HF&H Consultants, LLC

City of Sunnyvale

Annual Rate Reviews

1995 - Present

Client Needs

The City of Sunnyvale contracts with a private hauler to provide residential and commercial solid waste, recyclable materials, and green waste collection services. In accordance with the franchise agreement with the private hauler, annually the hauler is required to submit a calculation of its projected compensation for the forth-coming rate year.

Annually, the City wants to verify the compensation calculation submitted by the franchised hauler has been calculated in accordance with the guidelines outlined in the franchise agreement, that all costs reported to be incurred have been incurred providing franchised services to the City’s rate payers, and that such costs are reasonable based on industry experience.

HF&H Solutions

Our annual reviews of the private hauler’s rate applications have included: 1) reconciling the application to financial statements and prior year projections; 2) allocating costs between franchised and non-franchised operations; 3) developing and documenting an agreed-upon methodology for projecting workers compensation expense and a method for reconciling actual workers compensation expense to projected in future years; 4) developing and documenting an agreed-upon methodology for cost-savings incentive payments due to cost cutting measures employed by Specialty; and, 5) reviewing the reasonableness of and support for multi-year financial forecasts.

Results

For rate year 2006-2007, the company submitted its contractor compensation application in the amount of $16,138,115. HF&H reviewed the application and recommended adjustments, which reduced the contractor payment to $15,880,386, for a savings of $257,729.
HF&H assisted in the development of an incentive program to encourage operational efficiencies by the franchise hauler. Any cost-savings resulting from hauler-initiated operational efficiencies are shared 50/50 with the rate payers and hauler. For rate year 2006-2007, the operational efficiencies cost-savings program resulted in costs savings of $212,000 for the City’s rate payers.