GREAT WESTERN RECLAMATION, INC.1976

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MEMORANDUM tvtik To: _ City Manager Illllllililllllll� Da}e August 1, 1975 From: Management Analyst „ � Subject: RATE ADJUSTMENT FOR REFUSE COLLECTION Background The City' s refuse is collected by Great Western Reclamation, Inc. , which has the exclusive right to provide service within Santa Ana. The City Council has established the principle of keeping refuse collection activity on a self-supporting basis at the time that refuse collection expense was placed on a bill system and deleted from the property tax. To keep this program on a self-supporting basis, the City Council will, of necessity, have to pass a resolution adjusting the refuse rate paid by the homeowner to the City. October 1 , 1974 , was the last rate adjustment from $1. 50 to $1. 80 per month per single family residence. Prior refuse rate adjustments were established September 1, 1973 , at $1. 50 per month and January 1, 1972 , at $1. 30 per month. The refuse contract provides for a rate increase or decrease based on the Consumer Price Index. Payments to the contractor are adjusted with changes in the Consumer Price Index on May and in November of each year. It is estimated that payments to the contractor will rise from $1. 68 per water meter per month to approximately $1. 83 during fiscal year 1975-76. As of November 1, 1975 , the refuse contractor will be paid $1. 75 for each active water meter in Santa Ana in accordance with the contract. For the fiscal year 1975-76 , it is projected that the refuse contractor will be paid an estimated total of $831 ,000 . Other related costs of departmental inspection, clerical help, office supplies, and equipment rental will cost approximately $19 ,525. This does not include the pro-rated costs of mailing and data processing of refuse bills since these charges are printed on the water bill and mailed with the water bill; therefore, no duplication of postage is required. The total cost for the fiscal year 1975-76 to the City for refuse collection is estimated at $850 ,525 . A refuse rate increase will be required at this time effective October 1, 1975; to keep this program on a self-supporting basis . The increased cost from fiscal year 1974-75 to fiscal year 1975-76 is estimated at $90 , 465 or 11. 9% increase. Of the $90,465 increase, the refuse contractor will receive $87, 000 increase or 96. 2% of the total increase as required by the contract agreement as a result of anticipated Consumer Price Index increases. Financial Analysis To balance the current fiscal year budgeted revenue and expenditures, a rate increase of 11% will be necessary to put the program on a self- supporting basis for the fiscal year 1975-76. Without an increase in the current refuse collection rate, the program will incur a deficit of approximately $90,465 by the end of the fiscal year. An increase effective October 1, 1975, will produce increased revenues for only a nine-month period since three months of the fiscal year will have elapsed prior to the first billing and receipt of revenues. The rate