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owned and an open process would allow outside vendors to compete for a market share; and 2) <br />should the City change its current policy, which separates residential and commercial services for <br />the purpose of rate calculation. Ms. Young added that the latter issue was key to rate <br />containment. <br /> <br />Ms. Young noted there had been previous opposition to territories by both haulers and <br />customers. Customers objected to the loss of choice. Although the City has no territories, the <br />number of haulers has declined over time, while rates continue to rise. <br /> <br />Ms. Young referred the council to a map showing residential service areas in Eugene. <br /> <br />Mr. Fart arrived at the meeting. <br /> <br />Ms. Young said that the City had retained the services of consultant Scott Hobson, who was <br />present to answer questions about franchising and system redesign issues. <br /> <br />Ms. Nathanson thanked Ms. Young for the map she had provided. She referred to Ms. Young's <br />statement that customers might oppose a territorial plan because it could reduce choice. She <br />asked if citizens were more concerned about choice or cost. She wanted to reduce duplication <br />of services on the same street and said she had never liked the overlapping territories as they <br />seemed inefficient and more costly. Ms. Nathanson said she had requested information on the <br />number of households with a choice of two or more haulers to help her determine where a choice <br />was available. She said that it appeared that 85 percent of residences were using the same <br />provider. <br /> <br />Ms. Nathanson recollected that previous councils had expressed interest in pursuing changes to <br />the system but many factors, such as the need for the City staff to address ballot measures and <br />other work program items, had worked against their resolution. <br /> <br />Ms. Nathanson said she supported local businesses and wanted to support them whenever <br />possible. She indicated she had additional questions about implementing a system that would <br />support a reasonable return on investment. <br /> <br />Mr. Fart asked if staff believed that the system was broken. Ms. Young said yes. She said that <br />the rates are high because of the City's method of calculating rates. The City has separated <br />residential and commercial rates and there is no cross-subsidy as there was in many <br />communities, which served to keep rates Iow. Mr. Hobson added that typically, in a community <br />that franchised both residential and commercial service, commercial rates subsidized the <br />residential service. He cited Springfield and Corvallis as examples of communities taking that <br />approach, and said that numerous California jurisdictions followed the practice. <br /> <br />Mr. Fart asked if rates were high because of excessive profit-taking or because of the City's strict <br />regulations on how the service was delivered. Mr. Hobson replied that Eugene's residential rates <br />were higher than in other communities because it did not have the cross-subsidization he spoke <br />of. Comparing Eugene's rate to other jurisdictions with a separation between rates, the City's <br />rates were not out of line. Ms. Young said the profit levels in the residential collection area were <br />below the City's targets. In the commercial service category, levels were quite a bit higher than <br />the City's targets. <br />Mr. Farr believed that the City enjoyed a high degree of service for the cost. He asked how the <br />City's many waste management programs, such as recycling, added to the haulers' costs. Ms. <br /> <br />MINUTES--Eugene City Council November 27, 2000 Page 2 <br /> Work Session <br /> <br /> <br />