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Home My WebLink About01 WASTE ADJUSTMENTS 06-21-04 AGENDA REPORT Agenda Item 1 Reviewed: ~ City Manager Finance Director MEETING DATE: JUNE 21,2004 FROM: WILLIAM A. HUSTON, CITY MANAGER PUBLIC WORKS DEPARTMENT TO: SUBJECT: APPROVAL OF RESIDENTIAL AND COMMERCIAL SOLID WASTE RATE ADJUSTMENTS AND ADOPTION OF RESOLUTION NO. 04- 43 PLACING ASSESSMENTS FOR RESIDENTIAL -SOLID WASTE COLLECTION ON THE 2004-2005 ORANGE COUNTY PROPERTY TAX ROLL SUMMARY The City's Solid Waste Franchise Agreement with Federal Disposal Service provides for the City to adjust Solid Waste Rates annually. Federal Disposal Service requested approval of rate adjustments for all customers pursuant to an increase in the Producer Price Index and Commercial Rate Adjustments insurance costs. Staff is recommending approval of the Producer Price Index (PPI) adjustment and an extraordinary adjustment to residential and commercial customers related to increased Workers Compensation Insurance costs. The residential rate will increase by $.33 to $13.41 per month and commercial bin rates will increase by 2.5%. Staff is also recommending the adoption of a policy related to future extraordinary rate adjustments. RECOMMENDATION Staff recommends that the City Council 1) approve residential and commercial solid waste rate adjustments related to the Producer Price Index and an extraordinary insurance cost adjustment to both residential and commercial rates and, 2) adopt Resolution No. 04-43 placing assessments for residential solid waste collection on the Orange County Property Tax Roll for fiscal year 2004-2005, and 3) adopt a policy of not considering retroactive cost recovery and require the submission of a request for extraordinary rate adjustment at the time that the expense is incurred by the franchisee. FISCAL IMPACT Commercial customers pay a 2% Franchise Fee which is collected by the hauler and then paid to the City. Annual Franchise Fee Revenue to the City is approximately $67,000. An increase in the commercial rate will result in increased Franchise Fees paid to the City. Commercial rate adjustments also affect City budgets. Staff estimates that the recommended rate adjustment will increase City solid waste costs by $2,000. BACKGROUND The Integrated Solid Waste Management Services Franchise Agreement with Federal Disposal Service (FDS) specifies that Solid Waste Collection Rates may be increased annually according to changes in the Producer Price Index. The Producer Price Index is a federal measure of the average change, over time, of the price received by domestic producers of goods and services. Being a final cost measure, the PPI cannot be broken into various cost components. The City's Solid Waste Contract accommodates this situation by separating the two major cost components associated with the provision of solid waste services; disposal costs and service related costs. The disposal component of the rates is only adjusted when the County's waste disposal fee is adjusted. Pursuant to the Orange County Waste Disposal Agreement, the current disposal rate is fixed at $22.00 per ton and will remain at that level until 2010. The service component is comprised of the various operational costs incurred by the hauler while providing waste collection services and is annually adjusted according to the annual increase in the PPI. The 2004 PPI adjustment, for residential and commercial rates, is summarized in the table below: Producer Price Index Annual Change Solid Waste Collection (PCU5621115621112) as of 12-31-02 132.5 Solid Waste Collection (PCU5621115621112) as of 12-31-03 135.3 Incremental Change % Change +2.8 +2.1% In addition to PPI adjustments, the contract contains provisions to adjust rates at any time for extraordinary services costs incurred by the hauler. The contract specifies that extraordinary adjustments are to be for the purpose of accommodating "unusual changes in the cost of providing service". Approval, denial or modification of extraordinary adjustments shall be made "in the City's sole judgment". The bid specifications for this contract did not allow rate adjustments during the first two years of the contract. Subsequently, rates were adjusted in 2002 and 2003. The table below summarizes cumulative effect of previous rate adjustments. Cumulative Rate Adjustments 2000 to 2003 Rate Type Oct 2000 Total 2003-2004 Rates Adjustments Rates Residential 12.17 7.5% 13.08 Commercial - 3yd. 3x a week 104.76 15.5% 121.04 Roll Off 87.23 29.3% 112.80 FDS RATE ADJUSTMENT REQUEST FOR FY04/05 FDS has requested both a PPI increase for residential and commercial rates and an extraordinary increase in commercial rates for higher than anticipated insurance cost increases. FDS is contractually entitled to an annual PPI adjustment to its service costs (excluding disposal costs) corresponding to the increase in the PPI for the preceding calendar year. The extraordinary rate adjustment by FDS is intended to reflect insurance premium cost increases for property, general liability, automobile and Worker's Compensation Insurance. FDS also requested an $83,964 adjustment to recover "retroactive" extraordinary insurance costs incurred since October 2003 that was not included in the 2003 rate adjustment. FDS proposed to allocate all extraordinary costs to commercial customers. The attached Exhibit A contains FDS' original rate adjustment request. The table below summarizes the total extraordinary request. Insurance Coverage Property, General Liability, Automobile Worker's compensation Retroactive Cost Recovery - Property, General Liability, Automobile Retroactive Cost Recovery - Worker's compensation Total Request Premium June '03 Current Total Annual Increase % Change Premium 151,200 82,435 120% 216,243 47,837 28% 35,877 68,765 168,407 From Dec 2003 to present From October 2003 to present 48,087 214,236 After a thorough staff review of the proposed adjustments and requests for additional detailed information, FDS withdrew their extraordinary request for all insurance costs with the exception of current Workers Compensation costs. FDS proposes to return at a later date with an amended request and additional information for these costs and other costs that were not included with this request. While the state has recently adopted reforms to the Workers Compensation law, it remains to be seen what effect on rates, if any, will result from these reforms. The attached newspaper articles (Exhibit D) indicate that premiums are likely to go down. To date, FDS has not received a formal notice of a rate reduction. Therefore, the adjustments proposed by FDS above reflect the current premium rates. FDS has provided written assurance that future rate adjustments will reflect any decrease in Worker's Compensation costs. In an effort to minimize the effect of any rate increase on residential customers, FDS proposes to allocate the extraordinary rate adjustment to commercial accounts only. The final extraordinary cost adjustments and allocations proposed by FDS are explained below along with the staff recommended adjustments. Type of Extraordinary Cost adjustment Residential cost allocation Extraordinary Worker's Comp Insurance Commercial cost allocation Extraordinary Worker's Comp Insurance Total Final FDS Staff Req uest Recommendation 0 15,945 47,837 31 ,892 47,837 47,837 A summary of final rate adjustments requested by FDS is provided below: Final Rate Adjustments ReQuested by FDS Type of Adjustment % Rate Increase . Residential 0 PPI Adjustment 0 Extraordinary insurance costs Total 1.6% None% 1.6% . Commercial. 0 PPI Adjustment 1.2% 0 Extraordinary Insurance Costs 1.9% Total 3.1% Current % Monthly $ Adjusted Total Total Service Monthly Adjustment Adjustment Monthly Annual annual Rate Rate Adjustment cost Single Family $13.08 1.6% $.21 $13.29 $2.52 $159.48 Automated Cart Commercial 3 yard bin 83.60 3.1% $2.59 $86.19 $31.02 $1,034.28 2 x per week DISCUSSION FDS is fully entitled to PPI adjustments pursuant to the Franchise Agreement and staff recommends the approval of the PPI adjustments for residential and commercial customers. The 1.6 % PPI residential rate adjustment is an increase of $.21 per month or $2.52 annually. For commercial customers, the PPI adjustment is 1.2% across all commercial rate categories. Staff has analyzed and confirmed the Workers Compensation Insurance costs that FDS is claiming in their request. FDS has provided no compelling reason to apply its extraordinary costs only to commercial accounts. The Franchise Agreement already provides a balanced methodology for allocating rate adjustments based on the proportional cost of providing residential and commercial service. Based on total contract revenue, FDS has estimated that commercial customers account for two-thirds of its revenue and residential customers account for the remaining one-third. Therefore, staff is recommending the approval of the extraordinary rate adjustment for Workers Compensation Insurance costs and applying the costs to residential and commercial rates pursuant to the methodology contained in the Franchise Agreement. The PPI adjustment recommended by staff for residential service will result in a 1.6% rate increase. Staff is recommending that one third of the extraordinary adjustment be allocated to residential rates resulting in an additional 1 % rate adjustment. The total residential rate adjustment would be 2.6%. The recommended commercial rate adjustment would be 2.5% which includes a 1.2% PPI adjustment and a 1.3% extraordinary adjustment. Roll off rates and other service rates (with the exception of the roll-off tipping rate) will increase by the full PPI rate, which is 2.1 %. The staff recommended rates are summarized below. Additional detail is included with Exhibit B. Staff Recommended Rate Adjustments Current % Monthly $ Adjusted Total Total Service Monthly Adjustment Adjustment Monthly Annual annual Rate Rate Adjustment cost Single Family $13.08 2.6% $.33 $13.41 $3.96 $160.92 Automated Cart Commercial 3 yard bin 83.60 2.5% $2.08 $85.68 $24.96 $1,028.16 2 x per week While FDS has withdrawn their request for a retroactive adjustment, staff desires the City Council to provide policy direction regarding retroactive cost recovery. The Franchise Agreement allows the hauler to request City consideration of extraordinary adjustments at any time, not just with the annual adjustment. To avoid requesting a retroactive adjustment, FDS could have requested an adjustment at the time the