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Minutes - Board - 2006-05-25 (2)• • 1' COSTA MESA SANITARY DISTRICT MINUTES OF SPECIAL MEETING MAY 259 2006 The Costa Mesa Sanitary District held a Special Meeting at 6:00 p. m. on May 25 at 628 W. 19th Street, Costa Mesa. Directors Present: James, Ferryman, Greg Woodside, Art Perry, Arlene Schafer, Dan Worthington Staff Present: Robin B. Hamers, Manager /District Engineer; Tom Fauth, Assistant Manager; Joan Revak, Board Secretary/Program Manager /Clerk of the District; Wendy Davis, Treasurer; Alan Burns, General Counsel Others Present: David Ronnenberg President, CR &R 11292 Western Avenue Stanton, CA 90680 George Lazaruk Vice President, CR &R President Ferryman called the meeting to order at 6:00 p. m. Director Schafer led the Pledge of Allegiance. Director Woodside gave the Invocation. TRASH COLLECTION PROGRAM PRELIMINARY 2006 -2007 TRASH COLLECTION PROGRAM BUDGET Ms. Davis presented the proposed solid waste budget for fiscal year 2006 -2007 which included three different budget proposals as outlined in her information provided to the Board. Mr. Hamers presented a memorandum outlining meetings and discussions held with CR &R on the CMSD trash collection rate. Mr. Hamers noted that the rate CMSD charges residents has climbed to the highest rate in Orange County. Mr. Hamers stated a comparison of the CMSD rate with the rates charged by cities in Orange County is difficult as there are a number of factors in the rates charged by various cities that alone would cause the CMSD rate to appear higher than the city rate and these factors include: Min;:ites of Special Meeting May 25, 2006 Page 2 • • In the cities where the contractor does the billing, quoting the trash collection rate as the rate charged by the contractor directly to the resident. This rate does not include the city costs of a full time recycling coordinator, costs for the director of public services who makes all the decisions regarding the program, costs for the city attorney who reviews the contract and prepares new ordinances and contract revisions, the costs of a contract administrator, costs for the city's finance department that makes contractor payments and receipts reimbursements, and the cost of the city's public outreach program. • The ability of cities that collect both commercial and residential trash to recycle the commercial trash well above 50% in order to recycle the residential trash, below 50% and have lower residential recycling rates. • The prevalence of agencies that artificially reduce the residential rate and balance it with corresponding increases in commercial rates. • The establishment of a base rate by certain cities with additional costs paid by residents with service levels above the base rate. • A lack of cities that utilize a "commingled program" where all the trash is placed in one container and recycled at a MRF as in the CMSD. • Mr. Hamers stated that CR &R President David Ronnenberg, and Senior Vice President of Solid Waste Dean Ruff ridge, have shown a genuine interest in lowering the CMSD trash collection rate and remaining as the District's hauler and recycler over the long term. CR &R offered to forego the CPI increase in compensation paid to both Costa Mesa Disposal and CR Transfer for the 2006- 2007 fiscal year — valued at $130,000 - along with offering to take over payments for the remaining balance of $1.3 million on the District's standardized trash containers. Additionally, CR &R offered to guarantee there is no increase in the CMSD rate from 2005 -2006 to 2006 -2007 and offered future guarantees that the District's rate would remain competitive. Mr. Hamers reported that CMSD Staff is very appreciative of CR &R's offer and believes that a workable solution is available. Staff also believes that the existing "commingled program" is more advantageous than a program with three different colored containers and three trash collection trucks visiting each residence. Staff recommended the following to the Board of Directors for consideration: 1. Accept the offer by CR &R to forego the 3% rate increase to both Costa Mesa Disposal and CR Transfer for the 2006 -2007 fiscal year. 0 2. Decline the offer by CR &R for takeover of the trash container payments until a long -term contract is reached. CR &R also takes this position as both parties have a substantial investment under consideration. Minutes of Special Meeting May 25, 2006 Page 3 • 3. Accept the offer from CR &R to guarantee the District does not increase its rate from the existing 2005 -2006 rate. CR &R is presently performing a trash container inventory to identify the number of trash containers at each residence. With the Board's approval, CR &R proposes to implement a billing program whereby residents with three or more containers are billed for the additional containers. CR &R believes this additional revenue will adequately fund'the program to allow the trash collection rate to remain at the 2005 -2006 level. CR &R proposes to begin a notification program on July 1, 2006 and implement the extra container billing program on September 1, 2006. The result of 1, 2 and 3 will keep the existing rate at $19.95 per month per residence for the 2006 -2007 fiscal year. Mr. Hamers noted that the additional revenue from the extra container billing is District revenue and the long -term use of the money must be agreed to by both CR &R and the District. Director Woodside commented on the billing procedure and requested Staff study sending a single bill to each residence instead of a partial billing on the county tax collector's bill and a separate invoice for the extra containers. • 4. Review the new rates charged throughout Orange County for the 2006 -2007 fiscal year in comparison to the CMSD rate when the other rates are available. 