Re RFP 2014-38Holly & Jack,
As in our conversation earlier today and as further confirmation as to
my calculations, I had the opportunity to visit with Dr. Whittmer who is
the CFO for the City of Daytona Beach Shores and he stated the same
thing I did that it really is a simple calculation. If you have a
number that is already grossed up with the franchise fee included then
to get to the net number you would simply use the percentage of the
franchise fee, which in this case is 5% for residential and 10% for
commercial, and simply multiply the grossed up number by 100% less the
franchise fee amount of %5 which would equal 95% to reach the net number
the City would be required to pay the contractor. In this case the
number for residential is $5.30 + $3.30 + $2.00 + $2.65 = $13.25
including franchise fees of 5% for Republic. Now as a contractor I
would expect the City to pay me the $13.25 - .66 = a net $12.59 per unit
for those services. The .66 is 5% of the $13.25. Also if I use the
$13..25 grossed up number and multiply that time .95 = $12.59. If we
used you algebraic calculation of dividing the $13.25 / 1.05 = $12.62
therefore the City would be paying the contractor .03 to much per unit
monthly for a period of the contract which in this case would accumulate
and compound over 7 years. Just a simple non compounding of that .03
would equate to $4,344.48 but that is not the real number since it would
compound over the term. The contractor will expect to be paid the
amount of $12.59 per unit net to them.
The contractor will be paying the City a franchise fee directly to the
City on the commercial aspect of this contract and what they will pay
and how the will calculate this is page 2 of the spread sheet the amount
of $7.72 per cubic yard less 10% therefore equaling a net to the City of
$6.948 per cubic yard which is a true 10% of the grossed up amount
including the franchise fee which makes the net number $6.948. The City
will receive .772 per cubic yard franchise fee. If we did your
algebraic calculation the number would be net to the Contractor of
$7.018 per cubic yard and the City would receive .702 per cubic yard for
franchise fees instead of .772 making the difference of .07 per cubic
yard less and that would equate to $48,160.00 annually and the
non-compounded amount of over the 7 year contract equate to $337,120.00
less the City would receive in franchise fees.
The contractors would be more that happy to take your numbers because
they will keep more money which equals a lot of dollars over the term.
In my 35 years of doing this, this is how the calculations have been
done in every municipality I have dealt with and if Delray is different
for one reason or another I would suggest the City make those changes
now since it is a tremendous benefit to the City and this is what the
hauling community is accustomed to.
Any questions please do not hesitate to call on me.
Thanks,
Bill Redman
Sr. V.P.
On Mon, Dec 22, 2014 at 4:20 PM, Vath, Holly <vath@mydelraybeach.com>
wrote:
Please review the attached draft and summary pricing schedule.
This is based on the last spreadsheet from Mr. Redman. On the
residential, the side-door figures had to be removed. They were added to
the pickup, but not taken away.
Based on the discussions at the meeting, does this capture the
City Cost for Waste Management correctly?
Holly Vath
561-243-7123
--
William S. Redman, Jr.
Senior Vice President
Office Phone: 386-427-9339
Cell Phone: 386-527-8667
Fax: 386-427-4549