cost was realized. Staff is concerned with establishing a precedent that could affect other service and maintenance contracts such as the City's contract for tree trimming, custodial, heating, ventilation and air conditioning and landscape maintenance. Approval of retroactive adjustments would invite adjustment requests for a wide variety of service costs making contract costs highly volatile and unpredictable over the life of the contract. Therefore, staff is recommending that requests for retroactive cost recovery be disallowed. In conclusion, staff recommends approval of a rate adjustment with a PPI adjustment for both residential and commercial customers and a proportional allocation of the extraordinary insurance costs to residential and commercial customers. Staff also recommends the company be required, in the future, to submit future extraordinary requests to the City at the time that they occur and that requests for retroactive cost recovery be disallowed. The approval of the PPI and insurance related extraordinary adjustments will increase FDS' total annual residential and commercial compensation by a minimum of $110,000 over the 2003-04 rate years. Staff estimates that the total annual value of the residential and commercial services portion of the Franchise Agreement will be approximately $4.8 million. This represents an increase of approximately $600,000 from the original award of $4.2 million in 2000. ~~ Director of Public Works/City Engineer TDS:JM/ccg:FDS Rate Adjustment 6-21-04.doc Attachments: Resolution 04-43 Exhibit AORIGINAL FDS REQUEST Exhibit B STAFF RECOMMENDATION Exhibit C SOLID WASTE RATE SURVEY Exhibit D NEWSPAPER ARTICLES ON WC INSURANCE RESOLUTION NO. 04-43 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA ADOPTED PURSUANT TO THE PROVISIONS OF SECTION 5473 ET SEa. OF THE HEALTH AND SAFETY CODE OF THE STATE OF CALIFORNIA, APPROVING AND ADOPTING A REPORT RELATIVE TO PARCELS OF REAL PROPERTY RECEIVING SOLID WASTE COLLECTION SERVICES, DETERMINING THE CHARGES FOR SOLID WASTE COLLECTION TO BE ASSESSED AGAINST THE RESPECTIVE LOTS OR PARCELS OF LAND AS THEY APPEAR ON THE CURRENT ASSESSMENT ROLL The City Council of the City of Tustin does hereby resolve as follows: I. Proceedings were duly instituted, conducted and completed pursuant to provisions of Section 5473 et seq. of the Health and Safety Code of the State of California. A. A written report dated June 21, 2004 containing a description of each parcel of real property receiving solid waste collection services and facilities and the amount of the charge proposed to be levied upon each parcel for the collection of solid waste for the Fiscal Year 2004-2005 was prepared and filed with the City Clerk of the City of Tustin on June 21, 2004. B. That a Public Hearing to hear and consider all objections or protests, if any, to the aforesaid report and proposed charges was duly set for May 17, 2004 at 7:00 o'clock p.m. and continued to June 21, 2004 at 7:00 o'clock p.m. in the Council Chamber of the City of Tustin at 300 Centennial Way, Tustin, California. C. Said hearing was duly noticed as required by law, by publication once each week for two successive weeks on May 6, 2004 and May 13, 2004 in the Tustin News, a newspaper of general circulation in the City of Tustin. D. At the foresaid time and place the duly noticed hearing was held and all persons who were present were heard and all comments, objections, and protests to the aforesaid report and proposed charges were duly heard and considered by the City Council. E. The charges proposed in the aforesaid report are fair and reasonable, are commensurate with the services provided, and the charge therefore should properly be collected on the tax roll in the same manner, by the same persons and at the same time as, together with and not separately from, general taxes. Resolution No. 04-43 Page 2 II. The City Council hereby elects to have the charges set forth in the aforesaid report collected on the tax roll in the same manner, by the same persons, at the same time as, and together with and not separately from its general taxes, and hereby authorizes that such charges be collected on the tax roll, as all prescribed to the provisions of Health and Safety Code Section 5473 et seq. III. The resolution shall be effective following its adoption by a two-thirds vote of the members of the City Council and shall remain in force and effect and said charges shall be collected in the manner as foresaid for the year 2004-2005 and for each subsequent year as authorized by the hereinabove-referenced section of the Health and Safety Code. IV. The City Clerk is authorized and directed to forthwith file a certified copy of this resolution with the Auditor of the County of Orange, together with a copy of the hereinabove described report, and a statement endorsed thereon over her signature that the said report has been finally adopted by the City Council of the City of Tustin. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin, California, held on the 21st day of June, 2004. Tony Kawashima, Mayor ATTEST: City Clerk J ~ RESOLUTION CERTIFICATION STATE OF CALIFORNIA) COUNTY OF ORANGE) ss CITY OF TUSTIN ) RESOLUTION NO. 04-73 Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, does hereby certify that the whole number of the members of the City Council is five; that the above and foregoing resolution was passed and adopted at a regular meeting of the City Council held on the day of , by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: Pamela Stoker, City Clerk EXHIBIT A ORIGINAL FDS RATE ADJUSTMENT REQUEST Federal Disposal Service F05 ~ ev \ S c..,A EXHIBIT SA Proposed Residential Rates PPI Adjustment Customers Billed By the City on Tax Roll Step One: Determine disposal expense and service revenue as a percent of actual rate revenue Revenue Component Annual Amount (a) Percent of Rate Revenue Single Family Rate Revenue 2003 Actual Revenue $ 1,561,759 100.0% Less:Single Family Refuse Disposal Expense $ 368,016 23.6% Sinale Familv Service Revenue $ 1,193,743 76.4% Step Two: Calculate percentage change in adjustment factors Adjustment Factor Old New Percent ChanQe Disposal Gate Fee per Ton $ 22.00 $ 22.00 0.0% Producer Price Index 132.5 135.3 2.1% Step Three: Calculate weighted percentage change in single family rates Components of Actual Revenue Component Weicht Ib) Percent Change (c) WeiQhted Rate Adjustment Refuse Disposal 23.6% 0.0% 0.0% Service 76.4% 2.1% 1.6% Total 100.0% N/A 1.6% Step Four: Apply weighted percentage change to single family rates Service Current Monthly Rate (d) Weighted Rate Adjustment (e) Adjusted Monthly Rate Single Family-Automated Cart $ 13.08 1.6% $13.29 Revised6/16/2004 Federal Disposal Service EXHIBIT 5B Proposed Commercial Rates PPI and Extraordinary Worker's Compensation Insurance Adjustment Customer Billed By the Company (Except Rolloff) Step One: Deduct franchise fees from gross rate revenue Revenue Component (including Franchise Fees) Annual Amount (a) Percent of Rate Revenue Including Franchise Fees Actual Gross Commercial and MFR Rate Revenue 2003 Actual Revenue $ 2,606,849 100.0% Actual Commercial and MFR Franchise Fees 2003 Actual Fran Fee $ 67,199 2.6% Actual Gross Commercial and MFR Rate Revenue Net of Franchise Fees $ 2,539,650 97.4% Step Two: Determine disposal expense, Extraordinary Ins. and service revenue percentage of total actual rate revenue Revenue Component (net of Franchise Fees) Annual Amount (a) Percent of Rate Revenue Net of Franchise Fees Actual Commercial and MFR Bin revenue Net of Fran Fees (b) 2003 rate adj estimate $ 2,539,650 100.0% Less: Actual Commercial and MFR Disposal $ 948,574 37.4% Less: Worker's Compensation Ins (Actual Cost) $ 168,406 6.6% Actual Commercial and MFR Bin Service Revenue $ 1,422,670 56.0% Step Three: Calculated percentage change in adjustment factors Adjustment Factor Old New Percent Change Disposal Gate Fee per Ton $ 22.00 $ 22.00 0.0% Worker's Compensation Insurance $ 168,406.00 $ 216,243.00 28.4% Producer Price Index $ 132.50 $ 135.30 2.1% Step Four: Calculated weight percentage change in commercial and MFR Bin rates Components of Actual Revenue Component Weight (c) Percent Change (d) Weighted Rate Adiustment Refuse Disposal 37.4% 0.0% 0.0% Service 56.0% 2.1% 1.2% Worker's Compensation Insurance 6.6% 28.4% 1.9% Total 100.0% N/A 3.1% Step Five: Applied weighted percentage change to commercial and MFR Bin rates Service Current Monthly Rate Weighted Rate Adjusted Monthly Rate (e) Adjustment (f) 1 ea. 2 yard Bin once per week $ 41.05 3.1% $42.31 1 ea. 2 yard Bin twice per week $ 73.38 3.1% $75.63 1 ea. 2 yard Bin three times per week $ 105.72 3.1% $108.96 1 ea. 2 yard Bin four times per week $ 138.05 3.1% $142.28 1 ea. 2 yard Bin five times per week $ 170.39 3.1% $175.62 1 ea. 2 yard Bin six times per week $ 202.71 3.1% $208.93 1 ea. 3 yard Bin once per week $ 46.16 3.1% $47.58 1 ea. 3 yard Bin twice per week $ 83.60 3.1% $86.16 1 ea. 3 yard Bin three times per week $ 121.04 3.1% $124.75 1 ea. 3 yard Bin four times per week $ 158.47 3.1% $163.33 1 ea. 3 yard Bin five times per week $ 195.92 3.1% $201.93 1 ea. 3 yard Bin six times per week $ 233.35 3.1% $240.51 1 ea. 4 yard Bin once per week $ 51.26 3.1% $52.83 1 ea. 4 yard Bin twice per week $ 93.81 3.1% $96.69 1 ea. 4 yard Bin three times per week $ 136.34 3.1% $140.52 1 ea. 4 yard Bin four times per week $ 178.89 3.1% $184.38 1 ea. 4 yard Bin five times per week $ 221.44 3.1% $228.23 1 ea. 4 yard Bin six times per week $ 263.99 3.1% $272.09 Revised6/16/2004 Federal Disposal Service EXHIBIT 5C Proposed Roll Off Rates PPI Rate Adjustment Step One: Calculate percentage change in Producer Price Index Adjustment Factor Old New Percent Change Producer Price Index $ 132.50 $ 135.30 2.1% Step Two: Apply percentage change in Producer Price Index to Service Portion of rolloff rates Service Current Monthly Rate Adjustment Adjusted Rate Rate (a) Standard Rolloff charge per load (b) $ 112.80 2.1% $ 115.18 Compactor charge per load $ 165.36 2.1% $ 168.85 Delivery or relocation charge $ 80.01 2.1% $ 81.70 Temporary "Clean-Up" Bins $ 53.34 2.1% $ 54.47 Locking Bins $ 5.33 2.1% $ 5.44 On-Call Bin Cleaning Services (in excess of 1x/yr) $ 37.34 2.1% $ 38.13 Bulky Item Pick up (in excess of 2x/yr) $ 21.34 2.1% $ 21.79 Special Pick (in excess of 2xJyr) Auto Cart Cust $ 5.33 2.1% $ 5.44 CRT's (E Waste) $ 30.00 2.1% $ 30.63 Tippinq Rate $ 28.00 0.0% $ 28.00 Revised6/16/2004 Federal Disposal Service Proposed Rate Summary Dated 6/16/2004 PPI and