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HomeMy WebLinkAbout05/09/2006 B A K E R S F I E L D ~--[~ ~/~'~' Mike Maggard, Chair John Stinson, Assistant City Manager Irma Carson For: Alan Tandy, City Manager Harold Hanson AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Tuesday, May 9, 2006 - 10:00 a.m.- City Manager's Conference 'Room - Suite 201 City Hall, 1501 Truxtun Avenue, Bakersfield, CA 1. ROLL CALL The meeting was Called to Order at 10:05 a.m. Present: Councilmembers Mike Maggard, Chair, Irma Carson; and Harold Hanson 2. ADOPT MARCH 8, 2006 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Update Report and Committee recommendation regarding Refuse Hauling Contract extension negotiations Public Works Director Raul Rojas reported staff met with the haulers in ..... February. It was a positi~)e meeting, but there were unresolved issues. A letter was sent on February 23rd to Kern Refuse Disposal (haulers) outlining rate and contract related issues to be negotiated in relationship to the haulers' request to extend the expiration date of their contract. The main issues remaining were the City's request to limit customer rate increases to the Consumer Price Index and allowing customers to trade in the extra tan cart for the blue recycling cart. Staff is waiting for a response to the letter sent to the haulers. Committee Chair Mike Maggard stated at the last Council meeting, two weeks ago, staff was requested to negotiate with the haulers and bring the contract extension back to the Committee today and asked staff to explain the issues that are holding up the negotiations. AGENDA SUMMARY REPORT Page 2 BUDGET AND FINANCE COMMITTEE MEETING Tuesday, May 9, 2006 Solid Waste Superintendent Sal Moretti explained after the City/County Joint meeting at which the Council and the Board of Supervisors brought up mandatory curbside recycling, City Solid Waste staff and County staff met with the haulers twice regarding curbside recycling. The haulers' contract extension was not part of the discussions, but it became apparent the mandatory curbside recycling issue has impacted the progress of the negotiations. Mr. Larry Moxley, Kern Refuse Disposal, Inc., explained they have not responded directly to the Public Works Director's letter due to concerns regarding the possibility the City and County may decide to go to mandatory curbside recycling. The haulers would need to spend roughly $5.5 million for blue carts and trucks and if the haulers are required to do' processing, a processing plant would cost another $5 to $8 million to build. After discussion, Committee Chair Mike Maggard recommended since the City Council has not adopted a policy on mandatory curbside recycling, that it not be considered in the contract extension negotiations at this time. In the future, if the City Council and the Board of Supervisors decide to make curbside recycling mandatory, it could be negotiated as a separate issue. The Committee unanimously agreed. Mr. Moxley spoke regarding the contract extension negotiations. The haulers are not in agreement with the City on using only the Consumer Price Index (CPI) for yearly rate increases. CPI increases are always a year behind. The haulers have requested rate increases in addition to the CPI to cover fuel and workers' compensation expenses due to the extraordinary higher costs. Public Works Director Raul Rojas explained fuel and workers' compensation costs are included in the CPI, which is used each year in January when the haulers' rates charged to customers are adjusted. City Manager Alan Tandy stated the City's goal is to clear up the language in the contract to avoid open ended disputes every year. The contract needs to be clear as to whether there are going to be exceptions, or if everything is included in the Consumer Price Index. Specific unforeseen exceptions could be included in the contract, for example, new State legislation that impacts the costs associated with providing refuse services. Public Works Director Raul Rojas stated there is another unresolved issue with the contract regarding exchange of the extra tan cart for a blue recycling cart. The haulers are not in disagreement, but due to the cost differential between the two carts, the haulers would charge the City the actual monthly cost to service the blue recycling carts, which the City would have to subsidize. AGENDA SUMMARY REPORT Page 3 BUDGET AND FINANCE COMMITTEE MEETING Tuesday, May 9, 2006 Several years ago when the City was changing over to automation and the use of refuse carts, some families complained the one tan refuse cart was not enough. The City Council decided to provide a second tan cart for a nominal charge of just over $4.00 per month, which is subsidized by the City from the refuse fund. The charge for the first tan cart is $6.25 per month. Approximately 2.5 percent of the households have the extra tan cart at an approximate subsidy of $85,000 per year. Due to traveling distances, the blue recycling cart is charged at the actual cost, which is $6.67 per month, so. the subsidy would increase if the second tan carts were traded for blue recycling carts. Chuck Waide, CCAPE, spoke regarding the higher charge for the blue recycling carts and expressed in order to promote recycling, the City should not be subsidizing the tan carts. The charge should be the same for the second tan cart as the blue recycling cart or more, since the tan carts add to the waste stream. Committee Chair Mike Maggard suggested since this is holding up the negotiations, subsidizing the extra tan refuse carts or increasing the cost to the same as the blue carts to promote recycling should be part of a much larger discussion. He would charge the same, but would like to have input from the other Councilmembers on this policy issue. The Committee agreed and requested staff to complete the negotiations on the haulers' contract extension without the blue recycling cart issues and bring the contract extension back to the Committee at the next meeting. 