▪ HF&H evaluated each Hauler’s allocation of costs to the City by reviewing the types of allocation factors applies to the Hauler’s financial statements. HF&H assessed whether the allocation factor was reasonable or standard for the industry.
▪ HF&H benchmarked the residential, commercial, and residential bulky program costs against nearby jurisdictions or jurisdictions that have similar geographic structure and services. We inquired with each Hauler regarding costs that were higher than the benchmarked range. ▪ HF&H examined the current disposal, transfer, and organics pre-processing arrangements for each Hauler, including compensation for these services and their connection with the City’s composting facility.
▪ HF&H recalculated the Haulers’ tonnage reports to the City during the period under review and analyzed detailed general ledgers for certain expenses in the general and administrative categories.
The following discussion summarizes HF&H’s findings and recommendations.
Findings
• Gilton’s general and administrative allocation attributed an additional ~$96,000 in indirect expenses to the City based on an incorrect inclusion of commercial commodity revenue that is not part of the franchise. Because the current rates were set based on an inflation increase and not on this financial information, there is no impact to the current rates. • Bertolotti’s total costs per route are higher than the reasonable range from the benchmarks and the driving factor may be additional labor expenses for overtime. Gilton’s labor costs are higher than the reasonable range due to inclusion of other personnel within the driver labor category instead of the overhead category. Gilton’s overall per route costs, including fuel, are still slightly higher than the reasonable range.
• The Haulers’ annual rate adjustment application included costs that would double-compensate them for organics pre-processing services (firstly in direct costs and secondly through the per month fee). Because the current rates were set based on an inflation increase, the current rates do not double-compensate the Haulers for organics pre-processing.
Recommendations
Based on the above analysis, HF&H has summarized our recommendations for next steps below:
1. Third Party Review of Gilton Allocation: Because Gilton’s software for allocation of costs to the City is integrated with their accounting software, HF&H recommends that the software be reviewed periodically by a third party for accuracy and reasonableness. The cost for this review may be at the City’s or the Haulers’ expense.
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2. City’s Compost Facility Per-Ton Rate: HF&H recommends the City consider creating a separate rate for contaminated organic material. The City visually inspects incoming loads for contamination; if rejected, a load is charged to the Hauler, returned to their transfer station, cleaned, redelivered, and charged again. The additional cost and labor are intended to discourage contamination that should be removed during Hauler pre-processing. If a load is accepted based on visual inspection but is later determined to be too contaminated for processing, as City staff notes happens regularly, the City absorbs the cost of residuals and overs despite paying an additional pre-processing fee to haulers to ensure clean organic material. The City and Haulers should meet and confer to develop a surcharge that addresses this additional cost burden to ratepayers.
3. Amend and Restate the Current Franchise Agreements: HF&H recommends amending and restating the current franchise agreement to address operational, financial, and informational concerns. HF&H also recommends the Haulers resubmit official cost and operations forms to set a baseline to which future operations can be compared for reasonableness. The following two paragraphs provide specific recommendations regarding the amendment:
Modify Annual Rate Adjustment Methodology: The current annual rate adjustment process of using the ‘lowest cost Hauler’ does not provide sufficient guardrails to protect the City’s rate payers. HF&H recommends modifying the current annual rate adjustment process through the amendment to adjust expenses based on local collective bargaining agreements or regional and classification specific CPI indices. HF&H recommends that the new rate adjustment methodology calculate the compensation for disposal and organics pre-processing and delivery based on a build-up of tons multiplied by the rate at the destination facility. HF&H recommends tying the annual increase in the organics pre-processing rate to an index or other annual metrics.
Acceptable Disposal Location Designations: Because the current franchise agreement does not state which landfill the solid waste material should be delivered, HF&H recommends designating the disposal facilities in the franchise agreements to ensures material flow is managed and predictable.
4. Transfer / Organics Pre-Processing Rate Benchmarking: HF&H recommends the City review the transfer/pre-processing rate to ensure it is within the range of acceptable market rates.
5. Future Fee Component Removals: When performing the upcoming annual rate adjustment process, the following fees should be removed to not double-compensate the Haulers: Weekly Organics Collection, SB 1383 Collection Fee, Organics Waste Pre-Processing.
6. Monthly/Quarterly Tonnage Reports: HF&H recommends the City review the current reporting template for additional modifications, as needed during the amendment process, and discuss these modifications with the Haulers.
7. Detailed General Ledger Review: HF&H recommends placing a cap on annual increases to the general and administrative expenses through the annual rate adjustment methodology. #9..
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HF&H REVIEW AND ANALYSIS
Annual Rate Adjustment Application and Rates
Standard Methodology: The Standard Methodology was developed for the City by a previous consultant with the goal of calculating the ‘lowest cost Hauler’. Each Hauler submits audited financial information from the most recently completed fiscal year that is intended to reflect the costs to service the City. The City inputs these costs into the annual rate adjustment spreadsheet which compares Bertolotti’s and Gilton’s ‘per customer cost’ by customer class and determines the ‘lowest cost Hauler’. The lowest ‘per customer cost’ is selected for the hauler component of the rate for both Bertolotti and Gilton (Hauler Component). City fees are layered on top of the Hauler Component for City costs (e.g., landfills maintenance, compost facility improvements, City solid waste cost center).
There may be one additional adjustment made to the Hauler Component to account for anticipated increases in fuel costs based on the price of diesel. There are no adjustments to account for anticipated changes in tonnage, routes, labor, or other costs as the methodology assumes those changes will be reflected in the financial information when the applicable year is utilized for the annual rate adjustment process.
Most Recently Completed Annual Rate Adjustment Methodology: Each Hauler submitted its audited financial information from the most recently completed fiscal year (7/1/2021-6/30/22). The City input these costs into the annual rate adjustment spreadsheet to determine the ‘lowest cost Hauler’. Instead of utilizing the standard methodology with the ‘lowest cost Hauler’, the City enacted an increase to the current Hauler Components similar to the increase in the consumer price index. The City also layered various fees on top of the Hauler Component for City costs (landfills maintenance, non-containerized green waste, compost facility improvements, SB 1383 implementation, and City solid waste cost center) and additional Hauler costs not captured in their financial information (weekly organics collection, collect and process recycling, SB 1383 collection, and organic waste pre-processing). There were two adjustments made to the Hauler Component to account for anticipated increases in expenses: an increase in disposal costs based on consumer price index and an increase in fuel costs based on the price of diesel. The City chose to deviate from the standard methodology this year to account for the additional compensation for services required under SB 1383 and allow time to evaluate the impact of this rate adjustment methodology.
The City is allowed to approve, deny, delay, or enact a different rate increase than what was calculated per the annual rate adjustment applications. During the most recent annual rate adjustment, the City enacted a rate increase that was similar to the increase in the consumer price index rather than the full increase as calculated per the rate adjustment application. The rate adjustment application calculated a Hauler Component of $37.54 for residential services and $46.32 for commercial services; the City approved a $35.72 residential Hauler Component and a $43.57 commercial Hauler Component. #9..
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Hauler Allocation of Costs to Modesto
Bertolotti: Bertolotti reports its Modesto operations as a separate entity from its other corporations and franchises and provided the City with a separate set of audited financial statements. The separate set of financial statements for the City are used in the annual rate adjustment application. Bertolotti stated that all costs associated with serving the City are coded within their internal system directly to the City’s reporting entity. The only allocation that is used in preparation of the financials is related to the corporate service fee for administrative and support services to most parts of Stanislaus County and select areas of the City (further explained in the notes to the financial statements) which is allocated by containers.