Extraordinary Insurance Residential Multi-Familv Cart Rates Original Quantity Row Service Proposed of Monthly Annual Billings Monthly Rate Service Units Billings 1 Automated Cart $13.29 9,950 $ 132,248 $ 1,586,978 3 Total Cart Billings $ 132,248 $ 1,586,978 Commercial and Multi-Familv Bin Rates Pickups per Week Row Service 1 2 3 4 5 6 4 2 Cubic Yards $42.31 $75.63 $108.96 $142.28 $175.62 $208.93 5 3 Cubic Yards $47.58 $86.16 $124.75 $163.33 $201.93 $240.51 6 4 Cubic Yards $52.83 $96.69 $140.52 $184.38 $228.23 $272.09 Commercial and Multi-Familv Bin Distribution Matrix - Number of Bins Pickups per Week Row Service Total 1 2 3 4 5 6 7 2 Cubic Yards 66 15 14 - 2 - 97 8 3 Cubic Yards 239 475 445 107 104 49 1.419 9 4 Cubic Yards 23 129 141 33 43 39 408 10 Total 328 619 600 140 149 88 1,924 Commercial and Multi-Familv Bin Billinqs Pickups per Week Row Container -- Total Size 1 2 3 4 5 6 11 2 Cubic Yards $ 2,792 $ 1,134 $ 1,525 $ - $ 351 $ - $ 5,804 12 3 Cubic Yards 11,371 40,928 55,515 17.476 21,001 11,785 158,076 13 4 Cubic Yards 1,215 12,473 19,814 6,084 9,814 10,611 60,011 14 Total Monthly Billings $ 15,378 $ 54,535 $ 76,854 $ 23,561 $ 31,166 $ 22,396 $ 223,891 15 Total Annual Billings $ 184,538 $ 654,423 $ 922,249 $ 282,730 $ 373,991 $ 268,756 $ 2,686,686 Roll-Off Box BillinQs Row Description Billing Unit Units per Proposed Estimated Year Rate Annual Billings 16 Pull Charge # of Pulls 2,321 $ 115.18 $ 267,341 17 Disposal/Processing Charge # of Tons 10,366 $ 28 290,248 18 Total - 12,687 143 557,589 Summarv of Projected Annual BillinQs 19 Residential Multi-Family and Commercial Cart Billings $ 1.586,978 $ 1,561,759 1.6% 32.85°11 20 Commercial and Multi-Family Bin Service Billings 2,686,686 2,606,849 3.1% 55.61% 21 Roll-Off Box Billings 557,589 552,137 1.0% 11.54% 22 Total Projected Annual Billings $4,831,254 $4,720,744 2.3% Proposed Base Period Increase % Revenue Reconciliation Total Increase $110,510 WIC $47,836 PPI $65,062 $112,898 Variance -$2,388 Revised6/16/2004 Federal Disposal Service Integrated Solid Waste Management Services Franchise Workers Compensation Insurance Cost Increase In accordance with Article 6.5 of the Franchise Agreement, Federal makes request for an adjustment in rates for the extraordinary rise in costs of Workers Compensation Insurance totaling 28.41 % since July 2003. Workers Compensation Cost Cost as of: Base June 2003 Effective Cost October 2003 Increase Hourly Rate of Pay (average) Premium Rate Cost per hour $ 14.35 $ 25.77% 3.70 14.89 31.89% 4.75 Total labor Hours 45,540 45,540 Annual Workers Compensation Cost 168,406.69 216,243.09 $ 47,836.40 28.41% Total Annual Billings (All Group) $4,683,992.00 Under penalty of perjury, I Donald Shubin, President of Federal Disposal Service warrants the figures used in calculating the 2004 Rate Adjustment request to be true and accurate to the best of my belief and knowledge, and that our original price offer did not have any contingencies for extraordinary increases in workers compensation cost. Donald Shubin 6/16/2004 ~ 'FEDERAL .. DISPOSAL: :SE'RV I:CE . Corporate Office: 15031 Parkway Loop, Suite A. Tustin, CA 92780 Mailing Address: PO Box 14730. Irvine, CA 92623-4730 Telephone: 714259-0908. Fax: 714259-0533 May 17, 2004 Mr. Joe Meyers, Administrative Service Manager City of Tustin 300 Centennial Way Tustin, California 92780 Re: 2004 Rate Adjustment Request Dear Mr. Meyers, In connection with this company's annual rate adjustment and pursuant to your request for documentation, please accept the attached revised submittal: Certified & Documented Extraordinary Cost Increase Enclosed please find copies of Insurance invoices documenting our Extraordinary cost increases. Federal has taken the step for the benefit of the City of certifying the request and the documentation under penalty of perjury. Savings in Residential Rates! Federal Disposal Service hereby provides a price compromise (savings!) in Residential rates equal to the Extraordinary portion of the documented request. Pñce Guarantee! Should Workers Compensation Insurance costs decrease, please accept this letter as a guarantee that, in such a case, Federal Disposal Service will promptly notify the City of the amount of decrease and propose an equitable adjustment in rates. Retroactive Cost Recovery The Extraordinary costs we're requesting are a considerable sum and have been impacting Federal since December 2003. Included in the proposed future rates is an amount, in benefit of Federal, for the sum ofthe costs realized before the rates have effect. Rate Adjustments for Special Services Conceming your May 3rd analysis that the adjustment of rates for certain services are not contemplated by the Franchise Agreement, I wish to draw your attention to Article 6.3 titled Schedule of Future Adjustments which states that "rates are fixed for a two-year period, after which, they may be adjusted". I request the City's attention also to the headings of Exhibit SC, 58, and SA as being labeled "Examples~ of rate adjustments, in other words, the Franchise Agreement does contemplate adjusting other cost items than those listed in the Exhibits. Accordingly, I request the City consideration this matter more fully and allow the adjustments to all misc. cost items. Page 2 Mr. Joe Meyers, Admin. Service Manager Rate Adjustment Request Effective Date of Rates In accordance with Article 6.4.1, we request that the date change of all rates become effective July 1st. Thank you again for your review of our company's submittal. We look forward for the opportunity to meet with you and discuss its contents. Si]Cer y, ~ ' ; v. p/~ :IV' D Id~~' President , Attachment: 1. Revised Rate Sheet Calculation Pages, Exhibit 5A, 58 & 5C of the Franchise Agreement 2. Actual Insurance Cost Summary and Invoice Copies 3. A final PPI index. C. Mr. Tim Serlet, Public Works Director ¡..-Ms. Lois Jeffery, Ci!y Attorney ,. .. Bureau of Labor Statistics Data Page 1 of 2 Search I A-Z Index BLS Home I PrOQrams & Surveys I Get Detailed Statistics I Glossary I What's New I Find It! In DOL Data extracted on: May 17/ 2004 (05:14 PM) Producer Price Index Industry Data Series Catalog: Series 10 : PCU562111562111P Not Seasonally Adjusted Industry: Solid waste collection Product: Primary services Base Date: 9306 Data: IYearl~1 Feb I~I Apr II May I~~I Aug II Sep II Oct II Nov II Dee II Ann I 1199411105.511105.711105.71\105. 71\105. 71~1106.61\106.811106.sl~1107 .011107 .011106.3\ \199511107.011107.311107.311107.311107, 711107 .8\lll1.311111.411111.4!fUiAllll1.61\111. 61fiO9Al 11996\\110.2\1110.211109.511109 .511107 .3jI10S.01110S.21110S.21110SAIflõ8A1\110.21111D. 21~ 1199711110.2111100411111,31\111.3\1111.311111,211111. 51\111. 511112,ol~I110,lI1110. 2\~ 1199811110.211110.211109. 911111311112.011112.011112.211112. 211112.21["11T211112.211114. sII111.8\ \1999\\114.sl\114.811114.8\1114, 91\115 0411115 .411115.411115.sll115.81~1115. 911117. 51~ 12000\1118.3\1120.2\1120.211120.211120. 511122. 6\1122.811122.811122.811123 .611123. 611124.211121.81 1200111126.111126.111126.1\\126.111126.111126.1\1126,811126.sI1127 AII129.s\1129,6[1129. 511127.2\ 1200211129.311129.711129.91\ 130 .011129. 911130.811131.011131.411131.311131.411131.411132.511130.71 \200311132.211132.911133.611133.711133. 711135.2\\135,311136.511136.21\135,611135.311135.311134,6\ \2004\\135.7\\13604\\13604\\138.1\ (P) (P) (P) (P) P : Preliminary. All indexes are subject to revision four months after original publication. @ Bëi_ç;ILt9 ioQ WW~ .dQJÆ.Q~ Freç¡uently Asked Qyestions I Freedom of Information Act I Customer Surv~ h1-tT\.//r1"t" hl" (Tr",II'(T;-h;"kra~tp :'\/1 7 /2004 Federal Disposal Service EXHIBIT SA Proposed Residential Rates PPI Customers Billed By the City on Tax Roll Step One: Determine disposal expense and service revenue as a percent of actual rate revenue Revenue Component Annual Amount (a) Percent of Rate Revenue Single Family Rate Revenue 2003 Actual Revenue $ 1,561,759 100.0% Less:Single Family Refuse Disposal Expense $ 368,016 23.6% Sinale Familv Service Revenue $ 1,193,743 76.4% Step Two: Calculate percentage change in adjustment factors Adjustment Factor Old New Percent Chanae Disposal Gate Fee per Ton $ 22.00 $ 22.00 0.0% Producer Price Index 132.5 135.3 2.1% Step Three: Calculate weighted percentage change in single family rates Com onents of Actual Revenue Refuse Disposal Service Total 0.0% 2.1% N/A Step Four: Apply weighted percentage change to single family rates Service Current Monthly Rate (d) Weighted Rate Adjustment (e) Adiusted Monthlv Rate Single Family-Automated Cart $ 13.08 1.6% $13.29 Revised6/8/2004 Federal Disposal Service EXHIBIT 5B Proposed Commercial Rates PPI and Extraordinary Insurance Adjustment Customer Billed By the Company (Except Rolloff) Step One: Deduct franchise fees from gross rate revenue Revenue Component (including Franchise Fees) Annual Amount (a) Percent of Rate Revenue Including Franchise Fees Actual Gross Commercial and MFR Rate Revenue 2003 Actual Revenue $ 2,606,849 100.0% Actual Commercial and MFR Franchise Fees 2003 Actual Fran Fee $ 67,199 2.6% Actual Gross Commercial and MFR Rate Revenue Net of Franchise Fees $ 2,539,650 97.4% Step Two: Determine disposal expense, Extraordinary Ins. and service revenue percentage of total actual rate revenue Revenue Component (net of Franchise Fees) Annual Amount (a) Percent of Rate Revenue Net of Franchise Fees Actual Commercial and MFR Bin revenue Net of Franchise Fee! 2003 rate adj estimate $ 2,539,650 100.0% Less: Actual Commercial and MFR Disposal $ 948,574 37.4% Less: WIC & Veh/Gen Ins (Actual Cost) $ 158,122 6.2% Actual Commercial and MFR Bin Service Revenue $ 1,432,954 56.4% Step Three: Calculated percentage change in adjustment factors Adjustment Factor Old New Percent Change Disposal Gate Fee per Ton $ 22.00 $ 22.00 0.0% WIC & Veh/Gen Ins. $ 158,122.00 $ 244,974.00 54.9% Producer Price Index $ 132.50 $ 135.30 2.1% Step Four: Calculated weight percentage change in commercial and MFR Bin rates .- Components of Actual Revenue Component Weight (c) Percent Change (d) Weighted Rate Adjust Refuse Disposal 37.4% 0.0% 0.0% Service. 