14 - Laserfiche WebLink

"deficits." Likewise if revenues are more then anticipated and/or if expenditures were less then projected, a credit will be made to future years that minimize the need for an adjustment in a specific cost center or reserve. For the rate period beginning in 2004, both revenues and expenditures were less then projected. However, the revenue shortfall was in excess of the expenditures savings which resulted in an operating deficit of approximately $2.5 million dollars that is subject to recapture from future service rates. In addition to the above, the refuse and recycling business has been volatile and subject to significant price fluctuations for recyclable materials, increased landfill costs, and increased regulatory costs including fees. Finally, the most recent downturn in the economy has resulted in significant reductions in commercial revenues, particularly construction related, that has impacted total revenues. It should also be noted that rate adjustments are typically approved for a period of three years which would have resulted in an adjustment in 2007. However, due to the time required to develop the recycling program and the collection of data to address the rate adjustment for existing services, no rate adjustment occurred until June 2008. As indicated at the time, that rate adjustment was interim and approved to address a number of known financial issues that required more immediate funding. As a result, revenue projections made in 2004 to cover the years through 2007, were unable to take into account a significant number of cost increases that occurred from 2007 through the current time. Staff and the Subcommittee have reviewed the status of these reserves and cost centers and determined that at this time, in accordance with the terms of the franchise, a rate adjustment is appropriate. A summary of the PGS related 13% residential increase is as follows: 74% to address governmental regulatory costs (none of which are assessed by the City) associated with the refuse operations. Currently, PGS is assessed regulatory per ton landfill usage fees from a number of governmental agencies, including as the Alameda County Waste Management Authority, Alameda County Measure D, the State of California, etc. Since 2007, these fees have increased from $15.26/ton to $16.26/ton (6.5%). In addition, PGS estimates these fees, which are based in part on CPI formulas, will continue to increase over the next two years of this rate term. The rate adjustment to cover these fee increases represents a "pass through" to cover these costs. 1.2% to address dump fee related costs including recently adopted and projected increases at the Vasco Road Landfill. Since 2007, non regulatory costs at the Vasco Road landfill have increased from $14.63/ton to $18.27/ton (24.8%). In addition, PGS anticipates rates will increase by an additional 6% to 10% during this rate term. The rate adjustment to cover these fee increases represents a "pass through" to cover these costs. Page 4 of 9