it is virtually public-service been provided. rate payers are paying for the service. it is something the city has condemned with the current agreement that has lasted decades. -- it is something the city has condoned with the current agreement that has lasted decades. >> i have no idea of the documents in place. that is not something we looked at. supervisor mirkarimi: i know we're facing a tight timeline. if we ask you to go back and with the question that goes to the heart of what a number of us were asking about how we're getting compares to what other jurisdictions are getting, how long would it take you to do that comparison and look at the issue that commissioner avalos brought up? >> and like to get three weeks to a month.

-- i would like to get three weeks to a month. let me give you a caveat. to compare services, we will have to have cooperation from the haulers that provide services. a lot of jurisdictions including oakland and san francisco have city facilities collected either at the discounted rate or for no charge. there is no way for us to tell you on the city by city basis with the value of that is. that has to come from the haulers. in addition to the big three, there are 19 other ones plus one national one. the cities themselves may not want the information released. we would be happy to try and tell you what the results are. i can guarantee you we will not get it from everybody. supervisor mirkarimi: thank you very much. if you can stand by in case any

other questions come by. miss miller? we have representatives from rcology and melody standing by. supervisor mirkarimi: miss nutter, thank you for being here and working with the lafco staff to make sure we have as much information as we can have. >> she and her staff were always available to us as consultants. there were very professional in providing data. i believe we will get nothing but cooperation from her staff and your current provider. >> i am here to address you on the study commissioned.

i thought i would put a chart here on the overhead projector that may answer some of the questions. you may not be able to see that well. this charge is provided to all of you. it was distributed this morning. you should have at your desks. it may be in the package provided to you. it shows the effective franchise fees currently receive for the city and county of san francisco is about 10%. this chart adds up all of the fees paid directly to the city from recology through the rate setting process and the free services. some include the fees paid directly to the city. those are in pound accounts, vehicle license fees, debris box permit fees, business tax, and

facility permit fees. that equals the sum total of payments to the city of about $11 million. free services received by the city include free disposal, the city twitter can collection, discounted collection services, the clean team event, and other miscellaneous events throughout the year. that is a value of about $18 million. the total fees adn free services received is about $29 million. i wanted to highlight that because that seemed to be the direction of the questions. supervisor mirkarimi: is there a document that outlines the terms and conditions for the contractual relationship? is there a document that says

this is everything they are supposed to pay? >> it is documentation from the rate setting process. i would like to bring up robert haley. has gone through the process and can tell you what is included in terms of documentation. supervisor mirkarimi: is there a single document that outlines this? >> roberts kentucky what documentation is. -- robert can tell you what the documentation is. >> there is quite a bit of documentation in the last rate process. there was a lot of discussion on the subject. there is one exhibit that outlines the costs in the rates for these services. in the actual application, there is a table that talks about the impound account and those kinds of things. there are quite a few things in the record that would give you information on this.

supervisor mirkarimi: i am looking for a contractual, legally binding document that says what they are supposed to pay. >> we do not use a contract in san francisco. supervisor mirkarimi: commissioner avalos? supervisor avalos: i appreciate the line of questioning about what they provide. i agree that they provide a great service. communities across san francisco have benefited. it seems the service could be arbitrary depending on what the issue is and what service is being renewed or increased. that has some benefits. it would be great to have something that would be more global in how the new services are rendered to the city and what the benefits are. having clarity about that is

good practice in government. >> i hear the questions of the commission and the concerns regarding documentation. our main concern is to ensure that since we have a system that works, we have a system in place that has worked for many years, and that is highlighted, we are succeeding in having the highest ever generate, that we want to ensure that even if we are looking at additional documentation for our system, that our system is not disrupted. we are working aggressively to reach zero waste by 2020, and any part we -- in the work we're doing would severely jeopardize our ability to reach that goal. that is our perspective, how we can keep having momentum to move down the path to reach zero