5. NEW BUSINESS A. Discussion and Committee recommendation regarding sewer connection fee increase Finance Director Nelson Smith explained the City has been developing a financing plan for the expansion of Wastewater Treatment Plant No. 3. At the March 8th Budget and Finance Committee meeting, the City's bond consultant gave a presentation on a fee survey of other cities and proposed bond financing information, which was included in the Committee packet. The City has historically attempted to cover the annual debt service requirements with connection fee revenues to match the cost of the plant expansion associated with new development growth, which is driving the need for the plant expansion. The current connection fee for a single family residence is $2,500. The proposed fee schedule is a "phased-in" approach to raise the fee $300 per year for the next five years, with the single-family residence connection fee reaching $4,000 in July 2010. This is a one-time connection fee paid at the time of the building permit application. AGENDA SUMMARY REPORT Page 4 BUDGET AND FINANCE COMMITTEE MEETING Tuesday, May 9, 2006 The Committee reviewed the fee schedule for multiple family dwellings, dwellings with 14 or less fixture units, and commercial/industrial per fixture fee. Committee Member Harold Hanson asked about homes still on' septic tanks that have not hooked up to the sewer. Staff responded that there would be time before the fee increase goes into effect for those who want to avoid the first year's increase of $300. Committee Chair Mike Maggard raised questions regarding in-fill development in the downtown. Staff explained if there has ever been a home or business on the property, credit is given toward the connection fee. Finance Director Nelson Smith explained staff is requesting approval to proceed with the public notice and to put the resolution with the proposed new sewer connection fee schedule on the June 7th Council meeting agenda. If the resolution is adopted by the Council, the fee increases are subject to a 60-day waiting period before the fees go into effect. Committee Member Irma Carson made a motion the Committee approve staff's moving forward with the public hearing and placing the resolution and fee schedule on the June 7, 2006 Council meeting agenda. The Committee unanimously approved the motion. B. Discussion and Committee recommendation regarding dispensing with bidding procedures City Attorney Ginny Gennaro gave an overview of the memorandum in the Committee packet, which outlined the bidding procedures in the City Charter and ordinances. This referral arose from the City Council meeting at which the Council approved payment for an emergency sewer line failure. Due to the emergency situation, the contractor provided the cost based on time and materials and was not required to go through design and bidding procedures, so the City was actually able to save money. The City Attorney eXplained there are three exceptions: urgent necessity; sole source exception; and open market where the City does not receive responsive or any bids. Other than the exceptions, the City Charter requires some type of bidding procedures. The Charter can only be changed by the voters as ordinances cannot override the Charter. AGENDA SUMMARY REPORT Page 5 BUDGET AND FINANCE COMMITTEE MEETING Tuesday, May 9, 2006 Staff explained some items can be purchased in advance to save money, and the City is allowed to piggyback on State or Federal contracts, as the contracts have already gone out to bid. The Committee took no further action. 6. COMMITTEE COMMENTS Committee Member Irma Carson asked when new developments are charged fees, why do they not remain in the area where they are collected? City Manager Alan Tandy responded. Transportation Development Fees are collected for the impacts development has on regional transportation, so the fees collected are applied to projects on the adopted Transportation Impact Fee Schedule. Park Development Fees are regional but collected for three districts in the City. Committee Chair Mike Maggard thanked everyone for working through the issues on the haulers' contract, so it can again move forward towards getting resolved. 7. ADJOURNMENT The meeting adjourned at 11:30 a.m. Attendance: Staff: City Manager Alan Tandy; City Attorney Ginny Gennaro~ Assistant City Manager John W. Stinson; Finance Director Nelson Smith; Public Works Director Raul Rojas; City Clerk Pam McCarthy; Assistant Finance Director Sandra Jimenez; Solid Waste Director Kevin Barnes; Assistant to the Public Works Director Georgina Lorenzi; Solid Waste Superintendent Sal Moretti; Purchasing Officer Diane Wagner; and Wastewater Engineer Art Chianello Others: David Burger., Reporter, The Bakersfield Californian; Bruce Keown, Superior Sanitation; Larry Moxley, Kern Refuse Disposal, Inc.; Chuck Waide and Pete Rodriquez, CCAPE cc: Honorable Mayor and City Council S:~JOHN\Council Committees\06Budget&Finance~bf06 may 09summary.doc