Therefore, all direct service-related costs (labor, vehicle, fuel, disposal, etc.) are directly charged to and reflected in the financial statements utilized in the annual rate adjustment application. HF&H did not find any issues with Bertolotti’s allocation of the corporate service fee.
Gilton: Gilton services parts of Stanislaus County, Merced County, San Joaquin County, and various cities, including the City of Modesto. It accounts for its operations and costs as a single entity and provides a combined set of audited financial statements. The City of Modesto’s financial information is a supplemental schedule of costs allocated to the City based on various allocation factors. These allocation factors have been provided to the City and include allocation by percentage of loads, percentage of trucks to a jurisdiction/material, number of containers, customers, and revenue. The allocation calculation agrees to the information presented in Gilton’s Accounting and Supplementary Data, in which the auditor states, “We did not audit or review the financial statements or supplementary information included in the accompanying prescribed form nor we were required to perform any procedures to verify the accuracy or completeness of the information provided by management.” HF&H was unable to review the allocation calculations quantitatively as the spreadsheet calculations were hard-coded and a combination of multiple allocation methodologies. When HF&H requested a formuladriven version of the allocations file, Gilton asserted the spreadsheet provided is not a database export.
Allocation percentages are included in an allocation module in their accounting software which allocates costs held in suspense accounts until year end. This means that all files provided to HF&H include the results of the cost allocations, but the allocation percentages are calculated and applied in Gilton’s accounting software. This methodology is the same as Gilton’s Stanislaus County allocation methodology.
Therefore, if additional quantitative assurance is desired, more direct approaches may need to be considered (e.g., a site visit to Gilton to view the input of these percentages and calculations, a full review of their allocation software). However, HF&H reviewed the allocation methodology qualitatively for reasonableness of the type of allocation to the corresponding expense category and found the allocation types to be reasonable except for the revenue allocation. Revenue allocations for overhead costs are not the most appropriate allocation factor as the revenue from rates set by jurisdictions are not the best indicator of how much overhead costs are incurred.
During HF&H’s general ledger testing (refer to the Hauler Detailed General Ledger Review section below) Gilton provided copies of the general and administrative expenditures and recalculations of the general and administrative allocations. General and administrative expenditures were allocated based on revenue. HF&H reviewed the general and administrative allocation by tying revenue to the financial statements and noted that the commercial revenue was higher than presented in the financial #9..
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statements. HF&H inquired with Gilton to clarify where the additional revenue can be found in the financial information. Gilton’s response was, “this revenue is from specialty commodity bins, that should not have been included in the allocation. Prior to the enactment of SB 1383, our understanding was that we were not required to include this in revenue as recycle bins were open to competition as recycle/reuse streams are outside of the franchise revenue.” The City informed HF&H that recycling service was not an approved service per the franchise agreement, and that Gilton should not be providing this service to customers. The City also informed HF&H that hauling of any waste, including recyclable materials prior to the implementation of the curbside recycling program, is exclusive to service agreements and is not open to competition within the City limits.
Gilton provided a spreadsheet calculating the impact of reducing the City’s general and administrative allocation from 13.82% to 12.35% and its impact on the indirect expenses allocated to the City (approximately $96,000). HF&H estimated that this reduction of indirect expenses could have reduced the commercial per yard rate by $0.73. Gilton noted that this correction would not have impacted the current rates as the City enacted a rate increase assuming an inflation adjustment and not based on the higher rate increase requested based on the financial information in the application. However, HF&H notes that a review of previous year’s allocations would be required to ascertain whether the overallocation of indirect expenses occurred in previous years as well.
Hauler Collection Benchmarking
HF&H requested operational statistics from Bertolotti and Gilton for the most recently completed fiscal year (July 1, 2021 – June 30, 2022). A copy of the operational statistics shall be provided to the City for recordkeeping. HF&H also received a copy of Bertolotti’s and Gilton’s financial statements for July 1, 2021 – June 30, 2022 and the corresponding annual rate adjustment application prepared by the City.
HF&H calculated key operational and cost ratios using the financial and operational information; this allowed HF&H to benchmark the Haulers’ efficiencies and costs for reasonableness. HF&H compiled nearby jurisdictions’ Haulers’ ratios from Stanislaus County or the City of Stockton, or jurisdictions that have similar geographic structure and services in the Central Valley, and compared the key ratios. HF&H focused on cost per route, labor costs, and fuel costs for the residential and commercial sectors. While benchmarks are not always an ‘apples to apples’ comparison due to nuances of each service area, benchmarking allows general comparison and discussion on key areas as a starting point for further conversations. Refer to the tables below for a high-level summary of the benchmarking results.
Table 1. Summary of Benchmark Results - Residential
Benchmark Ratio Bertolotti Gilton
Operating Cost per Route 5% - 10% Higher than Reasonable Reasonable Total Cost per Route 0% - 5% Higher than Reasonable 5% - 10% Higher than Reasonable Total Labor Cost per Route Hour 10% - 15% Higher than Reasonable Reasonable Total Fuel Costs per Route Reasonable 30% - 35% Higher than Reasonable #9..
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Table 2. Summary of Benchmark Results - Commercial
Benchmark Ratio Bertolotti Gilton
Operating Cost per Route Reasonable Reasonable
Total Cost per Route 0% - 5% Higher than Reasonable 0% - 5% Higher than Reasonable Total Labor Cost per Route Hour Reasonable Reasonable
Total Fuel Costs per Route Reasonable Reasonable
Residential route benchmarking indicated the need for further analysis. Refer to the sections below.
Commercial benchmarking indicated an overall reasonableness in costs and was not further analyzed.
Bertolotti Per Route Comparison: Because Bertolotti was higher than reasonable in three of the four residential benchmarking categories, HF&H performed a deeper analysis on Bertolotti’s residential operations. HF&H translated Bertolotti’s financial information by expense category (labor, vehicle, fuel, etc.) into a per route cost. Then HF&H compared Bertolotti Modesto’s per route costs to Bertolotti Stanislaus County’s per route costs as these two jurisdictions are directly serviced by the same hauler and have similar programs, geography, and cost of expenses. The results of this analysis further confirmed the higher than reasonable costs were related to the labor and benefits expense categories.
Bertolotti Residential Route: HF&H inquired with Bertolotti regarding their residential route statistics and financial information specifically related to labor and benefits.
Bertolotti asserted that the residential labor costs included driver supervisor, mechanics, delivery drivers, maintenance workers, and cart assistance wages and benefits. Bertolotti also asserted that the average driver is earning between $150,000 - $160,000 with benefits. Because the benchmarks aim to compare direct driver labor, Bertolotti’s labor costs should be adjusted to remove the estimated wages and benefits related to these positions. HF&H had insufficient information to remove all categories of wages and benefits listed above but was able to remove an estimated amount for supervisor and cart assistance personnel wages and benefits. Then HF&H recalculated the labor ratios and average wage with benefits per driver. The hourly wage before benefits is competitive to benchmarked collective bargaining agreement, however the hourly wage after inclusion of benefits is higher than benchmarked collective bargaining agreements. HF&H recommends additional discussion when negotiating the amendment to the Agreement to tie the labor increases directly to a labor index based on the geographic area as Bertolotti’s divers are not under a collective bargaining agreement. However, the adjusted labor ratio (drivers per route per homes serviced) was still high in comparison to the benchmark’s reasonable range.
