated
costs, and encourage or discourage usage consistent with the economic and environmental
objectives of the City of Santa Clarita. This project will develop scenarios that satisfy each (or all)
of these different objectives and allow policy makers in the City to make informed choices about
their rate structure. An integral part of our approach is to provide officials in Santa Clarita the
ability to rapidly conduct future rate analysis using a computer spreadsheet. This will allow the City
a method to make adjustments in its rates consistent with changing requirements.
The principles behind the allocation of service costs to customers is well. developed in the utility
industry. In designing rate classes, the objective is to allocate costs fairly to each customer and,
as appropriate, promote environmentally sound management strategies. This method works as
follows: system costs are grouped into functional categories, such as generation, distribution, or
waste collection and waste hauling. Second these costs are classified according to what factors
affect their costs —peak loads, number of customers, and other factors. Finally, costs are allocated
to different customer classes. In this three step process, each of the major functional categories
of costs are described and allocated to that customer class responsible for causing these costs. In
addition to this three step process, one additional step must be added which is to develop short -
Proposal to Santa Clarita - 8
Commercial Sector Issues
Some communities provide dumpster service using very simple fee structures -- for example, linear
fees based almost exclusively on the total cubic yards collected per week. These types of rate
structures provide very little incentive for customers to use service inefficiently, and the solid waste
agency's commercial collection costs will be more costly and less efficient than necessary. We
have worked with agencies to modify rate structures to incorporate incentives for commercial
customers to recycle, use service less frequently and allow more efficient collection. This can
provide significant cost (and staff/equipment) savings for the City. We have developed new
revenue neutral rates for communities that incorporate these types of changes. We have examined
commercial rate structures, both public and private, from communities across the nation, identifying
patterns of frequency premiums and volume discounts that can lead to effective incentives and
efficient use of service. We have examined rates. structures for both garbage and recycling, and
attempted to construct rates that provide savings from increased recycling. However, in the
commercial sector, a number of real-world limitations can complicate cities' efforts in this direction,
including space limitations, competitive pressures, and other issues.
SERA staff have also worked with cities to identify appropriate methods to better spread the costs
of litter and other environmental services in communities to al/ beneficiaries. This can be
complicated if the city only provides solid waste service to residential customers. We have worked
with communities to develop appropriate. revenue sources. This has included looking at fees,
surcharges, and in particular, franchise fees, among other options.
B. RATES CALCULATION AND ANALYSIS
The basic approach to developing rates for any utility service, including solid waste, is essentially
the same. The system must collect sufficient revenues to cover costs, save for future anticipated
costs, and encourage or discourage usage consistent with the economic and environmental
objectives of the City of Santa Clarita. This project will develop scenarios that satisfy each (or alp
of these different objectives and allow policy makers in the City to make informed choices about
their rate structure. An integral part of our approach is to provide officials in Santa Clarita the
ability to rapidly conduct future rate analysis using a computer spreadsheet. This will allow the City
a method to make adjustments in its rates consistent with changing requirements.
The principles behind the allocation of service costs to customers is well developed in the utility
industry. In designing rate classes, the objective is to allocate costs fairly to each customer and,
as appropriate, promote environmentally sound management strategies. This method works as
follows: system costs are grouped into functional categories, such as generation, distribution, or
waste collection and waste hauling. Second these costs are classified according to what factors
affect their costs --peak loads, number of customers, and other factors. Finally, costs are allocated
to different customer classes. In this three step process, each of the major functional categories
of costs are described and allocated to that customer class responsible for causing these costs. In
addition to this three step process, one additional step must be added which is to develop short -
Proposal to Santa Clarita - 8
term forecasts of demand. As such our analytical efforts fall into four phases:
■ Develop demand estimates which provide short-term forecasts of the demand for solid waste
services used by each customer class.
■ Conduct a revenue requirements evaluation that analyzes the costs that would be incurred
meeting each customer sector's demand for services estimated in the previous task. In this
analysis, we need to evaluate all the activities that would be required to provide each of the
City's solid waste services .on a cost -center basis. We consider staffing and equipment
requirements; production and cost relationships, and other system changes to derive
estimates the total costs of meeting projected demand. These costs, along with financial
considerations, provide an estimate of the total amount of revenue that need to be collected
from all sources, including rate and non -rate revenues.
Develop a cost allocation evaluation that analyzes how the revenue requirements are to be
distributed between and within the customer classes. We will analyze alternative
relationships attributing Santa Clarita's system costs (or revenue requirements) based on the
type of service delivered (e.g. garbage, recycling, etc.) for the customer classes served (e.g.,
commercial, residential, multi -family, etc.).
