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Home My WebLink AboutRes2012-070 Sponsored by: Hunt item CITY OF SEWARD, ALASKA RESOLUTION 2012 -070 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AMENDING THE GARBAGE TARIFF, INCREASING THE RESIDENTIAL RATE SCHEDULE BY APPROXIMATELY 25 %, ADDING BULKY ITEM PICKUP SERVICE AND LOCKABLE DUMPSTER LIDS, CREATING A MONTHLY CHARGE FOR THE RENT OR LEASE OF DUMPSTERS FROM THE CONTRACTOR, ENCOURAGING THE USE OF BEAR RESISTANT GARBAGE CANS, AND INCREASING ALL OTHER RATES BY AN AVERAGE OF 25% FOR 2013 AND PROVIDING FOR AUTOMATIC ANNUAL ADJUSTMENTS TO THE RATE SCHEDULE DURING THE TERM OF THE FRANCHISE AGREEMENT BEGINNING JANUARY 1, 2014 AT A RATE EQUAL TO 140% OF THE CONSUMER PRICE INDEX WHEREAS, following a recent Request for Proposals for the collection of solid waste, the Seward City Council passed Resolution 2012 -68 at a Special Council Meeting held on August 13, 2012, authorizing a franchise agreement ( "Agreement ") for the collection and disposal of garbage and refuse, with Alaska Waste — Kenai Peninsula, LLC, subject to approval by the Seward voters in an election to be held October 2, 2012; and fir.. WHEREAS, the Agreement establishes a Refuse Collection Rate Schedule ( "Rate Schedule ") which reflects the bid prices set forth in the response to the Request for Proposals, and is attached hereto and incorporated by reference; and WHEREAS, refuse rates were last adjusted January 1, 2011 with an across - the -board increase of 25 %, and prior to that, in accordance with Resolution 2004 -18 effective April 1, 2004; and WHEREAS, the proposed Rate Schedule increases the residential rates by approximately 25 %, adds bulky item pickup service and lockable dumpster lids, creates a monthly charge for the rent or lease of dumpsters from the contractor, encourages the use of bear resistant garbage cans, and increases all other rates by an average of 25 %; and WHEREAS, the Garbage Tariff is further amended to allow for automatic annual adjustments to the Rate Schedule during the term of the franchise agreement beginning January 1, 2014, in accordance with the bid prices set forth in response to the Request for Proposals, at a rate equal to 140% of the Consumer Price Index, without further action of the City Council. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: fi r... CITY OF SEWARD, ALASKA RESOLUTION 2012 -070 i Section 1. Effective January 1, 2013, the City of Seward garbage /refuse rates and mil charges as set forth in the Utility Tariff are deleted and replaced with the rates and charges attached hereto and incorporated herein by reference. Section 2. Effective January 1, 2014, the City of Seward garbage /refuse rates and charges as set forth in the Utility Tariff will be adjusted, and on each January 1 thereafter during the term of the Agreement, based on 140% of the Consumer Price Index -U all items, 1982- 1984 =100, for urban wage earners and clerical workers, Anchorage, Alaska area, as published by the U.S. Department of Labor, Bureau of Labor Statistics (Note: 1/1/2014 adjustment will be based on 2012 CPI data). This adjustment will be automatic without further action required by the Seward City Council. Section 3. This resolution shall take effect ten days following adoption and posting. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10 day of September, 2012. THE CITY OF SEWARD, ALASKA David Sea ar , Mayo .. j AYES: Valdatta, Bardarson, Keil, Shafer, Casagranda, Terry, Seaward NOES: None ABSENT: None ABSTAIN: None ATTEST: J iRa /`l /i a- A ( J s hanna Kinney, CMC ity Clerk (City Seal) e 4: 1 ' V Or" Sr ',� ® . ° 4 C> "• ,dip &IPOEI • ° i • S j EAL • • • � � ® ra • r i a ' i ,. e.. � ♦ei •v, �a' Council Agenda Statement Meeting Date: August 27, 2012 of sett, 9 Through: James Hunt, City Manager u �; ; ,`~�'o From: Kristin Erchinger, Finance Director yfiliti g Agenda Item: Garbage Tariff Amendment and Addition of Automatic Annual CPI Adjustments BACKGROUND & JUSTIFICATION: The City of Seward, through its Charter and its Code of Ordinances, provides for the collection and disposal of garbage and rubbish and holds a Certificate of Public Convenience and Necessity issued by the Regulatory Commission of Alaska for its refuse utility (Certificate U- 99 -22). Since at least