CITY OF HERCULES
111 CIVIC DRIVE, HERCULES CA 94547
PHONE: (510) 799-8200
To: Dante Hall, City Manager
From: Michael Roberts, Public Works Director/City Engineer Re: Recommended Adjustments to the 2023 Refuse Collection Rates Date: November 9, 2022
In 1986 the City and Republic Services entered into a Franchise Agreement which provides Republic Services the exclusive right for collection and disposal services within Hercules. Since that time the Agreement has been amended multiple times. In accordance with Amendment No. 5, which was executed in 2013 and is the most recent, 2023 is a base year for rate review and adjustment. On other years the refuse collection rates are adjusted annually in accordance with the San Francisco-Oakland-San Jose Metropolitan Area Consumer Price Index (CPI).
On June 28, 2022 Republic Services submitted a base year rate adjustment request for +4.92% to be effective January 1, 2023 as provided for in Amendment No. 5. Under the Municipal Code Chapter 2A “Adjustment of Refuse Collection Rates”, the Public Works Director/City Engineer is required to review the rate increase request, including completing any necessary studies and conducting a public hearing. The findings and recommended action are to be compiled and then submitted in a report to the City Manager. This memorandum serves as my report.
Delivery of municipal services can be divided into management/administration and field operations. Rate reviews should include an evaluation of both. To be as cost effective as possible and maximize available resources, Hercules hired R3 to perform a high level, desktop review concurrently with the cities of Pinole and San Pablo. R3 is a Bay Area solid waste management consulting firm and satisfactorily completed the last rate review for Hercules back in 2013. R3 reviewed Republics rate adjustment applications for 2023 with regards to mathematical accuracy, consistency with industry standards, allocations between franchise areas, and consistency with the Franchise Agreements. They are recommending a base rate adjustment for Hercules of +3.52%, which they discussed with Republic, and Republic has agreed to use (See attached correspondence). This adjustment is less than the most recent CPI, which is tracking at 5.7%, and can be attributed to higher labor costs, gasoline prices, and truck costs.
I conducted a public hearing regarding the proposed rate increase at on Tuesday, November 8 as required by the Municipal Code. No members of the public attended. I have worked fairly closely with Republic, previously toured their facilities, and generally found their operations to be efficient and reliable.
Based upon these reports, findings and observations, I am recommending Republic Services’ base rate adjustment be set at +3.52% to be effective January 1, 2023.
Practical Considerations