Bertolotti asserted that the residential Modesto service area is very dense and is located near the transfer and disposal facilities; they have trucks that are old with low mileage due to this geographic benefit.
Bertolotti also asserted that a large portion of their service area included narrow alleys that require 6- point turns and limit speed due to dust control. Historically, HF&H has seen a reasonable range of residential customers serviced per route per day to be approximately 700-800 customers. However, Bertolotti’s residential routes are servicing on average 900 customers per route per day. This indicates to #9..
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HF&H that Bertolotti is likely needing driversto work some amount of overtime, even with the geographic benefit, to achieve this operating efficiency.
The above point indicated to HF&H that Bertolotti’s operating statistics may require revision surrounding the average hours per route per day. Bertolotti’s operating statistics indicate its drivers are working 10 hour route days, which include two hours of overtime. To achieve a reasonable number of homes serviced per route, HF&H calculated that each driver would work an average of 11 hours per day instead of the asserted 10. It is possible that not all homes set out their containers each week, but it would require a significant number of customers choosing to not participate weekly. Set out information was not provided by Bertolotti in its operating statistics to verify this hypothesis.
In summary, this analysis indicates to HF&H that Bertolotti may have increased full-time employee equivalents through longer route days than reported on its operating statistics and that the additional labor expense for overtime may be the driving factor that is escalating the operating and total costs per route higher than the reasonable range from the benchmarks.
Gilton Per Route Comparison: Because Gilton was higher than reasonable in two of the four residential categories, HF&H performed a deeper analysis on Gilton’s residential operations. HF&H translated Gilton’s financial information by expense category (labor, vehicle, fuel, etc.) into a per route cost. Then HF&H compared Gilton Modesto’s per route costs to Gilton Stanislaus County’s per route costs as these two jurisdictions are directly serviced by the same hauler and have similar programs, geography, and cost of expenses. The results of this analysis further confirmed the higher than reasonable costs were related to operating costs such as labor and fuel.
Gilton Residential Route: Because the operating cost per route hour is within the reasonable range, but the total cost per route is above the reasonable range, it indicates to HF&H that Gilton is beyond the benchmarked range due to pass-through costs such as disposal, processing, and transfer. Pass-through costs are constrained by designated facilities and distances to alternative facilities. Each benchmarked jurisdiction has a unique arrangement of pass-through costs due to local facilities and contract limitations, which means pass-through costs are the least ‘apples to apples’ to compare using benchmarks. Therefore, HF&H understands why Gilton may be above the reasonable benchmark range in this category given the unique specifications of the City’s disposal and processing arrangements.
Gilton’s benchmark for fuel prices is above the reasonable range. Over the past few years, fuel prices have significantly increased. Some of the benchmarks used in HF&H’s analysis are from cost proposals or index reviews before the price increase in fuel was captured, which indicates that the reasonable range of fuel costs per route is lower than the actual current range. However, the Stanislaus County benchmark for Gilton, which uses actual fuel costs, shows the average fuel cost per route at approximately 75% of the fuel cost per route as in Modesto. Additionally, the current Agreement does not designate disposal and processing facilities, which allows the Haulers the option to haul material to facilities that are out of the area and incur additional fuel expenses. Therefore, HF&H believes Gilton’s fuel costs in Modesto may still be higher than reasonable due to increased transportation and fuel prices, but less than the 30%-35% higher than reasonable benchmark.
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In summary, overall per route costs are higher than the benchmark due to disposal, processing, and transfer costs. However, the overall per route costs, including fuel, are still slightly higher than the reasonable range.
Figure 1: City of Modesto Hauler Service Area Map
Hauler Residential Bulky Program Benchmarking
HF&H requested additional operational statistics and financial information for the residential bulky collection program from Bertolotti and Gilton for the most recently completed fiscal year (July 1, 2021 – June 30, 2022). A copy of this information is included as Attachment A and B. HF&H calculated the monthly cost per resident for the residential bulky program by dividing the bulky program costs by the number of residents served: Gilton costs $1.11 per month per resident and Bertolotti costs $1.19 per month per resident. HF&H calculated nearby jurisdictions’ cost per resident for residential bulky programs to compare for reasonableness.
Bertolotti
Transfer Station
Gilton Resource
Recovery
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The benchmarks for monthly residential bulky program costs ranged from $0.79 - $5.32. The higher cost programs have a more complete collection program that includes more types of acceptable items (e.g., tires, e-waste, hazardous materials) and a larger volume of material collected per visit. The lower cost programs have more limitations on the acceptable items and restrict overall volume. The City’s per resident program cost falls within the reasonable range and is in line with expectations due to the restrictions on type of acceptable items. The City’s program does not allow for automobile parts (including tires), household hazardous waste, computer monitors, tv’s, dead animals, C&D, or household garbage.
However, the City’s program does not limit the volume of material collected per visit. Based on a discussion the City had with the Haulers, the cost’s provided for the bulky program include costs for illegal dumping clean-up. Therefore, the true cost of the bulky collection program is less than the per resident calculated above and is more in line with the lower range of the benchmark.
Hauler Transfer and Disposal Review
Based on discussion with the City, both Haulers are required to take all garbage first to the Covanta Wasteto-Energy facility. If the Waste-to-Energy facility is at daily capacity or is shut down for the day, they are to dispose of the material at a landfill. The current agreement does not state which landfill, but the City maintained that the Haulers should use the Fink Road Landfill and are having both Haulers include in the monthly report which landfill they are using. However, the City asserts that the Haulers have been delivering solid waste to Manteca’s, Merced’s, or Livermore’s landfills. The City further explained that they do not know how much each Hauler pays at these facilities. Because the annual rate adjustment process does not include language to limit the disposal component of the adjustment to the rate charged at the Waste-to-Energy facility or the Fink Road Landfill (refer to the Annual Rate Adjustment Application section) there is no protection for the City against increased costs associated with disposal at alternative locations.
HF&H requested a narrative from Bertolotti and Gilton describing their current disposal and transfer arrangements. HF&H intended to perform a build-up of the disposal component of the Haulers’ financial information and assess the reasonableness of this cost. Refer below for a summary from each Hauler.
Bertolotti: Bertolotti asserts that all loads of material (both solid waste and organics) are brought to the transfer station and then taken to their final disposal or processing location. Bertolotti asserted they are required to take all garbage to the Covanta Waste-to-Energy facility or the Fink Road Landfill, unless they are directed to take it to another landfill. The current transfer rate is $22.00 per ton, the Waste-to-Energy facility rate is $49.90 per ton, and the Fink Road Landfill rate is $29.00 per ton. Bertolotti did not provide HF&H with the transfer or disposal costs during the financial period used in the annual rate adjustment application. However, HF&H calculated an estimated cost per ton for disposal of solid waste tonnage based on Bertolotti’s operational statics and financial information and found that it is within a reasonable range of the cost per ton as provided by Gilton who has the same disposal arrangements and additional per ton detail.
Gilton: Gilton asserts that they bring all loads of material (both solid waste and organics) to the Gilton Resource Recovery Transfer Facility (GRR) where the material is weighed on a scale with documentation for route identification for future allocation of costs. GRR accumulates material and hauls it to the Covanta #9..
