GREAT WESTERN RECLAMATION, INC.1976

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REQUEST FOR COUNCIL ACTION October 31, 1975 Page 2 The City of Orange has granted it's refuse contractor a rate of $1.50 per water meter or an increase of 31¢ per unit. Orange does not have an automatic Consumer Price Index adjustment The City of Huntington Beach granted a refuse rate adjustment from $1.82 for twice a week pickup to once a week pickup for $1.92. The City extended the refuse contract until July 31, 1980. The last contract was from July 16, 1971 to February 18, 1976. The contractor for Huntington Beach must request a rate increase from the City Council since Huntington Beach does not use the Consumer Price Index to give the refuse contractor automatic rate increases. Also, a single cash payment of $30,000 was made to Huntington Beach' s refuse contractor. The City of Anaheim has given its contractor a temporary increase of 25¢ per electric me- ter. This increases the rate paid to the contractor to $1.55 per electric meter. The ref- use contractor is required to submit a certified audit report which will state the revenues and expenses of the contractor. From this information, the city auditor can determine if the 25¢ rate increase is justified based on the contractor's new union labor agreement. With the audit report, the Anaheim City Auditor states he will be able to develop accurate cost and expense information to determine what effect the recent labor wage agreement will have on the expenses of the refuse contractor. In the certified audit report, the certi- fied public accounting firm will explain any changes in accounting methods that would af- fect the revenues and expenses of the refuse contractor. The certified audit report is to be submitted to the City of Anaheim by December 31, 1975. It is a known fact that the refuse contractor's expenses have been increasing, but if his profits have also been increasing, then his revenues may have been able to offset his ex- penses. The City of Santa Ana is the only city surveyed that grants a Consumer Price Index adjust- ment twice a year. Great Western has been granted refuse rate increases at a faster rate than other refuse contractors surveyed. Therefore, Great Western has recovered its oper- ating expenses at a faster rate, assuming that the Consumer Price Index, in fact, keeps pace with rising expenses. The cities of Anaheim, Fullerton, and Orange have requested their refuse contractor to provide the City Council with financial statements to prove to the City that the refuse contractor deserves a rate increase. These cities review the contractor's balance sheet and profit and loss statements to determine the financial condition of the contractor. Santa Ana has not received similar information from the contractor. BACKGROUND: In August, 1975, the City's refuse contractor, Great Western Reclamation, Inc. , requested the following supplemental monthly labor payments effective: Monthly Cumulative Payment Payment Retroactive to May 1, 1975 $.30 per water meter $ .30 May 1, 1976 . 10 per water meter .40 May 1, 1977 .10 per water meter .50 Cumulative $.50 per water meter $ .50 Great Western Reclamation, Inc. has proposed the following changes to the refuse contract to become effective November 1, 1975. They have requested a supplemental monthly labor payment in addition to the Consumer Price Index rate adjustment granted each May and Novem- ber. This rate adjustment is being requested because the contractor's labor costs have increased due to settlement of a new union labor contract in May of 1975. The base pay for a refuse truck driver has increased from $3.28 to $4.00 per hour (22%) in addition to increases in fringe benefits. The contractor is asking for the following supplemental month- ly labor payments effective: Monthly Cumulative Payment Payment November 1, 1975 $.15 per water meter $.15 November 1, 1976 .10 per water meter .25 November 1, 1977 .10 per water meter .35 Cumulative $.35 per water meter $.35 Great Western wants to eliminate the refuse contract payments which are paid to Santa Ana for the City consent to the sale of Great Western to SCA Services , Inc. On December 10, 1973, Great Western Reclamation agreed to pay the City of Santa Ana for the right to sell the stock to Great Western Reclamation.. The agreement reads, "The owners of all the stock