56.4% 2.1% 1.2% WIC & Veh/Gen Ins. 6.2% 54.9% 3.4% Total 100.0% N/A 4.6% Step Five: Applied weighted percentage change to commercial and MFR Bin rates Retro Service Current Monthly Rate Weighted Rate Cost Adjusted Monthly Rate (e) Adjustment (f) Recovery 1 ea. 2 yard Bin once per week $ 41.05 4.6% 1.09% $43.39 1 ea. 2 yard Bin twice per week $ 73.38 4.6% 1.09% $77.56 1 ea. 2 yard Bin three times per week $ 105.72 4.6% 1.09% $111.75 1 ea. 2 yard Bin four times per week $ 138.05 4.6% 1.09% $145.92 1 ea. 2 yard Bin five times per week $ 170.39 4.6% 1.09% $180.11 1 ea. 2 yard Bin six times per week $ 202.71 4.6% 1.09% $214.27 1 ea. 3 yard Bin once per week $ 46.16 4.6% 1.09% $48.79 1 ea. 3 yard Bin twice per week $ 83.60 4.6% 1.09% $88.37 1 ea. 3 yard Bin three times per week $ 121.04 4.6% 1.09% $127.94 1 ea. 3 yard Bin four times per week $ 158.47 4.6% 1.09% $167.51 1 ea. 3 yard Bin five times per week $ 195.92 4.6% 1.09% $207.09 1 ea. 3 yard Bin six times per week $ 233.35 4.6% 1.09% $246.66 1 ea. 4 yard Bin once per week $ 51.26 4.6% 1.09% $54.18 1 ea. 4 yard Bin twice per week $ 93.81 4.6% 1.09% $99.16 1 ea. 4 yard Bin three times per week $ 136.34 4.6% 1.09% $144.11 1 ea. 4 yard Bin four times per week $ 178.89 4.6% 1.09% $189.09 1 ea. 4 yard Bin five times per week $ 221.44 4.6% 1.09% $234.07 1 ea. 4 yard Bin six times per week $ 263.99 4.6% 1.09% $279.04 Revised6/8/2004 Federal Disposal Service Integrated Solid Waste Management Services Franchise General and Vehicle Liability Insurance Cost Increase In accordance with Article 6.5 of the Franchise Agreement, Federal makes request for an extraordinary adjustment in rates for costs involved with the 112.61% rise in General Liability and Automobile (Vehicle) Insurance costs. General Insurance Cost Policy Period 12/01/02 -11/30/02 Tustin Total 1,500.50 3,001.00 General Liability and Property Automobile 53,150.00 140,520.00 Umbrella Liability State Taxes & Fees Policy Fee Non-SAK Broker Fee 13,250.00 414.07 125.00 325.00 26,500.00 828.13 250.00 650.00 Total Premiums $68,764.57 $ 171,749.13 $ Increase Percent Increase 12/01/03 -11/30/03 Tustin Total 3,343.56 6,687.12 1,843.06 - 120,500.00 234,500.00 67,350.00 - 26,000.00 656.25 52,000.00 1,312.50 12,750.00 242.18 (125.00) 375.00 - 700.00 1,400.00 - 151,199.81 $ 295,899.62 $ 82,435.24 119.88% Under penalty of perjury, Federal Disposal Service warrants these figures to true and accurate to the best of our belief and knowledge, and that its original price offer to the City did not have any contignecies for extraordinary increases in General and Automobile Insurance costs. Donald Shubin 6/8/2004 FEDERAL DISPOSAL SERVICE CITY OF TUSTIN SOLID WASTE TONNAGE REPORT 2003 Programs Dump Sites Qrtly 1st '03 2nd '03 3rd '03 4th '03 Residential Landfill (1 )Bowerman 2,630 2,606 2,726 2,504 Green Waste (2)Tierra Verde 1,462 1,693 1,786 1,321 Mixed Recy. (3)Sunset 1,031 1,163 1,284 1,358 TOTAL RESIDENTIAL TONNAGE COLLECTED 5,123 5,451 5,788 5,183 Commercial Landfill (1)Bowerman 9,618 10,636 10,459 7,894 Green Waste (2)Tierra Verde 68 75 60 56 Transformation (4)SERF 732 248 535 2,736 Select Routing (5)Recycling Sys 0 0 0 41 White Paper (6)Men Cal 5 3 2 0 Mixed Recycle (3)Sunset 227 327 340 315 TOTAL COMMERCIAL TONNAGE COLLECTED 10,650 11,289 11,395 11,043 YTD 2003 4,836 21,545 41 10 1,209 44,378 x22 368,016 x22 948,574 Cost of Funding Increased Worker's Comp and Gen Liability Insurance Assumptions: . Cost of funds: 4.5% Total increase due to Worker's Comp: $47,836.40 . Total increase due to General Liability & Auto: $82,435.24 Worker's Compensation Totallnerease Interest Expense Incurred Each Month Oct 03 Nov 03 Dee 03 Jan 04 Feb 04 Mar 04 Apr 04 May 04 Jun 04 Oet 03 3,986.37 14.95 14.95 14.95 14.95 14.95 14.95 14.95 14.95 14.95 Nov 03 3,986.37 14.95 14.95 14.95 14.95 14.95 14.~5 14.95 14.95 Dee 03 3,986.37 14.95 14.95 14.95 14.95 14.95 14.95 14.95 Jan 04 3,986.37 14.95 14.95 14.95 14.95 14.95 14.95 Feb 04 3,986.37 14.95 14.95 14.95 14.95 14.95 Mar 04 3,986.37 14.95 14.95 14.95 14.95 Apr 04 3,986.37 14.95 14.95 14.95 May 04 3,986.37 14.95 14.95 Jun 04 3,986.37 14.95 35,877.33 14.95 29.90 44.85 59.80 74.75 89.70 104.65 119.60 134.55 672.75 Interest 672.75 Total 36,550.08 General Libility and Automobile Dee 03 Jan 04 Feb 04 Mar 04 Apr 04 May 04 Jun 04 6,869.60 6,869.60 6,869.60 6,869.60 6,869.60 6,869.60 6,869.60 48,087.20 721.28 48,808.48 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 51.52 77.28 103.04 128.80 Interest Total July 1, 2004 through September 30, 2007 Principle 85,358.56 Term 39 Months Interest 4.50% Monthly Amount Beginning July 1, 2004: $2,356.71 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 25.76 154.56 180.32 721.28 A Renewal Insurance Program Prepared for FEDERAL DISPOSAL SERVICE Mr. Don Shubin REVISED - 12/05/03 SANDER A. KESSLER & ASSOCIATES, INC. 2850 Ocean Park Boulevard, Suite 200 Santa Monica, CA 90405 Telephone Number: (310) 309-2200 . FAX Number: (310) 309-2633 License No. 0313318 TABLE OF CONTENTS YOUR SERVICE TEAl.,! AT SANDER A.. KESSLER & ASSOCIATES 3 NAMED INSURED & LOCATIONS 4 PROPERTY 5 COMMERCIAL GENERAL LIABILITY ì EVIPLOYEE BENEFITS LIABILITY 8 A UTOJt;lOBILE 9 VEHICLE SCHEDULE 10 UMBRELLA. LIABILITY 12 COJt;lPARISON OF iv/AJaR FEATURES 13 PREMIUMS 14 COMMENTS 1 - .L) 16 MARKET SUMiYlARY 1ì COVERAGES NOT PRESENTLY INCLUDED IN YOUR INSURANCE PROGRA1V! 18 This proposal is presented for coverages to be effective December 1, 2003. The proposal being presented was based upon the exposures to loss [hat presently exist and were made ¡mown to Sander A. Kessler & Associates. Any changes in these exposures must be reported b.v the client in order that the proper coverages can be secured. The terminology used throughout our proposal is not intended to replace any of the language of the actual policy forms; coverage is proposed subject to the terms. conditions and exclusions of the policies. Date Typed: November 26, 2003; sjm 2 -11/26/2003 1) Property 2) General Liability 3) Automobile 4) Umbrella Liability 5) Taxes 6) Non-SAK Broker Fee Total Premiums *Reflects Current Exposures PREMIUMS Current Program Renewal Program 12/1/02-12/1/03 12/1/03-12/1/04 $508.00 $6,687.12 $2,493.00 Included $140,520.00 $234,000.00 $26,500.00 $52;000.00 None $1,312.50 None $1,400.00 $170,021.00 $295,399.62 Option for $10,000 Auto BI/PD Deductible: $305,002. A reduction of $16,590 l Sa-..J~~A 2B50 Ocean P....Bivd. l¡JUCl Su.02oo !lp<;S er & Sonia Monica 1'\.';;'"í,~OCïates Inc.. cal~cmia_OS . 31()'309-2200 ranee FAX: 31()'30g.2~OO A COMPLETE INSURANCE SERVICE sl\l.a\o:\ ~L / -- J.)t:.'-~;:¡:::'I:.!"".J.I.~""V"""""'~""""""""""--" PREMIUM FINANCE AGREEMENT DISCLOSURE STATEMENT AND SECURITY AGREEMENT (CA License < 9739145 (AICeO. I"ç,)) (CA Uœnse ; 9ì39865 (lmpanal PrelTllum Finance, ;nc,;) Arcco ,- -'- ._-~._--- - -- -- 150 WaTßf Street. New York. NY 10038 (212) 42a.5431 ex (877) 902.4242 1630 East Shaw Ave.. Suite 16O, ¡:'resno, CA 93710 (5591256.3300 cr i87ì) S{]Z.4242 ...... 777 SOU!l1 Figueroa St. 141:1 Fl.. Los AAge!es, CA 90011 [213) 68g.3500 or (877)902.4242 Two Rincen Center, 1,1 Spear St., 3" ?i., San Francisco, CA 94105 (877) 902.4242 One MacArthur Plat:::. Suite 610, South COASt Metro. CA 92707 (714) 43&-3500 or (877) 902-4242 520 Pike Street, Suite 2700. SeattJe. INA 98101 (206) 344.3237 or (877) 902.4242 A I Is I I INSURED/BORROWER 285,899,62 ' (Name. AocrlJSs ano Telephone Numcer) ¡ Shubll'1 Services I no 59.454.82 . federal Oiscosal SerJiç¡¡ 1:1 0 Sex ~~B TOTAL PREAlIUMS CASH DOWW PA YMENT REQUIRED c AMOUNT FINANCED (Tne Amount 01 C'~iI P",v'Q~( ~O Imur"o 01 en ItS o"nslr) 5 226,444,30 D FINANCE CHARGE (Dollar "mount creOJl wriJcostl s 5.552.96 - TOTAL PAThlENTS (Amounts IVnicn Wli! naY!: Dean o~ld ,flor .'T'sKirg ~il :cn~CUi<::J paym~r,~1 - I 231,997,ì6 ¡ Ace" .';0, Santa Ana =.m;¡,¡ Addr~ (oCtlonaÚ: I 714/542- 7701 ¡ I I I i I I CA 92701 ANNUAL,. PERCEHTAG¡¡ RATE {Co>! of (;;011 ~;u= as ; ye3rlY'Jœi ô.50 ~ AmcL11t~r Eac~ PèYl!'.e~1 I I : \urr'oer ci ~'~"ll!'.en~¡ ! ',,; "y '11':." , ~'nJI ?3ymCnI ' ! ~nn"al Gvly fAlI1!v Duo: I Que I I I I I : ' 8 i 01;01(2004, OB/O~;200..¡ PAYMENT SCHEDULE 28_999.72 i SEE PAGE 3 FOR SCHEDULE OF FINANCED POUCtES AGREEMENT OF INSURED (JOINT AND SEVERAL. IF MORE THAN ONE) THE UNDERSiGNED iNSuRED: 1. In conSideration of [no premIum p¡)ymems :Jel~::¡ RnancZd by LENDER :~ ~M Insurance c:Jmpanle$ listed on me SCHEDULE OF FiNANCE::! rOUGES, Jr !I1~ir ¡epresonta~ve, promIses ~o pay 10 me creer of LENDER the TOTAL OF PAYMENTS :0 be mace In accordance with tM PAYMENT 3CHEDLILE, suDjec: :0 the provisrons set form 1M this Agreement, " Irrevocably appointS ~ENDER Attcrney-¡n-rðc: Wltt1 full 3urnomy, in êtle eve~t of default, to i) cancel the said ûolic!es in accorDance '.Vrth me provisions herein, Ui) receive all sums 3s51gneo \0 LE~JDE:¿ and riii) exeC~te and deliver :In behalf of tho underslgne::! an documems, ,arms and notices ret3tlng 10 ;he insurance policIes listed on the SCHEDUL:ò OF FïNANCJ;J POLICIES In iur':nerancc of thIs Agreement. IMPORTANT NOl1CE TO INSURED NorICE: 1. Do not $19n Ii'lÌ$ AgrD8menl bllfore you road it or II it COnUln& any ban~ spa cas. l You are entitled to a com¡liel8 filled.ln-copy 01 thl& Agreement. J. KBep your copy of U,., Aç¡reemenl 10 protect your legal ri'1"t~. 4. You Ire entitled Ie e 'pani:>h tfanSlaUon of this AgreellUlnt beto,o ,¡gning, LJSlad hone dorecno a la Ver:lJOn en espanof de 8SIO contratO .nUt, de: firmer). NOTICE; Se~ Pages 2 and:) Additlonll/lmportanl lnt'crmðlÍcn. THE INSURED AGREES TO THE PROVISIONS ABOVE AND ON PAGES 2 AND 3 i::' i .Î-. - , -, , / , '/ ' / I /, )/ I f.; jl/' Iii " .f::~:,/'d/,¿t./ i DATE: SIGNATURE :"ND'TITlE] OF ~NSUR;::J(S) OR AGENT OR 6ROKER ON THEIR 6EHALF [to 'Xlon! ?~mltled by l,w) IAJCWEST(Q) {111001 AGENT OR BROKER Sander ,.;, Kessler & Associates. ¡liC BUSINESS ADDRESS 2850 Ocean Park Bivc., Suite 200 Santa Monica TEL Naif.MAIL ADDRESS CA 90405 ìhe UnCcf~lgne¡! Agent or 2~oKer ReprGS2nts 3nd warrants JS füllc~'JS: (aJ :0 me DeS! éJf tM unaerslgncd'$ KnOwlecge ~no belief, ~he :nsureo's signature :s genuJr1C cr. ~ the extent permlt!1!Q Dy JcptiCßblc Law, ~~e ~ndersigneo Agar.! or 8rokQr has been ðuthcrlZ!!O 'Jy rhQ :nsure:J to s:sn:nc :nls Agreemem Gn their denali, (I'J) the InSiJred.has received 3 coPy ef lms Agreement. (c) '.he scheauled Pciicies arc in full force 3nd effec: and the premiums indicated Iherefore are correct, (d) :nc :nsurea m~y cancCI all scheaUied policies immediately upon request, (e) none ~f :ne ?ollcles $cnccuJed In me Agreement are :10n-cancelaCle, and :~ the :Jown pa~ment as indicated 1I1 Box "B- and ,nStallm~nt:s due on have Deen colleC'.ed ana are bemg ïetained by us. 2. Upon csncellatic:1 or 3ny of me $chcaUlec ?olicie$, me urlcerslgnea Agent or Broker agrees upon demand ,0 ;Jay to ŒNDER or its 3s~jgns their ccmmi:,slOn an any unearned premli,¡ms apciicable:o me cancelled Policies. 3 For Caiiiomia ~us,"ess, the Jncersig!'