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07-13-10 Special Workshop Meeting
CITY COMMISSION CITY OF DELRAY BEACH, FLORIDA SPECIAL/WORKSHOP MEETING -TUESDAY, JULY 13, 2010 6:00 P.M. DELRAY BEACH CITY HALL FIRST FLOOR CONFERENCE ROOM The City will furnish appropriate auxiliary aids and services where necessary to afford an individual with a disability an equal opportunity to participate in and enjoy the benefits of a service, program, or activity conducted by the City. Contact Doug Smith at 243- 7010, 24 hours prior to the program or activity in order for the City to reasonably accommodate your request. Adaptive listening devices are available for meetings in the Commission Chambers. SPECIAL MEETING AGENDA Pursuant to Section 3.12 of the Charter of the City of Delray Beach, Mayor Nelson S. McDuffie has instructed me to announce a Special Meeting of the City Commission to beheld for the following purposes: SPECIAL EVENT REQUEST/7TH ANNUAL FAMILY FUN DAY AT POMPEY PARK: Consider approval of a special event request for the 7th Annual Family Fun Day on August 7, 2010 at Pompey Park produced by the Parks and Recreation Department; and authorize staff support for security, trash removal and clean up assistance, trash boxes, use of the large City stage, City generator use, and preparation and installation of event signage; with the condition that the event is held from 4:00 p.m. to 10:00 p.m. 2. WAIVER OF RENTAL FEES RE~UEST/ROOTS CULTURAL FESTIVAL, INC.:Consider a request for waiver of rental fees for the Youth Basketball Tournament to be held July 23-25, 2010, at Pompey Park and the Community Center and for the Prayer Breakfast/Health Fair proposed to be held at Pompey Park on August 14, 2010. WORKSHOP AGENDA 1. Discussion regarding Downtown Development Authority 2. Presentation of Benefits Comparison including Pension and Voluntary Employee Benefit Association (VEBA) 3. Final Report on the Waste Management Review for Commercial and Residential Accounts 4. Discussion regarding FY 2011 Budget 5. Commission Comments Please be advised that if a person decides to appeal any decision made by the City Commission with respect to any matter considered at this meeting, such person will need to ensure that a verbatim record includes the testimony and evidence upon which the appeal is based. The City neither provides nor prepares such record. MEMORANDUM TO: Mayor and City Commissioners FROM: Robert Barcinski, Assistant City Manager THROUGH: David T. Harden, City Manager DATE: July 6, 2010 SUBJECT: AGENDA ITEM SP.1 - SPECIAL/WORKSHOP MEETING OF JULY 13, 2010 SPECIAL EVENT REQUEST/7TH ANNUAL FAMILY FUN DAY AT POMPEY PARK ITEM BEFORE COMMISSION City Commission is requested to approve the 7th Annual Family Fun Day at Pompey Park produced by the Parks and Recreation Department proposed to be held August 7, 2010 at Pompey Park from 4:00 p.m. to 11:00 p.m. Commission is also requested to approve staff support for security, trash removal and clean up assistance, trash boxes, use of the large City stage, City generator use, and preparation and installation of event signage. BACKGROUND Attached are a special event permit application, site plan, and budget received from David Ricks, Recreation Supervisor, for this event. The event will include a talent show, food and non-food vendors, entertainment, games and motivational speakers. Parks and Recreation will be responsible for overall event management, vendor approval and other site management tasks. The estimated costs for staff assistance is $4,429, stage rental $535, trash box costs $122.50 and event signage $250 for a total cost estimate of $5,336.50. Per Event Polices and Procedures, since this is a City sponsored event, there are no charges for City services or equipment. Also, a Hold Harmless Agreement and Certificate of Insurance are not required. Parks and Recreation requests an ending time of 11:00 p.m. Staffs recommendation is 10:00 p.m. stop time and is made because the park is surrounded by a residential neighborhood. RECOMMENDATION Staff recommends approval of the special event permit, staff support for security, trash removal and clean up, providing trash boxes, setup and use of the large City stage, City generator use, and event signage with the condition that the event is held from 4:00 p.m. to 10:00 p.m. City of Delray Beach n~~w~YBFACH Special Event Permit ~ ~ V~ ~,,.~,~c~ Application JUN 3 0 210 M~NISTRAi'1VESERUICES PLEASE TYPE OR PRI T ~ ~g3 ~oo~ Event Name/Title: ~ ~~ ;~. ,~,~.ec- ~./ / Event Date(s): -~ Times: -~~ ~` ~~Q~ Event Sponsor/Producer: ~ih,D~y ~~~ ~~~r l1~/,~~C~`ft.L«i,~ Event ContactlCaordinato~ :C,~!~ ~9-r.•'.s~ ~ ~~~ '~-~' Name: ~ ~~-~ ~~'~ Address: d/ i~ ~ ~ .~' ~~-T" ,~ li- mac` .~C' ~:3 S/~y Brief History of Event (If applicab e):, ~~.csp a~ .f~ ~~ t~~P~z.- ~~"~~c~ P - /f,~J ~2P ~ ~~ / children's rides, games, other programs): f 6 Q ~~~1 ~- ~~ 3 ~'~~~-- ~ill.~~ •~ J~J['r~Q ~~i~.-- «2 >~-~~~Ct~1~,-ate Number of Individuals Served Previous Year (if applicable): ~~ /~ ~n . Describe the targeted population and expected ttendance: ~ ~n~i•~ ~rj~>~~ Page l.of5 Telephone Number: ~~3 ~ 7~.s ~ ~ _ Cellular Number; ` ` E-mail Address: ~/e.~' P ~y ~P/r~~ ~f ~. ~'d~ Planned Activities (Outline of activities/number of activities, i.e. entertainment, Page 2 of 5 Describe how the program or project ~ needs: ; h ~~ Describe your Marketing/Promotions Program (Haw will you market/promote, i.e. TV, radio, posters, flyers, web sites, other}: ~~ rrJ pJ'~'i~' C!/t°~fl ~c. c' ~ C ~~ i'~c,~ Sponsor Category {please check) City i~Noii-ProfitlCharitable ^ Private ^ Co~Sponsor -Non-Profit/Private ~ (If Non-profit attach proof of SO.Ic{3), c{4), c{6), C{10), or c(19) or (d) Event Location (Describe area bou dories of eventllocation): ~ ~-e ~'~~ Site plan attached: yes / no (Site plan required fa• errtrre event site. Liclude locations of tents, stage, portalets, dumpsters, portable lighting, and barricade location if applicable.) Rental of Old School Square: yes no /~ (lf yes, attach proof of approval) Private Property Use: yes no (If yes, attach letter giving authorization from property owner} Event budget Revenue & Expenses attached: yes / no (Required for all events) Previous year Revenue/Expense summary attached: yes `°~~ no_ (Required for all events) Do you have cash sponsors for the event: yes no ~°~ (Indicated on budget) Do you have inkind sponsors for the event: yes no (Indicated on budget) C:U~acuments and SettEngslfEcetwoodlDest;toplTemplSpecial Event Pe~i~it Application FINAL ~YU9-lU.doc Page 3 of 5 Serving or selling alcoholic beverages: yes na e/ (lf yes, copy of license and alcohol IiaUility insurance required two (2) weeks prior to event) Event certificate of insurance attached: yes no (Required two (2) weeks prior to event claming the City as additional i~rsur•ed, also regr~ired for vendors) Playing of amplified music: (Waiver required) yeS '~,/ no Will there be entertainment: yes ~ no (If yes, attached list of Performers and/ox DJ's) If yes, sponsor agrees all entertainment will be family oriented and contain na obscenities: yes / no Requesting Police assistance: yes / no (traffic eontroUsecurity) Will supplement with private security: yes ~ no (If yes, need plan attached) Requesting Emergency Medical assistance: yes no Requesting barricade assistance: yes / no (If no, haw are you Dandling?) Requesting trash removallclean up assistance: yes / no (Will be billed to sponsor} Requesting trash boxes/containers and liners: yes ~ no Requesting stage use: yes / no (If yes, check type) Large stage (1r4' x 3fi') r/Small stage (16' x 21') ~ Half small stage (S' x 21') Requesting signage: yes ~~ no Type: d'x4'Event sign / Parking Signs / Banner hanging-,,, Indicate dates required (Waiver required if rnore than one {I) week prior to event) Requesting City Portable Generator: yes / no. (If yes, size & power) Food and beverage vendors: yes ~ no If yes, arproximate number ~~ ~n~~ ~e d/,' (Health Department approval required) yes no C:1Docoments and Se€lingslfleetwoodl!]esktoplTcmplSpeciat Event Permit Application F1I~AL FY04-z(}.doc Page 4 of 5 Other vendors: ~~ yes / no (Indicate type) ~~ 7~0~ eu/~ i- ~~ , Tents: yes / no ~_- __ If yes, How many ~6 f ~~ What size or size required, /`D X ~ b (If yes, tent perrraits arad~re inspections may be needed) Will the event include amusement rides: yes no ~~' (If yes, type and location and copy of liability irtsrrrance required, also requires state license grad irrspectrort.} Will the event be gated: yes no ~ (Show ort-site rnap) Will there be a charge for the event: yes no ~ (If yes, indicate ticket prices} $ Will there be fireworks or other pyrotechnics: yes no ~^ (If yes, contact Tire Marshal to obtain and complete permit application} Will there 6e cooking with compressed gas; yes no ~ (If yes, contact Tire Marshal for inspections) Will you be providing port-a-lets for the event; yes nom (If yes, locate on-site wrap. If no, indicate laow yore will liartdle restroorrt needs) Is reserved parking requested: yes no (If yes, indicate locations artd purpose for rase) Event Permit Attachments: / Revenue/Expense Budget -~~Revenue/Expense Recap Last Years Event ~ Site Plan / Letter Requesting Noise Ordinance Waiver Letter Requesting Waiver Consumption Alcohol Beverages Proof of Non-Profit Status General Liability Insurance Certificate Alcohol Beverage Liability Certificate Proof of Rental Agreement or Authorization Letter from Private Property Owner Hold Harmless Agreement C:1Documents and SettingsltlcctwoodV]esktoplTemplSprciai Event Permit Application FIi~AL FY(~9-lEl.doc Page 5 of S Submittal Date Requirements: • Minor Event 45 days prior to event • Intermediate Event 90 days prior to event • Major Event 120 days prior to event • Neighborhood Block Party 30 days prior to event r~ { vent Contr~c-k r/Caordinatar Da Please prink: ~~~-a•D /,; ,~i ~.~ Please enclose the appropriate non-refundable application fee payable to the City of Delray Beach, 100 N.W. lst Avenue, Delray Beach, Florida 33444. Required with perl~ut application. Tor Staff Use Only , g j~ Date Received Application fee received $ /~'/ C:IDocuments and Settingsl(leetwoodll~esktopl`E'emplspccial Event Pertnit Application FINAL FY04-l0.doc I®/ 1~1 I®~ I®/ I®~ I®~ I®~ .~" ,::~~ - Corutnunrty __ a~~._~=~ Saturday ea~on~ _ - ~ August 7, 2010 ~i~o-=~a~ion ~ Porr~pey Park, 1101 NW 2nd Street t'o~act Person`: Rhonda Williams-Turner willianlsr(r~,ci.delray-beach.fl.us ~ontac,t~= ~ Phone: 561-243-7356 Fax:561-243-7342 ® ~ ~ - ~- -_ I®~ l:Prog~~rn1)~crfp~iirr -- - _ ~- = ~ -- ~ T ~ - I / Pompey Park Delray Beach Parks and Recreation Department presents an Annual Family bay and I®, Barbecue Fest at Pompey Park on Saturday of every year. Families are invited to join the fun between 4:00 pm and 11:00 pm with plenty of activities for everyone. A Best BBQ Ribs, Best I®~ Cake and Best Garlic Crabs Contest will be judged in three categories with prizes awarded to the i®, top three winners. A Kid zone will have bounce houses and games for ages 5 -12. Ruby Baker and Band along with other groups will provide live entertainment. A talent showcase will enable ®I different groups (Divas, Diamonds and Pearls, cheerleaders) and individuals to display their talents on stage, and motivational speakers will provide inspiration to the spectators. There will ®, also be dozens of food and nonfood vendors for the whole family to enjoy. This is a day that is ~ ~ not worth missing. Please make sure to bring your fawn chair and shade umbrellal I®~ --= =- _ - --_ -- - ~~ I~, -1?ragr~n~ D~jec.ti~eti - __ -. _ _ ~ ~; ` _ _ _ ,~, A fest~r-a! is an event, usually staged by a local community, which centers on some unique ~®~ aspect of that community, All programming for the festival is designed to celebrate cultural I®~ expression in a variety of farms and to encourage understanding and appreciation for different I®, cultures This is a free event and is open to the public. I®~ Bu~3gct /®/ ~ ~?:e-sci•iptrun.. -= ~„' - -~. ~ -_ 44Gc~ lfi.everure- ~~~G~tie4= I ~ Entertainment _ __ _^ $3500.00 ® _ =_ - _ I~~ Sound/DJ - - - _ $1000.00 ~®~ T-Shirts Staff and Volunteers = _ - - _ $250.00 ~.~ I ~ Snacks for Chaperone Staff and Volunteers -_ - - = $150.00 I®, ® BBQ Contest ls`-500,2" -250,3r -100 place - - - _ $550.00 I , 1•( Garlie Crab Contest 15`-300.2" -150. 3` $75 place _ = =- $525.00 I®~ I®/ Cake Contest 15E-250,2" -150,3` -54 lace _ -- _ - - ~ $450.00 ® Talent Contest 1 S` -300,2" -200,3` -100 ~ ~ $600.00 I , ® place ~ I ~ Tro hies and Awards _ $250.00 I®/ I®®®®®®®®®4~~®®®o®®®®®®®,®~®®®~~®®®®~®0®®®®®®®®®®®®®~®®~®®®®® ~e~ ~®~ ~®/ dot ~~/ `®/ 'o' ~./ ~.~ ~.~ ~w~ ~~ I:~ ~~~ ~./ ~~/ `.~ 1.~ ~.~ ~.~ I./ ~./ ®~a~ ~®~ r®~ -®~ -®~ -®~ ~®~ ~®~ ~.~ ~~~ 1®~ 'e' ~®~ 'o' ~w~ ~:~ ~~~ ~~~ ®®®~®®®®®®®®:+®e®®®~®®®®®®®®®~®®®®®®®®®®®®®®®®®~®®®~®~ n the Ci _ _ = 3~~0=--- _. _ ected far 20 vendors x $2S0 Food 10 vendors x $200 Non F d ~ ~ - 5000:1 =Ull~= - _ - - oo 1 S BBQ/CrabslCake x ~ ~ =~9(1b=00~ test/ $60 and _$~~~-~~ ~- ~ Talent 10 talent x $2S `~'= ~ _ . _ __ _ Sfaff ~nd~Res ~~sibRl~ties~ ___ _ - _ _ - = -- Family Day Coordinator 1. Plan the Family Fun Day Activities 2. Managing the administrative details necessary to the coordination of (monthly newsletters, agenda's, spreadsheets, etc) 3. Make Daily phone contacts 4. Responsible for check in 5. Oversee on-site program 6. Order Trophies and purchase all supplies 7. Set-up Meeting with the Police bept Office Assistance Assist the Coordinator. Duties will include monitoring activities. n Collect Funds and Applications a Assistant Coordinator D ELHRY E3EACH Parks ~S Recrea#~on \\ n„e,,,,_7F~~ ~~ t~~l~i ,~~ Pompey Park 2009 Recreation Family Fun Day -- Center 1101 NW 2nd Street Revenue anti Expenses Delray Beach Florida, 33444 Phone; Revenue {5bi} 293 - 7359 18 Faod Vendors $1800A0 Fax; 14 Nan Fvod Vendors $105D.D0 {5bi} 293 - 7392 {~ Talea~t Show Participants $150A0 F-Mail: 2009 Budget account 48.10 $3500.00 Total $b500.00 ricksCa~mydelrayE~each.com Website; www.mydelrayheach.com Expenses Awards - BBQ & Cake $800.00 ItS~r~~ Entertai~uuent $2000.00 it~P~~~~ Sound Equipment $9D0.00 Supplies $SDD.00 .~ Total $4200.D0 l ~. f /~ ~- ~.~ ` }"~ - ~Nw }+\\ 1 ~ ~~ ~, ~<~ ~ _~r ?- r~ -~N ~~~~!~. T~ ~~~ ~ i ~~°- --r J ~~'~, j1 ~~• ~i ,~ ~~ ~ -, `~~ X 3 __, . __ .~ €~ ~,~ ~ ~~_ ~ ~ "~' C '°s. a t 11 ': ~~ ~~ ~- ,~ X ~ MEMORANDUM TO: Mayor and City Commissioners FROM: Robert A. Barcinski, Assistant City Manager THROUGH: David T. Harden, City Manager DATE: July 8, 2010 SUBJECT: AGENDA ITEM SP.2 - SPECIAL/WORKSHOP MEETING OF JULY 13, 2010 ROOTS CULTURAL FESTIVAL, INC. WAIVER REQUEST -RENTAL FEES ITEM BEFORE COMMISSION Commission is being requested to waive facility rental fees for the Roots Cultural Festival, Inc. Youth Basketball Tournament proposed to be held July 23-25, 2010, at Pompey Park and the Community Center and for the Prayer Breakfast/Health Fair proposed to be held at Pompey Park on August 14, 2010. BACKGROUND Attached is an email request received from Alberta McCarthy requesting waiver of the rental fees for the Youth Basketball Tournament proposed to be held July 23 -25, 2010 and the Prayer Breakfast/Health Fair proposed to be held on August 14th. The rental fees for the use of Pompey Park and the Community Center for the youth basketball tournament are $3,125.00 and the Prayer Breakfast/Health Fair is $1,165.00 for a total of $4,290.00. These rental fees have been waived in the past. Roots Festival, Inc. will be responsible for the payment of police costs for the basketball tournament at the detail rate, estimated cost $3,000. RECOMMENDATION Staff recommends consideration for approving the waiver of rental fees for the Youth Basketball Tournament and Prayer Breakfast/Health Fair as requested. F3arcinski, Robert From: Rooks Cultural Festival [rootsfestivaldelray@gmail.com] Sent: Thursday, July 08, 2fl'l0 2:22 PM To: Barcinski, Robert Subject: Roots Cultural Festival, lnc. Dear Mr. Barcinski, On behalf of the Roots Cultural. E'estival, Tnc. T am asking for a waiver of fees for our summer events being held at city locations. Roots is a non-profit 501C3 with the state of Florida and has serviced our community over the past 33 years. The venues are Pompey Park and the Civic Center for the Roots South Florida Yauth Basketball Tournament from July 23rd to Juiy 25th. On August 14th it is Pompey Park for a health fair being held in the gym and the annual Prayer Breakfast in the kitchen and adjacent rooms. A copy of the rental application has already been provided. Thank you. Sincerely, -Alberta McCarthy, Chaixperson- Roots Cultural Festival, Tric. 85 S.W. 5th Avenue Delray Beach, k'T,. 33444 561-274-0365 office RootsFestivalDelray@gmail.com www.delrayrootsfestival.org 1 MEMORANDUM TO: Mayor and City Commissioners FROM: David T. Harden, City Manager DATE: July 9, 2010 SUBJECT: AGENDA ITEM WS.1 - SPECIAL/WORKSHOP MEETING OF JULY 13, 2010 DISCUSSION REGARDING DOWNTOWN DEVELOPMENT AUTHORITY ITEM BEFORE COMMISSION At the July 6 Commission meeting representatives of the Downtown Marketing Cooperative requested that the Commission add this item to the agenda for the July 13 Work Session. BACKGROUND In February a committee was established to review and recommend what duties and tasks should be the responsibility of the DDA and the DMC respectively. The resulting lists were presented to the DMC board on February 25, 2010. After considerable discussion the first two lists were approved, excluding those items the committee had been unable to resolve. Then the Board reviewed the undecided items and made a decision on how those should be divided up. Those decisions are recorded on the top and bottom of the last page of the attached minutes. If both organizations will follow the approved duties and tasks as agreed to on February 25, there should be no conflict between the two. Also attached is a copy of the enabling legislation for the DDA (excluding the legal description of the boundaries). It is important to remember that the DDA was created by the Florida Legislature subject to approval in a referendum in the District, and the subsequent referendum approved the District and brought it into being. The functions of the Authority are listed in Section 6, which appears on page number 10 of the attached legislation. The third item attached is an e-mail from the City Attorney which outlines, among other things, the fact that the City really has little control over the DDA's budget. The other attachments provide additional background information on the DDA. RECOMMENDATION Part of the current conflict between the DMC and the CDDA revolves around the use of the web site for downtown. Based on my conversations with the parties, it appears that some of this conflict may be rooted in technical issues. I recommend that City Management and IT staff be authorized to meet with representatives of the two organizations to see if we can resolve the conflict so that both organizations can have access to those portions of the web site they need, while possible retaining exclusive control over other portions of the site. uies Task eetin ®es February , 2010 ~~C All Cash and In-kind Sponsorship for the DDA City All Magazine and Other Publications • Annual Calendar Production & Printing o -Design • Art & Jazz (6 events) o -Co-op • Bed Race o -Distribution • Christmas/Holiday events . Arts Experience Meeting o -100 Ft. Christmas Tree Beachside Merchant Meeting o -Breakfast with Santa Block Leaders Program o -Tree Lighting . Calendar printed by the DDA o -Kids Day at the Tree . Chairman's Club Meeting o -Volunteer Party Clean and Safe-Banners, Lights, Kioslc o -Sponsor Luncheon Signs • Christmas Musical Tours Cluster Study • Cinco De Mayo . Concierge BoolcCMeeting • Clothing Drive . Construction Updates • Design and Typesetting of all event CVB PR Sub-Committee ** collateral DDA Grants program for non-profits • Email Marketing Campaigns Distribution of Collateral • Event Assistance & Coordination Downtown Development Authority Audit • Events Contract Downtown Roundabout • First Night Downtowns & Small Towns ** • Florida Festivals and Events Assoc. Economic Development Meeting • Green Initiatives/Efforts FRA Membership July 4th Gift Card Program • -Sponsor Breakfast Governor's Conference on Tourism ** • -Sandsculpting Contest . Green Initiatives/Efforts • Monthly Community Groups Meeting . Guidance Pathway Signage System • Multi-Cultural Festival Guidebook Co-op with Chamber • Music In the Grove Heritage Travel-National Historic • PGAD Sidewalk Sale Preservation Trust • Pineapple Grove Arts District/West Holiday Decorations Atlantic Hotel Advisory Meeting ** • Projects & Events . Howard Alan Art & Craft Shows • Population of Website * International Downtown Association- • Production of Monthly Calendar * Member & Small Orgaiuzational • Roots Committee • Signage of Events • Local's Info on Website ** ® Spady Gala Merchant Social • Spady Living Heritage Days . Music Entertainment Plan • Summer Nights on the Avenue Newsletter-Downtown Wire Take it Easel Nighttime Economy • Volunteers for event productions Created on 2/24/2010 1:01:00 PM uties Task eating ®tes February , 2010 I)I)A (Cont.) • Postcard mailing for website & Reader Responses • Press Releases • Printing of all event collateral ** • Resource Hospitality Institute • Retail Advisory Meeting • Retail Promotions o -Old Fashioned Christmas o -Mother's Day o -Valentine's Day • Savor the Avenue • Signage of events • Sociable Cities Network Conference • Tastemalcers ** • Tradewinds (not involved for some time) • Tri-Rail Marketing Initiatives • Video productions-All events ** • Visit Florida Committee ** • Visitor Information Center and Volunteer Program • Website * Reference: * items were in question as to the delineation of duty between the DDA and DMC ** Chamber of Commerce and CRA would like to see these items be moved to the DMC in the future restructuring of the DDA and DMC. This was not the consensus of the entire committee. Created on 2/24/2010 1:01:00 PM • Governor's Conference on Tourism ~ D • Hotel Advisory Meeting ~,,, ~,~ r~.~, ~~ ~ • Local's Info on the Website /~, ~%f~~ • Population of Website ~- ~~~~ ® Printing of All event collateral ~~~1 ~~~-S ~~~ ~ ~~ ~=~~`~~ • PrintiY~g of Monthly Calendar )~ M • Production of Monthly Calendar ~~- ~`"~ ~' • Savor the Avenue ~~ • Tastemalcers ~~ • Video Productions-all events ~~ c=~~ c~ ~ ~ ~ `~~~+~ ~ ~ ~~~`~ t'~ • Visit Florida Committee • Website ~'~ 07/09/2010 16:42 561-243-1079 DELRAY BEACH D.D.A. .'~ ~~ ,~~ge ub tk~ ~ . ,~ MINUTES ®owN'TOwN MARKErINC COOPERATIVE BOARD Oli" ®IRECT'oRS FEBRUARY 25, 2010 -~ x:30 A.M. CHAMBER OF COMMERCE -UPSTAIRS CONFERENCE ROOM PAGE 01/01 Members Present: Michael Listick, Diane Colonna, Mike Malone, Jay Alperin, Howard Lewis, Bob Barcinski Guests: Diane Franco, Doug Smith, Gregg Weiss, Gene Fisher, David Tolces, Marcia Arseneault, Elaine Angles, Seabron Smith, David Beale Staff: Marjorie Ferrer, Eileen List, Stephanie lmmelman, Sarah Martin, Selma Kleinman 1. Call to Order/Roll 2. Approval of Agenda of February 25, 2Q10- Motion to approve agenda by Marjorie Ferrer with addition of Task Force Sub-Committee Report moved to #~ (a)(1), seconded by Bob Barcinski. All in favor. Approved. 3. Approval of DMC Board Minutes of January 21, 2010. Motion tv approve by Jay Alperin, seconded by Bob Barcinski. All in favor. Approved. 4. NEW BUSINESS a (1) Task Force Sub-Committee Re ork. The Task Force members are Doug Smith, Gregg Weiss, Diane Colonna, Marjorie Ferrer and Sarah ~ Martin. Lists 1-4 were emailed to the members which outlined the DMC/DDA duties. The members felt they did not have enough time to review this. ® Sarah Martin: The basic idea at the time of the meetings was that the events should stay with the DMC and that tourism should move from the DDA to the DMC. That is the biggest change in mission between the two organizations that came up. Comments on behalf of the DDA and pMC pertaining to the events were (1) to mov Savor the avenue and Tastemakers (move to the DDA and (2) the Chamber and CRA suggested DMC. ® Sarah Markin: These are events that are run in conjunction with the DDA. and it is up Florida Table wha they want to do them. Delray Beach Aowntvwn Marketing Cooperative o City of Dctray Beach ®Community Redevelopment Agency o Downtown Development Authority ®creater betray Beach Chamber of Commerce 64-A SE 5~' Avenue. Delray Beaclt,l'L 33483 ®Tel: SG1.Z79.1380, ext 16 ®Fax: 56].278.055$ www.powrrtownA©Irayseach.com 07/09/2010 16:17 561-243-1079 DELRAY BEACH D.D.A. PAGE 06/12 ® Jay Alperin: Anyone who comes into town does not dictate to us what to do. He asked what the mission of the DDA is. What is their responsibility. • MiChael._L.istick: The mission statement of the DDA is based on the State Statute and whatever the City Commission requests. We submit our budget to the City Commission who approves our work program and how the money is spent. Two thirds of our money is spent on marketing and one third on supporting the DMC. At our meetings we review plans presented fio the Planning and Zoning Department. • This list basically is a new start. It will be going before Commission as it relates to the DDA, DMC, Chamber and City. ® Sarah Martin: The reminder of the list, Page 4 is geared around tourism and marketing and basically the Chamber of Commerce, the City and CRA believe that all these things should move to the DDA except Savor the Avenue and Tastemakers. The DDA and DMC thought that all the items an the list should stay where they currently are. ® Diane Colonna: When you say DMC on whose behalf are you speaking. o Sarah Martin: She is speaking on behalf of the DMC Staffe • Michael_Listick asked how the Chamber Economic Task Force fit into this. ® Gre Weiss: You requested that we delineate who is doing what to date. Your Board did not ask us to ga back to respective partners and start making suggestions about what structure we'd like to see. We may have our individual personal opinions and he is not going to speak on behalf of the Chamber as to what they have decided to do especially since the CEO of the Chamber is here. Their sub-committee was asked to do a specific jab. It is up to the board and the partners' to make final comments. From his perspective on the committee and what he was asked to do, it is his belief and it is not a unanimous believe of the committee, that marketing the events should be driven and should continue to be driven by the DMC and the DDA should be charged to do what it was charged to do. o Michael ~istick: For clarification, would you say that in both the DMC and DDA columns there might be some items that would end up eventually being done by the CRA or Chamber. This is a start of the general division of activities. ® Diane C_olonna: The other thing we are not addressing is jurisdictional because the DDA and the DMC both have geographical boundaries. When it comes to broader tourism the Chamber might be able to handle that more effectively because it is the greater Delray Beach area that they will be marketing. ® Gregg Weiss addressed the issue of membership. They area membership based organization. Their members border different cites, not just Delray Beach. Any tax dollars they bring into the City benei•Its their member base. The decisions that this board makes today they bring back to their board. qn a broad context such as tourism it will benefit their membership. It will never directly benefit every single member but their district is the City of Delray Beach vs. the fine boundary by the DDA and DMC. That is a big area of contention. ® Marjorie .Ferrer: When we divided the list it is very much financially driven because the DMC events all have to raise funds to produce them or they can't do them. The special events that are listed in the DMC column are what we have to raise money for. The DMC has no source of revenue to do anything. When the City gave the DDA the job of doing tourism back in 2004/2005 the dedicated source of funding was there. The DMC does the events that have to be sponsored. o Gregg Weiss: Going fihrough the list there were a few items where they had different views. He feels the Savor the Avenue and Tastemakers should stay with the DDA. we would recommend that the DDA keep fihe responsibility for local and regional marketing as it relates to downtown businesses within that district. The broader tourism responsibility of making Delray Beach as the destination should be outside of the DDA if all the parties involved agree to that. • In looking at the mission statement of the DDA it is a summary statement. If you read the 2 Delray Beach Downtown Marl~eting Cooperative ® City of Delray Heach • Community Redevelopment Agency • Downtown Development Autltorlty • Greater Delray Beach Chamber of Commerec 64-A S£ 5'" Avenue, Delray Beach, FL 33483 • Tel: 561,279.]380, ext 16 • Fax: SG1,278.0555 www.DowntownD elrayB each, com 07/09/2010 16:17 561-243-1079 DELRAY BEACH D.D.A. PAGE 07!12 ay-laws there is a clause regarding economic development as being one of the responsibilities of the DDA. To him that is an open and flexible statement that provides the flexibility for the DDA in doing some of these other types of marketing programs that would benefit their membership and help to maintain the downtown. ® They are here for the purpose of benefiting the City and the membership. Some of the advertising programs have been effective, but in his opinion there has been a lot of mismanagement and poor choices. His focus today is to figure out what the DMC should be doing. • Sarah Markin: When you are talking about this you have fio make sure that it is not a duplication and that we are not competing with each other. ® Michael Lisfiick: We all agree that tourism is important. The DDA has geographic boundaries; the DMC brought in all organizations in the City as well as the downtown. ® Diane Colonna: The main issue was who is driving and doing the tourism. Savor the Avenue and Tastemakers are a minor thing. Who is driving the tourism, doing the promotions, is best qualified, has the budget, and has the best shot of doing a good job. She was not interested in the minor things as to who is producing the monthly calendar or website; everyone will be having their awn website. ® Michael .Listick asked if Savor the Avenue and Tastemakers are budget neutral except for staffs time. He asked if there were any expenses. . Mariorie Ferrer: The DDA has some budgeted expenses such as the advertising and some rental items. • Michael Listick: Relative to Summer Nights on the Avenue, the Christmas Tree and Art ~ Jazz, his understanding is that a lot of that is sponsorship or in-kind services. If we are going to allocate this to someone we have to make sure they have the ability to get it funded. He wanted to know if that was Considered in their Task Force. Dianne Colonna: We had not gotten to that point. • J, ay Alperin: The way you plan is you decide what you want to do and then you figure out if you can afford to do it and do you have to modify it in order to do it. Mariorie Ferrer: The events are all contracted with the City so they fund part of the Christmas Tree and the Fireworks. The City's commitment is to the event. ® ~3ob Barcinski: The Christmas Tree and Tree Lighting expenses are broad. The DMC deals with the electrical contractor and the crane company. The DMC pays the City back for the security and assumes some of the costs. The DMC handles the entertainment and the volunteers and all the fund raising. The City's contribution to the Tree this year is $22,50Q. The Fireworks Contract is with the DMC and has another year to go. The rest of the fund^raising is about $80,000. The DMC also contracts for the barge. The Fireworks Contract will have to be renegotiated. ® He asked what staff does other then help promote. ® Mariorie .Ferrer: Besides helping promote all the events, they obtain items for silent auctions and give suggestions where needed. Jav Alperin: r-Ie referred to the breakdown on list # 3 that was distributed. He asked for clarification of "Green Initiatives/Efforts" on both columns. Sarah Martin: There are green initiatives that relate to events such as trying to bring recycling or activities at events that deal with recycling. As far as fihe DDA they try to bring recycling to downtown merchants- ® Jav Alperin: Under DMC "Project & Events". He understands the events part but wanted to know what projects meant. ® Sarah Martin: That should not be separate; ifi is park of Pineapple Grove. ® Michael Listick: The Task Force did what~we asked them to do. He asked if we want laelray Beach DowntMvn Marketing Cooperative ® City of Delray Beach o Community Redevelopment Agency ® Downtown Development Authority ®Greater Delray Beach Chamber of Commerce 64-A SE 5`h Avenue, Delray Beach, Fl, 33483 ®Tei: 561.2'19.1380, ext 16 ®Fax: 561.273,0555 www.DowntownDelrayl3eaeh.com 07/09/2010 16:17 561-243-1079 DELRAY BEACH D.D.A. PAGE 08/12 thei'n to do mare and widen the scope of their work. • Gregtq Weiss: This is black and white as these are the events that the DDAIDMC is currently doing. He has an idea of what he thinks should be and we all do to a certain extent, There is no perfect solution to this. On the budgetary issue, he thinks this is being brought up in the wrong manner. Personally, and he is not telling the DMC Board what to do, he would look at the DMC structure internally and the C~MC as a Board decide in their column what they should or should not be doing and is there something on the DDA side that they should be doing. • Michael Listick: He is thinking along the same lines, but has trouble knowing who is going to do what until he knows the economic impact. What he had in mind was the next step and that would be for Marjorie, who has most of the information as she is part of the committee to look at all the thing we have and incorporate how much it would cost to do. • Greaa Weiss; Marjorie can send that spread sheet to the Board Members, as Executive Director for both organizations. • Michael Listick; It is a cooperative effort of which one of us can do it best and with less expenditure of time and money. The general idea that he got at the DDA meeting is that they would like to do it all except those things beyond our boundaries. Obviously they can't do that based on their budget. They would like to do everything and look to other organizations to fund the deficit. He is putting this on the table as an alternative. The DDA wants all of these things done, by the best organization whoever that organization happens to be. ® We should all be saying, these are the things we want to do, who can do it best, and where will the money came from. ® Diane Colonna: We need to start discussing it and make a decision. She does not agree that we should ask the sub-committee to continue and come back. We need everyone here to talk about it. • Michael Listick: The first thing is to figure out the dollars. • Jay Alperin: That should be the last thing. The first thing you do is decide who is going to do what and then you figure out how to pay for it. You set goals and then figure out how you get there. You have to figure out what you have to do first and who is going to be responsible for fihese things. • His opinion is that we have way too many committees and boards. If the DDA can do this under their guidelines, and the City approves, he has no objection. • Michael Listick: Anybody can do it if they are funded and staffed. The fact of the matker is we weren't going to get funded, but that is what we'd like to do. Let's talk about what we can do. Fle asked Mike Malone what he thinks the next step should be. • Mike Malone: He would like to see what the structure is going to be first. They are going to implement whatever programs the group decides they want to have. • Bob Barcinski: Dealing with these concerns the City Manager asked where is the money coming from and who is going to do fihese tasks- In terms of money and being able to do these events this has been the result of Marjorie's efforts. Fund-raising efforts are based on relationships and those things take a long time to evolve. • Michael Listick asked if we have time to do all of this. To go out and reorganize ourselves, delegate tasks, get the staff in place and pick a location? As it stands today, can we do this by April 30th? What if the staff is offered other jobs? We need a realistic time frame as this affects people. • Diane Calonna: Not unless we start making some decisions. • Mike Malone: He understands that we don't want to rush into something. We are now into 60 days on this process. He thinks that the community is expecting us to resolve this issue as quickly as possible and move on. ® Michael Listick asked what the next step iS- 4 Delray Beach Downtown Marketing Cooperative • City of Delray Deach • Community Redevelopment Agency • Downtown Development Authority • Greater Delray Beach Chamber of Commerce 64-A SE 5~' Avenue, Delray Beach, FL 33483 • Tcl: 561.279.1384, ext 16 ®Fax: 561.278.0555 www.DowntownDelrayBeach.com 07/09/2010 16:17 561-243-1079 DELRAY BEACH D.D.A. PAGE 09112 ® Ja_v_Alperin: Does the DMC agree on the division of these responsibilities as shown on page 3? • Michael Listick: We would still like to have the dollar figures. • Jay_Alperin. You have the dollars. You need to talk about responsibilities. • Michael Listick: Marjorie raises the money, If we find ourselves without an executive director in 60 days who will raise the dollars? • Diane Colonna: Someone else will. We will get another director. • Michael Listick: If you have someone in mind he would like to know. He asked if they had any ideas. • Bob Barcinski: He has not had time fio look at this and cannot agree with this division. • Jav Alperin: He felt that this was turning into an issue about Marjorie. He is trying to make a decision on what the responsibilities are. There is always the possibility that if we have a light at the end of the tunnel we can extend the contract. If not, we have to go on to the next step which would be looking for a search committee to find a replacement for Marjorie, He is trying to solve the problem fihat we have in front of us, • Michael Listick: At the DDA meeting he received a motion to cut aff funding to the DMC. They also discussed the possibility of starting their own search for an executive director- Maybe we should be doing those things, but we don't have a job description. We need to solve this, get a job description and figure out which organization is going to do it. • piane Colonna: That is what we are trying to do. To get the duties outlined, to figure out who is doing what and from there figure out what our staffing needs are and what our budget is. • Michael Listick: He does not have a problem with that but where do we go from here. • Jav Alperin: He just made a suggestion. Let's see if the Board agrees with that, ® Michael Listick: He would like to meet again tomorrow. The DDA is going to meet as soon as possible and have a special meeting. He asked where the DMC stands. • Jav Alperin: Let's find out if we agree that this is what we should be doing (referring to list #3 and #4) • Mike Malone: Since we are the DMC we can look at that side of the problem~ ® Bob Barcinski: He would like some clarification from the committee. As he understands it, these are the lists (#3 and #4) that you agreed too that were being done currently by either the DMC/DDA. • piane Colonna: Everyone on the sub-committee is in agreement that these things stay where they are_ • Jay Alperin: Their question is do you agree with that and want to go on from there? We have a consensus that the DMC agrees with the DMC/DDA duties as outline in Item #3. Motion made by Diane_Colonna that the DMC support the Committee's recommendation on the delineation of the duties between the DMC/DDA as identified an Item #3 dated February 23, 2010. Motion seconded by Bob Barcinski, Roll called: Michael Listick, yes; Diane Colonna, yes; Mike Malone, yes; Bob Barcinski, yes; Howard Lewis, yes; Jay Alperin, yes. Unanimously approved. List -DMC/DDA Duties -Items under contention anion the artici atin task force members: • Diane Colonna: We should divide this list up now. • These items are also on the DDA list- These items are under contention. When she talked about this list she meant excluding the items that had not been decided on yet. • Michael ~,istick: Basically we will need to do a new motion. The question is which of those items in #4 we remove from the DDA column. Why don't we bring these to our individual boards and come back with that information. • Diane Colonna: Motion made to reconsider the vote that we just took. Seconded by Jay Alperin. All in favor. Unanimous. ~ Delray Beech Downtown Marketing Cooperative • Ciry of Delray Beach • Community Redevelopment Agency o Downtown Development Authority • Greater .betray Beach Chamber. of Commerce 64'A SE 5~h Avenue, Delray Seach, FL 33483 • Tel: 561.279.1380, ext 16 • Fax: 561.278.0555 www. DowntownpelrayBeach, com 07/09/2010 16:17 561-243-1079 DEFRAY BEACH D.D.A. PAGE 10/12 ~ New__Motion made by Diane Colonna to approve the items on this list (#3) with the exclusion of those items that have a single or double asterisk as listed on list #4. They will be discussing those items separately. This motion is to get the items off the table that everyone agreed on. This motion is to approve that we are not going to discuss these items any further and will only discuss the items that are on list #4. Motion seconded by Howard Lewis. All in favor. Approved unanimously. • Mike Malone: Suggested we take the results of this discussion back to individual boards. Discuss list #4 • Jay Alperin: Now we go one by one on lfiem #4 and make a decision, • Michael Listick asked Marjorie if there are any items on this list that are beyond the DDA jurisdiction. • Marione Ferrer: All of these things are representative of the businesses downtown, • Miehael_Lstc_k referred to list #4 "printing of the monthly calendar"_ Do we want the calendar to only be a downtown calendar or do we want it to be an area wide calendar which means it would possibly have to be done by the Chamber. o Mike Malone: It would probably be done outside of the DMC as by Statute you are limited by geographic area. • Michael Listick: We have to review the list and see which items are beyond the DDA, CRA or Chambers geographic jurisdiction. • Jay Alperin__ Do we all agree that the calendar should be outside the DDA? This item should be removed. ® Michael Listick brought up "printing of all event collateral" on the list and focused on the word "all", • A/like_Malone: He has a problem with "all collateral material". It is an ambiguous statement and we should leave that out entirely. Michael Listick: "Population of website". The big website is the DDA website and also has some City and Chamber information. He thinks it goes beyond the DDA. Right now we have a City website that has links to everyone. ® Marjorie Ferrer: The DDA's website is to link and support the people who pay the taxes in the DDA distract. It is meant as a marketing tool for all the merchants in the district. • Greg , Weiss: There is a master event calendar. The Chamber posts everyone's events on their site and they will continue to do that. We are all working together and don't want to change that. If you go to the master site "deraybeach.com you see an events calendar, You go to the other links and you see an events calendar. • "Population of Website", Keep that in DDA. • "GVB PR Sub-Committee". Each organization can decide on their own to what degree they want to participate. • Downtown's & Small Towns. It is recommended the DDA continue its membership. ® Governor's Conference on Tourism. It is recommended the DDA continue its membership. • Hotel Advisory Meeting, Nat DDA; possibly Chamber. • Local info on Website. Everybody does their own. ~ Printing of all events. Each organization prints their own. Printing monthly calendar. We will continue on an area wide bases, not a downtown bases (DMC). • Tastemakers -Savor the Avenue. Suggest that the DDA continue. • Visit Florida. Each group can decide the extent they want to join, • Video Productions -all events, Everyone does their own. Motion made by Jay Alperin to approve list #4 as discussed, seconded by Diane Colonna, All in favor. Unanimously approved- 6 Delray Leach Downtown Marketing Cooperative • City of Delray Beach • Community Redevelopment Agency • Downtown. Development Authority • Greater Delray )•3eaeh Chamber of Commerce 64-A SE 5`" Avenue, Delray J3each, FL 33483 • Tel; 561.279-1380, ext 16 • Fax: 561.278.0555 www,DowntownDelray~each.co.m CHAPTER 2003-314 House Bill No. 299 An act relating to the City of Delray Beach, Palm Beach County; providing for codification of existing special laws relating to the creation, powers, and duties of the Delray Beach Downtown Devel- opment Authority; codifying, amending, reenacting, and repealing chapters 71-604, 72-524, 80-495, 87-520, 89-477, 91-385, 92-263, 94- 476, and 98-503, Laws of Florida; providing an effective date. Be It Enacted by the Legislature of the State of Florida: Section 1. Pursuant to section 189.429 Florida Statutes this act consti- tutes the codification of all special acts relating to the Delray Beach Down- town Development Authority. It is the intent of the Legislature in enacting this law to provide a single, comprehensive special act charter for the Au- thority, including all current legislative authoritygranted to the Authority its several legislative enactments. Section 2. Chapters 71-604, 72-524, 80-495, 87-520, 89-477, 91-385, 92- 263 94-476 and 98-503 Laws of Florida are codified reenacted and re- pealed as herein provided. Section 3. The charter for the Delray Beach Downtown Development Authority Act is reenacted and re-created to read: Section 1. SHORT TITLE. This Act shall be known and may be cited as the "Delray Beach Downtown Development Authority Act." Section 2. DEFINITIONS AND RULES OF CONSTRUCTION.-Unless qualified in the text, the following definitions and rules of construction shall apply hereto: (a) "Authority" means the Delray Beach Downtown Development Au- thority hereby created, and any successor to its functions authority, rights, and obligations. (b) "City" and "Delray Beach" mean the City of Delray Beach, Florida. (c) "City Council" means the Delray Beach Citv Council and any succeed- inr~ Governing body of the Cites (d) "Downtown" and "Downtown area" mean the area herein described and to which this Act primarily relates, including the central business dis- trict and its environs. (e) "Herein," "hereby," "hereof," and similar compounds refer to the en- tire Act. (f) "Including" shall be construed as merely introducing illustrative ex- amples and not as limiting in any wa~generality of the inclusive term. CODING: Words strlekea are deletions; words underlined are additions. Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 fig) "Majority" without qualification means a majority of a quorum. (h) "State" means the State of Florida. southerly along said centerline to the easterlyprojection of the south property line of the Beach Cabanas Condominium; thence westerly along said easterly projection, and said south property line to the west property line of the Beach Cabanas Condominium; thence northerly along the west property line of said Beach Cabanas Condominium to the south CODING: Words striel£en are deletions; words underlined are additions. Section 3. DOWNTOWN AREA DESCRIPTION.-The Downtown area includes all lands lying within boundaries described as: east plat limit to the northeast corner of Lot 21, of said Plat of Seabreeze Park; thence westerlylong the north line of said Lot 21 and the westerly projection thereof to the west plat limit of Seabreeze Park; thence south- in a northwesterly direction to the southwest corner of said Lot 29; of intersection with the southerly projection of trie west line of Lot zu, Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 Subdivision to the mean high water line of the Atlantic Ocean; thence northerly along said high water line to the point of beginning. CODING: Words ~ are deletions; words underlined are additions. (~ The City Council shall by vote of a majority of its entire membership appoint the members of the Authority, and by vote of four-fifths of its entire of the action taken. (d) Vacancy in office, which shall be filled within thirty days of its occur- in good faith to perform his or her duty, or for a decision not to act, except in instances of fraud or willful neglect of duty. Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 Section 5. AUTHORITY BYLAWS AND INTERNAL GOVERNMENT.