HomeMy WebLinkAbout1994-121 Sanitary Rate IncreaseDecember 14, 1994
Honorable Mayor and city Council
Councillors Reid, Acklin, Administrator Almquist
Ashland Sanitary Rate Increase Request
The committee appointed by the Mayor met with Ashland Sanitary Service
representatives on December 12 to review their financial statements and their
justification for the proposed increase.
Findings:
1. The last increasewas approved bythe Council in July 1990 when rates were
increased $6.00 per can. $5.75 of this increase was designated for a
landfill closure fund administered byJackson County and 25¢ for Ashland
Sanitary Service.
The Portland Area CPI has risen 19.3% since July 1990 and the requested
increase of $1.20 on the $6.25 retained byAshland Sanitary for operations
represents a 19.2% increase. The overall increase requested on the $12.00
per can rate is 10%.
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As a result of the need to ~crease its recycling efforts and upgrade its
maintenance facility, Ashland Sanitary plans to expend some $365,000 in
capital improvements next year. This will result in an annual increase in
costs of $114,000,
The industry standard for return on total assets is 14.1%. In order to
allow for the additional expense of $114,000 and meet the industry
standard, total revenues will need to be increased by a net of $134,000
($150,000, less a projected 1% loss in overall revenues).
The recycling program is currently experiencing a loss of approximately
$130,000peryear, which is partially offset by profits for other garbage
operations, further justifying the need for the requested increase.
RECOMMENDATION:
After a review of the proposal, the committee recommends approval of the 10%
increase in rates requested by Ashland Sanitary Service.
The conlmittee also noted that an additional rate increase may be requested by
Ashland Sanitary in June 1995 after the final costs of closing the Valley View
landfill are refined and the new costs of the transfer of garbage to the Dry
Creek Landfill are known. There will also be a downward adjustment to the
monthly $5.75 per can Valley View closure component at that time.
ASHLAND SANITARY SERVICE RATE INCREASE JUSTIFICATION
The following calculations and justifications are intended to reflect additional expenditures
required by Ashland Sanitary Service, Inc. which can not be compensated for under the
existing rate structure. This informa!ion does not justify the current base rates. These
increases do not include additional costs to haul waste to either the D~y Creek or the
South Stage Landfills.
ANTICIPATED EXPENDITURES:
TOTAL COST
ANNUALCOST
1. Used Recycle Truck $45,000 $9,000
2. Two Compactor Trucks $200,000 $40,000
3. Replace Maintenance Shop $120,000 $15,000
4. Hazardous Waste Collection Program $15,000
5. Hire One New Recycle Employee $35,000
6. Annual Financial Audit (683 County Customers Only)
NOTE: Annual costs for trucks are based on five year loans,
Maintenance Shop is based on 30 year modgage.
ANNUAL TOTAL: $114,000
$5,000
ADJUST NET PROFIT TO iNDUSTRY STANDARD:
1993 Profit of $23,387 based on net fixed assets of $307,735 (Net Profit = 7.6%).
REFERENCE: Third pady audit supplied to Jackson County in June, 1994,
Standard Profit for privately held companies is approximately 14.1%.
REFERENCE: Jackson County Refuse Operators Rate of Return and Regulatory
Rate Setting Issues and Options, Deloitte & Touche, August, 1990.
ADDITIONAL PROFIT REQUIRED:
($307,735 X 0.141) ~ $23,387 ~ $20,004
NET ANNUALINCREASE REQUIRED:
$134,004
PER CAN RATE ADJUSTMENT FOR RESIDENTIAL CUSTOMERS:
CUSTOMER BASE:
Residential = 5354
Commercial = 642
REVENUE GENERATION:
Residential = 57%
Commercial = 43%
REFERENCE: 1993 Customer Service
Code for Ashland Sanitary Service.
REFERENCE: 1990 Rate increase
Documentation.
ASHLAND AND TALENT:
($134,000 x 0.57) / 5354 Customers / 12 months = $1.20 / Month.
ADJUSTED RATE = $12.00 + $1.20 = $13.20 / MONTH (10% INCREASE)
NOTE: Rate adjustment calculations are consistent with 1990 Rate Study.
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JACKSON COUNTY CUSTOMERS = 683 residential and commercial customers
outside of Ashland and Talent City Limits.
$1.20 + $5000 / 683 Customers / 12 months = $1.80 / Month
ADJUSTED RATE = $12.50 + $'1.80 = $'14.30 / MONTH ~14.4% INCREASE)
ADDITIONAL CHARGE FOR RURAL CUSTOMERS
Customers with pick up locations more than 30 yards from a public road will be
assessesd $0.60 per minute for the time required to drive from the public road to
the pick up point and back. Maximum charge: $5.001Month).
RATE ADJUSTMENT FOR 25 YARD DROP BOXES:
Current Rate = $138.00 / Box, including drop off and pickup, plus $10.00 / day rental.
PROPOSED RATE: INCREASE DISPOSAL RATE BY 10% AND ADD $75.00
DELIVERY AND PICKUP FEE.
ADJUSTED RATE = $138,(~(~ X 0,'10 + $78,00 = $227.00 (64% INCREASE)
Daily rental rate will not change.
NOTE: A comparable box supplied by Rogue Disposal Costs $265.25 plus $8.00 / day.
RATE ADJUSTMENTS FOR SPECIAL SERVICES SUCH AS 1.5 CUBIC YARD CONTAINERS
WILL BE INCREASED BY 10% CONSISTENT WITH THE PER CAN RATE ADJUSTMENT.
Page 2
Ashland Sanitary and Recycling
Commercial Container Rates
1 YARD CONTAINER
Holds seven 32-gallon cans
Once Weekly
Twice Weekly
Three Times
Four Times
Five Times
Every Day
Monthly Rates
OLD RATE
$61.00
$100.50
$140.00
$179.50
$219.00
$258.50
NEW RATE
$67.10
$110,55
$154.00
$197.45
$240.90
$284.35
1 1/2 YARD CONTAINER
Holds ten $2-gallon cans
Once Weekly
T~sce Weekly
Three Times
Four Times
Five Times
Every Day
Monthly Rates
OLD RATE
$68.00
$116.50
$161.00
$209.50
$255.00
$301.50
NEW RATE
$74.80
$128.15
$177.10
$230,45
$280,50
$331.65
2 YARD CONTAINER Monthly Rates
Holds fourteen 32-gallon cans OLD RATE NEW RATE
Once Weekly $87.00 $95,70
Twice Weekly $152.00 $167.20
Three Times $217.00 $238.70
Four Times $282.50 $310.75
Five Times $348.00 $382,80
EveryDay $412.00 $453.20
DROP BOXES
2S-Yard box
$152.00/load + $75 Deliver/Pickup Fee
Daily Rental = $10.00
10-Yard box (new service)
$60.00/load + $75 Deliver/Pickup Fee
Daily Rental = $10.00
Note: Rates are based on $6.00/Yard
Per Box Rates
OLD RATE NEW RATE
$138.00 $226.80
-- $135.00
COMPACTOR BOXES
1- to 4- Yard Rear Loader Box
Per Box Rates
OLD RATE NEW RATE
$19.40/Yard $21.40/Yard
15- to 25- Drop Box Compactor $11.00/Yard
Note: Per Box disposal fee depends on box size
$12.10/Yard +
$75.00/Pickup
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