waste by 2020. commissioner campos: just a follow-up -- was this information shared with r3? >> yes. it was sent on the morning of wednesday, april 13. >> yes, that is correct. was too late to make it in the final report, and that is why you have that as a separate item. commissioner campos: that goes to my earlier point. this information, it probably is the first time for me that i have seen anything that details the amount that is paid by recology to the city. it makes sense if you go back and get more information that this is information that they take into account. just a final point about the breakdown -- who decided what the amount would be, the 10.6%,

and we decided the allocation of the fees -- who decided the allocation of the fees? >> my understanding is it is part of the process between recology and the city. commissioner campos: in other jurisdictions -- oakland being one of them -- the city council actually has a say over rates. to your knowledge, the board of supervisors has never opined on what the amount should be or what the allocation of these funds should be? >> not to our knowledge, but other -- under our current process, any member of the board of supervisors could initiate the process. commissioner campos: is there a reason why under the rate process, the number that was cited was 10.6% of the total revenue? >> this is our deputy director.

>> it was not based on a percentage. it was based on looking at individual costs for programs and their individual services. that was looked at in the context of whether that total was a reasonable amount, but it was not set at 10.6%. at that point -- and actually, the percentage may vary depending on the revenue that comes in to recology. that 10.6% -- the amount is fixed, so if there revenue is lower, that percentage could go up -- it -- if their revenue is lower. commissioner campos: the reason i ask is a superficial comparison.

it does not necessarily -- >> it is not an apples to apples comparison. oakland a's $7 million for the recycling collection services. the net benefit to the city really is $22 million to the city of oakland. commissioner campos: again, we have not had our consultant look at that. ok, anything else? >> if i may just make a brief statement. thank you. on behalf of the department of the environment, we appreciate the information and analysis that was compiled, especially given the short time frame, and largely agree with the content that was included in the presentation today. the report confirms that san francisco's residential refuse rates are close to bay area averages, that commercial rates are at or below bay area averages, and the san francisco has one of the most comprehensive refuse collection systems in the bay area.

no major service voids have occurred, and as you have heard, the system is working actively. just as important, the study does confirm that our average rates are higher than any in the bay area. although we agree with the overall content of the report, we do have concerns with the report's recommendations. while representative use rates are low and average when compared to bay area counties and the program does perform at an exceptionally high level, as you heard, the report recommends that the policies governing our current system be repealed. this unfortunately does not add up. based on the performance and level of service that recology provides to send a cisco, we expect that the recommendation would be just the opposite, which is that other cities and counties could do well to perform -- conform their system to the way the san francisco is operating. to touch on a couple of points, san francisco's permit system

for refuse collection may be unusual, but that does not make it undesirable. san francisco, as you heard, is not alone in choosing its refuse collection through a non- competitive bidding process, and shows that 45% of jurisdictions do not competitively bid their refuse service. also, our current system provides the greatest flexibility in the event of any unforeseen circumstances that were referenced in the report. our current system has a level of flexibility already built into it that allows for ongoing improvements to service not possible under a bit and contract system. as i'm sure you are well aware, once a city accepts a bid, then that particular level of service as well as the particular cost is locked in here with our current system, service adjustments can be made at any time, and we can set rates at any time as well, so we do not need to wait for any

contractual changes. a couple points i wanted to raise -- the report also states that it is unclear whether recology could sell or reassign its licenses and permits to a different company. we did get confirmation from the city attorney's office that confirms permits are not transferable to other entities, so wanted to make sure that the commissioners were aware of that. on the other hand, contracts can be transferred, and if recology were planning to transfer service, the city could quickly reach to new permits, and the permit system ensures that the permit will not stop here finally, without an extended long-term arrangement, recology will have no incentive to invest in long-term recycling structure, which we are concerned could bring our push to zero waste to a halt. san francisco, as you know, has the best diversion rate of any city in the country because the rate process allowed recology to