- The Authority shall formulate and may amend its own rules of procedure and written bylaws not inconsistent herewith. A majority of its entire mem- bership shall constitute a quorum for the transaction of business. All action shall be taken by at least four affirmative votes of the Authority, and each member present shall vote on each matter unless barred from voting as herein provided. The Authoritv shall select one of its members as Chair and another as Vice Chair and shall prescribe their duties, powers, and terms of serving. It shall hold regular meetings at least once a month and shall provide in its bylaws for holding special meetings All meetings shall be open to the public. The bylaws may provide for the Mayor of the City, or his or her representative, to attend meetings of the Board as an ex officio member, but he or she shall not have an~vote or power over the Board except that he or she shall be entitled to speak on any issue or question before the Board. Section 6. FUNCTIONS OF THE AUTHORITY.-The Authoritv shall perform the following functions: (a) Prepare an analysis of the economic conditions and changes occurring in the Downtown area, including the effect thereon of such factors as metro- politan growth, traffic congestion, lack of adequate parking~and other access facilities and structural obsolescence and deterioration. (b) Formulate long-range plans for improving the attractiveness and ac- cessibility to the public of Downtown facilities, promoting efficient use thereof, remedying the deterioration of Downtown property values, and developing the Downtown area. (c) Recommend to the City Council and to Downtown businesspersons and residents the actions deemed most suitable for implementing the Down- town development Mans, including removal, razing, repair, renovation, re- construction, remodeling, and improvement of existing structures, addition of new structures and facilities relocation of any of those existing, and changes in patterns of and facilities for etting thereto and therefrom. (e) Participate actively in plans and programs to encourage economic development and promotion of the Downtown as a prosperous Downtown Area. (f) Carry on all projects and undertakings authorized by law and within the limits of the powers granted to it b~, and such additional public projects and undertakings related to the Downtown area as the City Council may assign to it with its consent. 10 CODING: Words skriel~ea are deletions; words underlined are additions. this paragraph shall not give the Authority any power or control over any Citesproperty unless and until assigned to it by the Citv Council under the provisions of paragraph (f) of this section. Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 Section 7. POWERS OF THE AUTHORITY.-In the performance of the functions vested in or assigned to the Authority, it is herebygranted the following~owers: (a) To enter into contracts and agreements, and to sue and be sued as a body corporate; (b) To have and use a corporate seal; (c) To acquire, own, convey, or otherwise dispose of, lease as lessor or (d) To accept grants and donations of any type of property, labor, or other thing of value from an~,public or private source; (e) To receive the proceeds of the tax herebyposed; (f) To receive the revenues from andproperty or facility owned, leased, licensed, or operated by it or under its control, subject to the limitations imposed upon it by trusts or other agreements validly entered into by it; (g) To have exclusive control of all funds legally available to it, subject to limitations imposed upon it by law or by any agreement validly entered into by it; (h) To cooperate and enter into agreements with any governmental agency or other public body; (i) To make to or receive from the City or Palm Beach County convey antes, leasehold interests •ants, contributions, loans, and other rights and privileges; (i) To request by resolution that the Citv exercise its municipal power of eminent domain in specific instances for the use and benefit of the Authority and, if the City complies with the request and the property involved is acquired, the Authority shall take over and assume control of such property on terms mutually agreed upon between the City and the Authority, but the Authority shall not thereafter be authorized to sell, lease, or otherwise dispose of such property so acquired without the formal consent of the Citv Council; (k) To issue and sell revenue certificates as hereinafter provided, or in any other manner .permitted by law and not inconsistent with the provisions hereof, and to take all steps deemed by it necessar o~pedient for efficient preparation and marketing of the certificates at public or private sale at the best price obtainable, including the entry into binding agreements with corporate trustees, underwriters, and the holders of the certificates, and the employment and~avment, as a necessary expense of issuance, for the ser- vices of consultants on valuations, costs, and feasibility of undertaking, revenues to be anticipated and other financial matters, architecture, en~i- neering, legal matters, accounting matters, and any other fields in which 11 CODING: Words s#~iel~eri are deletions; words underlined are additions. Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 expert advice may be needed to effectuate advantageous issuance and mar- ketin (p) To exercise all powers incidental to the effective and expedient exer- cise ofthe foregoing~owers to the extent not in conflict herewith or inconsis- tent herewith. shall pay the proceeds into the City treasury for the account of the Author- i Section 9. AUTHORITY RECORDS AND FISCAL MANAGEMENT.- The fiscal year of the Authority shall coincide with that of the Citv. (a) All funds of the Authority shall be received, held~and secured like other public funds bathe appropriate fiscal officers of the City. The funds 12 CODING: Words striel~ are deletions; words underlined are additions. (n) To acquire by rental or otherwise and to equip and maintain a rp inci_ pal office for the conduct of its business; to time; provided, its personnel shall not be under civil service regulations and shall be employed to serve at its pleasure. Its personnel shall not while emplo~v it serve as City officers or employees, and, with the exception of its Secretary, shall not while employed by it serve as a member of it; and valuation made annuall,~,y the County tax assessor. The rate shall be one mill on each dollar of tax base in 1972 and each year thereafter; provided, for each year after the first year of levy the Authority, by written notice to the County tax collector at such time as he or she shall specify, maw Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 Section 11. PROVISIONS GOVERNING ISSUANCE OF CERTIFI- CATES.-Issuance of revenue certificates by the Authorityshall be gov- erned bX the following General provisions: proceeds used, that do not constitute a general debt of the Authority, that are not secured directly or indirectly, in whole or in part, b~pledge of taxing powers, and that do not constitute a lien or encumbrance, legal or equitable, on an~property of the Authority or on any of its personal property other than the revenues pledged to secure payment of the certificates. (c) The rate or rates of interest and the sale price of the certificates by the Authority shall be such that the net interest cost to it on the proceeds 13 CODING: Words striel~en are deletions; words underlined are additions. of the Authority shall be maintained under a separate account, shall be used for onlypurposes herein authorized, and shall be disbursed onl~~ the schedule of performance. emptions from taxation as are afforded to income, property, and facilities of the City. Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 received from the sale shall not exceed an average annual rate of eight certificates prior to maturity. issue. undertaking for which the certificates are issued. (g) Revenue certificates may be issued for the purposes of funding, re- funding, or both. (h) All revenue certificates issued pursuant hereto shall be negotiable instruments for all purposes. Section 12. TRANSFER UPON CESSATION OF THE AUTHORITY.- Should the Authoritv cease to exist or to operate for whatever reason, all its property of whatever kind shall forthwith become the property of the Citti, subject to the outstandin obligations of the Authoritv, and the City shall use this property to the maximum extent then practicable for effectuating the purposes hereof and shall succeed to and exercise all powers of the Authoritv insofar as such exercise is not in conflict with or inconsistent with the provisions of the City charter or other law applicable to the Citv. Section 13. ACT CUMULATIVE; NO NOTICE REQUIRED.-Neither this Act nor anything herein contained shall be construed as a restriction or limitation upon any powers which the Authoritv might otherwise have under any laws of this State, but shall be construed as cumulative of such 14 CODING: Words skriel~ea are deletions; words underlined are additions. ins reserves therefor and for depreciation, replacement, and anv necessary extensions. (d) Before issuing anv revenue certificates, the Authority shall, as to each issue: (1) prepare or procure from a reputable source detailed estimates of Ch. 2003-314 LAWS OF FLORIDA Ch. 2003-314 through 680, Florida Statutes, 1969 (also known as Uniform Commercial Code). No proceedings, notice, or approval shall be required for the or aniza- tion of the Authoritv or the issuance of anv certificates or anv instrument as security therefor, except as provided herein or pursuant hereto, any law to the contrary notwithstanding; provided, nothing herein shall be con- strued to deprive the State and its governmental subdivisions of their re- s~ective poliopowers over andproperties of the Authoritx: Section 14. LIBERAL CONSTRUCTION AND SEVERABILITY.-The by a court of competent jurisdiction, each other portion shall remain effec- tive to the maximum practicable extent. Section 4. In the event any section or provision of this act is determined to be invalid or unenforceable such determination shall not affect the valid- ity of or enforceability of each other section and provision of this act. Section 5. Chapters 71-604, 72-524, 80-495, 87-520, 89-477, 91-385, 92- 263, 94-476, and 98-503, Laws of Florida, are repealed. Section 6. This act shall take effect upon becoming a law. Approved by the Governor June 26, 2003. Filed in Office Secretary of State June 26, 2003. 15 CODING: Words s#~iel£e~ are deletions; words underlined are additions. powers. The foregoing sections of this Act shall be deemed to provide a complete, additional, and alternative method for the doing of the things authorized thereby and shall be regarded as supplemental and additional Harden, David From: Shutt, Brian Sent: Wednesday, July 07, 2010 3:33 PM To: Harden, David Subject: DDA Special Act Based on the questions raised at last night's commission meeting and our discussion this morning I reviewed the special act that creates the DDA. Chapter 2003-314 of the Laws of Florida became law on June 26, 2003 and combined the prior amendments to the original special act into one special act. Section 8, of the special act, provides that a rate of 1 mill shall be assessed upon the property in the DDA district unless the DDA notifies the tax collector to assess a lesser amount. Section 9(a) provides that the City will hold the funds from the assessment for the DDA until the DDA gives direction to the City on the disbursement. The DDA may pay the City a reasonable amount, as an operating expense, for services rendered by the City, however, there is no language that provides for any further involvement by the City regarding the disbursement of the funds. R. Brian Shutt City Attorney 200 N.W. 1st Avenue Delray Beach, FL 33444 (561)243-7091 Fax (561)278-4755 shutt(a~mVdelra ybeach. com rYrat Yu~s~~DU ~r7 ~++++~+~i+~+ I~1 :. _ f, , t~e~±a~~.en~~ ;~u~~a~~t ~ ~~ ~fi : .tom iii ~~q~flte ~~ _ . ,~. ~ b E~~~.. ~~ 1 ~ ''T~a ~~'~ ~~,ri ,~~ , ~ '-- - _ r ~ ~ ~ i'~ ~ yi .,y ~ .,y~- 'r ~ ~ -'~ ;~r~rr-'f ~ D ., , . 7 ~~~;e~ 4'e.pr~e-~;ar~s '~ri~~ail ~~ .!; ~ ~~tiat~ues ~t~dle~ f~'~'~t~o~s ~r~~s' ~~~t-~~t~~-~ rofi~~ ~ ~~ > _ Suite 1~ ',I ~~~: ~~3~~a7 fax: ~~~ocai's ~~r~~ort~~n 6~ ~b ~~11isi~~r lk~a~~rm~i~~~~ G~nter.~, valt~~~r ~r~g °~;~r~ss ~ ._ "~ ~p~~ and f~(~a~r~up 07/09/2010 14:42 561-243-1079 DELRAY BEACH D.D.A. PAGE 02/02 ._.__ Downtown Marketing Cooper~ltive Partner CASH Administrative Contribution Analysis 1993 - 2009 8/5/09 - MF Year COC CRA DpA TQ'TAL PAYROLL* # STAFF 1993 10.0 50.0 25.0 85.0 36.0 1 mf 1994-5 10.0 50.0 25.0 85.0 61.0 1 + 1/2 mf*sk 1996 22.Ow 65.0' 37.0 124.0 87.0 1 '/a + 1 mf/sk *sn1 1997 22.0 65.0 37.0 124.0 104,0 2 $. 112 mf/sklsm 1998 22.0 65.0 37.0 124.0 114.0 2 & 1 /2 f/sk/sm 1999 22.0 65.0 44.0" 131.0 123.0 2 &'/s ~ ~crnas hel, mf/sk/sm + sr 2040 22.0 75.0 37.0 134,0 137.0 2 & 1/2 mf/sk/sm 2001 22.0 78.8 43.4 144.2 146.3 2 & 1/2 mf/sk/sm 2002 22.0 95.0 69.8 186.8*'~ 198.8 2 ~ 1/2 mf/sklsm 2003 22.0 110.0 91.7*'" 223.7 201.0 2 8<'/z + 1 I~nf/sklsm + ®1 2004 22.0 110.0 92.3 224.3 203.8 3 & 1/2 mf/sklsm/el 2005 22.0 136.5' 106,5 265.0 206.0 3 1/2 mf/sk/sm/el 2006 22.0 160.0 119.2 301.2 233.7 3 & 1/2 mf/sk/smlel 2007 22.0 160.0 119.2 301.2 277.0 3 ~. 1/2 mflsk/smlel 2008 22.0 210A *'~ 120.0 352.0 326.6 3 & '1/z + 1 mf/sk/sm/el + si 2009 22.0 210.0 120.0 352.0 326.6 4 $~ 1/2 mf/sklsm/el + $i ~ Payroll ~ taxes, workers comp, FUTA, benefits, health insurance 8 r®tlrement 1994-5 COC shifts Atlantic Avenue Association part tlm® staff and the Merchant Assoclatlon to the I~MC for management. DMC supplements $10,000 contribution from Howard Alan Graft Shows to offset COC loss in dues from m®rchant association. Staff person -Selma Kleinman. M. Ferrer salary adjusted. 1896 DMC board adds special Events assistant to team -Sarah Martin's position. 1999 DDA increases contribution to cover 3 month part-time Christmas Tree asst -Suzy Rusk 2002 Medical Insurance increase -adjustments for retirement 2, Op3.. DDA increases contribution -turns part tim® Christmas / Cluster Study position to full time -Eileen List's position, DpA was charged with Marketing and Advertising. City took over Clean & Safe initiatives per David hlarden and Commission. 2005 CRA hires consultant to study/change job descriptions and increase salary lev®Is for more professional help. ~~ ?Q08 CRA shifts $50,000 funding to DMC to cover West Atlantic 1 Pineapple Grove Arts Districts Marketing and Coordination - Stephanie Immelman ~i BRA DCLR~Y Bfl~C~l CGMMUNITVREDEVELGPMENT AGENCY TO: DOWNTOWN DEVELOPMENT AUTHORITY MEMBERS FROM: JEFF COSTELLO, AICP, ASSISTANT DIRECTOR COMMUNITY REDEVELOPMENT AGENCY MARK MCDONNELL, AICP, ASSISTANT DIRECTOR PLANNING AND ZONING DEPARTMENT DATE: JANUARY 12, 2009 RE: DDA FUNCTIONS AND COMPARISION TO FUNTIONS OF OTHER CITY ORGANIZATIONS [LDR SECTION 8.2.2(E)] This memorandum is a response by the staff of the City Planning and Zoning Department (P&Z) and the City Community Redevelopment Agency (CRA) to a request made by DDA Chair Michael Listick at the DDA meeting of December 8, 2008. Requested was a comparison of the list of the "Functions of the Authority" as detailed in Land Development Regulations Section 8.2.2 (E) to current functions performed by other organizations. The goal is to ensure the list of functions is either implemented by the DDA or by others, and that the DDA statutory responsibilities are being followed. Following is a list of the DDA functions from LDR Section 8.2.2(E) with corresponding comments from P&Z and CRA staff: (E) Functions of the Authority: The Authority shall perform the following functions; (1) Prepare an analysis of the economic conditions and changes occurring in the Downtown area, including the effect thereon of such factors as metropolitan growth, traffic congestion, lack of adequate parking and other access facilities, and structural obsolescence and deterioration. Commentary: This function should remain as one of the DDA. Following is information that supports thaf fhe DDA continues to satisfy fhis funcfion: The DDA contracted with H. Blount Hunter Research in 2005 for a study fo refine the market analysis with the development of a retail 33 strategy for the various "clusters" in the downtown. The aspects pertaining to the revitalization of fhe DDA area thaf include traffic, parking, and housing are addressed in the adopted CRA Plan and the Cify Comprehensive Plan, as well as the Downtown Delray Beach Master Plan. (2) Formulate long-range plans for improving the attractiveness and accessibility to the public of Downtown facilities, promoting efficient use thereof, remedying the deterioration of downtown property values, and developing the Downtown area. Commentary: This function is accomplished by the DDA in cooperation with the CRA and the P&Z Department. Following is information that supports this statement: Subsequent fo the creation of the CRA in 1985, the CRA Plan was adopted which included a variety of initiatives and programs which encouraged investment in and revitalization of the CRA area, which included the DDA area. The Plan addressed such needs as Elimination of Slum and Blighted Conditions, Economic Development, Infrastructure, and Recreafion and Cultural Facilities. The CRA Plan is consistent with the City Comprehensive Plan, which also addresses these needs. The CRA and the Cify initiated fhe West Atlantic Avenue Redevelopment Plan in 1993 (adopted 1995) and subsequently initiated the Downtown Delray Beach Master Plan in 2000 (adopted 2002). Both of fhe fwo plans detailed above identify the needs and recommendations for the revitalization of fhe downtown core and its sustainability. (3) Recommend to the City Commission and to downtown businessmen and residents the actions deemed most suitable for implementing the Downtown development plans, including removal, razing, repair, renovation, reconstruction, remodeling, and improvement of existing structures, addition of new structures and facilities, relocation of any of those existing, and changes in patterns of and facilities for getting thereto and there from. Commenfary: This continues to be a valuable function of the DDA and as such is recommended to continue. Following is information that supports that the DDA continues fo safisfy this function: The DDA makes recommendations to the CRA, Cify Commission and associated advisory boards on a variety of development-related activities/plans, public improvemenfs, infrastructure improvements, redevelopment plans, amendment fo regulations and the like. Through the Downtown Marketing Cooperafive, the business owners are informed of the development acfivity, infrastructure improvements and events. If a development activity requires a public hearing, fhe Planning and Zoning Department distributes notices to affected property owners. (4) Participate actively in the implementation and execution of downtown development plans, including establishment, acquisition, construction, ownership, financing, leasing, licensing, operation, and management of public facilities deemed feasible and beneficial in effecting implementation, but this paragraph shall not give the Authority any power or control over any City property unless and until assigned to it by the City Commission under the provisions of paragraph (5) of this section. Commentary: This continues fo be a valuable function of the DDA and as such is recommended to continue. ^ The CRA and City have faken the lead as it pertains to Phis function; however, DDA participation is encouraged as it relates to the establishment of a Visitor's Center as well as other economic development-related initiatives. (5) Carry on all projects and undertakings authorized by law and within the limits of the powers granted to it by law, such additional public projects and undertakings related to the Downtown area as the City Commission may assign to it with its consent, Commentary: This continues to be a valuable function of the DDA and as such is recommended to continue. The DDA performs this function as deemed appropriate by the City Commission. We look forward to discussing this comparison of functions at the DDA meeting on January 12, 2009, MEMORANDUM TO: Mayor and City Commissioners FROM: Bruce Koeser, Human Resources Director THROUGH: David T. Harden, City Manager DATE: July 9, 2010 SUBJECT: AGENDA ITEM WS.2 - SPECIAL/WORKSHOP MEETING OF JULY 13, 2010 PRESENTATION OF UPDATED TOTAL REWARDS COMPARISON INCLUDING PENSION AND VEBA ITEM BEFORE COMMISSION Updated Total Rewards Comparison Including Pension &VEBA BACKGROUND In February 2009, the City presented a comprehensive benefits comparison, to include pension and VEBA (Voluntary Employee Benefit Association). We worked with Gallagher Benefit Services and their actuaries to compare the City's benefits to other local government agencies. We have asked Gallagher Benefits Services to provide updated comparison information. The updated total rewards comparison results will be presented. MEMORANDUM TO: Mayor and City Commissioners FROM: Richard J. Reade, City Designee for the Solid Waste Managment Analysis THROUGH: David T. Harden, City Manager DATE: July 9, 2010 SUBJECT: AGENDA ITEM WS.3 - SPECIAL/WORKSHOP MEETING OF JULY 13, 2010 FINAL REPORT ON THE WASTE MANAGEMENT REVIEW FOR COMMERCIAL AND RESIDENTIAL ACCOUNTS ITEM BEFORE COMMISSION Staff & the City's Financial Review Board (FRB) will provide the City Commission with an update on the Solid Waste Management Commercial and Residential Analyses. BACKGROUND During the past year, a City resident, Ken MacNamee, has been investigating various aspects of the City's Solid Waste and Recycling collections, including management and administration of our Franchise Agreement with Waste Management Inc. of Florida (WM). In the course of Mr. MacNamee's investigation, which also involved City Staff, two (2) primary financial questions surfaced: "1. Has the City received all the Franchise Fees we should be paid by Waste Management for Commercial and construction and demolition solid waste collection services?" and " 2. Has the City overpaid for residential solid waste collection services due to errors in the number of residential units in each of the four categories of service provided within the City?" As a result, on February 10, 2010, Mayor Nelson S. "Woodie" McDuffie, on behalf of the City Commission, formally requested the Financial Review Board (FRB) to assist the City with answering the following: 1. "Is the City receiving all necessary information from Waste Management and does the City have in place processes to regularly review such information and provide reasonable assurance that the City is receiving all Franchise Fees due?" 2. "Do the City's business processes ensure that the number of units in each of the four categories is regularly and accurately updated, that Waste Management is billing the City for the appropriate number of units, and that the unit counts are periodically reconciled with the Property Appraiser's records?" In an effort to resolve these questions, Mayor McDuffie, on behalf of the City Commission, on February 10, 2010, formally requested the Financial Review Board (FRB) to assist with answering these questions. This task was then taken on by City Staff with the intent to receive confirmation by the FRB and Mr. MacNamee that all questions had been answered. Following receipt of the Mayor's letter, staff developed a plan to perform an analysis (a Financial or Forensic Audit was not completed) of the City's Commercial & Residential Solid Waste program - historically and currently. Commercial Analysis: The Commercial Franchise Fee Analysis provided an analysis of the City's Commercial Solid Waste program. The Analysis included a summary of the program's history (since 2001), outlined the major services that are required to be provided by the Contractor, noted the duties of the Contract Administrator and the provisions for the various Commercial Rates, billing and remittance of the Franchise Fee and other charges, including Administrative Fees. In addition, fourteen (14) Work Plan items were developed in an attempt to confirm the proper receipt of Commercial Franchise Fees. The comprehensive analysis is attached. Commercial AnalysisObservations Completion of each Work Plan item provided the following observations regarding the City's Commercial Solid Waste program: A. Our analysis showed that from FY 2002 to FY 2008 (excluding the years impacted by the hurricanes and the C&D law suit), increases in Commercial Franchise Fee revenues appear to compare favorably with the corresponding year's rate increase (as a percentage). B. In FY 2009, the City removed the "exclusive" C&D franchise option, which resulted in the "non- exclusive" haulers charging "market rates." Because of this, along with the fact that monthly Franchise Fee information prior to the change in C&D services to anon-exclusive option is not available, the change in the volume for C&D services cannot be determined. C. It was determined that minor deviations from the rate Ordinance for FY 2006, FY 2007, FY 2008, FY 2009 and FY 2010 were due to a "rounding" issue, which does not appear to have sufficient material concerns to warrant a further detailed analysis. D. 339 of 1,039 Commercial Customers (32.6%) in FY 2009 were sample tested; the sampling indicated that the rates were correct and properly implemented during this time period. E. When the "non-exclusive" Open Top (temporary) C&D Monthly Franchise Fees were added to the Total Monthly Franchise Fees Earned for a five (5) month period, the monthly general average aggregate rate decreased. F. During a five (5) month time period, three (3) Franchise Fee omissions were identified totaling $51,025.37. In addition, it was found that WM had failed to submit requisite Administrative Fees totaling $1,873.95 over a separate five (5) month period. All omitted funds have been received by the City. G. WM claimed it was "over" paying an Administrative Fee and excluded 95 Permanent Roll-Off containers from all future Administrative Fee payments as of March 2009 H. Beginning in February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has been instrumental in resolving various requests for information and evaluating and documenting (e.g., transparency and accountability) the City's various solid waste management business processes. Commercial AnalysisRecommendations The following recommendations were developed regarding the City's Commercial Solid Waste program: 1. Coordinate with the Contractor to ensure that the rates that are prescribed within the approved Rate Ordinances (Chapter 51 "Garbage And Trash -City Code of Ordinances) are utilized for all billings to eliminate potential errors. This practice began in FY 2009 (October 1, 2008). 2. Develop a monthly rate structure for all Commercial Services and for all pick-up options available and include this within the annual Rate Ordinance. Written, electronic confirmation that both the City and the Contractor have reviewed and confirmed the proposed rates should be provided. 3. All Franchise Fee remittances should be provided one (1) month in arrears to facilitate a monthly analysis of all Commercial Franchise Fee revenue earned. 4. To confirm the accuracy of Commercial Franchise Fees remitted on a monthly basis the City will randomly select 10 to 20 Commercial Customers and request all detailed information regarding these accounts. This information should include customer name, service address (number and street name should be provided in separate cells), container type, frequency of pick-up, Special Service fees (if applicable), Administrative Fee (if applicable), total monthly Franchise Fee earned from the service provided and total monthly billed amount earned from the service provided. This will permit the City to conduct a test of these randomly selected customers, which may include field visits, to confirm the accuracy of Franchise Fees received. 5. To ensure the accuracy of the monthly C&D Franchise Fees, Detailed Billing Registers should be reviewed by the Contract Administrator and/or their designee and the Utility Customer Service Division Manager and/or their designee, on a monthly basis. 6. Reference the Contractor's ability to charge Special Service Fees within the annual Rate Ordinance. 7. The Contractor should provide written, electronic notice of any administrative issues and/or changes that may affect total revenues received and/or expenditures to be paid to the City to the City's Contract Administrator within 72 hours. 8. As provided within the approved Franchise Agreement, Section 4.C.3.b -Disclosure -the Contractor should continue to provide all Commercial Customers with an annual disclosure statement. 9. Detailed internal controls (i.e., business process policies and procedures) have been developed. Commercial AnalysisConclusion It was found that numerous barriers (i.e., "live system," lack of detailed customer data, communication, etc.) prevented the completion of a detailed determination regarding whether appropriate Commercial Franchise Fees have been received since the inception of the current Franchise Agreement (FY 2002). It should also be noted that this determination includes the payment of $51,025.37 in Commercial Franchise Fees as well as $1,873.95 in Administrative Fees for two separate five (5) month periods. In addition, various business process improvements have been identified and recommended to be implemented (some already have begun) to ensure the accuracy of the City's Commercial Solid Waste program and Franchise Fees payments. Residential Analysis: The Residential Analysis included a summary of the program's history (since 2001), outlined the major services that are required to be provided by the Contractor and the City, noted the duties of the Contract Administrator and the provisions for the various Residential Rates, billing and collection and remittance of the Franchise Fees. In addition, seventeen (17) Work Plan items were developed in an attempt to confirm whether an overpayment by the City has been made. The comprehensive analysis is also attached. Residential Analysis Observations Completion of each Work Plan item provided the following observations regarding the City's Residential Solid Waste program: A. When compared to the Palm Beach County Solid Waste Authority's (SWA) total count (as of the Non Advalorem (NAV) certification date) and with the Contractor's invoices, the City's unit count is generally consistent with the SWA's. B. It was found, that there was no "paper trail" or evidence to ensure receipt of the monthly Reports by the receiving entities. C. The City's Field Inventory Count, which included analyzing, classifying and verifying all properties throughout the City into the four (4) service categories, was completed in March 2010. The total unit count (prior to WM reviewing and contesting certain units) was 33,744 (AGAR - 14,992 units, BGAR - 1,418 units, CGAR - 2,638 units &DGAR - 14,696 units) and when compared with the SWA's adjusted FY 2010 NAV total unit count, a difference of only 13 total units resulted. Further, when compared with the March 2010 WM invoice, a total unit difference of 111 units was identified. The differences found within each category are as follows: AGAR: 119 units, BGAR: -43 units, CGAR: 16 units &DGAR: 16 units. D. When comparing actual (current) and adjusted unit counts (based on the Field Count & CO Report) with the unit counts that were provided in WM's monthly billing statements, the following was found: The Contractor's invoiced BGAR, CGAR &DGAR unit counts did not change over a 41/z year review period, until August 2009. All new CO's and demolitions (265 net units) were incorporated into the AGAR category Invoiced Total Unit Counts did not track with the adjusted Field Investigation counts throughout the analysis period When tested on a month-to-month basis, the AGAR count (until August 2009) was not updated in a timely manner to reflect the construction activity within the City for the corresponding time periods The City's current total unit count of 33,744 (as of March 2010) differs from the corresponding Billing invoice by 111 units (-.33%) and suggests that the Contractor is now billing the City more accurately E. When reviewing the City's General Ledger accounts and comparing the actual monthly Residential service payments with WM's actual monthly billings (invoices), the following was found: Occasionally, invoices required adjustments prior to payment by the City Invoices were submitted with dates that may not have reflected the service date The incorrect number of units for garbage and recycling were included within some monthly invoices and adjustments were made to reflect a corrected number of units An inadvertently missed payment ($177,926) by the City was identified in December 2005 as a result of a billing concern by Staff over whether the City's payments were being made in advance or in arrears All errors and adjustments that were not captured within the monthly invoices were captured within this analysis H. After comparing the "adjusted" monthly amounts with the number of units actually billed by WM it was determined that the City has overpaid WM an estimated $64,960 over the previous five (5) year period (from Apri12005 to Apri12010). L It was found that it was not "out of line" for the City to pay WM for their "special" collection efforts to accommodate the City's "Clean City" initiative. J. The Contractor has been verbally requested that the City provide payment for all disposal costs associated with 84 sidewalk containers (i.e., trash cans), which are located along AlA, Atlantic Avenue and Pineapple Grove these services from FY 2005 to FY 2009- $38,800.66. K. Beginning in February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has been instrumental in resolving various requests for information and evaluating and documenting (e.g., transparency) the City's various solid waste management business processes. Residential Analysis Recommendations The following recommendations were developed regarding the City's Residential Solid Waste program: 1. The monthly Certificate of Occupancy (CO) Report should be distributed to the Contractor (WM), the Contract Administrator and the Utility Customer Service Division Manager -Finance Department by the Code Enforcement Division -Community Improvement (CI) Department electronically (i.e., E- mail) by 15~ of each month to ensure receipt (a time and date stamp is now provided). 2. All BGAR areas should have the opportunity to vote and determine if they prefer to retain side or rear door services at a higher rate. This option would still require residents within this service classification to bring recycling to curb for collection 3. Ensure that WM commits and utilizes the new (agreed) Field Count numbers within all invoices dating back to March 2010. Further, all future invoices should include the adjusted service category unit counts based on the CO Reports, which are now being forwarded to WM electronically. Finally, WM and/or the City should make all necessary financial adjustments that may result due to this new count. Potential adjustments should be made back to the date that the new Field Count was established - March 2010 4. The Master Billing File should be updated to account for all Residential units that were identified during the Field test 5. The City's total unit count, adjusted Field Inventory Count and the Master Billing counts, should be compared and reconciled with the SWA's annual (certified) Non-Ad Valorem total units to ensure confirmation of accuracy within all data bases. Generally, this should take place September of each year 6. Amend the Special Collections section of the City's Code and include language within the Franchise Agreement to ensure that the City is not billed or will not provide payment to WM for additional Residential Special Collections on a "go forward basis" throughout the term of the existing Solid Waste Agreement. In addition, WM will bill for special collections that are "called" in by Commercial customers (in accordance with the Franchise Agreement and/or City Code). In the rare cases where Code Enforcement action is required, the City will provide collection services and payment will be made to the Contractor for this service. The fee for this service will be in accordance with the Franchise Agreement and/or City Code. 7. The City should reimburse the Contractor the estimated disposal costs for 84 sidewalk containers dating back to FY 2005. Further, this amount should be utilized to reduce the total estimated overpayment from $64,960 to $26,159.04. 8. WM should reimburse the City the estimated overpayment dating back to Apri12005. 9. The Solid Waste Employee Working Group (i.e., Community Improvement and Finance Staff) should continue to meet to ensure communication across departments and that all necessary Staff are apprised of any solid waste issues that may develop. 10. Both the Community Improvement Department & Finance Department have developed detailed internal controls (i.e., business process policies and procedures) have been developed. Residential Analysis Conclusion As shown within this analysis, invoiced unit counts have not been updated in accordance with the City's monthly CO Reports nor have they be compared and reconciled with the SWA. In fact, it wasn't until the fall of 2009 that the new CO's and demolitions were being distributed among all four (4) service categories. As a result, it has been determined through this analysis that the City has overpaid for Residential Solid Waste services by $64,960 over the past five (5) years (April 2005 to March 2010). However, due to amount owed for sidewalk container disposal services, the estimated overpayment is reduced to $26,159.04. In addition, this analysis has provided the City with the opportunity to cross departmental lines and review, amend and document its business practices related to Residential and Commercial Solid Waste collection and the approved Contractor. Further, this study has provided the City and WM with a very accurate unit count that, as we proceed forward, should produce confidence in the Contractor's invoices and payments that are made. Final Conclusion for both the Commercial & Residential Analyses: Instead of pursuing the option of continuing either Analysis and further investigating particular areas of these programs, which could prove to be cost prohibitive (i.e., financial and personnel capital) and may not be productive, Staff has recommended that the City close the review of historical Franchise Fee Analysis and the Residential Analysis and proceed forward in implementing the various policies and procedures that will be prepared by Staff at a later date. The proposed changes that were recommended by Staff and the Financial Review Board, if adopted by the City Commission, will ensure better communications within the City as well as with the Contractor. In addition, these recommendations will enhance accountability and documentation as well as assist in ensuring that future Commercial Franchise Fees and the Residential Unit Counts and Payments will be closely monitored for accuracy on a monthly basis. Financial Review Board: Both Reports -the City's "Commercial Solid Waste Program Analysis and Proposed Business Process Recommendations" report -dated April 28, 2010 (revised on July 5, 2010) and the City's "Residential Solid Waste & Recycling Program Analysis and Proposed Business Process Recommendations" report - dated July 5, 2010 -were formally presented to the Financial Review Board (FRB) for review, comment and consideration. Letters related to the FRB's review have been provided to Mayor McDuffie outlining their general positions regarding both Reports, including the obeservations, recommendations and conclusions, and are attached. Please Note: The Exhibits for both reports have not been included within this Agenda, but are available in either electronic or paper formats upon request. COMMERCIAL SOLID WASTE PROGRAM ANALYSIS AND PROPOSED BUSINESS PROCESS RECOMMENDATIONS April 28, 2010 (Revised July 5, 2010) Table of Contents Executive Summary ............................................................................................................ Pages I -IV Memorandum to the City of Delray Beach Financial Review Board: I. Goal -Identification of Issue(s) ..................................................................................... Page 1 II. Background ................................................................................................................... Page 2 Commercial Services Provided .............................................................................................. Page 2 Commercial Franchise Agreement (i.e., Contract) Administration ............................... Page 3 Commercial Rates, Billing and Remittance of Franchise Fee and other Charges..... Page 3 III. Commercial Franchise Fee Analysis Work Plan ...................................................... Page 5 IV. Analysis of Commercial Franchise Fees and Administrative Fees .......................... Page 6 Work Plan Item #1. Review Rate Ordinances since FY 2002 (the first year of the BFI Agreement) to calculate and determine the average percentage change in the Commercial Franchise Fee rates .......................................................................................... Page 6 Work Plan Item #2. Review the City's General Ledger accounts to compare actual FY 2008 and FY 2009 Commercial Franchise Fee revenues received to determine the actual percentage increase in Franchise Fees over this time period ....................................................................................................................................... age 12 Work Plan Item #3. Obtain various WM Commercial Customer Summary Billing Registers (before and after FY 2008 rate increase) and develop a worksheet combining Customer Summary Billing Registers and sort by customer to ensure comparable customer data ........................................................................................... age 13 Work Plan Item #4. Analyze FY 2007, FY 2008 and FY 2009 Commercial Container counts to determine changes in the monthly Commercial Franchise Fee received before and after the rate increase -Ordinance #44-08 -effective October 1, 2008... Page14 Work Plan Item #5. Review a large sample of Commercial Customer rates (monthly billings) and compare with rates provided in Ordinance #44-08 to determine if rates are accurate and properly implemented ........................................................................... Page14 Work Plan Item #6. Obtain "Non-Exclusive" C&D Monthly Franchise Activity Reports from October 2008 through September 2009 ..................................................... Page 16 Work Plan Item #7. Review and analyze Commercial Open Top (temporary) C&D activity prior to and after the rate became unregulated (i.e., market rates) in October 1, 2008 (September 2008 was the last month that WM held the exclusive franchise for C&D collections ............................................................................................... age 17 Work Plan Item #8. Review and analyze the effects/impacts of the monthly Commercial Container Customer rate increases (Ordinance #44-08 -Effective October 1, 2008) on the services provided (i.e., # of containers, size of containers, frequency of pickup, combining waste services and business closure) .......................... age 19 Work Plan Item #9. Review and analyze the February 2009 detailed Commercial Customer Billing Register and reconcile the administrative fees received from WM ........................................................................................................................................... Page 19 Work Plan Item #10. Coordinate and bring together all areas of the City that participate in the City's Solid Waste program to encourage communication across departments, resolve public requests for information, evaluate and document (e.g., transparency) the City's various solid waste management business processes and develop administrative and operational recommendations that will be provided in both the Commercial and Residential Analyses ................................................................ Page 21 Work Plan Item #11. Review, analyze and provide recommendations regarding the Community Improvement Department's (CI) Commercial Solid Waste Collection business processes to ensure proper monitoring and notification, receipt of detailed monthly Commercial activity and collection of revenue ................................... Page 22 Work Plan Item #12. Review, analyze and provide recommendations regarding the Finance Department -Utility Customer Service Division's business processes to ensure proper monitoring and notification, receipt of detailed monthly Commercial activity and collection of revenues ...................................................................................... Page 23 Work Plan Item #13. Review, analyze and implement WM recommendations regarding business processes to ensure implementation of rate adjustments, proper monitoring and notification, delivery of detailed monthly Commercial activity and collection of revenues ....................................................................................... Page 24 Work Plan Item #14. Identify important observations and provide recommendations ................................................................................................................... Page 25 V. Conclusion ........................................................................................................................ Page 31 EXECUTIVE SUMMARY COMMERCIAL SOLID WASTE PROGRAM ANALYSIS AND PROPOSED BUSINESS PROCESS RECOMMENDATIONS I. Goal -Identification of Issue(s) During the past year, a City resident, Ken MacNamee, has been investigating various aspects of the City's Solid Waste and Recycling collections, including management and administration of our Franchise Agreement, with Waste Management (WM). In the course of Mr. MacNamee's investigation, which was aided by City Staff, a question regarding the City's Commercial Solid Waste Program surfaced, "Has the City received all the Franchise Fees we should be paid by WM for Commercial and construction and demolition solid waste collection services?" In an effort to resolve this question, Mayor McDuffie, on behalf of the City Commission, on February 10, 2010, formally requested the Financial Review Board (FRB) to assist the City with determining "Is the City receiving all necessary information from WM and does the City have in place processes to regularly review such information and provide reasonable assurance that the City is receiving all Franchise Fees due?" This task was then taken on by City Staff with the intent to receive confirmation by the FRB and Mr. MacNamee that all questions had been answered. II. Analvsis of Commercial Franchise Fees and Administrative Fees Following receipt of the Mayor's letter, Staff developed a plan to perform an analysis (a Financial or Forensic Audit was not completed) of the City's Commercial Solid Waste program - historically and currently. The Commercial Franchise Fee Analysis provides an analysis of the City's Commercial Solid Waste program. The Analysis included a summary of the program's history (since 2001), outlined the major services that are required to be provided by the Contractor, noted the duties of the Contract Administrator and provided the provisions for the various Commercial Rates, billing and remittance of the Franchise Fee and other charges, including Administrative Fees. In addition, fourteen (14) Work Plan items were developed in an attempt to confirm the proper receipt of Commercial Franchise Fees. The comprehensive analysis is attached. III. Observations Completion of each Work Plan item provided the following observations regarding the City's Commercial Solid Waste program: A . Our analysis showed that from FY 2002 to FY 2008 (excluding the years impacted by the hurricanes and the C&D law suit), increases in Commercial Franchise Fee revenues appear to compare favorably with the corresponding year's rate increase (as a percentage). B. In FY 2009, the City removed the "exclusive" C&D franchise option, which resulted in the "non-exclusive" haulers charging "market rates." Because of this, along with the fact that monthly Franchise Fee information prior to the change in C&D services to a non- exclusive option is not available, means the change in the volume for C&D services cannot be determined. C. It was determined that minor deviations from the rate Ordinance for FY 2006, FY 2007, FY 2008, FY 2009 and FY 2010 were due to a "rounding" issue, which does not appear to have any material concerns to warrant a further detailed analysis. D. 339 of 1,039 Commercial Customers (32.6%) in FY 2009 were sample tested; the sampling indicated that the rates were correct and properly implemented during this time period. E. When the "non-exclusive" Open Top (temporary) C&D Monthly Franchise Fees were added to the Total Monthly Franchise Fees Earned for a five (5) month period, the monthly general average aggregate rate decreased. F. During a five (5) month time period, three (3) Franchise Fee omissions were identified totaling $51,025.37. In addition, it was found that WM had failed to submit requisite Administrative Fees totaling $1,873.95 over a separate five (5) month period. All omitted funds have been received by the City. G. WM claimed it was "over" paying an Administrative Fee and excluded 95 Permanent Roll-Off containers from all future Administrative Fee payments as of March 2009 H. Beginning in February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has been instrumental in resolving various requests for information and evaluating and documenting (e.g., transparency and accountability) the City's various solid waste management business processes. IV. Recommendations The following recommendations were developed regarding the City's Commercial Solid Waste program: 1. Coordinate with the Contractor to ensure that the rates that are prescribed within the approved Rate Ordinances (Chapter 51 "Garbage And Trash -City Code of Ordinances) are utilized for all billings to eliminate potential errors. This practice began in 2009 (October 1, 2008). Page II 2. Develop a monthly rate structure for all Commercial Services and for all pick-up options available and include this within the annual Rate Ordinance. Written, electronic confirmation that both the City and the Contractor have reviewed and confirmed the proposed rates should be provided. 