The City of La Palma has an exclusive residential and commercial waste hauling agreement. The agreement requires a biennial examination to verify the accuracy of customer billing, franchise fees remitted to the City, and confirmation of the processing cost component assumptions.
HF&H Solutions
The City retained HF&H to perform the initial biennial review for calendar year 2000 and subsequent reviews for 2002, 2004, and 2006. To meet the needs of the City, the scope of the biennial examinations has varied from review to review. The scope of work for the biennial reviews completed included the following:
Verifying the accuracy of franchise fee remittances;
Verifying account and billing information;
Performing field observations of commercial bins and roll-off boxes in service and reconciling observations to customer billing records; and,
Verifying the accuracy of the processing cost component of the rates.
Results
Calendar Year 2000: HF&H found that the Contractor accurately calculated and paid franchise fees, properly remitted water and sewer receipts, accurately billed residential and commercial customers, and accurately billed processing components charged to and collected from customers.
Calendar Year 2002: HF&H found that the Contractor accurately calculated and paid franchise fees, accurately billed residential and commercial customers, and that the processing components charged to and collected from customers exceeded actual processing costs by $85,000.
To offset the over-billing of the processing component, the contractor agreed to waive the cost of living adjustment to the Contractor’s service component of the rates for two and one half years.
Our findings lead to an amendment of the solid waste services contract to clarify language related to the processing cost component. The billing method for roll-off box services was modified from a flat fee per load to a charge per pull plus actual disposal costs.
Calendar Year 2004: HF&H found that the Contractor accurately calculated and paid franchise fees, inaccurately billed a number of roll-off customers as the Contractor transitioned to a new roll-off billing methodology, and that the processing components charged to and collected from customers exceeded actual processing costs by $36,000.
Calendar Year 2006: HF&H found that the Contractor was overpaid franchise fees by approximately $6,000, accurately billed the processing components charged to and collected from customers in relation to the actual processing costs incurred, and met the required MRF diversion of 35%.
City of La Palma