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<br /> Trash Contract
<br /> Page 4
<br /> from competitors who might wish to utilize such data to their advantage in
<br /> an unfair manner in potential competitive bidding situations in other areas.
<br /> This confidential treatment is similar to that now required by State law
<br /> for certain aspects of sales tax data and police information. After the
<br /> staff report and public hearing, specific Council action on the requested
<br /> increase should be required. Only one request for increase per year should
<br /> be considered.
<br /> 8 . On December 10 , 1973, the contractor (Great Western Reclamation) agreed to
<br /> pay the City for the right to sell its stock to S.C.A. Services , Inc. These
<br /> annual "refund" payments represent a continuing expense to the contractor fox
<br /> which he receives no other benefits. The refunds are paid quarterly and in-
<br /> crease by approximately $2,000 yearly; in 1975 this refund payment will
<br /> amount to $33 , 000 . This requirement should be deleted but, in fairness to
<br /> the City, taken into consideration in reviewing the contractor' s request for
<br /> a supplemental rate increase at this time (reference commentary on amend-
<br /> ment #9 ,below) .
<br /> 9. The original purpose of the CPI adjustment was to provide for inflation,
<br /> although it seems reasonable to assume now that the current "double digit"
<br /> rate of inflation was never contemplated when the contract was drafted.
<br /> Great Western Reclamation, Inc . has requested a supplemental monthly labor
<br /> payment in addition to the Consumer Price Index rate adjustments . This
<br /> rate adjustment is being requested because the contractor's labor costs
<br /> have increased due to settlement of a new union labor contract in May of
<br /> 1975. The base pay for a refuse truck driver has increased from $3 . 28 to
<br /> $4. 00 per hour (22%) , in addition to increases in fringe benefits . The
<br /> contractor is asking for the following supplemental monthly labor payments
<br /> effective:
<br /> CUMULATIVE
<br /> MONTHLY PAYMENT PAYMENT COST TO CITY
<br /> Retroactive to:
<br /> November 1, 1975 $ .15 per water meter $ .15 $ 71,280 (11/1/75-
<br /> 10/31/76)
<br /> November 1, 1976 .10 per water meter .25 120 ,000 (11/1/76-
<br /> 10/31/77)
<br /> November 1, 1977 .10 per water meter .35 169 , 680 (11/1/77-
<br /> 10/31/78)
<br /> CUMULATIVE $ .35 per water meter $ .35 $360 , 960 (3 years)
<br /> If, as has been recommended in the commentary on proposed amendments #5 and
<br /> #8 above, no supplemental adjustment is allowed this year and a credit is
<br /> allowed in the reduction of frequency of CPI adjustments and a charge is
<br /> imposed for elimination of "refund" payments, an extended cost analysis is:
<br /> CHARGE FOR CREDIT FOR EST. CPI TOTAL GAIN
<br /> "REFUND" CPI ADJUST. GAIN BY PAYMENT TO BY
<br /> PERIOD ELIMINATIONS REDUCTIONS CONTRACTOR CONTRACTOR* CONTRACTOR
<br /> 11/1/75-10/31/76 $34 , 000 $16 ,500 $17,500 $ 47,500 $65, 000
<br /> 11/1/76-10/31/77 36 ,000 16 ,500 19,500 57 ,600 77,100
<br /> 11/1/77-10/31/78 38,000 16 ,500 21,500 63 ,000 84, 500
<br /> 11/1/78-10/31/79 40 ,000 16 ,500 23,500 68 ,600 92,100
<br /> 11/1/79-10/31/80 42,000 16 ,500 25,500 73 ,400 98,900
<br /> 11/1/80-10/31/81 44,000 16 ,500 27,500 78 ,300 105, 800
<br /> CUMULATIVE NET GAIN BY CONTRACTOR IN 6 YEARS = $523,400 (7%;
<br /> CP_
<br /> *Assuming a constant percentage increase in the next five years equal to the
<br /> average percentage increase in the CPI of the last five years .
<br /> These offsetting charges and credits result in a net supplemental gain to th4
<br /> contractor that is only a portion of the amounts his supplemental rate in-
<br /> creases would yield. Any additional supplemental payments to be allowed
<br /> due to the labor settlement should be justified based upon an audit of all
<br /> revenues and expenses .
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