3. All Franchise Fee remittances should be provided one (1) month in arrears to facilitate a monthly analysis of all Commercial Franchise Fee revenue earned. 4. A monthly Customer Detail Billing Register should be provided by all Contractors electronically (i.e., E-Mail), in Excel format, to the City with all remittances to allow for electronic comparisons and analysis. This document should include customer name, service address (number and street name should be provided in separate cells), container type, frequency of pick-up, Special Service fees (if applicable), Administrative Fee (if applicable), total monthly Franchise Fee earned from the service provided and total monthly billed amount earned from the service provided. Note: An alternate option (accepted by WM within an E-mail that was received by Staff on June 8t" and forwarded to the FRB by E-Mail on the same day) to confirm the accuracy of Commercial Franchise Fees remitted on a monthly basis has been recommended since WM will not provide the requested reports as provided within the recommendation above. This option would include the following: On a monthly basis, the City would randomly select 10 to 20 Commercial Customers and request all detailed information regarding these accounts from WM. The requested information should include customer name, service address (number and street name should be provided in separate cells), container type, frequency of pick-up, Special Service fees (if applicable), Administrative Fee (if applicable), total monthly Franchise Fee earned from the service provided and total monthly billed amount earned from the service provided. It is requested that WM provide this detailed information electronically (i.e., E-Mail), in Excel format, to the City for testing purposes. The City may conduct, on an as needed basis, a test of these randomly selected customers, which may include field visits, to confirm the accuracy of Franchise Fees received. 5. To ensure the accuracy of the monthly C&D Franchise Fees, Detailed Billing Registers should be reviewed by the Contract Administrator and/or their designee and the Utility Customer Service Division Manager and/or their designee, on a monthly basis. Page III 6. Reference the Contractor's ability to charge Special Service Fees within the annual Rate Ordinance. 7. The Contractor should provide written, electronic notice of any administrative issues and/or changes that may affect total revenues received and/or expenditures to be paid to the City to the City's Contract Administrator within 72 hours. 8. As provided within the approved Franchise Agreement, Section 4.C.3.b -Disclosure - the Contractor should continue to provide all Commercial Customers with an annual disclosure statement. 9. Detailed internal controls (i.e., business process policies and procedures) have been provided as Exhibits within the Residential Analysis (dated July 5, 2010) for review by the FRB. V. Conclusion As shown within this analysis, numerous barriers (i.e., "live system," lack of detailed customer data, communication, etc.) prevented a complete and detailed determination from being completed to determine whether appropriate Commercial Franchise Fees have been received since the inception of the current Franchise Agreement (FY 2002). It should be noted that this determination includes the payment of $51,025.37 in Commercial Franchise Fees as well as $1,873.95 in Administrative Fees for two separate five (5) month periods. In addition, various business process improvements have been identified and recommended to be implemented (some already have begun) to ensure the accuracy of the City's Commercial Solid Waste program and Franchise Fees payments. Instead of pursuing the option of continuing the Analysis to further investigate particular areas of this program, which could be proven to be cost prohibitive (i.e., financial and personnel capital) and may not be productive, Staff is recommending that the City close the review of historical Franchise Fee Analysis and proceed forward in implementing the various policies and procedures that will be prepared by Staff at a later date. These proposed changes, if recommended by the Financial Review Board and adopted by the City Commission, will ensure better communications within the City as well as with the Contractor. In addition, these recommendations will enhance accountability and documentation as well as assist in ensuring that future Commercial Franchise Fees will be closely monitored for accuracy on a monthly basis. Page IV MEMORANDUM April 28, 2010 (Revised July 5, 2010) To: City of Delray Beach Financial Review Board From: Richard J. Reade, City Designee for the Solid Waste Management Analysis Subject: Analysis of the City of Delray Beach's Commercial Solid Waste Program Analysis and Proposed Business Process Recommendations On behalf of the City Staff associated with this project, I want to present our financial analysis and final report on the City's Commercial Solid Waste Program Analysis. In addition, we are providing our observations and recommendations to improve the internal and/or external business processes to ensure that the City of Delray Beach is receiving an accurate amount of Commercial Franchise Fees [Commercial and Construction and Demolition (C&D) services] and Administrative Fees. I. Staff Goal -Identification of Issue(sl During the past year, a City resident, Ken MacNamee, has been investigating various aspects of the City's Solid Waste and Recycling collections, including management and administration of our Franchise Agreement, with Waste Management Inc. of Florida (WM). In the course of Mr. MacNamee's investigation, which was aided by City Staff, two (2) primary financial questions surfaced: "1. Has the City received all the Franchise Fees we should be paid by Waste Management for Commercial and construction and demolition solid waste collection services?" and "2. Has the City overpaid for residential solid waste collection services due to errors in the number of residential units in each of the four categories of service provided within the City?" As a result, on February 10, 2010, Mayor Nelson S. "Woodie" McDuffie, on behalf of the City Commission, formally requested the Financial Review Board (FRB) to assist the City with answering the following (See Attached -Exhibit #1): 1. "Is the City receiving all necessary information from Waste Management and does the City have in place processes to regularly review such information and provide reasonable assurance that the City is receiving all Franchise Fees due?" 2. "Do the City's business processes ensure that the number of units in each of the four categories is regularly and accurately updated, that Waste Management is billing the City for the appropriate number of units, and that the unit counts are periodically reconciled with the Property Appraiser's records?" Note: The first request for assistance refers to City's Commercial Solid Waste Franchise Fees, which are analyzed within this report. Request #2 refers to the City's Residential Solid Waste and Recycling Program. At a later date, Staff will provide the FRB with an analysis of the City's solid waste and recycling program, which will include a detailed comparison of actual unit counts with WM billing statements and a reconciliation of the monthly amounts that 1. were paid and should have been paid to WM (Expense side) and 2. that Residential customers were billed and should have been billed since WM took over the Solid Waste contract from BFI. II. Background In 2001, the City formally Bid the opportunity to provide Commercial and residential solid waste and recycling services within the City of Delray Beach. This Bid process resulted in the selection BFI Waste Systems of North America, Inc. (BFI) by the City Commission and led to the approval of a five (5) year contract (or Franchise Agreement) that commenced on October 1, 2001 (Expiration Date -September 30, 2006) (See Attached -Exhibit #2). Although, BFI was awarded this service opportunity, in 2003, Waste Management Inc. of Florida purchased BFI and took over (through assignment from BFI) the City's solid waste collection services beginning on October 1, 2003. At this time, the City and WM agreed to a new 5-year term beginning with the assignment on October 1, 2003 (Expiration Date -September 20, 2008). In 2008, per the City's Franchise Agreement, the City and WM negotiated a new five (5) year Agreement extension with revised terms and conditions (i.e., removed exclusive franchise for C&D, In-Kind Services increased from $10,000 to $20,000, etc.). This new Agreement is effective until September 30, 2013. Note: All of the documents described within this analysis will be provided as electronic Exhibits to save on financial and environmental costs. They will only be provided as a "hard copy" upon request. Commercial Services Provided: Within Section #3 of the Franchise Agreement (as amended) between the City and WM, all solid waste collection services and residential recycling collection services are outlined and described. To summarize the Commercial services provided: WM shall provide mandatory Commercial solid waste collection services (i.e., Commercial container, Roll-Out Carts, Compactor and Permanent Roll-Off Container), excluding temporary Construction and Demolition Debris (C&D) collection services WM shall be eligible to provide temporary C&D collection services as a "non-exclusive" franchise provider WM shall be responsible for the billing and collection of Commercial Solid Waste Collection Services and disposal costs not being billed and collected by the Solid Waste Authority (SWA) and/or its designee or another "non-exclusive" franchise provider WM shall provide "non-exclusive" Commercial Recycling Collection Services in the City upon request by the Customer or the City Page 2 Commercial Franchise Agreement (i.e., Contract) Administration: The Franchise Agreement defines the City's Contract Administrator as "the person designated by the City who shall act as the City's representative during the term of the Franchise Agreement." This person will be responsible for administering the Agreement and monitoring collection services provided by WM (including including collection and disposal). Please note that the Franchise Agreement indicates that the City's Community Improvement Department - Code Enforcement Division will hold these responsibilities. However, due to budget and personnel resources constraints, these duties have been assigned to the City's Assistant Community Improvement Director and are shared with various Community Improvement Department Staff. Commercial Rates, Billing and Remittance of Franchise Fee and other Charges: Commercial Rates: Initially, in 2001, when the "Solid Waste, Vegetative and Recycling Collection Services" (i.e., Franchise Agreement) formal bid was awarded to BFI, the contractor rates for residential, multi- family and commercial units were established within BFI's Bid documents. Monthly Commercial collection and disposal rates were identified in Exhibit I as a "per cubic yard" rate. This provided for all basic charges associated with collection and disposal of Commercial waste. It should be noted that disposal costs are defined by the Palm Beach County Solid Waste Authority (SWA) and any adjustments are not within the control of the City and/or the contractor. Further, the Franchise Agreement, "Section 6. Charges, Rates and Level of Services", provided for the charging of various costs associated with this service including: an annual rate adjustment based solely on the Consumer Price Index (CPI) -not to exceed 3% in any one year, Extraordinary Rate Adjustment for unforeseen operational costs (requires City Commission approval), an Administrative Fee ($0.35 per residential customer or per Commercial Container customer) that is remitted back to the City, a Franchise Fee of 5% to support the exclusive right to provide residential and commercial services within the City and aRoll-Out Cart Replacement Fee of $0.90 for all residential and commercial Curbside Cart customers to compensate for the City's costs to purchase and replace these carts. In addition, "Section 4. Solid Waste and Vegetative Waste Collection Service: C. Commercial Solid Waste Collection Service:" provides that the contractor shall only charge rates as set out in Exhibit I or as otherwise allowed by this Agreement (i.e., "Special Services"). These additional "Special Services" charges, which are outlined in Exhibit #2, include but are not limited to "special services for collection of solid waste such as rolling containers out of storage areas, opening doors and gates for access or other such special services." Following the determination of Commercial rates, charges and fees within the approved Bid Award, City Staff, on an annual basis, applies the permitted CPI to determine the new monthly Commercial collection rates. At this time, City Staff also identifies and incorporates any necessary adjustments to the disposal rate as defined by the SWA. This new annual rate information is then submitted to the contractor (BFI and WM) for review and approval. Upon Page 3 receipt of the contractor's approval, the new rates are included in an annual "Rate Ordinance" that is considered by the City Commission. The annual Rate Ordinance also maintains language that updates/amends the existing City Code and the existing Franchise Agreement. If approved by the Commission, all new rates are then codified (Chapter 51 "Garbage And Trash -City Code of Ordinances) and applied to respective Commercial customers beginning on the first day of the fiscal year (October 15t) It should be noted that since the Franchise Agreement was approved in 2001, the City Commission has approved three (3) separate Amendments to the Agreement. Only the most recent, Amendment No. 3, in July 2008, (See Attached -Exhibit #3C), provided for a revision to the previously established monthly collection rates. This Amendment authorized: An extension of the existing Franchise Agreement to provide an additional one, five (5) year period as permitted by Amendment No. 1 (approved by the City Commission in September 2003) A modification to the permitted CPI rate adjustment threshold Provided for a Fuel Surcharge Provided for a revised Approved Rate Schedule -Exhibit #2 -Franchise Agreement The approved changes to determine the monthly collection costs were requested by WM due to various reasons (i.e., historically low CPI rate adjustments, high fuel and operational costs, etc.). Billing: The Franchise Agreement provides that "Commercial Customers" includes all customers other than residential and multi-family (5 or more units) customers. Further, all Commercial billing and collection services are completed by the contractor (i.e., BFI and WM), thus the City does not participate in daily, operational billing activities for Commercial Solid Waste Collection Services. Commercial Billing is determined as follows: Total Monthly Disposal Charge =Monthly Container Yards x Disposal Rate Total Monthly Collection Charge =Monthly Container Yards x Collection Rate per Yard Total Monthly Collection & Disposal Charge =Total Disposal Charge + Total Collection Charge Total Mon. Charge =Total Monthly Collection & Disposal + 10% Franchise Fee + $0.35 Admin Fee As mentioned earlier, all eligible collection rates, fees and charges are listed within either the prevailing Rate Ordinance and/or Franchise Agreement (e.g., Natural Disasters, Extraordinary Rate Adjustment, Special Services -moving containers, opening and closing doors and/or gates for access, adding and opening locks, etc.). The current collection rates, fees and charges can be found in Ordinance #44-08 and the corresponding Franchise Agreement (See Attached - Exhibit #4). **Please note, as defined in Question #1 -Part 7 of WM's February 2010 responses to Ken MacNamee's 12 Commercial Questions (See Attached - Exhibit #5), that Commercial Containers/Dumpsters, Curbside Carts and Commercial Compactors with monthly service Page 4 charges are billed in advance (at the beginning of a period). Permanent Roll-Offs, Roll-Off Compactors and Open Top (temporary) C&D Roll-Off Containers are billed in arrears (at the end of a period). This information is utilized throughout this Commercial analysis. In addition, it should be noted that there are some fees charged by WM that are "otherwise allowed" and are not subject to being charged a Franchise Fee (i.e., Commercial Recycling, Commercial Recycling compactor leases, repairs to customer owned compactors and/or containers, etc.). Franchise Fees: Per the City's Code of Ordinances, a monthly Franchise Fee is collected and remitted to the City by WM for all Commercial containers [Commercial Containers/Dumpsters, Permanent Roll-Off containers, Roll-Off compactors and Open Top (temporary) C&D Roll-Off containers]. In 2001, the 5% monthly Franchise Fee on all contractor fees (i.e., collection, disposal and container maintenance), was established as a requirement within the City's Request for Proposal (RFP) documentation. The Franchise Fee remained at 5% until FY 2007 when it was increased to 10% (Ordinance #50-06 -September 2006). As a result, WM is authorized to charge a 10% Franchise Fee (Total Collection & Disposal Charge x 10%) As noted earlier, one of the main provisions of the revised Franchise Agreement (Amendment No. 3) was the removal of WM as an "exclusive" C&D Franchise provider, which had been part of the original 2001 Agreement. At this time, due to concerns with providing "exclusive" rights to the City's C&D services, the City removed the "exclusive" option within the 2008 Franchise Agreement extension and permitted "non-exclusive" franchises to be offered to various C&D haulers, beginning October 1, 2008. Thus, multiple, permitted "non-exclusive" now provide this service within the City's boundaries and remit the monthly Franchise Fee separately. Administrative Fees: Per the City's Franchise Agreement, a monthly Administrative Fee ($0.35 per container per month) for all Commercial Cart, Commercial Container/Dumpster and Commercial Compactor accounts is collected and remitted to the City. Permanent Roll-Off, Roll-Off Compactors and Open Top (temporary) C&D containers are not charged this fee. III. Commercial Franchise Fee Analysis Work Plan 1. Review Rate Ordinances since FY 2002 (the first year of the BFI Agreement) to calculate and determine the average percentage change in the Commercial Franchise Fee rates 2. Review the City's General Ledger accounts to compare actual FY 2008 and FY 2009 Commercial Franchise Fee revenues received to determine the actual percentage increase in Franchise Fees over this time period 3. Obtain various WM Commercial Customer Summary Billing Registers (before and after FY 2008 rate increase) and develop a worksheet combining Customer Summary Billing Registers and sort by customer to ensure comparable customer data Page 5 4. Analyze FY 2007, FY 2008 and FY 2009 Commercial Container counts to determine changes in the monthly Commercial Franchise Fee received before and after the rate increase -Ordinance #44-08 -effective October 1, 2008 5. Review a large sample of Commercial Customer rates (monthly billings) and compare with rates provided in Ordinance #44-08 to determine if rates are accurate and properly implemented 6. Obtain "Non-Exclusive" C&D Monthly Franchise Activity Reports from October 2008 through September 2009 7. Review and analyze Commercial Open Top (temporary) C&D activity prior to and after the rate became unregulated (i.e., market rates) in October 1, 2008 (September 2008 was the last month that WM held the exclusive franchise for C&D collections 8. Review and analyze the effects/impacts of the monthly Commercial Container Customer rate increases (Ordinance #44-08 -Effective October 1, 2008) on the services provided (i.e., # of containers, size of containers, frequency of pickup, combining waste services and business closure) 9. Review and analyze the February 2009 detailed Commercial Customer Billing Register and reconcile the administrative fees received from WM 10. Coordinate and bring together all areas of the City that participate in the City's Solid Waste program to encourage communication across departments, resolve public requests for information, evaluate and document the City's various solid waste management business processes and develop administrative and operational recommendations that will be provided in both the Commercial and Residential Analyses 11. Review, analyze and provide recommendations regarding the Community Improvement Department's (CI) Commercial Solid Waste Collection business processes to ensure proper monitoring and notification, receipt of detailed monthly Commercial activity and collection of revenues 12. Review, analyze and provide recommendations regarding the Finance Department - Utility Customer Service Division's business processes to ensure proper monitoring and notification, receipt of detailed monthly Commercial activity and collection of revenues 13. Review, analyze and implement WM recommendations regarding business processes to ensure implementation of rate adjustments, proper monitoring and notification, delivery of detailed monthly Commercial activity and collection of revenues 14. Identify important observations and provide recommendations IV. Analysis of Commercial Franchise Fees and Administrative Fees Work Plan Item #1. Review Rate Ordinances since FY 2002 (the first year of the BFI Agreement) to calculate and determine the average percentage change in the Commercial Franchise Fee rates In an effort to determine the average percentage change in Commercial Franchise Fee rates, all Commercial Franchise rate increases were reviewed dating back to FY 2002, the time when the initial BFI contract became effective. During this period of time, the following was identified: Page 6 From FY 2002 through FY 2006, Annual Commercial rate increases were minimal (on average -less than 1.2% per year) and tied to the Consumer Price Index (CPI) per the approved Franchise Agreement -Max. 3% per year Annual Commercial rate increases were amended in FY 2008 (See Attached -Exhibit #3C) to permit a new CPI of a rolling cap of up to 5% per year as well as a "fuel surcharge" that would be determined in a Rate Ordinance prior to each fiscal year City Franchise Fees were 5% of commercial billings from FY 2002 to FY 2006 Franchise Fee collections for FY 2005 and FY 2006 were negatively impacted due to two (2) large scale and unexpected natural events (Hurricane Frances in 2004 and Hurricane Wilma in 2005) that resulted in continued power outages and debris issues In addition to the related hurricane effects, the City was also in the midst of a law suit with Southern Waste Systems, LLC (SWS), which began in 2001. SWS challenged the City's Ordinance and Franchise Agreement between the City and BFI that provided exclusive C&D services collection rights within the City of Delray Beach. A significant loss of revenues occurred when the District Court entered a determination of "enjoined enforcement" (declared an injunction) against the City. This prohibited the City from collecting C&D Franchise Fees under its "Exclusive Franchise Agreement." The suit was then heard on appeal and eventually "reversed, vacated and remanded" by the 11t" District Court of Appeals in August 2005; allowing the City to enforce its exclusive C&D Franchise and collecting Franchise Fees from WM. These events (i.e., hurricanes and law suit) negatively impacted the City's total Franchise Fee for each of the affected years considerably -from $213,158 in FY 2004 TO $94,517 in FY 2005 & $92,058 in FY 2006. As a result, Franchise Fees collected during this period did not meet budgeted amounts (FY 2005 - $159,300 and FY 2006 - $100,000), which do not prove well within this analysis to determine appropriate Franchise Fees collected. Beginning on October 1, 2006 (FY 2007), Commercial Franchise Fees were increased from 5% to 10%, which includes collection, disposal and container maintenance. In addition, due to the annual CPI adjustment and the 10% Franchise Fee increase, a 118% average rate increase was experienced for a Commercial Container service - 3 cu.yd. container collected 2 times per week. From FY 2002 to FY 2006 (excluding the year's impacted by the hurricanes and the C&D law suit), Commercial Franchise Fee revenues appear to compare favorably with the corresponding year's rate increase (as a percentage). In an effort to further investigate Commercial Franchise Fees received from FY 2007 to present, Staff then reviewed the requisite annual Rate Ordinances to determine the average percentage change in the Commercial Franchise Fee rates (See Chart Below). Page 7 Franchise Annual Fee Franchise (%) Rate Annual Actual Franchise Franchise Fee Rate Fee Increase Received Earned FY2007 10% 10.71 118.3% $339,543 15t Year of 10% Franchise Fee FY2008 10% 10.80 0.84% $354,096 FY2009 10% 21.24 96.7% $490,515 1St Year of 5% CPI + Fuel Surcharge FY2010 10% 20.94 (1.41 %) N/A Annual Franchise Rate =Franchise fee on 3 cu.yd. container collected 2 times per week We began this analysis by looking at how the FY 2008 rate increases affected Commercial Franchise Fee revenues when compared to FY 2007. This enabled Staff to compare two (2) years - FY 2007 & FY 2008 -that maintained the same Franchise Fee percentage (10%) and determine if the Commercial Franchise Fee received was generally accurate: In FY 2007, the Commercial Franchise Fee was increased from 5% to 10% and resulted in a significant increase in revenues collected by the City ($339,543). Unfortunately, due to the skewed data from the hurricane and C&D law suit years, we are unable to make any significant comparisons to ensure accuracy of remitted Fees. However, when the FY 2007 revenues are compared with the revenues received in FY 2008 (with a very small rate increase), the remitted Franchise Fee appears to be in line. In FY 2008, a .84% Commercial Franchise Fee rate adjustment (based on the CPI fora 3 yard container collected 2 times per week) was implemented to accommodate increasing collection costs. Also, at Fiscal Year End 2007 there were a total of 1,113 Commercial Containers and at Fiscal Year End 2008 there were a total of 1,129 Commercial Containers. As a result of this slight increase in Containers (17 additional Containers), the small CPI increase and when FY 2007 & FY 2008 Franchise Fees are compared, revenues collected increased by 4.29% (FY 2007 - $339,543 and FY 2008 - $354,096). Thus, suggesting appropriate Franchise Fees were remitted back to the City for FY 2008. Prior to FY 2009, WM was restricted to an annual rate increase of up to 3% per year based upon the CPI. However, beginning in FY 2009 (October 1, 2008 to September 30, 2009), the City Commission, within Ordinance #44-08, approved a "general rate increase average" (in collection and disposal rates) in the City's Commercial Franchise Fee of 96.7% for Commercial Container/Dumpster service (the most common type of Commercial service offered). In addition, the Contractor is entitled to increase in the collection rate threshold from 3% to a maximum annual rolling rate of 5% based on the CPI as well as to implement an annual fuel surcharge (based on nationally published rates). In an effort to ensure consistency throughout this Analysis (due to the numerous combinations of container sizes and frequency of pick-ups along with the various types of collection options), Staff determined that it would be best to determine a "general rate increase average" for each Page 8 Commercial Service category to provide an understanding of the Franchise Fee rate increase in FY 2009 (See Chart Below). The general rate increase average is defined as the most common pickup option utilized within the category. As an example, Staff utilized a 3 yard container collected 2 times per week (i.e., Median) as the general rate increase average for the Commercial Container/Dumpster category. Thus, the Commercial Franchise Fee rate increase for this category increased from $10.80 per month to $21.24 per month and represents a 96.7% increase in the Commercial Container Franchise Fee rate when compared to FY 2008. Note: Commercial Franchise Fees, when compared from one year to another, does not necessarily compare "apples to apples." This is due to various business and economic conditions (i.e., number of containers change, businesses open and close, container size and/or frequency of collection is altered, businesses partnering to share containers). Thus, the actual Franchise Fee revenue collected generally never equals the exact increase in the Franchise Fee rate. However, this is a useful tool and provides an understanding of whether the Fee received is reasonable. "General Rate Increase Average" of Commercial Services Categories Total Monthly Franchise Fee Increases from FY 2008 to FY 2009 Size of Container Type of Container Pick Up Frequency Total Monthly Franchise Fee Increase from FY 2008 to FY 2009 3 Yard Container/Dumpster 2 times/week 96.7% 3 Yard Front-Load Compactor 2 times/week 61.8% 40 Yard Permanent Roll-Off Compactor 1 time/week 24.1% 30 Yard Open Top (Permanent) Roll-Off 1 time/week 114.7% 95 Gallon Roll-Out Cart 2 times/week 196.7% N/A Commercial Container Maintenance N/A 0% N/A Special Services N/A 0% Total Monthly Franchise Fee =Disposal Costs + Collection Costs + Container Maintenance + Special Service Fees When determining the City's Commercial Franchise Fee, additional fees are included in the calculation, as defined by the City's Franchise Agreement. Listed below, permitted additional fees include: Container Maintenance Fee: This Fee has remained constant and did not have an impact on the City's Franchise Fee collected when compared to FY 2008 & FY 2009. Special Services Fee: Additional charges that include but are not limited to "special services for collection of solid waste such as rolling containers out of storage areas, opening doors and gates for access or other such special services." These fees have remained constant (assuming the customer maintains the same service), thus, this Fee did not have an impact on the City's Franchise Fee collected when compared to FY 2008 & FY 2009. Page 9 Administrative Fee: Collected to assist with the City's cost of administering the Solid Waste program. This Fee has been fixed at $0.35 per Commercial container (at least since the inception of the FY 2002 award to BFI). This Fee is not incorporated into the determination of the Commercial customers Franchise Fee, but is included in the Total Monthly Charges and remitted to the City. Further, this monthly amount, due to it being a nominal amount (approximately $350 per month), is recorded within the City's Franchise Fee revenue account. This fee is based on the number of Commercial Cart, Commercial Container/Dumpster and Commercial Compactor accounts within the City. Permanent Roll-Off, Roll-Off Compactors and Open Top (temporary) C&D containers are not charged this fee. Since there has not been an increase in these Fees and no significant increase in customers, there is no impact to the City's total monthly revenues when compared to FY 2008 & FY 2009. In an effort to accurately determine the general average aggregate rate increase for the all of the above types of containers except C&D during this time period, Staff has reviewed and compared the Total Commercial Monthly Franchise Fee received under the old rates - FY 2008 - and the new rates - FY 2009 - (See Chart Below). This general average aggregate rate increase was determined by comparing the Total Commercial Franchise Fee in August 2008 (FY 2008's last billing period) with the Fee received in October 2008 (FY 2009's first billing period that includes the new rates for all eligible services). Total Monthly Franchise Fees (Excluding C&D) Earned Sample Months - FY 2008 to FY 2009 Aug 2008 Sept 2008 Oct 2008 Feb2009 Mar 2009 (Last) Billing at Billing at Billing at Billing at New Billing at New New New Rates Old Rates Rates Rates Rates FY 2009 FY 2008 FY 2009 FY 2009 FY 2009 WM Original Monthly Franchise Fee -All Services $27,348 $31,750 $29,408 $32,758 $33,901 Add: WM Permanent Roll-Off Containers Omitted $0 $4,333 $5,761 $0 $0 Total WM Monthly Franchise Fee $27,348 $36,083 $35,169 $32,758 $33,901 General Average Aggregate Rate Increase (%) - 0.00% 75.79% 77.76% 83.48% 80.67% New Rate Compared with Old Rate (August 2008) Notes: WM Original Monthly Franchise Fee -All Services received includes Administrative Fees remitted by WM. Permanent Roll-Off Containers were omitted from WM's Franchise Fee payment for the 4th Quarter of 2008 (may also be identified as the 15t Quarter of FY 2009) due to a WM clerical error. WM remitted this Fee in January 2009 and is shown in the above chart. Further, a lengthy explanation regarding this payment is provided below and within Question #1 of WM's written response to Ken MacNamee's 12 Questions. Since FY 2002, the City's Solid Waste Franchise Agreement provided the selected contractor with an "exclusive" right to provide Open Top (temporary) C&D container services. This resulted in WM coding all Open Top Roll-Off containers (i.e., permanent and temporary C&D) as the same service type (same price) within their computer system. WM is unable to differentiate between the two types of services offered without manually going through each of these customers. As a result, to ensure a comparison of Franchise Fees received under the old rates - FY 2008 -and the new rates - FY 2009, Staff chose to compare the Fees received in August 2008 with the Fees received in October 2008. This provides the "general aggregate rate increase average" for all container types that will be utilized throughout this report. Open Top (temporary) C&D container service has been excluded from this chart due to the fact that following the implementation of the "non-exclusive" C&D option, all haulers are eligible to determine and utilize "market rates." Thus, Franchise Fees paid are not determined by Ordinance and a percentage increase. Page 10 Note: Staff chose to compare the Fees received in August 2008 (old rates) with the Fees in October 2008 (new rates) to ensure a comparison of the Franchise Fee received for all Commercial Services [excluding Open Top (temporary) C&D service. This provides a better comparison of Franchise Fees received. It was determined that September 2008 would not be utilized due to the fact that this month's remittance included Franchised Fees based a combination of services that were billed under "new" rates as well as services billed under the "old" rates. WM implements a monthly billing cycle that does not correspond (or terminate) on the same day for all services. Instead, they provide a billing system that is collected in "arrears" or based on monthly services provided [Permanent Roll-Off containers and Open Top (temporary) C&D Roll-Off containers] and those services that are billed in advance of the monthly services to be provided (all other Commercial Containers and Multi-Family Container Maintenance service). Upon review of the general average aggregate rate increase for each of the months listed (See Chart Above), it becomes evident that the percentage amount of Commercial Franchise Fees received (excluding C&D) appears to be consistent. Further, these rates appear to fall within the mid-point of the Commercial Services Categories that are listed above. Note: When Open Top (temporary) C&D Franchise Fees remitted by all "non-exclusive" haulers are incorporated into Chart below, it was observed that the general average aggregate rate decreases. This suggests that the amount of C&D Fees remitted have been affected by the sluggish building sector economy. Further, the use of "market rates" may also be driving the cost down, which maintains a direct correlation to the amount of Franchise Fees remitted for C&D services. Total Monthly Franchise Fees Earned Sample Months - FY 2008 to FY 2009 WM Original Monthly Franchise Fee -All Services Add: WM Permanent Roll-Off Containers Omitted Add: WM Open Top (temporary) Roll-Off Containers Omitted Total WM Monthly Franchise Fee Add: "Non-Exclusive" Open Top (temp.) Roll-Off Franchise Fee Total Monthly Franchise Fee General Average Aggregate Rate Increase (%) -New Rate Compared with Old Rate (August 2008) & includes C&D Aug 2008 Sept 2008 Oct 2008 Feb2009 Mar 2009 (Last) Billing at Billing at Billing at Billing at Billing at New New New New Old Rates Rates Rates Rates Rates FY 2008 FY 2009 FY 2009 FY 2009 FY 2009 $27,348 $31,750 $29,408 $32,758 $33,901 $0 $4,333 $5,761 $0 $0 $0 $10,842 $0 $0 $0 $27,348 $46,925 $35,169 $32,758 $33,901 $0 $0 $9,951 $8,063 $8,253 $27,348 $46,925 $45,120 $40,821 $42,154 0.00% 71.60% 64.99% 49.26% 54.14% Notes: WM Original Monthly Franchise Fee-All Services received includes Administrative Fees remitted by WM. Page 11 Work Plan Item #2. Review the City's General Ledger accounts to compare actual FY 2008 and FY 2009 Commercial Franchise Fee revenues received to determine the actual percentage increase in Franchise Fees over this time period In FY 2008, WM held the "exclusive" Franchise for Open Top (temporary) C&D services and remitted $364,938 in total Franchise Fees to the City. These Fees were calculated as 10% of the billings for Commercial Container/Dumpsters, Front-Load Compactor, Permanent Roll-Off Compactor, Open Top (permanent) Roll-Off Containers, Open Top (temporary) C&D Roll-Off Containers and Commercial Roll-Out Carts contractor services. In FY 2009, the City removed the "exclusive" C&D franchise option and qualified "non- exclusive" haulers to provide C&D services within the City. This resulted in the "non-exclusive" haulers charging market rates, which are not determined by City Ordinance and does not provide for consistent C&D Franchise Fee revenue budget projections. Thus, there were multiple vendors providing this service and remitting the appropriate 10% Franchise Fee to the City. Although this resulted in a significantly smaller monthly C&D Franchise Fee from WM after October 2008 (even though there was a significant rate increase), this change did not appear to degrade the City's total monthly C&D Franchise Fee revenues (See Chart Below). It reduced the amount remitted by WM since they were no longer the "exclusive" hauler. Multiple vendors are now remitting their Fee back to the City along with a monthly C&D customer list, which was not provided previously. As a result, the City's 2009 FY Franchise Fee received from multiple vendors, including WM, increased 34.4% from FY 2008. Month All Franchise Fees Recorded WM Exclusive Contract FY 2008 All Franchise Fees Recorded Various Companies Exclusive and Non-Exclusive Contract FY 2009 October $28,698 $31,750 November 29,006 32,091 December 29,928 29,280 January 28,595 53,920 February 28,633 46,420 March 30,186 40,820 April 29,394 62,580 May 30,812 39,500 June 30,295 32,688 July 28,953 46,177 August 27,348 40,032 September 32,246 35,257 Other 10,842 0 Totals $364,938 $490,515 Annual Commercial Franchise Increase % 34.4% Page 12 Note: The amount ($10,841.51) shown under the row titled "Other" in FY 2008 represents the September 2008 Open Top (temporary) C&D Franchise Fee that was not paid previously by WM. In December 2009, Mr. MacNamee identified that there was an unknown amount of Franchise Fees omitted for September 2008. As a result, the Finance Director promptly contacted WM about this issue. WM then verified this omission and provided the City with the amount earned in September 2008. A detailed explanation confirming these events are provided in WM's Question #1 of their written response to Ken MacNamee's 12 Commercial Questions. Although revenues increased by $125,577, the annual percentage increase in Franchise Fees collected for FY 2008 and FY 2009 does not appear to reflect the general average aggregate monthly rate increase for all container types - 77.76%. Work Plan Item #3. Obtain various WM Commercial Customer Summary Billing Registers (before and after FY 2008 rate increase) and develop a worksheet combining Customer Summary Billing Registers and sort by customer to ensure comparable customer data It was found that for many years the City only received a one (1) page explanation of that month's Franchise Fee remittance along with the corresponding Franchise Fee check. This limited information did not permit for proper review of Franchise Fees received in FY 2009. Further, this did not allow for a detailed comparison of the rate increase that was approved for FY 2009. Thus, the City requested that WM provide a Detailed Billing Register with all future Commercial Franchise payments (business process change implemented). When requested, it was learned that historical customer data was not available due to WM's "live billing system," which is noted in WM's written response to Mr. MacNamee's 12 Questions (See Question #3). As a result, and in an effort to provide this information, WM committed more than 17 hours manually preparing/developing a comprehensive Customer Detailed Billing Register for February 2009 (See Attached -Exhibit #6) for our further analysis. This report, which attempted to combine multiple reports, was provided on a "one time basis" as a hard copy and could not be received as an electronic file, thus, limiting our analysis. Aware of this issue and understanding the constraints that resulted due to WM's "live system," the City then began to request electronic monthly billing registers prior to the Commercial rate increase (Ordinance #44-08 -October 2008) and the months following in an effort to determine the difference between the monthly Franchise Fees received in FY 2008 with the Fees in FY2009. Further, the provision of this information in an electronic format enabled the City to put this data into useful formats for analysis. As a result, the City received Customer Summary Billing Registers (as opposed to Customer Detailed Billing Registers) for August 2008, September 2008, October 2008, February 2009 and March 2009. These five (5) months of Registers included limited customer data (i.e., type of account, customer, account number, company name, WM service code, total monthly billed amount per customer -includes Franchise Fee and Administrative Fee, total monthly billed amount less the Franchise Fee per customer account and the total monthly Franchise Fee paid per account). A Customer Detailed Billing Register, which was developed manually for February 2009 included significantly more customer data (i.e., ,customer account number, customer name, customer address, container type and size, frequency of pick-up, rate per can, total Page 13 monthly Billing amount, total monthly Franchise Fee charged). The limited, available information received was then incorporated into a worksheet (See Attached -Exhibit #7) and compared each customer's total Franchise Fees on a monthly basis. Other relevant information, including container counts, service characteristics and/or monthly rates, could not be evaluated. When compared with the Citv's General Ledger (i.e., revenues received), the total Franchise Fee from each monthly Customer Billine Resister matched/eaualed the amount of the Franchise Fees remitted to the City. This provides assurance that what WM billed and collected matched the remittance to the City. Work Plan Item #4. Analyze FY 2007, FY 2008 and FY 2009 Commercial Container counts to determine changes in the monthly Commercial Franchise Fee received before and after the rate increase -Ordinance #44-08 -effective October 1, 2008 As mentioned earlier, a Customer Detailed Billing Register was unavailable for this time period(except for February 2009), thus, preventing an analysis for this Work Plan Item. Work Plan Item #5. Review a large sample of Commercial Customer rates (monthly billings) and compare with rates provided in Ordinance #44-08 to determine if rates are accurate and properly implemented Since the Assignment of the City's Franchise Agreement in October 2003 (WM took over all "exclusive" Commercial and Residential Solid Waste Collection Services from BFI), it was determined that WM (from December 2003 through September 2008) utilized a Commercial rate structure based upon a "cost per cubic yard" for collection and disposal in accordance with Exhibit 1 of the Franchise Agreement. The initial Commercial Collection rates were determined by the original Franchise Agreement. This Agreement also provided that these rates ("cost per cubic yard") could be increased in accordance with the annual Consumer Price Index (CPI), but not to exceed 3%. These "cost per cubic yard" rates were developed annually by the City's Utility Customer Service Division and reviewed and implemented by WM. In addition, to confirm the new annual rates, the Utility Customer Service Division developed and presented a Rate Ordinance to the City Commission annually. This Ordinance defined most new Commercial rates (affected by the annual CPI) to be charged to commercial customers. It did not include those fees and rates that would remain constant as outlined in the Franchise Agreement. In addition to the Commercial collection rates charged by WM, the Solid Waste Authority (SWA) implemented a "per cubic yard" disposal rate. Combined, these fees (collection and disposal) represent the "Contractor Fees." In addition, a Franchise Fee (originally 5% -currently 10% of monthly Contractor Fees), Administrative Fee (currently $.35 per container) and other related fixed fees (i.e., locking, Container Maintenance Fee, etc) are charged on a monthly basis. Page 14 When determining the total monthly Commercial rate during this time period, it was determined that there was a deviation in the rates provided by the City's Rate Ordinance and the actual rates that were charged. During this Commercial analysis, which was also confirmed within WM's response to Ken MacNamee's 12 Questions -Question #5 as well WM's April 6, 2010 Letter (See Attached -Exhibit #8), it was determined that these rate deviations were due to a "rounding" issue. This "rounding" issue was made during the application of the "per yard collection rate." To illustrate this issue, please see below the calculations required to determine the "Contractor Fee": Total Monthly Collection Rate Determination: Monthly Container Yards =Container Size (cu.yd.) * # of Pick-ups per Week * 4.33 weeks Note: The average number of weeks in a month is determined by dividing 52 weeks by 12 months. This determination could also be viewed as an unending decimal 4.333333...; however, it is common to this round this number to the hundredth position or two places after the decimal, which could lead to a very small change in the number/rate. Thus, creating a "rounding" issue. Total Monthly Collection Rate =Monthly Container Yards * Collection Rate per cu.yd. x CPI Total Disposal Rate Determination: Disposal rates are provided by the Solid Waste Authority and are expressed in terms of a cost