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Managing Tomorrow's Resources Today <br />Ms. Jennifer Auletta <br />April 29, 2015 <br />Page 10 of 14 <br />The three liquidity ratios indicate ACI ability to meet current obligations is consistently below the <br />industry average and in FY2014 there was a significant decline in working capital. The ratios support <br />ACI's assertion it is in need of the special rate adjustments; however, based on the three-year history it <br />appears the company has consistently operated with minimal working capital. This practice leaves the <br />company vulnerable if unexpected negative financial events occur. <br />Summary of City of San Leandro's Range of Options <br />Although each of the above items may be analyzed independently or in various combinations, it is the <br />opinion of HF&H that the City of San Leandro has a range of options as identified below: <br />• The City of San Leandro may elect to deny ACI's special rate adjustment request and approve <br />only the RRI based increase per Sections 6.2 and 6.2.B.i of the Agreement. <br />• The City of San Leandro may consider ACI's special rate adjustment requested amount per the <br />terms stated in the LOU with ACI dated April 2, 2015. <br />• The City of San Leandro may request the removal of the profit for ACI and /or forego the <br />applicable City of San Leandro franchise fees. <br />The following two tables show the different rate impacts to a residential ratepayer based on the City of <br />San Leandro allowing ACI to include the additional labor costs at its MRF. The projections for future <br />years were based on the labor rate projections stated in the LOU between the union and ACI. The <br />projected impact is solely related to the labor costs and does not include other adjustments that may <br />occur in those future years. <br />Table 8: <br />Projected Future Rate Impacts to Single Family Residential Service Due to Special Rate Review <br />(With Profit and City Franchise Fees) <br />