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Waste-to-Energy facility or the Fink Road Landfill, unless directed to take it to another landfill. Hospital waste is taken directly to the Waste-to-Energy facility. Material is brought first to the Waste-to-Energy facility to increase the City’s diversion, but will be brought to Fink Road Landfill if the Waste-to-Energy facility cannot accept it. The City notes that Gilton’s weekly report indicates that material is also brought to other landfills.
Gilton also provided a breakdown of the per ton cost for transfer and disposal of solid waste material.
Illegal dumping disposal costs was not included in this breakdown. HF&H recalculated the disposal and transfer costs based on the tonnage reported in the operating statistics and found they agree within an immaterial variance to the disposal and transfer costs as reported in Accounting and Supplementary Data used in the annual rate adjustment process. Refer to the table below for a summary of the per ton rates during the time period reviewed.
Table 3. Gilton Transfer and Disposal Per Ton Cost
7/1/21 - 9/30/21 10/2/21 - 6/30/22
Residential, Commercial, and Debris Box Disposal $43.00 $44.00 Bulky Item Disposal $48.00 $53.00
Transfer Station Fee (Any Material) $24.00 $27.00
Hauler Organics Pre-Processing Review
As mentioned previously in the Annual Rate Adjustment Application section above, the City layers on additional fees to the Hauler Component for various programs and services. One of these fees is for residential and commercial organics pre-processing before delivery to the City’s compost facility. The City informed HF&H that all organic material collected by the Haulers within the City limit should be delivered to the City’s compost facility.
Based on the City’s SB 1383 compliance consultant’s (R3) report, the organics’ pre-processing rate was established to pay the Haulers to pre-process organic waste for delivery to the City’s compost facility. The contamination threshold at the City’s compost facility is 1%. The pre-processing rate was based on estimates from the Haulers to begin pre-processing organic material, assuming no pre-processing was currently occurring, to reach 100% clean organic material. The City asserts that neither Hauler was required to pre-processing organic material from July 1, 2021 – June 30, 2022 as it was not part of their contracts; the requirement for pre-processing began July 1, 2022 because of SB 1383 compliance. The additional component was also added to the rates beginning July 1, 2022. The current residential rate includes $1.72 per month and the current commercial rate includes $3.11 per month per cubic yard for organics pre-processing. The amount of this additional fee was based on feedback from both Haulers on the cost of pre-processing and developed by R3.
Bertolotti: Bertolotti’s narrative confirmed that it is required to deliver all organic material to the City’s compost facility. Bertolotti asserted that the transfer rate for solid waste materials is the same for organic materials, which is in alignment with the City’s narrative that Bertolotti was not pre-processing material during this time as the transfer rate for organic material would be higher to account for additional cleaning and grinding.
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However, Bertolotti’s annual rate adjustment application included $157,890 for green waste cleaning.
Therefore, Bertolotti’s annual rate adjustment application included costs that would double-compensate them for organics pre-processing services. Because the rates were set based on an inflation increase, not the Hauler’s applications, Bertolotti was not double compensated for organics pre-processing. However, this indicates to HF&H that the current rate adjustment methodology allows for potential doublecompensation in areas where the Hauler is compensated separately from the Hauler Component of the rates.
Gilton: Gilton’s narrative confirmed that organic waste is delivered to the GRR facility where it is cleaned and ground. Gilton’s breakdown of the per ton cost for transfer and disposal of solid waste included a breakdown of the cost to pre-process and transfer organic materials. HF&H confirmed with Gilton that the transfer rate for organic materials is inclusive of pre-processing and delivery of material to the City’s compost facility. the cost for pre-processing and transfer was $67.00 per ton from 7/1/21-9/30/21 and $71.00 from 10/1/21-6/30/22. Gilton asserts that they have been pre-processing organic material before it was required by the City in 2023 and consider it part of the scope of current services.
The cost to pre-process organics is compensated through the additional per month fee and should not be included in each Hauler’s financial information. Therefore, Gilton’s annual rate adjustment application included costs that would double-compensate them for at least some portion organics pre-processing services. If Gilton was the ‘lowest cost Hauler’, then costs to pre-process organic material would be included twice (firstly in direct costs and secondly through the per month fee). This indicates to HF&H that the current rate adjustment methodology allows for potential double-compensation in areas where the Hauler is compensated separately from the Hauler Component of the rates. This also indicates to HF&H that a reset of the base rate based on all current services and removes all per month fees remitted to the Haulers, would be beneficial.
For the upcoming annual rate adjustment application, the costs to pre-process organic materials will be included in both of the Haulers’ financial information and the per month fee should be removed to avoid double-compensation regardless of which Hauler is the ‘lower cost Hauler’.
City Compost Facility Rate
The City informed HF&H that the City’s compost facility reviews incoming organic material for compliance with the 1% contamination limit through a visual inspection. However, this inspection has been insufficient to identify incoming tonnage that is above the contamination level. The compost facility has been disposing of more organics contamination residue than anticipated and is incurring approximately $600,000 annually in City funds from other programs to dispose of the residue. The organics preprocessing rate was established for the Haulers to fully clean the organic materials collected within the City’s jurisdiction.
The City’s compost facility has two per ton rates: an in-city and out-of-city rate. The facility does not have a separate rate for contaminated material to cover the additional costs for the City to continue to process organic material because the pre-processing rate was established for delivered materials to have no contamination. If a load is identified as having contamination, the City will either reject the load and return #9..
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it to the Haulersfor additional pre-processing before charging a second tip fee upon return or the City will continue to process the material on site at the Compost facility at their own expense. Therefore, the current rates at the facility do not cover all of its costs incurred to process and dispose of organic residue.
Hauler Tonnage Review
The City discussed with HF&H its lack of confidence in the tonnage reports submitted by the Haulers to the City. The City also informed HF&H that the Recycling and Disposal Reporting System tonnage for the City of Modesto does not match the information provided to the City. HF&H performed a recalculation of the tonnage reports for Bertolotti and Gilton by material stream from July 2021 – June 2022. The recalculation found that not only did the annual tonnage disagree with the annual tonnage reported in the operating statistics, but it also did not agree to subtotals within the individualreports. HF&H compared the tonnage reports to the tonnage reported in the operating statistics provided to HF&H and inquired about discrepancies.
HF&H inquired with both Bertolotti and Gilton regarding the tonnage discrepancies and received the following response: The tonnage reports were created by and provided to each Hauler to fill out. The intent of the forms was submission to Cal Recycle but has since changed due to SB 1383. Gilton noticed that some of the formulas on the tabs differed from the summary page but did not modify the form. Both Bertolotti and Gilton mentioned that self-haul and schools were not included in the operating statistics tonnage reported as they are not part of the franchise. Gilton also noted that these reports were revised after June 2022. In summary, the operating tonnage submitted to HF&H should differ from the tonnage reports and Gilton recommends the tonnage per the operating statistics should be used for our review purposes. If the City requires additional information from these reports, the optimal time to modify these templates will be during the agreement amendment process.
Hauler Detailed General Ledger Review
HF&H requested expenditure descriptions from Gilton and Bertolotti for the line items in their annual rate adjustment application. A copy of these descriptions is provided at Attachments C-1 and C-2. These descriptions allowed HF&H to remap the Haulers’ annual rate adjustment applications to compare similar types of expenditures to each other as Gilton and Bertolotti group some categories of expenditures differently. Then, HF&H requested detailed general ledgers from the Haulers for expenditure categories that were of interest to the City or were significantly higher than the other Hauler.