invest in amortize state of the art recycling facilities over time. finally, just wanted to mention without the flexibility, security, long-term planning, and cooperative partnership of the current system, the city's 0 with goals, which are set by the board of supervisors, could be severely compromised. we urge the lafco commissioners to support the current refuse system that works for san francisco. thank you very much for your time today. commissioner campos: thank you. i have a quick follow-up -- one of the things that stood out to me was the abatement report. i wonder whether or not you agree or disagree with what they are saying. this is what it says -- "while no apparent service lapses or voids have occurred, it does not appear that recology is contractually obligated to negotiate with san francisco or continue providing services." >> it is true we do not currently have a contract in

place. that is true. but again, from our experience, we have not seen any lapses in services for any reason to be concerned about the service that recology is providing. if there was a lapse in service, we could quickly reassigned those permits to another entity to enter the service does not stop in san francisco. commissioner mirkarimi: thank you. i agree with the overture with regard to recology. it does provide an excellent service, and it is a hallmark that it is employee-owned, and it is something that is unique to san francisco. in your remarks, i want to make sure we are clear about the uniqueness about recology and investing in san francisco and us and them. it is known that recology is

looking into brisbane. with that on the horizon, but they could continue with their continuous operation to expand to about a 70-plus acre land, that would mean moving not into san francisco, but moving actually into brisbane. the city council there is contemplating a tax that would then benefit the city of brisbane, not the city of san francisco. isn't that correct? >> that is what they are currently looking at. commissioner mirkarimi: this is something i have shared with the office of economic and workforce development. to me, that is a mess. i thought that there was some opportunity or prospects for san francisco to be able to buy four that were to be part of the expansion process, it would have been, i think, more to our advantage -- and actually, we are going to try to advocate for san francisco -- to have that

opportunity afforded to city hall so that we would have been able to be more competitive in that process. i have to tell you, when we came in to the knowledge of that happening, and based on all our research, city hall was not on the front burner of trying to stymie that expansion into a city away from san francisco. >> as you know, we have initiated discussions with the port of san francisco to see if there is an alternative to keep recology in the city and county of san francisco and consolidate their facilities long term at the port. we have been working actively to make sure that we are exploring all options and insuring that as recology does expand service and a facility, that san francisco will get the best deal. on the measure that is potentially being proposed for brisbane, that is being negotiated as we speak. that is not a done deal.

we certainly do need to and would recommend that we engage with the city of brisbane to look at what the terms of that measure would be and have been in touch with city hall about that. commissioner mirkarimi: and we get that, but i know through a lot of the meetings, which i do appreciate, the feedback we have been getting from your department as well as recology itself, and that recology has got to do what recology has got to do. but in the conversation you just had with share -- chair campos, i want to make sure it is clear that for us to benefit from their growth and expansion is the question that we are trying to prime, and that is -- how does san francisco and san franciscans benefit from this as well? that goes to the purpose of what is being discussed here, based on past practice and future, i think, observation. is exactly what i think is driving some of this discussion.

when i and others tried to insert ourselves in the discussion, it was only on the knowledge towards the tail end of us discovering that there had been plans set in motion to drive expansion away from san francisco, when we said, "weight, is there not an opportunity for san francisco also to get a piece of the pie?" so we could be a limit our for or be able to afford business back within the municipality itself, while at the same time supporting, i think, the business plan that recology may have geared our way to make sure that the presentation you would forward with is also attached to the notion that we're trying to look at the future and where the dollars are going to come from. >> i agree with you and we have been sympathetic to the interest in ensuring that the city and county of san francisco gets the best deal. i know that you will be hearing from recology soon, but looking

at this in the big picture, even if the facility is consolidated and there may be a tax cut on the ballot, the reality is with the upgrade in service and the upgrade in facility, how will that still benefit our ratepayers and long- term service in san francisco? so i think it is a macro picture, and recology is best to speak to that, but i want to make sure that we are looking at even if the facility does expand, it stands to have some pretty strong benefits for our service. commissioner mirkarimi: thank you. commissioner campos: let me say that one of the things that i have seen through this process in learning more about how the process works and the work that recology does is that i have been very impressed by the operation that recology runs and the fact that it is an employee-

