HomeMy WebLinkAbout2004-09-28 - AGENDA REPORTS - CPI INCREASE FOR CONSOLIDATED (2)CONSENT CALENDAR
DATE:
SUBJECT:
DEPARTMENT:
Agenda Item: 8
CITY OF SANTA CLARITA
AGENDA REPORT
City Manager Approval:
Item to be presented by:
September 28, 2004
CONSUMER PRICE INDEX (CPI) INCREASE FOR
CONSOLIDATED DISPOSAL SERVICES
Field Services
RECOMMENDED ACTION
City Council approve a resolution for the 18th amendment to the City's Residential Franchise
Agreement with Consolidated Disposal Services allowing Consolidated to increase the funds
they will receive based on the CPI percentage increase between October of 2003 and October of
2004 or by five percent, whichever is less. Pursuant to Section 21 (B) of the Residential
Franchise Agreement, Consolidated is entitled to the rate increase.
BACKGROUND
In November of 2003, the City Council selected Buntec Waste Industries, Inc. as the exclusive
solid waste hauler for commercial services and Blue Barrel Disposal as the exclusive hauler for
residential services. Since Consolidated Disposal Services was not selected as an exclusive
hauler, their current franchise agreements remained unadjusted and in effect until their
termination dates of July 31, 2004 for commercial services and April 14, 2006 for residential
services.
Pursuant to Section 21 (B) of Consolidated's Residential Franchise Agreement with the City,
Consolidated, who services approximately nineteen percent of the City's residential customers, is
entitled to obtain an annual CPI rate increase, or a five percent rate increase, whichever is less.
The rate increase would take effect on January 1 of the following year. The CPI increase is
determined by finding the percentage difference between October of the previous year and
October of the current year for the Los Angeles -Riverside -Orange County, California area as
determined by the U.S. Department of Labor. This data will not be available until December 17,
2004, but as previously mentioned, cannot exceed five percent. Based on the CPI difference for
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August of 2003 and August of 2004, the CPI percentage change has been approximately 3.3%.
This proposed rate increase will not increase the rates for residents subscribing to three can
services located in Consolidated's franchised areas (mainly consisting of single-family homes and
mobile homes). The City's new franchise agreement with Blue Barrel Disposal, requires Blue
Barrel to absorb the cost of Consolidated's rates for residents with three cart services in order to
maintain them at their current rate of $18.64 per month ($14.91 per month and $13.98 per month
for senior citizens and mobile home residents respectively). However, this will create an increase
in rates for all multi -family residents, who subscribe to bin services and not the three can system,
located within Consolidated's franchised area, since those services are not covered in the
agreement the City has with Blue Barrel. As an example, a multi -family location subscribing to
one three yard bin with three times a week collections is currently paying $162.61 per month. If
the CP1 change of 3.3% remains the same, starting on January 1, 2005, they will pay $167.98 per
month. If the rate increase reaches the five percent maximum, they will pay $170.74 per month.
ALTERNATIVE ACTIONS
No alternative actions have been identified.
FISCAL IMPACT
Staff prepared estimates on the effect the rate increase will have on franchise fees based on the
information the City has pertaining to the total number of residential bins located around the City
that are currently being serviced by Consolidated and the frequency of their collections. Staff
estimates that, assuming the CPI trend continues as is and Consolidated does not pursue another
CPI increase for 2006, the City will receive approximately $690 in additional franchise fees
(approximately $1,040 if Consolidated gets the maximum increase of five percent) for the
remainder of Consolidated's franchise (15 1/2 months).
ATTACHMENTS
CPI Increase for Consolidated Resolution