.ec agent will "a'"..e:'¡C [rem ŒrJDëR S fer aiding 'n Jdmlnis;r8\IOn :Jf premium ñnancc; agreement relating ~o t!'.e ::::ove :rem:u~s. THE AGENT OR BROKER AGREES TO THE PROVISIONS ABOVE AND ON PAGE 3 DATE 5IG;.,HUR~ AND TITl~ OF AGENT OR BROKER ~a~ 1 01 DEC 05 21::J\j,j 14; 4èj rK ::JHI'tl!t:.K r\t:.::::JL...::K -r-1:J:::U\... IU .i.(':""<::'.)J~';..J..J I . ""'" <J\"J AoomONAL AGREEMENTS OF INSURED (JOINT AND SEVERAL, IF MORE THAN ONE) 3. CanceUation. Aner me OCClJtTenCg of a defautt In the ~yment of any monÐY due !tic ~ENO£R or a default consÌS!I!1g of a transfer to a third part)' ei any 01 L"e scheduled ::olici:s. LENDER may r¡¡quest cancellation of the insurðnce poücies listed in ll1e SChedule upon expiration of 10 dlIyS written notica ellntcr~ to c¡¡nœl (13 d3ys in Ut3h. 15 days In Idaho). Pn:MdeO saId defauJl is not cured within sut:.1 period, and LENDER may prOCeed to collect the entire unpaid b1ilance due hereunder :Jl" any pM :t1greot oy appropnetc legal procee1Jings. II any as/ault r~sUl[s In the c;¡ncellation of the Pekj, insureD agroes to pay a canceuauon cnarge in ~cordanœ W1Û1 appiicabfl! law (not applI¡;aclc In NV). 4. Money Reœived After C.1nœJIation. ATrf payment received after coiicy cancellation t11ay be creaned to U1e indeblecness due hereunoer withour any ¡¡aOllily or oOJlgauon an the part of LENDER to r~uest reimunement of Juan cancelled pOlicy. Any sum :eccNea from an insurance :;:¡mpany shall be:-.~it~ to the balanœ due nereunoer. any surplus snalll)e paid over to the insure:: in c;¡¡se of deficl<!nc'j, tho Insured shail oay the :¡ame. 5. Application of Payments.:f applìt:aDle jaw pemUs. all payments rccalvec by LENDER will be apclled m the alOes!. invoICe fir.;t Ariy ~emaining amount~ \'/'11 oe appliea to laIc fees and otl1er'c~arges (if appJlc3blei. ù'e remainder (if any) wuuld be "COiled to any oth~r outStanDing amoot1ts. 6. Returned Chf!1:x Charge.:f an:¡ payment made by Check ;5 returned bec:aU:;e :.'e inSureD h¡¡d ,10 acount cr InsuJficiem runes:n l.t1e cayer ::;anK, ,nsurce .viil be c~¡¡rgeo the maximum fee, if any. aermlUeo uncer appJic3ble law íS i 5 In NV1. DefaulL If any ct the following happens; a, A caymer'ol i5 not made wnen it IS Que; D, A procee1Jing In oankrUl)tC'j. recalVershlp, insolvency or similar proceeding Is InsttUted ':.'1 or Jg.inst me: :;r c. Insured falls to keep any promls," me Insured makes ;n this Agreement: Insur~a will be in Defau!t; ~,~OWev9r. ~h8t, to the ext::m ..eq~lraa :::'1 appllcame 'aw, .nsureo may ce ne!c ~~ ~e ,n ae/aUI! cnlY ~DOn the cw.::rcn::::. -:,f an event aescnoca In c:aus~ (a) aoove. B. Secunty. To secure payment of all amounts due under ~IS Agreement. insureD asSigns ~ENDER a securit)' ",tcrest 'n all n9m, tide ana ;n!crest to t:-.c ::CI!Cl' inc!uding (but enlY to the extent permitted by applicable lawl, 8, ail meney :Mt5 or may IJe jL;8 me ~ec;¡use oi 8 iOSS unae.r :11e"3Iicy :nat reec::a.s :ne ~nearr:ec ~rc;;-,:ums :SUbJec.:o ,,'1e Inter~st 01 any 3Pplicable mon.gagee or loss oayeeì; b, any retum of the premium fo1:.'19 Policy; and c. civlaGnas which may e~ome cue me In conneC'~O,1 Wltn the POhc;, Right to Demand Immediate P3yment in Full. At any time after d:::.faUil. ~.:~!DE~ can :emana anc ~8ve :~,e r¡çm :c ::;ce:ve 1rT1r:1eciate :ar~e;;1 ;8X:~:t to :ne e¡:tent clMrwlsa :roviae!1 :,y apc¡¡catle :8,:/, ,n W~IC~ ,:ase L::Wé:':: .vlIl ~avo ~~e ,.:;nt to rece:'!e such oayment in Jcccr:an:~ '!11th ,~c!; I::JWI :;f :~a t~tal uneald ::alance cue unDer tH!> Agres;;-,ent even:f ~ENCEK ;¡as not recelveQ any retune::f ~ne3rned premì~m, ¡D. Warranties. Insured warrantS to LENOE~ (al to nave :ecelveò a :opy cí t:1:S ,;l.gree~e~t ~nd !,bJ :r !he ,nsued :5 r,ot 211 :ndIVIOU¡;1. that the ~igra!:~y i5 aulhoriz~d tJ sign this Agreement:n bohalt cf the insureo. The insured 'gp:es~;::s 1~3:.t ,5 :1ct prc:::~.1¡¡Y ,~e ó~bjsc: of OJ ¡n wmemolallcn of a pr~c~cc:~,S In oanKruptcy. recSJvershlp,:r il1solvency, or If it is a oearer In banKruptcy, the BanKruptcy Court ~1J~ aulhoflZed tnis n.nsact:on. 11, Earty PaymenL At any time. Insured may pay lMe wholc ~mount still~noald, if !nsurec :,aÿs the fUll amour,t ee:c~e It :SjU8. ,nsureCl.v¡iI ~e given a reiUr1ð fer me unearned F¡nancc-Charg~ computed by ;he method cf rgjund as reqUired by aopiiczù!e law, 12, A5s¡gnmen~. in$urea may not assign the Policy Dr ;)115 Agre~menr '.vlthotJt LENCEK'£ wrrm;m ;¡¡nsent, :-:owe:ver. ,nsu~e:J does nol need L::NDEi'.'s wnr.cn consent to 300 mortgage~s or ether per$On5 as toss payees. ~ENDER may ¡rans:er Its rIG~,ts under this AgreemenT to anyone without !nsure";:; ODnSc~t, All of LENDE?:s rights snail inure to ¡he Denefit of LENDER's SUCCC~$ors ana éIS$lgnS. 13. Colleeùon. if mancy is due and insured rails lO pay. LENDER may collect the unpaid balance from me without reeour.;o TO the security interest granted ur,oer thIS AgreemenL i 4. Late Charge~. Upon cefauil in ¡¡Byment of any installmentS for not less ¡han Ave ~ys I,I;! sucn gre¡¡¡er numoer of (jays !equiraa oy appllccoie law;' :n~ured agrees to pay ¡¡ late e,'1arge In acccraance with applicable 1<11'1. In no cv~nl snail sue :ate ,:harS3 exceed a maximum of 5% of sucn :nstal!l1'.ent :S5 ,n Montana: 2% maximum In AlasKa 3M Oregon). 15, Fínan:;:e Charge. The (inance ctJdrge bsglns te accrue 'rem the ef'.e:~ve date of tn,s Agreement 0: U'le i.!JrliC5l inception oate of l11e insurance ;oolicY(I<?~1 listed on me ScheOUle of Policies, whicnever is earlier. II LENDER terminates this Agreerlenr due to a ceiault 'nsuree w~1 pay Intcrgst :n the outstanding indeoteonoss al the maximum rate authonzed by appliCable stare law ;n effe::; en the dale :f cancellation and from said date until Insured pays me oulSIanal119 indebtedness In lull to LENDER, To Ule cxtent acrmiued by aaplicable law, :ne ëinanc; C~arge may i~c;uae " "onrerunaae:e agreement cnargc not to exceed S20 ($1 0 in ,Jl,K, i,l ,"nd ',VA: 512.50 In ~,1T), 16, Attorney's Fees. if LENDER hires an altorney (whiCh IS nO! a Salaned emoloyee) to collec: any money Insured owes unòer ti1is Agreement. :nsured will pay that attorney' 5 fees ¡¡nd other collection costS ílnCluoing c~llectCrs' fees! :r ðnd!D me extent ~etm:\tea by apDIICaOte iaw (20% of outStanDing balance maximum In NV) 17. Agent or Broker. ¡he ,-'gem or Bro~er nameo en tne front at this Agreemem is nelln!!!' aulhorizea ';)y LENOi::R to rec.eive inStallments payable unCler this Agreement nor is autnonzed t.:J make any representations to insureCl on LENDER's Denali (excopt to the extent exoreSSly required by applicable law), 18, Amendments.:r the ir\5urance contract has not been issued at the lime of Ihe signing of lr'olS AgreemenT, ana if :he polìci~s being financ!!Q are assigned 'SK polie:es or policies listed in a state fund, the Dalicy numbers.! amilled herein, may be Inser.ec In this Agreem~nt after J1 has peen SIgnee, 19. Effeotive Date. This Agreement will not go IntO affect untJI it 15 ~ccectea by ~ENDER in writing. !n me State of California, Il15ured 3hall i1¿¡ve the fight :0 disavow this Agreement for r.on /10) cays after acceptance ~y LENDER ii the Agreement contalnc::: any blðn~ :¡p~ce wnen it was executea by Insured:cr an Insured's Denaln and ~ch blank space was subseouemtv flIled In 20, umltalion of UaÞilñy. 'nsured recognizes and agre!:s ;hat ~ENCE:;: i$ a ¡once, and not an :ns~r¡¡nce comean: ana th¡¡t ~ENDER 3ss~mes ,'0 liabilIty 35;.:n Insurer nereunocr, LENOEK'sliaCility ¡or braacn of any ef lile :erms or ::öìs Agreement cr:J1e wrongful or improper exercise of 311'j of its POwers una~r :nis Agr~:::ment snail oe limited to the amoum cf the principal balance outstanding. e~cect In the event of Li:NDER's gross ;~egliçence or willful mrSCOnðL.:C:. 21 Govsming Law&, The raw of the Slate af lhe InSUre(t"s ;esioence snail ;o'Jen this Agreemem except, 'Dr :C:O:3CC, HawaII, :dane an:;: Wyoming 'nsurQC¡, this :::lntract IS governeD :.y ¡r,e taws of !J1e State of New 't' or~ 22, Signature anO Acknowledgement 'n$ured 1as signed and rece¡\'~oJ J :;:¡py of :~¡s ;'greemem ï tne :~surec ;s~ot an if1Civlaual, the unDersignec 15 aumonzed to sign thiS Agreement 011 bcnJlf of the Insured. ..¡'II ¡ne !nsureas ilSli.!d ;n any Policy "ave slgneé. :nsurec acknowleages and unders¡and ::1al insurance prÐmlum finanbng law does ,1at require an Insured to enter Into ò ~remlum nnancing agreement as : condition of :he purc~ase CJf ¡¡ny insUlançe polley. 23 CAliiornlolnsured. FOR INFORMATION CONTACT THE DEPARTMENT OF CORPORATIONS, STATE OF CALlFORNIA. 7. 9. II\ICWESTIQ) ;:11,01 ~.gtl Z of DEC 05 2003 14:49 FR SANDER KESSL:1R -ASSOC PUlley NumDel and Pn3f1x (itemIZed) PiIlCe (X) II Not AtIharized (See #4 belOW) D. TO 17142590533 1-'.1ð~/Iðt! SCHEDULE OF POLICIES (Continue SctleduleonAuachment If Necessary) x Fuji NanIC of InSIlf811œ Comøany ami Name ønt.I AðdnIss or Pœcy 1:I:IW1g Agen or Company 0Hœ ï Q iM1icn PraITlMn IS PalO anti NOIJCeS are Sent Arch Insurance Company Stamford. Ci Sender A. Kessler & A3s0êates, Inc. Empire Fire & Marinlt Ins Co Omans. NE Lit Mac & A$$odares Brokers ~ee aU Sander A. Kessler dr. Assodatas, inc. Untied States Fire Ins Co Atlanta, GA Sander A. ì<esster & Asaoaatsli, inc. '(AR.ASSIGNED RISK), V..AUOrrABLE), (lS.LQSS SENSmVE) 4. ~. 5. 7. 8. IAICWESTfOI fl1l'JD Ty~of Parcy Premium ?KG I State Tale UMB State Ti 8FE I AU, :> ~ ~ ~; I Term " - 5"= tn 3 <R Mo:. c~v. Sy ~. '( POlICy Prl!!NUI\S Effealvl! Dare w 01 0.0 12101/2003 12 6,556.00 13U2 25.0 I I 100.01 I 0.0 I ! I I I I 12101/2003 12 42,000.00 1.312.50 12 12101/2003 1,400.00 12 12/01/2003 234,500.00 TOTAL PREMIUMS (R~c()f~ in 'A" 285,a99.62 ' ADCmONAL REPRESENTATIONS & WARRANTIES OF BROKER OR AGENT Pal,19 :l of WarrantS mat this is the authorited Policy issuing agent oItne insurance comcante.5 or the broker ¡¡jac:ng tM coverage Directly with the ¡n~urnnœ comp~ny on <III the PoUcies 5chetJuied !!tcept those Indicated WIth an 'X. ¡¡bove. WarrantS lI1at trlerc are no policies included In this Agreement whlcn me subjec: to audit, õepclt cl '/BIUes. rmrcspec!lVe rating, cr minimum eamea prel1'1ium. oxcept 8S indicaæø below. and trial. if there are any, the deposit or provisional cr~mium thereon is not less man me antJCiCat£d premium Ie be earned for tile full term oltha cOlicy. Po/Icy Nc.