solid waste franchise agreement - city of milpitas · franchise agreement -review november 14, 2016...

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Solid Waste Franchise Agreement Background – City/MSI Inc. Solid Waste Franchise Agreement Rate Adjustment Process Solid Waste Rates Average & Sample Residential Rates Average & Sample Multi-family Rates Average & Sample Commercial Rates Public Outreach Franchise Agreement Amendment No. 3 1

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Page 1: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Solid Waste Franchise Agreement

Background – City/MSI Inc. Solid Waste Franchise Agreement

Rate Adjustment Process

Solid Waste Rates

Average & Sample Residential Rates

Average & Sample Multi-family Rates

Average & Sample Commercial Rates

Public Outreach

Franchise Agreement Amendment No. 3

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Page 2: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Franchise Agreement - Review

November 14, 2016 – Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI)

Agreement term is 15 years - expires August 31, 2032

Citywide collection and hauling of solid waste, organics, and recycling materials

Amendment No. 1: March 21, 2017, changed start date of Waste Management services to December 1, 2017

Amendment No. 2: October 17, 2017, clarified entities providing post-collection services as Approved Facilities

Proposed Amendment No. 3: Recommend Approval

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Page 3: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Rate Adjustment Process Franchise Agreement - Exhibit D allows for annual rate adjustments.

Specifies annual rate adjustment applications are submitted and approved by the City Manager or designee.

Rate adjustments are Index-Based for all years except years 4,7, and 12.

Years 4, 7, and 12 are Cost-Based Adjustments.

Rate adjustment applications are submitted October for Index-Based Years, and August for Cost-Based Years for approval each December and effective each January 1.

Delayed approval of rate increase allows MSI to retroactively bill customers.

The Franchise Agreement caps the index-based rate adjustment at 5%. A cost-based adjustment greater than 5% requires Council approval.

The Rate Adjustment as approved is 4.26%, effective January 1, 2019.

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Page 4: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Solid Waste Rates

The approved 4.26% Rate Adjustment results in a cost increase for residential and commercial customers.

Residential increase ranges from $2.06 to $6.05 per quarter depending on cart size.

Example: 45 gallon cart service cost will increase from $123.57 to $128.83 -$5.26 per quarter.

Milpitas continues to have the lowest residential solid waste rate within Santa Clara County.

Average monthly single family rate per gallon for 12 cities within Santa Clara County and the City of Fremont is $1.00/gallon compared to Milpitas at $0.72/gallon.

Reasons for Rate Increase: Changes in Industry Index, increase in costs for services including labor, fuel, equipment, and processing costs.

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Page 5: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Average Residential Rate5

Page 6: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Residential Rates6

Garbage Cart Size

Current Quarterly Rate

Quarterly Rate; 4.26% Increase

Amount of Increase per Quarter

19-gal 96.66 100.78 $4.12

26-gal 105.06 109.54 $4.48

45-gal 123.57 128.83 $5.26

67-gal 141.96 148.01 $6.05

19-gal* 48.33 50.39 $2.06

26-gal* 52.53 54.77 $2.24

Single Family Split Cart ServiceBasic Weekly Service with Food Scraps, Recyclables & Yard Trims

* Senior Rate

Page 7: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Average Multi-family Rate7

Page 8: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Multi-family Rates

Garbage Bin Size

Current Monthly Rate

Monthly Ratewith 4.26% Increase

Amount of Increase per Month

1 yard 1x-week

337.24 351.60 $14.36

2 yard 1x-week

528.36 550.84 $22.48

4 yard 1x-week

881.80 919.36 $37.56

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Top Three Service LevelsBasic Weekly Service with Food Scraps, Recyclables & Yard Trims

Page 9: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Average Commercial Rate9

Page 10: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Commercial Rates

Garbage Bin Size

Current Monthly Rate

Monthly Ratewith 4.26% Increase

Amount of Increase per Month

2 yard 1x-week

733.48 764.72 $31.24

4 yard 1x-week

1,238.96 1,291.76 $52.80

4 yard 2x-week

2,427.36 2,530.76 $103.40

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Top Three Service LevelsBasic Weekly Service with Food Scraps, Recyclables & Yard Trims

Page 11: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Public Outreach11

City and MSI websites provide updated rate information

Courtesy notice of rate increase through local newspaper & City social media

Rate increase courtesy notices posted at City facilities

MSI residential quarterly newsletter issued January – February

Bill insert for Multi-family & Commercial accounts in January

Page 12: Solid Waste Franchise Agreement - City of Milpitas · Franchise Agreement -Review November 14, 2016 –Approved Franchise Agreement with Milpitas Sanitation, Inc. (MSI) Agreement

Proposed Amendment No. 3

Routine minor Amendments to the contract are required to update tables, facilities, and indices to ensure agreement reflects services rendered.

Amendment No. 3 is now recommended for approval:

Section 4.5.A., Collection Services to City Facilities – collection services for all City facilities are offered at no additional cost.

Exhibit D, Table 2 Detail Index Information – Updates required measurement indices to conform with current US Bureau of Labor Statistics.

Exhibit D-1, Index-Based Rate Adjustment Methodology – Aligns specified agreement costs, depreciation, and interest expenses for amortization over full 15 year agreement term.

Exhibit F, List of City Facilities – Adds the McCarthy Pump Station and City property under SR-237 bridge to list of City facilities for collection services.

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