Bertolotti: HF&H reviewed the detailed general ledgers for the following categories: Advertising, Bank Charges, and Rent. Detailed review of these general ledgers confirmed that all expenses in these categories were business-related expenditures that were reasonable to incur in operating the business and did not appear to be related to specifically non-Modesto jurisdictions.
Gilton: HF&H reviewed the detailed general ledgers for the following categories: Bank Charges, Computer, Depreciation, Rent, and Telephone. Detailed review of these general ledger confirmed that all expenses in these categories were business related expenditures that were reasonable to incur in operating a business and did not appear to be related to specifically non-Modesto jurisdictions. #9..
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Rosene Nguyen
April 17, 2024
At the City’s request, HF&H performed a deeper review of the Business Travel expenses incurred by Gilton.
HF&H reviewed the general ledger of Business Travel and noted that 62% of expenses were for travel to attend insurance related meetings, 20% of expenses were for business lunches with employees, vendors, and other business associates, and 18% of expenses were for business meals and travel for purposes of conventions, vendor negotiations, and equipment surveying.
Gilton also provided HF&H with additional background on their Business Travel: The Operations Manager’s duties include equipment/vehicle evaluations and purchases, safety coordinator, employment practices, and insurance insight. The Operations Manager also sits on the Board of Directors for Gilton’s Captive Insurance policies, which includes worker compensation, vehicle, and liability insurances. The Operations Manager attends safety meetings twice a year to ensure Gilton is in compliance and stays on top of industry changes. The Operations Manager and Richard Gilton attend board meetings for Captive Insurance twice a year. As part of the Board meetings there are educational classes regarding loss mitigation and other insurance related subjects.
After HF&H reviewed the general ledger and Gilton’s narrative, HF&H believes these types of business travel expenses appear reasonable to incur in operating a business.
FINDINGS
• Gilton’s general and administrative allocation attributed an additional ~$96,000 in indirect expenses to the City of Modesto based on an incorrect inclusion of commercial commodity revenue that is not part of the franchise. HF&H estimates the impact of this overallocation of expenses to be ~$0.73 per commercial cubic yard. Because the current rates were set based on an inflation increase and not on this financial information, there is no impact to the current rates. A review of prior period allocations would be required to ascertain whether the incorrect allocation was used in previous years.
• Bertolotti’s total costs per route are higher than the reasonable range from the benchmarks and the driving factor may be additional labor expenses for overtime. Gilton’s labor costs are higher than the reasonable range due to inclusion of bulky drivers, customer service reps, and other personnel within the driver labor category instead of the overhead category. The overall per route costs, including fuel, are still slightly higher than the reasonable range. • Bertolotti’s and Gilton’s annual rate adjustment application included costs that would doublecompensate them for organics pre-processing services (firstly in direct costs and secondly through the per month fee). However, because the current rates were set based on an inflation increase, the current rates do not double-compensate Bertolotti or Gilton for organics preprocessing.
HF&H RECOMMENDATIONS
Based on the above analysis, HF&H has summarized our recommendations for next steps below:
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Managing Tomorrow’s Resources Today
Rosene Nguyen
April 17, 2024
1. Third Party Review of Gilton Allocation: Because Gilton’s software for allocation of costs to the City is integrated with their accounting software, HF&H recommends that the software be reviewed periodically by a third party for accuracy and reasonableness. The cost for this review may be at the City’s or the Hauler’s expense. Additionally, HF&H recommends that the City provide direction to Gilton on appropriate allocators for each overhead cost category, such as customer count or overhead labor hours by jurisdiction.
2. City’s Compost Facility Per-Ton Rate: HF&H recommends the City consider creating a separate rate for contaminated organic material. The City and Haulers should meet and confer to develop a surcharge that addresses this additional cost burden to rate-payers.
3. Amend and Restate the Current Franchise Agreements: Based on discussions with the City regarding past experiences under the current franchise agreements, operational and informational challenges with the Hauler, and the insufficient franchise agreement language to provide the City the guardrails and direction it desires, HF&H recommends negotiating an amendment to and restating the current franchise agreement to address these concerns. HF&H also recommends the haulers resubmit official cost and operations forms to set a baseline to which future operations can be compared for reasonableness.
Initially, HF&H recommends the City and Haulers and discuss how the current franchise agreement is functioning appropriately, and how it can be improved. This process could be navigated through use of a third party, like HF&H, to facilitate a pointed discussion on key points of the franchise agreement and document key issues and alternatives.
Modify Annual Rate Adjustment Methodology: Because the current annual rate adjustment process of using the ‘lowest cost Hauler’ does not provide any guardrails to protect the City from high inflation factors, operational inefficiencies, disposal costs at non-preferred locations, doublecompensation, and other operational issues that impact costs, HF&H recommends modifying the current annual rate adjustment process through the amendment to account for these possibilities. Some possibilities could include linking labor cost increases to local collective bargaining agreements or inflating expense categories based on regional and classification specific CPI indices. HF&H would be happy to discuss with the City the alternative rate setting methodologies used in other jurisdictions and discuss the pros and cons of those alternative methodologies.
Acceptable Disposal Location Designations: Because the current franchise agreement does not state which landfill the solid waste material should be delivered, the Haulers may choose where to bring the material. This may increase the cost of delivery (additional fuel and labor time), and due to the current annual rate adjustment process, increased costs will directly flow to the rate payers. HF&H recommends designating the disposal facilities in the franchise agreements to ensures material flow is managed and predictable.
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Managing Tomorrow’s Resources Today
Rosene Nguyen
April 17, 2024
Additionally, HF&H recommends that the new rate adjustment methodology calculate the compensation for disposal and organics pre-processing and delivery based on a build-up of tons multiplied by the rate at the destination facility. The ‘clean material’ rate at the City’s compost facility should be used for organics because the Haulers are being compensated to pre-process material to the facility’s standards. If the City’s compost facility enacts a separate charge for contaminated loads, as recommended above, the Haulers would be responsible for covering the additional cost if the organic material does not meet contamination standards.
4. Transfer / Organics Pre-Processing Rate Benchmarking: Because Gilton Resource Recovery and Gilton Solid Waste are affiliated parties, HF&H recommends the City review the transfer/preprocessing rate to ensure it is within the range of acceptable market rates. Additionally, HF&H recommends negotiating with the Haulers to tie the annual increase in this rate to an index or some other annual metric.
5. Future Fee Component Removals: Because certain City fees are for services that the Hauler is currently performing, the costs to perform these services will be reflected in the Hauler’s future financial information. Therefore, these fees should be removed in the upcoming annual rate adjustment process to not double-compensate the Hauler. A list of these fees is included below for reference:
a. Weekly Organics Collection
b. SB 1383 Collection Fee (For collection and processing of recyclable materials) c. Organics Waste Pre-Processing
6. Monthly/Quarterly Tonnage Reports: Because the reporting requirements may change with an amendment to the agreement, HF&H recommends the City review the current reporting template for additional modifications, as needed during the amendment process, and discuss these modifications with the Haulers
7. Detailed General Ledger Review: HF&H’s review of selected general ledger accounts did not yield expenditures that were unallowable in nature. However, certain business-related decisions and practices that are at the discretion of the company (e.g., increasing driver wages to incentivize tenure, attending multiple instead of few industry conferences, purchasing additional IT software/security) will affect the City’s rate payers and the City has no influence on or ability to veto these expenses. A revision to the annual rate adjustment process that places a cap on general and administrative expenses, or limits specific categories of expenses, can provide the City with a general enforcement mechanism while allowing the Haulers the opportunity to make these business decisions at their discretion.
