used rape board hearing in 2023 . we're going to call this meeting to order. thank you. please respond with here or present, um, chair chew. ah and board member um corbyn, nova corba nova sitting in for board member herrera present. with two board members present. we do have a quorum. we also have john givner here today from the city attorney's office. thanks for being here. um. now we'll move forward with the land acknowledgment. we acknowledge that we're on the unseated ancestral homeland of the rama touche aloni, who are the original inhabitants of the san francisco peninsula? as the indigenous stewards of this land

and in accordance with their traditions. the rahmatullah aloni have never seated loss nor forgotten their responsibilities as the caretakers of this place as well as for all peoples who reside in their traditional territory. as guests. we recognize that we benefit from living and working on their traditional homeland. we wish to pay our respects by acknowledging the ancestors, elders and relatives of the rama tuesday community and by affirming their sovereign rights as first peoples. them. the next item is item to hear, uh, opportunity for public comment on any matters within the board's jurisdiction that are not on the agenda. um comments specific to the item on the agenda may be heard when that item is considered general public comment, maybe continued to the agenda, maybe continue to the agenda of speakers succeed 20 minutes of public comment. do we have any in person public

comment here today? for general public comment. seeing none. we will move to the phone lines. we have sf gov tv and digital, um or media services helping us out today. um do we have any colors online? i'd like to say something. thank you. um, one moment, please. and your time will begin now. good morning, everybody. this is dennis herrera, general manager, the sfp you see? um i as i've let the chair and others know. um i am. i'm sorry. i'm not there today, but i have covid and i am recovering. and, um, you know, while i'm around following state , city and state guidelines about when i can return to in person work, so i will be attending this on webex and i

look forward to the presentation. thank you. thank you, mr herrera. and we hope you recover very quickly. we still have one collar for public comment. thank you very much, um , will now go to that color. um, your time will begin now. can you hear me now? yes we can. mr. pill pill. thank you. surprise it's david pimple. so three quick things one i join in wishing general manager herrera a speedy and successful recovery . we want him to be well to, um period, so i hope you feel better, too. i could not hear chair chew at the beginning. so if you could just be sure that her microphone is a muted when she's speaking so that we can all hear her and three i just wanted to say to all present and

listening. i really appreciate the time and attention that everyone is given to this process. i've uh, spoken to many of you. in the last weeks and months, and i feel very heard and, um, able to participate here, so i think this has been a good process thus far. i expect that it will continue to be, and i just thank you for being able to be heard. i don't always feel that way with city government, but i feel like this has been a good process today. and just wanted to thank everyone for their time, and that's all i have to say right now. thanks for listening. thank you, mr popo. i recognize here. i didn't read the instructions for webex . so i will read them now this will be the only time we read them. but if you need more information, please just type that in the chat. members of the public who wish to provide public comment on this item should call 4156550. access code 2598054. a password should not,

um, not be necessary. but if prompted, please enter 32 to 8, then press pound if you haven't already done so, please dial star three delighted to speak. for those using webex, please click the raise hand icon. a system prompt will indicate you have raised your hand. please wait until the system indicates you have been and muted and you may begin your comments. please note that you have two minutes to speak. the refugees rate board will, um, here up to 20 minutes of remote public comment on each agenda item in order that commenters add themselves to the queue. because of the 20 minute time limit. it is possible that not every person in the queue will have the opportunity to provide remote public remote public comment. remote public comment from people who have received an accommodation due to a disability will not count towards the 20 minute limit. um do we have any other speakers online? there are no speakers online currently. thank you very much, um, chair to this

concludes the general public comment. thank you very much. clerk stone. we're going to call item number three. thank you. item number three is to adopt a code of conduct and ex parte communications limitations procedures. this is an action item and has been noticed in accordance with charter section 4.104. thank you very much, jay. this was, uh, we put it back on the agenda because we hadn't noticed properly in the previous meeting, so it's the same code of conduct that you read in the previous meeting and approved. thank you very much for the overview. just a quick note here for folks. there is a part or a line in the expert, a communication that i just want to read out loud. for the record . it speaks to the manner in which the refuge rate board members should not communicate with refuse companies on matters within the subject matter, jurisdiction of the refuge rate board. um there is also an

exception. however, this policy shall should also shall not apply to communications between a refuse company and a member with respect to city. business distinct from the actual rate setting process, except that in such cases, members shall disclose the nature of the communications on the record at the start of the next refuse rate board hearing. i want to just communicate that for transparency, the city administrators office through the office of contract administration is an active negotiations with regards to san francisco's city municipal waste contract. um and while i am not in direct communication, my staff, maybe. so i simply want to make sure that we put that on the record as well. with that. do we have any public comment? thank you. chair chew. we will now take public comment on this item. uh, members of the public may address the board with comments specific to the current item and will be limited to two minutes of speaking time per person and a total 20 cumulative minutes for this item. members

of the public who i wish to provide in person. public comment. please line up at the podium now, do we have any members who would like to provide these comments in person? does not appear so members of the public who wish to provide remote public comment on this item should dial star three on the phone or click raise hand in webex. please note you will have two minutes. do we have any remote public comments for this item? we have one caller. thank you, um. color your time begins now. can you hear me again? we can hear you, mr. pill pill? yes. great david . fill pelican. so um, thanks for being the code of conduct packed for a second round today . i think the language is good. i had a couple of suggested. edits on the paragraph on x

party communications. um i think it might read better if it says it shall be the policy of the refuge rate board for members to not communicate blah, blah, blah so that it it's not what's against the policy, but says what the policy is, um, second point there, i would consider expanding that ban on communications to not just be with refuse companies but also with city departments that receive funds through the impound account with regard to use of those impound account funds, only to have a very narrow ah limitation there because it just seems like that might be useful. um and in the paragraph on ethics rules. the first line. sorry the second line that the first sentence actual and potential conflicts

of interest instead of must say , and shall publicly disclose such matters as required by city law and policy. and those are my three suggested at its rear consideration. but the language here in general is good and my suggestions were merely to buff it up a little bit. thanks for listening. thank you, mr pill pelt. um do we have any additional colors online who would like to give public comment on item three. there are no more collars. um chair chew. this concludes public comment on item three. thank you very much clerk stone for the public comment, um, given that we have a discussion or action item on this item, i want to appreciate the public. uh, commenters recommendation. i think that the policy as it's written is appropriate. i do believe that from time to time we may want to seek information from departments in the course of

this process just to make sure that we understand pieces, so i'm not going to suggest that we amend. that, of course, will work closely with j to make sure that that occurs inappropriate manner. so colleagues. do we have a motion on this item? i would move to approve. okay there's a motion to move it and i will second it and we'll do a real call. okay we'll do a roll call vote, um, chair chew. yes. uh in member core. ivanova? yes. thank you. thank you. it's been passed. we will move on to item number four, which is a presentation of the refuse rate administrators report and recommended rate order. thank you. church ooh, four is the presentation of the refuse rate administrators report and recommended rate order. this is a discussion item only presenters may begin with their presentation when ready, and i believe we'll start with opening comments from the deputy comptroller. good morning chair

, chew and member corvin nova, um and also general manager and member um herrera on the line. it's a pleasure to be before you here today. todd rystrom, deputy comptroller. i've been working on a number of these items and about 2020 with ecology and the refuse cos i'm here in san francisco, and we made a lot of good progress and covered a lot of ground that said, i believe there's also a lot of ground yet to cover and so later in the presentation today, you'll hear from refuse rate administrator allow about planned work that we have scheduled. um over the coming 12 to 18 months in particular. um i would also like to say that it's been very good to work with ecology, as well as dpw department of environment and also the department of public health department of public health service of vital function wherein they serve as a sort of a bureau of delinquent revenue, um, for unpaid refuse bills that are public health

necessity required service levels in the city. um and that makes them the relationship as well, unique as well, because it also helps cut down on, um on bad debt or or uncollected bills. the rate before you here as you've discussed briefly in your first session as well is a two year rate request and the refuse rate administration office. we established it very quickly after voters mandated that it be moved to the comptroller's office in june of 2022 fully staffing it by late fall. 2022 and i'd like to acknowledge in particular jaleo as well as ben becker for their great work and bringing this and ramping ramping up. ramping up is a lot of detail as the members on this on this body? no and so there's much done and there's much it to do. a couple of areas that she'll hear about it towards the end of mr lau's

presentation, i think will interest the rate board in particular. in addition to that, our offices, finishing also a planned public integrity report on the landfill disposal agreement, and so in coming weeks, we plan to issue that as well. and that's of note because the proposal before you for your deliberations includes the assumption of the terms and conditions extended under that landfill disposal agreement. which leads me to say that there may be opportunities mid cycle or in early 2025 to revisit various provisions as well, um, for the rate order. requires us to have no less than two years no longer than five years, and so questions like that, including cola, or automatic escalation. provisions are some of our outstanding questions that we'd like to review and consider with city attorney as well as others as far as what's permissive and what's limited, given the way the property was written. so with that, i'll turn it over to, um, um, mr lau and,

um look forward to helping with any questions. morning uh, church, chew, uh, number corbyn nova. general manager herrera and member herrera. j. we refused rates administrator with comptroller's office. can we pull the presentation of. so for this agenda item we've broken out into a few parts, the first part of this presentation as a standing item. it's the refuge rate administrators report, which serves as a process update for the board. quick update the second part of the presentation . i'll lay out our recommended great order. we've issued proposed rate changes through the prop 2 18 notice. but we have not issued the written rate order yet. so we anticipate that will be ready before the next hearing on june 20/6. however the content in today's presentation will represent essentially the whole of our

recommendation for the right order. the board can accept, reject or amend any parts of our recommended recommended rate order. but because of prop 2 18, any changes cannot exceed ecologies proposed rates. if the board is considering any amendments to the reorder, we can present impacts the next rate hearing on june 20/6 for board consideration. um the way this presentation of structure it all first summarize that high level both colleges proposed in our offices. recommendations will then move into presentation . details on the proposed items with right impacts. ah a pause after our presentation on the impound account detail and allow , uh, department starting with public works than environment than ecology, uh, to make a present or make comment, and afterward college e. we like to invite general manager herrera to comment as well. uh i'll finish the remainder of the proposed items with right impacts and again, we'll do

pause again for the departments for ecology and general manager herrera to opportunity present and then the last portion of presentation proposed items without rate impacts again at the end of this will allow comment for the same groups. so this is a quick summary of the work that we've done since our last meeting. uh after the, uh our our schedules were issued , and rick ology sent their submission in march. 7th we've been conducting an analysis and building our public record, which includes hiring hf and hr consulting from the support some of this analyses, particularly the rate comparisons and profit margin comparisons. the bulk of the work, however, is really in the right changed the mission analysis. um then the public

record building we've done to public workshops for commission hearings to refuse rates, administrator hearings one board hearing and then, uh, including this here, including this meeting, there will be an additional 3 to 4 refugees rate board hearings for toilet 12 13 opportunities for oral public input. and then we have our interrogatory process where we've been submitting. formal requests to rick ology and receiving formal responses since march, 7th. we've had written objections open and we continue to collect those and then propped to 18 notices were sent june 1st tall residential ratepayers. we've been receiving some, uh, some protests since then. uh in terms of public outreach, we've been continuing our public website or email campaigns. social media, we have the prop 2 18 mailers, public records off automation on next request. we've targeted neighborhood papers as well as outreach to registered neighborhood organizations.

upcoming i think after the release of our rate order, there'll be a press release an additional email campaigns. ah this is just a summary of, uh of written comment or public input to date. we've had 55 written comments or objections sent elektronik lee through our online form. this is related to the prop f common or objection. um. 45 of them are related residential rates one commercial nine related to both all comments, object to any increase in rates are in favor of the refuse rate administrators proposal. just a sampling of some of the comments related to, uh some of the some of the themes that we saw. one is that we call it should not be trusted with increase in repair funds after the corruption scandal, ecology received an 8.86% automatic college just mint in january and should not increase rates again. and then there were

a few comments in support of our offices proposal. during public hearings and public workshops. we've had one public commenter, mr pill powell. this is just a sample of some of the comments he has made a request for more information on impound account, concerned about nexus and portrait proportionality on use of impound account funds. he said that he would support a proposal that would minimize contamination and maximize diversion and wants to see reasonable fair rates good value to repairs and supports profit. the current profit margin would expect some increase in rates. uh are proper to 18 protests are the letters are beginning to arrive. i think we have three to date. and the hearing for the proper to 18 protests will take place. uh, july 20/4. um as part of our role we need to bring commission. uh comments from the commissioners from the street

and sanitation commission as well as the, commissioner environment. uh so it's the first hearing for sanitation streets and sanitation commission was mostly around clarifying questions on how rates are set drivers of the tipping fee increase. um commissioners recommended additional outreach on rate setting process which we did, um, second hearing, um we did a presentation on the impact of the stop they requested comparison with ecologies aesop , structured with other types of solid waste company structures, something that will look into the next rate cycle. uh and then also since rates are based on projections, ensuring troops with actuals, this is something we'll be doing as well. the commission environment focused on a few areas in the first hearing again, more questions clarifying questions around profit incentive to manage cost how tenants reporting is

validated. how they impound count is set and the use of the zero waste and 70 funds how they're approved, and one commissioner supported changing zero. waste incentive. next trick from tonnage 2% recovered. in the second hearing, we focus more on certain program enhancements. uh with the contamination. hanse mint will go into some detail later in the presentation, but there were concerns and support express for potential camera technology. onboard cameras on the trucks. there is concerned focus concerns focused on privacy, the efficacy of these cameras, lack of tests and potential litigation. uh with the zero waste incentive account. one commissioner supported incentive as a various forms while expressing skepticism on the efficacy of outreach, another committee commission noted the current structure does not correlate with diversion. but in general, there was general support for some kind of incentive structure. uh, compost contamination. there was general concern for the level of contamination. 24% was found not readily compostable, and then we

can clean up they supported current. we can claim does not include recycling or composting bins, and, uh, this group supported, including those bins and reused component for the neighborhood cleanup program. lastly i'll note that they passed a resolution that encourages an adjustment that helps the 2030 0 waste and climate related goals. this included ah testing of truck cameras. reinstatement analysis of contamination charges, processing of organics testing and evaluation of new technology. outreach to residents tested evaluating the trash processing, um, establishing zero incentive account with annual recovery targets and then supporting the funding through the impound account of environments. uh, proposed impound budget. um the next slide here is a summary of our interrogatory process where we submit a formal request by

