HomeMy WebLinkAbout2005-11-22 - AGENDA REPORTS - CPI INCREASE DISPOSAL SERVICE (2)Agenda Item:
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR City Manager Approval:
Item to be presented by: Travis Lange
DATE: November 22, 2005
SUBJECT: CONSUMER PRICE INDEX (CPI) INCREASE FOR
CONSOLIDATED DISPOSAL SERVICES
DEPARTMENT: City Manager's Office
RECOMMENDED ACTION
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Adopt resolution for the 19th amendment to the City's Residential Franchise Agreement with
Consolidated Disposal Services allowing Consolidated to increase the funds they will receive by
the maximum of five percent based on the CPI percentage increase between October of 2004 and
October of 2005 (5.40 percent). 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 Bumec 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 agreement 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. The CPI percentage difference for October of 2004
and October of 2005 is approximately 5.40 percent; therefore, Consolidated is entitled to a five
percentincrease.
Adopted: le.2L 1.39
As was the case last year when Consolidated requested and received a rate increase, 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 between the City and 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
they are located in Blue Barrel's franchised area, and $169.96 per month in Consolidated's area.
With the proposed five percent increase, Consolidated customers will pay $178.46 per month.
On April 15, 2006, Blue Barrel will start providing exclusive residential collection services for
the City, including multi -family units that are currently being serviced by Consolidated. At that
time, Blue Barrel will charge the same rates outlined in their new franchise agreement for all City
residents. For the majority of service levels, the rate will go down.
ALTERNATIVE ACTIONS
No alternative actions have been identified.
FISCAL IMPACT
The five percent increase in Consolidated rates for multi -family customers, will be reflected in
the ten percent franchise fees received by the City.
ATTACHMENTS
CPI Increase for Consolidated Resolution