owned company, and having visited the facility, it is very impressive. this discussion is not about the ecology not doing the job that is supposed to be doing, nor is it about the quality of the work. to the contrary, i do not think anybody is disputing that. the question here is what is the city getting -- is the city getting the best deal possible for itself and ratepayers'? that is the central point. looking at what happened in brisbane, i do not fault the city council or city government to try to get its fair share. in these tough economic times, every government has to figure out a way of injecting revenue into its system, and that is why we are going through this process. i'm trying to understand from

your perspective, is there a benefit to us further exploring whether or not we should have a codified franchise fee agreement for a codified agreement -- is there a benefit to us exploring whether or not the percentage of what the city gets from recology should be modified? is there a benefit to us deciding whether or not we should benefit to a rate that is comparable to other jurisdictions? >> from our opinion, those are absolutely appropriate questions to be asking from this body as well as the board of supervisors. we obviously have to make sure that all of those bases are covered, while we are renegotiating as well as having additional discussions. i will say that our concern is

that there will be -- it depends on the process of how some of those items may be addressed. that is the question for us because there are some processes that may very severely disrupt the work of the department of environment. if certain facts are taken to address those questions. i will say we absolutely respect those questions being asked, and this is a very worthwhile discussion to be had. we have concerns about the different ways that that may take shape and how that will ultimately affect our department goals. commissioner campos: thank you very much. why don't we hear from recology? again, i want to thank recology and their cooperation with the city and county throughout the process and for being very open and sharing information with us. one of the things, by the way, that really impressed me was the

respect that is accorded to your employees who ultimately are the owners of the company. >> thank you. we want to thank you for the opportunity to comment on the work that r3 did in the report. we were very pleased by the comments that they made about how we conduct our business and the things we do for the city. everything has already been said a few times already, but i would like to comment on a couple of things. i guess we just see the world from a different point of view. there is no contract, as you know, with the city, but -- we have -- the mentioned 23 communities in the bay area that we have contracts with. around the state, would probably have about 100 contracts.

i do not think any ~ well are alike. -- i do not think any two are alike. we began providing service in san the tail on january 1 of this year. those 12 agencies have a standard form agreement that provides all the legal terms about what we are obligated to do. every city has decided they want some slightly different little services. they all want a different franchise fee. they have others that are added on to that. in that area, where branded state of the art agreements, if you can call of that, no two are alike. sadly, you can look for comparability anywhere you wanted. we look at the arrangement we have with san francisco a lot

differently from others here today do. we apply occasionally, and we have tried to make it a fairly regular process for changes in rates that are designed to cover our costs of business and give us what the city percy's -- perceives as a fair profit. that is a very intensive, long process altogether, including public hearings before we ever file a rate application. members of the public are invited to comment upon the services that we provide, what they might like to see done differently. many open public meetings. we work with a couple of city departments to adjust that, put that into the thought behind a rate request.

we work closely with department of public works, with department of the environment to develop the specific programs that we are going to provide. in san francisco, just on our recycling programs, there is 19 of them. in the other 99 or so contracts we have, nothing comes close to that. we are trying to develop things that accomplish what it is the city tells us they want. we provide that information, and then again go through hearings in front of a hearing officer that is usually the director of public works, the person assigned to that. we get through -- we provide testimony under oath. witnesses can be examined, cross-examine. we can be asked to submit additional information. the city then reviews all that, puts on their take on what is all about. after about roughly a five-month

process, we end up with a very detailed rate order. i actually provided a copy of it so they could see in great detail what we are expected to do. in our mind, that is our contract. it is telling us, "you have to provide these kinds of services. you can use this many trucks of this nature, this many employees. you will be incentive -- incented if you accomplish specific requirements. sometimes there are penalties if you do not achieve them." it is very specific about what we have to do, how we get compensated for what we do. that might not be a contract, but it comes awfully close to one, and is reviewed typically every five years. if you do not have that, we are more than happy to make that available toou