per ton. The Solid Waste Authority also states there are 134 lbs. per cubic yard. Thus, to calculate the Total Disposal Rate, the following must be completed: Disposal Rate per Cubic Yard = .067 cu.yd. (Disposal Factor) * Disposal Rate per ton Note: Disposal Factor on a cu.yd. basis = 134 lbs. per cu.yd. _ 2,000 lbs. (one ton) Total Monthly Disposal Rate =Disposal Rate per cu.yd. * Total cu.yd. per month Within each of these calculations, various factors and percentages are utilized. Depending upon the number of decimal spaces that these factors and percentages are truncated down to, a rounding issue could result and affect the final Commercial rate that is charged. This rounding factor, as provided in WM's April 6, 2010 letter, could result in the rates deviating from the Rate Ordinance by a few cents -either in WM's favor or the Commercial Customer's favor. In addition to the deviation within the Contractor Fees, a franchise fee of 10% (prior to 2007 - 5%) is applied on these differing rates, which could also lead to an additional difference in the final Commercial rate charged when compared with the approved Rate Ordinance. Although actual Commercial Rates charged (per customer) could not be evaluated due to the unavailability of the requisite data, Staff was able to compare the actual rate structure that was utilized by WM with the corresponding Rate Ordinances for FY 2006, FY 2007, FY 2008, FY 2009 and FY 2010. As a result, it appears, from the limited data and resources available, that this Page 15 deviation in rates, on a monthly basis, was due to the above mentioned rounding issue. Further, it appears that this deviation should not have amounted to a significant level (either gain and/or loss of Franchise Fees) to warrant (i.e., total personnel/Staff costs) a further detailed analysis. Beginning in FY 2009 (October 1, 2008), at the direction of the City, WM began utilizing the exact rates that were specifically prescribed within the approved Rate Ordinance (Ordinance #44-08) to ensure consistency. Thus, eliminating the potential for rounding errors as well as confusion between the approved Commercial Rates with the Commercial Rates charged. In an effort to confirm that this practice has been implemented, Staff utilized the February Detailed Billing Register that was manually prepared by WM and compared 339 of 1,039 Commercial Customers (32.6%) to determine if the Commercial Rates within the approved Ordinance matched the amount that was being billed. Please note that all rates matched to the approved Rate Ordinance. Note: The City's Rate Ordinance did not provide for all Commercial Compactor service rates. As a result, WM was required to "interpolate" [per www.Dictionary.com - "to insert, estimate, or find an intermediate term in (a sequence)"] the monthly rate fora 4 cu.yd. Commercial Compacted Container. This resulted in a clerical rate error for three (3) Compactors that was the result of a "rounding" error. The City was notified of this error and each of the Commercial Compactor customers affected were notified that their accounts would be credited to ensure the billing amount equaled the approved Commercial Rate. As a result, WM provided a credit to three (3) customers totaling $1,154.81 to correct this issue. Amore detailed explanation of this issue and resolution is provided by WM in their written response to Ken MacNamee's 12 Questions (See Attached -Exhibit #5). Since the sample testing found that the rates were correct and properly implemented during this time period, Commercial Rates were also determined not to be a reconciling factor when attempting to identify the reasons for the resulting "percentage gap" when comparing the percentage of Franchise Fees (revenues) received - 34.4% -with the general average aggregate Franchise Fee rate increase of 77.76% for FY 2009. In summary, the exact Commercial Rate amounts did not match the amounts as set forth in prior year Ordinances; however, they do appear to match the current rates. Work Plan Item #6. Obtain "Non-Exclusive" C&D Monthly Franchise Activity Reports from October 2008 through September 2009 "Non-Exclusive" Open Top (temporary) C&D Monthly Franchise Activity Reports were obtained from October 2008 through September 2009. These Reports, which are similar to the Customer Summary Billing Registers, are prepared by each "non-exclusive" C&D hauler, including WM, and provide limited Customer information (i.e., Name, Address, Account Number, Billing Amount and Franchise Fee paid amount). In addition, by obtaining these C&D Monthly Franchise Activity Reports, it confirmed to the City that each "non-exclusive" C&D hauler, Page 16 including WM, maintain this information, which can be provided to support their monthly Open Top (temporary) C&D services Franchise Fee remittances. Work Plan Item #7. Review and analyze Commercial Open Top (temporary) C&D activity prior to and after the rate became unregulated (i.e., market rates) in October 1, 2008 (September 2008 was the last month that WM held the exclusive franchise for C&D collections To complete this Work Plan Item, Staff reviewed the "non-exclusive" Open Top (temporary) C&D Monthly Franchise Activity Reports along with Total Monthly Franchise Fees Received (See Chart below) for a five (5) month period -August 2008, September 2008, October 2008, February 2009 and March 2009. Total Monthly Franchise Fees Received Sample Months - FY 2008 to FY 2009 WM Original Monthly Franchise Fee -All Services Add: WM Permanent Roll-Off Containers Omitted Add: WM Open Top (temporary) Roll-Off Containers Omitted Total WM Monthly Franchise Fee Add: "Non-Exclusive" Open Top (temp.) Roll-Off Franchise Fee Total Monthly Franchise Fee "General Average" Rate Increase (%) -New Rate Compared with Old Rate (August 2008) Aug 2008 Sept 2008 Oct 2008 Feb2009 Mar 2009 (Last) Billing at Billing at Billing at Billing at Billing at New New New New Old Rates Rates Rates Rates Rates FY 2008 FY 2009 FY 2009 FY 2009 FY 2009 $27,348 $31,750 $29,408 $32,758 $33,901 $0 $4,333 $5,761 $0 $0 $0 $10,842 $0 $0 $0 $27,348 $46,925 $35,169 $32,758 $33,901 $0 $0 $9,951 $8,063 $8,253 $27,348 $46,925 $45,120 $40,821 $42,154 0.00% 71.60% 64.99% 49.26% 54.14% Notes: WM Original Monthly Franchise Fee-All Services received includes Administrative Fees remitted by WM. During the analysis, it was observed that the general average aggregate rate decreased when C&D Franchise Fee revenues were incorporated into this percentage calculation. In addition, this chart includes Open Top (temporary) C&D Franchise Fees that were omitted for various reasons: In January 2009, the City received 19 750.17, which represented WM's first payment under the City's "non-exclusive" C&D services option for the 4t" Quarter of 2008 (October, November and December). Following implementation of the "non-exclusive" C&D services option from an "exclusive" contract, the City's Code Enforcement Division -Community Improvement Department remained in contact with WM to ensure that they were aware of the omitted Franchise Fee payments for this time period. It was at this time (December 2008) that WM was in the process of downsizing due to the shrinking economy. As a result, WM acknowledged that they did not have Staff assigned to track and pay the new Franchise Fee during this process and, as a result, omitted this payment until the new "non-exclusive" Page 17 approval process was completed. Throughout this time period, WM remained in contact with the City and continued collecting the requisite Franchise Fee from their customers. On April 15, 2009, WM issued a check in the amount of $20.433.69, which represented the Franchise Fee for Permanent Roll-Off Container services for September 2008, October 2008, November 2008 and December 2008 that were omitted. Due to a change from an "exclusive" hauler for Open Top (temporary) C&D services to a "non-exclusive" option, WM changed their accounting system. However, prior to implementing the "non-exclusive" option, WM maintained the same billing code for each of the two (2) types of Roll-Off services [i.e., Permanent Roll-Off and Open Top (temporary) C&D Roll-Off], which were included within the "exclusive" system and required a Franchise Fee payment to be remitted on a monthly basis. As a result of these changes, WM claimed that a clerical mistake led to the removal of all Roll-Off services from being included in the City's monthly Franchise Fee. Further, they noted that upon the hiring of new Staff, WM identified this $20,433.69 error and provided payment (April 2009) for the full amount -September 2008 - $4,333.36, October 2008 - $5,760.73, November 2008 - $5,085.49 and December 2008 - $5,254.11 Note: The issues that resulted in the above two payments ($19,750.17 and $20,433.69) were identified by Waste Management and/or the City's Code Enforcement Division -Community Improvement Department and were resolved in January 2009 and April 2009, respectively. In January 2010, the City received 10 841.51 for the September 2008 Open Top (temporary) C&D Franchise Fee that was not paid previously by WM. In December 2009, Mr. MacNamee identified that there was an unknown amount of Franchise Fees omitted for September 2008. As a result, the Finance Director promptly contacted WM about this issue. WM then verified this omission and provided the City with the amount earned in September 2008. Note: A detailed explanation confirming each of the three (3) amounts and events that led to the identified Franchise Fee omissions totaling 51 025.37 is provided in Question #1 WM's of written response to Ken MacNamee's 12 Commercial Questions. Following the identification of these omitted Fees (including receipt of revenues), WM provided a Customer Billing Register for all C&D Container accounts to reconcile all Franchise Fees due and payable during this time period. To ensure a more "true" comparison of this five (5) month period, all identified and omitted funds were credited back to the appropriate individual accounts and total monthly revenues earned. When comparing Franchise Fee data during this five (5) month time period (See Chart Above), which is adjusted for the omitted Permanent and C&D Franchise Fees, it was noted that the monthly percentage increase from August 2008 to September 2008 increased to 71.60% following WM's advanced implementation of the rate increase (month in advance). However, after September, total Franchise Fee revenues began to steadily decrease (on a percentage basis) when compared with the August 2008 total - 64.99% in October 2008, 49.26% in Page 18 February 2009 and 54.14% March 2008. These decreases in revenues provides for a more logical understanding why FY 2009 Franchise Fee revenue shows an increase of only 34.4% from FY 2008 and does not match and/or is not closer to the general average aggregate rate increase of 77.76% in October 2009. Work Plan Item #8. Review and analyze the effects/impacts of the monthly Commercial Container Customer rate increases (Ordinance #44-08 - Effective October 1, 2008) on the services provided (i.e., # of containers, size of containers, frequency of pickup, combining waste services and business closure) As noted previously, the general average aggregate Commercial rate increase for all Commercial services after October 15t, 2008 (following approval of Ordinance #44-08) was estimated to be 77.76%. Yet, when Total Franchise Fee revenues are compared for FY 2009 with FY 2008, there appears to be much smaller total increase - 34.4%. As a result, this decrease in revenues leads to the following question: Although annual Franchise Fee revenues increased by $125,577 ($364,938 in FY 2008 and $490,515 in FY 2009) for all Commercial services combined, what prevented Franchise Fee revenues from being more comparable to the general average a~~re~ate rate increase of 77.76% for October 2009? Early on in the analysis, WM stated that their business services had declined since the October 1, 2008 rate increase. The main concerns were affiliated with the general economic conditions, including the downturn in the construction and the real estate industries. Asa result, Commercial Customers were looking ways to save and cut costs (i.e., reduce container sizes, change pick-up frequency, sharing Containers/Compactors/Roll-Off services and businesses closing). While reviewing the five (5) months of customer data provided by WM, Staff identified that that many Customers were now paying less after the rate increase had been implemented (October 15t) than what they were paying prior to the rate increase. In fact there were 214 Commercial accounts that were billed at a reduced rate, between September 2008 and February 2009. Thus, confirming that the Commercial customers were either reducing the total number of containers, downsizing container sizes, reducing pick-up frequency and/or the business(es) closed. These changes in Commercial services negatively affected almost 21% of the Citv's total Commercial Customer base services since September 2008. This helps to explain why the Citv did not experience an increase Franchise Fee revenues comparable to the eeneral average. Work Plan Item #9. Review and analyze the February 2009 detailed Commercial Customer Billing Register and reconcile the administrative fees received from WM A monthly Administrative Fee ($0.35 per container per month) is collected and remitted for all Commercial Cart, Commercial Container/Dumpster and Commercial Compactor accounts. Page 19 Permanent Roll-Off, Roll-Off Compactors and Open Top (temporary) C&D containers are not charged this fee. In an effort to complete this Work Plan Item, Staff reviewed the monthly WM Franchise Fee remittance, which included Administrative Fees, from FY 2008 through FY 2009. To complete this Work Plan Item, Staff utilized the February 2009 Detailed Billing Register, which was prepared by WM and is the only Detailed Register that has been received and provides sufficient data to complete a detailed analysis of Commercial customer services and charges. Following receipt and review of this information, the City prepared an Excel spreadsheet listing all Commercial customers and the number of containers that they maintained (i.e., billed). Following this analysis, Staff found the following: When reviewed, the City found that WM was billing/charging an Administrative Fee of $0.35 per container. WM remitted a higher amount - $396.90 (based on 1,134 containers) to the City in March 2009 for February 2009 service. The City, with the assistance of Mr. MacNamee, became aware of this issue in the Fall of 2009 when reviewing Administrative Fee graphs prepared by the Finance Director. As a result, it was determined that WM was remitting a higher amount of Administrative Fees than required. The total number of containers should have been 1,040 (a reduction of 94 units Customers) for February 2009 service with a total Fee to be paid of $363.65. In addition, WM found that they were not billing/collecting these customers for this Fee. Thus, the customers were not affected. WM became aware of this issue in March 2009 and removed the inclusion of Roll-Off Containers into the calculation of the monthly Administrative Fee remittances. The City was not notified of this change until one year later. An explanation of this issue is provided by WM within their written response to Mr. MacNamee's 12 Questions. Administrative Fees are billed in advance (paid one month in arrears -similar to Commercial Roll-Off). In November 2009, the City became aware that WM had failed to submit requisite Administrative Fees for five (5) months -July 2007, August 2007, September 2007, October 2007 and December 2007. The City has received two WM checks representing the full-payment of the total amount due ($1,873.95). Note: The City has requested WM to provide written notice of any administrative issues and/or changes that may affect total revenues received and/or expenditures to be paid to the City. As a result, WM has committed to resolving any future issues by immediately notifying the City, in writing, regarding any additions/deletions to accounts due to administrative circumstances, including the determination of an error. It is the City's recommendation that this information, along with proposed remedies, is reported directly to the City's Contract Administrator by E- mail within 72 hours of identifying the concern. Page 20 Work Plan Item #10. Coordinate and bring together all areas of the City that participate in the City's Solid Waste program to encourage communication across departments, resolve public requests for information, evaluate and document (e.g., transparency) the City's various solid waste management business processes and develop administrative and operational recommendations that will be provided in both the Commercial and Residential Analyses In February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has a significant impact on the development of the final Commercial Analysis. The Working Group includes the City Manager's Office (myself), the City Attorney, the Community Improvement Director, the Assistant Community Improvement Director/Solid Waste Contract Administrator, the Code Enforcement Executive Assistant, the Finance Director and the IT Division's Senior Programmer. In addition, this Group has been instrumental in developing recommendations that will be provided in both the Commercial and Residential Analyses. In fact, the Group has meet on numerous occasions to resolve various requests for information and to evaluate and document the City's various solid waste management business processes. Specifically, this Working Group has addressed the following: 1. Collecting and organizing all requisite information that will be provided to the City's Financial Review Board for a determination on: a. Whether the City has received all Franchise Fees from WM for Commercial and Construction and Demolition Solid Waste Collection services b. Whether the City overpaid for Residential Solid Waste Collection services due to errors in the number of residential units in each of the four (4) service categories provided within the City 2. Developed policies and procedures that outlines the City's business processes related to Residential and Commercial solid waste. This also includes the identification and implementation of new procedures and recommendations that have already been undertaken by Staff and WM. 3. Completed the Residential Field Inventory to ensure unit counts are correct for the four (4) service categories offered: AGAR -Single Family Curbside Roll-Out Carts BGAR -Rear door/Side door Pick-Up CGAR -Curbside Bag Pick-Up DGAR -Multi-Family Containerized Page 21 Note: This process began on February 15t and has been completed. This information will be a key component in the final Residential Analysis that is expected to be presented to the Financial Review Board at a later date. 4. Reclassifying our existing monthly Permitting (Certificate of Occupancy's (CO's)] reports for all residential and commercial properties, since 2001, into one of the four (4) Service Categories in order to identify new and deleted properties. This will assist in better defining our historical unit counts, which will then be compared with previous WM billings as well as the Solid Waste Authority (SWA) data that is derived from the Palm Beach County Property Appraiser's Office. As information, since Monday, February 8, 2010 through Wednesday, March 31, 2010 (37 calendar days), City Staff (including the Working Group and other Staff) has dedicated more than 1,200 total straight hours working specifically on the Residential and Commercial questions along with other solid waste related items that have been requested/required by the City's and Mr. MacNamee's findings. Please note that this does not include overtime hours (additional % hours) for Staff that is working through the weekend to complete the Residential Field Inventory. Work Plan Item #11. Review, analyze and provide recommendations regarding the Community Improvement Department's (CI) Commercial Solid Waste Collection business processes to ensure proper monitoring and notification, receipt of detailed monthly Commercial activity and collection of revenues The current Franchise Agreement provides for the City to identify and designate a member of Staff to serve as the Solid Waste, Vegetative and Recycling Collection Services "Contract Administrator." The Contract Administrator is directly responsible for monitoring the performance and field operations of each Solid Waste hauler/contractor doing business with the City. Specifically, this person is designated to act as the City's Representative during the term of the Franchise Agreement. Thus, all correspondence, changes in services and/or routes, payments, information, fines, etc., should generally be directed to the Contract Administrator for action and/or information. In the past these duties were held by the City's Code Enforcement Administrator, however, since the recent retirement of our long time Administrator, all duties have been shifted to the City's Assistant Community Improvement Director. In an effort to assist with the City's "Clean City" initiative, the City's Community Improvement (CI) Department provides the following: Manages and oversees the daily clam-shell truck workload. The clam-shell truck is provided to the City by the contractor (WM) per the Franchise Agreement (Special Terms And Conditions -Solid Waste, Vegetative Waste and Recycling Collection Services - Bid No. 2001-21) to collect debris that is set out early/late with respect to the normal pick-up day Page 22 Monitors the contractor's (WM) performance in collecting garbage, vegetative debris, recycling and special pickups for both Residential and Commercial customers Responsible for oversight of the "non-exclusive" Open Top (temporary) C&D container services provided to City properties Receive and review monthly "non-exclusive" C&D Monthly Franchise Activity Reports from all C&D haulers to ensure the appropriate Franchise Fee is remitted on a monthly basis. This check is then transmitted to the Finance Department for deposit. Levies (financial) fines/penalties against the contractor (WM) for insufficient service levels Distributes Residential and Commercial Roll-Out carts for new units and replaces Roll- out carts that are defaced and/or damaged within the City Monitors all "non-exclusive" C&D containers in the field During this analysis, Staff has evaluated and documented the City's various Solid Waste Management Business Processes related to the Community Improvement Department. The draft business process information is located within "City of Delray Beach -Policies and Procedures -Solid Waste Franchise Agreement Administration -Code Enforcement Division - Community Improvement Department" (See Attached -Exhibit #9). A final version will be completed at a later date. In addition, the Community Improvement Department, along with the Employee Working Group and WM, developed various administrative and operational recommendations to improve the daily operations and management of the City's Commercial Solid Waste program and ensure accurate Franchise Fees and Administrative Fees are received and may be reconciled. These recommendations are provided below in Work Plan Item #14. Identify important observations and provide recommendations. Work Plan Item #12. Review, analyze and provide recommendations regarding the Finance Department -Utility Customer Service Division's business processes to ensure proper monitoring and notification, receipt of detailed monthly Commercial activity and collection of revenues The Utility Customer Service (UCS) Division is responsible for maintaining the City's master utility billing files (i.e., water, sewer, garbage), meter reading, monthly billing for all residential and multi-family garbage and water and sewer customers (approx. 21,000 accounts), collecting monthly payments, reviewing Waste Management invoices to ensure accuracy of residential invoices/fees and preparing the monthly request for Residential Solid Waste payment. This Division also receives and deposits all monthly Commercial Franchise Fees, including C&D, and Administrative Fees remitted by WM and other "non-exclusive" haulers. This Utility Customer Service Division also prepares the UCS Division and the City's Sanitation Fund budgets as well as the various (annual) Rate Ordinances (i.e., garbage, water and sewer). Utility Rate Ordinances are prepared, in draft form, and forwarded to WM for their review and approval prior to being presented to the City Commission for consideration during the Public Hearing process. Page 23 Currently, WM submits a Customer Billing Register with their monthly Franchise Fee and Administrative Fee remittance. This is a hard copy report that provided limited data, including total Fees paid that provide for the reconciliation with the check/remittance being submitted. In addition, WM provides a Commercial Container listing, by container size and frequency of pick-up. During this analysis, Staff has evaluated and documented the City's various Solid Waste Management Business Processes related to the Utility Customer Service Division -Finance Department. The draft business process information is located within "City of Delray Beach - Policies and Procedures -Solid Waste Franchise Agreement Administration -Utility Customer Service Division -Finance Department" (See Attached -Exhibit #10). A final version will be completed at a later date. In addition, the Finance Department, along with the Employee Working Group and WM, developed various administrative and operational recommendations to improve the daily operations and management of the City's Commercial Solid Waste program and ensure accurate Franchise Fees and Administrative Fees are received and may be reconciled. These recommendations are provided below in Work Plan Item #14. Identify important observations and provide recommendations. Work Plan Item #13. Review, analyze and implement WM recommendations regarding business processes to ensure implementation of rate adjustments, proper monitoring and notification, delivery of detailed monthly Commercial activity and collection of revenues Waste Management Inc. of Florida, in accordance with the Franchise Agreement, is responsible for the collection and disposal of Solid Waste and Recycling services for both Residential and Commercial units within the City. Commercial Recycling is not an exclusive franchise per State Statutes, but all other Commercial and Residential services are provided within the City under an "exclusive" Franchise Agreement, which is held by WM. Multiple "non-exclusive" hauling companies have been authorized to collect C&D containers within the City. WM, in accordance with the Franchise Agreement, is responsible for the Commercial Customer Master File, determining (based on billings) and remitting Commercial Franchise Fees and Administrative Fees to the City. In addition to directly billing all Commercial Customers, Waste Management bills Multi-Family Container Rental costs. Within their monthly submission, WM submitted a one (1) page statement explaining how the monthly Commercial Franchise Fee was derived in addition to the check for both the monthly Franchise Fee and Administrative Fee. As provided by the City Commission (Ordinance 50-06 - Amending Chapter 51 "Garbage And Trash -City Code of Ordinances), all Franchise Fees are charged as a fixed percentage (10%) of the contractor's billings and all Administrative Fees are calculated as a fixed amount ($0.35) per Commercial Cart, Commercial Container/Dumpster and Commercial Compactor accounts. Permanent Roll-Off, Roll-Off Compactors and Open Top (temporary) C&D containers are not charged this fee. Page 24 According to WM, for each Commercial Account, they assign a customer code and a location code to each customer. In addition, they document container(s) size(s) and frequency of Pick- up(s) as well as the appropriate rates as well as other pertinent customer information. This information is transmitted monthly to WM's home office, in Texas, where the monthly customer invoices are prepared and mailed to the City's Commercial Customers. Commercial Customers are billed in advance of the service being rendered, while Open Top (temporary) C&D, Permanent Roll-Off Container and Roll-Off compactor customers are billed in arrears (following the service being rendered). All Roll-Off customers are billed following their service since the disposal costs are based upon the actual weight of the container for each Pick-up whereas the Commercial Containers/Dumpsters maintain a fixed rate for disposal that is built into their rate structure. Since the City bills all Residential customers, Waste Management invoices the City for their monthly collection costs for these services. Collection costs include: garbage, trash (vegetative) and recycling. Disposal fees for Residential units are charged to all homeowners by the Solid Waste Authority (SWA) through anon-Ad Valorem assessment program, which is included on each property owner's annual tax bill. The monthly collection costs are broken down by type of service. The unit count that is utilized to calculate monthly costs paid by the City is updated using information received from the City's Community Improvement Department - "CO Report" that provides information on new and demolished units within the City. Work Plan Item #14. Identify important observations and provide recommendations OBSERVATION: The Commercial Franchise Fee Analysis provides an analysis of the City's Commercial Solid Waste program. The Analysis included a summary of the program's history (since 2001), outlined the major services that are required to be provided by the Contractor, noted the duties of the Contract Administrator and provided the provisions for the various Commercial Rates, billing and remittance of the Franchise Fee and other charges, including Administrative Fees. In addition, fourteen (14) Work Plan items were developed in an attempt to confirm the proper receipt of Commercial Franchise Fees. It should be noted that neither a financial audit nor a forensic audit was undertaken during this process. OBSERVATION: All Commercial Franchise rate increases and revenues received were reviewed dating back to FY 2002, the time when the initial BFI contract became effective. Our analysis showed that from FY 2002 to FY 2006 (excluding the years impacted by the hurricanes and the C&D law suit), increases in Commercial Franchise Fee revenues appear to compare favorably with the corresponding year's rate increase (as a percentage). OBSERVATION: In FY 2007, the Commercial Franchise Fee was increased from 5% to 10% and resulted in a significant increase in revenues collected by the City ($339,543). Unfortunately, due to the skewed data from the hurricane and C&D law suit years, we are unable to make any significant comparisons to ensure accuracy of remitted Fees. However, when the FY 2007 revenues are compared with the revenues received in FY 2008 (with a very small rate increase), the remitted Franchise Fee appears to be in line. Page 25 OBSERVATION: In FY 2008, a .84% Commercial Franchise Fee rate adjustment (based on the CPI fora 3 yard container collected 2 times per week) was implemented to accommodate increasing collection costs. As a result of the identified increase in Commercial Containers (17 additional Containers), the small CPI increase and when FY 2007 & FY 2008 Franchise Fees are compared, revenues collected increased by 4.29% (FY 2007 - $339,543 and FY 2008 - $354,096). Thus, suggesting appropriate Franchise Fees were remitted back to the City for FY 2008. OBSERVATION: In FY 2009, Staff determined a general rate increase average for each Commercial Services category [i.e., Commercial Container/Dumpsters, Front-Load Compactor, Permanent Roll-Off Compactor, Open Top (permanent) Roll-Off Containers, Commercial Roll- out Carts, Commercial Container Maintenance and Special Services] and the amount of the rate increase for each service category, pursuant to the Commission's approval of Ordinance #44-08, ranged from a low of 0% to a high of 193.6%. However, in an effort to accurately determine the general average aggregate rate increase for the all of the above types of containers during this time period, Staff reviewed and compared the Total Commercial Monthly Franchise Fee received under the old rates - FY 2008 -and the new rates - FY 2009 - 77.76%. Upon review of the general average aggregate rate increase for each of the listed months, it was observed that the amount of Commercial Franchise Fees received (excluding C&D) appears to be consistent. Further, these rates appear to fall within the mid-point of the Commercial Services Categories. OBSERVATION: Additional fees are included in the Franchise Fee calculation, as defined by the City's Franchise Agreement, and include: Container Maintenance Fees and Special Services Fees . In addition, Administrative Fees are charged on a monthly basis. RECOMMENDATION: To facilitate a monthly analysis of all Commercial Franchise Fee revenue earned, all Franchise Fee remittances should be provided one (1) month in arrears. The receipt of and the City's acceptance of WM's reply to the September 2009 Receivable Confirmation should clarify this issue. OBSERVATION: Currently, the Franchise Agreement (Section 4. Solid Waste and Vegetative Waste Collection Service: C. Commercial Solid Waste Collection Service - 8. Special Services) provides that the "Rate charged for Special Services may not exceed the special service rates as listed in Exhibit I. In the event the requested special service is not included within Exhibit I, the Contractor may negotiate with the customer for the rate. Upon failure of the parties to reach an agreement on the rate, the Contract Administrator shall establish the rate. The Contractor shall be responsible for billing and collection of payment for all Special Services. This indicates that there is no requirement to establish Fees for non-rate specified services through a formal Amendment and/or Ordinance. They are permitted as a result of the approved Franchise Agreement. However, earlier in the Franchise Agreement (under the same section -Section 4. Solid Waste and Vegetative Waste Collection Service: C. Commercial Solid Waste Collection Service - "Special Services"), it states "If the Contractor provides special services, such charge must be separately stated under the "RATES FOR SERVICES" disclosure statement. The maximum for these Special Service rates are fixed by the City." As a result, it appears that there are multiple types of Special Services permitted under the Franchise Agreement -some that are a fixed cost and some that are negotiable. The City, at least since the inception of this Page 26 Franchise Agreement in October 2001, has not provided reference for these Fees within a formal City Ordinance. The Fees within the original Franchise Agreement provided WM's maximum billing amounts. RECOMMENDATION: In an effort to ensure that all Special Service Fees are fully documented and there is a strong level of consistency, Staff recommends exploring the option of developing a more clear reference to the Contractor's (WM's) ability to charge a Special Service Fee through a formal Amendment to the Franchise Agreement and/or within the annual Rate Ordinance. OBSERVATION: In FY 2009, the City removed the "exclusive" C&D franchise option, which resulted in the "non-exclusive" haulers charging market rates that are not determined by City Ordinance and does not provide for consistent C&D Franchise Fee revenue budget projections. This resulted in a smaller monthly C&D Franchise Fee from WM after October 2008. Because of this, along with the fact that monthly Franchise Fee information prior to the change in C&D services to a "non-exclusive option" (in October 2008) is not available, means the change in the volume for C&D services cannot be determined. RECOMMENDATION: It is the City's recommendation that a monthly Customer Billing Register be provided by all Contractors ("exclusive" and "non-exclusive") electronically (i.e., E-Mail), in Excel format, to the City with all remittances to allow for electronic comparisons and analysis. This document should include customer name, service address (number and street name should be provided in separate cells), container type, frequency of pick-up, Special Service fees (if applicable), Administrative Fee (if applicable), total monthly Franchise Fee earned from the service provided and total monthly billed amount earned from the service provided. Note: An alternate option (accepted by WM within an E-mail that was received by Staff on June 8t" and forwarded to the FRB by E-Mail on the same day) to confirm the accuracy of Commercial Franchise Fees remitted on a monthly basis has been recommended since WM will not provide the requested reports as provided within the recommendation above. This option would include the following: On a monthly basis, the City would randomly select 10 to 20 Commercial Customers and request all detailed information regarding these accounts from WM. The requested information should include customer name, service address (number and street name should be provided in separate cells), container type, frequency of pick-up, Special Service fees (if applicable), Administrative Fee (if applicable), total monthly Franchise Fee earned from the service provided and total monthly billed amount earned from the service provided. It is requested that WM provide this detailed information electronically (i.e., E- Mail), in Excel format, to the City for testing purposes. Page 27 The City may conduct, on an as needed basis, a test of these randomly selected customers, which may include field visits, to confirm the accuracy of Franchise Fees received. RECOMMENDATION: To ensure the accuracy of the monthly C&D Franchise Fee remitted, this document should be reviewed by the Contract Administrator and/or their designee, on a monthly basis. RECOMMENDATION: Detailed internal controls (i.e., business process policies and procedures) have been provided as Exhibits within the Residential Analysis (dated July 5, 2010) for review by the FRB. OBSERVATION: Since the Assignment of the City's Franchise Agreement in October 2003, it was determined that there was a deviation in the total monthly Commercial rates outlined within the City's Rate Ordinance and the actual rates that were charged. During this Commercial analysis, it was determined that these rate deviations for FY 2006, FY 2007, FY 2008, FY 2009 and FY 2010 were due to a "rounding" issue, which is evident during the application of the "per yard collection rate." Further, it appears that this deviation should not have amounted to a significant level (either gain and/or loss of Franchise Fees) to warrant (i.e., total personnel/Staff costs) a further detailed analysis. RECOMMENDATION: Beginning in FY 2009 (October 1, 2008), at the direction of the City, WM began utilizing the rates that were specifically prescribed within the approved Rate Ordinances (Chapter 51 "Garbage And Trash -City Code of Ordinances) to eliminate the potential for rounding errors and confusion between the approved Commercial Rates with the Commercial Rates charged. RECOMMENDATION: Staff recommends the development of a monthly rate structure for all Commercial Services and for all pick-up options available and include this within the annual Rate Ordinance. These new rates may be prepared by either the City and/or the Contractor, provided that there is written, electronic (i.e., E-Mail) confirmation that both the City and the Contractor have reviewed and confirmed the proposed rates. These rates, following Commission approval, should be the final rates utilized by the Contractor for all Commercial Customers. This will remove the need for "interpolation" and ensure that both the City and the Contractor (WM) agree on "rounding rules" and prevent any future inconsistent billing issues. OBSERVATION: Staff utilized the February 2009 Detailed Billing Register to sample test/compare 339 of 1,039 Commercial Customers (32.6%) in FY 2009 and it was found that the rates were correct and properly implemented during this time period. In addition, these Rates were determined not to be a reconciling factor when attempting to identify the reasons for the resulting "percentage gap" when comparing the percentage of Franchise Fees (revenues) received - 34.4% -with the general Franchise Fee rate increase average of 77.76% for October 2009. OBSERVATION: Staff reviewed the "non-exclusive" Open Top (temporary) C&D Monthly Franchise Activity Reports added to the Total Monthly Franchise Fees Earned for a five (5) Page 28 month period -August 2008, September 2008, October 2008, February 2009 and March 2009. The general average aggregate rate decreased when C&D Franchise Fee revenues were incorporated into these monthly totals, which suggested that the struggling construction and development economy really affected the City's overall Franchise Fee revenues. When comparing Franchise Fee data during this five (5) month time period, which is adjusted for the omitted Permanent and C&D Franchise Fees, it was noted that the monthly percentage increase from August 2008 to September 2008 increased to 71.60% following the rate increase. However, after September, total Franchise Fee revenues began to steadily decrease (on a percentage basis) when compared with the August 2008 totals -and provides for a more logical understanding why FY 2009 Franchise Fee revenue shows an increase of only 34.4% from FY 2008 and does not match and/or is not closer to the general average aggregate rate increase of 77.76% for October 2009. OBSERVATION: During this five (5) month time period, three (3) Franchise Fee omissions were identified totaling $51,025.37: In January 2009, the City received $19,750.17, which represented WM's first payment under the City's "non-exclusive" C&D services option for the 4t" Quarter of 2008 (October, November and December). In April 2009, the City received $20,433.69, which represented the Franchise Fee for Permanent Roll-Off Container services for September 2008, October 2008, November 2008 and December 2008. In January 2010, the City received $10,841.51 for the September 2008 Open Top (temporary) C&D Franchise Fee that was not paid previously by WM. OBSERVATION: Although annual Franchise Fee revenues increased by $125,577 ($364,938 in FY 2008 and $490,515 in FY 2009) for all Commercial services combined, Staff attempted to find out what prevented Franchise Fee revenues from being more comparable to the general average aggregate rate of 77.76%? WM had previously claimed that their business services had "dropped off" since the October 1, 2008 rate increase due to the general economic conditions and Commercial Customers were looking ways to save and cut costs. While reviewing the five (5) months of customer data provided by WM, it was determined that that many Customers were now paying less after the rate increase had been implemented (October 15t) than what they were paying prior to the rate increase. In fact, there were 214 Commercial accounts that were billed at a reduced rate, between September 2008 and February 2009. Thus, confirming that the Commercial customers were either reducing the total number of containers, downsizing container sizes, reducing Pick-Up frequency and/or the business(es) closed. These changes in Commercial services negatively affected almost 21% of the City's total Commercial Customer base/services since September 2008. This helps to explain why the City did not experience an increase Franchise Fee revenues comparable to the general average. OBSERVATION: The City found, in November 2009, that WM had failed to submit requisite Administrative Fees for five (5) months -July 2007, August 2007, September 2007, October 2007 and December 2007. The City has received two WM checks representing the full-payment of the total amount due ($1,873.95). Page 29 OBSERVATION: In an attempt to reconcile the Administrative Fees received from WM, Staff found that WM was paying an Administrative Fee ($0.35 per container) on Roll-Off Containers in addition to Commercial Containers (Note: Roll-Off Containers are not subject to this Fee). In addition, it was found that WM was not collecting these customers for this Fee. Thus, the customers were not affected. As a result, WM immediately excluded these containers from all future Administrative Fee payments -beginning in March 2009 -and reduced the total number of Commercial Customers with Commercial Cart, Commercial Container/Dumpster and/or Commercial Compactor services from 1,134 to 1,040 (a reduction of 94 Customers). This reduction in Customers resulted in a lower Administrative Fee remittance of approximately $33 per month or $400 per year. RECOMMENDATION: The City has requested WM to provide written notice of any administrative issues and/or changes that may affect total revenues received and/or expenditures to be paid to the City. WM has committed to resolving any future issues by immediately notifying the City, in writing, regarding any additions/deletions to accounts due to administrative circumstances, including the determination of an error. It is the City's recommendation that this information, along with proposed remedies/resolutions identified, are reported directly to the City's Contract Administrator by E-mail within 72 hours of identifying the concern. RECOMMENDATION: As provided within the approved Franchise Agreement, Section 4.C.3.b - Disclosure -the Contractor should continue to provide all Commercial Customers with an annual disclosure statement that provides all required language and a disclosure of rates and/or changes for all Commercial services. OBSERVATION: Beginning in February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has been instrumental in resolving various requests for information and evaluating and documenting (e.g., transparency) the City's various solid waste management business processes. OBSERVATION: The City's Community Improvement -Code Enforcement Division charges a Special Collection Fee to both Residential and Commercial properties that place their vegetative debris, bulk trash and other debris out for collection either before or after their regular collection day(s). This is done so that neighborhoods, business communities, etc. do not have to endure piles of debris either in visible, private areas and/or within City Rights-of-Way for extended periods of time. This Fee is currently $11.50 per cubic yard and is charged directly to the customer on their monthly Utility Bill. Currently, the City collects this waste with afull-time clamshell truck with driver (provided by WM) and assigned to the Code Enforcement Division. This truck and driver is provided as part of the original Bid Documents -BID NO. 2001-21 - SpecialTerms and Conditions -Solid Waste, Vegetative Waste and Recycling Collection Services and is incorporated into the Franchise Agreement as provided by the General Terms and Conditions of this Document. A more detailed discussion on this issue, along with a RECOMMENDATION, will be provided within the Residential Analysis. RECOMMENDATION: A recommendation will be provided in the upcoming Residential Analysis. Page 30 Note: The recommendations outlined with this analysis were developed by the Solid Waste Employee Working Group as well as through discussions with WM on how to improve the daily management and operations of the City's Commercial Solid Waste program. Many of the recommendations require City Commission approval, however, many others can/have been implemented. V. Conclusion As shown within this analysis, numerous barriers (i.e., "live system," lack of detailed customer data, communication, etc.) prevented a complete and detailed determination from being completed as to whether appropriate Commercial Franchise Fees have been received since the inception of the current Franchise Agreement (FY 2002). It should be noted that this determination includes the payment of $51,025.37 in Commercial Franchise Fees as well as $1,873.95 in Administrative Fees for two separate five (5) month periods. As defined within this analysis, as well as WM's written responses to Ken MacNamee's 12 Questions, a majority of this funding (almost $40,000) was being tracked by City Staff ($19,750.17) to fund the "non-exclusive" C&D Franchise Fee for the 4t" Quarter of 2008 and the Franchise Fee revenue ($20,433.69) that was identified by WM due to a clerical error that removed Permanent Roll-Off from the Franchise Fee and was a direct result of the transition from an "exclusive" C&D hauler contract to a "non-exclusive" C&D hauler option, which took place in FY 2009 (September 2008) and provided for multiple vendors to provide C&D services at market rates. The remaining $10,841.51 of the $51,025.37 can be directly traced to the determination of a local citizen, Mr. MacNamee. Finally, it was found, in November 2009, that WM had failed to submit requisite Administrative Fees totaling $1,873.95 for five (5) months - July 2007, August 2007, September 2007, October 2007 and December 2007. Further, there may be some level (very small amounts) of Franchise Fees that may still be recoverable due to the inconsistency between the Franchise Agreement and the with the City's Rate Ordinances that have led to the identified and reported "rounding" issue. This inconsistency clearly does not provide a level of certainty to City Staff and/or our customers that the correct rate was being charged. However, upon further review (See detailed explanation above), it appears that this rate inconsistency resulted in very small monthly Commercial charges that were in the favor of either the Contractor (WM) and/or in the favor of the customer. Essentially this difference could be a "wash." To complete this analysis, which probably cannot be completed due to WM's "live system," an untold and undefined amount of Staff and WM hours must be utilized to potentially identify, what Staff believes, may result in a very small amount of Franchise Fees that could be recovered. Further, additional analysis would be extremely expensive -additional City Staff/personnel costs -and may be proven to cost prohibitive for the small amount of Fees that may be recovered. Instead of pursuing this option, which could be proven to be cost prohibitive (i.e., financial and personnel capital) and may not be productive, Staff is recommending that the City close the review of historical Franchise Fee Analysis and proceed forward in implementing the various policies and procedures that have been recommended by Staff and WM (outlined earlier within Page 31 this report). These proposed changes, if recommended by the Financial Review Board and adopted by the City Commission, will ensure better communications within the City as well as with the Contractor. In addition, these recommendations will enhance accountability and documentation as well as assist in ensuring that future Commercial Franchise Fees will be closely monitored for accuracy on a monthly basis. I would like to thank all of the members of City Staff that have assisted with this complex and detailed analysis, including Joe Safford, Finance Director, Lula Butler, Community Improvement Director, Brian Shutt, City Attorney, AI Berg, Assistant Community Improvement Director/Contract Administrator, Danise Cleckley, Administrative Assistant - Community Improvement - Code Enforcement and Paul Fleetwood, Senior Programmer - Finance Department - IT Division. In addition, I would like to thank Ken MacNamee and Butch Carter for all of their assistance with this effort. Both have proven to be valuable resources. Attachments c: Mayor and City Commission David T. Harden, City Manager Brian Shutt, City Attorney Joseph Safford, Finance Director Lula Butler, Community Improvement Director Harold "Butch" Carter, Waste Management Inc. of Florida Ken MacNamee, Delray Beach Citizen Page 32 City of Delray Beach Financial Review Board May 4, 2010 ' iLj i:~ ~~~Y ~ _~ ? fiQ C]TY ~~~8~~l~~ CC ~. C~~~~ ~~ ~v-x.