(s): Minimum earned premium, if any: $ Warrants mat there are no ass¡gned risk pol ides In the SchedUle of POlicies except as indic8ted in the SCheDule cf PcJícies. The Agent or Broker wiU hold in trust tor LENDER any payments made or cretlltec to the Insured throuçh the Agent cr BroKer direc~y. indirectly. actually or ccnstrue'Jvely, by any of the insuranœ ccmparues listed in tne ScheclJle of Policlcs and will pay the monies to LENDER upon demand to 3atISfy the then Qutstanclng balance hereunder, The Agent or BroKer win prompUy notify LENDŒ in writing if any informatJon on this Agreement becomes inaccuraLe AlCCO 1630 Eo Shaw Avenue Suite 160 Fresno CA 93710 INVOICE llU¡fp'(;'1}1,t I . ".. L_n~".... 04..1. CREDIT CO.HP.-t'vlES' 11.111111.11111111111111.1111111111111111111111111111111111111 Shubin Services Inc Federal Disposal Service POBox 118 SANTA ANA CA 92702-0118 Account Number: 02-010-880367-4 "w' Date of Notice: 01/05/04 AGENT. SanGer A. Kess1er 8. Assoc~ates. Inc, Messages: Payments not received as scheduled may result in late charges or cancellation of insurance coverage as provided for in your premium finance agreemenT. For customer service inquiries, please call or inquire on-line at: ~ -. 1-877-615-4242 II.!~ 0- , ww\,¡,.IArCC.com AiE?AC5 fJ~ - lMfJr':1J1.\ r .".. ......",,- ...'1..1. CREDIT Co.ll 1'. \.\'llo'S ' Make your check payable to: ArCeO Due Date: 01/01/04 Please put your account number on your check and mail it with this payment stUb to: T mal Due: $28,999.72 Arceo Department 76~5 Los Angeles ~A 9003J-75'5 Overnighted payments will not be processed at the remittance add res:>. Please contact a customer service represemati\'e for an overnight address. 020108803674000000000100289997217 ;TATE :OMPENSATION NSUAANCE ~UNC P.O. BOX 785.1 - - -, <=RANCISCO, CA \120-7854 WORKERS' COMPENSATION INSURANCE PAYROLL REPORT 40481400003170204000000031700S0103G6010310031S2 GROUP POLICY 481 000317 - 02 8 4 R FEDERAL DISPOSAL SERVICE 1 .J PO BOX 118 SANTA ANA, CALIF 92702 PAYROLL "ERICO 5íOl/03 TO 003152 6/01íO3 104 :HECK :lOX AT RIGHT "OR ':"DDRESS CHANGE ¡ADDRESS ¡~:"' ~~;:";"'; ~:.~,;' 'I'~¡~mìi illíllml~l¡íl'~m~~îlìl¡ìl~'II~ï IIÎill~ill¡lìlllllllllllllllllllllllllllllllll¡ilíl¡~ I¡¡IÎ ~I¡ 111111111111111111111111111111 1I1I1 lIil'lllll 111111111 1111 R ò. FEDERAL DISPOSAL SERVICE 050103 Oó0103 481 000317 02 . CLASS CODE NO, . Itemize payroll below YOUR POLICY WILL OVERTIME only for corporate BE SUBJECT TO EXCESS officers, general part- TOTAL ners, LLC members or CANCELLATION IF s PAYROLL relatives Ifarm only! THIS REPORT AND not excluded by PAYMENT ARE NOT RECEIVED BY endorsement. CHECK MUST BE ENCLOSED N"'ME -T - ¡DESCRIPTION OF WORK DONE ¡CODE :--:0, IPAYRCLL liS PAYROLL " c= INCLJDED ",aO\;::: ' I I I is ' I y-- NO I 1 =::> I I I I I I YES I NO \ I I I I I YES I NO - 8742 I I 8810 i 9403 I I I I I I I I I I I I I I . DESCRIPTION OF 'NORK iJONE SEE ~E'JERSE ¡;: ADDiTIONAL CLASSIFICATION NEEDED I PRí:MiUM iML:,,-I:>Lv,'AÝ,ROL,c 3Y,INTERIM RATE, -HEN OI'JIDE 3Y '00 I TC JE""ERMINE "REMIUM :JUE! \ ! PA vRCLL OF EMPLOY=::S !NT::?IM RAT:: SALESPERSONS-OUTSIDE I I I I I I I I I I I I I I I , ,68 CLERICAL , ,37 ! 23,22 GARBAGE/STREET SWEEP ! \ 6/::: -,: =-':: i ,,- l', j':' ::;, '" 1 GROSS , PREMIUM s , EXPERIENCE ,"10DIFICATION 86% 6/11/03 FOR THIS AMOUNT. . Ilwel certify that the above reported payroll accurately reflects the total wages, salaries, and other compensation all employees (including unlicensed contractors or contractors without W.C. coverage! during the period covered, WILLFUL UNDERREPORTING OF SUCH AMOUNTS IS A VIOLAT10N OF CALIFORNIA FRAUD STATUTES, SIGNATURE OF PERSON TITLE I ",REACOOE PHONE NO, PREPARING REPORT. NAME ,>,NO ADDRESS WHERE PAYROLL RECORDS "'RE KEPT (include ZIP COOE I paid to DAT::: uu",v~ STATE =OMPENSATION NSUFtANCe F= U NO WORKERS' COMPENSATION INSURANCE PAYROLL REPORT AMOUNT ENCLOSED 40481400003170302000000031700401040501041004122 P.O. BOX 7854 SAN FRANCISCO, CA '4120-7854 FEDERAL DISPOSAL SERVICE GROUP 481 8 POLICY 000317 - 03 2 004122 PAYROLL PERIOD 4/01/04 TO 5/01/04 1 SF R & MAJ 104 ¡ADDRESS CITY. STATE ZIP PO BOX 14730 IRVINE, CALIF 92623 ':HECK BOX AT RIGHT FOR ADDRESS CHANGE SEE INSTRUCTIONS ON BACK - If zero payroll. write NONE on all pages. 3ign. Date. and return all pages. 00 NOT PERFORATE 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 R & FEDERAL DISPOSAL SERVICE 040104 050104 481 000317 03 . CLASS CODE NO. DESCRIPTION OF WORK DONE SES REVERSE IF ADDITIONAL CLASSIFICATION NESDED PAYROLL OF EMPLOYEES INTERIM RAT': PREMIUM IMULíIPLY PAYROLL BY INTERIM. RATE: THEN DIVIDE 9Y 100 TO DETERMINE PREMIUM DUEl 8742 I SALESPERSONS-OUTSIDE .2. S7 8810 CLERICAL 2.29 9403 GARBAGE/STREET SWEEP I 31.39 I I I - I I I Itemize payroll below only for corporate officers, general part- ners, LLC members or relatives (farm only! not excluded by endorsement. YOUR POLICY WILL OVERTIME BE SUBJECT TO EXCESS $ CANCELLATION IF TOTAL PAYROLL $ THIS REPORT AND PAYMENT ARE NOT RECEIVED BY CHECK MUST BE ENCLOSED GROSS PREM I UM s EXPERIENCE MODIF!CATION 112% 5/1 1/04 FOR THIS AMOUNT. . NAME TITLE DESCRIPTION OF WORK DONE CODE NO. PAYROLL IS PAYROLL I NCLUDED ABOVE 7 $ I YES NO I I I YES NO I I YES NO I . I (we) certify that the above reported payroll accurately reflects the total wages, salaries, and other compensation all employees (including unlicensed contractors or contractors without W.C. coverage) during the period covered. WILLFUL UNDERREPORTING OF SUCH AMOUNTS IS A VIOLATION OF CALIFORNIA FRAUD STATUTES. SIGNATURE OF PERSON TITLE AREA CODE PHONE NO. PREPARING REPORT ... NAME AND ADDRESS WHERE PAYROLL RECORDS ARE KEPT Îlnclude ZIP CODE: paid to DA TE "~. WE E K L YBU LLETI N Published by Western Insurance Agents Association 11190 Sun C9!'1:er Drive, Suite 100 . Rancho Cordova, CA 95ó70 (916) 4L3-t1221 . \ôCO\ 553-.1221 . :-c;w; (916\ 443-.5.559 No. 1,415 State Fond Iss des The State Fund has issued 2t1 announcer'.. ent to Calífomia' 5 i nsuranœ agents and Announcement to brokers iniorming them oí new measures which must be immediately enacted in an 1I..øenIS 3Ød BroiœtS "ifort \0 maintain the long-t""" Ï1na~cial 51abilit¡ oj the ¡:und. Tn" fallowing ar" the measures that have been ir..piemented by tr:e State Fund, sffec:ive April 1, 20D3, April 1 f 2003 ii Agems submitting new business Tor staï. up DuSlnessas with an estimated ar¡nüai premium (EAP) be\ow S25.0CO must sL:bmitmree precis of dec~¡natjcnfí::m trlree carriers ...vrning workers' compensation lnSL.r,S"c; in Calficmia. . For existing Dus\nesses ..vnrl EAF ':;;e+cw 52:, DeC, ','vT-,id"T have been r.cn-í;::newed and cannet be placsd in tr,e private mar':æt in add;ticn to the three proofs of dr:>l"'\'lnat¡'on brok:::>rs""'" ,ct also .¡nr-:uc.¡:, a r-,..,pv ~':""':::> 1"'r-+;c"" or" ..,0"'" ~::>I"'::'\N-\ +h-'" ~- , ... ¡,¡U->L -;.- _~J~",'~'I'-'""" II,\-\_.,_d",d~ demonstrates tr-.e ca¡¡~ilaticn ,vas beyond ccmro\ oftr,e insured. . Accounts with an E.i\P greater~Jlan S25,000, and bus;nesses with r=.ðP less than $25,000 that have been non-renewed ::;r ::znœ\led fer reasons within the control of'ihe insured and cal1not be placed \1'1 tria private market, will not be initially quoted. An appeals process win be implemented by the Department of Insur- ance for any ac~unts 'J"at trIa State Fund ultimately declines to quote. . MY broker producing consistently un;:rontable busineSS 'Nil\ have ïts business re- laDonshipwith the Stare Fund terminated. However, iftr.e terminated broker is unable to place existing policies with another insurer, State Fund win renew lr,e ae:ountfor one policy term, or a period of one year, wnichever is shaner. Termi- nateO brokers wi1l continue to earn commission en their exiSting pclic:es I":P to trle policy expiration date. The criteria fc¡ termination is also under review and further information will be provided when it is made avaiiable. Ii To assist tr.e placement of business witL¡ ather carriers, State Fund wiH suspend the imposition of short-term penalties en mid-term cancellations wim effective dates of April 1 tilraugil December 3 i. 2003. In addition to these maasures, tr.e annour,~mer,t also addressed tr,e issue cf agent and broker commissions. Effec.ive August Î, 2C03, the State Fund wi II pay a maxi- (over please) .. 2003 WIAA Insurance services. All nghlS .eserved. Repcccuetioó 0' OtiO""O' " who!. or i, part witheU! wrtlle' permission is prohibited. ---~ I EXHIBIT B STAFF RECOMMENDED RATE ADJUSTMENT r - Fed~ral Disposal Service 71uFF Rev.. EXHIBIT SA Proposed Residential Rates PPI and Extraordinary Worker's Compensation Insurance Adjustment Customers Billed By the City on Tax Roll Step One: Determine disposal expense, Extraordinary Ins. and service revenue as a percent of actual rate revenue Revenue Component Annual Amount (a) Percent of Rate Revenue Single Family Rate Revenue 2003 Actual Revenue $ 1,561,759 100.0% Less:Single Family Refuse Disposal Expense $ 368,016 23.6% Less:Single Family Worker's Comp Ins. Expense $ 56,136 3.6% Sinale Family Service Revenue $ 1,137,607 72.8% Step Two: Calculate percentage change in adjustment factors Adjustment Factor Old New Percent Change Disposal Gate Fee per Ton $ 22.00 $ 22.00 0.0% Worker's Compensation Insurance $ 56,136.00 $ 72,081.00 28.4% Producer Price Index 132.5 135.3 2.1% Step Three: Calculate weighted percentage change in single familY--'"ates Components of Actual Revenue Component WeiQht (b) Percent ChanQe (c) WeiQhted Rate Adjustment Refuse Disposal 23.6% 0.0% 0.0% Worker's Compensation Insurance 3.6% 28.4% 1.0% Service 72.8% 2.1% 1.5% Total 100.0% N/A 2.6% Step Four: Apply weighted percentage change to single family rates Service Current Monthly Rate (d) Weighted Rate Adjustment (e) Adjusted Monthly Rate Single Family-Automated Cart $ 13.08 2.6% $13.41 Revised6/15/2004 Federal Disposal Service EXHIBIT 5B Proposed Commercial Rates PPI and Extraordinary Worker's Compensation Insurance Adjustment Customer Billed By the Company (Except Rolloff) Step One: Deduct franchise fees from gross rate revenue Revenue Component (including Franchise Fees) Annual Amount (a) Percent of Rate Revenue IncludinQ Franchise Fees Actual Gross Commercial and MFR Rate Revenue 2003 Actual Revenue $ 2,606,849 100.0% Actual Commercial and MFR Franchise Fees 2003 Actual Fran Fee $ 67,199 2.6% Actual Gross Commercial and MFR Rate Revenue Net of Franchise Fees $ 2,539,650 97.4% Step Two: Determine disposal expense, Extraordinary Ins. and service revenue percentage of total actual rate revenue Revenue Component (net of Franchise Fees) Annual Amount (a) Percent of Rate Revenue Net of Franchise Fees Actual Commercial and MFR Bin revenue Net of Franchise Fees 2003 rate adj estimate $ 2,539,650 100.0% Less: Actual Commercial and MF~ Disposal $ 948,574 37.4% Less: Worker's Compensation Ins (Actual Cost) $ 112,271 4.4% Actual Commercial and MFR Bin Service Revenue $ 1,478,805 58.2% Step Three: Calculated percentage change in adjustment factors Adjustment Factor Old New Percent ChanQe Disposal Gate Fee per Ton $ 22.00 $ 22.00 0.0% Worker's Compensation Insurance $ 112,271.00 $ 144,162.00 28.4% Producer Price Index $ 132.50 $ 135.30 2.1% Step Four: Calculated weight percentage change in commercial and MFR Bin rates Components of Actual Revenue Component Weight (c) Percent Change (d) Weiahted Rate Adjustment Refuse Disposal 37.4% 0.0% 0.0% Service 58.2% 2.1% 1.2% Worker's Compensation Insurance 4.4% 28.4% 1.3% Total 100.0% N/A 2.5% Step Five: Applied weighted percentage change to commercial and MFR Bin rates Service Current Monthly Rate Weighted Rate Adjusted Monthly Rate (e) Adiustment (f) 1 ea. 2 yard Bin once per week $ 41.05 2.5% $42.07 1 ea. 2 yard Bin twice per week $ 73.38 2.5% $75.20 1 ea. 2 yard Bin three times per week $ 105.72 2.5% $108.35 1 ea. 2 yard Bin four times per week $ 138.05 2.5% $141.48 1 ea. 2 yard Bin five times per week $ 170.39 2.5% $174.63 1 ea. 2 yard Bin six times per week $ 202.71 2.5% $207.75 1 ea. 3 yard Bin once per week $ 46.16 2.5% $47.31 1 ea. 3 yard Bin twice per week $ 83.60 2.5% $85.68 1 ea. 3 yard Bin three times per week $ 121.04 2.5% $124.05 1 ea. 3 yard Bin four times per week $ 158.47 2.5% $162.41 1 ea. 3 yard Bin five times per week $ 195.92 2.5% $200.79 1 ea. 3 yard Bin six times per week $ 233.35 2.5% $239.15 1 ea. 4 yard Bin once per week $ 51.26 2.5% $52.53 1 ea. 4 yard Bin twice per week $ 93.81 2.5% $96.14 1 ea. 4 yard Bin three times per week $ 136.34 2.5% $139.73 1 ea. 4 yard Bin four times per week $ 178.89 2.5% $183.34 1 ea. 4 yard Bin five times per week $ 221.44 2.5% $226.95 1 ea. 4 vard Bin six times per week $ 263.99 2.5% $270.55 Revised6/15/2004 Federal Disposal Service EXHIBIT 5C Proposed Roll Off Rates PPI Rate Adjustment Step One: Calculate percentage change in Producer Price Index Adjustment Factor Old New Percent Change Producer Price Index $ 132.50 $ 135.30 2.1% Step Two: Apply percentage change in Producer Price Index to Service Portion of rolloft rates n Service Current Monthly Rate Adjustment Adjusted Rate Rate (a) Standard Rolloff charge per load (b) $ 112,80 2.1% $ 11.5.18 Compactor charge per load $ 165.36 2.1% $ 168.85 Delivery or relocation charge $ 80.01 2.1% $ 81.70 Temporary "Clean-Up" Bins $ 53.34 2.1% $ 54.47 Locking Bins $ 5.33 2.1% $ 5.44 On-Call Bin Cleaning Services (in excess of 1x1yr) $ 37.34 2.1% $ 38.13 Bulky Item Pick up (in excess of 2x/yr) $ 21.34 2.1% $ 21.79 Special Pick (in excess of 2x1yr) Auto Cart Cust $ 5.33 2.1% $ 5.44 CRT's (E Waste) $ 30.00 2.1% $ 30.63 Tipping Rate $ 28.00 0.0% $ 28.00 Revised6/15/2004 Federal Disposal Service EXHIBIT 5C Proposed Roll Off Rates PPI Rate Adjustment Step One: Calculate percentage change in Producer Price Index Adjustment Factor Old New Percent Change Producer Price Index $ 132.50 $ 135.30 2.1% Step Two: Apply percentage change in Producer Price Index to Service Portion of rolloff rates Service Current Monthly Rate Adjustment Adjusted Rate Rate (a) Standard Rolloff charge per load (b) $ ~ 112.80 2.1% $ 115.18 Compactor charge per load $ 165..36 2.1% $ 168.85 Delivery or relocation charge $ 80.01 2.1% $ 81.70 Temporary "Clean-Up" Bins $ 53.34 2.1% $ 54.47 Locking Bins $ 5.33 2.1% $ 5.44 On-Call Bin Cleaning Services (in excess of 1x/yr) $ 37.34 2.1% $ 38.13 Bulky Item Pick up (in excess of 2x/yr) $ 21.34 2.1% $ 21.79 Special Pick (in excess of 2x1yr) Auto Cart Cust $ 5.33 2.1% $ 5.44 CRT's (E Waste) $ 30.00 2.1% $ 30.63 TippinQ Rate $ 28.00 2.1% $ 28.59 Revised6/8/2004 Federal Disposal Service Proposed Rate Summary Dated 6/8/2004 PPI and Extraordinary Insurance Residential Multi-FamilY Cart Rates Original Quantity Row Service Proposed of Monthly Annual Billings Monthly Rate Service Units Billings 1 Automated Cart $13.29 9,950 $ 132,248 $ 1,586,978 3 Total Cart Billings $ 132,248 $ 1,586,978 Commercial and Multi-Family Bin Rates Pickups per Week Row Service 1 2 3 4 5 6 4 2 Cubic Yards $43.39 $77.56 $111.75 $145.92 $180.11 $214.27 5 3 Cubic Yards $48.79 $88.37 $127.94 $167.51 $207.09 $246.66 6 4 Cubic Yards $54.18 $99.16 $144.11 $189.09 $234.07 $279.04 Commercial and Multi-Family Bin Distribution Matrix - Number of Bins Pickups per Week Row Service Total 1 2 3 4 5 6 7 2 Cubic Yards 66 15 14 - 2 - 97 8 3 Cubic Yards 239 475 445 107 104 49 1,419 9 4 Cubic Yards 23 129 141 33 43 39 408 10 Total 328 619 600 140 149 88 1,924 Commercial and Multi-Family Bin BillinQs Pickups per Week Row Container Total Size 1 2 3 4 5 6 11 2 Cubic Yards $ 2,864 $ 1,163 $ 1,564 $ - $ 360 $ - $ 5,952 12 3 Cubic Yards 11,661 41.974 56,934 17,923 21,538 12,086 162,117 13 4 Cubic Yards 1.246 12,792 20,320 6,240 10,065 10,883 61.545 14 Total Monthly Billings $ 15,771 $ 55,929 $ 78,819 $ 24,163 $ 31,963 $ 22,969 $ 229,614 15 Total Annual Billings $ 189,256 $ 671.152 $ 945,825 $ 289,958 $ 383,552 $ 275,626 $ 2,755,368 Roll-Off Box BillinQs Row Description Billing Unit Units per Proposed Estimated Year Rate Annual Billings 16 Pull Charge # of Pulls 2,321 $ 115.18 $ 267,341 17 Disposal/Processing Charge # of Tons 10,366 $ 29 296.382 18 Total - 12,687 144 563.723 Summary of Proiected Annual BillinQs Proposed Base Period Increase % Revenue 19 Residential Multi-Family and Commercial Cart Billings $ 1,586,978 $ 1,561,759 1.6% 32.350~Î 20 Commercial and Multi-Family Bin Service Billings 2,755,368 2,606,849 5.7% 56.16% 21 Roll-Off Box Billings 563,723 552.137 2.1% 11.49% 22 Total Projected Annual Billings $4,906,069 $4,720,744 3.9% Reconciliation Total Requested Increase $185,325 Residential Credit Insurance PPI Retro Cost Recovery (44,946) $130.272 $71,718 $28,281 $185,325 Variance $0 Revised6/B/2004 Federal Disposal Service Integrated Solid Waste Management Services Franchise Workers Compensation Insurance Cost Increase In accordance with Article 6.5 of the Franchise Agreement, Federal makes request for an adjustment in rates for the extraordinary rise in costs of Workers Compensation Insurance totaling 28.41 % since July 2003 and for the extraordinary rise in costs of General Insurance totaling 119.88% since October 2003. Workers Compensation Cost Cost as of: Base June 2003 Hourly Rate of Pay (average) Premium Rate Cost per hour $ 14.35 $ 25.77% 3.70 Total Labor Hours 45,540 Annual Workers Compensation Cost 168,406.69 General Insurance Cost Policy Period Effective Cost October 2003 14.89 31.89% 4.75 45,540 216,243.09 Total Premiums 68,764.57 12/01/02 - 11/30104 12/01/03 - 11/30104 151,199.81 Grand Total $ 237,171.26 $ Total Annual Billings (All Group) $4,683,992.00 367,442.90 Increase $ 47,836.40 28.41% $ 82,435.24 119.88% $ 130,271.64 54.93% 2.78% Under penalty of perjury, I Donald Shubin, President of Federal Disposal Service warrants the figures used in calculating the 2004 Rate Adjustment request to be true and accurate to the best of my belief and knowledge, and that our original price offer did not have any contingencies for extraordinary increases in workers compensation or vehicle/generalliability insurance cost. Donald Shubin 6/8/2004 F~d~ral Disposal Service Proposed Rate Summary Dated 6/15/2004 PPI and Extraordinary Insurance Residential Multi.Family Cart Rates Original Quantity Row Service Proposed of Monthly Annual Billings Monthly Rate Service Units Billings 1 Automated Cart $13.41 9,950 $ 133,478 $ 1,601,737 3 Total Cart Billings $ 133,478 $ 1,601,737 Commercial and Multi.Family Bin Rates Pickups per Week Row Service 1 2 3 4 5 6 4 2 Cubic Yards $42.07 $75.20 $108.35 $141.48 $174.63 $207.75 5 3 Cubic Yards $47.31 $85.68 $124.05 $162.41 $200.79 $239.15 6 4 Cubic Yards $52.53 $96.14 $139.73 $183.34 $226.95 $270.55 Commercial and Multi-Family Bin Distribution Matrix - Number of Bins Pickups per Week Row Service Total 1 2 3 4 5 6 7 2 Cubic Yards 66 15 14 - 2 - 97 8 3 Cubic Yards 239 475 445 107 104 49 1,419 9 4 Cubic Yards 23 129 141 33 43 39 408 10 Total 328 619 600 140 149 88 1,924 Commercial and Multi-Family Bin Billinas Pickups per Week Row Container - . Total Size 1 2 3 4 5 6 11 2 Cubic Yards $ 2,777 $ 1,128 $ 1,517 $ - $ 349 $ - $ 5,771 12 3 Cubic Yards 11,307 40,697 55,202 17,378 20,882 11,718 157,184 13 4 Cubic Yards 1,208 12,402 19,702 6,050 9,759 10,552 59,673 14 Total Monthly Billings $ 15,291 $ 54,228 $ 76,421 $ 23,428 $ 30,990 $ 22,270 $ 222,628 15 Total Annual Billings $ 183,498 $ 650,732 $ 917,049 $ 281,136 $ 371,882 $ 267,240 $ 2,671,537 Roll-Off Box Billinas Row Description Billing Unit Units per Proposed Estimated Year Rate Annual Billings 16 Pull Charge # of Pulls 2,321 $ 115.18 $ 267,341 17 Disposal/Processing Charge # of Tons 10,366 $ 28 290,248 18 Total - 12,687 143 557,589 Summary of Proiected Annual Billinas Proposed Base Period Increase % Revenue 19 Residential Multi-Family and Commercial Cart Billings $ 1,601,737 $ 1,561,759 2.6% 33.16~1 20 Commercial and Multi-Family Bin Service Billings 2,671,537 2,606,849 2.5% 55.30% 21 Roll-Off Box Billings 557,589 552,137 1.0% 11.54% 22 Total Projected Annual Billings $4,830,863 $4,720,744 2.3% Reconciliation Total Increase $110,119 W/C $47,836 PPI $65,062 $112,898 Variance -$2,779 Revised6/15/2004 Federal Disposal Service Integrated Solid Waste Management Services Franchise Workers Compensation Insurance Cost Increase In accordance with Article 6.5 of the Franchise Agreement, Federal makes request for an adjustment in rates for the extraordinary rise in costs of Workers Compensation Insurance totaling 28.41 % since July 2003. Workers Compensation Cost Cost as of: Base June 2003 Effective Cost October 2003 Increase Hourly Rate of Pay (average) Premium Rate Cost per hour $ 14.35 $ 25.77% 3.70 14.89 31.89% 4.75 Total Labor Hours 45,540 45,540 Annual Workers Compensation Cost 168,406.69 216,243.09 $ 47,836.40 28.41% Total Annual Billings (All Group) $4,683,992.00 Under penalty of perjury, I Donald Shubin, President of Federal Disposal Service warrants the figures used in calculating the 2004 Rate Adjustment request to be true and accurate to the best of my belief and knowledge, and that our original price offer did not have any contingencies for extraordinary increases in workers compensation cost. Donald Shubin -: 6/15/2004 FEDERAL DISPOSAL SERVICE CITY OF TUSTIN SOLID WASTE TONNAGE REPORT 2003 Programs Dump Sites Qrtly 1st '03 2nd '03 3rd '03 4th '03 Residential Landfill (1)Bowerman 2,630 2,606 2,726 2,504 Green Waste (2)Tierra Verde 1,462 1,693 1,786 1,321 Mixed Recy. (3)Sunset 1,031 1,163 1,284 1,358 TOTAL RESIDENTIAL TONNAGE COLLECTED 5,123 5,451 5,788 5,183 Commercial Landfill (1 )Bowerman 9,618 10,636 10,459 7,894 Green Waste (2)Tierra Verde 68 75 60 56 Transformation (4)SERF 732 248 535 2,736 Select Routing (5)Recycling Sys 0 0 0 41 White Paper (6)Men Cal 5 3 2 0 Mixed Recycle (3)Sunset 227 327 340 315 TOTAL COMMERCIAL TONNAGE COLLECTED 10,650 11,289 11,395 11,043 YTD 2003 """"", ........ ....",,"""... 4,836 21,545 x22 368,016 1,209 44,378 EXHIBIT C COUNTY SOLID WASTE RATE SURVEY 1 - 2004 Trash Rate Survey - March '04 Residential Monthly Rates Rank City Curbside Company Collection 1 Orange $10.64 Waste Management 2 Irvine $10.66 Waste Management 3 Los Alamitos $11.47 Consolidated Disposal 4 Lake Forest $11.95 Waste Management 5 Mission Viejo $12.00 Waste Management 6 Laguna Hills $12.12 CR&R 7 Dana Point $12.24 CR&R 8 Buena Park $12.81 Park Disposal 9 Tustin (existing) $13.08 Federal Disposal Service Tustin (FDS request) $13.29 Federal Disposal Service Tlistin (staff rec) $13.41 Federal Disposal Service 10 San Juan Capistrano $13.53 CR&R 11 San Clemente $13.56 CR&R 12 Rancho Santa Margarita $13.58 Waste Management 13 Laguna Beach $13.77 Waste Management 14 Seal Beach $13.84 Consolidated Disposal 15 Laguna Niguel $13.90 CR&R 16 La Habra $14.00 Waste Management 17 La Palma $14.14 Park Disposal 18 Santa Ana $14.40 Waste Management 19 Stanton $14.91 CR&R 20 Fullerton $15.31. Taormina Industries 21 Yorba Linda $15.45 Taormina Industries 22 Brea $15.53 Taormina Industries 23 Placentia $15.82 Taormina Industries 24 Anaheim $16.03 Taormina Industries 25 Cypress $16.34 Consolidated Disposal 26 Garden Grove $16.45 Taormina Industries 27 Villa Park $16.47 Taormina Industries 28 Fountain Valley $16.66 Rainbow Disposal 29 Costa Mesa $17.43 Taormina Industries 30 Huntington Beach $17.44 Rainbow Disposal 31 Laguna Woods 32 Newport Beach Rate comparisons N/A 33 Westminster Commercial Monthly Rates Rank City 3 Cubic Yards Company 1X1Week 1 Lake Forest $44.00 Waste Management Tustin (existing) $46.16 FederéllDisposatService Tustin (staff rec) $47.31 Federal Disposal Service Tustin (FDS request) $47.58 Federal Disposal Service 3 Mission Viejo $49.15 Waste Management 4 Laguna Hills $73.27 CR&R 5 San Juan Capistrano $73.57 CR&R 6 Irvine $75.32 Waste Management 7 Dana Point $76.86 CR&R 8 Westminster $77.25 Rainbow Disposal 9 Laguna Niguel $78.17 CR&R 10 Orange $80.07 Waste Management 11 Santa Ana $89.11 Waste Management 12 Rancho Santa Margarita $90.37 Waste Management 13 Laguna Beach $99.00 Waste Management 14 San Clemente $101.62 CR&R 15 La Palma $101.75 Park Disposal 16 La Habra $103.00 Waste Management 17 Brea $103.99 Taormina Industries 18 Buena Park $105.26 Park Disposal 19 Los Alamitos $105.40 Consolidated Disposal 20 Yorba Linda $107.26 Taormina Industries 21 Placentia $110.19 Taormina Industries 22 Villa Park $113.50 Taormina Industries 23 Stanton $117.13 CR&R 24 Garden Grove $117.43 Taormina Industries 25 Huntington Beach $117.68 Rainbow Disposal 26 Fountain Valley $118.76 Rainbow Disposal 27 Anaheim $119.02 Taormina Industries 28 Seal Beach $119.21 Consolidated Disposal 29 Cypress $122.07 Consolidated Disposal 30 Fullerton $126.27 Taormina Industries I 31 Costa Mesa 32 Laguna Woods Rate comparisons N/A 33 Newport Beach EXHIBIT D NEWSPAPER ARTICLES ON WORKERS COMPENSATION INSURANCE Workers' comp costs likely to drop 15% initially First independent analysis of the law predicts further savings in 2005. By JOHN GITTELSOHN and CATRINE JOHANSSON The Orange County Register SACRAMENTO - Workers' compensation insurance premiums should go down 13 percent to 15 percent on July 1, according to the first independent analysis of reforms released Tuesday. The Workers Compensation Insurance Ratings Bureau, an independent industry analysis group, noted that the preliminary estimate does not factor in future savings from reduced payments on disabilities and doctor fees, which will not be implemented until next year. The estimates, which are not binding on insurance companies, were prepared in advance of hearings for the state insurance commissioner on Thursday. Gov. Arnold Schwarzenegger, who made workers' compensation reform a cornerstone of his new administration, projected rates eventually will drop 25 percent to 30 percent. His spokesman, Vince Sollitto, said estimates by the Insurance Ratings Bureau show the governor is on course. "Those projections are encouraging, considering they appear to recognize substantial savings even as significant reforms have yet to take effect," Sollitto said. Workers' compensation insurance, which is mandatory for all California employers, cost an average $6.33 per $100 in payroll last year, more than double the national average, a cost that Schwarzenegger and others said was driving jobs out of the state. Savings from the new law stem from restrictions on medical treatment and a shorter dispute-resolution process. Employers gave the projection a mixed reaction. Steve Sladky, 37, an airline industry health and safety manager in Santa Ana, said rates could come down more once all of the changes in the package take effect because he will have more control over how injured workers are treated. "It allows me as an employer to send the injured worker to an occupational therapist who will work to get the employee back to work, not sit at home," said Sladky, who asked that his company's name not be used. . But Steve Speer, co-owner of Gina's Pizza and Pastaria in Irvine, scoffed at the projections. "That's a joke," said Speer, 48. Speer said that his insurance rates rose 50 percent last year without any injury claims and that he had expected a more sizable savings after the reforms passed in April. 'Where are all the savings going?" Speer said. "Why aren't the employers that are paying the bills getting the savings?" Speer blames the insurance companies for keeping the savings instead of passing them on. "It's typical of the insurance industry that prices go up a lot faster than they come down," Speer said. "You can bet that the insurance industry is figuring out every which way to justify this small decrease. It doesn't mean it's right, but they can show it on paper." The law signed by Schwarzenegger in April did not regulate insurance rates, but it included a requirement for a study to evaluate whether insurance companies are reaping excessive profits. The bill's sponsor, Sen. Chuck Poochigian, R-Fresno, said he was pleased by the projection but not satisfied. "If this were to be a final number, I'd be less than enthusiastic," he said. Dtø ~fW .... .COIII. http://www.latimes.comlbusiness/la-fi-comp14may14,1, 14 72802.story?coll=la-headlines-business CALIFORNIA Going Slow on Cutting Premiums Insurers say savings will come from workers' compensation reform, but probably not as soon as employers wish. By Marc Lifsher Times Staff Writer May 14,2004 California employers are likely to see lower insurance premiums now that the state has overhauled its costly workers' compensation system - but they'll have to be patient. A veteran business lobbyist warned Thursday that the cost savings that analysts were projecting from the overhaul signed into law April 19 by Gov. Arnold Schwarzenegger probably would not be reflected in workers' comp premiums anytime soon. And insurance industry executives cautioned that it was too soon for them to commit to sharply lower premiums in the second half of the year. - The Workers' Compensation Insurance Rating Bureau, a research and statistical service backed by workers' comp insurers, told Insurance Commissioner John Garamendi during a hearing Thursday that early projections indicated immediate savings of about 15% from the recent changes in the workers' comp system. But premiums for coverage of medical care and compensatory benefits for injured workers, which soared by 15% a year over the last four years, aren't likely to come down quickly enough to satisfy business owners expecting bills before Dec. 31, said Willie Washington, a legislative advocate for the California Manufacturers and Technology Assn. in Sacramento. "I don't think that the small employers, who got 50% and 100% increases over the last few years, are going to be happy," Washington said. "They'll think the reduction is too small." "We have to get it across to them that this is the beginning of premiums coming down. And they should be coming down on a regular basis." Garamendi, though conceding that the bulk ofthe new bill's relief won't be felt until next year, said he was likely to recommend that insurers cut rates beginning this summer by at least 18%. The proposed reduction, he said, would reflect savings from this year's law and two other workers' comp bills passed by the Legislature in 2003. The commissioner's advice, however, is not binding on insurance companies. Insurers say they'll analyze the rating bureau's estimates, Garamendi's numbers and their own research before setting midyear premiums. ,"We':!.come up with our best guess as to what is prudent for us to do," said Stanley lax, president of Woodland Hills-based Zenith National Insurance Co., the fifth-largest workers' comp writer in California. Zax said the rating bureau's estimates were reasonable "if we were living in a perfect world." But he warned that it would take time to know whether the forecasts would pan out. He predicted that Zenith would cut rates by somewhere between 5% and 14%. Another major insurer, Switzerland-based Zurich Financial Services, said it wouldn't speculate on how much, if at all, its premiums might decline this year. Company spokesman Keith Owens said Zurich didn't expect to see an effect on claims until 2005, when changes in the calculation of permanent disability benefits for workers - a key provision of the overhaul - are expected to go into effect. The insurers' caution doesn't please consumer groups, Democratic lawmakers or the attorneys who represent injured workers. All three groups are pushing bills to regulate workers' comp rates to guarantee that savings from the overhaul are passed on to business. Rates for employers should drop by an immediate 25% to reflect savings from earlier bills, Assembly Speaker Fabian Nuñez CD-Los Angeles) said Thursday Douglas Heller, director of the Foundation for Taxpayer and Consumer Rights, a Santa Monica activist group, said premiums should drop by at least the 14% estimated by the rating bureau. "The only reason they wouldn't pass every dime of savings back to business is there are no regulations requiring them to do it," he said. 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