email to recall aji and receive formal responses. schedule requests are updates to the schedules that we submitted. we made 17 of those 12 of those responses were completed as of last week. exhibits we've requested 40 exhibits and have escaped 39 to date and then 100 56 questions, mostly clarifying questions around assumptions in order 45 responses since then. since last week. and then this is the remaining rate process of today's hearing. you'll be hearing the summary of our proposal. uh we plan on issuing are written report week of june 18th ahead of the next hearing. june 20/6. uh um, this will be, uh, the board's official hearing of the refuse rate administrators proposal. um well, also, if the board has any amendments or changes they would make to this proposal that we're proposing. today we can present

any of those analyses of any of those adjustments that hearing um. july 15th will be closing the prop effort and objection to allow the, um our office to analyze and organize and present and be able to present the those objections to the board for the july 20/4 hearing where again, we can hear the proposed rate order prop effort and objections and then prop 2 18 protests. july 20/8 is an additional hearing if needed. so this next part of the presentation. i'll introduce our offices, proposal and comparison colleges proposal uh, before i go into this presentation, i do want to reiterate what deputy comptroller reached from had

said that, uh, we've, uh, this process uh, his gone really well part in no small part to the responsiveness from the department's environment and public works as well as the ecology. um, it's been a good working relationship. um i also wanted to draw back on proposition f, which establishes four principles. that service will be cost effective rates will be reasonable and fair that the process will be transparent. and that the work of our office will be conducted with high professional ethical standards. i believe that we've adhered to these four principles. our team has worked hard to make this process transparent to make sure every deliberation that impacts rates is presented in public forum and part of the public record. and that all information is publicly available or analyses of costs and have jurisdiction. comparisons leads us to believe that the rates were proposing are reasonable and fair. and the changes we're proposing should only improve service delivery. given the time constraints for this rate setting process. there are many

other areas. we were not able to make recommendations, and we've outlined the analyses to be performed in the next right cycle. um we and we about mind set of additional reporting requirements we believe will set us up to address some of the issues we plan on tackling over the next couple of years. uh so this is our high level are rate change proposal? um uh huh. the i should note that the collections rate is inclusive of the tipping free feet increase its including and so the bottom half of the table shows the tipping fee increase. um that's internalizing the collections rate and what you're seeing is colleges proposal in the first year right year 2024 is a 3.9% increase in rates are offices present present, proposing no change. uh second year, right?

you're 2025, or ecology is proposing additional 2.17% increase our offices proposing at 3.92% increase. the accumulative percent change for colleges proposal the 6.15% our proposal. no change first year, so the community cumulative change would be 3.92% across both rate years. um just kind of a quick summary recall a jeez the major drivers of some of the changes they haven't contamination enhancement. where there ah, adding some expenditures to enhance their contamination. uh mitigation work. uh included in this, though, is an assumption of additional 5 million revenues through contamination fees. another major driver was the closure of sustainable crushing site and actually write your 2020. it was in 2022, the closed um in 2023. there were around

4.1 million in costs related to freight, and, uh and release costs that go away and write your 2024 so that actually reduces rates. um. in terms of our change, refuse rate administrators major changes to ecologies proposal we remove the contamination enhancement. and with that the $5 million revenue also goes away. we're proposing a cost cap on pension and then we're also recommending suspending the zero waste incentive account for this rate cycle. uh this is among other changes that will go into detail around. it's next slide just shows a summary of how, uh, this these rate changes would impact the dollar values of the rates. um so currently, um, uh there's

a per dwelling unit rate for residential buildings with 15 units at 17 55. um uh, colleges proposal would increase the spy 68 cents and rate your 2024 additional 40. cents an right year 2025 for a dollar, eight cent increase across the two right years. our proposal makes no change in its first year, 69 cents and second year um. and then with the, um with the been changes. um. yeah, with the been changes, rick ology, uh, is increasing the rates from 7 $7.33 to $7.62 and rate year 2024 and then up to 7 78 and right year 2025 again. we have no change in 24. uh and then, uh , increasing the rates of 7 62

for each been in rate, your 2025 just a note that the these are the line items that repairs will see on their rate schedule. minimum level of service is 16 gallon trash bins, 32 gallon recycling and compost. but the default service that psychology provides is 16 gallon trash. 6 64 gallon recycling 32 gallon compost. this next slide just shows what the total bill would look like one under default service for one unit building and then the second is we looked at, um i think, on average for 1 to 5 units around three unit building, and then we looked at the typical level of service from buildings with 1 to 5 units is the 32 gallon trash 64 calorie cycling 32 gallon compost. um so i'll focus on that kind of typical level of service because i think we've looked at the default service

before. um the total, the total charge currently would be $89.30 for typical level service. um under. and our colleges proposal . this would increase by $5.50 to $92.78 in the first. uh sorry. to $94.80 across the 28 years right year, so that's a $5.50 increase. our our recommendation would increase the total cost by 3 50 across the 282 rate years. um the other set of rates that we are regulating. here are the apartment rates. these are six units or larger. um so again, there's a per dwelling unit fee of $5.83. colleges proposal would increase the base charge

by 59 cents across both right years compared to 23 cents for our proposal. and then the 32 gallon. ben would see it $2.83. cent increase across both three years compared to a dollar 10. under our proposal, the one cubic yard ben would see a $17.84 increase compared to our $6.95 increase across the two right years. the other thing i would add. is that for apartments, um, they are offered a diversion, landfill diversion discount, and so this is equal to the composting and recycling volume divided by total volume, minus a 25% floor. so this is then applied to, um they've been costs. and so we can see that. and the next slide illustration . so again, we're looking at 11 unit building. um uh huh. typical service 96 gallon trash 96 gallon recycling 32 gallon

compost. um. so the total that total cost for that level of surface under current rates would be $260.97. however applying the diversion discount when you put that in the calculations is 32% discount. that brings the total charge down $297.07. uh um. so uh, under ecology is proposal and write your 2024 would increase this $197.70 to $205.41 and then again in 2025 to $209.87. our proposal makes no change in 2024. 2025 you would see it go up to $205.45. so that kind of

summarizes the impacts to repairs. i did want to invite our consultants dave hilton from h f and h to talk about the residential rate comparison and the operating ratio profit margin comparisons analysis that they conducted. thank you, j good morning, everyone. um so as part of our analysis, we were asked by j and his team to look into other jurisdictions and what they're paying for their garbage service. these jurisdictions were selected based on service sized population or location. similarity to san francisco. what you can see here in this slide is that san francisco has that minimum cost of or default costs. rather residential trash is, i think, in compost of $46.87. as compared with some of these other jurisdictions, which

range from a low of 22 94 to a high of $55.03. and it does fall on the higher end of the spectrum and quite a bit higher than the average of $36.94 about 30% higher than the average that we're seeing there. it should be noted that these levels of service differ based on jurisdiction, and the offering for san francisco is a total of about 80 gallons, as opposed to some of these other jurisdictions, the minimum level of service or default level of service and as much as 288 gallons, so there is a difference in the service received. for these rates. it should also be noted that some of these other jurisdictions such as oakland, um and pardon me and castro valley do also offer lower levels of service, um and on a per gallon rate, it would come out to a similar per gallon charged at san francisco

customers on a residential cases. the next slide. j. we also looked at the operating ratio and profit margin proposed by rick ology. they're requesting a 9.89% profit margin. we also wanted to note that the aesop does potentially present additional tax savings with a range from around 2 to 4% of the benefit, which would boost that profitability ratio to around 11.89 to 13.89. in our survey of other jurisdictions with municipal contracts, as you can see on the table to the right here. um there's quite a wide range in terms of profitability. it ranges from as low as 7.53% that we saw in san luis obispo all the way up to what we believe to be nearly 36% in oakland that isn't estimate that our firm put together that

we do have a known range of 21.1% in carlsbad that was taken from their franchise agreement. so that request from reporter ecology does fall in line with what we see in other jurisdictions who do have municipal contracts. few j. thanks, dave. so i think that question yes. for the presenter. on page or slide 18, where it speaks to the residential rate comparisons. it shows the monthly default monthly cost of residential trash recycling compost collection combined for the different jurisdictions. is there? is there a differential you can explain, or is there something that's more or unique or complicated to those ones that look like they're above the average? um no. these are just

the basic standard rates that those jurisdictions receive. the costs are, but there's different services provided other provision in the contract, such as bulky item pick up. there's all different sorts of provision offered in each of these jurisdictions that really makes them unique. all we were attempting to do is try and find similar service areas. what that lower ah, cost that you could receive as a customer would be, uh, in terms of receiving service, so let me just make sure i understand. this is not necessarily a apples to apples comparison necessarily, because what's embedded in some of these monthly costs, maybe other benefits or other services like bulky items. both the item pick up another's correct. that is correct. okay? thank you. thank you. so just based on the, uh,

the r consultants profit and a profit margin analysis. we are, uh, maintaining colleges or request for the 9.89% probability ratio. the 91% operating 9% 91% operating ratio. um in the next slide. we just wanted to give highlight the what we see in colleges proposal is the main cost drivers. um so, looking at, uh. beginning with kind of our base here, right right year, 2023. there is a total. eligible or costs of $213.77. for scanning census scavenger and golden gate so that top half is really the collections cost. the bottom half is ecology san francisco, which which receives revenue from the tipping fee. does the transfer station soft focus on

the top. the bottom part of the, uh of this of this table is really just more for transparency. these are the items that flow up into the sunset scavenger and golden gate cost. um so, uh, program enhancements they have about 3.48 million in program enhancements in rate year 2024 compared to write year 2023 1.6% of the additional costs again. the sustainable crushing clothes site closure that i mentioned reduces reduces costs by a little over 4 million. um they've requested some labor enhancements. 2.8 1,000,001 0.3% of the costs and then other costs. um mainly a trash processing pilot and a seismic seismic study a little under a million with 0.4% of the cost. the rest of it is economic or

business cost changes. inflation factors, mainly, um, and projections of recycling and fuel prices. right you're 2025 fewer changes. um from right here, 2024. we'll see some changes in program enhancements and sorry didn't add the percentage there. um capital expenditure change. we'll talk about that. is that a proposal for organics pre processing system? and then again just economic and business cost changes. ah outside of the cost. there were some other major revenue changes. there's assumption of 2% tonnage growth each year in this kind of flows into this flows into, uh, revenue projections. and then i mentioned earlier. the contamination feed the $5 million in additional revenue. um. we'll talk a little bit more about settlement dollars. um

this assumes $4.25 million of remaining settlement. from 2021 that was meant to be returned to ratepayers and so assumes the use of the remaining dollars there and then it's their proposal also assumes the continuation of the zero waste incentive account. um returning all tears to rate pairs and rate year 2024 and two tiers in 2025. um and then this is a summary of our offices. changes to colleges proposal. um and, well, the rest of the presentation kind of goes, goes into detail on each of these items. the first is the impound account contamination enhancement. the organics pre processing system, trash processing pilots. seismic study , pension, corporate allocations and then the economic or business cost factors. uh um. and then there's some account

changes that that we're proposing one suspension. zero waste incentive count the creation of a programmatic reserve. um, use of the impound account balance and then changes to the use of the settlement dollars. what? we're calling the right stabilization fund 2022. and so just kind of a high level summary. ah our proposal is a reduction of 4.6 million in expenditures and write your 2024 and 8.1 million in the year 2025 we also have a reduction in $5 million in revenue for both years. uh um. and then the impact of the account changes first further reduces costs by about 5.2 million and 5.7 million for right. you're 2024 and 20 105, respectively. um the these changes aren't additive when you um we can give you what you're seeing here in this table are kind of marginal impacts.

uh, ah, some of some of the changes impact others and some cost flows through the tipping fee before impacting collection rates, so the actual net impact is a reduction to rates of 15.97 million and right year 2024 and 8.39 million and right here, 2025. jay can you explain your your third bullet here a little bit more in detail unless you're going to cover it later. uh sure . so um, one example. uh is, um the. for instance, the inflation factor. we changed the inflation factor, and they have our we have an updated projection of inflation based on the controllers. five years of financial plan update lowers the inflation factor in that will flow through say into rate your 2025 that needs to factor into their labor cost assumptions. um, i'm sorry, not their labor costs. but there are other cost

assumptions. um, removal. of. of the zero waste incentive count, which is spread across the tipping fee and the collections rate. so there's zero waste incentive account or sorry. the tipping fee accounts for maybe um. the cost of the revenues. uh about maybe i would say around 90% or so flows up into the collections rate. that's not the full amount of that cost that you'll see. um or the revenues. um uh, so it's just various items have kind of interactive effects. um it's pretty close the additive when you do it, additive. i think it's around. 15 million in the first year and 8 million in the second year. so um, there's. with the interactive active effects. there's additional savings there.

uh so i'm going to go into the details of the changes that impact the rates and i'll start with the impound account annual programmatic summary. um so ecology so this is an impound count is been raped, funded for over two decades for programs that public works and environment department ecology makes no changes of proposals proposed budget from the prior right order, however, departments requesting budget that reflects cost increases to departments and the only enhancement would be the public works request for an additional trash can manager position to be in 18 24. ah prior to the next rate cycle. we're also recommending completion of study by refuge great consultant that

could include how neighboring jurisdictions are providing services along with associated proposition to 18 nexus. um. the were also recommending so. kind of high level our proposal. uh in total amount is the same as the department proposal. uh but as you can see, um, in the line items, environment department is requesting 4.7 million. um, our proposal. apologies. this not look great. that's right. sorry so environment is requesting 14.7, and we're reducing that to 12.2 in the first year department. public works is requesting 9.5 million. we're proposing 12 million. and so this is really just a shift in approximately 2.5 million and uses of funding from the

environment part the department of public works, um the shift out of the rates for the environment department. ah! uh what we moved out of that 2.5 million will be moved out of rates into general fund and the equivalent amount of general fund us work from department of public works will be moved into the rates. um so, uh, this is a part of kind of an ongoing ongoing work. where were, um shifting items that may be less closely tied to refuse related work and shifting in items that that have closer nexus? j what's the impact on? the departments have made this proposal? it sounds like that's really just shifting where the expenses are carried, either through the general fund or the impound account. it does not sound like there's any reduction in what the departments have proposed. that's correct to say that's fair to say yes. it's swapping

sources. so next slide. i'll go into some of the detail of what some of these changes were. um so, uh, the environment department is funded. by the impounded car. eight of the 1236 of the program areas from the environment department are funded through the impound account. zero waste and toxics are, uh, areas that have very close nexus to refuse related work and have benefit to the right pair. so we're not recommending, uh, any shifting of funds for those two program areas. for the other areas. we did work with the department environment. city attorney's office on identifying, uh areas that are specific to refuse. so for example, in communications

outreach removed 7.39 fte. it's a 3% reduction for work that was not specific to refuse and serves department goals more broadly for green building we remove this is a smaller portion of the cost. but we only remove 0.76 ft. which is also 30% reduction. um and just move non refuse related activities such as data analysis about building use in carbon emissions. for climate again only keeping the proportion that could be related to, uh, mainly the diversion goals and then environmental justice and there's some work there. uh that includes increasing recycling, composting and both of you. pickup program participation at affordable housing, public housing sites and reducing illegal dumping. and so we removed 1.8 ft, which is 37% reduction. for the public

works proposal. um uh, the. ah we've accepted, um, the entirety of their proposal here with the addition of mechanical street sweeping, which is the 2.5 million that was brought in from the general fund into the rates equivalent amount that was moved out of the environment department proposal. um you know , as so street sweeping, it's a it's a mitigation measure that helps ensure public trash, litter and other debris like plastic bags. don't clause storm clog storm drains and stays stays out of the cities combined , uh, sanitary and stormwater sewer system, so we feel like this has a strong nexus. um in addition to the impound account budget, public works is requesting that previous allocated unspent impound account funding can be used to purchase new public receptacles . the total cost would be 15 million, which public works is requesting used and rate your