Conduct a rate design analyzing the form and relationships of the rates to be charged. We
will evaluate the rate outcomes and equity between and within sectors, and other
implications of a variety of rate design options for the City. We will estimate the levels of
rates that will recover the amount of revenues needed from each customer class and service
type. We can then work with the City and evaluate alternative rate structures in the light
of the principles developed in the earlier tasks and the priorities of the City.
We will use a spreadsheet model to derive cost of service estimates, address sensitivities to
alternate scenarios, and identify potential risk areas and exposure levels to the City based on a
range of issues/alternatives, including:
■ changes in demand;
■ introduction of new programs;
■ demand changes in response to new rates;
■ anticipated future system costs, including landfill rate changes, etc.;
■ cost allocation alternatives;
■ rate design alternatives, and
■ other issues.
We believe that it is critical for the City to understand the impacts of different programmatic,
operational, and design alternatives, and the revenue impact of assumptions made in the analysis,
so our rates model supports evaluation of the impacts of these sensitivities. This model can be
used- by the City to test alternative scenarios.
Proposal to Santa Clarita - 9
We propose to work closely with the City to assure that we mutually agree on project goals,
approach, and products. We propose to gather information from the City, including the
comprehensive plan, costs and budget information, historical revenues, program changes, set outs,
customer information, demographics, and other data and financial reports, to characterize the status
quo. This information will be used to develop and estimate of revenue requirements, accounting
for all the costs the solid waste systems will incur providing service to all customer sectors for the
status quo. We will examine and evaluate the current customer classes and fees, and allocate costs
from the revenue requirements model appropriately to rate classes and rate components.
As part of this process we will need to develop estimates of the rate impacts for the prototypical
residential and commercial customers for each of the scenarios developed in this project. We will
work with the City to analyze the impacts of changes in key assumptions and their impact on the
rates and financial risk for the City. We will review interim draft results with the City, identify risks
and alternatives, and work with the City to understand the City's priorities and tradeoffs. We will
revise and refine the model and recommendations based on the comments from the City. Finally,
we will summarize the results, develop recommendations as appropriate, provide a well-documented
report on methodology and results, and prepare presentations as needed.
In the conduct of the rate study, we will need to work with City staff to collect a great deal of data
about the City's system, including information related to capital and on-going costs for equipment,
staffing, and operations to support programs, facilities and capital costs; financial information; and
other data. We will need to work with the City to develop an understanding of the manner in which
these cost factors vary with changes in demand, customers, subscriptions, and program availability
and charges. Data that are high quality and are provided at the appropriate level of detail support
the range of sensitivity analyses and scenarios that can be modeled, which increases the City's
confidence in the resulting rates.
C. SUMMARY
This section has provided some detail on our understanding of.the issues facing Santa Clarita as it
considers variable rates and other rate structure and system changes. We believe that this
background prepares us well for this work, and that, working closely with the City staff, we will
be able to produce a credible, appropriate, and equitable study that will achieve the objectives of
the City of Santa Clarita.
Proposal to Santa Clarita - 10
Attachments 6 and 7
Indemnification
The proposer guarantees and agrees to indemnify, defend and hold harmless the
City and its elected and appointed officers, agents and employees against any
or all loss, liability, damages, claims or costs arising out of defective material
and products, faulty work performance, negligent or unlawful acts, and
noncompliance with any applicable local, state or federal codes, ordinances,
orders or statutes including the Occupational Safety and Health Act (OSHA) and
the California Industrial Safety Act. This guarantee is an addition to and not
intended as a limitation on any other warranty, expressed or implied.
Compliance with Law
Vendor warrants that it will comply with all federal, state; and local laws,
ordinances, rules and regulations applicable to its performance under this
Contract, including, without limitation, the Fair Labor Standards Act of 1938,
as amended, the Equal Employment Opportunity Clause prescribed by Executive
Order 11246 dated September 24, 1965 as amended, and any rules, regulations
or orders issued or promulgated under such Act and Order. Vendor shall
indemnify and save and hold City from and against any and all claims, damages,
demands, costs and losses which the City may suffer in the event that vendor
fails to comply with said Act, Order, rules, regulations or orders. Vendor further
warrants.that all goods sold hereunder will comply with and conform in every
respect to the standards applicable to the use of such goods under the Williams -
Steiger Occupational Safety and Health Act of 1970, as amended, and any
regulations and orders issued thereunder. Any clause required by any law,
ordinance, rule or regulation to be included in a contract of the type evidenced
by this document shall be deemed to be incorporated herein.
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