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HomeMy WebLinkAboutAgr 2013-04-01 (Mill Valley Refuse Service)Town ofTibumn • 1505 Tiburon Boulevard • Tiburon, CA 94920 • P. 415.435.7373 F. 415.435.2438 • w .ci.dbumn.ra.us Office of the Town Attorney / 415.735.7370 adanforthi'4ci tiburanca.us April 30, 2013 By Email(iiavarone(a4millvalleyrefuse.com) and U.S. Mail Jim Iavarone, Managing Director Mill Valley Refuse Service PO Box 3557 San Rafael, CA 94912-3557 Re: Rate Calculation — Marginal Operating Method Dear Jim: /IHJ�/\s Jim Fraser Mayor .............. Emmett O'Donnell Vice Mayor Richard Collins Councilmember Frank Doyle Councilmember Alice Fredericks Councilmember Heidi Bigall has told me that you and she worked out a tentative agreement to MaTmvu Ma a erran resolve our disagreement over the application of Section 16.G of the Town's July 1, 2011 franchise agreement with MVRS ("Agreement"). To review, Section 16.G provides that rates that. provide MVRS with an operating margin of ten percent shall be deemed reasonable and as providing MVRS with a fair rate of return. Section 16.G does not clearly explain how to calculate the operating margin and the Town and MVRS interpreted it quite differently: Town staff interpretation: total rates collected= [Allowable Costs + 10%] + Pass -Through Costs. MVRS interpretation: total rates = [Allowable Costs x 1.10] + Pass -Through Costs. Both the Town and MVRS acknowledge the rates for the Town have historically been calculated as proposed by MVRS. To resolve this good -faith misunderstanding of the language of Section 16.G, you and Heidi agreed to the following mutual accommodations: 1. In the event that MVRS applies for a rate increase for fiscal year 2013- 2014, that rate increase will be limited to a CPI increase as set forth in Section 16.E(2). 2. The Town will apply MVRS's interpretation of a ten percent operating margin in considering rate increase applications for fiscal year 2014-2015 and thereafter for the remaining term of the Agreement. Mr. Jim lavarone, MVRS April 30, 2013 Page 2 of 2 3. Town employees typically have a furlough period of approximately two weeks, beginning in December and ending after the New Year's holiday ("Holiday Furlough"). During the Holiday Furlough, MVRS will collect, remove and dispose of Solid Waste in the downtown area. Said services shall be at a frequency and from sites determined by Town's Director of Public Works and reasonably acceptable to Collector. For purposes of this agreement, the downtown area shall include Main Street, Ark Row, the portion of Tiburon Boulevard between Mar West Street and Main Street, the portion of Paradise Drive between Main Street and Mar West Street and the properties fronting said streets. This shall be a Non -Allowable Cost. The parties will amend the Agreement to include this provision when the Council next holds a public hearing on a Base Rate Change Application, as defined in Section 16.E(1) of the Agreement. Please let me know if you have any questions. Thank you for your courtesy and cooperation. Sincerely, Ann R. Danforth Town Attorney cc: Jessica Kamer, Keegin Harrison I Schoppert Smith & Kamer LLP ( via email jkamer@keeginharrison.com) Margaret A. Curran, Town Manager Heidi Bigall, Director of Administrative Finances RILL VALL�r RECEIVED �, REFUSE SERVICE APR -1 2013 :� W p ..� " TOWN MANAGERS OFFICE TOWN OF TIBURON Peggy Curran, Town Manager Town of Tiburon 1505 Tiburon Blvd Tiburon, CA 94920 April 1, 2013 We are pleased to report this year that MVRS seeks only a rate adjustment equal to the CPI rate of 2.7%. As such, no direct action is required on the part of the Council. However, there are two additions to the rate sheet that will require approval: the establishment of a Commercial Compost Service Rate, and the establishment of a Backyard vs. Curbside rate for residential trash service. COMMERCIAL FOOD COMPOSTING RATE Since food waste composting service began almost three years ago, businesses such as restaurants, deli's and supermarkets, have not been allowed to participate because the compost permit at the landfill restricts the amount of food waste that can be mixed with yard waste for composting. We now believe the relatively small number of such businesses in our jurisdictions will not upset the permitted ratio of food to yard waste, and so we intend to begin offering this option to our commercial customers in the food industry. In a couple of pilot programs conducted this past year, we learned that most restaurants really need food waste carts to be dumped daily, rather than on a weekly basis as is the case with residential food waste. Since trash service includes picking up recycling and compost as well, a restaurant that subscribes to trash service multiple days per week will have its compost carts picked up the same amount of days at no extra charge. However, few restaurants require daily trash service, so if a restaurant needs compost service on extra days, a new rate must be created for this additional service. We wish to bring to your attention that this year's rate sheet includes this new rate. This rate is optional, and would only affect those businesses that subscribe to it. Businesses that use this option may be able to reduce their trash service and achieve some overall savings as their food waste "migrates" from their trash cans to their compost carts. Of course, participation in this program will also help to meet State and County zero waste goals by diverting more and more waste from our landfills. 