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Managing Tomorrow’s Resources Today
Rosene Nguyen
April 17, 2024
CONCLUSION
HF&H reviewed the annual rate adjustment process, benchmarked the current programmatic costs and operating statistics, examined the current transfer, disposal, and pre-processing arrangements, and checked general and administrative expenses for reasonableness. HF&H recommends amending and restating the franchise agreement to modify the current rate adjustment methodology to align annual cost adjustments with indices or other third-party sources, include disposal and pre-processing guardrails to direct the flow of and quality of materials, and remove future fee components in the next year’s rates to avoid double-compensation.
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ATTACHMENT A-1:
BERTOLOTTI BULKY PROGRAM STATISTICS
A B
Account Information
1 Customer Annual Collections 2,343 NONE
Labor Information
2 # of route/hourly personnel 2 NONE
3 # of spare personnel 0
4 # of salaried personnel 0
5 Total labor hours/year 2080
A B
# of routes per
6 ONE ROUTE 2 DAYS A WEEK Weekday 1 NONE
7 Saturday
8 Sunday
# of persons/route per
9 Weekday 2
10 Saturday
11 Sunday
# of route hours/day/route per
12 Weekday 20
13 Saturday
14 Sunday
# of route hours/year per
15 Weekday 2080 NONE
16 Saturday 0 0
17 Sunday 0 0
18 Total 2080 0
19 # of FTE routes 1 0
Vehicle Information
20 # of regular collection vehicles 2
21 # of spare collection vehicles
22 Total # of collection vehicles 2
Tonnage Information (annual)
23 Direct Haul
24 Transfer
25 Solid Waste Disposed 0 0
26 Recyclable materials
27 Organic materials
28 Total 0 0
29 Tonnage Disposed
30 Projected Processing Residue %
Pulls = pull and return etc.
Full Time Equivalent (FTE) = 40 hours per week, 2,080 hours per year
STATISTICAL & OPERATIONAL DATA
Modesto
Residential
Bulky
Commercial
Bulky
Residential
Bulky
Commercial
Bulky
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ATTACHMENT A-2:
BERTOLOTTI BULKY PROGRAM COSTS
Expenses
Wages 68,640 NONE
Benefits 18,139
OTHER P/R TAX, W/C INS, UNIFORMS 19,434
Total Labor Related Costs 106,213 -
Fuel 14,300 NONE
Vehicle Related Costs R&M 9,600
Depreciation 62,000
Other Direct Costs LIABILITY INS 2,450
Total Direct Costs 194,563 -
Allocated Costs - Labor, Vehicle & Other Costs
General & Administrative 12,000 NONE
Vehicle & Container Maintenance
12,000 -
Total Annual Cost of Operations 206,563 -
Pass Through Costs
Disposal 65,007 NONE
Transfer 14,402
Interest
Total Pass Through Costs 79,409
Total Contractor Cost before City Fees 285,972 -
Residential Bulky
Collection
Commercial
Bulky Collection
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ATTACHMENT B-1:
GILTON BULKY PROGRAM STATISTICS
A B
Account Information
1 Customer Annual Collections 14712
Labor Information
2 # of route/hourly personnel 3.2937
3 # of spare personnel
4 # of salaried personnel
5 Total labor hours/year 6851.01
A B
# of routes per
6 Weekday
7 Saturday
8 Sunday
# of persons/route per
9 Weekday
10 Saturday
11 Sunday
# of route hours/day/route per
12 Weekday 0
13 Saturday
14 Sunday
# of route hours/year per
15 Weekday 0 0
16 Saturday 0 0
17 Sunday 0 0
18 Total 0 0
19 # of FTE routes 0 0
Vehicle Information
20 # of regular collection vehicles 1.96
21 # of spare collection vehicles
22 Total # of collection vehicles 1.96
Tonnage Information (annual)
23 Direct Haul
24 Transfer 2408.65
25 Solid Waste Disposed 2408.65 0
26 Recyclable materials
27 Organic materials
28 Total 2408.65 0
29 Tonnage Disposed 2408.65
30 Projected Processing Residue %
STATISTICAL & OPERATIONAL DATA
Modesto
Residential
Bulky
Commercial
Bulky
Residential
Bulky
Commercial
Bulky
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ATTACHMENT B-2:
GILTON BULKY PROGRAM COSTS
Expenses
Wages 218,446
Benefits 100,315
Other (Please List) Laundry 1,108
Total Labor Related Costs 319,869 -
Fuel 71,682
Vehicle Related Costs 50,016
Depreciation 53,240
Other Direct Costs 7,736
Total Direct Costs 502,543 -
Allocated Costs - Labor, Vehicle & Other Costs
General & Administrative -
Vehicle & Container Maintenance 99,903
99,903 -
Total Annual Cost of Operations 602,446 -
Pass Through Costs
Disposal 124,106
Transfer 62,931
Interest
Total Pass Through Costs 187,037 -
Total Contractor Cost before City Fees 789,483 -
Residential Bulky
Collection
Commercial
Bulky Collection
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ATTACHMENT C-1:
BERTOLOTTI EXPENSE LINE ITEM DESCRIPTIONS
Expense Line Item
(Modesto Annual Rate Application
Expense Line Item
(Per Financial Statements) Expense Line Item Description Direct Costs:
Wages: Supervisor Wages, Salaries and Wages Salaries and wages for Bertolotti Modesto (BMDI) drivers and mechanics Other Payroll Expenses:
Comp Insurance Workmen's Comp. Workers comp insurance costs for drivers and mechanics Group Insurance Medical / Group Ins. Medical insurance cost for BMDI drivers and mechanics Payroll Taxes Payroll Taxes Payroll taxes for BMDI drivers and mechanics Profit Sharing Profit Sharing Profit sharing for 401K BMDI drivers and mechanics Truck Expenses:
Depreciation Depreciation Depreciation for BMDI fixed assets Fuel Fuel, Oil, & Lube Fuel costs for BMDI trucks
Licenses Licenses / DMV City business licenses and DMV costs for BMDI Repairs Repairs & Maint. All R&M costs (except for fuel and tires) for BMDI trucks/equipment Tires Tires Tires costs for BMDI trucks
Vehicle/Liab Insurance Vehicle Insurance Liability/Physical damage coverage for BMDI vehicles Other Operating Expenses:
Bulky Item Disposal Fee Bulky Item Disposal Fee Disposal fee for Bulky items Green Waste Cleaning Green Waste Cleaning Cleaning costs for sorting and cleaning of organics Green Waste Hauling Green Waste Hauling Hauling costs for organics Green Waste Tip Fee Green Waste Tip Fee Tip fee for organics Laundry Laundry & Uniforms Uniform costs for BMDI employees Transfer Station fee Transfer Fees Hauling fees charged by Bertolotti Transfer Station G&A Expenses:
