MO 1998-041 to 1998-045 - Laserfiche WebLink

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User Fee Increases Recycling Service 3 July 30, 1998 $ 5.10 $ 5.60 $ .50 1996 Refuse rates have not been increased since 1992 although operating revenues have not covered current operating costs for five of the past six years. The operations have been subsidized by the General Fund and by a capital transaction of selling equipment to the Garage Fund. Continuing use of non - service revenue to subsidize the refuse service is not financially prudent. Even with the proposed rate increase, the existing deficit will only be eliminated over a 10 year period. The increase in operating costs over the years can be attributed to several factors. Landfill tipping fees have increased by over 300% . In 1992, the cost was $17.00 per ton. The current cost has risen to $52.83 per ton. The introduction of small can service (20 gallon at $7.00 per month) has impacted revenue. While the cost to pick up the can remains the same, the revenue is reduced. This in part is offset by a reduction in disposal costs, but the not on a dollar for dollar basis because of the labor cost. Overall, while the Consumer Price Index has increased 22 % since 1992, rates were not increased at all. In fact, there was a 3 % rate reduction in 1995 from $10.40 to the current $10.10. The City's recycling program is part of the same fund, with a separate user fee. The service is provided by San Leandro Recycling, Inc. under a franchise agreement awarded in 1996. The agreement provides that the rate the City is charged for the service can be increased by 80% of the annual increase in the CPI and in 1997 the contract rate rose to $5.18. However, this rate increase was not been passed on to the users. After this proposed rate was developed, the City was notified that the contract rate would increase to $5.36. Therefore, even the proposed user rate increase to $5.60 will not eliminate the funding deficit. Current Proposed Monthly Monthly Monthly Last Increase Increase Residential Rates $15.50 $16.90 $1.40 1996 The City Council adopted the sewer replacement and reserve program based on a wastewater replacement financing study. This study was first completed in 1985 and has been updated every two years. The last update was completed in 1997. The report states "Past unfunded depreciation is estimated to be $50 million dollars and current annual depreciation is estimated to be $2 million, each requiring funding which is the purpose of the study presented herein". The Council's established policy is to accumulate the recommended reserves over time through the implementation of annual rate increases equal to 5 % plus CPI (The magnitude of infrastructure expenditures required by this fund is reflected by the recent sewer failures at Doolittle/Marina/Davis Street and the emergency replacement of the Neptune Lift Station pump at a total cost of over $3.3 million). The proposed rate increase will fund capital facility upgrades vital to the integrity of the system. 11