5. Consider contract language suggested by CR &R similar to language in their contracts with other agencies that guarantees their rate is automatically adjusted to local benchmarks. These provisions would keep the CMSD rate at a point desired by the Board of Directors. 6. Consider a study of trash collection rates in Orange County that would compare rates on an equal basis. Whether CR &R or the District, or both, fund the study is up for consideration. Establish a trash collection "base rate" of two 60- gallon containers. Residents with additional capacity beyond this level would pay additional monthly charges. This will generate additional revenue to support the program while instituting a "variable rate structure ", which has been a goal of the District. 7. Begin capturing partial year charges when a residence comes on -line during the year and should pay trash collection charges until being added to the yearly roll submitted to the Orange County Auditor - Controller. • In order for the above factors to be incorporated into a long -term agreement beginning with the 2007 -2008 fiscal year, the above items must be completed and agreed to by both parties by December 2006. Minutes of Special Meeting May 25,12006 Page 4 • Mr. Hamers recommended the Board approve an extended timeframe from May 25, 2006 until December 15, 2006 for CR &R and District Staff to complete the above items and bring an agreement to the Board of Directors. Mr. Hamers noted, as mentioned in previous meetings, establishment of a rate stabilization fund is appropriate to handle future unexpected cost increases such as extraordinary fuel costs. Also presented to the Board were copies of the CMSD Residential Trash Collection Survey for the year 2000 and 2005. After discussion by the Board of Directors, the Board directed Staff to continue working with CR &R in accordance with their proposal. The Board also directed Ms. Davis to bring back the three budgets outlined in her memorandum to the Board — an 8% increase, a 5% increase, and no increase, for consideration at the June 8, 2006 regular meeting. The Board stated that a trash rate study as described in item 6 above was unnecessary. The Board also acknowledged Mr. Hamers comments that continued study into the average volume or weight of trash per residence is necessary , in order • to determine a fair base rate. A Special Meeting was scheduled for Monday, June 19, 2006 at 6:00 p.m. to continue discussion on the CR &R proposal and to monitor progress of the work. VI. SEWER PROGRAM Ms. Davis presented a Proposed Liquid Waste Budget for Fiscal Year 2006 -2007 reflecting a 20% increase in sewer rates for the upcoming 2006 -2007 fiscal year. Ms. Davis noted the increase provides only $800,000 for Capital Improvement Projects, most of which are maintenance- oriented projects instead of capital improvement projects. The remaining portion of the budget provides approximately $933,000 for the Sewer Maintenance Program. Ms. Davis also presented the "Summary Budget Worksheet" and noted the worksheet shows projected increases of 20% through the fiscal year 2009 -2010 with operational expenses increasing at 5% from one year to the next. Ms. Davis noted all additional revenue derived from the increased rates is for Capital Improvement Projects. Mr. Hamers stated this long term forecast provides revenue for both operations and maintenance and for capital improvement projects. • The Board directed Ms. Davis to bring the 2006 -2007 sewer program budget as presented back to the regular meeting scheduled for June 8, 2006. • Minjutes of Special Meeting May 25, 2006 VII. CONSIDER BUDGET ADJUSTMENTS FOR FISCAL YEAR 2005 -2006 Page 5 Ms. Davis presented a list of Capital Improvement Projects with amounts to be transferred from one project to another as explained by the Manager /District Engineer. Director Perry moved to transfer funds as noted below. From Westside Abandonment #101 Tustin Pump Station Force Main #171 South Coast Plaza Force Main #173 South Coast Plaza Force Main #173 To' Amount Newport/191h Sewer #181 $85,000 Tustin Pump Station #168 $500,000 Tustin Pump Station #168 $60,000 Newport/19th Sewer #181 $115,000 Director Woodside seconded. Motion carried 5 -0. VIII. CONSIDER COUNTER OFFER ON PROPERTY AT 2252 FAIRVIEW ROAD • Mr. Fauth presented a counter offer on potential District Yard property located at 2252 Fairview Road. After discussion on the pros and cons of purchasing the property for the use as the District yard, the consensus was that without an appraisal and with the property owner's high asking price, the Board does not feel comfortable about purchase of this property. Staff will direct Realtor Don Gregg to continue searching for appropriate property for the District yard. IX. CONSIDER LAFCO NOMINATIONS Director Schafer informed the Board that information on candidates for open LAFCO seats is forthcoming and requested the item be continued to the regular June 8, 2006 Board meeting. X. PUBLIC COMMENTS There were no public comments. • Minute's of Special Meeting May 25, 2006 r1 LJ XI. ADJOURNMENT Page 6 Prior to adjourning the meeting at 8:10 p.m., President Ferryman informed the Board he was nominated to be Chairman of the Orange County Sanitation District Board of Directors. Secretary • • President