GREAT WESTERN RECLAMATION, INC.- RATE ADJUSTMENTS

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) ;.1 P A ns REQUEST FOR COUNCIL ACTION �, , 4s PREPARED BY Ronald E. Wolford DATE OF COUNCIL ACTION -3,/� DATE March 29 , 1976PHONE 834-416 SUBJECT ADJUSTMENT IN RESIDENTIAL TRASH oat _ o . _.. � , COLLECTION PAYMENTS TO CONTRACTOR i " / ®/ l 'R— 2.... S APPROVED g, 12/1 a,x_ Apre„ fi i a ,, .re ART-MENTI /' I Y46_ Re CL COU sL RECOMMENDED ACTION It is recommended that the City Council authorize the following compen- sation adjustments for Great Western Reclamation, Inc . for residential trash collection effective April 1 , 1976 : 1 . An increase of $0 .15 per water meter per month. 2 . Cancellation of the pay-back clause which was established in December 1973 when SCA acquired Great Western stock. BACKGROUND By letter dated November 25 , 1975 , the contractor requested a number of changes in the contract, two of which specifically related to the amount of compensation paid him by the City. They asked for a special adjustment due to increased labor costs , as they had endured a strike in the spring of 1975 with a subsequent increased wage settlement with the union . The contractor requested the following increases per water meter per month. November 1 , 1975 - $0 . 15 November 1 , 1976 - $0 .10 November 1 , 1977 - $0 .10 The second compensation item contained in their letter was a request to cancel the pay-back clause that was imposed at the time SCA acquired the stock of Great Western. ANALYSIS The contractor had furnished us information regarding increased labor costs during the period from December 1970 to 1975. The bare wage rate increased about 82% , while during the same time period the con- tract price (based on the Consumer Price Index) increased about 73% . This indicated that an increase of $0 . 09 per water meter per month was justified . This office wrote to the contractor on February 20, 1976 indicating that staff could support the repeal of the pay-back feature which would offset their increased wage costs . Copies of this letter were furnished to City Council at that time . The contractor countered with the suggestion that their fringe benefits had increased far greater than had their basic wage costs during the five year period under study. We suggested to them that they furnish the necessary supporting data with certification by an accounting firm. They have submitted the additional data by letter dated March 17 , 1976 . This contains a report from Arthur Young & Company which shows that wages and fringe benefits combined have increased 106% from December 1970 to December 1975 . Based on these data, we feel that an increase of $0 . 15 per water meter per month can be justified in addition to the cancellation of the pay-back clause . We do not, 'CO) � .& b �a "p6-191