Item B: Solid Waste Collection/Fee Structure

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4 Chapter Two Rate Setting Policies The City Manager has established several policies that guide City staff in the determination of the City’s collection rates. The most significant policies are described below. Reported Revenues and Expenses The City requires licensed haulers to report revenues and expenses for services provided inside the corporate boundaries of the City and revenues and expenses for services provided to all other customers outside the corporate boundaries of the City. This allows City staff to review the reasonableness of the licensed haulers’ reported results of operations. Disposal Tip Fees The City excludes disposal tip fees from the licensed haulers’ expenses when determining the allowed profit. This prevents significant fluctuations in the haulers’ profits due solely to changes in the regulated tip fee. Non-Allowable Expenses The City considers income taxes, interest expense, amortization expense, and political and charitable expenses to be non-allowable expenses. The allowed profit is set on a pre-tax, pre-interest basis so that taxes and interest are paid from the allowed profit. Amortization expense and political and charitable expenses are paid from owner/shareholder profits. Combined Residential and Commercial The City determines allowed rates by combining residential and commercial financial results of operations. Rates may be increased if the combined profits are less than the City’s target profit level or decreased if the combined profits exceed the City’s target profit level. Allowed Profit The City sets rates to achieve a target pre-tax, pre-interest profit level of 11% of gross revenues. This profit level is comparable to the level allowed by other Oregon cities that regulate solid waste collection rates. Process Overview Each year, the licensed haulers prepare a report summarizing their financial and operational results of operations for their most recent fiscal year. The haulers use an Excel spreadsheet model provided by the City to accumulate their data in a format useful to the City. City staff reviews each hauler’s data for completeness and reasonableness. In each even-numbered year, City staff uses the data from the hauler with the greatest number of accounts to calculate the required rate adjustment, if any. City staff calculates the minimum rates that are sufficient to allow the selected hauler to earn the target profit level through continued service to its existing customers. The City does not guarantee that the licensed haulers will earn the target profit, because events and circumstances do not occur as expected. Licensed haulers are also allowed to submit at any time to the City Manager a written request for review of the monthly rate schedule.