Figure 1 – Example Rate Impact of Adjustment
BACKGROUND
In 2012, the City, participating with other members of the District, issued a competitive request for proposals for collection services and entered into the new Agreement with GWR effective July 1, 2015.
The Agreement provides for the following, related to the adjustment of rates:
• Rates are annually adjusted throughout the term of the Agreement, using various inflationary indices, actual tonnage, and changes in the tipping fees at the District, unless either the City or GWR request a Cost Based Rate Adjustment (CBRA).
• The City and GWR may mutually agree upon alternative approaches to structuring rates without amendment to the Agreement (Section 8.2.D).
• During the CBRA review in RP5, a number of issues surrounding the process for setting rates and the resulting rate relationships amongst sectors and materials was identified. As such the City and GWR have negotiated an amendment to the prescribed methodology for the CBRA and index adjustments so as to not alter rate relationships between service sectors and material types. • Through negotiations of the amendment and as a result of the desire to maintain current rate relationships between sectors and service levels, the City and GWR have prescribed a uniform rate adjustment to be applied to all sectors.
RATE CALCULATION REVIEW
HF&H Scope of Work
HF&H performed this review of the rate request in accordance with Exhibit E1 (for the index based rate adjustment). These procedures included:
1. Review of the rate request for completeness and compliance with the procedures contained in Exhibit E1 of the Agreement.
EXHIBIT A
7 Managing Tomorrow’s Resources Today
Matt Mogensen
April 26, 2024
2. Review for mathematical accuracy and logical consistency to determine that the rate request is mathematically correct, that the rows and columns of numbers add down and across as intended, and that the stated assumptions were, in fact, used. Also, to determ ine that the rate request is internally consistent and that any summary schedules agree to the supporting schedules and worksheets.
3. Verification of the inclusion of the franchise fee calculation in the adjustment.
4. Verification of contract compliance with regard to:
A. The indices used in the adjustment.
B. The tip fees reported for the disposal/processing components of the rates.
C. The use of quarterly-reported tonnage data and allocations among agencies. A detailed audit of tonnage and allocations of tonnage reported by GWR was not a part of this scope of work.
HF&H discussed GWR’s allocation methodology with them and the methodolog y appears reasonable and consistent with standard practices within the industry.
D. Any changes in governmental fees on the fee component of the rates; and, the accurate application of the resultant percentage changes in the various rate components to the rate schedule approved by the City through the Agreement.
Review of Rate Request
Rate Period 10 Application
HF&H reviewed the rate application for RP10. The results of the calculation of RP 10 per methodology of Exhibit E1 of the amendment can be seen in Figure 2 below.
EXHIBIT A
8 Managing Tomorrow’s Resources Today
Matt Mogensen
April 26, 2024
Figure 2 – City of Marina Application of Index Based Adjustments to RP10
EXHIBIT A
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Matt Mogensen
April 26, 2024
Review of GWR Costs
There are four major components to GWR’s rate application : 1) calculation and application of the inflationary indexes as prescribed in the Agreement; 2) the disposal and/or processing component; 3) the Agency Fees; and, 4) other one-time adjustments.
There are three indexes used in the index adjustment: CPI, fuel index, and labor index. The annual percent change in each of the indices is used to calculate the coming years projected cost for the line items to which these indexes are applied.
HF&H has reviewed and GWR has confirmed the accuracy of each of these indexes, and notes that the fuel index remains unchanged, as reported by management staff at the District.
Review of Disposal/Processing Component
Calendar Year 20 23 collected tons were used for the RP10 review in accordance with the amendment.
The disposal and processing components also consider the tipping fees charged by the District in order to project anticipated disposal and processing costs at the District. The following table describes the changes in the City’s disposal and processing costs for each material type based on the tip fees at the District which have been incorporated into our RP10 review.
Figure 3 - Impact of District Tip Fee Changes
Review of Fee Component
HF&H ensured that the fee component of each rate matches the contractual percentage of 10% for franchise fees, and 5% for vehicle impact fees, remitted to the City by GWR.
Additionally, rate application review costs and other identified District costs totaling $59,982 were added as a one-time adjustment to cover the rate review, franchise management, and other identified District costs such as staff time and public education and outreach.
EXHIBIT A
10 Managing Tomorrow’s Resources Today
Matt Mogensen
April 26, 2024
New Rates
Attached hereto is a table of all rates recommended for RP10 based on the adjustments described in this report (Attachment B). HF&H recommends adopting these rates by resolution to be effective July 1, 2024. * * * * *
We would like to express our appreciation to GWR staff for their assistance and cooperation in this process. Should you have any questions, please call me at (925) 977-6959 or rchilton@hfh- consultants.com.
Very truly yours,
HF&H CONSULTANTS, LLC
Rob Hilton
President
EXHIBIT A
11 GreenWaste Recovery LLC
610 E Gish Road, San Jose, CA 95112
O: (408) 938-4930
www.greenwaste.com
Apri
l 1, 2024
Matthew
Mogensen
City Manager
211 Hillcrest Avenue
Marina, CA 93933
Dear Mr. M
ogensen:
We have perf
ormed the calculations of the Refuse Rate Index for the rate adjustment effective July 1, 2024. Enclosed are the following:
1. The Mari
na Index Based Rate Adjustment table showing a weighted rate increase of
5.10%.
2. Marina Agreement Rate Tables
3. Copies of the Index tables used from the Bureau of Labor Statistics/Federal Reserve.
If you hav
e any questions, please feel free to call me at (347) 602-1131 or e-mail me at [email protected].
Yours
very truly,
__________________
__________
James Redmond
Chief Financial Officer
EXHIBIT B
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