MEETING DATE: 5/8/2018
DEPARTMENT: COUNTY ADMINISTRATION OFFICE
DEPT HEAD/DIRECTOR: John Guertin
AGENDA ITEM PREPARER: Kevin McCarthy, IWM Technical Lead Manager
SBC DEPT FILE NUMBER: 142
SUBJECT:
RESOURCE MANAGEMENT AGENCY - J. GUERTIN
Landfill Ad Hoc Committee’s Recommendation to Approve Waste Connections Inc. Landfill Operating Agreement 2018 Cost of Living Adjustment (COLA) request for $153,397.00; Approve annual COLA; and Direct staff to make this payment through use of funds in the landfill (IWM) Enterprise Fund 301.
SBC FILE NUMBER: 142
RESOLUTION NO: 2018-17
AGENDA SECTION:
REGULAR AGENDA
BACKGROUND/SUMMARY:
Summary
The Landfill Ad Hoc Committee, comprised of Board Chair Botelho and Vice-Chair Muenzer, is recommending approval of Waste Connections Inc. (WCI) 2018 COLA request for $153,397. County staff and the Landfill Ad Hoc Committee met on March 15, 2018 to review the final adjusted COLA request from WCI dated March 12, 2018 and determined the request was acceptable. A summary of how the COLA adjustment amount was determined is found in the table below provided by WCI.
|
2017 John Smith Road Landfill COLA
|
|
Employment Cost Index
|
|
Year
|
1st QRT
|
2nd QRT
|
3rd QRT
|
4th QRT
|
Average
|
% Change
|
|
2016
|
125.8
|
127.1
|
127.3
|
128.4
|
127.2
|
|
|
2017
|
129.2
|
130.2
|
131.1
|
131.6
|
130.5
|
2.7%
|
|
Consumer Price Index
|
|
Motor Fuel Index
|
|
Year
|
Annual
|
% Change
|
Year
|
Annual
|
% Change
|
|
2016
|
269.5
|
|
2016
|
200.2
|
|
|
2017
|
277.4
|
2.9%
|
2017
|
232.4
|
16.1%
|
|
Expense
|
Amount
|
% of Cost
|
Index
|
% Increase
|
|
|
|
Labor1
|
$1,124,141
|
30.0%
|
2.7%
|
0.8%
|
COLA
|
|
|
Fuel2
|
$255,408
|
6.8%
|
16.1%
|
1.1%
|
2017 Revenue
|
Increase
|
|
Other3
|
$2,373,392
|
63.2%
|
2.9%
|
1.9%
|
$4,085,861
|
$153,397
|
|
Total
|
$3,752,941
|
|
|
3.75%
|
Floor4
|
$81,717
|
|
1) Sum of Total Labor, Total Supervisor, & Wage Related Items from Truck Variable
|
|
2) Line items 52142 & 56142 from 2016 P&L
|
|
3) Total operating costs & SG&A less labor & fuel
|
|
4) Floor and Cap set at 2 & 6 percent respectively
|
The 2018 COLA payment is much higher than the 2017 COLA payment of $74,405 due to a much higher increase in the motor fuel index at 16.1% vs. a 12.5% reduction the previous year.
Background
WCI submitted its annual request for a compensation adjustment per Section 6.2 of the Operations Agreement. There were a series of communications between County contract RMA staff re: the 2018 COLA request as follows:
1. WCI submitted its original 2018 COLA adjustment via email on 2/26/18 for a total requested adjustment of 5.45% or $226,576.67. This amount included a request for $4,052 for a COLA adjustment on the COLA payment made by the County to WCI last year. The application also included use of two new indices as two of the previously used U.S. Bureau of Labor Statistics indices expired; one of the new indices was a replacement index for (CPI) and the other new index was a diesel fuel index to replace the expired motor fuels index.
2. Staff researched to confirm and determine what the exact replacement indices and found that WCI had used the correct CPI index but had not used the replacement index for motor fuel. WCI was directed by staff on March 1st to resubmit their COLA request reflective of use of the new motor fuel index.
3. On March 1st WCI resubmitted their COLA adjustment and the result was a request for 3.75% or $153,397 plus $2,793 for the COLA on the COLA payment; new total of $156,190, a reduction of $70,386.67.
On March 1st and again on March 12th, staff inquired as to the contractual justification for assessing a COLA on the County’s prior year COLA payment as no such rationale seemed to exist. On March 12th WCI emailed staff and stated they would withdraw their request for the $2,793 COLA on the County’s prior COLA payment.
BUDGETED:
Yes