112 Front Street • San Rafael, [A 94901 • 415-057-9160 9 Fax: 415-457-3003 • www.millvalleyfefuse.com BACKYARD VS. CURBSIDE SERVICE RATES A pressing issue we must face at this time is that the carry cans our drivers use to transport trash from backyard locations to their trucks for disposal are no longer being manufactured. We were one of the last companies to use carry cans, and the market for them dwindled so much that the manufacturer stopped making them two years ago. We bought a large supply of these cans when we heard this news, and now our supply is running out. When they are finally gone, it will necessitate a change in the way we handle trash service for those who wish to keep their cans in backyard locations. Last year, we had our drivers use hand counters to tally the number of trash cans people were bringing out to their curbs now, versus those that were left in backyard locations. Roughly 80% of residences either bring their can to the curb now, or have their cans located so close to the street that it would be no problem to bring them out to the curb. We propose that those who choose to bring their cans to the curb pay the rates that will take effect July 1 (i.e. this year's rate increased by the CPI). This will be relabeled on the rate sheet as the Curbside Rate. For those who choose to continue having backyard service, our drivers will bring their cans out from—and return them to—their original backyard locations for the additional fee of $10 per can, per month. This Backyard Rate will be optional and charged only to customers who call our office to specifically request this service. The obvious question some may ask is: If the current rates cover going into backyards now, shouldn't those rates be for backyard service, and the curbside rates be something lower? The answer is no because, strictly speaking, the current rates are not really backyard rates. Instead, they reflect the true conditions on the street where 80% of our customers bring, or have their cans located, very near to the curb, while only 20% are in actual backyard locations. Over the years, we have consolidated trash routes not only because there is less trash due to increased recycling, but also because of the reduced amount of time it takes for our drivers to pick up trash cans from their true locations. As our rates have evolved over the years, they are much closer to being true curbside rates than they are to being backyard rates. BACKYARD RATES WILL NOT START ON JULY I We propose to NOT put Backyard Rates into effect right away. We anticipate that our supply of carry cans will last until around January, 2014. Therefore, we will spend the next six months sending out repeated notices explaining the reasons for a new backyard service rate, and advise those who want to continue backyard service that they must call to sign up for that service. (We will automatically charge everyone the curbside 112 Front Sheet • San Rafael, CA 94901 • 415-457-9760 • Fax: 415-457.3003 • www.millvalleyrefuse.com rate, so only those who call to subscribe to backyard service will begin to be charged for it starting in January, 2014.) It is unknown how many individuals will seek exemptions from the backyard rate because of age or for medical reasons. We must be mindful of the fact that backyard services require more labor, and' if exemptions are given out too easily, the higher costs due to overtime paid or increasing routes will be passed on to everyone. A few elderly residents now ask for help getting their recycle and compost carts to the curb. We deal with such age-related requests by visiting the homeowners and trying to find suitable solutions on a case-by-case basis. We propose to continue this practice for the elderly. However, we are not comfortable with the idea of asking for a physician's note concerning someone's medical condition, nor are we qualified to judge what medical conditions warrant exemptions. Therefore, we have no plans to grant medical exemptions. We also have no plans at this time to purchase and distribute new trash carts similar to the ones used for recycling and green waste. We prefer to initiate this program by having residents continue to use the trash cans they already own. This will prevent the waste of perfectly good cans for now, although we concede that the switch to standard rolling carts may be inevitable if there is a public demand for them. (Even then we must be careful because rolling trash carts may themselves become obsolete as more people continue to migrate to 20 -gallon cans.) While this is a significant development, please keep in mind that curbside service has become the industry standard in other communities, and there is every reason to believe that a curbside program will work in our communities as well. Still, we are open to suggestions and can modify this service as we learn more about our residents' needs and move closer to the proposed January, 2014 start date. We look forward to answering your questions about this development in the next few months. A new rate sheet with the additions mentioned in this letter will follow in the next couple of weeks. Sincerely Yours, �4 �T aures Iavarone 112 Front Sheet • Son Rafael, CA 94901 • 415-457.9760 • fax: 415.457-3003 • www.milivalloyrefuse.com