STRICTLY CONFIDENTIAL
Town of Atherton Discussion Materials
October 2024
Strictly Confidential - GreenWaste 2
Town of Atherton Discussion Materials
Key Considerations and Overview
• Current Contracted Rate Increases
- The table below shows the Scheduled Rate Increases
• Rationale for Current Contractual Rate Schedule
- The current Rate increase schedule was agreed to defer the increase in the rates in the first period of the Agreement and to cover other costs associated with the new Agreement
Key Considerations
• Proposal
- GreenWaste provided a recommendation on an updated rate schedule to defer large rate increases for 2025 and 2026 into future years - Deferred revenue for the Franchisee will be offset by the Contractual Franchise Fee
• Determine Options for 2025 Rate increase
- We have determined a potential range of 5 – 7% rate increase for 2025 in place of the contractual 11% increase
- A potential future schedule will be developed in early 2025 to spread the impact of future rate increases
• Approval of new Rates
- Changes to the Agreement will be agreed by the Town Council and a new amended contract will be signed
- The existing contract may also be updated to include a future contact extension Key Next Steps
Sep-24
Signed Amended
Contract
Atherton Town
Council Meeting
Dec-24
Initial
Meeting
Aug-24 Oct Mar-25 -24 Nov-24
Committee
Review
Atherton Town
Council Meeting
Approval of Proposal Rate
Increases and Contract
Amendment
Initial Analysis of potential Options and financial
Impact
Proposal for 2025 Updated Rate Increase and
Associated Approvals
2025 Rate
Increase
Notification
Increase Date % Increase Comments
Effective 1/1/2025 11.0% Fixed Rate
Effective 1/1/2026 11.00% Fixed Rate
Effective 1/1/2027 11.00% Fixed Rate
Effective 1/1/2028 8% Fixed Rate
Effective 7/1/2029 3% + CPI Fixed Rate + CPI
Review of Available Options and
Determination of Process for
Change Rate Increase Schedule
Process Timeline
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Town of Atherton Discussion Materials
2025 Rate Increase
• 2025 Rate Increase
- We propose that in order to defer the impact of the 11% rate increase for 2025, an increase of 6% be applied
- This 6% rate incorporates a fixed portion of 3% plus 2024 CPI increase of 3.0% to illustrate to customers the impact of higher CPI - The impact of reduced revenue for the Franchisee will be defrayed through the Franchise Fee, as allowed under section 9.5 of the Agreement
• Additional Service Rate Increase
- We propose that an additional rate increase of 2% would be applied to certain services and this would take the total increase to ~8% total increase for these services
- GreenWaste will calculate the financial impact of this rate increase in quarter and this will be paid as part of the Franchise Fee - Currently its is assumed that this additional service rate would apply to additional
GreenWaste Rate Proposal
In order to ensure that the appropriate rate adjustment for 2025 can be processed in time, we would propose that in lieu of a 11% rate increase there would be a 6% increase
• 2025 Rate Increase
- The Table below provides an overview of the financial impact of the rate adjustment for Franchise Fees
- Note that the amounts for additional services is an estimate only Financial Impact and Alternatives
Option
#1
Option
#2
Option
#3
5.0% 6.0% 7.0%
Shortfall in Revenue vs Contract (257,905) (214,920) (171,936) Forecasted Total Franchise Fee 451,333 455,631 459,930
Remaining Franchise Fee Payable 193,428 240,711 287,993 Potential Impact of Additional Service
Increase 15,000 17,500 20,000
208,428 258,211 307,993
Proposal
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Town of Atherton Discussion Materials
The table below shows an initial proposal for future rate increases and the associated forecast impacts; note that any adjustment in Franchise foregoes that offset indefinitely in the future. This will need to be offset by future rate increases to increase the Franchise Fee once again
Financial Overview – Future Potential Adjustments
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Contractual Rate increase % 11.0% 11.0% 8.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Franchise Fee ($) $477,123 $529,607 $571,975 $600,574 $612,586 $624,837 $637,334 $650,081 $663,082 $676,344 $689,871 Franchise Fee % 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Rate increase* % 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 2.0% 2.0% Rate Type 3% + CPI Fixed Fixed 2% + CPI 2% + CPI 1% + CPI 2% + CPI 2% + CPI 2% + CPI CPI CPI Franchise Fee (Proposed 2025 rate) $455,631 $478,413 $502,334 $522,427 $543,324 $559,624 $576,412 $593,705 $611,516 $623,746 $636,221 Annual Loss in Required Revenue ($214,920) ($511,940) ($696,420) ($781,474) ($692,618) ($652,138) ($609,218) ($563,761) ($515,666) ($525,980) ($536,499) Amount recovered - Franchise Fee $214,920 $478,413 $502,334 $522,427 $543,324 $559,624 $576,412 $563,761 $515,666 $525,980 $536,499 Remaining Franchise Fee $240,711 $0 $0 $0 $0 $0 $0 $29,943 $95,850 $97,767 $99,722 Deficit to be funded by the Franchisee ($33,528) ($194,086) ($259,047) ($149,294) ($92,514) ($32,806) $0 $0 $0 $0 This projection assumes CPI of 2% from 2028 onwards. This assumed rate has been added to the fixed rate where applicable Note: The impact of Additional Service Rate Increases has not yet been included in this analysis Strictly Confidential - GreenWaste 5
Town of Atherton Discussion Materials
Appendix
9.5 Special Adjustments - Changes which cannot be foreseen, or events outside of Franchisee’s control, may also be the basis for a special adjustment of the Franchisee’s Compensation. Franchisee may request a Special Adjustment at any time. Special Adjustments will be solely at the reasonable discretion of Town, based on the written request and documentation provided by the Franchisee. In the event Franchisee requests a Special Adjustment, Franchisee shall have the burden of demonstrating to the reasonable satisfaction of the City Manager that the failure of Town to adjust the Maximum Service Rates will result in the Franchisee incurring new and unanticipated costs or reduced revenues. The Franchisee will have to demonstrate new and unanticipated costs or reduced revenues by allowing for the City Manager or his/her designee review of financial statements and/or other supporting documentation reasonably necessary to determine the impact of the change. Any resulting rate adjustment shall be subject to the approval of the City Council. If a rate adjustment is not approved, Franchisee may petition the City Council to offset Franchisee’s increased costs using Franchise Fees or reducing other services provided under this Agreement. Franchisee is aware that SB 1383 became law in 2016.
Franchisee agrees that the passage of this law and the regulations implemented under pertaining to Franchised material collection and processing services described in Section 3.1 will not present a Change in Law and Contractor has incorporated all known costs associated with SB 1383 compliance for Franchised Services in Franchisee’s Compensation.
Non-Contractual Rate Increases