~ !I ' ~~ Mr. Nelson S. "Waodie" McDuffte; Mayor 100 N.W. First Avenue Delray Beach, FL 33444 Subject: Review of City staff s Conrfttereial Solid Waste Progr•a~ta Analysis and Proposed Bustrtess Process Recona~r2endatians Dear Mayor McDuffie: On February 10, 2010 the City Commission asked the Financial Review Board to review several issues regarding the City's commercial franchise agreement with Wastc Management (Mayor's letter). Coneun~ently, the City initia#ed a comprehensive multi-departmental staff investigation of the same topics. The Board determined that to avoid duplication of effort and interference with this work being perfoa-med by staff, the Board would nat conduct a separate audit or analysis which of necessity would require participation by the same personnel involved in the staff project. Rather, the Board would wait until staff had finished their analysis and use that information to make a recommendation. Mr. Ellingsworth so informed the Mayor. On April 19, 2010 the Board received electronically 26 megabytes of information developed by staff and a 31 page report from Mr. Richard Reade summarizing staffs findings and preliminary conclusions. (Commercial analysis.}. At its regularly scheduled meeting on April 20, 2010 Mr. Reade presented this summary report to the Board. Mr. Ken MacNamee was present and participated in the discussion. Based on this discussian Mr. Reade made several format and presentation changes to the report, which the Board discussed in a special purpose session on April 30 with Mr. Reade and Mr. MacNamee again participating. Although the Board did not participate directly in the staff analysis, the final version of the report incorporates the Board's sugges#ians, and input from these hvo discussions. uestion 1: Has the City received all the franchise fees we should be paid by Waste Management for commercial and construction and demolition solid waste collection sezvices? The Board agrees with staffs primary conclusion: As shown within this analysis, numerous barriers ~i.e., "live system," lack of detailed customer data, communication, etc.) prevented a complete and detailed determination from being completed as to whether apprapriate Commercial Franchise Fees have been received since the inception of the cun~ent Franchise Agreement (FY 2002). {p. 30) Page t of 2 City off' Delray Beach Financial Review Board. Corollary Question l: Is the City receiving all necessary information from Waste Management and does the City have in place processes to regularly review such information and provide reasonable assurance that the City is receiving all franchise fees due? With respect to the first part of this question, the Board believes that staffs primary conclusion, cited above, clearly shows that the City is not currentl receiving all necessary information. With respect to the second part of this question, the Board agrees with s#aff s concluding recommendation: Staff is recommending that the City close the review of historical Franchise Fee Analysis and proceed forward in implementing the various policies and procedures that have been recommended by staff anal WM. (p.31) In agreeing with this recommendation, the Board noted that signifzeant business process ~vork has been done by staff and reported under Work Plan Items 10 - 14 (pp. 21 - 30). The Board supports the specific recommendations in these sections and recognizes and supports staf#'s intention to build detailed business processes based on these recommendations. The Board emphasizes that the success of many of those process improvements will rest largely on the ability of Waste Management to provide detailed data in support of their franchise fee calculations. As suggested by staff, the Board will review these policy and procedural changes when they are available, and will then provide Mr. Reade with our comments. References 1. {Mayor's letter). Febzuazy 10, 20101etter from Mayor McDuffie to Howard Ellingsworth. 2. (Commercial Analysis). Commercial Salid Waste Pragrant Analysts and Proposed Business Process Recommendations. April 28, 2010 The Board wishes to commend and thank Mr. Reade and his staff colleagues for their efforts on this project. Sincerely, Howard Ellingsworth, Ch c: Joseph Safford Richard Reade Page 2 of 2 RESIDENTIAL SOLID WASTE PROGRAM ANALYSIS AND PROPOSED BUSINESS PROCESS RECOMMENDATIONS JULY 5, 2010 Table of Contents Executive Summary ............................................................................................................ Pages I -VI Memorandum to the City of Delray Beach Financial Review Board: I. Goal -Identification of Issue(s) ..................................................................................... Page 1 Legal Issues ............................................................................................................................. Page 2 II. Background ..................................................................................................................... Page 3 Residential Services Provided .............................................................................................. Page 2 Residential Franchise Agreement (i.e., Contract) Administration ................................... Page 3 Residential Rates, Billing and Collection and Remittance of Franchise Fees ................. Page 4 III. Residential Fee Analysis Work Plan ............................................................................ Page 6 IV. Analysis of Residential Solid Waste & Recycling Program & Service Category Total Unity Count(s) ........................................................................................................... Page 7 Work Plan Item #1. Review and analyze the City's Residential Unit Count growth within each of the four (4) service categories since the approval of the Franchise Agreement in 2001 ................................................................................................................. Page 7 Work Plan Item #2. Obtain and review the historical monthly billings (i.e., invoices) for all Residential Solid Waste, Vegetative and Recycling collection and disposal services .................................................................................................................................... Page 14 Work Plan Item #3. Review, analyze and revise the Certificate of Occupancy (CO) Monthly Reports into a new Excel Format that provides assurance of the service category that new structure will be classified for collection and billing purposes ........................................................................................................................ age 15 Work Plan Item #4. Complete a comprehensive Field Inventory Count of each of the four (4) service categories (i.e., AGAR, BGAR, CGAR and DGAR) by City Staff to determine the correct unit counts within each service category .................................... Page16 Work Plan Item #5. Compare total unit counts to the Solid Waste Authority of Palm Beach County (SWA) and the Palm Beach County Property Appraiser's records.......... Page16 Work Plan Item #6. Provide the results of the City's final Residential total unit count as well as a breakdown of units within each of the four (4) service categories to WM for their review, analysis and acceptance ................................................................. Page 17 Work Plan Item #7. Complete a comparison of actual (current) and adjusted unit counts based on the City's Field Inventory Count and monthly CO Reports for each service category with the unit counts that were provided in WM's monthly billing statements ............................................................................................................................. age 18 Work Plan Item #8. Obtain and review Rate Ordinances to identify the Total Fees (i.e., garbage collection, recycling, yard trash, Administrative Fee and Franchise Fee) for each Residential service category ......................................................................... Page 18 Work Plan Item #9. Review the City's General Ledger accounts and compare the actual monthly Residential service payments with WM's actual monthly billings (invoices) .................................................................................................................................. Page 19 Work Plan Item #10. Develop a comparison of the resulting amounts that should have been billed to Residential customers (based on monthly CO Reports and recently identified unit count) with the actual monthly invoice totals to determine possible overpayments/underpayments ............................................................................. Page 19 Work Plan Item #11. Review the Special Collections services that are provided for within the City's Franchise Agreement and City Code ...................................................... Page 20 Work Plan Item #12. Review the history of the Sidewalk Container services (including billing and payments) and determine if there is a balance owed by the City for disposal of these containers ................................................................................... Page 22 Work Plan Item #13. Coordinate and bring together all areas of the City that participate in the City's Solid Waste program to encourage communication across departments, resolve public requests for information, evaluate and document the City's various solid waste management business processes and develop administrative and operational recommendations that will be provided in both the Commercial and Residential Analyses ................................................................................ Page 23 Work Plan Item #14. Review, analyze and provide recommendations regarding the Community Improvement Department's (CI) Residential Solid Waste Collection business processes to ensure confirmation and accuracy of unit count, proper monitoring and notification, receipt of detailed monthly Residential activity, collection of revenues and payment of expenditures ...................................................... Page 24 Work Plan Item #15. Review, analyze and provide recommendations regarding the Finance Department -Utility Customer Service Division's business processes to ensure confirmation and accuracy of unit count, proper monitoring and notification, receipt of detailed monthly Residential activity, collection of revenues and payment of expenditures ............................................................................................... Page 25 Work Plan Item #16. Review, analyze and implement WM recommendations regarding business processes to ensure implementation of rate adjustments, utilization of accurate unit counts, proper monitoring and notification, delivery of detailed monthly Residential activity and submittal of accurate billing statements ... Page 26 Work Plan Item #17. Identify important observations and provide recommendations ................................................................................................................... Page 27 V. Conclusion ........................................................................................................................ Page 32 EXECUTIVE SUMMARY RESIDENTIAL SOLID WASTE & RECYCLING PROGRAM ANALYSIS AND PROPOSED BUSINESS PROCESS RECOMMENDATIONS I. Goal -Identification of Issue(s) During the past year, a City resident, Ken MacNamee, has been investigating various aspects of the City's Solid Waste and Recycling collections, including management and administration of our Franchise Agreement, with Waste Management (WM). In the course of Mr. MacNamee's investigation, which was aided by City Staff, a question regarding the City's Residential Solid Waste Program surfaced: "Has the City overpaid for residential solid waste collection services due to errors in the number of residential units in each of the four categories of service provided within the City?" In an effort to resolve this question, Mayor McDuffie, on behalf of the City Commission, on February 10, 2010, formally requested the Financial Review Board (FRB) to assist the City with determining "Do the City's business processes ensure that the number of units in each of the four categories is regularly and accurately updated, that Waste Management is billing the City for the appropriate number of units, and that the unit counts are periodically reconciled with the Property Appraiser's records?" This task was then taken on by City Staff with the intent to receive confirmation by the FRB and Mr. MacNamee that all questions had been answered. II. Analysis of Residential Solid Waste & Recycling Program & Service Category Total Unit Count(s) Following receipt of the Mayor's letter, Staff developed a plan to perform an analysis (a Financial or Forensic Audit was not completed) of the City's Residential Solid Waste & Recycling program -historically and currently. The Residential Solid Waste & Recycling Program & Service Category Total Unit Count(s) Analysis provides an analysis of the City's Residential Solid Waste program. The Analysis included a summary of the program's history (since 2001), outlined the major services that are required to be provided by the Contractor and the City, noted the duties of the Contract Administrator and provided the provisions for the various Residential Rates, billing and collection and remittance of the Franchise Fees. In addition, seventeen (17) Work Plan items were developed in an attempt to confirm whether an overpayment by the City has been made. The comprehensive analysis is attached. III. Observations Completion of each Work Plan item provided the following observations regarding the City's Residential Solid Waste & Recycling program: A . When the City's total unit count is compared to the Palm Beach County Solid Waste Authority's (SWA) total count (as of the NAV certification date) and with the Contractor's invoices, the City's count is generally consistent with the SWA's. B. It was found, during this analysis, that there was no "paper trial" or evidence to ensure receipt of the monthly Reports by the receiving entities (i.e., the Contractor - WM, the Contract Administrator and the Utility Customer Service Division Manager -Finance Department). C. The City's Field Inventory Count, which included analyzing, classifying and verifying all properties throughout the City into the four (4) service categories, was completed in March 2010. The total unit count (prior to WM reviewing and contesting certain units) was 33,744 (AGAR - 14,992 units, BGAR - 1,418 units, CGAR - 2,638 units &DGAR - 14,696 units) and when compared with the SWA's adjusted FY 2010 NAV total unit count, a difference of only 13 total units resulted. Further, when compared with the March 2010 WM invoice, a total unit difference of 111 units was identified. The differences found within each category are as follows: AGAR - 119 units, BGAR - -43 units, CGAR -16 units &DGAR -16 units. D. When comparing actual (current) and adjusted unit counts based on the City's Field Inventory Count and monthly CO Reports for each service category with the unit counts that were provided in WM's monthly billing statements, the following was found: The Contractor's invoiced BGAR, CGAR &DGAR unit counts did not change over a 4% year review period, until August 2009. All new CO's and demolitions (265 net units) were incorporated into the AGAR category Invoiced Total Unit Counts did not track with the adjusted Field Investigation counts throughout the analysis period When tested on a month-to-month basis, the AGAR count (until August 2009) was not updated in a timely manner to reflect the construction activity within the City for the corresponding time periods The City's current total unit count of 33,744 (as of March 2010) differs from the corresponding Billing invoice by 111 units (-.33%) and suggests that the Contractor is now billing the City more accurately E. When reviewing the City's General Ledger accounts and comparing the actual monthly Residential service payments with WM's actual monthly billings (invoices), the following was found: Occasionally, invoices required adjustments prior to payment being issued by the City Page II Invoices were submitted with dates that may not have reflected the correct service date The incorrect number of units for garbage and recycling were included within some monthly invoices and adjustments were made to reflect a corrected number of units An inadvertently missed payment ($177,926) by the City was identified in December 2005 as a result of a billing concern by Staff over whether the City's payments were being made in advance or in arrears (as required within the Franchise Agreement) All errors and adjustments that were not captured within the monthly invoices were captured within this analysis F. After comparing the "adjusted" monthly amounts with the number of units actually billed by WM it was determined that the WM has underpaid the City (or that the City has overpaid WM) an estimated $64,960 over the previous five (5) year period (from April 2005 to April 2010). G. In an effort to assist with the City's "Clean City" initiative, the City's Community Improvement -Code Enforcement Division manages and oversees aclam-shell truck that is provided by the Contractor (WM) per the Franchise Agreement to collect Residential and Commercial debris (i.e., vegetative debris, bulk trash and other debris) that is set out for collection either before or after their regular collection day(s). As a result, the City charges a Special Collection Fee ($11.50 per cubic yard) on the customer's monthly Utility Bill. The City's Code of Ordinances "provides that a payment may be received by the City's "contractor" for this service. As a result, it was not "out of line" for the City to pay WM for their "special" collection efforts to accommodate the City's "Clean City" initiative. H. Since the City's last payment in 2004, an invoice requesting reimbursement for all disposal costs associated with 84 sidewalk containers (i.e., trash cans), which are located along A1A, Atlantic Avenue and Pineapple Grove, was not submitted to the City by the Contractor. As a result, the City has not provided payment for disposal services from FY 2005 to FY 2009. Thus, it has been verbally requested by the Contractor that the City provide payment for these services - $38,800.66. I. Beginning in February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has been instrumental in resolving various requests for information and evaluating and documenting (e.g., transparency) the City's various solid waste management business processes. IV. Recommendations The following recommendations were developed regarding the City's Residential Solid Waste program: Page III 1. The monthly Certificate of Occupancy (CO) Report should be distributed to the Contractor (WM), the Contract Administrator and the Utility Customer Service Division Manager -Finance Department by the Code Enforcement Division -Community Improvement (CI) Department electronically (i.e., E-mail) by 15t" of each month to ensure receipt (a time and date stamp is now provided). 2. All BGAR areas should have the opportunity to vote and determine if they prefer to retain side or rear door services at a higher rate. This option would still require residents within this service classification to bring recycling to curb for collection 3. Ensure that WM commits and utilizes the new (agreed) Field Count numbers within all invoices dating back to March 2010. Further, all future invoices should include the adjusted service category unit counts based on the CO Reports, which are now being forwarded to WM electronically. Finally, WM and/or the City should make all necessary financial adjustments that may result due to this new count. Potential adjustments should be made back to the date that the new Field Count was established -March 2010 4. The Master Billing File should be updated to account for all Residential units that identified during the Field test 5. The City's total unit count, adjusted Field Inventory Count and the Master Billing counts, should be compared and reconciled with the SWA's annual (certified) Non-Ad Valorem total units to ensure confirmation of accuracy within all data bases. Generally, this should take place September of each year 6. Amend the Special Collections section of the City's Code and include language within the Franchise Agreement to ensure that the City is not billed or will not provide payment to WM for additional Residential Special Collections on a "go forward basis" throughout the term of the existing Solid Waste Agreement. In addition, this recommendation includes the elimination of billing for Commercial Special Collections by the City for special collections that are "called" in by the customer and permits WM to directly bill (in accordance with the Franchise Agreement and/or City Code) any Commercial customer that requests this service. In the rare cases where Code Enforcement action ("do not call in" for service and leave debris/garbage out for Special Collection pick-up) is required, the City will provide collection services and payment will be made to the Contractor for this service. The fee for this service will be in accordance with the Franchise Agreement and/or City Code. 7. The City should reimburse the Contractor the estimated disposal costs for 84 sidewalk containers dating back to FY 2005. Further, this Total Amount Due should be utilized to reduce the total estimated overpayment that has been determined within this Analysis from $64,960 to $26,159.04. Page IV 8. WM should reimburse the City the estimated overpayment dating back to April 2005. 9. The Solid Waste Employee Working Group (i.e., Community Improvement and Finance Staff) should continue to meet monthly and should schedule a standard meeting time and date to ensure that communication across departments continues following this analysis and to ensure that all necessary Staff are apprised of any solid waste issues that may develop. 10. Both the Community Improvement Department & Finance Department should review and document all residential solid waste and recycling business processes to ensure continued confirmation and accuracy of the number of units within each of the four (4) service categories, WM is billing for the appropriate number of residential units and the total unit count is periodically reconciled with the SWA's records as well as with the City's Master Billing File. 11. The City has requested WM to provide written notice of any administrative issues and/or changes that may affect total revenues received and/or expenditures to be paid to the City. WM has committed to resolving any future issues by immediately notifying the City, in writing, regarding any additions/deletions to accounts due to administrative circumstances, including the determination of an error. It is the City's recommendation that this information, along with proposed remedies/resolutions identified, are reported directly to the City's Contract Administrator by E-mail within 72 hours of identifying the concern. V. Conclusion As shown within this analysis, invoiced unit counts have not been updated in accordance with the City's monthly CO Reports nor have they be compared and reconciled with the SWA. In fact, it wasn't until the fall of 2009 that the new CO's and demolitions were being distributed among all four (4) service categories. As a result, it has been determined through this analysis that the City has overpaid for Residential Solid Waste services by $64,960 over the past five (5) years (April 2005 to March 2010). However, due to amount owed for sidewalk container disposal services, the estimated overpayment is reduced to $26,159.04. In addition, this analysis has provided the City with the opportunity to cross departmental lines and review, amend and document its business practices related to Residential and Commercial Solid Waste collection and the approved Contractor. Further, this study has provided the City and WM with a very accurate unit count that, as we proceed forward, should produce confidence in the Contractor's invoices and payments that are made. However, if these types of detailed financial and operational reviews were to be considered, there is not clear evidence to suggest that a significant amount of payments made would be identified and reimbursable in accordance with the Franchise Agreement as well as Federal, State and local laws. Page V Instead of pursuing this issue further, which could be proven to be cost prohibitive (i.e., financial and personnel capital) and may not be productive, Staff is recommending that the City close the review of the historical unit count analysis and proceed forward with implementing the new Field Unit Count and adjust it monthly based on the CO Reports. Further, these counts should be periodically compared and reconciled against the Palm Beach County Solid Waste Authority's Non-Ad Valorem total unit counts as well as the City's Master Billing File customer counts. By implementing the various policies and procedures that have been recommended by Staff (outlined within this report and provided as Exhibits), there will be better assurance that the monthly unit counts will produce more accurate invoices from the City's Residential & Commercial Contractor. These proposed changes, if recommended by the Financial Review Board and adopted by the City Commission, will ensure better communications within the City as well as with the Contractor. In addition, these recommendations will enhance accountability and documentation as well as assist in ensuring that future invoices, unit counts and payments will be closely monitored for accuracy on a monthly basis. Page VI MEMORANDUM July 5, 2010 To: City of Delray Beach Financial Review Board From: Richard J. Reade, City Designee for the Solid Waste Management Analysis Subject: Analysis of the City of Delray Beach's Residential Solid Waste & Recycling Program and Proposed Business Process Recommendations On behalf of the City staff associated with this project, I am presenting our financial analysis and final report on the Waste Management Inc. of Florida (WM) Residential Solid Waste & Recycling Program Franchise Fee. In addition, we are providing our observations and recommendations to improve the internal and/or external business processes to ensure that the City of Delray Beach is receiving an accurate monthly billing statement for Residential collection and disposal services. I. Staff Goal -Identification of Issue(s) During the past year, a City resident, Ken MacNamee, has been investigating various aspects of the City's Solid Waste and Recycling collections, including management and administration of our Franchise Agreement, with Waste Management Inc. of Florida (WM). In the course of Mr. MacNamee's investigation, which was aided by City Staff, two (2) primary financial questions surfaced: "1. Has the City received all the Franchise Fees we should be paid by Waste Management for Commercial and construction and demolition solid waste collection services?" and "2. Has the City overpaid for residential solid waste collection services due to errors in the number of residential units in each of the four categories of service provided within the City?" As a result, on February 10, 2010, Mayor Nelson S. "Woodie" McDuffie, on behalf of the City Commission, formally requested the Financial Review Board (FRB) to assist the City with answering the following (See Attached -Exhibit #1): 1. "Is the City receiving all necessary information from Waste Management and does the City have in place processes to regularly review such information and provide reasonable assurance that the City is receiving all Franchise Fees due?" 2. "Do the City's business processes ensure that the number of units in each of the four categories is regularly and accurately updated, that Waste Management is billing the City for the appropriate number of units, and that the unit counts are periodically reconciled with the Property Appraiser's records?" Note: The first request for assistance refers to City's Commercial Solid Waste Franchise Fees, which was analyzed within the City's Commercial Solid Waste Program Analysis and Proposed Business Process Recommendations" report -dated April 28, 2010 and Revised on July 5, 2010. This report was formally presented to the FRB for consideration, however, to date, formal and final action on the Commercial Report has not been provided. A letter from the FRB to Mayor McDuffie outlining their general positions regarding various Staff recommendations and conclusions is provided as an Attachment (See Attached -Exhibit #2). Request #2 refers to the City's "Residential Solid Waste and Recycling Program Analysis and Proposed Business Process Recommendations," which includes: 1. Complete a comprehensive Field Inventory Count of each of the four (4) service categories (i.e., AGAR, BGAR, CGAR and DGAR). Compare total unit counts to the Solid Waste Authority of Palm Beach County (SWA) and the Palm Beach County Property Appraiser's records 2. Review and revise (in Excel format) the monthly Certificate of Occupancy (CO) Reports 3. Complete a comparison of actual (current) and adjusted unit counts based on the City's Field Inventory Count and monthly CO Reports) for each service categories with the unit counts that were provided in WM's monthly billing statements 4. A comparison of the resulting amounts that should have been billed to Residential customers (based on monthly CO Reports) with the actual monthly invoice totals 5. Determine possible overpayments/underpayments 6. Review and document all residential solid waste and recycling business processes to ensure continued confirmation and accuracy of the number of units within each of the four (4) service categories, WM is billing for the appropriate number of residential units and the total unit count is periodically reconciled with the SWA and the Property Appraiser's records. Legal Issues: Upon the advice of the City Attorney, this analysis may generate various legal concerns, which we are not addressing at this time. As a result, a five (5) year threshold was utilized for the various reports and was based on existing statute of limitations law, which mayor may not apply. II. Backeround In 2001, the City formally Bid the opportunity to provide Residential and Commercial Solid Waste and Recycling services within the City of Delray Beach. This Bid process resulted in the selection BFI Waste Systems of North America, Inc. (BFI) by the City Commission and led to the approval of a five (5) year contract (or Franchise Agreement) that commenced on October 1, 2001 (Expiration Date -September 30, 2006) (See Attached -Exhibit #3). Although, BFI was awarded this service opportunity, in 2003, Waste Management Inc. of Florida purchased BFI and took over (through assignment from BFI) the City's solid waste collection services beginning on October 1, 2003. At this time, the City and WM agreed to a new 5-year term beginning with the assignment on October 1, 2003 (Expiration Date -September 20, 2008). In 2008, per the City's Franchise Agreement, the City and WM negotiated a new five (5) year Agreement extension with revised terms and conditions (i.e., removed exclusive franchise for C&D, In-Kind Services increased from $10,000 to $20,000, etc.). This new Agreement is effective until September 30, 2013. Page 2 Note: All of the documents described within this analysis will be provided as electronic Exhibits to save on financial and environmental costs. They will only be provided as a "hard copy" upon request. Residential Services Provided: The City's Solid Waste, Vegetative Waste and Recycling Collection Franchise Agreement (Franchise Agreement) defines the duties and responsibilities of the selected contractor and the City of Delray Beach related to this service. Within Section #3 of the Franchise Agreement (as amended) between the City and WM, all solid waste collection services and Residential recycling collection services are outlined and described. To summarize the Residential services provided: WM shall maintain the exclusive right to provide mandatory curbside, rear-door and/or containerized Residential solid waste collection services: AGAR -Single Family Curbside Roll-Out Carts BGAR -Rear door/Side door Pick-Up CGAR -Curbside Bag Pick-Up DGAR -Multi-Family Containerized WM shall provide Residential solid waste collection services twice per week WM shall maintain the exclusive right to provide mandatory Residential recycling collection services within the City's service area. Recycling collection services will be provided once per week WM shall provide curbside vegetation waste collection services to all residential units once per week WM shall provide Bulk Trash collection services to all residential units once per week The City will be responsible for the billing and collection of payments for Residential solid waste and recycling services WM will not bill disposal costs to Residential customers by the City and/or WM as they are billed on their annual property tax bill notice by the Palm Beach County Tax Collector's Office Residential Franchise Aereement (i.e.. Contractl Administration: The Franchise Agreement defines the City's Contract Administrator as "the person designated by the City who shall act as the City's representative during the term of the Franchise Agreement." This person will be responsible for administering the Agreement and monitoring collection services provided by WM (including including collection and disposal). Please note that the Franchise Agreement indicates that the City's Community Improvement Department -Code Enforcement Division will maintain these responsibilities. However, due to budget and personnel resources constraints, these duties have been assigned to the City's Assistant Community Improvement Director and are shared with various Community Improvement Department Staff. Page 3 Residential Rates, Billing and Collection and Remittance of Franchise Fees: Residential Rates: Initially, in 2001, when the "Solid Waste, Vegetative and Recycling Collection Services" (i.e., Franchise Agreement) formal bid was awarded to BFI, the Contractor's rates for residential, multi- family and commercial units were established within BFI's Bid documents. Monthly Residential collection and disposal rates were identified within the City Code as a Total Fee -Contractor. This provided for all basic charges associated with collection and disposal of Residential waste and Recycling services. It should be noted that disposal costs are defined by the Palm Beach County Solid Waste Authority (SWA) and are billed on each property owner's Annual Notice of Ad Valorem Taxes and Non-Ad Valorem Assessments (i.e., annual tax bill) by the Palm Beach County Tax Collector's Office. Adjustments of this cost are not within the control of the City and/or the contractor. Further, the Franchise Agreement, "Section 6. Charges, Rates and Level of Services", provided for the charging of various costs associated with this service including: an annual rate adjustment based solely on the Consumer Price Index (CPI) -not to exceed 3% in any one year, Extraordinary Rate Adjustment for unforeseen operational costs (requires City Commission approval), an Administrative Fee ($0.35 per residential customer or per Commercial Container customer) that is remitted back to the City, a Franchise Fee of 5% to support the exclusive right to provide residential and commercial services within the City and aRoll-Out Cart Replacement Fee of $0.90 for all residential and commercial Curbside Cart customers to compensate for the City's costs to purchase and replace these carts. In addition, "Section 4. Solid Waste and Vegetative Waste Collection Service: C. Commercial Solid Waste Collection Service:" provides that the contractor shall only charge rates as set out in Exhibit I or as otherwise allowed by this Agreement (i.e., "Special Services"). These additional "Special Services" charges, which are outlined in Exhibit #3, include but are not limited to "special services for collection of solid waste such as rolling containers out of storage areas, opening doors and gates for access or other such special services." Following the determination of Residential rates, charges and fees within the approved Bid Award, City Staff (Finance Department), on an annual basis, applies the permitted CPI to determine the new monthly Residential collection rates. This new annual rate information is then submitted to the contractor (BFI and WM) for review and approval. Upon receipt of the contractor's approval, the new rates are included in an annual "Rate Ordinance" that is considered by the City Commission. The annual Rate Ordinance also maintains language that updates/amends the existing City Code. If approved by the Commission, all new rates are then codified (Chapter 51 "Garbage And Trash -City Code of Ordinances) and applied to respective Residential customers beginning on the first day of the Fiscal Year (October 15t). Amendments to the Franchise Agreement are handled in a similar manner, but require separate approval by the City Commission prior to any amendment taking place. It should be noted that since the Franchise Agreement was approved in 2001, the City Commission has approved three (3) separate Amendments to the Agreement. Only the most recent, Amendment No. 3, in July 2008, (See Attached -Exhibit #3C), provided for a revision to the previously established monthly collection rates. This Amendment authorized: Page 4 An extension of the existing Franchise Agreement to provide an additional one, five (5) year period as permitted by Amendment No. 1 (approved by the City Commission in September 2003) A modification to the permitted CPI rate adjustment threshold Provided for a Fuel Surcharge Provided for a revised Approved Rate Schedule -Exhibit #3 -Franchise Agreement The approved changes to determine the monthly collection costs were requested by WM due to various reasons (i.e., historically low CPI rate adjustments, high fuel and operational costs, etc.). Billing: The Franchise Agreement provides that "Residential Customers" includes all residential and multi- family (5 or more units) customers. Although all collection services are completed by the contractor (i.e., BFI and WM), the City is responsible for the daily, operational billing and collection of payments activities for Residential Solid Waste, Vegetative Waste and Recycling Collection Services. Residential Billing is determined as follows: Total Monthly Fees -Contractor =Garbage + Recycling + Yard Trash Collection Charges Total Monthly Fees =Total Monthly Fees -Contractor + 10% Franchise Fee + $0.35 Admin Fee Note: A Rollout Cart Replacement Fee of $0.90 is charged monthly to Residential customers within the AGAR service category. This Fee is added to the Total Monthly Fees above. Total Disposal Charge =Included with each property's annual tax bill. Not incorporated into the monthly billing process As mentioned earlier, all eligible collection rates, fees and charges are listed within either the prevailing Rate Ordinance and/or Franchise Agreement (e.g., Natural Disasters, Extraordinary Rate Adjustment, Special Services -moving containers, opening and closing doors and/or gates for access, adding and opening locks, etc.). The current collection rates, fees and charges can be found in Ordinance #45-09 and the corresponding Franchise Agreement, as amended (See Attached -Exhibit #4). **Please note, as defined in Franchise Agreement, that the City shall make monthly payments in arrears to the Contractor for the Residential Solid Waste and Recycling Collection Services. In addition, the Contractor shall be entitled to payment for services rendered irrespective of whether or not the City collects from customers for such approved (by the City) service. Payments from the City to the Contractor will be due no later than thirty (30) days following the submittal of an invoice from the Contractor. Franchise Fees: Per the City's Code of Ordinances, a monthly Franchise Fee is collected by the City for all Residential accounts. In 2001, the 5% monthly Franchise Fee on all contractor fees (i.e., collection, disposal and container maintenance), was established as a requirement within the City's Request for Proposal Page 5 (RFP) documentation. The Franchise Fee remained at 5% until FY 2007 when it was increased to 10% (Ordinance #50-06 -September 2006). As a result, the City now charges a 10% Franchise Fee (Total Monthly Fees - Contractor x 10%). The Franchise Fees that are collected for Special Services for residential customers, in particular multi-family, are billed, collected and remitted back to the City by the Contractor within the Commercial Franchise Fee monthly remittance. III. Residential Analysis Work Plan 1. Review and analyze the City's Residential Unit Count growth within each of the four (4) service categories since the approval of the Franchise Agreement in 2001 2. Obtain and review the historical monthly billings (i.e., invoices) for all Residential Solid Waste, Vegetative and Recycling collection and disposal services 3. Review, analyze and revise the Certificate of Occupancy (CO) Monthly Reports into a new Excel Format that provides assurance of the service category that new structure will be classified for collection and billing purposes 4. Complete a comprehensive Field Inventory Count of each of the four (4) service categories (i.e., AGAR, BGAR, CGAR and DGAR) by City Staff to determine the correct unit counts within each service category 5. Compare total unit counts to the Solid Waste Authority of Palm Beach County (SWA) and the Palm Beach County Property Appraiser's records 6. Provide results of Residential Unit Field Inventory of all service categories to WM for verification and acceptance of the accurate unit count within each service category 7. Complete a comparison of actual (current) and adjusted unit counts based on the City's Field Inventory Count and monthly CO Reports for each service category with the unit counts that were provided in WM's monthly billing statements 8. Obtain and review Rate Ordinances to identify the Total Fees (i.e., garbage collection, recycling, yard trash, Administrative Fee and Franchise Fee) for each Residential service category 9. Review the City's General Ledger accounts and compare the actual monthly Residential service payments with WM's actual monthly billings (invoices) 10. Develop a comparison of the resulting amounts that should have been billed to Residential customers (based on monthly CO Reports and recently identified unit count) with the actual monthly invoice totals to determine possible overpayments/underpayments 11. Review the Special Collections services that are provided for within the City's Franchise Agreement and City Code 12. Review the history of the Sidewalk Container services (including billing and payments) and determine if there is a balance owed by the City for disposal of these containers 13. Coordinate and bring together all areas of the City that participate in the City's Solid Waste program to encourage communication across departments, resolve public requests for information, evaluate and document the City's various solid waste management business processes and develop administrative and operational recommendations that will be provided in both the Commercial and Residential Analyses 14. Review, analyze and provide recommendations regarding the Community Improvement Department's (CI) Residential Solid Waste Collection business processes to ensure confirmation and accuracy of unit count, proper monitoring and notification, receipt of detailed monthly Residential activity, collection of revenues and payment of expenditures Page 6 15. Review, analyze and provide recommendations regarding the Finance Department -Utility Customer Service Division's business processes to ensure confirmation and accuracy of unit count, proper monitoring and notification, receipt of detailed monthly Residential activity, collection of revenues and payment of expenditures 16. Review, analyze and implement WM recommendations regarding business processes to ensure implementation of rate adjustments, utilization of accurate unit counts, proper monitoring and notification, delivery of detailed monthly Residential activity and submittal of accurate billing statements 17. Identify important observations and provide recommendations IV. Analysis of Residential Solid Waste & Recvclin~ Program & Service Cate~orv Total Unit Count s Work Plan Item #1. Review and analyze the City's Residential Unit Count growth within each of the four (4) service categories since the approval of the Franchise Agreement in 2001 Initial Unit Count -Solid Waste. Veeetative Waste and Recvcline Collection Services Reauest for Proposals (RFP) Package - 2001 According to the City's Finance Department, when the City of Delray Beach bid out the Residential & Commercial Solid Waste franchise in February, 2001, the bid format and specifications were derived from the Palm Beach County Solid Waste Authority (SWA) model bid package and tailored to the meet our community service needs. One important deviation from the City's previous contracts for solid waste collection and disposal was that the City would now assume all billing responsibilities associated with each of the four (4) Residential service categories, including multi- family. Previously, the approved Contractor billed all multi-family