2024. given the number of trash cans and the anticipated time to install our office proposal is including the 15 million not to exceed contract authority. however we're recommending consideration of purchase order over three years. this has allowed the city to, um, throttle down, spinning overtime. jake and i ask that question on that. yes. for it allows the contract authority to be at 15 million, but the actual funding that's available for public works to spend as then one third in year 11 3rd in year two and one third and year three. we haven't prescribed any amount, but we are that would be kind of a recommendation or one reconnection were commendation we can make is that 3rd 3rd 3rd. why why wouldn't we want to deploy as quickly as possible if they had the capacity to do so.

um, i think kind of from art. uh, our our view is that it would, um ah! might need some help on this one. todd reads from deputy comptroller church. ooh the authority, 15 million and also the spending capacity of 30 million. there's technically enough in the fund of unused, previously appropriated balance. this recommendation allows for uncertainty and also for potential capacity and based upon where we are in the cycle, and dpw is in the cycle and the procurement there's things that we don't know. and so this is an idea that we would encourage they consider. but for the purposes of today, um it is 15 million. the funding is available, and the net net to the rates is, um already taken care of, so no additional cost.

but we don't know about the economy. we don't know about the procurement. we don't know about the capacity and so these are going to be, um, good questions for the department as well. so i just want to make sure i understand what would be embedded within this component. this would allow public works to enter into a $15 million contract. if they had the capacity and ability to do so they could actually deploy and spend $15 million and deploy all the trash cans in year. one is that embedded within this recommendation? that's a flexibility that's possible technically could do that we would recommend that they consider a three year spend planned, um or multi year spend plan potential for capacity. if there's not enough capacity or roll out and again. these are answers. we don't know. but again we're not saying that they shouldn't do it. we're just saying that these would be considerations. um the city enters into very large contracts all the time, with annual spend down provisions and so from our purposes, we do see availability of the sources side of it for certain certification. we also

see and would be permissive and recommend consideration. of a multi purchase order issuance over the coming three years given economic and other unanswered questions again, questions that we don't have answers to the public works might have additional information on bruce robertson from the public works department . can i ask you to chime in on capacity? an impact. bruce robertson, chief financial officer for san francisco, public works, um, chair true. it's a good question. and the understand, sir, is we don't know we've been basically following the approach that new york city did recently when they replaced all of their trash cans. and they were able to find it was tailored on the front end. and then it waned over time, so because we haven't issued the contract were actively drafting the rfp as we speak. we're a little unsure exactly what the role and is going to be based on the responses we get. we are working

with an industrial design firm to help come up with the technical aspects of the rfp because our cans are failing and we want to try to replace him as fast as possible. so one of the things that we're actively looking and putting into the rfp is trying to find a way so we can do as many of these as soon as possible. and so our goal would be to have, you know more of the money upfront. but if there's flexibility, we can make it happen. that would be fine. but to give you a specific, detailed answer, because we haven't issued the rfp north, seeing the responses, i can't give you that level of specificity at this time. you have no problem with the controllers recommendation or the rape rate administrators recommendation. then i heard from deputy comptroller read storm that if their need for those funds is prior than at one third, one, third one third those would be available. that would be fine with us as long as if we are able to expedite the whole out of the trash cans. the funds will be available. that would be fine. thank you. thank you.

heidi last slide on the impound account is around the impound account balance. uh so it's a nine months report the solid waste fund impound account is antipasti anticipated have 2.4 million in expenditure savings. the fund is expected projected to have a year in balance of 8.5 million. this is in addition to the 15 million and unencumbered expenditure budget carried forward from prior fiscal year that department public works. has budgeted to use for the replacement of the public trash cans, so our estimate of total available balances 23.5 million for the next two years. uh so in addition to the 15 million and funding for public trash cans, uh, the for the next few years as proposed in the budget, the refuse rate administrators refuse rate administration work

from our offices funded using a portion of the accumulated inappropriate fund balance about 857,000. and rate your 23 24 about one point 8,000,024 25. this work would include funding of, um, the refuge rate administrators position the refuge right analyst funding for noticing hearing costs. contract services related to the next rate cycle. in addition, the rate refuse rate administrators proposing use of impound account balance for the proposed trash processing pilot in the seismic study. um these two items would be about a million and rate your 2024 and 500,000 or eight year 2025. so this would move it out of having right impacts for these years and, um, using the impound account balances source , since these are one time items , um and then consideration of

both the consideration of funds from the fund balance, uh, can be a source for one time or episodic rate studies, consultant works and other refuse rate administration costs. does that mean that the entirety of the refuse rate administrator met edward administration's work is completely funded by the impound account, so there's no general fund costs currently to the city currently? yes. okay, thank you. i think with that i wanted to pause and allow departments starting with public works and then environment in the ecology and then general manager herrera to, um make comments or ask questions. public works does not have any other comments. so one bite environment up.

good morning, great board chair cum and chew puc members. aaron corn over in person, dennis herrera online. i am jack may see the zero waste program manager for the san francisco environment, and it's my honor to join you today and comment. on the proposed rate adjustment. um i would like to start in referencing prop f which obviously is guiding. this process. and as you probably know, proper have stated purpose was not only to reform and modernize the city's process for sitting, refuse rates to be more fair, transparent and accountable. but also to quote help the city. continue to pursue its zero waste goals. the prompt f an amendment to the refuse ordinance included that

the refuse rate administrator and the refuge storyboard quote, taking into account any environmental goals established by law. the city has a zero waste to landfill inspiration. incineration goal with interim zero waste targets for 2030 to reduce generation by 15% and disposal by 50. these have been codified. as you may know, in chapter nine of the environmental code and incorporated into the city's adopted climate action plan, uh, and are seen as a necessary component of achieving our goals. the 2030 targets were also part of a global climate action pledge by our mayor. ah to increase or maintain diversion away from landfill and incineration by at least 70% by 2030. in addition, there are laws that mandate everyone in the city of adequate refuse service for all three refuse streams to source separate the refuse and compostable recyclables and trash. as codified in chapter 19. and

recall aji services and efforts are vital. and helping the city achieve these goals and mandates. i want to also acknowledge the san francisco has been recognized national global leader and zero waste programs. it's composting program is a model the state is using and requiring jurisdictions across the state to remove organics from the landfill as a part of a very important climate law. the zero waste programs that we ecology has been implementing are due to the to them being approved through previous rate processes . the rate board has in recent decades played an important role in supporting our zero waste leadership and progress. however i'm sort of sad to say that we are actually falling behind. ecologies diversion or recovery rate, as you may have seen peaked at 62% in 2014 and since has dropped significantly was down to 39% of the last 12

months. through 23 march, 23. and actually is even sliding below that. continuing this downward trend this has been, you know, primarily due to the shrinking and closing if it's sustainable, crushing operation and secondarily due to more restrictive recycling and accomplishing market conditions and increased contamination in the refuse streams. and i would argue in insufficient efforts to address these challenges, and they are real challenges. under the current status quo, every colleges, programs and resources and efforts if they are not changed with this rate process. the city cannot achieve zero waste or climate goal. 2030 targets at the rate we're going so ecologies rate proposal had a number of program enhancements, of course, and these were driven in part by our priorities and discussions with ecology with a goal to reverse the city's

backsliding. on zero waste and to be able to meet our legal mandated requirements that we have in our in our city code. we believe these program enhancements will allow the city to regain progress towards zero waste. and some of the specific enhancements really are vital. with modest resources needed to make that progress. which i think it's still allow for reasonable and fair rates. as you may know, the commission of the on the environment they agreed by passing a resolution that there may 23rd hearing on on refuse rates that encourages the refuse rate administrator and the rape board. ah to uh, help san francisco advanced zero waste and climate goals. by supporting a rate adjustment that provides funds for increasing efforts to reduce contamination. and all three streams. through improved route

collection route monitoring and the use and the testing and use of truck. cameras and new technologies, reinstatement and analysis of contamination charges and the pre processing of organics testing and evaluation of new technology to remove contamination before sending to the accomplice facility. increasing recovery through improved outreach to san francisco residents and businesses with the specific goal of reaching every resident. at least every two years. test and evaluating trash processing to recover recyclables compostable that has state of the art regional facility in developing a plan to expand trance processing in the future. and finally. establishing a zero waste incentive system with annual recovery targets to create. real performance and financial incentive to help the city towards this 2030 goals. we believe that all the cuts that

are being proposed of recall a jeez program enhancements will not allow sufficient progress to reach zero waste goal to course correct and get back on that. and we feel that we ecologies proposals. modest proposals will allow critical progress to get us back on track. so let me just be some specific on some of these as we ecology presented to the rate board in april 13 they proposed for 168,000 to improve contamination, monitoring and effectively assess contamination charges as needed. this included installing high definition cameras on 38 trucks. now we've heard about concerns about this technology not being completely verified yet. which we share, so we see that this can be phased in and you could start with his as few as the six trucks that they've tested some older camera technology, updating them with the latest to test and verify their quality adequacy and identifying contamination before

adding additional cameras. but once that camera technology is verified, we'd like to see additional cameras faced in. we know that this technology is improving and believe it can be a valuable tool really critical actually to improve contamination monitoring, providing adequate documentation to support the use. of contamination charges consistently and equitably across all three refuse streams. and it is a high priority for us to reinstate contamination charges that were stopped with the advent of covid have not been reinstated. yet these were previously approved in 2013 and 2017 rate processes. they have been a key financial mechanism to increase compliance of the city's mandatory composting and recycling law. we have not pursued alternative fines, for example, through the administrative code. we see the rate mechanism and much more efficient process. ecology has developed a really detailed protocol and how they'll use the cameras, although identify contamination provides

sufficient warnings with multiple tags and letters before assessing the contamination charges, how the work with accounts to help them fix their contamination and get off these charges. so in order to do this to implement this protocol consistently and equitably across the city. we strongly support as a priority for us their proposed additional one fte for contamination charge monitoring, evaluating photos conducting trainings managing account data. warning managing the warnings and which are an important part of the process and the work needed to help accounts get off those charges as soon as they can by taking appropriate action. another piece, which is the pre processing organics. this is a case where we ecology has come in on the request of the rate administrator with an alternative proposal, which allowed them to more quickly install a screen to remove contamination before sending it to the compost facility. and we

support this. we feel like then that allow us to evaluate the effectiveness of these equipment and look at potential changes in future rate processes. another priority. we have that was presented to you by from ecology on april, 13th is to improve outreach to all residences. they proposed 398,000 to improve outrage to all residents over the two year period, so this means reaching out to all single family residence in one year and all multi family say 60 minutes and above the following year. and what this involves is that we would collaborate with ecology. we would help design developed the content designed with in house graphic designers, ecology would print and mail ah to a total of 320,000 customers. all their customers over all the residential customers over the two year period. this is really important because you know about a third of san francisco

residents are turning over every year. we have not been doing and enough. targeted outreach of this type. ah and it is sorely needed, so they also need an additional 50 to help conduct. focused, targeted outreach. particularly to low. diversion recovery customers and this is a priority for us as well. they also have actually a very good newsletter. that can be, uh, better distributed to all customers electronically and that was part of that proposal. another priority we have is around trash processing and future planning. uh i'm pleased that the refuse rate administrator supports this. now you may have noticed that they are taking it out of the rates and putting it proposing to fund it through impound reserve. as long as it gets done here is an example for about a half a

million dollars of really critical test. of using a new state of the art facility that waste management runs in san leandro testing a significant enough of material 1200 tons over three days to really look at the effectiveness of that technology and the resulting products and how well they meet market needs, including compost, and, uh this is this is a whole need for trash processing is really about the fact that we still are seeing well over half of what's going into our trash bins being readily recyclable or in compostable. and then this leads me to talk about the zero waste incentive. the and it's a new one. it's a it's a change incentive. the zero waste incentive. this is a financial incentive for ecology to improve their recovery efforts to help the city advanced towards zero waste and climate goals. the proposed incentives have been changed from tonnage based used in recent rate processes to

incentives based on colleges overall recovery percent. that's their total recycling, accomplishing tons divided by all the tons they receive. and this is ah! and we're but the way we calculated the proposed in percentages is looking at where do we need to be in 2030? you heard me referred to a 70% recovery rate. we've also calculated to reach each her spot. richard disposal goals in 2030 recall, aji would need to be at a 70% recovery rate. so they were at 39. over the last year. getting to 70% by 2030 is a big gain. uh but we believe it is, uh achievable, more reasonable and achievable than the previous tonnage targets. the previous tonnage targets were based on a much more ambitious and steeper slope going 20 tons of landfill. which we had focused on prior to adopting in 2018 2030 targets. ecology as we know is not able

to meet those tonnage targets in recent years. they did earlier on, uh but that was due to the fact that they were very ambitious and we had a combined with their drawdown and closing a sustainable, crushing dramatic changes in the economy, stricter marking recycling markets. college is a lot more control over the recovery rate. and it really is, um robert were inappropriate. our concern is that without the zero waste incentives and associated monetary benefit for ecology, there is no financial incentive for real psychology to do what they can and we do see opportunities. you know in their proposal and how they can optimize their resources such as through their way zero team and outreach, better monitor contamination and all three streams. engage with customers to better sort their refuse comply with are mandatory source separation. and basically reduce the amount of compulsory and recyclables in the trash dream, given that well, more than half of what's going in the trash

