October 4, 2007
LC Commkissioners Give Norcal 15 Percent Increase

By Dave Maxwell

Asking for a 30 percent increase in garbage collection fees from Lincoln County, Commissioners last Monday allowed Norcal only a 15 percent increase.

Two weeks ago, Norcal representatives had appeared before the Commission continuing their request of a 30 percent increase in rates for residential and commercial customers. In accordance with Norcal’s 49-year lease with the County to provide garbage collection service, they are allowed to make request for up to a 30 percent rate increase each year. Norcal has said at current operating expenses, they are losing about $424,000 a year and even with a 30 percent increase for 2008, would still be losing over $335,000. However, Commissioner Wade Poulsen said he understands that to mean that County has the right in the agreement with Norcal to set the rates that can be less than 30 percent, but not higher. At the time, Commissioners were not willing to accept the request of 30 percent and asked Norcal to revise their request.

Paul Yamamoto, acting on behalf of Norcal, presented a new proposal of a 25 percent increase for residential customers, but the same 30 percent increase for commercial. A 25 percent increase in residential rates would only lower the current rate 50 cents a month. The annual residential rate would then go from $120 a year to $138 a year, or from $10 a month to $11.50 a month. Commercial rates might be adjusted differently.

Poulsen said he does expect Norcal will now take the matter through an appeal process.

Another factor driving the need for the price increase Norcal claims, is the fact that they still have not secured an expected contract with the city of Los Angeles to haul garbage by railroad to the Lincoln County landfill. When Norcal bought the Crestline service in Lincoln County, one of the main selling points was that the LA contract would generate upwards of $1.5 million per year and that Norcal would soon be making enough money to maybe not even have to charge residents of Lincoln County at all for service. However, after several years of negotiating, Norcal still has not received the LA contract and Yamamoto indicated at the meeting this week, he does not know how long that might be, if ever.

In offering the 25 percent increase, Yamamoto said the extra 5 percent ($9,000 a year) would be deferred into an “interest bearing account that over time could potentially be paid off at the time when LA waste arrives at the landfill. But if the hoped for contract with LA does not happen, then Norcal would forgive the debt and absorb the loss themselves. Commissioner Wade Phillips summarized the offer by saying the meaning of the proposal if for Lincoln County to raise residential rates by 25 percent. Norcal then puts $9,000 a year, (the other five percent of the original 30 percent) would go into an account that grows at a fair market value. When Norcal gets the LA contract, the County would then reimburse Norcal for the account. If Norcal fails to get the contract, then Norcal would not ask for repayment and just take the loss.

Yamamoto said Norcal feels the County should also share some of the risk of Norcal getting or not getting the LA contract. If they do, Lincoln County would not have to pay back the extra 5 percent, but if they don’t, then Lincoln County owes however much is in the deferred account at the time.

After much discussion, the Commission was not willing to take the 25 percent rate increase idea and allowed Norcal only a 15 percent increase which will probably raise residential rates from $120 to $138 a year, effective with next landfill bill sent out.