and commercial accounts. Within the City's Request for Proposals (RFP) package (See Attached -Exhibit #3), a breakdown of the estimated number of units [originally derived from the SWA's certified Non-Ad Valorem Assessment (NAV) roll as of September 2000] to be billed by the selected Contractor on a monthly basis were provided to allow for a comprehensive bid proposal. These counts would be amended on a monthly basis (as needed) based on newly built structures (requires new service) and demolitions (removes service), which are provided for within the City's Certificate of Occupancy (CO) Report and prepared by the Community Improvement Department. Note: Per the Palm Beach County Property Appraiser's web site: "The non-ad valorem assessment (NAVJ roll is certified to the Tax Collector by local governing boards, e. g. the Solid Waste Authority and water control districts. Mon- ad valorem assessments are based on the cost of the service provided by the levying authority, not by the value of the property." The initial (estimated) Residential unit counts (as of September 2000 -date of the most recently certified NAV roll) that were provided by the City within the RFP are as follows: AGAR -Single Family Curbside Roll-Out Carts 12,888 units BGAR -Rear door/Side door Pick-Up 1,361 units CGAR -Curbside Bag Pick-Up 2,505 units Page 7 DGAR -Multi-Family Containerized 13,847 units Total Unit Count (as of February 2001) 30,601 units Note: This Total Unit Count with the City's RFP package matched the SWA's certified total residential unit count (as of September 2000), which was included within their Fiscal Year (FY) 2001 Governmental Disposal Credit Report To ensure that it was clear that the unit counts provided within the RFP were an estimate of the total unit count within the City, the following language was included in the bid package: "The Bidder hereby acknowledges that the number of units, containers, cubic yards or other data supplied by the City are good faith estimates for the sole purpose of determining bid awards. The City does not guarantee any minimum or maximum amount of work whatsoever." Note: As information, the SWA generates their unit count directly from the Palm Beach County Property Appraiser's Office Non-Ad Valorem (NAV) data base (See Attached -Exhibit #5) and categorizes their unit counts within the following structure: Single Family Multi-Family (Duplex, Triplex & Quadplex) -Less than five (5) units (<5) Mobile Homes Multi-Family -More than four (4) units (>4) Due to various enhanced services that are provided to the residents within the City of Delray Beach (i.e., Rear door/Side door Pick-Up and Curbside Bag Pick-Up), Staff is unable to compare the City's unit count within each of our four (4) service categories with the individual categories that are utilized by the SWA. This is due to differences in how each agency categorizes particular units. For example, the City classifies some duplexes, triplexes and quadplexes as single family (AGAR) and others as multi-family (DGAR). Thus, the City would not be able to "tie into" the SWA's Multi- Family -Less than five (5) units (<5) category without a re-classifying areas of the City to meet the SWA's respective service structure. This could result in a change in monthly fees and a requirement to obtain/construct infrastructure to accommodate the proposed changes. This would most likely result in customer service issues/complaints by a significant portion of the citizenry. It should be noted, however, that the City can utilize the SWA's total unit count to compare and ensure that their total count is accurate and consistent with our Master Billing file. This also allows for a comparison with the Contractor's total unit count to confirm accuracy on the monthly billing statements. Unit Count Survey: Recently, the City completed a survey of five (5) local municipalities to determine how they establish their Residential unit count for garbage services and if they have (in the past and/or currently) conducted field counts to verify the number of residential units within their municipality. The survey responses are provided below: Page 8 1. Boynton Beach -Services provided by City -SWA data is used to establish the annual unit count. They conducted acity-wide field count for residential units "many years ago." Staff could not remember when, but acknowledge it was a very long time ago 2. Boca Raton -Services provided by City -SWA data used annually; field counts have been conducted for all annexations 3. Palm Beach Gardens -Services contracted out to Waste Management -use SWA data to establish the residential unit count 4. Riviera Beach -Services contracted out to Waste Management -SWA data is used to establish the residential unit count; staff does not believe they have conducted acity-wide field count 5. West Palm Beach -Services provided by City -SWA annual data is used to establish the unit count; no knowledge of conducting acity-wide field count As a result, this information suggests that most municipalities utilize the SWA's NAV data to establish their residential unit counts on an annual basis. Further, when the City's total unit count is compared to the SWA's total count (as of the NAV certification date) and with the Contractor's invoices, the City's count is generally consistent with the SWA's (See Chart Below): Annual Comparison of Total Units As of September of Each Fiscal Year Fiscal Year City of Delray Beach Field Unit Count Adjusted for CO's* BFI/WM Invoices SWA Disposal Credit Report 2001 N/A N/A 30,601 2002 * * 31,449 31,102 31,049 2003 31, 838 31,444 31, 548 2004 32,312 31,671 31,886 2005 32,762 32,382 32,402 2006 32,129 32,471 32,727 2007 32,371 32,807 33,229 2008 33,530 32,947 33,312 2009 33,662 33,069 33,431 2010 33,726 32,631 33,713 2010* * * 33,744 33,633 33,731 *Note: The City's total unit counts provided in the above chart were derived from the recently completed Field Count Investigation and adjusted based on the revised monthly CO Reports. The Field Investigation utilized the City's Master File customer list. Once the baseline count was determined (as of March 2010), units were added/removed (working backwards to 2001) based upon the CO Reports **Note: The Contractor began to provide collection and disposal services in October 2001 (FY 2002). Thus, invoiced unit counts were not available until October 2001 (when the contract began). To enable a comparison with the City's Field Count and the Contractor's first invoice total unit count -October 2001, the SWA's FY 2002 Disposal Credit Report count was adjusted to include approved CO's and demolitions (51 total units) during the months of September and October 2001 ***Note: Due to the timing of this analysis, the updated 2011 SWA total unit count was/is not available (expected in September 2010). As a result, to compare the most recent total unit counts -March 2010 -the SWA's Master File count was adjusted to incorporate all CO's and demolitions since the NAV was last certified in September 2009 (FY 2010). Thus, 18 total units were added to the FY 2010 SWA total unit count to determine the adjusted total unit count for March 2010. This provided the opportunity to then compare the revised SWA count with WM's March 2010 invoiced count - a difference of Page 9 80 units were calculated. Comparing the Field Unit Count with the adjusted SWA count showed a difference of 13 units. This information suggests that the City's total unit count compares well with the SWA's total unit count Changes in Unit Count History Since the City has last bid for Residential solid waste collection services in 2001, the total Residential unit count has changed significantly due to construction activity, amending unit counts by comparing and reconciling with the SWA's NAV, etc. It should be noted that at the onset of this contract, neither the Contractor nor the City completed an on-site field inventory count to determine the accurate number of residential units. As a result, the City attempted to address this situation by including the following within the approved and fully executed Franchise Agreement ("Section 6. Charges, Rates and Level of Services"): "On or before October 1, and before commencement of work by the Contractor under the terms of this Agreement, the City shall provide to the Contractor the estimated total number of units to be serviced." In addition: "Thereafter and for the duration of this Agreement, the City shall promptly notify the Contractor of new Residential units to be served and/or deleted and payments will be adjusted accordingly." "New dwelling units, which are added for service during the City's Fiscal year, will be added to the (City's) customer service list and payment will be rendered as invoiced in the Contractor's monthly payment." Finally: "The City reserves the right to correct any errors of omission or commission per the laws and rules that govern the City. Upon determination of any overpayment, the Contract Administrator will verify the error and make appropriate adjustment of the Contractor's payment to correct the error." BFI Waste Systems of North America. Inc. (BFI) -October 2001 to October 2003 On April 15, 2001, the City Commission selected BFI to serve as the City's Residential and Commercial solid waste collection and disposal Contractor based on cost proposals that were derived from the SWA's FY 2001 unit counts. However, due to the contract actually beginning in October 2001, it was recognized that the unit count within the RFP would not match the count that would be in effect at the time that BFI would start collection services. Essentially, the RFP count was "out of date." As a result, the unit counts were required to be updated to account for the previous seven (7) months of development activity within the City. Thus, the unit counts that are provided below were utilized within the first billing (in arrears) by BFI in November 2001 for October 2001 service: AGAR BGAR CGAR DGAR Total Units 13,389 1,361 2,505 13,847 31,102 Page 10 Note: 501 total units were added to the total unit count that was included in the RFP bid package (February 2001) to the start of collection services by BFI in October 2001. This information was found within BFI's first invoice (Invoice No. 10001), which was dated November 1, 2001. It should be noted that evidence regarding the establishment of the above initial unit counts cannot be located. It has been suggested by the Finance Department that these counts were developed by BFI based on the counts within the RFP and increased in accordance with the CO Reports that were developed by the Community Improvement Department. However, it should be noted that during this analysis, it was determined that the accurate total unit count at the start of this contract (in October 2001) should have been 31,449 total units (AGAR - 13,690, BGAR - 1,417, CGAR - 2,638, DGAR 13,704). As a result, the unit counts appeared to be "off" at the onset of the contract with BFI It should be noted that each month the City provided the Contractor (BFI) with a CO Report to provide for the unit count to be updated. The CO Report accounted for all new buildings within each of the four (4) service categories that would require new service as well as those that were demolished and would not need service. This should have affected the monthly invoice amount that was billed and paid by the City. However, when reviewing previous invoices, for example -September 2002 (See Chart Below) - after one year of service by BFI, it was found that the Contractor was not always adding/deleting units from the appropriate service category. Instead, it appears that all new units were only added to the AGAR classification. Thus, the accurate (or as accurate as possible) totals were not being determined, which directly affected the monthly invoicing amounts that were paid by the City. AGAR BGAR CGAR DGAR Total Units 13,731 1,361 2,505 13,847 31,444 Note: It should be noted that 342 units were added to the AGAR service category without any change to the other service categories over a one (1) year period. During Staff's analysis, it has been identified that the actual number of total units that should have been used was 31,838 (AGAR - 13,876, BGAR - 1,418, CGAR - 2,638 &DGAR 13,906) as there were 413 CO's issued during this time period According the Finance Department, effective October 1, 2002, BFI adjusted their DGAR service category and total unit counts to match the SWA's FY 2003 Disposal Credit Report. The DGAR count was adjusted to equal the SWA's Multi-Family -More than four (4) units (>4) category - 11,905 units. The possible reasoning behind this effort was that BFI attempt to tie into the SWA's unit count structure due to the fact that the City also maintained amulti-family service category that included buildings with more than four (4) units (>4). If the multi-family count could be identified, it was probably assumed that the BGAR and CGAR counts remained relatively the same (since they are defined areas within the City), then the difference in the total unit count was to be added to the AGAR count. As a result, 1,758 units were added to AGAR and 1,942 units were removed from DGAR -the revised October 2002 unit count that was invoiced by BFI is as follows: AGAR BGAR CGAR DGAR Total Units 15,489 1,361 2,505 11,905 31,260 Note: At the time that the DGAR count was adjusted to match the SWA count, BFI did not adjust the total unit count to match the SWA's. Thus, the actual total unit count shown on the FY 2003 SWA report was 31,548 - a difference of 288 units. During Staff's analysis, it has been identified that the actual number of total units that should have been used was 31,862 (AGAR - 13,883, BGAR -1,418, CGAR - 2,638 &DGAR 13,923) Page 11 Following this change in counts, BFI continued the practice (for more than a year) of only updating the AGAR monthly counts based on the City's CO Reports until December 2003. All other categories remained exactly the same. As an example, the November 2003 invoice submitted by BFI to the City was based on the following unit counts: AGAR BGAR CGAR DGAR Total Units 15,998 1,361 2,505 11,905 31,769 Note: During Staff's analysis, it has been identified that the actual number of total units that should have been used was 32,411 (AGAR - 14,156, BGAR -1,416, CGAR - 2,638 &DGAR 14,201) - a difference of 642 total units Waste Management. Inc. of Florida -October 2003 to Present In 2003, Waste Management Inc. of Florida (WM) purchased certain assets of BFI, which included the Franchise Agreement with the City of Delray Beach. As a result, on September 29, 2003, the City Commission approved the first (15t) Amendment to the Solid Waste, Vegetative and Recycling Collection Franchise Agreement to permit the assignment of the City's contract to WM (See Attached -Exhibit #3A). Although approval to assign the contract was received, WM began its franchised Residential billing on December 1, 2003 -the initial WM invoice for December service was received by the City in arrears in January 2004 (Invoice No. 13437). Within the first billing statement, it is apparent that WM continued BFI's practice of only adding to the AGAR classification as each of the other three (3) service categories remained the same (See Chart Below). It should be noted that the AGAR count actually increased 303 units, however, the approved CO's for December 2003 only totaled 57. Thus, the AGAR increase did not correspond with the approved CO's for this month. AGAR BGAR CGAR DGAR Total Units 16,301 1,361 2,505 11,905 32,072 Note: The adjusted SWA FY 2004 total unit count for this time period was 32,094 and the identified actual number of total units that should have been used (based on the City's Field test) was 32,463 (AGAR - 14,208, BGAR - 1,416, CGAR - 2,638 & DGAR 14,201) WM continued this practice of updating only the AGAR category per the City's monthly CO reports for the next 5% years until June 2010. This practice can be viewed by looking at the June 2009 unit counts that were invoiced by WM: AGAR BGAR CGAR DGAR Total Units 17,337 1,361 2,505 11,905 33,108 Note: During Staff's analysis, it has been identified that the actual number of total units that should have been used was 33,695 (AGAR - 15,058, BGAR - 1,424, CGAR - 2,638 &DGAR 14,575) and the adjusted SWA's FY 2010 total unit count for this time period was 33,463 (an increase of 32 CO's -net basis) In June 2009, the Residential unit counts for each service category were questioned to determine why they were not being amended within the Contractor's monthly invoices. Only the AGAR unit counts were being revised. As a result, Staff compared and reviewed the unit counts within each of the four (4) service categories from the City's Master Billing files with the Contractor's billing statements. This unit count analysis (as ofJune 2009) found the following: Page 12 AGAR BGAR CGAR DGAR Total Units WM Invoice 17,337 1,361 2,505 11,905 33,108 June 2009 Master Billing File 15,003 1,407 2,505 13,716 32,631 June 2009 Unit Count -2,334 46 0 1,811 -477 Difference Staff's analysis found that it appeared that there were deviations in the Residential service category unit counts when compared with WM's monthly invoices. Only the number of CGAR units within the City's Master Billing File and the Contractor's invoice matched. Further, this suggested that the City may be overpaying, on a monthly basis, for AGAR service, but underpaying for BGAR and DGAR service. In June 2009, the City's former UCS Division Manager began working with WM's District Manager to resolve the unit classification issues. The City provided WM with the Residential Solid Waste customer list, which was generated from the Master Billing File. This list included a breakdown of actual unit counts (into each of the 4 service categories) that were being billed by the City. According to the Finance Director, upon receipt, WM accepted the unit counts within AGAR (15,003), BGAR(1,361) and DGAR (2,505). Then, according to WM, they felt that they should complete a "general" field inventory count on this classification. As a result, WM conducted a "spot check" of DGAR customers and later agreed on a unit count of 13,716. Upon acceptance of all four (4) category counts, WM began to base their invoices on these new counts -August 2009 - to ensure the accuracy of the City's monthly payment for Residential services. The accepted adjustments can be seen by comparing the August counts with July 2008 (See Chart Below): Invoice Date Total # of Units Per Month Contractor Billings (Invoices) Total # of Units 4 Residential Service Types Month-Year A B C D July 2009 17,337 1,361 2,505 13,716 34,919 August 2009 15,003 1,361 2,505 13,716 32,585 Note: According to the Finance Department, since this initial adjustment in August 2009, the City and WM have continued to revise the unit counts based upon new structures requiring Residential solid waste services as well demolished structures. An accurate unit count (within each service category as well as the total count) provides for a critical component to determine how much the City is responsible for paying each month to the Solid Waste Contractor for Residential collection services. Following additional adjustments along with the completion of the Field test, the current counts (as of March 2010) were compared with the SWA's total unit counts to determine if the billed unit counts appeared to be accurate going forward (See Chart Below): Page 13 AGAR BGAR CGAR DGAR Total % Difference Units with Adjusted SWA's FY 2010 Total Count City Field Unit Count 15,080 1,425 2,638 14,601 33,744 0.039% March 2010 *Adjusted City 14,988 1,411 2,625 14,593 33,617 -0.338% Master Billing File March 2010 WM Invoice 14,961 1,465 2,622 14,585 33,633 -0.291% March 2010 **Adjusted SWA N/A N/A N/A N/A 33,731 N/A Disposal Credit Report March 2010 *Note: Due to the fact that the City's Master Billing file is a live file, the unit counts were adjusted based on approved CO's for February and March 2010. Thus, 2 total units were added to the Billing File counts (1 unit in AGAR and 1 unit in BGAR) **Note: Due to the timing of this analysis, the updated 2011 SWA total unit count was/is not available (Expected in September 2010). As a result, the SWA's NAV unit counts for FY 2010 (certified September 2009), were adjusted to incorporate all CO's and demolitions since September 2009 (FY 2010). Thus, 18 total units were added to the SWA's total unit count to determine the projected total unit count for March 2010 Note: When compared with the SWA's March 2010 adjusted total unit count, the differences identified with City's Field Count, the City's Billing File and WM's invoice are all less than .4%. Work Plan Item #2. Obtain and review the historical monthly billings (i.e., invoices) for all Residential Solid Waste, Vegetative and Recycling collection and disposal services As a result of the determination that the unit counts invoiced by WM were not accurate when compared with the City's Master Billing File, it was suggested by Mr. MacNamee (during a January 2010 meeting) to begin reviewing the historical changes in Residential unit counts. Thus, in early 2010, the Finance Director took on the effort of recovering (either through the City's records that were held in retention and/or from the WM) the invoices from both BFI and WM dating back to commencement of the existing Franchise Agreement (October 2001). Mr. Joseph Safford, Finance Director, was able to retrieve most of BFI's and WM invoices. For those invoices that were not retained by the City, WM provided computer generated copies of the invoices. Collection of this data provided the City with the requisite data to analyze the changes in unit counts along with the related monthly billings that were charged to the City for Residential services. A detailed report outlining the historical unit counts was created in an Excel format, titled "Residential Solid Waste Analysis -Garbage, Vegetative Waste & Recycling Analysis of Monthly Service (Collection) Rates, Contractor Billings (Invoices) & Estimated & Actual Payments - Field Test Updated by Actual Certificates of Occupancy Back to 2001 Bid" (See Attached -Exhibit #6). Note: Data from this effort was utilized, along with information from the City's monthly CO Reports and the Field Unit Count Investigation, to build an Excel spreadsheet in accordance Page 14 with the Franchise Agreement and all federal, state and local laws to determine if the City or WM should be reimbursed. Work Plan Item #3. Review, analyze and revise the Certificate of Occupancy (CO) Monthly Reports into a new Excel Format that provides assurance of the service category that new structure will be classified for collection and billing purposes All new construction as well as demolished structures are permitted and tracked by the City's Community Improvement (CI) Department through an automated software process. This electronic process provides the department with the opportunity to develop a monthly report that identifies all development work that may affect the City's Residential and Commercial unit counts. As a result, the CI Department is responsible for preparing a Certificate of Occupancy (CO) Report that identifies all new structures that require garbage and recycling services as well as buildings that have been demolished. This report is (has been) generated by the department's Building and Inspections Division on a monthly basis. The report is then shared with: 1. The City's Utility Customer Service (UCS) Division -Finance Department, who is responsible for maintaining the City's master utility billing files (i.e., water, sewer, garbage), monthly billing for all residential and multi-family garbage and water and sewer customers (approx. 21,000 accounts), collecting monthly payments, reviewing Contractor invoices to ensure accuracy of residential invoices/fees and preparing the monthly request for Residential Solid Waste payment 2. The City's Contract Administrator, who is responsible for administering the City's Residential and Commercial Solid Waste, Vegetative and Recycling Collection Franchise Agreement 3. The City's Contracted Waste Hauler, who is responsible for invoicing the City for all Residential collection services and the collection, disposal and billing/collection of Commercial properties on a monthly basis In the past (prior to this analysis), the CO Report included the property address, building permit number and type of construction (i.e., single family, multi-family, commercial, demolition, etc.). However, this report did not break out the garbage service type (i.e., AGAR, BGAR, CGAR & DGAR). This function was intended to be completed by the City's UCS Division upon receipt of the report from CI. During this analysis, it was determined that the CO Report should include the categorizing of new structures within the appropriate service type. As a result, the Report has been modified to incorporate this change into a new Excel format. All annual reports dating back to the inception of the current solid waste Franchise Agreement (October 2001) are provided as an attachment to this analysis in a monthly and annual format (See Attached -Exhibit #7). Finally, it was found, during this analysis, that there was no "paper trial" or evidence to ensure receipt of the monthly Reports by the receiving entities (i.e., the Contractor - WM, the Contract Administrator and the Utility Customer Service Division Manager -Finance Department). As a result, the monthly Report is now being distributed to each of the three (3) entities provided above in an electronic format (i.e., E-mail) to ensure receipt (a time and date stamp is now provided). Page 15 Work Plan Item #4. Complete a comprehensive Field Inventory Count of each of the four (4) service categories (i.e., AGAR, BGAR, CGAR and DGAR) by City Staff to determine the correct unit counts within each service category In February 2010, City Staff determined that the best method to verify the total number of Residential solid waste customers was to complete a Field Inventory Count. This effort required City Staff to develop a comprehensive list of customers from the City's Master Billing File, sorted by street address, and compared with SWA's and the Property Appraiser's Office's property lists - "Solid Waste Comparison Worksheet" (See Attached -Exhibit #8 -Note this Exhibit is 25 MB's an cannot be forwarded electronically -Please request electronic copy on disk). Once this list was compiled by the City's Information Technology (IT) Division -Finance Department, the City's Sanitation Officers and Code Enforcement Officers (Community Improvement Department) worked almost seven (7) consecutive weeks (including weekends) in the field verifying each property address and the service type provided. Following the completion of the Inventory Count, City Staff then analyzed and verified service types, particularly within the DGAR category, to confirm the accuracy of the Field Count. This effort required site visits to numerous multi-family, mixed-use development projects on the days that garbage service was provided. Further, the Staff's verification included interviewing property managers on the total number of units and location of garbage service. This process proved to be extremely time consuming, but led to the most accurate counts. The City's Field Inventory Count, which included analyzing, classifying and verifying all properties throughout the City into the four (4) service categories, was completed in March 2010 (See Attached -Exhibit #9A) and resulted in the following total Residential unit counts: AGAR -Single Family Curbside Roll-Out Carts 14,992 units BGAR -Rear door/Side door Pick-Up 1,418 units CGAR -Curbside Bag Pick-Up 2,638 units DGAR -Multi-Family Containerized 14,696 units Total Unit Count (as of March 2010) 33,744 units Note: When the City's Field Count was compared with the SWA's adjusted FY 2010 NAV total unit count, a difference of only 13 total units resulted. Further, when compared with the March 2010 WM invoice, a total unit difference of 111 units was identified. The differences found within each category are as follows: AGAR - 119 units, BGAR - -43 units, CGAR - 16 units &DGAR -16 units Work Plan Item #5. Compare total unit counts to the Solid Waste Authority of Palm Beach County (SWA) and the Palm Beach County Property Appraiser's records As noted within Work Plan Item #3, the City utilized both the SWA's and the Property Appraiser's records to verify the accuracy of the City's total unit counts. Although both entities utilize service structures that do not match the City's defined service types, it was effective for the City to review and compare property addresses and total unit counts with the City's billing records during the recently completed Field Inventory Count. This review and comparison resulted in the following: Page 16 City of City of Palm Beach Palm Beach Delray Beach Delray Beach County County Billing Count Field Count Solid Waste Property Authority* Appraiser's Office Total Unit 33,617 33,744 33,731 34,506 Count Note: The City's billing records and Field Count is within 114 units (-0.338% deviation) and 13 units (.039% deviation), respectively, with the SWA. This suggests that the City's billing records are generally accurate; however, following the completion of the Field Count, there are some updates that will be required. *Note: The SWA's FY 2010 unit count of 33,713 was adjusted to include the 18 net CO's that have been permitted by the City since the NAV roll was certified in September 2009. Work Plan Item #6. Provide the results of the City's final Residential total unit count as well as a breakdown of units within each of the four (4) service categories to WM for their review, analysis and acceptance Immediately following completion of the City unit count verification process, the Staff provided the results, which included the total unit count as well as breakdown of the units within each of the Residential service types. At this time, WM notified the City that they would perform and complete a comprehensive analysis, which included a field investigation performed and funded by WM, of the DGAR category. They notified the City verbally that they would accept the numbers that were provided for both the BGAR and CGAR service categories as well as the total unit count. Further, they essentially agreed to the AGAR unit count, with the understanding that these numbers may be amended based on the results of their DGAR count. The City submitted this information to WM electronically in April 2010. WM then took approximately three (3) weeks to complete their field count and analysis and provided the City with a written response outlining their recommendations of changes within each of the four (4) categories on May 14, 2010. These recommendations included the movement of 554 units from the DGAR category to be distributed based on current services provided to the AGAR, BGAR and CGAR categories. Since the City received WM's response, both entities have been working together to come to a tentative agreement on the final unit count that included the movement of 88 units to AGAR and 7 units to BGAR. In addition, 191 units are still under consideration to be reclassified from DGAR to AGAR - a decision is expected to be received shortly (See Note Below & Attached Exhibit- Exhibit #9B for further details). The remaining 268 units were agreed to remain within the DGAR classification. The tentatively agreed upon distribution of units within the four service categories and total unit count is as follows: AGAR -Single Family Curbside Roll-Out Carts BGAR -Rear door/Side door Pick-Up CGAR -Curbside Bag Pick-Up DGAR -Multi-Family Containerized Total Unit Count (as of March 2010) 15,080 units 1,425 units 2,638 units 14.601 units 33,744 units Page 17 Note: As part of WM's unit classification recommendations, asignificant amount of time was exhausted on the examination of a multi-family development that was originally CO'ed (approved) by the City to receive DGAR services. Over the years, the service level at this particular location (191 units) was increased to a level that replicated curb side pick-up utilizing carts provided by the property owner. According to WM, this level of service was established by BFI and continued after WM's acquisition. Although this service level was not approved by the City's Contract Administrator, Staff has not found another instance of this practice within the City and has determined that this issue is exclusive to this development. Further, Staff has spoken with the property manager and provided them with the option of remaining in DGAR and continue paying the lower monthly per unit rate or convert to AGAR and begin paying the higher monthly per unit rate for this service. In addition, the DGAR choice would require various infrastructure improvements (i.e., install concrete pad, obtain dumpster, etc.), which were approved within their final site plans, to support the requisite collection equipment and vehicles. Work Plan Item #7. Complete a comparison of actual (current) and adjusted unit counts based on the City's Field Inventory Count and monthly CO Reports for each service category with the unit counts that were provided in WM's monthly billing statements The detailed results of this Work Plan item are provided within Exhibit #6 - "Residential Solid Waste Analysis -Garbage, Vegetative Waste & Recycling Analysis of Monthly Service (Collection) Rates, Contractor Billings (Invoices) & Estimated & Actual Payments -Field Test Updated by Actual Certificates of Occupancy Back to 2001 Bid." As a result of this Work Plan analysis, it appears that the following has occurred: The Contractor's invoiced BGAR, CGAR &DGAR unit counts did not change over a 4% year review period, until August 2009. All new CO's and demolitions were incorporated into the AGAR category. This resulted in a net of 265 units not being classified within the correct service category. Further, this affected the amount of the monthly invoices that were paid by the City over this time period Invoiced Total Unit Counts do not track with the adjusted Field Investigation counts throughout the analysis period When tested on a month-to-month basis, the AGAR service category did not match the CO's and demolitions that were approved by the City. Thus, the AGAR count was not updated in a timely manner to reflect the construction activity within the City for the corresponding time periods. Only AGAR was tested as the other categories were not amended over this time period, until August 2009 The City's current total unit count of 33,744 (as of March 2010) differs from the corresponding Billing invoice by 111 units, which is a difference of -.33% and suggests that the Contractor is billing the City more accurately. It is expected that this count, including each of the service category counts, will match the City's adjusted Field Count as well as the City's Billing records once final acceptance of the unit count occurs by WM. Work Plan Item #8. Obtain and review Rate Ordinances to identify the Total Fees (i.e., garbage collection, recycling, yard trash, Administrative Fee and Franchise Fee) for each Residential service category The detailed results of this Work Plan item are found within Exhibit #6 - "Residential Solid Waste Analysis -Garbage, Vegetative Waste & Recycling Analysis of Monthly Service (Collection) Rates, Contractor Billings (Invoices) & Estimated & Actual Payments -Field Test Updated by Actual Certificates of Occupancy Back to 2001 Bid." Page 18 Work Plan Item #9. Review the City's General Ledger accounts and compare the actual monthly Residential service payments with WM's actual monthly billings (invoices) The detailed results of this Work Plan item are provided within Exhibit #6 - "Residential Solid Waste Analysis -Garbage, Vegetative Waste & Recycling Analysis of Monthly Service (Collection) Rates, Contractor Billings (Invoices) & Estimated & Actual Payments -Field Test Updated by Actual Certificates of Occupancy Back to 2001 Bid." As a result of this Work Plan analysis, the following has occurred: There were occasions where the Contractor's invoices required adjustments prior to payment being issued by the City (i.e., invoices did not reflect the newly approved Total Monthly Fees -Contractor and invoices included a request to pay collection rates that included a Franchise Fee) Billing statements were submitted that included dates that may not have reflected the correct service date The incorrect number of units for garbage and recycling were included within some monthly invoices. Adjustments were made to the invoice prior to payment that reflected a corrected number of units Service fines that were issued were removed from the monthly invoiced amount, which is consistent with the Franchise Agreement A missed payment ($177,926) by the City was identified in December 2005 as a result of a billing concern by Staff over whether the City's payments were being made in advance or in arrears (as required within the Franchise Agreement) Due to the fact that the City used the adjusted Field Inventory Count and went back in time to determine overpayment/underpayment, all errors and adjustments that were not captured within the monthly invoices were captured within this analysis -Work Plan #10 Work Plan Item #10. Develop a comparison of the resulting amounts that should have been billed to Residential customers (based on monthly CO Reports and recently identified unit count) with the actual monthly invoice totals to determine possible overpayments/underpayments The detailed results of this Work Plan item are provided within Exhibit #6 - "Residential Solid Waste Analysis -Garbage, Vegetative Waste & Recycling Analysis of Monthly Service (Collection) Rates, Contractor Billings (Invoices) & Estimated & Actual Payments -Field Test Updated by Actual Certificates of Occupancy Back to 2001 Bid." Within this Report, Staff incorporated all CO's (net of demolished units) dating back five (5) years (April 2005). The monthly CO's were then added/subtracted to the completed Field Investigation Unit Count (going backwards) by month. This determined the "adjusted" total number of units within each service category that should have been included within the Contractor's monthly invoice over a five (5) year period. These "adjusted" units were then multiplied against the approved rates (Total Monthly Fees -Contractor) to determine what the monthly payment should have been. These "adjusted" monthly amounts were then compared to the number of units actually billed by WM. By comparing "adjusted" payments with actual payments based only on unit counts, all other ancillary charges and adjustments were removed from this analysis. Page 19 As a result of this Work Plan analysis, it appears that WM has underpaid the City (or that the City has overpaid WM) an estimated $64,960 over the previous five (5) year period (from April 2005 to April 2010). This underpayment is the result of the following: An inadvertently missed payment ($177,926) by the City was identified in December 2005. This payment was not paid, apparently, due to a billing concern by Staff over whether the City's payments were being made in advance or in arrears (as required within the Franchise Agreement) In 2002, BFI modified their DGAR unit count to match the SWA count (11,905 units). This adjustment also resulted in an increase in the total AGAR count by 1,758 units. It should be noted that this increase in the AGAR unit count was inherited by WM when they took over from BFI in 2003. This increase contributed to the identified overpayment by the City All new units, as provided within the City's monthly CO Report, were only added to the AGAR classification rather than distributed correctly to the appropriate service category. This practice began with BFI and continued with WM in 2003 (until August 2009) when they took over all franchised operations from BFI. This has led to an inflated AGAR unit count within the Contractor's monthly invoices and an over payment by the City Work Plan Item #11. Review the Special Collections services that are provided for within the City's Franchise Agreement and City Code In an effort to assist with the City's "Clean City" initiative, the City's Community Improvement (CI) Department manages and oversees aclam-shell truck that is provided by the Contractor (WM) per the Franchise Agreement (outlined within the Special Terms And Conditions -Solid Waste, Vegetative Waste and Recycling Collection Services -Bid No. 2001-21 and incorporated into the Franchise Agreement as provided within the Agreement's General Terms and Conditions) to collect debris that is set out early/late with respect to the normal pick-up day Pursuant to the approved 2001 Franchise Agreement, the assigned clam-shell truck and driver that are assigned to the City are completely funded and supplied by the Contractor (i.e., Waste Management). This truck is utilized daily for the collection vegetative debris, bulk trash and other debris that has been set out either before or after their regularly scheduled pick-up day(s). This practice was implemented by the City to ensure that our residential neighborhoods would not have to endure piles of debris with private areas and/or City Rights-of-Way for extended periods of time. As noted earlier within this analysis, the Contract Administrator and/or their designee serve as the City's representative regarding the Franchise Agreement and is responsible for administering the Agreement and monitoring collection and disposal services provided by the WM. In addition, this position is responsible for handling non-compliance solid waste issues and directing and overseeing the daily abatement as provided within Chapter 51.40 (D) of the City's Code of Ordinances: "If garbage and trash is placed adjacent to the pavement or travel way of the street/alley at any time other than the time periods allowed, the City or its contractor may collect the garbage and trash and a fee of eleven dollars and fifty cents ($11.50) per cubic yard will be charged to the resident or business for such collection. The minimum charge shall be eleven dollars and fifty cents ($11.50) and Page 20 all charges shall be to the nearest whole cubic yard. The fee shall be placed on the resident or business's water bill. If the resident or business does not receive a water bill, then a separate bill for this charge shall be sent to the property owner." In addition, the City's Code (Section 51.22 (C) and 51.23 (D)) provides for the same charge to be levied for vegetative waste and bulk trash that is placed out for pick-up either prior toand/or after their scheduled collection day. Note: As referenced within an E-mail from the City Attorney -dated July 2, 2010 (See Attached - Exhibit #15), the language within our Code of Ordinances "provides that a payment may be received by the City's contractor." After analyzing all of the invoices and checks that were issued to WM for Special Collections Services over the past five (5) years, it appears that the City has paid $51,240 for this service -See Chart Below: Analysis of Special Collections Payments 2005 $6,800 2006 $5,711 2007 $11,719 2008 $15,764 2009 $10,960 2010 $288 Total Special Collections Paid $51,240 Although, it is clear that City's Ordinances permit that payment may be provided to WM, it is also clear that the Franchise Agreement does not clarify the issue. Note: During this analysis, it was determined and agreed upon by WM that they will no longer (on a "go forward basis" will no longer bill and/or receive payment for this service throughout the term of the existing Solid Waste Agreement. Thus, WM agreed to discontinue its practice of billing the City for this service and the City will retain all charges paid for this program, which are billed monthly on the City's utility bills. Further, WM has agreed to take on all responsibilities associated with Commercial Special Collections, including collection and disposal, billing and payment collection for service pick-ups that are called in by the customer. According to past history, the City has experienced approximately one (1) commercial pick-up per week. As a result, Staff does not believe there is a justification to continue this practice "in-house" except for instances that require Code Enforcement action ("do not call in" for service and leave debris/garbage out for Special Collection pick-up). In this case, the City will provide collection services utilizing the clam truck and will bill the customer directly. Notice of these collections will be provided electronically to the Contractor (no later than the 15t" of the month) and payment will be made by the City following receipt of a billing statement by the Contractor for this service. The fee for this service will be in accordance with the Franchise Agreement and/or City Code. The proposed Special Collections -Policies and Procedures are defined within Exhibit #10. Page 21 Work Plan Item #12. Review the history of the Sidewalk Container services (including billing and payments) and determine if there is a balance owed by the City for disposal of these containers Beginning in FY 2003, the City requested the Solid Waste Contractor (BFI) to collect and dispose of the 104 trash cans ("sidewalk containers") along A1A (beach area), Atlantic Avenue and Pineapple Grove. Eighty-four (84) of the 104 cans do not have property control numbers and, therefore, the City is not charged disposal costs by the Solid Waste Authority. Thus, the City is responsible for the reimbursing the Contractor the disposal costs associated with these 84 cans -disposal costs associated with twenty (20) cans is paid directly to the SWA annually. Collection costs for these containers are provided by the Contractor at no cost to the City. Within each of the City's annual Rate Ordinances (since this program was created), the total annual fee for this service is identified (this fee was not included within the Franchise Agreement). Further, this fee is expected to be paid by the City upon the submission and receipt of an invoice by the Contractor, which is generally expected prior to the end of each Fiscal Year (billed in arrears). As a result, Staff reviewed the previous Rate Ordinances and verified all payments made to the Contractor for this service (See Chart Below) and it suggests that the Total Amount Due - $38,800.66 -should be paid to the Contractor (upon receipt of an invoice) by the City for all disposal costs associated with the City's 84 garbage cans along A1A, Atlantic Avenue and Pineapple Grove from FY 2005 to FY 2009. Sidewalk Contain Billing & Payment Analysis FY 2003 through FY 2009 Service Year Amount Due (Per Rate Ordinance) Amount Paid Total Amount Due (Difference) FY 2003 $7,390.66 $7,390.66 $0.00 FY 2004 $7,390.66 $7,390.66 $0.00 FY 2005 $7,390.66 Unpaid -Invoice not submitted $7,390.66 FY 2006 $7,390.66 Unpaid -Invoice not submitted $7,390.66 FY 2007 $7,390.66 Unpaid -Invoice not submitted $7,390.66 FY 2008 $7,390.66 Unpaid -Invoice not submitted $7,390.66 FY 2009 $9,238.32 Unpaid -Invoice not submitted $9,238.32 Totals $53,582.28 $14,781.32 $38,800.96 Note: The Contractor is responsible for submitting the annual invoice to the City prior to the end of the Fiscal Year following the completion of service (or in arrears). However, to date, the Contractor has not provided the submitted invoices for the previous five (5) years to the City. Thus, the City has not provided payment for these services. During the Residential Solid Waste and Recycling Analysis, WM requested that the Total Amount Due be utilized to reduce the total estimated overpayment that has been determined within this Analysis. Thus, the total estimated overpayment that has been determined within this Analysis would be reduced from $64,960 to $26,159.04. Page 22 Work Plan Item #13. Coordinate and bring together all areas of the City that participate in the City's Solid Waste program to encourage communication across departments, resolve public requests for information, evaluate and document the City's various solid waste management business processes and develop administrative and operational recommendations that will be provided in both the Commercial and Residential Analyses In February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has a significant impact on the development of the final Residential Analysis. The Working Group includes the City Manager's Office (the City's Designee for the Solid Waste Management Analysis), the City Attorney, the Community Improvement Director, the Assistant Community Improvement Director/Solid Waste Contract Administrator and the Finance Director. This Group has been instrumental in developing recommendations that are provided in both the Commercial and Residential Analyses. In