bins are recyclable and compostable. i kind of calculate that if they were able. to reduce the amount of recyclables and compostable by 1/5 that's going into the trash bins. they were easily immediate least the first two tiers and if they did it by 30% the commute all four tiers. again i think that this is an important incentive. i understand. the concern of creating a fund. that may not be one, and if its course ecology does not meet the targets these go these get credited back to the ratepayers because she's proposal did include, as in the past their ability to propose. necessary investments that they could identify. critical, urgent needs to maintaining or increasing recovery and that should go in front of the rape part. i would argue in a public process before it's approved. but i want to also talk about if the rate board decides that they are not willing to have a zero

waste fund in the next two years. there are alternatives that the board could consider. one is to have a smaller fund and incentive fund that's based on one versus 2. will be a 4.1 versus 8.2 million. i still think that provides a reasonable and worthwhile, though weaker incentive. another option. to avoid any upfront fund that the ratepayers pay into would be to have would be to still have incentive targets but to provide a delay reward. either in the next rate year, such as through an adjustment to court calculator or potentially more easily. factored into the right next rate cycle. after the coming to write years with an allowed increase in profit. achieved or some create a creation of an incentive, bonus or fund. so essentially, this approach would avoid ratepayers paying into an incentive fund

before any incentive target is reached. this delayed reward is what a number of jurisdictions like the city of oakland and santa rosa that i've seen do and setting diversion. what they call diversion, same thing as recovery diversion targets or mandates in their contracts, collection contracts and then whether whether those targets are met or not. is factored into a future rate adjustments. and i think that there's an opportunity for us to include that approach. without necessarily having to study it over the next two years. again we're really at a kind of a critical juncture. it's been six years, which is the longest that i've seen being with the city for almost 30 years between ray processes, this is an important opportunity for us to look at the zero waste. needs that we have. and i think that with these modest proposals, we can

make progress as well as you know the opportunity, creating incentives. now the benefit of the incentive funds allow in the past. when they haven't been met in college. they used some of them for critical investments dealing with rap dramatic changes in the markets. allow our ecology and the city to continue being able to recycle as much as they did, um, and if you don't have a zero waste incentive fund, i am pleased and we do support this proposed, although quite modest, programmatic reserve fund, it's a smaller fund. that could potentially be used towards some urgent needs that the city identifies and request ecology. to undertake. uh and those are my comments in happy to answer any questions. thank you very much. oh, and i am. also i don't know if you've got a chance to

see the commission resolution, so i'd like to i have three copies there. for you. thank you very much jack for the presentation. i do have a few questions on this one. i appreciate that department of the environment and the commission's resolution, and i am curious to hear a little bit more about you talked about the four priorities. um in terms of potential potential considerations for this for this rate body. um can you tell me a little bit more about how these and you didn't really speak to how much the composing screening would cost. whether that's a one time expense for an ongoing

expense there, so we just wanted to do a little bit more about that one and then i also want to understand from your perspective of these three items, which moves the dial most when it comes to zero waste achieving ours. you always goals. yes. hmm the costs of you okay. well, i would. i would say that. the think using the contamination charged increased contamination monitoring. including the use of cameras and the use of contamination charges. i see that as having the potential to move the needle, the most and then secondarily. the uh and then, of course, includes the f t. and then secondarily and that was their total proposal for that was 4 68, but that included trucks and all 38 cameras. so sorry on 38 trucks. if that is,

uh, scaled back or phased in over two years than it would be a lower cost. the second impact i see here. would be around the improved targeted outreach. including the botham mailing and the fte, uh, at least in terms of sort of what's being proposed to cut you know the zero waste since the zero waste incentive. um here's an opportunity where it's a little bit harder to quantify. but if they did achieve those that they would be that would be moving the needle. uh significantly. and i think you had a further question about cost. j just said he could answer that. but do you wanna the question was about the compost screening. uh huh. you had listed that as your second item, but you didn't indicate how much that was the other pre processing for the screening?

yeah. administrator understand? so we have that in our presentation. do you want us to go into that now? i think there might be other questions. okay. why don't we come back to that? we can share that later. good. and we do have member herrera on the line member her please feel welcome to unmute yourself. if you do want to add questions at this time. um thank you, madam clerk. i am a couple of things number one. i just first of all want to thank the refused rate administrator, um for some extremely good analysis and work hard on me. video there, especially when it comes to the issue of the profitability ratio , and that i thought that the analysis and um with respect to

the aesop's impact, and what the numbers meant was exactly what i was looking for. when i asked the question and our first hearing, so i very much appreciate your very good analysis on that. so that made me feel very comfortable. thank you, and just you're in the middle of the conversation. um about something that is a concern. to me when you look at um. where we are and what we're where we're stalling and what we're trying to accomplish. on compost, but also if you look at the press today, talking about the explosion that we've seen in the city of illegal dumping and what has occurred, i think they go hand in hand, so i know that you're going to be going into another analysis that looks like on the inside 27. but i think that we really have to ensure that, um we recognize that

enforcement tools are just as important as um, public outreach and education and there has to. we have to ensure that there are incentives and consequences for because there comes a point where you do plateau if people don't see an incentive or consequence, and i think that we're sort of seeing ah, the result of that, uh, so those are things that i'd like to sort of get. um make sure that we do a little bit more work on but it's something i think needs the attention of all of us. so those are my comments. thank you. thank you, member herrera. um are there any other discussion items or should we continue with the presentation? okay? um now it's time where we're ecology will give their presentation. um ben, will you help with the slides? the slides are getting pulled up now. thank you.

learning. good morning chair chew member corvin ova. and member herrera, virtually. my name is evan boyd. i'm the new regional vice president for ecology. san francisco. we appreciate the rate administrators work thus far, certainly appreciate the process that we've gone through. and appreciate the continued partnership. ah and all those. there has been a lot of work done, and there's been a lot of agreement on a number of items to date. we do have a few comments that we're going to make, um, here and to do that. i'm going to call up john brown's law on our team director of business process improvement. good morning church to member corvin, nova. member herrera. and my name is john browse lime, the director of business process improvement for ecology, a couple of items that we want to

address. mhm 20 more. um first, there was some discussion by mr hilton of they residential rate comparisons and i think chair to you, you put it aptly and said they're not necessarily apples to apples comparisons. um with discussed this at a number of hearings and discussed it with the refuse rate administrator. it's difficult to compare rates and different jurisdictions without a lot of detailed information to impacted by density by the types of services provided by automation. so when looking at a comparison, it we would urge caution in in coming to any conclusions there. for a lot of the jurisdictions in the state. they're trying to grapple with the impact of 13 83, and we're starting to see that, um

flow through rate increases in a number of areas, actually in a number of rick ology service areas, we've had pretty significant increases and we expect that to continue to happen throughout the state. fortunately san francisco as an environmental leader, we've already accounted for the majority of the impacts of 13 83 in terms of our rate, our cost structure. so again, i think that that, um you know that? that's something that we'll see across the state. two other quick things one. i think for us, it's most important to look at comparable areas and you can see on the slide if you look compared to san jose and oakland. the rates in san francisco. not only are lower today, but would be lower at the end of the year. 2025 even in under rick colleges proposal and

that doesn't include any potential increases in oakland or san jose, and those next couple of years. so we believe compared to the reasonable comparatives. then we are we are, in fact, quite low, quite a bit lower. the other issue. want to bring up mr hilton talked about the cost per gallon, and he he referenced that in his study. we've talked about this again many times, and i think the conclusion that we've come to and members of the city staff have come to is that it's really not an apt comparison. that one of the environmental goals in san francisco is to reduce the amount of material that our ratepayers are our customers generate. and towards that end we've introduced the system with the 16 gallon trash container. in an effort to encourage and teacher ratepayers and city residents that it's better to

reduce the amount of material that they generate. so again. we don't believe that it's an apt comparison in the concern there is that we've talked about it many times. and although now we're here talking about it again. the other issue. i want to bring up briefly as a couple of points about the operating ratio again. i think that the take away the conclusion that i heard from mr hilton that the operating ratio in san francisco is reasonable within the range compared to other california jurisdictions, but a couple of important points. one of our profit margin, meaning or expenses over the revenue that we generate to support them. is approximately 5.9% so we talked about 9% or 9.89 return on the expenses. it's really much lower , partly because there's a lot of expenses that don't generate a profit, even though they're

allowed in the rate, primarily the disposal and processing cost. um considerably lower than the public companies. so again any type of comparative rate we see that ecology actually generates a lower return. most importantly, we've had discussion today and had discussion previously about the aesop. we want to reiterate our position is that the aesop tax benefits do not result in additional profits for ecology. um in considering that the tax benefit of our ownership structure. we also need to consider the cost of maintaining that structure and keeping it in place. the cost of maintaining that s up benefit. it's primarily the cost of distributing payments to retirees. considerably is

considerably higher than the theoretical called tax savings that we would get, um, based on uh, based on the fact if we were a taxpayer you know, we would we would be paying those taxes. the tax code is designed to promote , uh, employee ownership. and, um. further we're not quite sure of the analysis that that hilton performed of those numbers. we haven't we haven't seen the analysis so we can't verify. um you know, we can't attest to its validity. but again, we do our own calculations their tax calculations and the cost of the of the sa benefit is considerably higher. happy to answer any questions on

this. we've got more. um more further on in the in the presentation. okay. thank you. so we'll continue, uh, presentation going into the details of items that impact the rates and we'll start with the program enhancements. summary. so that's slide. 27 if you're following along, um so excluding the three bin collections operations ecology also has 26 programs included in the proposed rates. they're seeking in their proposal changes to only four of those programs. um in terms of the abandoned material in public receptacles, um, part of the band of

materials that remember herrera had just mentioned there are enhancements were our office for college and public works are in line and the need for enhancements in those two areas and, um the ah! for the abandoned materials. pick up we won't i won't go into a detailed budget review here, but they're adding additional pickup zone for a total six zones. this would also add two new drivers and two new vehicles. um this was part of the presentation in the in the april in the april hearing here, so i won't go into further details on that. but for the public receptacles pick up i would also add two routes to public can pick up as well as two drivers into new vehicles. uh um. in terms of the other items, there's a weekend cleanup events, uh, that we've made no changes to in terms of the proposal. environment had some requests in terms of further enhancing this event, and then

the contamination enhancement will go into detail about that, in terms of why we're removing that from the rates as well. so for the weekend cleanup events. these are district events intended support proper disposal reduced materials left in public rightful way it's implemented in conjunction with public works. the program was paused during the pandemic. the program currently only offers one been with no reefs component. um the environment department contends us works against the cities that are a waste goals and climate goals. um and both the department commissions support expanding the program to include recycling composting bins and reused component. rick ology has estimated that the expansion program to conclude three bins and reuse component would increase the cost from 680,000 to 1.3 million. um our proposal

currently does not, uh, include any of these changes. uh with the contamination programs, so the contamination work really includes in terms of the enhancements includes three items. one is a waste. zero outreach site visits, presentations and service recommendations to maximize diversion. there are currently six ft. this enhancement would add two additional ft, um, the contamination, outreach and education, uh, contamination outreach portion, when included outreach and education, onboard camera and third eye subscription for 38 trucks and an additional 50. and then the contamination fee. the impact of these ecology has estimated would generate 5 million additional contamination fees. um. i should note. we're not making any changes to the current contamination work.

contamination fees can still be applied. this is about the enhancements they're requesting here. um and, uh, reason for moving. these were currently we have no data, information or information on the efficacy of existing outreach programs or enhancements. um you know, we don't know how this outreach would mitigate contamination or reduce repeat offenders. um or this outreach in the cameras could actually change behavior reduced contamination. um in regards to the cameras are consultants raised concerns about the efficacy of cameras, citing consist, citing issues around consistent clear photos and false positives and other jurisdictions. um, the other is , you know, san francisco's, uh , a dense city with high amount of pedestrian traffic. um and so there's an unknown impact on that pedestrian traffic on contaminating repair bins. um

and then also where there was an unknown customer response to contamination. mitigation efforts are enhancements. as i mentioned earlier, does this actually changed behavior? lastly with regarding the fee, um with these enhancements, we i don't believe we haven't sufficient backup that the fee revenue generated from from these activities would, uh, we don't have enough backup to really validate this number. um and then, lastly, um as i mentioned, we're not making any changes to the current contamination protocols. um and just in conversation with environment, it seems that some of these protocols currently aren't being followed. and i think this requires review of what is happening? what should actually be happening? what are the impacts of kind of current level of contamination work before committing to any new enhancements, so our commendation is reviewing the impacts of outreach. the cameras

the impact of public contamination of ratepayer bins and the review of current protocols and compliance with the agreed upon protocols before we commit to any of these enhancements. um and this is not to say that we don't agree that there shouldn't be enhancements to our that there shouldn't be expanded contamination work. it's just that i think we need to establish what work is actually happening now and what impact it has. j or ecology. uh this is a question for you about the contamination component here. um it sounds like you have not reached or receive sufficient information to justify the $5 million in revenues. um, is that information not available from ecology has a has the organization not provided it? anyway. that apology could provide it, or is it just that that information, right? we made the request? um they've stated that it's just the estimate on, uh the increase in accounts that

would uh or the contamination would be apply their estimate of that, but we haven't seen any backup material for that yet. i see someone standing. is that our ecology representative yes. good morning. kevin flanagan, rick ology, golden gate general manager. so yes, when we submitted the proposal, the revenue was based on our averages for current contamination fees. and we applied that math and extrapolated it over the 38 cameras and what we estimated they would produce contamination wise. and that's how we came up with the 5 million so let me just understand you have six current cameras and operational use at the moment and you assumed an expansion to all of your your trucks. essentially that's how you receive or got to the $5 million number. yes essentially so, yeah, the six we're currently piloting. um and

we've had some challenges with that. the quality of photos. um so the enhanced enhancement that we proposed was addressing those quality issues. ah ah and installing 38 units out there, but i will note that those 38 units are untested. um, so this would be new a new enhancement essentially. end of your six that are currently operational that that you are piloting or utilizing at the moment. what's your rate of i guess, miss mischaracterized kind of fees or or. bills that are that should not have been generated. and how much. how much error do you see through that process? um i don't know if i have any specific samples to address your question . exactly but there have been, uh, quality issues with the photos we do receive, um, and questions on if we can properly assess charges based on those photos and then just for my

perspective on the sixth, the $5 million revenue. how much would this have covered in terms of the new enhancements? would it have been even would there have been additional amount that's required of rates? um, that the total cost of the program including the fte and the additional outreach and the capital for the system was i believe 468,000 but 248 43,000 of that was was a capital investment. so yes, it would, it would have all set. it would have have offset and exceeded the expenses hypothetically, if the if the revenues materializes , you projected, correct. um and therefore reducing the impact to the repairs in terms of the rate. thank you. thank you. yeah. could i ask questions? i think this might be for department of the environment because they were supporting

this proposal, and i'm wondering if they had any commentary on concerns over the efficacy of the cameras and how they believe that might be being addressed. yes thanks for that question. so you know, we've looked. we've seen some of the pictures that have produced to date. and there, you know, mixed quality, and so ah, we see this technology improving over time. and recall, aji has been working closely with their vendor giving them feedback. so to us, it makes sense for them to be able to install the latest generation. which we think there's a you know, a good potential that those that quality will be significantly better. and we would wanna instead of just installing all 38 camera trucks and all cameras in all 38 trucks right away, do a subset of replace the sixth trucks that have them now with the latest technology have that quality verified. ah ah! and if