the early 1970s, the City has utilized a private contractor to provide refuse services in Seward. The City Code requires that a franchise for a public utility be approved by a majority of electors in a regular City election. In response to a recent Request for Proposals, the City Council approved Resolution 2012 -68 at a Special Council Meeting on August 13, 2012, authorizing a franchise agreement ( "Franchise Agreement ") with Alaska Waste — Kenai Peninsula, LLC, subject to approval by the Seward voters in an election to be held on October 2, 2012. The Agreement is for seven years with an option to extend for up to three additional years. Refuse rates in Seward have been increased three times since 1991 (21 years). In 2002, the residential rate (for the first two standard containers, one pick -up per week) rose from $10.85 to $15.94 per month (47 %), and then to $17.22 per month in 2004 (8% increase), and to $21.53 per month in 2011 (25% increase). The recently- approved franchise agreement calls for a residential rate of $26.91 beginning January 1, 2013 (25% increase). Assuming the Franchise Agreement is approved, since 1991 rates will have increased a total of 148% reflecting an average annual increase in refuse rates of 7 %, or $0.76 per year. Since rates have only been amended three times in 21 years, rate increases resulted in "rate shock" because they were substantial increases necessitated by overall inflationary cost increases, plus the significant cost in the increase of fuel. To avoid rate shock — and to provide Seward residents with transparency about potential rates during the duration of this contract -- the Request for Proposals required the contractor to bid on future rate adjustments as a percentage of the annual Consumer Price Index ( "CPI ")'. In this way, prospective bidders would not be able to bid artificially low in order to win the contract, only to propose large rate adjustments in the future after securing the contract. This transparency enables to the customer to get a sense of what they can expect in the way of rate increases going forward, and allows contractors a level playing field in the bidding process. The CPI has increased an average of 2.559% from 1991 to 2011. The successful bid by Alaska Waste — Kenai Peninsula, LLC proposes annual rate adjustments equal to 140% of the CPI. It is not possible to predict the future price of a basket of goods; however, assuming that the average CPI increases at a rate similar to the past twenty years, refuse rates can be expected to increase by 3.58% per year (2.559% x 1.40). Over the seven -year life of the franchise agreement, it is reasonable to predict that rates will increase from $26.91 in 2013 to approximately $33.23 in 2019 (the first CPI - CITY OF SEWARD, ALASKA RESOLUTION 2012 - based increase will be January 1, 2014). This represents a total increase of $6.32 per month, or a cumulative increase of 23.5 %. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan: Page 11- Maintain a clean, litter -free community; 1. Page 14- Support ADF &G's Bear -Safe Community Program; Page 27- X Conduct rate studies on utilities as needed. 2. Strategic Plan: Page 18 - Promote a Safe Community X 3. Other (list): X INTENT: Adopt a new garbage tariff consistent with the new Franchise Agreement with Alaska Waste —Kenai Peninsula, LLC. Implement a new annual CPI adjustment in the Garbage Tariff which allows for automatic annual adjustments as approved in the new Franchise Agreement, without the need for further Council approval. ATTORNEY REVIEW: Yes X No FISCAL NOTE: The City Code requires that the City of Seward provide for refuse collection services either through the public works department or a contractor. This contract will not require the City to provide the services directly. The City collects a 3% franchise fee from the contractor for the use of City streets, alleys, etc. Approved by Finance Department: • RECOMMENDATION: Council approve Resolution 2012 — o _ , 0 adopting the Garbage Tariff, including automatic annual adjustments to the Rate Schedule based on 140% of the CPI. 'The Consumer Price Index all items, 1982 -1984 =100, for urban wage earners and clerical workers, Anchorage, Alaska, area, as published by the U.S. Department of Labor, Bureau of Labor Statistics.