GREAT WESTERN RECLAMATION, INC.- RATE ADJUSTMENTS

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.3-14114 City Manager * Pa Ua}eFebruary 12, 1975 •ram: Director of Public Works Sub'ea4: REPORT ON COMMERCIAL TRASH CONTAINER RATES Cr- BACKGROUND The contract between the City of Santa Ana and Great Western Reclamation provides that providing commercial trash containers is to be handled by agreements between the Contractor and the customer. The contract also states that the rates shall be subject to the approval of the Director of Public Works. Since these rates affect a large segment of the community i .e. , business, industry and multi-family residential, we have in recent years brought the rate schedules to the City Council for review and approval. The current rates are contained in a resolution adopted by City Council and have been in effect since September 1971. The Contractor, Great Western Reclamation, some time ago asked that the rates be increased due to increased costs that have been experienced during the past 3-1/2 years. This office has been negotiating with their officials for some weeks and have reached a conclusion that appears to be mutually acceptable. Although not a part of these negotiations but an additional factor which must be considered is that the Contractor's labor union agreement expires on April 18, 1975 and the effect of increased wages and benefits will have an additional impact on not only the commercial containers rates but the rates paid to the Contractor by the City for individual residential trash collection service. ANALYSIS The U. S. Consumer Price Index has risen 23% from September 1971 to December 1974. Extrapolating this ahead indicates that the increase to April 1, 1975 would total about 26%. The purchase price to the Contractor for a 3 cubic yard container was $112.00 in September 1971. Today the same unit costs 5251.60 or an increase of 125% during the 3-1/2 year period. The price paid for diesel fuel by the Contractor in January 1973 was $0.102 per gallon. In January 1975 the price had risen to $0.289 per gallon or an increase of 183% during the 2 year period. In June 1972, the Contractor paid $32,681 for a 3-axle, 10-wheel, front-end loader, packer refuse truck. In October 1974 the price quoted was 846,243 or an increase of 42% in the 2-1/2 year period. As of today, a firm price quotation cannot be obtained but only that the cost will be the market price at time of delivery which is about one year after placement of order.