. we agree that that quality is sufficient for living charges or using it. we also have an ordinance called the refuse separation compliance ordinance that targets the largest generators in the city. and if they fail comprehensive audit. and those audits now are based on to the handheld cameras by the audit staff. so we know that you know, camera technology can work. it's just a matter of. can it work in that application, and we think there's certainly a good chance and it would make a really big difference in doing so. thank you, jake. could you just confirm that contamination feed is that currently exists right now or have we have we paused that there is a contamination fee. um the as i mentioned. i think the application of it is unclear for us in terms of how they're following the protocol. um so that's we're recommending. we

kind of review these protocols and what we've seen is, uh kind of prior protocol given to us from department environment and then ah, a new set of protocols that was sent to us from ecology . we haven't been able to sort out kind of the differences there and how they're being applied at the moment. um i should also note jack just mentioned, um, an alternative in terms of replacing those six cameras with the new technology. this was a proposal that came to us. you know, after we released our rates, i think ecology had estimated that cost of replacement of just the six existing cameras would be about $38,000. can i ask one more question regarding the weekend cleanup events. on the second to last bullet estimates that the expansion of the program to include three bins and reuse component would more than double the annual cost. why is that the case? i'll ask for ecology. that

seems pretty steep. is there a way to reduce that? good morning . anthony crescenzi, general manager, sunset scavenger. the increased costs is to be able to sort the material on site which we would find to be operationally difficult, um, and be able to move the line. so we need more drivers, more trucks. also we don't really have operational space for that type of event. that would be difficult. i think to site and service cisco. were i believe i understood from prior meetings that these events were ongoing prior to the pandemic at that time did they have just the trash bins or was it all options available? they just had debris boxes that collected basically bulky items that we would run across a line to try and recover as much material. i want to be clear that this was not a trash

drop off event. it was always a event for material that we would always attempt to try and recover as much as possible. it did also includes a reused component at the end of the event, which was in partnership with goodwill. however we did not have been set up for specifically for recycling for composting and then for trash the bend the system as the cleanups always wore a supplement to the bulky island recycling program in an effort to promote positive behavior and event abandoned material. uh the three streams that service is that customers have provided them to be able to essentially recycle compost and drop off trash now, so we don't believe that it would be necessary to have an event where people would just bring more of that material to drop off without limit. really what we'd like to do is help keep the streets clean. by having this type of an event apartment dwellers. those who have items that generally don't fit well into carts. potentially

or the shoots in their buildings would be able to come to these events and we would make our best effort to divert the material if possible, adding components were the material would have to be separated at the location would be very difficult because the material would have to people coming up. we'd have to direct them to specific bins ensure the material going in is 100% of that stream. in creating a very long line. uh and potentially not a very positive customer experience. thank you very much. next slide. i wanted to address questions around outreach from the, um, previous meeting. um so you know, both departments and ecology have outreach efforts. public works as a one team,

which has guided by 311 service requests it educates public on acceptable waste disposal methods and conducts related code compliance with door to door outreach efforts. addition they repeat violators held accountable through administrative citation process. um so there is a compliance and penalty component to their work environments. outreach is very good. um some of the refuge related outreach examples include reuse campaigned food waste reduction campaign, uh, people in life transitions campaign, which helps reduce toxics in homes by encouraging use of the household hazardous waste pickup program. um ecology side employees for diversion auditors to identify contended waste and validate contamination charges to customers and then they're wasted routine currently has six specialists who provide education for ratepayers who have contaminated waste. rick

ology is requesting 313 new fte one diversion auditor to weigh zero auditors are proposal does not include those and then if you can see an environment we mentioned this earlier. we are reducing their outreach by, um 7.39 ft. uh, um out of their outreach efforts, um. could you . explain um, the reason behind the not doing the three additional fts for ecology, ease outreach. so this, uh they're related to the contamination. program enhancements. so that's where those cuts come from. next slide. we're getting to the costs that church who was asking about the organics pre processing system. and so

colleges looking to reduce the amount of non compostable tonnage and it's organized collection. currently 24% is non compostable. ah their proposals to invest in a $3.2 million system on a 10 year lease. uh system would not be implemented until later and write your 2025 would cost approximately 205,000 in the first year of 2025 and then in future rate years, it would cost $410,000 per year. um and consultation with environment and ecology, given the uncertainty of the new technology and the immediate need for reducing the amount of non compostable tonnage, we've worked with ecology on college is working on an alternative proposal using screens as an interim solution, which could be implemented more quickly. at a lower annual costs around $180,000 per year, and during the interim where, uh, we're recommending that a study be

conducted determine the appropriate long term solution for organics, pre processing um, and so the new system has ah, lower throughput. um, but as we mentioned it can be implemented in the interim, while we kind of figure out the long term solution, um. what stop if there any questions on that? is this connected to the pilot? that's um uh, proposed to be funded through the impound account. this is different from that. so that's the trash processing pilot, and that would be taking san francisco waste to site in oakland managed by waste management to process san francisco trash. to see the effect efficacy of, uh, trash processing in removing contamination. thank you. so moving on to the other changes,

uh, not categorized within the program enhancements. we've already mentioned, sustainable crushing, so i won't go into detail, but this sustainable crushing operation at pier 94 closed in 2021. uh and clear it will be cleared in august. 2023 the cost and write your 23 23 amount to 3 million freight costs and lease costs. um and 1.1 million at least costs. um and so no consist, anal crushing costs are included in the right year, 2024 and beyond. so this is a net reduction of 4.1 million cost rates for rate year 2024. safe services and another program that was presented in the prior meeting. and this is, uh, safe service in the for service in the tenderloin for collections in tenderloin, three additional 50 to go with the drivers and one supervisor, um and you know, looking at the incident reports. this really feels it feels like there's a real need for safety for

colleges, drivers. um uh, we just mentioned the trash processing pilot. this is the test the feasibility of processing trash for san francisco to recover organics and recyclable materials that can be composted recycle. um and so there would be an analysis as well conducted by, um consulting firm or base er, environment. and then, lastly, as a seismic study is a structural and geotechnical study at pier 96 that the san francisco ports is requiring of ecology. so we're recommending that this we swapped sources for this and use impound account balance since the one time study. ah i'll go into the next two slides are more detail in terms of the pension costs changes we're proposing, and i'm sorry first, the other labor cost changes than pension costs. um and the corporate allocations cut we're recommending. um so this is just

a summary of the labor costs of this is not including the line items that were in the program enhancements covered in the previous slides for a band of materials. public receptacles the way zero specialist and contamination uh um. so no new and then no new additional ft or request and write your 2025. um we just want to note the new ft requests are based on adding capacity address additional needs. due to this new rate setting process or impacts that we think are likely temporary, such as the reduction of recycling prices, leading to the need for additional cardboard pickup. um so for this reason that we're recommending that these positions be hired as project based and re evaluated in the next cycle. in addition will be monitoring. um uh, there's additional drivers and supervisors would be monitoring the driver to supervisor driver to manager ratios as well. right

this table showing rate year 2023. is that not the current rates, not the current rate. so um, some ft were included in 2023 that ecology has or there were new f t in 2023 out of the right process. we their record they ecology is proposing that we continue these into these two right years. j before we moved to pension costs. can i go back just quickly to the program enhancements? slide on page 27? no, we spoke about this a little bit, but i want to understand where we ended up with with what this potential proposal will look like with regards to abandon materials and public alike. public receptacle enhancements. can we just speak a little bit more about specifically what repairs would expect? that's different from what it is now with these enhancements. sure and i'll

bring us for ecology. talk about this in more detail, but, um, currently for abandoned materials. there are five zones and, uh, this would add an additional zone to allow for, um , uh, faster response. um and additional additional pick up um this is also included inclusive and will we have a section towards the end on the service level agreement changes that we're making for this service, but this is also inclusive of some proactive pickup for, um bayview, chinatown and the mission as well. um and for public receptacle pick up this, uh, would include two additional routes and two drivers into new vehicles. um, and so this would be uh, adding to the kind of current routes that they have but also being able to respond

quickly to city requests for when receptacles are full, um to if the drivers are on the route that they can pick those up within two hours and then being able to respond to when receptacles are full, and drivers are outside of the routes or outside of hours. um i don't know. if there's more detail. i can ask for ecology, too. provide that information. i can, uh anthony crescenta, general manager of sunset scavenger. i can confirm but what j just laid out. we're looking for improved response times for abandoned materials routes and be able to proactively sweet streets with the additional zone and respond to a growing number of requests . or is it just a higher number of question historically has been the case and the additional public receptacle routes to be able to provide additional passes where they're needed. in addition, being able to respond within the given time frame and the impact that the sensors on the city cans the public

receptacles may have. we've seen a significant increase in the number of requests. although we have not validated that the data itself from those sensors and its accuracy we still want to be able to must provide a response within that time frame, and we'll utilize those resources to do so. in addition to ensure that we provide the levels of service for the cans that is needed. so let me just make sure i understand when we say that we're moving from five zones and we're adding one's own. what does that mean that we have an expanded geographical area or what does that exactly mean? for us? it means that the five zones that dedicated zones there's five that currently respond to 311 request by adding 1/6 zone. all the zones would become smaller. and that will allow that leads to the efficiency that you would would need for proactive sweeps and response time. and what are the five the five zones currently what areas is that cover if there's a way to kind of see that in the city? yeah, there's a map that shows

it. it basically breaks up this this whole city, including treasure island, the entire city. the five the entire city. yes. so, essentially, you're you are splitting the entire city instead of five zones into six and your staffing a six zone so that it's faster. essentially that is correct. and then the three areas that you mentioned bayview chinatown mission does that mean that those areas or i think jay had mentioned it. what does that mean for those zones or those areas that they just have faster response times? or is there something different? i think there's something different happening in those areas in the bayview. there's a dedicated route that follows with public works to provide, uh, collection. it does not receive 311 calls. it's just out there helping the highly impacted area. likewise there's his own k, which is dedicated to the chinatown and tenderloin areas, not not the mission, chinatown in tenderloin, and its route again is very similar. and not receiving calls per se, but it's driving around and works in conjunction with the already

existing zone that's out there to provide as much services needed to the highly impacted areas with the mission. the mission does not have a dedicated area has a regular zone associated to it. chinatown tenderloin, baby or or or some of our most impacted areas, not saying that other areas are not in. which is the reason why we're looking for the sixth zone. and then with regards to the public receptacle enhancements. can you just speak a little bit more about what will that mean for our city's residents? so what we'll have is again a similar situation when we add the two additional routes onto the existing capacity will be able to make the route somewhat smaller and, in turn, be able to provide more service two cans in certain areas, particularly the mission. we're seeing a of pretty significant use of cans as pandemic behaviors. changed over time. we're seeing a lot of activity outside of our downtown area in some of our commercial residential areas, so we wanna

be able to provide multiple passes. the previous setup was not really like that. and so in order to be able to hit these cans, additional times update will need to adjust how the routes are set up. in addition, there are the sensor is being deployed. there's approximately about public work, speak to the specifics of sensors if they choose, but there's almost 1000 of them deployed at this time. we're getting a lot of hits through the 311 system that we are responding to. um and these additional zones will be able to allow us to be able to do that within the time frame as we go and get the data out. this is perhaps a question, but we're investing a good amount of money into purchasing additional receptacles that include adding sensors in them, so it helps us to understand how full those bins are and at what basis and i think it helps us to collect the data to help us do this better. aren't we already collecting some of that information? you probably are getting a lot of 311 telephone calls. perhaps that kind of say where there's overflowing bins and i'm guessing some of this route change that you are proposing is

trying to address where you see those high volume issues already, so what's the added benefit of having sensors as opposed to just proactively knowing which routes need to have more people. going for passes. i would probably defer that question to public works. if that was. good afternoon. um refuse reporter bruce robertson, cfo for public works again. i think it would answer in two ways. one is i think we have approximately 900 sensors out there now, and we're just now starting to get the data. we are in taking the data. we've got some dashboards on each public receptacle. and then we're importing the data into a power bi i reporting tools and then we'll plan to do the data. so i think part of it is to the efforts from the ecology as they get the data. i think they can adjust the roots, but i also think we can use the data to provide a level of detail and

granularity and how those routes should be adjusted. and if we need to ensure that some canada being picked up 345 times a day versus some that maybe need to be picked up once every other day, so i think, really, that's what we're looking forward to doing. and that's why we're doing the pilot. now we're seeing some of that. but we really admittedly haven't gone and done the four analytical rigor that we need to do. that is our summer activity once we get through this process, and that new position that we are proposing, as part of this application will be the point on that. and i would definitely recommend making sure that as we're taking a look at our sensor data, we track how much it cost us to maintain and operate a sensor program as opposed to investing in kind of more passes with ecology through it because there's a trade off between new technology and the cost of maintenance of that technology versus the people that we know we're going to need to deploy the other thing. i would like to make sure that we include is that the sensors tell us how full of business but it doesn't tell us what's outside the bin in terms of illegal dumping, and so we're definitely going to want to marry up the