Accounting Accounting Services Costs paid to outside CPA for audit, financials and tax return prep Advertising Advertising Earth Day 2023 booth and supplies Advertising paid to City Advertising Paid to City Modesto billed advertising fee Bad Debts Bad Debts Write-offs of uncollectible receivables Bank Charges Bank Charges Bank servicing and credit card processing fees City Billing Fees City Billing Fees Modesto billing fees City Pollution Insurance City Pollution Insurance Bertolotti's portion of Modesto's pollution policy Computer Exp Computer / Data Process. Desktop support from outside IT consultant and small computer items Depreciation & Amort. Depreciation Depreciation of fixed assets Employee Benefits (Medical/Group Ins.) Medical/Group Ins. Medical insurance for BMDI office employees Indirect Liability insurance Indirect Liability Insurance General liability coverage Insurance (Workmen's Comp Ins) Workmen's Comp. Ins. Workers comp insurance for BMDI office employees Office Supplies Office Supplies Small Office supplies for BMDI (paper, pens, etc) Other Taxes Other Taxes and Licenses Misc taxes and licenses for BMDI (annual SOS filing, business license) Outside Services/Security Outside Services Outside temps Payroll Taxes Payroll Taxes Payroll taxes for BMDI office employees Postage Postage General postage and freight
Professional Fees/Services Professional Services
Legal costs (corporate minutes, employment liability assessment, defense costs)
Profit Sharing (Def Comp) Profit Sharing Profit sharing for office employees Property Taxes Property Taxes Real and personal property taxes Rent Rent Office and equipment rent
Salaries Salaries & Wages Salaries and wages for BMDI office employees Security Security 3 rotating security guards
Telephone Telephone VOIP Costs, Cell Phones, Radios, Fiber Internet Travel & Enter Meals & Entertainment Travel, meals, and entertainment (conventions, meals for office) Utilities Utilities BMDI utilities (TID, PGE)
Total G&A Exp:
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ATTACHMENT C-2:
GILTON EXPENSE LINE ITEM DESCRIPTION
Expense Line Item
(Modesto Annual Rate Application
Expense Line Item
(Per Financial Statements) Expense Line Item Description Direct Costs:
Wages: Wages
GROSS PAY FOR NON-ADMINISTRATIVE AND NON-MANAGEMENT INCLUDING REGULAR, OVERTIME,
VACATION, SICK, PTO AND HOLIDAY PAY (EXCLUDES SHOP)
Other Payroll Expenses:
Comp Insurance Compensation Insurance
WORKERS COMPENSATION INSURANCE PAID/ACCRUED DURING THE FISCAL YEAR FOR NON-ADMIN AND
NON-MANAGEMENT STAFF
Group Insurance Group Insurance
MEDICAL, DENTAL AND VISION PAYMENTS MADE TO INSURANCE PROVIDERS AS WELL AS SELF-INSURED
PLANS ON BEHALF OF NON-ADMIN, NON-MANAGEMENT STAFF
Payroll Taxes Payroll Taxes
EMPLOYERS SHARE OF SOCIAL SECURITY, MEDICARE, FEDERAL UNEMPLOYMENT INSURANCE, CA STATE
UNEMPLOYMENT INSURANCE AND EMPLOYER TRAINING TAX
Profit Sharing Profit Sharing EMPLOYER MATCH OF SECTION 401 (k) PAYMENTS FOR EMPLOYEE RETIREMENT PLAN Truck Expenses:
Depreciation Depreciation
ANNUAL STRAIGHT-LINE COST OF HAULER'S COLLECTION VEHICLES AND TRAILERS, E.G. AUTOMATED, FRONT LOADER, ROLL-OFF, BULKY ETC.
Fuel Fuel COST OF GAS AND DIESEL EXPENSE RELATED TO HAULER COLLECTION VEHICLES Licenses Licenses
COST OF COLLECTION VEHICLE RELATED FEDERAL AND STATE TAXES, LICENSING, PERMITTING AND
REGISTRATION FOR BOTH INITIAL PURCHASE AND RENEWALS
Repairs Repairs COLLECTION VEHICLE RELATED REPAIRS COSTS INCLUDING OIL, GREASE AND FLUIDS (PARTS AND LABOR) Tires Tires PURCHASE, INSTALLATION AND/OR REPAIR OF HAULER COLLECTION VEHICLE TIRES Vehicle/Liab Insurance Vehicle // Liability Insurance COST TO INSURE HAULER COLLECTION VEHICLES INCLUDING PROPERTY AND VEHICLE RELATED LIABILITY Other Equipment Expenses:
Depreciation Depreciation
DEPRECIATION ON CONTAINERS, LEASEHOLD IMPROVEMENTS AND OFFICE FURNITURE, FIXTURES AND
EQUIPMENT
Other Operating Expenses:
Laundry Laundry LAUNDERED UNIFORMS, MATS, TOWELS
Supplies Supplies CLEANING, JANITORIAL, DRIVER SUPPLIES, AND OTHER MISCELLANEOUS SUPPLIES Transfer Station fee Transfer Station Fee TIPPING FEE AND PROCESSING FEE PAID TO TRANSFER STATION Indirect Costs:
Officer Salaries
Shop Expense Shop Expense
ALL NON-SPECIFIC SHOP OVERHEAD (E.G. WAGES, REPAIRS, FUEL, WC, LAUNDRY, INSURANCE, SUPPLIES, ETC. NOT DIRECTLY ALLOCATED)
G&A Expenses:
Accounting Accounting COST PAID TO EXTERNAL AUDITORS, ACCOUNTANTS AND CONSULTANTS Advertising Advertising GENERAL PROMOTIONAL ITEMS
Bad Debts Bad Debts UNPAID AND UNCOLLECTABLE CUSTOMER BILLS REMOVED FROM ACCOUNTS RECEIVABLE Bank Charges Bank Charges BANK SERVICE CHARGES AND CREDIT CARD AND ELECTRONIC PAYMENT MERCHANT FEES Cash O/S Cash Over / Short MISC. CASH/OVER SHORT FROM CASH DRAWER City Billing Fees Billing Expenses
COST PAID TO THE CITY OF MODESTO FOR BILLING/COLLECTIONS (CITY WITHHOLDS THIS FROM AMOUNT
PAID TO HAULER)
Community Education/Support Public Education Costs INVOICES FROM THE CITY OF MODESTO FOR PUBLIC EDUCATION Computer Exp Computer Expenses
SERVER HARDWARE AND SOFTWARE LICENSING AND MAINTENANCE, REPORT DESIGN, DATA STORAGE,
COMPUTER AND NETWORK RELATED HARDWARE AND SOFTWARE
Contributions Contributions INDUSTRY RELATED NOT-FOR -PROFIT CONTRIBUTIONS Depreciation & Amort. Depreciation and Amortization ANNUAL STRAIGHT-LINE COST OF SUPPORT VEHICLES AND AMORTIZATION OF LOAN FEES Employee Safety Exp Employee Safety Expenses LITERATURE, TRAINING, SAFETY EVENTS AND INCENTIVES Insurance (Workmen's Comp Ins) Insurance HEALTH, DENTAL, VISION AND LIFE INSURANCE, WORKERS COMPENSATION Office Supplies Office Supplies
COPY PAPER, STAPLES, PAPER CLIPS, PENS, CALCULATOR TAPE, OTHER SMALL OFFICE ITEMS, 10-KEY CALCULATORS ETC.)
