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File Number: 20-052 Rate Increases 2010-2019 Year Rate Reason 2010: 2.88% Annual rate adjustment per Amendment 10 2011: 1.12% Annual rate adjustment per Amendment 10 2012: 5.50% Annual rate adjustment per Amendment 10 2013: 1.82% Annual rate adjustment per Amendment 10 2015: 4.01% Special rate adjustment per Amendment 11 2015: 8.49% Special rate adjustment per Amendment 12 2017: 1.65% Annual rate adjustment per Amendments 10 & 12 2018: 3.41% Annual rate adjustment per Amendments 10 & 12 2019 7.89% Special rate adjustment per Amendment 13 On June 17, 2019, the City Council approved ACI’s request for a special rate adjustment of 7.89% effective October 1, 2019. That rate request included 3.78% contractual adjustment (using the RRI) to rates as specified in Amendment 10 to the Franchise Agreement, and an additional 4.11% increase to manage the financial impact of the Chinese government’s National Sword policy (which significantly curtailed the volume of recyclable materials that China will allow to be imported into their country), and SB1383 implementation. At the June 17 meeting, ACI indicated that they would come back to the City Council to request a modification to the annual rate adjustment methodology to be applied to rates effective July 1, 2020 and thereafter. The new rate adjustment methodology is intended to more accurately capture the cost of operations and reflect the unanticipated costs associated with changes in law. The existing annual rate adjustment process (RRI) has not accurately reflected ACI’s true vehicle replacement costs, increases in recycling and organics processing costs, and was established prior to any state or local recycling/composting mandates. Analysis ACI proposes a new Detailed Rate Adjustment Methodology (DRAM) to adjust rates annually. Like the RRI, the DRAM includes changes in actual labor costs, actual landfill disposal costs, and indices for fuel, vehicle repair and general costs. It also includes the following: ·Three-year average cost of container purchases ·Recycling Processing Costs ·CNG fuel costs ·Profit (expressed as an operating ratio of 0.90) The DRAM also includes costs for depreciation and interest (as a fixed cost). These costs would only change to the extent that ACI purchases new vehicles or equipment. As before, City franchise fees are calculated on gross revenues and recycling processing fees are calculated using an annual average CPI for the San Francisco Bay Area. ACI is also proposing that costs be re-evaluated for the rate year commencing July 1, 2022. The cost-based adjustment would reflect actual costs for the most recent twelve-month period and Page 2 City of San Leandro Printed on 2/25/2020 1069