311 data on dumping with that sensor to make sure that we understand what the full picture is for cans on the latter point in greek completely. another formal point will certainly work with the registration administrator to provide that i'm just if i could say one thing real quick and public works. these are huge initiatives that we are very much in support of and they will help our goal of keeping the city clean. thank you. thank you. should we check to see if, um member herrera would like to ask any questions? yeah. go ahead. hold on. go ahead, dennis . yeah i just want to be clear because i think i heard two separate things. and i think at first i thought we were talking about the zones. you were simply talking about the public cans. but then i heard that are we talking are they're two separate things we're talking about. i kind of want to make sure that we're focusing on the cans and illegal dumping. so i just kind of or is there increased? um his their increased circulation for

illegal dumping. in addition to in addition to the cans, or is it all one thing? that is correct. it is separate. there are two different program enhancements. okay because it was it sounded like you were emerging little bit. and then just when chair chu was going through things it sounded like it was they were being separated, and i just wanted to make sure that confirm that and just one question. yeah. i saw that article in the paper today and talked about that the central waterfront is becoming, um an area that has seen increased, uh, illegal dumping are we making is are we still looking at what the data says was number one was that accurate? number two. are there any programmatic changes being made for the central waterfront ? or if not, it's just additional data being analyzed. um and in response to the question, the data absolutely supports that that there is an

ongoing issue with the legal dumping in the bayview neighborhood. so the data that's i'm separating it out to me. the bayview is along the side. i'm trying. that's what i want to understand. because to me, the central waterfront is different from the baby hunters point. that's why i wanted to make sure that we're talking about apples and apples. um we have seen an increase in the central waterfront in terms of illegal dumping. but not to the extent we've seen it in the bayview hunters point neighborhood. what the word not making any additional program enhancement recommendations at this time to deal with that, because the data doesn't support that yet, and is that a fair assessment? that is a fair assessment? correct. thank you very much. thank you. okay? thank you. j. okay so we'll move on to slide. 35 proposed changes to pension costs, so colleges proposals to set pension costs at levels

where it would be fully funded by right year 2025 around july 2025. um our proposals is we're proposing to cap the annual cost for the pension could be fully funded in five years, and we think that by smoothing costs out over time, we can lower rates for both 2024 and 2025 while ensuring less volatility and rates in future years. um our proposal limits any cost allocations above any beyond those included in this rate order. um and then, in addition to that our proposal is asking for reporting on pension, actuarial valuation and market valuations on a quarterly basis . um this proposal would reduce pension costs from approximately 23.5 million to 11.3 million and right year 2024 and from 17.6 million to 11.4 million right year 2025. affected estimated

marshall. impact of this cost is 3.5% 3.6% change in rates over 2024. actually increase in the following year. because of the lord, um of the lord basis be a 1.71% change in rate year 2025 net change of 1.8% over the to right years. on this one. j. hmm. can you speak to why we would not want to accelerate? um pension funding. this is a cost that is where we know that we had this obligation. so help me understand? is it where it's five years? a typical smoothing period? what's the rationale here? i think, um, we asked for, uh, look at what it might be 35 10 years. um the i think the rationale is that will fully funded, uh, is an achievable

goal. i think we can do that over a longer period of time. it seems um, a bit extraordinary to fund it within this kind of two year period. uh um and then be able to smooth over time. i think it also is going to create less volatility, i think down. down the road in future years as well. the five years um i wouldn't say arbitrary, but it was, uh, that the 10 year kind of brought brought the rates down too low and was kind of a spreading the costs a little too. a little too far out, and there's too much uncertainty out there in the five years feels like kind of a good middle middle point where we have some expectations for future costs and what that might how how pension costs might change throughout that time. i appreciate the smoothing because i do think that we see kind of huge volatility and we tried to, um implement that through any particular rate year that that would be huge jumps, ups and

downs. that would be challenging. so i think that the smoothing process is a good one. um but i'm not sure i agree that it seemed that if we couldn't do more, because i think the reality is that what the what you are proposing is a 0% increase in rates this year, so it feels like we do have some room to move potentially if we wanted to accelerate some of the pension obligations we know we already have. help me think about this if we were to pre fund some pension funds, so if we were to accelerate some of the payments and not just do the 50% or that they increase that you're proposing so far on pension my understanding is that in some ways, the more you kind of invest up front, you have the ability to gain in terms of earnings over time, so it does help us in the long run. is that not a good way to think about that? yeah, i think that is a good way to think about it. um and i only say this because we're at a point where we're considering a 0% rate increase, but we know that we had these

outstanding obligations that exist. yeah. okay. okay. let me think about. um moving on to our corporate allocations proposal so corporate allocations or cost of the three ecology subsidiaries, um, sunset scavenger, golden gate and colleges defrancisco. uh from our colleges, corporate entity college incorporated non operating companies, so these costs include could include legal, financial, administrative , human resources support that are allocated to its subsidiaries. um. so based on the comptroller's office, public integrity reviews our office believes that corporate allocations are high. the current allocation methodology being used is revenue base. um which are office believes is not to the benefit of san francisco

repairs. san francisco rates tend to be higher than other jurisdictions for other ecology compared to other jurisdictions as service buyer ecology. and we believe that this higher caution not be a factor in the allocation. um so the refuge rate administration administrator has requested a review of impacts of other allocation methods such as tonnage based allocation. um at the time or recommending a 5% cut in the corporate allocations , um as well as our view before the next rate right cycle to evaluate expense eligibility to confirm that no prophet is being turned into assess other allocation methods. um in addition, where recommending establishing a programmatic reserve, um using this 5% corporate allocation amount as a basis for that program active reserve, the reserve would be used to cover city costs of city requests outside of scope of any agreed upon service level agreement. and so the net effect of the two changes would be no

impact rates. can i clarify. so when you say the current allocation methodology is revenue based so of the subsidiary operating companies, the allocation of the total costs of the non operating companies is based on the proportional revenues of each subsidiary. is that correct? that's correct. and so. does that mean that the total cost of the non operating companies is based on the cost? of proper running them. yes i believe so. so. right the total cost for the corporate services to all subsidiaries. that would be the total cost. yeah. and so if you used a different allocations, such as tonnages, it would shift say between recalled csf and ecology golden gate. but with the cost of those still

eventually roll back to the rates. to be paid by the same rate pairs. i'm trying to understand the impact of a different allocation methodology on the actual rates at the end of the day. right so i guess the question is, uh, what would be the impact of saying a tonnage based allocation versus the revenue revenue base. so, uh, if we look at revenue revenue, it's basically your rates times. you can you know rates times the number sorry. i'll let you go. but um, uh, by the, uh. number of accounts in the size of their bins. and so that's i think, roughly correlated with the tonnage and so given that our rates are higher and that are kind of levels of service in terms of sizes of bins are little assumption is that we would have the tonnage based allocation would actually be lower than a revenue based allocation. the cost that go to

the san francisco subsidiaries. so it would result in shifting subsidiary costs outside of san francisco to the non san francisco subsidiaries. got it? uh, i think college. he wants a comment so. john brussels, director. business process improvement um. we've taken a preliminary look and first revenue based allocations are industry standard. uh it's what not only rick ology, but in all of the jurisdictions that we're aware of, and from discussions with various rate consultants that that is a standard ah, doing a tonnage based allocation. ah it's complicated because you have to ask the question. where does the tonnage live? when it's collected from a resident? when it's delivered to a transfer station when it's sent to a landfill. you don't

want to count it three times and so the structure of the allocation really determines where the where the allocation, um since one thing i think that's important to point out. is ecology. san francisco, um, about 80% of their total revenue . 90% of the of the revenue from tonnage. is intercompany. what that means is that comes from golden gate and sunset. so in the revenue allocation, that's all eliminated. so the allocation to ecology san francisco is actually quite a bit lower than other companies have a comparative size that would have their revenue coming in from directly from customers. so we believe on an overall basis that a revenue allocation is appropriate. but as as you mentioned it's something that they've asked the question and

we will, you know, work to study and determine the overall impact. also the types of service that's provided and as we talked earlier the fact that the city has environmental goals to reduce the amount of material um, that is going to landfill. and to better recover materials . all of those things have an impact on the tonnage that's generated. assume moving on to slight 38 looking at economic business costs, particularly inflation. is that the one change that we made so we're colleges. initial proposal used the inflation factor based on controllers, five year financial plan, which

was published, um i think it was actually published january 2023 , which consumed increases of 3.68% and 3.5% for eight years, 2024 and 25, respectively. um the comptroller's office is updated that inflation forecast in march, which projects slightly lower rates. um so we've updated the proposal or proposal to include this forecast, which is 3.44% and 2.89% for the same years. um so the adjustment is it's a it's a marginal impact, reducing cost of rates about 166,000. and write your first rate year and 307002nd rate year. we also reviewed some other aspects of economic and business costs. we had our consultants look at recycling prices and fuel prices. these are items with high variability. um ultimately concluded that that the current assumptions were reasonable and lastly, with the economic growth

assumption ecology had based their economic growth assumption again on the controllers. five year financial plan, uh, in the controllers update, they may know uh, changes to the underlying assumptions on economic growth, so we've kept that constant as well. j out of curiosity to remember what the assumption was for fuel prices. uh there are different fuel prices. i don't remember what they are. thank you. um moving on to the we can provide that detail. next hearing as well, um , in the account changes. summary um, we have we've talked about the impound account, but i'll focus on the ones we haven't talked about zero. waste incentive account the programmatic reserve that, um ah , we are tying to the corporate

allocations cut a rate stabilization fund that comes from settlement funds. and then, um oh, yeah, just those three, so the rate stabilization fund includes remaining funds from settlement negotiated in march, 2021 as part of the settlement, recalled g would reimburse repairs around 94.5 million and over charges and interest. so after the reimbursements, the reimbursement fund had remaining 4.25 million balance, which was placed in this rate stabilization fund 2022 so this fund can be used to lower rates the remaining amount colleges proposal uses the entire balance and write your 2024 our proposal. is recommending the use of that fun to be spread across the two rate years. so um , would be 2.2 million and write your 2024 2.23 million right year 2025. the thinking behind that was at the end of all the

changes from our proposals. there was a slight ah! uh negative change in the rate years in the rates for right year 2024. this would bring it up to zero change and we can lower the lower than the change in rates in right year, 2025. um . programmatic deserve as i mentioned is established, provide flexibility for the city to make service requests beyond those outlined in the service level agreements. these requests require cost a cost estimate from ecology, and the recipe was right administrative approval. the amount of fun would be equivalent to that proposed corporate allocation cut, which would result in a positive about 783,008 year. 2024 and 807,000 right here, 2025. moving on to the zero waste incentive account . so this is we've talked a

little bit about this in the previous hearing, but this is and the department environment has has mentioned this. it's an incentive account that recall it could draw down if it meets certain targets meeting all targets would add additional 2% profit for ecology. it's about 8.25 million. and refuse. the fun contributes about 8.25 million refuse costs for right year 2025 8.338 and rate year 20. sorry 8.25 and write your 2024 8.338 and rate year 2025 when ecology does not meet the targets. the funds are used to lower repair rates and subsequent years or returned sorry, not lower, but to return to repairs and subsequent years . uh so rick ology assumes that does not meet its targets in 2023. so all of that is added back the 8.49 million and rate your 2024 and then does not meet its, uh and it assumes the add

back of two tiers for eight year 4.48 year. 2025 so some of these unachieved funds from the account have been used in past the support infrastructure spending and this was has been in the past approved outside of the rate process. um ecology has not met its zero waste and seven targets for several years. currently ecology has a recovery rate about 39% down from a peak of 62% in 2014. in the next slide that shows this chart. um the black line in the middle tons disposed is what's going to landfill. the blue lines are the various wwi targets. so as you can see, over the last 10 years, at least since 2014. none of these targets have been met. can we sit on this for just a moment ? the your third bullet point point. help me understand? unachieved funds from the

account have been used in the past to support infrastructure spending. what exactly are unachieved funds? so these are two of the tears and the previous prior right order if they aren't met. um, allowed. with approval, i think from the department of environment of the use of those funds for certain projects in this case, in one case, it was for the recycling. site and pure 96. so these were use of funds outside the repair process rather than returning them back to the ratepayers they were used for, um infrastructure spending. i see so when ecology would not meet at zero waste targets those funds that were not allocated to ecology sat instead of being returned to ratepayers in some in a subsequent year, they were used to pay for other projects outside of this rate process, and then we have procedures in

place for that. how does that work now? is it the same authority that allows department of environment to do so? in our proposal. we are not including the zero waste incentive account, and we don't think that uh, infrastructure spending should be done outside of a rape process. um and so we would not include that as part of our proposal. thank you, and then just quickly for the. recovery rate of 39% down from a peak of 62. how do we? how do we explain what? why? that is uh um, that's the question for a college. i think what are you experiencing? what are you seeing? curious. marie's quillen general manager , recalled the san francisco the big decrease associated with the recycling was the closure of sustainable crushing and that drove down the diversion rates from the mid 50% range of the current 30% range. um during covid, we saw a significant

reduction in tonnages, which, of course, drove down overall diversion rates as well as disposal rates. um most of the tonnage just starting to slowly come back up nowhere near quite what it was prior prior to covid. um but we are seeing rebound in the commercial and residential apartment sectors. so with the closure of sustainable crushing is all of that material now just being disposed of in the landfill is that what's happening, you know, that would be a question for the dpw operation. most of the tonnage that we received that that site was specifically from d v w street, your street repair. um i don't. i do not believe at this point that that tonnages being disposed of. it's probably going to another site outside the city and county of san francisco. but dpw can confirm that. and then just quickly before you you go. you said that covid had an impact because there was a reduction in tonnage. we saw we saw significant reductions in tonnage with the onset of covid , especially from the downtown

sector. but how does that impact recovery rate? it should just be you just have, you know 100 tons less, but the percentage would be the same. typically the recovery or recyclables that we received from the apartments and residential remain flat. the commercial drives the recovery recycling percentages a bit more than the residential. so with the reduction and commercial tonnage, we saw significant reductions and overall recovery as a result of those tons being reduced. that's helpful. thank you. and then to public works with regards to the question on sustainable crushing. good morning. i'm pretty robertson, cfo for public works once again, it is going to multiple facilities and the peninsula off the top of my head. i don't know the names those facilities, but i certainly can report back. thank you. so it sounds like the recovery through ecology has decreased, but not necessarily the recovery overall, because

ppl you is doing a direct recovery that is absolutely correct. thank you. some moving to slide 42 so. you know that the incentive account has not correlated with reductions in landfill tonnage or improvement to recovery rates, so our office is proposing a two year suspension of the incentive account to look at other models that may be more effective and could reduce cost to rate pairs. um we think the suspension. one uh, it would reduce cost of repairs. suspending this account . also would increase transparency and spending. we wouldn't have those two years of funds that could be, uh, used by ecology outside of the rate cycle, and it gives us some time to consider alternative with either retrospective incentives or penalties, something that really kind of ties either

colleges, investments or efforts to recovery rather than kind of it seems like right now that the highest correlation or kind of economic conditions or changes into facilities. um. can i just do a quick time check with with you? j i know we still have a number of slides to go through. what do you think is about our time? i want to just be mindful of a break period that we may want to schedule and i think our meeting goes to three o'clock. i think we're scheduled will be well within that time, period. um you know, we'll utilize the full time through three o'clock . no no, i think we'll be well within that, um, i would depending on i know rick ology has i think maybe a few more slides present? i don't know if the departments have additional comments, the remainder of our presentation is around items without rate impacts. i think it's a much shorter sections, so assuming we might be able to get through this and that our okay.