fact, the Group has meet on numerous occasions to resolve various requests for information and to evaluate and document the City's various solid waste management business processes. Specifically, this Working Group has addressed the following: 1. Collecting and organizing all requisite information that will be provided to the City's Financial Review Board (FRB) for a determination on: a. Whether the City has received all Franchise Fees from WM for Commercial and Construction and Demolition Solid Waste Collection services b. Whether the City overpaid for Residential Solid Waste Collection services due to errors in the number of residential units in each of the four (4) service categories provided within the City 2. Developed policies and procedures that outlines the City's business processes related to Residential and Commercial solid waste. This also includes the identification and implementation of new procedures and recommendations that have already been undertaken by Staff and WM or will be presented to the City Commission for approval to implement 3. Completed the Residential Field Inventory to ensure unit counts are correct for the four (4) service categories offered: AGAR -Single Family Curbside Roll-Out Carts BGAR -Rear door/Side door Pick-Up CGAR -Curbside Bag Pick-Up DGAR -Multi-Family Containerized Note: This process began on February 15t and has been completed. This information is a key component in this final Residential Analysis and the determination that an overpayment by the City has occurred. Page 23 4. Reclassifying and reformatting the City's monthly Permitting [Certificate of Occupancy's (CO's)] Report for all residential and commercial properties, since 2001, into one of the four (4) service categories in order to identify new and deleted properties. This effort assisted in better defining the City's historical unit counts, which were then compared with previous WM billings as well as the Solid Waste Authority's (SWA) Non-Ad Valorem data that is derived from the Palm Beach County Property Appraiser's Office. As information, since Monday, February 8, 2010 through June 25, 2010 (138 calendar days), City Staff (including the Working Group and other Staff) has dedicated more than 1,775 total straight hours working specifically on the Residential and Commercial questions along with other solid waste related items that have been requested/required by the City's and Mr. MacNamee's findings. Please note that this does not include overtime hours (additional % hours) for Staff that is working through the weekend to complete the Residential Field Inventory. Note: Following the completion of this analysis and implementation of the various recommendations, the Working Group will continue to meet to discuss and deal with the "day-to- day" operational issues that may arise from the City's Residential and Commercial Solid Waste, Vegetative and Recycling Collection program. The Working Group will be revised to include members of the City's Finance Department (including but not limited to Utility Customer Service, Information Technology and Administration) and the Community Improvement Department (including, but not limited to, the Contract Administrator, Code Enforcement and Administration). Work Plan Item #14. Review, analyze and provide recommendations regarding the Community Improvement Department's (CI) Residential Solid Waste Collection business processes to ensure confirmation and accuracy of unit count, proper monitoring and notification, receipt of detailed monthly Residential activity, collection of revenues and payment of expenditures The current Franchise Agreement provides for the City to identify and designate a member of Staff to serve as the Solid Waste, Vegetative and Recycling Collection Services "Contract Administrator." The Contract Administrator is directly responsible for monitoring the performance and field operations of each Solid Waste hauler/contractor doing business with the City. Specifically, this person is designated to act as the City's Representative during the term of the Franchise Agreement. Thus, all correspondence, changes in services and/or routes, payments, information, fines, etc., should generally be directed to the Contract Administrator for action and/or information. In the past these duties were held by the City's Code Enforcement Administrator, however, since the recent retirement of our long time Administrator, all duties have been shifted to the City's Assistant Community Improvement Director. In an effort to assist with the City's "Clean City" initiative, the City's Community Improvement (CI) Department provides the following: Manages and oversees the daily clam-shell truck workload. The clam-shell truck is provided to the City by the contractor (WM) per the Franchise Agreement (Special Terms And Conditions -Solid Waste, Vegetative Waste and Recycling Collection Services -Bid No. 2001-21) to collect debris that is set out early/late with respect to the normal pick-up day Page 24 Monitors the contractor's (WM) performance in collecting garbage, vegetative debris, recycling and special pickups for both Residential and Commercial customers Responsible for oversight of the "non-exclusive" Open Top (temporary) C&D container services provided to City properties Receive and review monthly "non-exclusive" C&D Monthly Franchise Activity Reports from all C&D haulers to ensure the appropriate Franchise Fee is remitted on a monthly basis. This check is then transmitted to the Finance Department for deposit. Levies (financial) fines/penalties against the contractor (WM) for insufficient service levels Distributes Residential and Commercial Roll-Out carts for new units and replaces Roll-Out carts that are defaced and/or damaged within the City Monitors all "non-exclusive" C&D containers in the field During this analysis, Staff has evaluated and documented the City's various Solid Waste Management Business Processes related to the CI Department, including Field Count Investigation/Audit (See Attached -Exhibit #11), Monthly CO Report (See Attached -Exhibit #12), Special Collections (See Attached -Exhibit #10) & Construction & Demolitions (C&D) Non- Exclusive Franchise (See Attached -Exhibit #13). In addition, the Community Improvement Department, along with the Employee Working Group and WM, developed various administrative and operational recommendations to improve the daily operations and management of the City's Residential Solid Waste program and ensure accurate unit counts within each of the four (4) service categories to assist in confirming the accuracy of the Contractor's monthly invoices. These recommendations are provided below in Work Plan Item #16. Identify important observations and provide recommendations. Work Plan Item #15. Review, analyze and provide recommendations regarding the Finance Department -Utility Customer Service Division's business processes to ensure confirmation and accuracy of unit count, proper monitoring and notification, receipt of detailed monthly Residential activity, collection of revenues and payment of expenditures The Utility Customer Service (UCS) Division is responsible for maintaining the City's master utility billing files (i.e., water, sewer, garbage), meter reading, monthly billing for all residential and multi- family garbage and water and sewer customers (approx. 21,000 accounts), collecting monthly payments, reviewing Waste Management invoices to ensure accuracy of residential invoices/fees and preparing the monthly request for Residential Solid Waste payment. This Division also receives and deposits all monthly Commercial Franchise Fees, including C&D, and Administrative Fees remitted by WM and other "non-exclusive" haulers. This Utility Customer Service Division also prepares the UCS Division and the City's Sanitation Fund budgets as well as the various (annual) Rate Ordinances (i.e., garbage, water and sewer). Utility Rate Ordinances are prepared, in draft form, and forwarded to WM for their review and approval prior to being presented to the City Commission for consideration during the Public Hearing process. In addition, the UCS Division updates all accounts within the City's Master Billing File based on the City's monthly CO Report, which is provided by the CI Department. Further, UCS receives and Page 25 confirms the accuracy of the unit count that is provided within the Contractor's monthly invoice against the Master Billing File and authorizes payment by the City. During this analysis, Staff has evaluated and documented the City's various Solid Waste Management Business Processes related to the Utility Customer Service Division - Finance Department, including the Residential & Commercial Solid Waste Administration Policies and Procedures (See Attached -Exhibit #14). In addition, the Community Improvement Department, along with the Employee Working Group and WM, developed various administrative and operational recommendations to improve the daily operations and management of the City's Residential Solid Waste program and ensure accurate unit counts within each of the four (4) service categories to assist in confirming the accuracy of the Contractor's monthly invoices. These recommendations are provided below in Work Plan Item #16. Identify important observations and provide recommendations. Work Plan Item #16. Review, analyze and implement WM recommendations regarding business processes to ensure implementation of rate adjustments, utilization of accurate unit counts, proper monitoring and notification, delivery of detailed monthly Residential activity and submittal of accurate billing statements Waste Management Inc. of Florida, in accordance with the Franchise Agreement, is responsible for the collection and disposal of Solid Waste and Recycling services for both Residential and Commercial units within the City. All Commercial and Residential services (except Commercial Recycling and C&D temporary roll-offs) are provided within the City under an "exclusive" Franchise Agreement, which is held by WM. Commercial Recycling is not an exclusive franchise per State Statutes and multiple "non-exclusive" hauling companies have been authorized to collect C&D containers within the City. WM, in accordance with the Franchise Agreement, is responsible for directly billing for all Multi- Family Container Rental costs. In addition, they Provide Residential solid waste collection services twice per week Retain the exclusive right to provide mandatory Residential recycling collection services within the City's service area once per week Provide curbside vegetation waste collection services to all residential units once per week Provide Bulk Trash collection services to all residential units once per week Amend their invoiced unit count based upon the City's monthly CO Report, which is now provided electronically, to determine accurate billing rates Submit invoices to the City for their monthly collection costs for collection services (i.e., garbage, trash (vegetative) and recycling] Do not bill and/or collect payments for Residential solid waste and recycling services. This task is completed by the City of Delray Beach -Utility Customer Service Division -Finance Department Don not bill disposal costs to Residential customers as they are billed on their annual property tax bill notice by the Palm Beach County Tax Collector's Office Page 26 City Staff has verbally engaged with WM on numerous occasions to discuss any concerns and/or ideas for improvements on how communication (including billing) between the City and WM can be enhanced as well as thoughts on how to improve service delivery. WM has acknowledged verbally that they agree with many of the recommendations and changes that are being proposed within this analysis. However, they have not provided this confirmation in writing. Work Plan Item #17. Identify important observations and provide recommendations OBSERVATION: The Residential Analysis provides an analysis of the City's Residential Solid Waste program. The Analysis included a summary of the program's history (since 2001), outlined the major services that are required to be provided by the Contractor and the City, provided a statement on potential legal issues, noted the duties of the Contract Administrator and provided the provisions for the various Residential Rates and billing. In addition, seventeen (17) Work Plan items were developed in an attempt to ensure that the number of units in each of the four (4) service categories is regularly and accurately updated and that WM is billing the City of the appropriate number of units and that the unit counts are periodically reconciled. It should be noted that neither a financial audit nor a forensic audit was undertaken during this process. OBSERVATION: Residential unit count growth within each of the four (4) service categories was reviewed dating back to September 2000, the time when the SWA certified the Non-Ad Valorem total unit count that was utilized within the City's February 2001 Request for Proposals. Due to potential legal issues, this analysis only utilizes the past five (5) years of data to determine possible overpayments/underpayments. OBSERVATION: The initial (estimated) Residential unit counts (as of September 2000) that were provided by the City within the RFP matched the SWA's certified total residential unit count (as of September 2000), which was included within their Fiscal Year (FY) 2001 Governmental Disposal Credit Report. OBSERVATION: The City completed a survey of five (5) local municipalities to determine how they establish their Residential unit count for garbage services and if they have (in the past and/or currently) conducted field counts to verify the number of residential units within their municipality. This survey suggested that most municipalities utilize the SWA's Non-Ad Valorem (NAV) data to establish their residential unit counts on an annual basis. OBSERVATION: When the City's total unit count is compared to the SWA's total count (as of the NAV certification date) and with the Contractor's invoices, the City's count is generally consistent with the SWA's. OBSERVATION: In June 2009, it was identified that only the AGAR unit counts were being amended within the Contractor's monthly invoices. As a result, Staff compared and reviewed the unit counts within each of the four (4) service categories from the City's Master Billing files with the Contractor's billing statements and found that it appeared that there were deviations in the Residential service category unit counts when compared with WM's monthly invoices. Only the number of CGAR units within the City's Master Billing File and the Contractor's invoice matched. Further, this suggested that the City may be overpaying, on a monthly basis, for AGAR service, but underpaying for BGAR and DGAR service. Page 27 OBSERVATION: It was determined that the monthly Certificate of Occupancy (CO) Report should include the categorizing of new structures within the appropriate service type. Thus, it was modified to incorporate this change into a new Excel format. OBSERVATION: It was found, during this analysis, that there was no "paper trial" or evidence to ensure receipt of the monthly Reports by the receiving entities (i.e., the Contractor - WM, the Contract Administrator and the Utility Customer Service Division Manager -Finance Department). As a result, the monthly Report is now being distributed to each of the three (3) entities provided above in an electronic format (i.e., E-mail) to ensure receipt (a time and date stamp is now provided). RECOMMENDATION: The monthly Certificate of Occupancy (CO) Report should be distributed to the Contractor (WM), the Contract Administrator and the Utility Customer Service Division Manager -Finance Department by the Code Enforcement Division -Community Improvement (CI) Department electronically by 15t" of each month. OBSERVATION: The City's Field Inventory Count, which included analyzing, classifying and verifying all properties throughout the City into the four (4) service categories, was completed in March 2010. The total unit count (prior to WM reviewing and contesting certain units) was 33,744 (AGAR - 14,992 units, BGAR - 1,418 units, CGAR - 2,638 units &DGAR - 14,696 units) and when compared with the SWA's adjusted FY 2010 NAV total unit count, a difference of only 13 total units resulted. Further, when compared with the March 2010 WM invoice, a total unit difference of 111 units was identified. The differences found within each category are as follows: AGAR -119 units, BGAR - -43 units, CGAR -16 units &DGAR - 16 units. OBSERVATION: The City worked with WM to come to a tentative agreement on the final unit count that included the movement of 88 units to AGAR and 7 units to BGAR. The remaining units that were contested by WM are expected to remain within the DGAR classification subject to acceptance by WM. RECOMMENDATION: Obtain final, written confirmation from WM that they fully accept the Field Unit Investigation count - as amended - to be 33,744 total units (AGAR - 15,080 units, BGAR - 1,425 units, CGAR - 2,638 units &DGAR - 14,601 units). This count may change shortly due to the determination of 191 units on whether to remain within the DGAR classification or converting to AGAR. RECOMMENDATION: The City's Contract Administrator and/or their designee should update the recently completed Field counts monthly (based on the Monthly CO Report) for each of the four (4) service categories. These adjusted counts should be compared with the monthly invoice and the Master Billing counts, possibly during the monthly Working Group meetings. RECOMMENDATION: All BGAR areas should have the opportunity to vote and determine if they prefer to retain side or rear door services at a higher rate. This option would still require residents within this service classification to bring recycling to curb for collection OBSERVATION: When comparing actual (current) and adjusted unit counts based on the City's Field Inventory Count and monthly CO Reports for each service category with the unit counts that were provided in WM's monthly billing statements, the following was found: Page 28 The Contractor's invoiced BGAR, CGAR & DGAR unit counts did not change over a 4% year review period, until August 2009. All new CO's and demolitions (265 net units) were incorporated into the AGAR category Invoiced Total Unit Counts did not track with the adjusted Field Investigation counts throughout the analysis period When tested on a month-to-month basis, the AGAR count (until August 2009) was not updated in a timely manner to reflect the construction activity within the City for the corresponding time periods The City's current total unit count of 33,744 (as of March 2010) differs from the corresponding Billing invoice by 111 units (-.33%) and suggests that the Contractor is now billing the City more accurately RECOMMENDATION: Ensure that WM commits and utilizes the new (agreed) Field Count numbers within all invoices dating back to March 2010. Further, all future invoices should include the adjusted service category unit counts based on the CO Reports, which are now being forwarded to WM electronically. Finally, WM and/or the City should make all necessary financial adjustments that may result due to this new count. Potential adjustments should be made back to the date that the new Field Count was established -March 2010. RECOMMENDATION: The Master Billing File should be updated to account for all Residential units that identified during the Field test. RECOMMENDATION: On a monthly basis, the UCS Division Manager and/or their designee will complete a comparison of the City's Master Billing File total units, along with the unit counts within each of the four (4) service categories, with the adjusted Field Inventory Count and the monthly invoice, possibly during the monthly Working Group meetings. A reconciliation of counts should occur not less than quarterly. OBSERVATION: When reviewing the City's General Ledger accounts and comparing the actual monthly Residential service payments with WM's actual monthly billings (invoices), the following was found: Occasionally, invoices required adjustments prior to payment being issued by the City Invoices were submitted with dates that may not have reflected the correct service date The incorrect number of units for garbage and recycling were included within some monthly invoices and adjustments were made to reflect a corrected number of units An inadvertently missed payment ($177,926) by the City was identified in December 2005 as a result of a billing concern by Staff over whether the City's payments were being made in advance or in arrears (as required within the Franchise Agreement) All errors and adjustments that were not captured within the monthly invoices were captured within this analysis RECOMMENDATION: The "Residential Solid Waste Analysis -Garbage, Vegetative Waste & Recycling Analysis of Monthly Service (Collection) Rates, Contractor Billings (Invoices) & Estimated & Actual Payments -Field Test Updated by Actual Certificates of Occupancy Back to 2001 Bid" Report should be continued to be updated and maintained Page 29 OBSERVATION: After comparing the "adjusted" monthly amounts with the number of units actually billed by WM it was determined that the WM has underpaid the City (or that the City has overpaid WM) an estimated $64,960 over the previous five (5) year period (from April 2005 to April 2010) due to the following: An inadvertently missed payment ($177,926) by the City was identified in December 2005 BFI modified their DGAR count to match the SWA count (11,905 units) in addition to adjusting the total AGAR count by 1,758 units. This increase in AGAR was inherited by WM and contributed to the identified overpayment by the City All new units, as provided within the City's monthly CO Report, were only added to the AGAR classification rather than distributed correctly to the appropriate service category RECOMMENDATION: WM should reimburse the City the estimated overpayment dating back to April 2005. RECOMMENDATION: The Contract Administrator and/or their designee, along with the UCS Division Manager and/or their designee, should receive, review and approve the Residential Solid Waste monthly billing statement prior to payment by the Finance Department, possibly during the monthly Working Group meetings. This will ensure that there is a monthly review of the invoiced unit counts along with the confirmation that the rates charged by WM matched the approved rates within the City's Rate Ordinance and City Code. RECOMMENDATION: The City's total unit count, adjusted Field Inventory Count and the Master Billing counts, should be compared and reconciled with the SWA's annual (certified) Non-Ad Valorem total units to ensure confirmation of accuracy within all data bases. Generally, this should take place September of each year. RECOMMENDATION: The City's UCS Division should engage in a process to ensure that all accounts are being billed monthly and all payments are being received. If it becomes apparent that there is collection problem, it is recommended that the City's Code (Section 51.77 - Unbilled Properties; Remedial Measures) be amended to permit Residential "backbilling" in a similar manner that is provided for water & wastewater billings. RECOMMENDATION: The City's UCS Division should develop a method to track inactive and delinquent accounts for repayment purposes. In addition, the UCS Division should continue its practice of working with the City's legal department to ensure liens are filed against those properties that have not met their financial obligation for Residential Solid Waste services. OBSERVATION: In an effort to assist with the City's "Clean City" initiative, the City's Community Improvement -Code Enforcement Division manages and oversees aclam-shell truck that is provided by the Contractor (WM) per the Franchise Agreement to collect Residential and Commercial debris (i.e., vegetative debris, bulk trash and other debris) that is set out for collection either before or after their regular collection day(s). As a result, the City charges a Special Collection Fee ($11.50 per cubic yard) on the customer's monthly Utility Bill. The City's Code of Ordinances "provides that a payment may be received by the City's "contractor" for this service. As a result, it was not "out of line" for the City to pay WM for their "special" collection efforts to accommodate the City's "Clean City" initiative. Page 30 RECOMMENDATION: Amend the Special Collections section of the City's Code and include language within the Franchise Agreement to ensure that the City is not billed or will not provide payment to WM for additional Residential Special Collections on a "go forward basis" throughout the term of the existing Solid Waste Agreement. In addition, this recommendation includes the elimination of billing for Commercial Special Collections by the City for special collections that are "called" in by the customer and permits WM to directly bill (in accordance with the Franchise Agreement and/or City Code) any Commercial customer that requests this service. Further, this recommendation includes that the City will bill Commercial customers that "do not call in" for service and leave debris/garbage out for Special Collection pick-up. This type of collection, through previous experience, is rare and would require the City to enact the Code Enforcement process. The City will provide written notice of these collections electronically to the Contractor (no later than the 15t" of the month) and the Contractor (in accordance with the Franchise Agreement and/or City Code) will then bill the City for this service. The City will only make payment following the receipt of a billing statement by the Contractor for this service. OBSERVATION: Since the City's last payment in 2004, an invoice requesting reimbursement for all disposal costs associated with 84 sidewalk containers (i.e., trash cans), which are located along A1A, Atlantic Avenue and Pineapple Grove, was not submitted to the City by the Contractor. As a result, the City has not provided payment for disposal services from FY 2005 to FY 2009. Thus, it has been identified that the City has not paid the Contractor for these services and the Contractor has verbally requested that the City provide payment - $38,800.66. RECOMMENDATION: The City should reimburse the Contractor the estimated disposal costs for 84 sidewalk containers dating back to FY 2005. Further, this Total Amount Due should be utilized to reduce the total estimated overpayment that has been determined within this Analysis from $64,960 to $26,159.04. OBSERVATION: Beginning in February 2010, Staff created a Solid Waste Employee Working Group that has met regularly and has been instrumental in resolving various requests for information and evaluating and documenting (e.g., transparency) the City's various solid waste management business processes. RECOMMENDATION: The Solid Waste Employee Working Group (i.e., Community Improvement and Finance Staff) should continue to meet monthly and should schedule a standard meeting time and date to ensure that communication across departments continues following this analysis and to ensure that all necessary Staff are apprised of any solid waste issues that may develop. RECOMMENDATION: The Working Group should establish an Outlook E-mail Distribution List to be utilized for all electronic correspondence to the Contractor regarding the City's Residential and Commercial Solid Waste program. This feature, which was successfully utilized within the Grant Team structure, ensures that all interested parties remain "in the loop" on all Solid Waste issues. OBSERVATION: Detailed internal controls (i.e., business process policies and procedures) related to the City's Residential Solid Waste program have not previously been developed to ensure unit counts are regularly reconciled with the SWA and the City's Master Billing File. RECOMMENDATION: Both the Community Improvement Department & Finance Department should review and document all residential solid waste and recycling business processes to ensure Page 31 continued confirmation and accuracy of the number of units within each of the four (4) service categories, WM is billing for the appropriate number of residential units and the total unit count is periodically reconciled with the SWA's records as well as with the City's Master Billing File. RECOMMENDATION: The City has requested WM to provide written notice of any administrative issues and/or changes that may affect total revenues received and/or expenditures to be paid to the City. WM has committed to resolving any future issues by immediately notifying the City, in writing, regarding any additions/deletions to accounts due to administrative circumstances, including the determination of an error. It is the City's recommendation that this information, along with proposed remedies/resolutions identified, are reported directly to the City's Contract Administrator by E-mail within 72 hours of identifying the concern. Note: The recommendations outlined with this analysis were developed by the Solid Waste Employee Working Group as well as through discussions with WM on how to improve the daily management and operations of the City's Commercial Solid Waste program. Many of the recommendations require City Commission approval; however, many others can/have been implemented. V. Conclusion As shown within this analysis, invoiced unit counts have not been updated in accordance with the City's monthly CO Reports nor have they be compared and reconciled with the SWA. In fact, it wasn't until the fall of 2009 that the new CO's and demolitions were being distributed among all four (4) service categories. As a result, it has been determined through this analysis that the City has overpaid for Residential Solid Waste services by $64,960 over the past five (5) years (April 2005 to March 2010). However, due to amount owed for sidewalk container disposal services, the estimated overpayment is reduced to $26,159.04. In addition, this analysis has provided the City with the opportunity to cross departmental lines and review, amend and document its business practices related to Residential and Commercial Solid Waste collection and the approved Contractor. Further, this study has provided the City and WM with a very accurate unit count that, as we proceed forward, should produce confidence in the Contractor's invoices and payments that are made. It should be noted that neither an audit nor a forensic investigation was completed during this Residential Solid Waste Analysis. Staff attempted to answer the questions that were posed by the Mayor and the City Commission as well as those outstanding questions that were identified by members of the community. However, if these types of detailed financial and operational reviews were to be considered, there is not clear evidence to suggest that a significant amount of payments made would be identified and reimbursable in accordance with the Franchise Agreement as well as Federal, State and local laws. Instead of pursuing this issue further, which could be proven to be cost prohibitive (i.e., financial and personnel capital) and may not be productive, Staff is recommending that the City close the review of the historical unit count analysis and proceed forward with implementing the new Field Unit Count and adjust it monthly based on the CO Reports. Further, these counts should be Page 32 periodically compared and reconciled against the Palm Beach County Solid Waste Authority's Non- Ad Valorem total unit counts as well as the City's Master Billing File customer counts. By implementing the various policies and procedures that have been recommended by Staff (outlined earlier within this report), there will be better assurance that the monthly unit counts will produce more accurate invoices from the City's Residential & Commercial Contractor. These proposed changes, if recommended by the Financial Review Board and adopted by the City Commission, will ensure better communications within the City as well as with the Contractor. In addition, these recommendations will enhance accountability and documentation as well as assist in ensuring that future invoices, unit counts and payments will be closely monitored for accuracy on a monthly basis. I would like to thank all of the members of City Staff that have assisted with this complex and detailed analysis, including Joe Safford, Finance Director, Lula Butler, Community Improvement Director, Brian Shutt, City Attorney, AI Berg, Assistant Community Improvement Director/Contract Administrator, Danise Cleckley, Administrative Assistant -Community Improvement -Code Enforcement and Paul Fleetwood, Senior Programmer -Finance Department - IT Division. In addition, I would like to thank Ken MacNamee and Butch Carter for all of their assistance with this effort. Both have proven to be valuable resources. Attachments c: Mayor and City Commission David T. Harden, City Manager Brian Shutt, City Attorney Joseph Safford, Finance Director Lula Butler, Community Improvement Director Harold "Butch" Carter, Waste Management Inc. of Florida Ken MacNamee, Delray Beach Citizen Page 33 City of Delray Beacft ~ ,~~~ry °.. ~ ~~~~ Financial Review Board ~~~µ~ ~:~~.}~~Il~~~(~:6~3~~_~~ July 9, 2010 Vlr. Nelson S. "Woodie" McDuffie, Mayor 100 N.'VV. First Aveuue Delray Beach, FL 33d4~1 Subject: Review of City staff s ~~irrl}+si.s of the City of Delray Beach's Reslderatial Solicl 1~aste cfL Recycling Program a~ad Proposed Btrsir~esr Process Recalrrrjte~tclation, June 25, 2010 (Residential analysis) Dear Mayor McDuffie: On Febnrary 10, 2010 the City Commission asked the Financial Review Board to review several issues regarding the City's residential contract with Waste Management (Mayor's letter). Concurrently, the City initiated a comprehensive multi-departmental staff investigation of the same topics. The Board detern--ined that to avoid duplication of effort and in#erference with this work being performed by staff, the Board would not conduct a separate audit or analysis which of necessity would require participatiatt by the same personnel involved in the staff project, Rather, the Board would wait until staff had finished their analysis and use that information to make a recommendation. Mr. 1•:llingslvorth so informed tltc Mayor, This letter, which also includes our comments on several Commercial Contract items included by staff in their Residential Analysis, constitutes our response to the Commission's request. During the period June 25 through July 5, 2010 the Board received electronically ft•orn Mr. Richard Reade a substantial amount of information developed by stafFand a 42 page report sur3~marizing staffs observations, findings and recommendations. At a special meeting on July ] and at its regularly scheduled meeting on July 6 fhc report ,vas presented by Mr. Reade and discussed by those attending, including several members oFthe staff Working Group, the City Attot~tey, a representative from Waste Management, and Mr. Ken MacNamee. The Board also met on July 9 for a final review of its report. Although fhc Board did not participake directly in the staff analysis, the final version of the staff report incorporates the Board's suggestions, and general input from these several discussions. In his letter the Mayor posed two specific questions: trestiort 2: Has the City overpaid for residential solid tivaste collection services due to errors ict the number of residential units in each of the four categories of service provided within the City? Yes. Staffs analysis found that the City overpaid for Residential Solid Waste services by a net amount of approxirttately $25,000 during the period March 2005 to March 2010. This net amount, tvhiclt gives effect to offsetting undetpaymertts, seems to be well documented, although the staff report notes that neither an audit nor a forensic investigation was completed during the analysis. Although the analysis included Waste Management contraefi periods prior to April Page t of 4 City ofDelray Beach Financial Review Board 2005, staff determined that statute of limitations restrictions precluded the possibility of collection before April 2005. In addition to the potential to recover City funds, negotiations with WM relating to repayment could serve to clarify the repayment amount and to provide additional information that would be helpful in fixture analyses. The Board recommends drat the City ,pursue repayment fi-arTr Waste Management, subject to the next para rg aph. Several open items should be resolved and the results included in deterrrrina#ion of the final repayment amount: (I) Contract provisions governing billing and payment for special collections in general and the cost of the "clamshell tnrck" specifically remain uncertain. These issues should be resolved. (2) The staff should insure that the $177,000 December 2005 payment was truly omitted, rather than having been made earlier or later or otherwise having been an offset to some other obligation. (3) There is uncertainty regarding the classification of l91 rinits. The resolution of this item ~vill affect the final amount. Corollary Question 2: Do the City's business processes ensure that the number of units in each of the four categories is regularly and accurately updated, that Waste Management is billing the City for the appropriate number of units, and that the unit counts are periodically reconciled with the Property Appraiser's records? The Boarcl agrees with staffs observations and reeom~t~endations on these topics: Staffs atraiysis found that invoiced unit counts have not been updated in accordance wi#ir the City's monthly CQ Reports nor have they been compared and reconciled with the SUVA. However, the analysis has provided the City a3rd WM with a very accurate unit count that sirould produce confidence i~r the Contractor's fu#ure invoices and payments. The Board agrees with staffs recommendation to close the review of historical unit counts. . The Board agrees with staffs Policies and Procedures updates and improven3ents in general; and, specifically with staffs recommendation to proceed forward with imnlemanting tl~c,na~v 1?iald Unit Count and to adjust it monthly based on the CO Reports. As staff recommended, these cou~tits should be pei~iodieally compared and reconciled against the Palm Beach County Solid Waste Authority's Nan-Ad Valorem total unit counts as even as the City's Master Billing File customer counts. Irr addition to these answers to the two specific questions asked in the Mayor's letter, the Board makes the following observations and recommendations: 1. We agree }vitli the staffs recommendation that the records used to sr~port the.City`s billing to residents should be updated and maintained based on information generated in the staff anal sis. bVe make no recommendation regarding corrections to historical aver 1 under billing of residential customers. 2. We rccomrnend that planning begin now to ideErtr'fy alterEratives and options irr pren_a_ration for the expiration of this contract. We make the fottawing observations and suggestions in support of this recomrrrerrdation: Page 2 pf City of Delray Beach Financial Review Board The technology and business of residential solid waste collection has advanced substantially since the Waste Management contract was agreed. Consistent with reconunendations by the Budget Task Force, a contract of this size and magnitude should not be le8 in place, wit}rout going out for bid and comparison, and revised industry-standards' check, for over 10 years. This contract was last bid in 2001 and extends eun•ently unti12013. The trash industry has changed immensely since 2001- in many households, recyelables now outnumber the amount of trash generated, compaction is an industry nor-n on multi-unit and co~mnercial properties, many of our Homes and other properties are now gated and monitored. This 2001 contract does not adequately address these and other current issues. Consistent with recommendations by tiro Budget Task Force, a contract of 3 to 5 year duration would be reeanunended in the ftitt~re. b. The contract as written is difficult to manage, is vague, and is too long, Contracts should clearly delineate ALL responsibilities for both parties and state clear-cut compensation instead of using complicated formulas, With the details accompanying this Contract as written, it would take a staff member several hours adequately to check records monthly to verify accuracy. c. As staff's analysis shows, lit a City that is aver 95% built-out, drastic changes in the number of customers and other service volume metrics are unlikely. The City could consider a flat mo~tthly commercial franchise fee per unit of service, based on an initial amount, This number could be adjusted annually, for example based on the net number of new COs less the number of demolitions. d. Serious discussion should begin immediately with neighborhood groups r'egard'utg the kinds of residential pickups provided. Consideration should be given to lowering the number of types of pickups; residents should be amenable to minor changes that save money. e. Compaction, especially for the restaurant areas downtown, and for major office, COn]]l1CFC1al, and large residential buildings, should be encouraged and rewarded since it has been proven to eliminate a mrrltitt~de of issues such as rats, insects, rotting foods, at3d unpleasant odors while also reducing landfill space and the number of pickups needed 3. 141anagirtg a vender co~ttract, insuring that vender invoices and payments are consistent with this contract, and providing accurate billing to residents are among the most basic of purchasing /contract management and finance tasks. The fashion in which #lte "Waste Management" issue surfaced, that the analysis had to be undertaken by a specially farmed task force, the information and procedural shortfalls identified by the staff's analysis, and the amount of staff and calendar time needed to answer the Commission's questions, indicate firndanientai deficiencies in the way that these frutctions are organized and staffed. The Board recainrnends that the City Manager undertake a comprehensive organizational and staff review of the purchasing and fi-iance functions. The Board will ?age 3 of ~ City of Delray Beach >rtinancial Review Board make specific organizational recommendations supporting this reconva~endation in its upcoming annual report to the Conrn~ission. The Board wishes to commend and thank Mr. Reade and members of the Solid Waste Employee Working Grottp for their efforts•on this project. Sincerely, c: Joseph Stafford Richard Reade References 1. (Mayor's letter). February 10, 2©10 letter fram Mayor McDuffie to Howard Ellingsworth. 2. {Residential Analysis). Analysis of the City of Delray Beach 's ResidenFin! Solid lFaste 8c Rec}Jcli~ag Pt-agj•nm a;'ad Proposed Business Process Re~arnmendatiota, June 25, 2010 Wage ~R of 4 1~USY i#f It ~EEEEE~SWUI l[1, l_.I lk[li ORDINANCE NO. -10 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF DELRAY BEACH, FLORIDA, AMENDING CHAPTER 51, "GARBAGE AND TRASH", OF THE CODE OF ORDINANCES OF THE CITY OF DELRAY BEACH, BY AMENDING SECTION 51.01, "DEFINITIONS"; SECTION 51.18, "TYPES OF SERVICES PROVIDED FOR PICKING UP GARBAGE AND TRASH"; SECTION 51.22, "VEGETATIVE WASTE"; SECTION 51.23, "BULK TRASH"; SECTION 51.40, "PLACEMENT OF CONTAINERS 'AND TRASH; PRECOLLECTION PRACTICES; SECTION 51.70, "RI ~:(~ ULAR CHARGES LEVIED"; SECTION 51.71, "PAYMENT AND BIhLI\(~", ~1~0 CLARIFY THE SERVICES AND BILLING PROCEDURES A\ 1J ~l~O PROVIDE FOR CONSISTENCY BETWEEN CITY ORDINAL (:J :~ AND '1 I I 1 : FRANCHISE AGREEMENT; PROVIDING A GENERAT. Rl .P L.ALER CLAN ~ l :, 'y SAVING CLAUSE, AND AN EFFECTIVE DATE. WHEREAS, the City Commission desires t~ ~ clariF~- the scr~~-ices and billing procedures set forth in City Ordinances and to provide for consistence I~em een City Ordinances and the Franchise Agreement for Solid Waste Collection. NOW, THEREFORE, BE IT OR1~ ~1\ED BY THE CITY COMMISSION OF THE CITY OF DELRAY BEACH, FLORID~~, _~~ I ~Ol .l .O\VS: Section 1. That Chapter 51, "Garl~a~e arld Trash", subheading, "General Provisions", of the Code of Ordinances ~•r the City of Delray Beach is hereby amended by amending Section 51.01, "Definitions", t~ ~ rca~j as r~ ~11~ ~~~ s: Sec. 51.01. DEFINT'1'IO\~. T~ ~ the c~tent the ~jetnliti~ ins c~ ~ntained herein conflict with similar definitions contained in any Fe~jcral, Mate or l~ •cal la~~ ,the ~lcrulition herein shall prevail. hr~~l~a~ardous or ~ u.~~~'rb,~.~'>r~r.~/~.; sh:dl mean any solid waste or liquid waste which may cause disease or reasonably be suspected of harboring pathogenic organisms, included [including], but not limited to, ~~aste resulting fi-~~n1 the operation of medical clinics, hospitals, and other facilities producing wastes which m.i~ c~,nsist of, but are not limited to, diseased human and animal parts, contaminated batuj~.l~es, pathological specimens, hypodermic needles, contaminated clothing and surgical gloves. Biological ~araste. Solid waste that causes or has the capability of causing disease or infection and includes, but is not limited to, biohazardous waste, diseased or dead animals, and other waste capable of transmitting pathogens to humans or animals. Bulk trash. Any nonvegetative item which cannot be containerized, bagged or bundled including, but not limited to, inoperative and discarded refrigerators, ranges, toilets, pool heaters, water softeners, pianos, washers, dryers, bath tubs, water heaters, sinks, bicycles, and other similar appliances, household goods, furniture, large boxes, barrels and crates, and shall not be commingled with vegetative waste or any other type of refuse. C~'D Debris Service Prodder. A licensed company authorized by the City to remove construction and demolition debris. C~'D Bollo,~f Collection Service shall mean the Collection of C&D only open top temporary rolloff containers. or the Collection of C&D by other mechanical means within temporary locations in the Service Area. limited to new construction sites and remodeling or refurbishment sites. C&D Rolloff Collection Service is not exclusive to Contractor. City. The City of Delray Beach, Florida, or the City's auth~,riiecj agents or contractors. City Manager. The City Manager of the City of Delray l~cach or his/her designee. Collection: The process whereby solid waste, ~arl~.lge, trash, bulk trash, ~ emetative waste or recyclable material is removed and transported to a t~csi~nated facility. Commercial trash. Any and all accumulations ~,t ~~a~~er, rags, excelsior or usher packing materials, wood, paper or cardboard boxes or containers, s~~ eej~in~s, and any other accumulation not included under the definition of garbage, generated by the ~,~~eration of stores, offices, and other business places. Commercial trash shall inclucje furniture if pry ~~~erl~T containerized. Commercial trash shall not include special waste. Construction and d rr~~ ~/iu J-hers. 'Materials generally consi~lcred to be not water soluble and nonhazardous in nature, ineludin~, Inir nut hnlite~l t~ ~, steel, glass, brick, concrete, roofing material, pipe, gypsumwallboar~j, and lumber tr~•m the anlsti-uction or destruction of a structure. Mixing of a de minimis amount ~ ~t waste other than C&D debris from a construction site will not exclude such mixed solid waste from elassificati~ ul as Cc~D debris under this definition. Cu~'h~~~~I ~ 1 h,~~;rl~/nr/ul~. l~he person designated by the City who shall act as the City's representati~ e under this eha~~ter. 1ny references that reduire aporo~al by the City shall also mean aot~r~»;il Irv the Contract -~~lministrat~~r. C.onlnr~~/or~ or vendor: A\'~,istc A[ana~gement Inc. of Florida. Depa~/;:i~irl. The Florida 1~epartment of Environmental Protection. Designated f~!~~ilrly~. A disposal processing, recovery, recycling or transfer facility designated by the Solid Waste Authurit~ or the City Manager. Disposal costs. The "tipping fees" or landfill costs charged to the Contractor by others for disposal of the waste collected by the Contractor. D~arellz~ng unit. One or more rooms connected together, designated to be occupied by one family, constituting a separate, independent housekeeping establishment and physically separated from any other dwelling unit which may be in the same structure and which contains independent sanitation, living, cooking and sleeping facilities. 