Other Taxes Other Taxes EMISSIONS COMPLIANCE, PCORI TAX, CITY OF MODESTO ANNUAL BUSINESS LICENSE Outside Services/Security Outside Services FIRE AND SECURITY ALARM SERVICES, PEST CONTROL AND, VEHICLE FUEL SERVICING FEES Payroll Taxes Payroll Taxes
EMPLOYERS SHARE OF SOCIAL SECURITY, MEDICARE, FEDERAL UNEMPLOYMENT INSURANCE, CA STATE
UNEMPLOYMENT INSURANCE AND EMPLOYER TRAINING TAX
Penalties Penalties LATE FEES AND OTHER PENALTIES
Permits/Licenses Permits STATE OF CALIFORNIA MOTOR CARRIER PERMIT FEE Postage Postage COST OF POSTAGE, POSTAGE EQUIPMENT LEASE, MAILING SERVICE AND POSTAGE SUPPLIES Professional Fees/Services Professional Fees LEGAL FEES, DIRECT PAYMENTS TO MEDICAL FACILITIES, 3RD PARTY ADMIN FEES, BROKER FEES Profit Sharing (Def Comp) Profit Sharing EMPLOYER MATCH OF SECTION 401 (k) PAYMENTS FOR EMPLOYEE RETIREMENT PLAN (ADMIN/MGMT) Property Taxes Property Taxes
STANISLAUS COUNTY UNSECURED PROPERTY TAX FOR OPERATING EQUIPMENT (E.G. CONTAINERS) USED
BY THE CITY OF MODESTO
Rent Rent OFFICE LEASE AND/OR TEMPORARY EQUIPMENT RENTALS Repairs (Repair & Maintenance) Repairs REPAIR SERVICES INCLUDING PARTS AND LABOR RELATED TO THE BUILDINGS AND GROUNDS Salaries Salaries
GROSS PAY FOR ADMINISTRATIVE SUPPORT, CSR, IT AND MANAGEMENT INCLUDING SALARY, VACATION,
SICK, PTO AND HOLIDAY PAY
Subscriptions (& Dues) Subscriptions INDUSTRY RELATED MEMBERSHIPS DUES AND FEES Telephone Telephone
CELL PHONE, TABLETS GPS SERVICES, DRIVER/FLEET MANAGEMENT, ANALOG LAND LINES, DEDICATED
FIBER/INTERNET, VOIP PHONE SYSTEM, FIREWALL
Travel & Enter Travel & Entertainment BUSINESS RELATED TRAVEL AND ACCOMPANYING EXPENSES (DOES NOT CONTAIN ENTERTAINMENT) Utilities Utilities WATER, SEWER, GARBAGE, NATURAL GAS, ELECTRICITY FOR OFFICES AND SHOP Vehicle Exp Vehicle Expenses
FUEL, REPAIRS AND MAINTENANCE, TIRES, LICENSING/REGISTRATION AND GENERAL UPKEEP OF SUPPORT
VEHICLES
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California Levine Act Disclosure
California Government Code Section 84308, also known as the "Levine Act", prohibits City “officers” from participating in any action related to a license, permit, or other entitlement for use (a “proceeding”) if such member accepts, solicits, or directs political contributions from a party to the proceeding or their agent totaling more than $500 while the proceeding is pending before the agency, and for twelve (12) months following the date a decision concerning the proceeding has been made. The Levine Act also requires disclosure of such contribution by a party to the proceeding.
Section 84308(a)(4) of the Levine Act defines an "officer" as follows: “Officer” means any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elective office in an agency. The term “officer” is further defined 2 Cal. Code Regs. Section 18438.1, which states:
An officer of an agency includes only those persons who make, participate in making, or in any way attempt to use their official position to influence a decision in the license, permit, or entitlement for use proceeding, or who exercise authority or budgetary control over the agency of officers who may do so, and:
(1) Serve in an elected position, including an official appointed to an elected position due to an interim vacancy or an election otherwise canceled because the official was the sole candidate for the position; (2) Serve as a member of a board or commission;
(3) Serve as the chief executive of a state agency, or county, city or district of any kind; or (4)Have decision making authority with respect to the proceeding involving a license, permit, or other entitlement for use and is also a candidate for elected office or has been a candidate for elective office in the 12 months prior to the proceeding.
A list of Modesto City Council Board Members can be found online at: Modesto City Council https://modestogov.com/706/Council-Members (modestogov.com). The party making this certification is responsible for determining whether a recipient of a political contribution is a City officer prior to answering the following questions:
1. Have you, your company, or any agent on behalf of you or your company, made any political contributions of more than $500 to any City officer, in the twelve (12) months preceding the date of the submission of your proposals or the anticipated date of any Council action related to this contract?
___ YES If yes, please identify the Councilmember(s):
___ NO
2. Do you, or your company, or any agent on behalf of you or your company, anticipate or plan to make any political contribution of more than $500 to any City officer in the twelve (12) months following any Council action related to this contract?
___ YES If yes, please identify the Councilmember(s):
___ NO
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Answering YES to either of the questions above does not preclude the City of Modesto from awarding a contract to your firm or taking any subsequent action related to the contract. It may, however, preclude the identified City officer from participating in any actions related to such contract.
HEREBY CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT.
_________________ _____________________________
Date Signature of authorized individual
_____________________________
Company/Applicant Name
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California Levine Act Disclosure
California Government Code Section 84308, also known as the "Levine Act", prohibits City “officers” from participating in any action related to a license, permit, or other entitlement for use (a “proceeding”) if such member accepts, solicits, or directs political contributions from a party to the proceeding or their agent totaling more than $500 while the proceeding is pending before the agency, and for twelve (12) months following the date a decision concerning the proceeding has been made. The Levine Act also requires disclosure of such contribution by a party to the proceeding.
Section 84308(a)(4) of the Levine Act defines an "officer" as follows: “Officer” means any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elective office in an agency. The term “officer” is further defined 2 Cal. Code Regs. Section 18438.1, which states:
An officer of an agency includes only those persons who make, participate in making, or in any way attempt to use their official position to influence a decision in the license, permit, or entitlement for use proceeding, or who exercise authority or budgetary control over the agency of officers who may do so, and:
(1) Serve in an elected position, including an official appointed to an elected position due to an interim vacancy or an election otherwise canceled because the official was the sole candidate for the position; (2) Serve as a member of a board or commission;
(3) Serve as the chief executive of a state agency, or county, city or district of any kind; or (4)Have decision making authority with respect to the proceeding involving a license, permit, or other entitlement for use and is also a candidate for elected office or has been a candidate for elective office in the 12 months prior to the proceeding.
A list of Modesto City Council Board Members can be found online at: Modesto City Council https://modestogov.com/706/Council-Members (modestogov.com). The party making this certification is responsible for determining whether a recipient of a political contribution is a City officer prior to answering the following questions:
1. Have you, your company, or any agent on behalf of you or your company, made any political contributions of more than $500 to any City officer, in the twelve (12) months preceding the date of the submission of your proposals or the anticipated date of any Council action related to this contract?
___ YES If yes, please identify the Councilmember(s):
___ NO
2. Do you, or your company, or any agent on behalf of you or your company, anticipate or plan to make any political contribution of more than $500 to any City officer in the twelve (12) months following any Council action related to this contract?
___ YES If yes, please identify the Councilmember(s):
___ NO
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Answering YES to either of the questions above does not preclude the City of Modesto from awarding a contract to your firm or taking any subsequent action related to the contract. It may, however, preclude the identified City officer from participating in any actions related to such contract.
HEREBY CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT.
_________________ _____________________________
Date Signature of authorized individual
_____________________________
Company/Applicant Name
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