how did we feel okay with rolling through. no we're discussing a bio break. we're not taking a bio break. we're gonna continue moving on. thank you, j. thank you. um i do want to. i did say i would pause here to allow departments or ecology to present if they had any other comments. i don't think public works has any. i don't know if environment. hello alexa. guilty with the environment department. i wanted to comment on the weekend cleanups. um the we can clean ups are not a priority for the environment department. however if we do decide to go forward with them, we do want to prioritize all three streams and

reused component. we are in discussions with having goodwill. continue their involvement with that program. prior i know there was a bit of a conflict, um around whether or not three streams were previously offered, and in fact , the program used to be called years prior gigantic three, so i do know there were three streams available in the i know the program was discontinued during covid. and prior to that, perhaps it was only one ben available, um part of the reason why we want to prioritize three streams as we want to obviously maximize recovery, but we also want to send a message to the public that three streams and starting your material is a priority for the public as well. thank you. robertson from public works once again just to piggyback on that

0.1 of the things we hear about quite a bit as our at our beautification events is the discontinuation of the service, so we hear it from elected officials because their constituents are asking why there's no longer happens. but in terms of happening overall what it does, it does help reduce the overall legal vending in the street and quite often, it's hazardous waste, so we would often get motor oil or pay or some of those hazardous materials, so it does really help in the reduction of illegal vending for some of those types of materials, so i don't want to. i'm looking at on an operational lends not in terms of the diversion component, but operationally it is a big benefit for public works. thank you. john breslin, director of business process improvement for

ecology. a couple of quick comments. i want to make first. on the pension slide. um we appreciate and agree with the goal of reaching 100% funding and i think chair to your to your point of funding at the current level, which is $25 million at a plant at the plan level approximately 23.5 for san francisco. ah as the refuse, straight administrator said, would get us two full funding approximately the end of june of 2025. that would be a total of about $43 million of funding to get to that 100% target whereas doing it over five years at 12 year, approximately $60 million it would be funded at that five

year level. one thing important to point out is that uh, the actuarial calculations shows on a longer term basis. the fund would still drop below 100% if there was no additional funding , so we expect that there will be some funding in the long term. but again, that kind of gives you a perspective on that. current funding level versus funding at a at a lower amount a couple of things i want to point out one is, uh, the numbers that you see on the slide and what we've been talking about is actuarial analysis. there was a suggestion that ecology report both actuarial and market based funding levels. the actuarial analysis is based on a long accepted set of principles and parameters that are used to evaluate pension plans. the market analysis is something

that our our plan consultants are pension managers use, and there's a lot more variability there. we have worked with our actuaries and arrange for them to do a quarterly report and feel that that's really the appropriate way to address the analysis of funding levels. another important thing that that we want to point out something that we proposed is having some triggers in the funding requirement. um proposal that is, as i mentioned over the long term, we expect that the funding to drop back below 100% and therefore be required to continue to fund in addition, if there's any significant market correction, it may require that that we fund to bring the two plan back up towards the 100% so

we proposed that a trigger that once we reach 100% if the plan then drops below 98 that funding , um again be commenced and be allowed in the rates. likewise if in the face of a significant market correction there a risk of requirements, regulatory requirements, uh, to put additional contributions into the plan. that those funds be, um be allowed in the raid. john did clarify these two funding triggers that are proposed. these are triggers that would kick in automatically during the course of a two year cycle. if these conditions were to be met ? is that what the proposal is correct? and does that to j? is that included in our current proposal? it is not. okay. thank you. the next thing i want to, um to touch on briefly is, um j

mentioned the inflation and growth assumptions first, uh, with respect to fuel, we did not include any increase in 24 25 inflation for the fuel that fuel has been quite volatile, but it had peaked a couple of years ago and kind of leveled out and based on the information that we had, um, you know, futures and some other inputs that we felt that the cost level that we that exist today, um, we would be able to maintain through 24 and 25, so there's no inflation. specifically related to fuel. as you mentioned the inflation rate . we originally used the inputs from the city's five year plan and then revised them as as as j explained and suggested. so um, the revised numbers that you've

looked at this morning. include those changes. the one thing we did want to point out was that we are is the growth assumption that's included there. that growth assumption is an overall waited 2% growth on all of our revenues. it's based on the city's five year plan, and that five year plan included a 5% growth. in business tax in 2024 and 4.1 and 2025 when we spread that over our entire revenue base, that's what got us to the 2% well, we're not asking for a change in the analysis or or in the application that we do want to point out that it's ah, you know that that's highly uncertain. it's we feel that ah , that's a risk factor for ecology. uh 5% growth and face some in in the face of some of

the current information about um you know some of the hotel markets some of the commercial buildings that it's a pretty good, aggressive. it's a pretty aggressive assumption. so again. it's included in in the projections that you see there is some concern there, and that's as we'll talk about later. one of the things that, um we want to bring up as we discussed balancing account. next i want to go quickly over um corporate allocations. the corporate allocations. um as i mentioned. the allocations are based on industry standards, so that's the revenue is an industry standard before i want to step back, though, um j mentioned that that there was a conclusion from the public integrity review that the allocations are high. that's not something that we saw in in the report or in some of the

extensive work we had done with the deputy controller and his audit team. we didn't really get the indication that that that was an issue. so that's kind of new, uh, new information for us. um we haven't seen any basis for a 5% cut to allocations. we feel that it feels arbitrary in that sense. ah, we did. talk with. um with jay and ben regarding and the question about embedded profits. we did run them through a set of calculations and spreadsheets. to demonstrate that there were no embedded profits think there was a comment earlier. um from this court ivanova regarding the allocations and the allocations are based on the costs the underlying costs at the corporate entities. um. in

addition to the discussions we've had recently regarding that. this was another area that we spent a lot of time. in the integrity review discussing we provided documentation that tied the 2021 allocations back to the audited financials back to the underlying, um general ledger data to demonstrate that there were no profits included. in the costs that were being allocated . we've actually now engaged a third party. they're in the process of reviewing this and before we get to the next rate board hearing, we'll have a report that will provide to, uh , the comptroller's office and then ultimately to this hearing. to demonstrate that fact one other thing i want to mentioned , um, is that a good portion of the costs that are allocated or

costs related to technology? we've got a significant project underway. we're updating our operations, billing and customer service system to modernize that we're still we're operating on a legacy system that was originally put in place decades ago. and so we're in that process. along with that there's a lot of, um there's a lot of need to push our technology forward to make a better experience for ratepayers. also to be able to do a lot of the reporting and a lot of the analysis that we have been struggling to work through during this process. and then. finally with respect to programmatic reserve. um that's a concept that that we support. um we believe that it should be paid for in the rates. uh and

not not necessarily associated with um, any questions about corp corporate allocations? so again, we believe that it's a good idea to have a programmatic reserve. it's often the case where uh, people come to us and say, oh, i need you to do x y or z, uh, having a process where we can come back to the comptroller's office back through the city and agree on that any additional work that we're going to do? that's something that that we think is important. excuse me beneficial . there's a few things that we want to point out. this is just some suggestions that we made once we saw the initial proposal is that it's not intended to replace things that are normally normally paid for a build for. so if we've got, um currently city services it's not intended to say oh, we'll pick this up

for me under this programmatic reserve, as opposed to a normal building. also it's something that again we can, um we can fund it on a monthly basis based on whatever level of funding that we agree as appropriate. can be really disconnected from any discussion of corporate allocations. then as i mentioned , it's something that we would look back to. the city to the comptroller's office to guide us in terms of what would, um what qualifies under the reserve. and what are the approved approved expenditures? the intent is not to do anything that would cross the line of a rate rate setting process so it wouldn't go past 2025. it's something that in order to do that additional work there, there have to be funds. in the in the account. and then

it's something that, um we would propose that we would be able to execute and that would be include the cost, and the o are associated with that. um, we proposed that. any unused balance be rolled into a capital expenditure fund. we believe that creating a capital expenditure fund is a good idea . um we heard that the comment from j. ah that there's a desire not to approve things outside of the rape process. it certainly could be used to, uh, to support capital expenditures in a future rate process. but we believe that that's a more appropriate use of any remaining balance of that of that fund. questions.

no. great. thank you. do we want to give opportunity for general manager herrera to make comment or questions. comment j. okay, thanks. so the next portion of the presentation is around proposal items without rate impacts. these would include, uh found some account cost of living adjustment for subsequent right years. service

level agreements reporting requirements and then plan to work in the interim. just some background on the balancing count under the december 2022 settlement agreement, there was a $25 million bouncing account created the this notional balance would be increased based on profits earned or losses incurred in, uh right years. 2023 using the 0.91% or the 91% 0 r on eligible costs and applying to 50% adjustment. ah any remaining balance from this , uh, from this account would be used to offset any increase in equal amounts for eight years. 2025 to 29. it's a five year period. um so college is proposing a new balancing account to be based on profits earned and losses incurred for

rate year 2024 and 25 with 100% adjustment. our office is recommending a balance account based on if the original 50% adjustment. ah we believe that 100% adjustment would reduce the incentive for ecology control costs. ah. condition um. 100% judgment has the potential to create more involved chilean readjustments than than a 50% adjustment. so um, the i think the idea of the bouncing encounter part. part of why this is in our proposal is that it was a recommendation and one of the public integrity reviews that we include balancing account. this serves to service ratepayers by ensuring that any unanticipated savings or surplus revenues are used to offset subsequent years of cost and the unanticipated expenditures or revenue, short falls or smooth in overtime to mitigate rate shocks. and so the mechanism and i have a couple of illustrations that show how this might work.

um if the, uh if. if the at the end of the year 2024. we're below 91% operate ratio 50% of that amount below will be taken from the bouncing account and used to cover any approved shortfalls or eligible costs. previous review previously reviewed and covered by approved rate order. um and that amount can be spread across. uh, ah! no more than five or eight years. um and then again if it's above 91% that amount would result in a reduction to the balancing account, and that amount could be spread across, uh, some 0.5 right years. um in terms of the bouncing count use we're playing a cap that it cannot affect rates more than 2 2.5% of the retina revenue subject to rate setting for any subsequent right

here. um. so i walk through. one of the first illustration is where the entire balanced is used in the following right years. so if you follow along in right year, 2024 um, this is after the rate year amount is finalized. it's finalized the right year 2024. the amount will be finalized sometime. in right year 2025 and we've done the true up. but you find that you have a actual profit. ah! before the balancing account adjustment of 13.48% so that's a 3.59% difference from your target. um that would be an excess of about 7.2 adjustment would be reducing rates down by 3.6 million. and so if you follow down to the bottom tranche to rate your 2026 that started balance. is 3.6

million. and in this case, we use that entire amount to adjust rates and rate year. 2026 is we're doing rate setting. um and so if you go up, i'm sorry. this is kind of convoluted. but if you go up, you'll see that in this scenario, um uh, we're assuming that in right, you're 2026 in order to meet the authorized profit. the right order will just it by 0.98% and then we apply the bouncing account adjustment. ah which would have a minus 0.94% impact. um that's so the total rate adjustments ends up being 0.4% and so you're just net profits at 8.94. and then for right year 2025. we have, um a. where a shortfall where the actual profits before the adjustments

at 7.19% and so that's a negative 2.7% difference from the target. and so that's a $5.6 million shortfall. 50% adjustment would adjust rates up by 2.8 million. and so if you go to the starting balance at the bottom 2.8 million we use that amount. up at the top. um again , we assume that in order to meet authorized profits are re order. we need to just it up to 1.97. this would apply. then you would apply the bouncy count 2.8 million, which would impact the rates by 0.72% and actually increase the rates more to 2.6 increase the adjustment more to 2.69% and you have an adjusted net profit 2.61. in the second illustration on the next page. um this scenario where its determined uh again same

scenario where you have excess profits. and 2024 and a shortfall in 2025, but we spread the use of the balance across the two right years. and so the same scenario where, uh, we have a 3.59% difference from the target. your adjustment is 50% 3.6 million. so you're starting balance is negative 3.6 million. instead of using the full amount we use 1.8 million to adjust the rates. um uh down. and so it's a lower adjustment. if you go to the top, it's a minus 0.47% adjustment. and so your total rate adjustment after the bouncing count use would be 0.51% just net profit 9.42. in the second year. uh, um. right you're 2025. we have that 50% 2.8 million adjustment that uh,

can gets pulled into the bouncing account. um the ending balance from the previous from the previous or the balancing count is, uh, remainder that 1.8 million negative 1.8 million. is cary ford in the next year, and so the net uh, the net of the new balance in the previous years. balance is one about 1 million. and so this is a case where we use the entirety of that 1 million to adjust to adjust rates would be a 0.26. rate adjustment. total rate adjustment of 2.23% addressing that profit 10.15% um, i did want this next slide just kind of looks at some volatility illustrations. uh in scenario one. you have a shortfall of 3.59% from authorized profit and

write your 2024. in an upward adjustment determined during right setting for rate year 2026 . so if you apply the entirety of the 50% adjustment um in 2026 , you would see a rate adjustment of going from 0.98. to 1.92% 100% adjustment would further increase that if you use the entirety to 2.86. in scenario two. it's the same scenario, but you spread the adjustment. over the 2/2 years and so you can kind of smooth out that cost over time. where instead of increasing to 1.92% 50% rate adjustment increases from 0.98% to 1.45. the 100% adjustment would increase that to 1.92. the last scenario is a case where, uh, the rate adjustment has a mitigating

impact to the to the right order adjustments. so you have an excess of three point 5 9% from authorized profit and write your 2024 and the rate setting for the right order for right year. 2026 we're assuming an upward adjustment. and so 50% adjustment reduces right year 2026 rate adjustment from 0.98% 2.4. and the 100% adjustment would bring it down actually to negative 0.89. re change. i'll stop there with their any questions around the balancing account. clarification understand? under the proposal. it is 50% that gets applied two years out, essentially whether it's a negative or a positive and then the remaining 50% stays within the account for balancing account, essentially is there a cap to it remains in the balancing account. uh, there's not a. so it's the 50. it's a