2 ORD. NO. Garbage. All putrescible waste which generally includes but is not limited to kitchen and table food waste, animal, vegetative, food or any organic waste that is attendant with or results from the storage, preparation, cooking or handling of food materials whether attributed to residential or commercial activities. Garbage shall not include any material that falls within the definition of special waste. Garbage receptacle. Any commonly available light-gauge steel, plastic or galvanized receptacle of a nonabsorbent material, closed at one end and open at the other, furnished with a closely fitted top or lid and handle(s). A receptacle also includes a heavy duty, securcl~ tied, plastic bag designed for use as a garbage receptacle. Garbage receptacles or waste materials shall not exceed fifty (50) gallons in capacity or fifty (50) pounds in weight. Rollout containers ~~rovided by the City may be thirty-two (32), sixty-eight (68), or ninety-five-gallon-size cont.lincrs. Hazardous ~araste. Solid waste as defined h~ nc~ State of l~l~ ~rida Department of Environmental Protection as a hazardous waste in nc~ State of Florida Administrarive Code, or by any future legislative action or by Federal, State or,l~ ~ra1 law. Litter. See Chapter 98 of the Code of Ordinanres ~ ~f nc~ City of Delray Beach. Loadz~ng and unloading area. Am l~ ~a~ling or unloading space or area used by any moving vehicle for the purpose of receiving, shi~~~~in~, and trans~~~ ~rtii~g, goods, wares, commodities, and persons. Loose refuse. Any refuse, either garbage ter h~~uschold trash, stored in and collected from any type of container other than a mechanical container or garbage receptacle related to multiple-family dwellings or the designated rarilit~. RcEuse that is collected from the ground is considered loose refuse. Mech ~ 4zr% ~~ ;:rierl~. _1n~ detarhahle metal ~,r plastic container designed or intended to be mechanicill~ dum~~ed into ~ a l~ ~adcr-~~acker type of garbage truck used by the contractor and includes any m~t~~ri~ed or elertriral r~ ~m~~~act~•r .Mechanical containers may be c~~nstructed of plastic. Further, .111 mechanical containers must be uniform in color, have closeaL~lc lids, and be free or any advertising or other information other than an eight and one-half (8 1/2) by elegy en-inch sticker~~ ith the name, address and telephone number of the Contractor. Multp~~ r/>rr1,>;ilr~ inr.~/.~. _ any building containing five (5) or more permanent living units, not including motels and h~ ~tels. Parking lots. Commercial and public lots designed for the parking of any vehicles with the exception of residential parking. Permanent Boll-off Collection Services shall be exclusive to the Contractor. However. C&D Temporary Rolloff Collection Service as defined above is not exclusive to Contractor. The Contractor shall be responsible for the billing and collection of Commercial Solid Waste Collection Services and all disposal costs that are not billed and collected by the Solid Waste Authority or its designee. 3 ORD. NO. Person. Any natural person, owner, agent, corporation, partnership, association, firm, receiver, guardian, trustee, executor, administrator, fiduciary, occupant, lessee, tenant, or representative or group of individuals or entities of any kind. Premises. Lots, sidewalks, alleys, rights-of--way, grass strips, and curbs up to the edge of the pavement of any public thoroughfare. Private property. Property owned by any person as defined in this Section, including, but not limited to, yards, grounds, driveways, entrance or passageways, parking Areas, storage areas, vacant land, or body of water. For the purpose of this Chapter, "private hr~ ~herty" owners are required to maintain rights-of--way up to the edge of the pavement of any public the ~roughfare. Publicproperty. Any area that is used or held out tc~ lie used by the huhlic, whether owned or operated by a public interest, including, but not limited t~ ~, highways, streets, allevs, parks, recreation areas, sidewalks, grass strips, medians, curbs, or rights-~:,t-~~ ay up to the edge of the pavement of any public thoroughfare or body of water. Recyclable materials shall be the same as defined in Chahtcr -IU3 of the Florida Statutes. Recyclz~ng shall be the same as derided in Chapter 403~~ ut the Florida Statutes. Refuse. Commercial trash, househ~ old trash ~.uld ffarbage or ~~a combination of mixture of commercial trash, household trash and ~arl~a~e, including haher, glass, metal and other discarded matter, excluding commercial rec~clal~lc materials. Residers/ial do ~/ ,~%i~u ~~ lj~~~~~r~~/.~. A[iuor residential repairs done exclusively by the homeowner. Residers/~~r1 ~rl~~i~~r. ~1'hc refuse, rec~clin~ and 1c~etative waste collection service provided to persons occupy ing residential d~~ elling units ~~ ithin the City who are not receiving commercial or multifamily sen ices. ~17~is ~~ ~ n~ld include single-ful~ily homes, duplexes, triplexes, quadplexes and mobile h~~mes. Ko%'~ff collection srl~~i~~~. R~ ~ll-orr c~~llection service shall else mean the collection of i solid waste in r~~ll-~~ff compact~~rs; (2,) solid waste from permanent open-top roll-off containers: (31 horticultural ~~r a~riculh,ral ~~astes at horticultural or agricultural nurseries, but only when the customer chop uses m use ,hen top roll-off containers for horticultural or agricultural waste, and horticultural and agricultural waste shall not include any other type of waste, including, but not limited to, special waste, ~arlaage or recyclable materials. Roll-out carts. Carts that are either athirty-two (32), sixty-eight (68), or ninety-five-gallon (approximate) wheeled container of a type approved by the City Manager or his designee, and shall be equipped with wheels and a lid and shall on1,T~provided by the City for residential service, unless otherwise approved by the Contract Administrator. Sludge. The accumulated solids, residues and precipitates generated as a result of waste treatment or processing, including wastewater treatment, water supply treatment, or operation of an air pollution control facility, and mixed liquids and solids pumped from septic tanks, grease traps, privies, or similar waste disposal appurtenances. 4 ORD. NO. Speczal ~araste. Solid or liquid wastes that require special handling and management, which are not accepted at a landfill or other disposal facility or which are accepted at a landfill or other disposal facility at higher rates than is charged for refuse, including, but not limited to, asbestos, whole tires, automobiles, boats internal combustion engines, nonautomobile tires, sludge, dead animals, septic tank waste, hazardous waste, used oil, lead-acid batteries, and biohazardous or biomedical wastes. Trash. All refuse, accumulation of paper, excelsior, rags, w~~oden or paper boxes and containers, sweepings, broken toys, tools, utensils, and all other .iccur~uil:;pions of a similar nature other than garbage, which are usual to housekeeping and to the r;her.ition of stores, offices and other business places, but shall not include vegetative waste. Vegetative ~araste. Any vegetative matter resulting from yard and landscaping maintenance and shall include materials such as tree and shrub materials, ~clss clippings, palm fronds, Christmas trees, tree branches and similar other matter usually produced as refuse in the care ~,r lawns, landscaping and yards. All grass clippings, leaves, pine needles, and similar small loose items must he bagged or containerized. Vegetative waste, except palm fronds, must lie n~~ nu~re than six (6) feet in length and no single item shall weigh more than fifty (50) pounds. Aatur:d Christmas trees shall be considered vegetative waste and will be collected if they are not mere. th~,ul eight (8) feet in length and weight less than fifty (50) pounds. Vegetative ~~ rite d~ yes not include any Corm of matter or debris resulting from land clearing or land development. Section 2. That Chapter 51, "Garl~a~e and Trash", sul~hcading, "Collection Services, Requirements", of the Cede ~~r Ordinances ~~t the (;ity of 1~elray Beach is hereby amended by amending Section 51.18, "'Types ~~r services 1'r~,~ ided for Picking Up Garbage and Trash", to read as follows: Sec. 51.18. TYPF.~ O I ~ ~ I ~:RVICF~:~ PRO\11~ I ~:1~ I ~ O1Z PICKING UP GARBAGE AND TRASH. (A) RoII-Oil C.~rII.S~~1~~;4~~. ll) X11 single-family h~~mes, duplc~es, triplexes, quadplexes and mobile homes of the City shall h~~n-e roll-out cart curbside piclc~ip, except for the areas listed in subsections (B) and (C) and as otherwise a~oro~ed y the City. The customers in areas receiving cart service shall be re~uircd to use roll-nut carts furnished by the City. (2) These roll-~n~t carts shall be furnished by the City ~~° -~~ ~~~~°~~~~ ; and shall remain the property of the City. If a roll-out cart becomes unserviceable or is missing because of customer neglect, the City may repair or replace it, but repair or replacement does not constitute a waiver by the City (or its contractor) to proceed against the negligent customer for reimbursement for any replacement or repair. The City (or its contractor) shall supply only one roll-out cart ready for use to each dwelling receiving residential service. However, additional roll-out carts may be rented to the customer at a charge not to exceed one dollar and fifty cents ($1.50) per month. Any additional roll-out carts shall be collected by the City or its contractor at the same time as the first roll-out cart, and there shall be no additional monthly service charge for that collection other than the charge for each additional roll-out cart r replacement fee. 5 ORD. NO. (3) All customers receiving roll-out cart service are required to use those roll-out carts for all garbage and for whatever trash that can be reasonably contained therein. All roll-out cart service shall be collected on regular schedules and routes as determined by the City or its contractor. (4) All vegetative waste shall be placed adjacent to the pavement or traveled way of the street, in containers or bundles less than fifty (50) pounds each and with no dimension over six (6) feet each, and then shall be collected on one of the scheduled _garbage collection days as determined by the City. (5) The provisions and requirements set forth in this Sccti~,n notwithstanding, for those customers who, by reason of disability and with no ~~rher able-b~ died person residing in the residence, certified by a doctor and approved br the Cite, are unable to place the roll-out cart at the street, then collection shall be from r~ X11-uut c:tirts located at accessible locations adjacent to the house or structure. (B) Bear-Door/Side-Door Service. (1) For the residential area of the Cir<T located east of the lnt~acoastal Waterway, Spanish Wells and Sherwood Park, garbage and trash sh,dl be collecteN at least twice each week on regular schedules and routes as determined by t1~e City ~ .r ors contractor rrpm the rear, side or front of and adjacent to the served residences, at locati~ ins reas~ ~nabl~ accessible to the City or its contractor. (2) All vegetative waste and bulh trash shall be hlaced adjacent to the pavement or traveled way of the street, in containers ~,r bundles less than rirt~ (50) pounds each and with no dimension over six (6) feet each. Ve~etati~ e ~~ rite shall be collected on one of the scheduled arg bade collection days ~~~as determined b~ the City. (C) Cup z~ir1~~. ~~ ~~ nrt~r ~ra~l t log ~ ~,'~ulr/ 1 ~~;;~,~~ ~ r L)r.~/ ~~~~~rble Containers with Tlegetative 1~Ylaste and Bulk Trash ,~ . I~~•r the residential area ~•r the City located at Imperial Villas, Country Manors and High P~~int, the customer's ~:Lrba~c and trash shall be placed in disposable bags at locations adjacent to the street and shall be collected at least twice per week on regular schedules and routes as determined 1 ~~ the City or its contractor from the front of the served residence. (2) All garbage and trash shall be placed in secured plastic bags or other secured disposable container and n~, b;lg shall weigh more than fifty (50) pounds. (3) All vegetative waste and bulk trash shall be placed curbside by the customer for collection by the City or its contractor on one of the scheduled garbage collection days. (D) Mechanical Container Service. (1) Multifamily dwelling units containing five (5) or more units shall use mechanical containers, except as otherwise approved by the City because of lack of suitable space for a mechanical 6 ORD. NO. container or other good reason. (2) Business establishments, churches, schools, office buildings and other establishments that receive commercial service may use mechanical containers or roll-out carts. (3~ Government -Government buildings, as identified by the Solid Waste Authori , (tom SWAL Palm Beach County shall be charged the regular commercial customer rate, but shall not be charged for disposal fees. where the Contractor receives the a~p~~~,~,riate disposal credits from SWA. (E) Recycling Program. (1) Each residence of the City receiving residential se~-~-ice shall be pru~ i~jed two (2) recycling containers, by the SWA, for the accumulati~~n :uul collection of recyclable. materials. (2) All condominiums and apartment complexes r~ ~nraining fig c' (5) or more dwellm~ units using mechanical containers shall be provided an ~acjeyuare number of recycling containers to collect recyclable materials (3) The containers referred to in subscrri~.n /1) shall be brought ~e curbside and shall be collected at least once per week. I~~_~r carte resi~jcnce or unit referred to in subsection (1) above, such collection shall be ma~jc ~.n ~~nc ~•r nc~ regular refuse collection days. For condominiums an~j aparrnlent complc~cs rcEerred t~~ in subsection (2) above, collection shall be made ~nrc per wccl<. (4) In the event nc~ recycling c~~nrainers contain unacceptable materials, the materials will not be collected an~j an c~planat~ ~r~ n~ ~rirc ~~-ill be C~laced in the container by the Contractor. (5) In nc~ e~ ent that nc~ rcr~-cling containers, furnished either by the City or by the contractor, sire l~>st, dama~e~j ~.r sr~,len, the residence or condominium or apartment shall pay the r~ ~ntractor or Cite cjircrrl~ t~~r replacement containers. (6) 1'arrici~ation in the recycling program shall be mandatory for all residential properties. Section 3. 'l~har Chapter 51, "Garbage and Trash", subheading, "Collection Services, Requirements", ut nc~ G ~~le of Ordinances of the City of Delray Beach is hereby amended by amending Section 51.22, "Vegetative Waste", to read as follows: Sec. 51.22. VEGETATIVE WASTE. (A) Vegetative waste shall be collected from residential areas once a ax~~ week on one of the regular scheduled collection days as approved b~ the Contract Administrator. Collection shall begin no earlier than 6:00 a.m. and cease no later than 6:00 p.m. Vegetative waste shall be placed adjacent to the pavement or travel way of the street/alley. Residents shall bag or containerize all grass clippings, leaves, pine needles and similar loose items whenever possible. Large vegetative waste items must not be more than six (6) feet in length or fifty (50) pounds in weight, and shall be placed nearly at the 7 ORD. NO. curb. Vegetative waste shall not be comingled with trash or garbage. In the event of a dispute between the contractor and a customer as to what constitutes vegetative waste, the situation will be reviewed and decided by the City Manager, whose decision shall be final. ~) E} If vegetative waste is placed adjacent to the pavement or tra~~el way of the street/alley at rime periods or at locations outside of th~_~se allowed by subsccri~ ~n 51.40(I~, .. , then the City or its contractor may collect the ~~egerati~ e waste and a fee of eleven dollars and fifty cents ($11.50) per cubic gird will be ch:u~~ed t~ the resident or business for the collecrion of the vegetarive waste it such c~~llccri~.n is not performed on the regular scheduled collection day. The minimum ch~,u~~c shall Ise eleven dollars and fifty cents ($11.50) and all charges shall be r~ ~ the nearest ~~h~ ale cubic ~:u-d. Such fee will be placed on the resident or business's ~~arcr bill. Ir the resident ur business does not receive a water bill then a separate hill for this change shall be sent to the property owner. The $11.50 per cubic yard charge shall be remitted r~ ~ and retained by the City for all collections from residenrial properries. ~I~hc $11.50 per cubic ;ard charge for collections from commercial properries sball be billed b~ the Cit<=. Section ~. Thar ChaE~ter 51, "Garbage and Trash", subheading, "Collection Services, Requirements'', of die Code ~•r Ordinances of the City of Delray Beach is hereby amended by amending Secrion 51.23, "13ullc Trash", to read as follows: Sec. 51.23. I~ ~~l .K TRASH. (A) Bulk trash shall be collected from residential areas within the City no more than once per week. Bulk trash shall be placed adjacent to the pavement or travel way of the street/alley. The bulk trash pickup day shall coincide with the first or second refuse collecrion day, which shall be a Monday/Thursday, Tuesday/Friday or Wednesday/Saturday of each week. ~) 8 ORD. NO. {~} It shall be unlawful for any person to leave outside any building in a place accessible to children any appliance, refrigerator or container with any doors, lids ~ •r closures of any type in place. This prohibition shall not apply to any appliance, rerri~erator or container at a commercial establishment which has been placed on or adjacent tr. the rear of the building and is crated, strapped or locked to an extent that it is impossible E~_~r a child. to obtain access to any compartment thereof. {~}~ If bulk trash is placed adjacent to the pav emeut or travel way of the street/alley at time periods or at locations outside of those allowed b~ subsection 51.40 (E) ~~'' ~~~'~~`'~~~ ~~` the City ur its contractor may collect the bulk trash and a fee of eleven dollars and rirt~~ cents ($11.50) per cubic yard will be charged to the resident or business for the collection ~ ~r dlc bulk trash if such collection is not performed on the regular scheduled c~ ~llcction day. Thee minimum charge shall be eleven dollars and fifty cents ($11.50) and all charges sh~.lll be m the nearest ~~-hole cubic yard. Such fee will be placed on the resident or business's ~~atcr bill. 1r the resident or business does not receive a water bill then a separate hill for this chai-~c shall be sent to the property owner. The $11.50 charge shall be remitted t~, and retained b,~ the (:it~~ Eor all c~_~llcctions from residential properties. The $11.50 per cubic ~~ard charge t-or collecti~;ns from commercial properties shall be billed b~ the Ci Section 5. That Chahter ~l, "Garha~e and Trash", subheading, "Rates and Charges", of the Code of Ordinances ~ ~t the City ~ •r 1~clra~ 13c,ich is hereby amended by amending Section 51.40, "Placement or Containers and Trash: Precollectiun Practices", to read as follows: Sec. ~ l.-~0. PLACE\[I ~:A"1~ OI ~ CONTAINERS AND TRASH; PRECOLLECTION PRAC 1' I C F.S. (A) l~l~ ~ckage of Storm Drains. It shall be unlawful for any person to place any refuse, trash, refuse recept:lclcs or containers on, upon or over any storm drain or so close thereto as to be dr,i~~ n h~ the elements into the storm drain or to block the flow of water into the storm drain. (B) Dangerous Trash Items. It shall be unlawful to place dangerous trash items and all waste materials of injurious nature in containers unless they are securely wrapped so as to prevent injury to the collection crews and others. Dangerous trash and waste materials shall include, but shall not be limited to, broken glass, light bulbs, sharp pieces of metal, fluorescent tubes, and television tubes. (C) Hazardous Waste. It shall be unlawful to place hazardous waste in any receptacle used for collection by the City. The items listed in subsection (B) may be classified as hazardous waste unless properly wrapped to prevent injury to collection crews and others. 9 ORD. NO. (D) Garbage and Trash. It shall be unlawful to place in garbage receptacles trash which has not been drained of all liquids. Any items of trash which are too large for receptacles and cannot be reduced to a size which can be placed in a garbage receptacle may be placed adjacent to the pavement or travel way of the street/alley no earlier than 5:00 p.m. on the day preceding the collection date for that material, provided those items are covered or secured so as to avoid unsightly litter conditions. Any garbage receptacle may not be placed adjacent to the pavement or travel way of the street/alley earlier than 5:00 p.m. on the day preceding the collection day and must be removed by 7:00 p.m.` ~~n the day of collection. Garbage and trash that is not placed adjacent to the ~~a~ anent or travel way of the street/alley on the collection day by 6:00 a.m. may not lie collected by the contractor if the contractor has already passed the residence. If garbage and trash is placed adjacent to the pavement or travel way of the street/alley at any time ~ ether than the time periods allowed, the City or its contractor may collect the garbage and trash and :~ fee ~•F eleven dollars and fifty cents ($11.50) per cubic yard will be ch~a<<~ed to the resident ur Inisiness for such collection. The minimum charge shall b,~~ c1~:~ en dollars and fifty cents (S 11.50) and all charges shall be to the nearest whole cubic ~ ard. The fee shall be placed on the resident or business's water bill. If the resident or business d~•es n~~t receive a water bill then a separate bill for this charge shall be sent to the property owner. (E) Bulk Trash. Bulk trash shall Ise C~laced adjacent t~ ~ the pavement or travel way of the street/alley no earlier than 5:00 p.m. ~,n the day C~ri~•r to the regular scheduled collection day. Bulk trash that is not placed adjacent t~ ~ the ~~a~ ement ~,r trav~lway of the street/alley on the collection day by G:OO a.m. may n~.t be c~,llected b~~ the contractor if the contractor has already passed the residence and may Lac subject to the fees set forth in Section 51.230 C). If the property ~ owner places I~ulk trash adjacent to the pavement or travel way of the street/alley after the cnnmact~.r has already ~~assed, then the property owner must remove those items fi-~.m this area I~~ ;~OO p.m. ~r that day in order to be in compliance with this Section. (I') Aechanical C~~ntaincrs. (1) Placement of c~~iitainers emptied by mechanical means shall be determined by the City \[anager. The following materials shall not be permitted to be placed in these containers: (a) ~l~ires; 11 ~j Motor vehicle parts, including, but not limited to, batteries; (c) Carpet or padding larger than three (3) feet by three (3) feet; (d) Metal pipe in excess of one-half inch by three (3) feet; (e) Construction or building materials; (~ Wood in excess of one inch by two (2) inches by three (3) feet. 10 ORD. NO. (2) It shall be unlawful for anyone to place or maintain materials or place any vehicle under their control, whether temporarily or permanently, so as to block access to any mechanical container. (G) Refuse. It shall be unlawful for anyone to fail to place and maintain refuse in containers as specified herein. All containers shall be kept covered at all times with tight- fitting covers. (H) Vegetative Waste. Vegetative waste shall be placed adjacent to the pavement or travel way of the street/alley. Placement of vegetative waste in an alleyway is prohibited unless approved in advance by both the City and its contracr~r. y~e~etative waste for collection shall be placed at the required location no earlier than 5:O0 p.in. ~,n the day preceding the collection date. Vegetative waste that is not placed adjacent to the }~a~ ement or travel way of the street/alley on the collection day by 6:00 a.rri. ray not be collected by the contractor if the contractor has already passed the residence and may be subject to the fees set forth in Section 51.22(E B). If the property owner hl~lces vegetative waste adjacent t~, the pavement or travel way of the street/alley after the c~~ntr:LCtor has already passed, then the property owner must remove those items from this area I~~ 7:U0 h.m. of that day in order to be in compliance with this Section. (1) Recycling. (1) Recycling containers shall Inc hlaced adjacent t~, the pavement or travel way of the street%alle~ n~ ~ earlier than ~:UU h.m. un the day preceding the collection date for the material, pry ~~ ided those items are covered or secured so as to avoid unsightly litter c~~ndirions. ~17~c collection shall coincide with the first or second refuse collecti~.n day. Anv c~~ntainer placed adjacent to the pavement or travel way of the street/alley must lac rcnuwcd I~~ :OO p.m. on the day of collection. A recycling c~~ntaincr that is n~ .t placed adjacent t~, the pavement or travel way of the street/alley ~~n the c~~llccti~.n day by 6:00 a.m. may not be collected by the contractor if the contlact~ n- has :dreadv passed the residence. (2) If rcc~~cling cunt.iiners are placed adjacent to the pavement or travel way of the street/alle~~ at time periods or at locations outside of those allowed by subsection (Il, the CitS ~~~r its contractor may collect the recycling matter and charge a fee of elegy en dollars and fifty cents ($11.50) per cubic yard. The minimum charge shall be elc~ en d~ ~llars and fifty cents ($11.50) and all charges shall be to the nearest whole cubic ~•ard. such fee will be placed on the resident's or business' water bill. Section 5. That Chapter 51, "Garbage and Trash", subheading, "Rates and Charges", of the Code of Ordinances of the City of Delray Beach is hereby amended by amending Section 51.70, "Regular Charges Levied", to read as follows: Sec. 51.70. REGULAR CHARGES LEVIED. The following service charges or fees are levied for collection service. unless the Ci , has approved a different type of service and then each unit/development shall be billed in accordance with the type of service that it is receiving: 11 ORD. NO. Charges for the below-described collection service shall be as follows and shall commence when a certificate of occupancy is issued by th~City for any residential or commercial units, and shall continue monthly thereafter unless service is discontinued in accordance with Section 51.73: (A) Residential Service (Single Family Homes, Duplexes, Triplexes, ~uadplexes and Mobile Homes: Curbside Roll-Out Carts TABLE INSET: Monthly Service Cost Per 'nit Garbage Collection Recycling Yard Trash Total Fees--Contractor Cart Replacement Administrative Fee Franchise Fee (10%) Total Fees TABLE INSET: Rear-Door Owner C~ nlrainer Monthly Sc~-~ ice Cost Per Unit Garbage Collection Recycling Yard Trash Total Fees--Conrracr~r Administrative Fee Franchise Fee (10%) Total Fees Curbside Disposable Bags With Vegetative Waste and Bulk Trash Pickup Monthly Service Cost Per Unit 12 ORD. NO. Garbage/Trash Collection Recycling Yard Trash Total Fees--Contractor Administrative Fee Franchise Fee (10%) '' Total Fees (A) Multi-Family Service. Multiple-family dwelling units containing five (5) units or more shall use containers emptied by mechanical mean:;, except as othct-~~ ise approved by the City because of lack of suitable space for a mechanical container ur ~ ether good reason. Multiple-family monthly fees shall be hasc~l ~ •n a per-unit charge. These monthly rates assume two (2) pickups per week. If the anu punt ~f refuse generated reduii~-s more than two (2) pickups per week, then the third and :111 sul~secluent collections shall 6e charged by the Contractor at the commercial collection rate ~;nl~. It using roll out carts located within enclosures for multi-family collection service in addition to the monthly total fee (based on the number of units paid to t]~e (;its , the. Contract .r is ~~ermitted to charge aroll-out rate that shall be the same as rollout cart sei~-ice h .r c~ ~mmercial customers listed in Exhibit 1. Special Services, of the franchise agreement. Ir the C~ ~ntract~~r furnishes the roll-out carts, as aporo~ed by the Cite, then a m~~nthl~ fee ~t SLUO ~~er cart may be charged by the Contractor directly t~ dle cusr~~t7ler. Collecti~ .n ~~ I Iauling Rate Per knit TABLE INSET: M~ ~nthl~ Service Monthly Cost Per Unit Refuse Collection Recycling Total Per-Unit Fee--C~ mtractor Administrative Fee Franchise Fee (10%) Total Monthly Fees Per Unit (A) Commercial Service. (1) Commercial customers shall use mechanical containers or rollout carts. Commercial customers shall include all customers other than residential or multi-family customers. Commercial customers may use any of the following containers for accumulation of refuse: 13 ORD. NO. (a) Kollout Carts. The City shall require any commercial customer needing more than six (6) rollout carts to use mechanical containers, if feasible. (b) Mechanical Containers. (2) The owners/operators of commercial establishments and other commercial customers shall accumulate such refuse in those locations mutually agreed upon by the owner/operator and the City or its contractor, and which are convenient for collection by the Cir_y or its contractor. (3) Mechanical containers emptied by mechanical means shall Inc ~~rovided by the C~-a~t~ contractor. These containers shall be emptied on a schedule menially agreed upon by the customer and the City or its contractor, but not less than one day a ~~ eelc nor more than seven days a week. (4) Commercial customers needing six (6) or less r~~llout carts, and those appr~~~~ed for this type of service by the City in advance because nc~v lack a suitable location f~~r .a mechanical container, shall be serviced at least once per ~~ celc. 111 garbage and commercial trash shall be collected from such refuse containers ar l~ ~cati~,ns a~~reed to between the City or its contractor and the customer. The charge shall Inc Lased u~~on the following schedule: Commercial Races (\[~ ~nrhl~'. TABLE INSET: Container Size C~ilraincr Pickup Frequency (I'er Week) 1 2 3 4 5 6 7 2 Yard C~ ~llccriun Dish,sal Container \Llintenance Fee Total Contlactt~r Fees Franchise Fee (1O° ~~) Administrative Fee Total Fees 3 Yard Collection Disposal Container Maintenance Fee Total Contractor Fees 14 ORD. NO. Franchise Fee (10%) Administrative Fee Total Fees 4 Yard Collection Disposal Container Maintenance Fee Total Contractor Fees Franchise Fees (10%) Administrative Fee Total Fees 6 Yard Collection Disposal Container Maintenance Fee Total Contractor Fees Franchise Fee (10%1 Administrative Fee Total Fees 8 Yard Collc c ti ~ ~ n Disposal Container Maintenance Fee Total Contractor I ~ ccs Franchise Fee (10° o) Administrative Fee Total Fees Commercial Front-Load Compacting Containers TABLE INSET: Pickups Per Week 1 2 3 4 15 ORD. NO. 2 Yard Collection Disposal Total Contractor Fee Franchise Fee (10%) Administrative Fee Total Fee 3 Yard Collection Disposal Total Contractor Fee Franchise Fee (10%) Administrative Fee Total Fee 5 Yard Collection Disposal Total Contractor Fees Franchise Fee (10%) Ad i i i F m n strat ve ee 1'~tal Fees 6 Yard Collection Disposal Total C~ ~nrractor Fees Franchise Ice (10%) Administrari~~c Ice Total Fee Commercial/Mule-Farr/„~ N~Ir~iaueut Boll-(off Containers: Permanent 8 open-top roll-off container: Two hundred twenty-five dollars ($225.00) per pickup plus disposal cost and franchise fee Compactors: Two hundred twenty-five dollars ($225.00) per pickup plus disposal cost and franchise fee; TABLE INSET: 16 ORD. NO. 15 Yard 20 Yard 30 Yard 40 Yard Excludes commercial recycling containers and construction/demo ~lition debris. Commerczal95-Gallon Cart Service (Does not apply to residential servicel TABLE INSET: Pickups Per Week 1 2 ~~~ ~3 4 ~ 6 Collection Disposal Container Maintenance Fee Total Contractor Fees Franchise Fee (10%) Administrative Fee Total Fees NOTE: The f~~rc~~ ~in~ rates ~.u-c l~ascd on t]~irt~-rig c dollars ($35.00) per ton (two dollars thirty-five cents ($''.35) her cubic ~ar~lj, ~~ hich is the anticipated Solid Waste Authority tipping fee to be effecti~ c Oct Aber 1, ?OUS9. Waste A[ana~ement currently hicks uh individual thirty-gallon cans along Atlantic Avenue, the beach area, and Pineapple Grove. Out ~•r a total of one hundred four (104) containers, eighty-four (84) do not have pr~_~herr<r contr~~l numbers and, therefore, the City is not charged for disposal costs by the Solid Waste Auth~ ~rir<r. n ante \[auagement, by contract, does not charge the City for collection costs but should be paid t~~r their disposal costs. Since the Solid Waste Authority does not reimburse Waste Management r~ n- these disposal costs, it should be the responsibility of the City to reimburse them. The City will be billed nine thousand two hundred thirty eight dollars and thirty two cents ($9,238.32) annually which will be computed as follows: Eighty-four (84) thirty-gallon containers picked up six (6) times per week Thirty-five dollars ($35.00) per ton disposal rate charge by SWA =Two dollar thirty-five cents ($2.35) per cubic yard 17 ORD. NO. Thirty-gallon container = .15 cubic yards Eighty-four (84) containers x .15 cubic yards x six (6) pickups per week Xfifty-two (52) weeks x two dollar thirty five cents ($2.35) =nine thousand two hundred thirty eight dollars and thirty two cents ($9,238.32) Waste Management will be picking up trash at the newly installed bus shelters. The City will be billed thirty-nine thousand dollars ($39,000.001. The Contractor shall be allowed to charge the Special Services rates, as set forth in Exhibit 1 of the Franchise Agreement, if the Contractor performs any of the sen ices listed on the special services exhibit. The City's franchise fee shall be applied to these rates. Section 5. That Chapter 51, "Garbage and 'brash.", subheading, "Bares and Charges", of the Code of Ordinances of the City of Delray Beach is hereby amended by amending Section 51.71, "Payment and Billing", to read as follows: Sec. 51.71. PAYMENT AND BILLING. (A) Compensation. The City shall pay the contractor conhcllsation for the performance of the contract the sums due as set forth in ~ecri~ m X1.70, subject r~ ~ any conditions or deductions as provided under the contract. Contract~n- shall sul~m~r an imroice by the tenth of each month for residential services rendered during the hreceding m~ ~nrh, and payments will be made to the contractor within thirty (30) dais upon reccihr and verifirarit~rl of the invoice submitted. Service to commercial cusr~,mers ~~ ill Inc billed ~lirecdy by the Contractor in accordance with the schedule of rates scr r~ ~rrh in ~ecti~,n 51.70, subject to any conditions or deductions as provided under this agreement. (B) Bih~,ur 1'ru ~/~~I~:~. Billing arrangements r~ n- die various service types are summarized as follo« s: TAB1 J : 1 SET: Service "1~~ he Customer Billed By Solid Waste C~ ~llecrion Residential and Mulrir;unil~ City Commercial Contractor Vegetative Waste Collection Residential City Recyclable Materials Collection Residential and Multifamily City Commercial Contractor 18 ORD. NO. Container ~l maintenance/Purchase Residential City Commercial and Multifamily Contractor Container Special Services Residential, Multifamily and Commercial Contractor On the first day of each month the contract payment(s) for -all services hereunder shall be adjusted to correspond with the occupancy of existing or new buildings, :and the demolition of old buildings. The adjustment made on the first day of each month shall Ise for buildings either occupied or demolished during the second month preceding the adjustments. For example, any change which is made on June 1 of any year will be for buildings occupi~a or demolished in ~1pri1 of the subject year. Any existing unit shall be considered unoccupied ~~ henever the City has rcnahorarily terminated water service, at the customer's request only. Anp nc~~ unit shall be considered to I ~c ~ occupied when a certificate of occupancy has been issued and ~~ arer service has been provided rc~ the unit's occupant(s). Proof of demolition shall be demolition permits issued by the Building Department. (C) Disposal Costs. Residential and mulriFlmily solid was re disposal costs shall not be included with residential and multifamily cullecri~ ul se~-~-ice costs. Residential and multifamily disposal costs will be billed by the Solid ~X'aste ~urhorit~ or Palm lie~ach County by non_ad valorem assessment. The contractor will be gig en a dish ~s:d credit r~.r each residential unit as calculated by the Solid Waste Aurh~ ~rir~~. H~ ~~~ ever, the Cir~~ shall n~ ~r be responsible for disposal shortfall costs. Part of the commercial disposal c~ ~sts will he Filled by the Solid Waste Authority by non_ad valorem assessment. ~1'hc n~~nassessment h~rtion ~•t the commercial disposal costs will be billed to the commercial cusr~ ~mcrs I~~ the CunTracr~.r. '1'hc C~ ~ntractor shall pay the Solid Waste Authority for all solid ~~=as re dish sal c~ ~srs incurred and nut paid through non_ad valorem assessment. 51.lU: 1'he Contractor shall Dill c~ ~mmercial customers the appropriate fees as set forth in Section (1) The container monthly maintenance charge; (2) The container monthly disposal charge; and (3) The m~_~ndily collection and hauling fees .; (4~ Special services fees, as set forth in the franchise agreement. (51 Franchise Fee as determined by the City. which is based upon the disposal charge. the collection cost. the monthly maintenance charge. and special service charges. if and The charge for disposal to the 19 ORD. NO. customer shall increase or decrease in accordance with the charges s€ set by the Solid Waste Authority. Section 7. That should any section or provision of this ordinance or any portion thereof, any paragraph, sentence, or word be declared by a Court of competent jurisdiction to be invalid, such decision shall not affect the validity of the remainder hereof as a whole or part thereof other than the part declared to be invalid. Section 8. That all ordinances or parts of ordinances in c•: ~rltlict herewith be and the same are hereby repealed. Section 9. That this ordinance shall become effccti~~c up~,n irs passage on second and final reading. PASSED AND ADOPTED in regular session on second and fin.il i-cading on this the day of 201 ~. \[ ~1'OR ATTEST: City Clerk First Second Reading 20 ORD. NO. AMENDMENT NO. 4 TO SOLID WASTE AND RECYCLING COLLECTION FRANCHISE AGREEMENT DATED SEPTEMBER 20, 2001 THIS AMENDMENT NO. 4 to the Solid Waste and Recycling Collection Franchise Agreement dated September 20, 2001 is made this day of 2010 by and between the CITY OF DELRAY BEACH (the City) and WASTE MANAGEMENT INC. OF FLORIDA ("WMI F") WITNESSETH: WHEREAS, the Franchise Agreement dated September 20, 2001, and as further amended, provides for the collection of solid waste and recycling materials within the City (the "Agreement"); and WHEREAS, the Franchise Agreement was transferred from BFI to WMIF; and WHEREAS, the parties desire to amend the Agreement to provide for a clarification of the terms. NOW , THEREFORE, in consideration of the covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows: 1. The recitations set forth above are incorporated herein. 2. The Contract Administrator shall be the City Manager or his/her designee. The Contract Administrator shall mean the person designated by the City Manager who shall act as the City's representative during the term Agreement. 3. Contractor shall not be allowed to charge any fee to the City or to any residential or commercial customer unless such fee is set forth in City ordinance or in the Franchise Agreement or Contractor has received written approval from the Contract Administrator to charge such fee. If Contractor is charging fees that are not specifically set forth in City Ordinance or the Franchise Agreement, Contractor shall cease charging such fees upon the execution of this Amendment, unless Contractor receives written 1 approval from the Contract Administrator to charge such fee. 4. In an effort to confirm the accuracy of Commercial Franchise Fees remitted on a monthly basis, WM will provide the following: Commercial Customer Franchise Fee Summary (Billing Register Report) On a monthly basis, the City would randomly select 10 to 20 Commercial Customers and request all detailed information regarding these accounts from WM. The requested information should include customer name, service address (number and street name should be provided in separate cells), container type, frequency of pick-up, Special Service fees (if applicable), Administrative Fee (if applicable), total monthly Franchise Fee earned from the service provided and total monthly billed amount earned from the service provided. It is requested that WM provide this detailed information electronically (i.e., E- Mail), in Excel format, to the City for testing purposes. The City may conduct, on an as needed basis, a test of these randomly selected customers, which may include field visits, to confirm the accuracy of Franchise Fees received. 5. The definition of Roll-o[~f~ Collection Service is amended as follows: Rolloff Collection Service shall mean , c°~r~^° °''^" ^'°^ ,~^~~~~ the Collection ol~(i) Solid Waste in rolloff compactors; (2) Solid Waste from permanent open-to~~ rollo[~[~ containers; (3) horticultural or agricultural wastes at horticultural or agricultural nurseries, but only when the customer chooses to use rolloff containers for horticultural or agricultural waste, and horticultural and agricultural waste shall not include any other type of ~-~~astc, includil~g but not limited to, Special Waste, Garbage or Recyclable Material. 6. Clarification regarding the roving clamshell truck - The additional clamshell truck and driver service assigned to Code Enforcement shall pick up vegetative waste or bulk trash that is placed adjacent to the pavement or travel way of the street/alley as directed by the City. For collections from residential properties the charge for the collection, as set forth in City ordinance, shall be billed and retained by the City, for collections from commercial properties the charge shall be billed by the City and remitted to the contractor. 7. Sidewalk Containers - The Contractor shall collect and dispose of the waste from the City sidewalk containers on a weekly basis and shall be paid the annual amount that is set forth in City ordinance on a prorated monthly basis (in arrears). 2 Exhibitl to the Franchise Agreement is amended as follows: RATES DETERMINED BY THE CITY (NOT TO BE ADJUSTED DURING TERM MONTHLY CONTAINER DL'"~T MAINTENANCE RATES CONTAINERS SIZE RATE 1 YD X18.70 2 YD X19.40 3 YD X21.44 4 YD X22.21 6 YD X25.53 8 YD X27.09 10 ~'D X32.79 95 GAL. C~~RT 1.00 RATES DETERMINED BY THE CITY ~\OT TO BE ADJUSTED DURING TERM) SPECIAL SERVICES Service Rate per Service Rolling Out Commercial/multi-family 95 gallon X1.00 (no charge for commercial less than 10 feet) container (10 or more feet) Rolling Out Container (and returning it to orignnal X2.70 location) Opening (and closing) Doors or Gates No Charge X9.00 (one time) Locks for Containers Charge for Replacements based on cost + 10% X135 Unlocking Containers X55.00 Supplying (and retrofitting) locking mechanism on container No Charge Adding wheels to or changing wheels on Containers ~,~> (_a~arge Adding lids to or changing lids on Containers No Charge Moving Container Location Per Customer Request X25.00 Changing Out Sizes (above twice per year)* Additional Scheduled Pick-ups for Residential Same as Applicable Commercial Collection Rates Containerized Customers (No Disposal Charges) Additional ~~nscheclulal (n~>i including "on-call") 3 times more Applicable Commercial Rates Pick-ups i~rr (_:~mimercial and Residential (No Disposal Charges for Residential Containerizccl Customers Special Service of s~ccisl equipment rcyuired because Negotiable of impaired acces sil> i 1 i i ~ *The first two change <~urs arc fi-cc to the customer 9. This Amendment No. 4 together with the original Agreement and any written amendments hereto, constitute the entire Agreement between the parties relating to the subject matter hereof. It is the final expression of agreement between the parties, thus, neither party shall be entitled to rely upon any conflicting oral representations, assurances, claims or disclaimers, made either prior to or simultaneous with the 4 execution of this Amendment. 10. Except as expressly modified in writing herein or as modified by subsequent written amendments, all other terms and conditions of the original Agreement and any amendments thereto survive this Amendment and are deemed to be incorporated herein and are binding on the parties. IN WITNESS WHEREOF, the parties have executed this Amendment to the Solid Waste and Recycling Collection Franchise Agreement on the day and year first hereinabove written. ATTEST: CITY OF DELRAY BEACH, FLORIDA Bv: City Clerk Nelson S. McDuffie, Mayor Approved as to legal form and sufficiency: City Attorney WITNESSES: ~-WASTE MANAGEMENT INC. OF FLORIDA Bv: (name printed or typed) (Corporate Seal) (name printed or typed) STATE OF COUNTY OF The foregoing instrument was acknowledged before me this ___ day of --------------~ 2010 by ----------------------~ as ----------------- (name of officer or agent, title of officer or agent), of Waste Management Inc. of Florida, a Florida corporation, on behalf of the corporation. He/She is personally known to me or 5 has produced (type of identification) as identification. Notary Public, State of Florida at Large Name Typed, Printed or Stamped MEMORANDUM TO: Mayor and City Commissioners FROM: David T. Harden, City Manager DATE: July 9, 2010 SUBJECT: AGENDA ITEM WS.4 - SPECIAL/WORKSHOP MEETING OF JULY 13, 2010 DISCUSSION REGARDING FY 2011 BUDGET ITEM BEFORE COMMISSION The item before Commission is a discussion of the FY 2011 Budget. Please refer to the attached memo. Memo To: City Commission From: City Manager CC: Date: 7/9/2010 Re: FY 2011 Budget Many observers of our national economy now agree that those factors which have reduced the City's revenues in the last few years are not likely to change soon. In order to deal with this long term reduction on resources available to fund the City's General Fund operations, structural changes need to be made to reduce our costs for the long term. For three years now we have balanced the City budget by a combination of relatively minor service reductions, cutting costs wherever possible, increasing fees and some increase in the millage rate. For this coming year, for example, we have been able to reduce our projected health insurance costs by $1,000,000. This year the Commission requested that staff present a budget which would not require a millage increase. The propose of this memo is to outline steps which must be taken to reduce our costs to what will hopefully be a sustainable level for the long term while avoiding any increase in millage. As I have previously reported to the Commission, by cutting individual line items I have reduced initial departmental expenditure requests of $100,092,050 to a current net total of $98,419,260. Our current revenue estimate at the current millage of 7.19 is $91,146,290, leaving a budget gap of $7,272,970. To keep the current millage I recommend closing this gap by making the following changes: Reduce the transfer for Capital Improvements [1 ] $1,500,000 12 unpaid furlough days for all employees [2] 2,080,000 Eliminate City contribution to Retiree Health Trust (VEBA) [3] 703,800 Pension Plan changes [4] 2,000,000 Reallocate Engineering Division costs [5] 445,666 Reduce Fire Department Minimum Manning by two [6] 500,000 Additional line item adjustments 43,504 Total $7,272,970 [1] The current undesignated fund balance in the General Fund is $19,747,589. If we use $1,500,000 for capital improvements in next year's budget, the remaining balance will still be over 20% of total General Fund expenses for FY 2011. [2] This equates to a 4.6% pay reduction for all city employees. It avoids laying off any employees and spreads the sacrifice equally to everyone. Fire department shift employees would be furloughed one shift per quarter. An alternative for Police would be to return them to a 40 hour week. (They are currently on a 42 hour week.) [3] Eliminating the VEBA contribution (3 % of salary) would significantly reduce our costs without affecting take home pay. Also, since the recently passed Federal healthcare legislation includes subsidies for health insurance for early retirees stating at age 55, the need for a VEBA has been reduced. Perhaps a VEBA could be resumed in better economic times. [4] The Commission had previously been informed of various possible pension plan changes. These will have to be negotiated with our bargaining units. [5] Engineering Division costs will be divided equally between the General Fund, Water and Sewer Fund and the Stormwater Fund, rather than all being charged to the General Fund. [6] Reducing Fire Department minimum manning by two. This will significantly reduce overtime costs in the Fire Department. However, it means that at times presumably Stations 4 and 5 would have one less person on the shift. The rollback rate is 8.1330 mills, which would bring in an additional $5,618,650. Each 1/10 of a mill would bring in $645,574. • Page 2