50. there is a 50% adjustment goes into the balancing account and that can be used to just rates. any amount of that can be used to adjust rates and the right years that we're doing the right setting. um there's no limit to how much can be in the balancing account. right now we have. the only cap we have is the use of the balance so it can't adjust rates by more than 2.5% of net revenue. nations mind you. this is a you know, a two year right order, so it's only for two years we can have another chance to adjust the balancing account mechanism. it feels like it needs a cat. thank you. um the next item slight 50 is cost of living adjustment in

the refuge right administrators proposed rates, uh, the our current rate proposal includes inflationary increases included , including negotiated labor contract costs, and, uh projected fuel and recycling prices are accounted for in both right years. uh um, in the previous rate order and automatic cola escalator, which were ecology received in january , which amounted to about 8.86% increase in collections and 5.96% increase in tipping fees. um ecologies proposal includes the same automatic escalator that would take place take effect and write your 2026 if no subsequent rate orders approved our offices recommending no automatic coal adjustment after eight year 2025 and anticipates a plan recommended in order to be heard by the refuge rate board before the next rate cycle. we believe in the rate adjustments should be done through the right process, which would provide more transparency.

ah! moving on to the service level agreements. um so we've talked a little bit about this already abandoned materials. these are service level agreements that ah! college of that public works and ecology has been working together. uh to, uh. to set for a band of materials and public receptacles. um it would be a requiring a pickup for obama materials within four hours monday through friday workday eight hours on weekends. um and there would be caps on the number of notices per day and notices per year increasing 2% and write your 2025. proactive so i needed check this since, uh on mission. it sounds like that . it's not part of the pro active pickups. so it's bayview chinatown tenderloin area. it

will continue. bayview increased service. there's a new zone k to focus better on downtown. um and then there's abandoned. i think i conflated was abandoned material collections in mission in chinatown will continue. um public receptacles dedicated collection routes at hours agreed upon by colleges, public works not to exceed 8.5 hours condition during hours of operations on dedicated routes there would be to our pickup on notice of four receptacles. 20 notices per day 43,008 her nose per year increasing by 2% rate your 2025 repair of receptacles would continue. i should note with these caps one of the data requests from our office has been just kind of back up on these caps and seeing the historical data on number of notices per day notices per year or see if this is a reasonable

cap. um so we're awaiting that day to the last item is a request from, uh, department public works is that currently the language for disposal of stripping band waste? uh includes languages says for designated public work trucks. um this would change that to all public works trucks. i appreciate making sure that we have an understanding of whether the service level caps make sense. i appreciate you doing the due diligence there and then i also noted the discrepancy on the proactive pickup with mission as well. so we should confirm it sounds like in the presentation today from ecology that it did not include a proactive mission pick up so we just make sure that we confirm that and then what did you say about the abandoned cardboard collection mission in chinatown ? uh, so there is additional service for abandoned cardboard collection in mission in

chinatown. i can ask for ecology to explain more about that service. could you also explain the zone? k anthony exchange, the general manager of sunset scavenger, first for the abandoned materials for his own k zone, case and existing zone. sweep route has been in place for a number of years. it is not new. um, as far as the abandoned cardboard. we have two routes that are going out and picking up abandoned cardboard throughout the city in on our commercial corridors. there's two routes. um and they would be targeting areas obviously that have cardboard that's been legally set out. i see so the two zone k and abandon cardboard pick up those are all existing progress. so the zone case existing program for a number of years. the abandoned cardboard is actually came into existence this past february and is being asked as part of the right application to continue. thank you.

uh next slide will have more detail, i think in the next presentation or reporting requirements, but including our right order, continue the annual audited financial statements that were part of the settlement agreements, uh, to create consolidated statements that show elimination of ineligible costs. uh um. quarterly and annual reports would continue and work spit. we're looking at other, um, data points, expand reporting requirements, and so this would include, uh if approved the balancing account. i certainly the 2022 settlement balance account, but, uh if we move forward with the current pouncing count proposal that should be included. uh, in this that report as well, uh as and,

um, also, uh, inclusion of agreed upon procedures to link the audited financial statements to these quarterly reports. so this was a third party auditor. that uh, that conducted in a u p for ecology that would tie quarterly report dated to the audited financial statements. um . the refuge. marie were also currently documenting other reporting requirements from previous rate cycle, including landfill agreement requirements , as well as agreed upon reporting to environment department and these will be memorialized and not rate order. um and then, in addition will be requesting additional reporting to allow for analysis of operational efficiencies such as routes and lift data, um, as well as reporting allows for analysis of customer service levels. um and then the last

item this is just as planned work and some of our perimeter cost that we, um think and be used, uh, we can use impound account balance for, um, so there's a capital infrastructure study that we're recommending that would include needs for recycling processing. ah the organics, pre processing kind of what the long term solution is deputy director deputy comptroller breeds from had mentioned the landfill agreement and landfill needs will be and then the trash processing pilot and how that will factor into the future capital expenditure possible future capital expenditures. um we are recommending into in contamination mitigation or diversion study. um you know, we talked a little bit about contamination mitigation work. we really want to understand the impacts of outreach cameras or current protocols. um, and then

, on the other end, i think this is tied very much to some of the infrastructure work is um what are kind of the most effective diversion tools? um and then we also would consider another waste characterization. studies support this in market conditions for recyclables and comp, composting or compostable. the next item is cost allocation of resident central and commercial cost currently, um, that's difficult to break out because the trucks pick up from both residential commercial. um and so, uh, having a cost allocations study? what kind of understand? help us. understand uh uh, the differential costs between residential commercial services. um vehicle licensing around permit review, as is looking at kind of comparisons of our current system for, um in

terms of permitting for selecting a waste hauler versus other other jurisdictions. um. structures competitive bidding franchise agreements. and what are the impacts to, um not just rates but also if there are differential impacts to service levels, um as well. under those different structures. um. performance standards process in our kind of reporting requirements, will outline some performance measures that, uh, that we should be collecting. um and i think that will set us up to start setting standards and benchmarks for the next cycle. and so this is setting sights and funding to support that work and in contracting support next rate cycle, and one thing i mentioned was having a consultant to review of us city

functions in the nexus to rates. there are some internal studies city can pick up a new trash can evaluation that will be tied to the new trash can manager position evaluating city rules and then evaluating the current reporting requirements, and so we'll take that on in our office? jay, can you clarify of the contractor rate review and cost study work? what is anticipated to happen in the next year? are these just forward looking for future years? are these all anticipated to be picked up in the coming year? uh um, word? uh i think we're anticipating to do the bulk of this work in the next 12 18 month period. um to try to set us up for the next next rate cycle. i don't you know, likely we won't be able to get to every item but will prioritize a few things. i think particularly landfill will be doing the trash processing already. i think the contamination mitigation studies going to be important, especially since we're not

approving of the enhancements for this round. um and then i think it will be important for you know it's responsibility. the great board set performance standards, so i think we'll want to include that as well. um. may i request as we're thinking about our next rate cycle, and we're potentially pulling on board consulting support, etcetera. one of the things that would be really interesting to hear is whether there's any structure in place that's possible to invent incentivize cost control. okay because currently under the structure we've got the 91% right profit. um ratio and i one of the things i really want to understand is what is the incentive for the organization to continue to manage costs because we're essentially paying for it, assuming a certain amount of profitability and i understand it. i've heard before. in our previous rate meetings at the organization's incentive is to be competitive in the larger marketplace on cost control, but

i'm just curious to see what other jurisdictions or other best practices could be to incentivize the organization to also um, manage their costs. okay. we can definitely include that. so that concludes our presentation. we also want to give opportunity for again the departments and recall aji to comment represent. it might just be ecology. john bracelet. director of business process improvement for ecology. let's see. let's start with the balancing account. um balancing account again is a mechanism that is designed to hold recall aji to the profit level. that is approved in the

raid order. so if we use a 91% operating ratio way the balancing account works is that we take our actual profits and measure that against what a profit would be at 91% and the difference goes into the balancing account either positive or negative. um. that that's kind of the purpose of the account. uh a couple of things and as we've talked about previously ecology feels strongly that the balancing account we put in place should be put in place at 100. um as as j mentioned and is included in the integrity report, there was a concern with variants from the , um target profit. based on the actual results that recall aji um experienced the only way to make that to address that issue and go back to the target profit

is to use 100% balancing account anything less. so if you use a 50% account 50% of the variants stays either with the company or is a deficit that, um that is, you know, back to the ratepayers essentially. ah another issue on that. is that in those places where balancing accounts exist to our knowledge, there's nothing less than 100% balancing account the city of belmont. and west contra costa central contra costa waste authorities. they have working balancing accounts . they're all they're all at 100. ah, um. in addition that there's certain items as we were discussing pension, there was concern. ah on during the review in the event that the company made contributions that were, um

once we reached 100% funding and . the proposed remedy was to put 100% of those into the balancing account. so that's an example of when you've got a variance that went into the 100% as opposed to using the 50. also our understanding. is that really the 50% balancing account? was the result of settlement negotiations, and there were a number of factors that were included in that work and when we came to that agreement, so really, the 50. was um was related to that settlement and not necessarily looked at as an ongoing thing. um we appreciate the complexity of the uh, of the mechanism and we worked a lot with jay and ben and team going back and forth on looking at examples a couple of things to point out one. when we think

about the balancing account. we have to think about it in the long term. so if we take in account and we spread, um we spread a balance over three years. on the second year, you're adding a second layer in the third year, you're adding a third layer. so by year three. you've got three years worth of balancing account so in looking at it. you have to be careful not to look at the impacts as a snapshot, but rather as a long term, we feel that we're going to adopt the mechanism that we would like the like it to be something that is consistent and stable for the long term. um i think having changes in the structure you know that go from rate process to rate process. uh, could potentially create additional volatility. it also we recognize creates a lot of risk for the company. because

we've seen in past situations where a balancing account balance built and then a municipality or an authority decided that they didn't necessarily want to honor the past agreements. so that's just a risk that that, um, we've seen speaking to the issue of cost controls, and this is, um part of the rationale that was presented to the 50% balancing account. there's a couple of things that i want to mention first. is that the process that we're in this is the kind of the basis and cornerstone for creating the cost structure that ecology then operates under so we go through a review process. in addition, um we've put mechanism in our rate reporting so that any significant variances from either period period or in the past, from

projected numbers to actuals are reviewed by the comptroller's office. and there's mechanisms in place to question and or disallow things, depending on the level of variance, so that's something we're operating under. uh, underwrite under right now. i guess the final. comment about that is with respect to volatility. uh there are conditions under which having 100% balancing account would reduce the volatility. it really depends on the direction that you're moving. whether you've been, you know, going up and down over the years what the accumulated balance of the account is so again. it's something that it's really important to think about over a long period. as we contemplate adopting it. the next day. i

wanted to comment on this. j talked a little bit. um mentioned about the cola. uh he mentioned which we'll talk about in a moment is the future work and that that there's a bunch of work that we're contemplating in the next 12 to 18 months. the reason i bring that up. is that the purpose of a cola is to allow for adjustments to reflect inflation, uh, in the event that there is a period where a formal rate is not set. so as we've talked, the intent right now is to set this rate for two year cycle and then to set a new rate that would begin on october 2025 . well that means we would start the process. um probably we've learned from from this process at least a year in advance. which means that we're under a

lot of pressure to get, um, to get that work done. and it's um it's been in the case in the past that unforeseen events have delayed a rate increase so we would propose adopting a cola for that reason, so that in the event that there is a delay, there's adjustments to reflect inflation of costs and whenever the next rate is adopted uh, it's adopted. it doesn't have the same magnitude of change. finally we think in the discussion of the balancing account that tying the balancing account. and a cola adjustment makes sense since the mechanism of a balancing account means you've got an annual adjustment. and in the event that we're not able to set rates. um for whatever reason, and october of 2025 the balancing account would be part of any any cola

adjustment that we adopt. whoops me go. 12. oh, let me before i before i turn it over to maurice quillin a couple more quick things. um reporting requirements. we've we've talked with the comptroller's office and we just want to make clear that their separation between audited financial statements and work on rate reports. audited financial statements are governed by gap. so any opinion that you provided regarding those statements can't include rate reporting was because there's not the same regulatory structure. that would guide their work on the rates. as j mentioned we have done, um, a ups agreed upon procedures

related to reconciling the rate reports to the audited financials and agree, and we'll we'll continue to do those and that work is contemplated. in the proposal. ah we do feel there will be some challenge to correlate audited financials to quarterly reporting because there's no quarterly audit. the audit only comes on an annual basis. so our concern is we want to make sure with whatever um, whatever final reporting requirements are included in the adopted rate order that there are things that one are possible and in the event that it requires a lot of additional work from our auditors that then costs for those, um, those additional that additional work is included in whatever the final proposal is. questions for me. at this point, no. all right. turn it over to maurice

quillin. to talk about service level agreements. thank you, john. good afternoon, maurice quillin recalled the san francisco general manager. um the ecology management team has collaborated with public works on this service level agreements shown here, the refuse rate administrator presentation accurately captures the abandoned material and public receptacle service level agreements. called you to report on the performance quarterly and we plan to evaluate the reasonable iness of these service level agreements as part of our next rate process. on the public works. trucks qualifying for free disposal. um the statement that all public work trucks qualify for free disposal is accurate as it does not reflect the assumptions put into the ecology. san francisco right application. ecology has included the disposal expenses for the public works, mechanical street sweepers and abandoned

waste collection operations. we have not included any expenses that contemplated disposal for all of the public works tonnages that could potentially be generated within the city and county of san francisco. we have included 21,072 tons of free disposal in our application. india vented public works succeeds a ton of estimated by the ecology san francisco. we would look to seek reimbursement for that tonnage from the programmatic reserve. and that concludes the ecology presentation were available for any additional questions. can we go back to that last side, please? on the public receptacles that repair within 72 hours is this also include the new receptacles that the city is planning to install. it does not. those would be the legacy, uh, concrete cans for lack of a better word, and we replaced liners in all kinds, except for the big belly cans. so i'm clear when we speak about

the repairs, what is that actually cover the actual concrete receptacle or the liners inside the receptacle. it's the doors on the concrete cans the liners in the concrete cans and it is the liners inside the metal renaissance kant's but no repairs to anything on the renaissance cans, and it doesn't require include graffiti paints out those kinds of things correct. it does not does not, and then to public works with regards to the future cans. is maintenance anticipated to be completed by dpw by the vendor. um maintenance will be done by either the vendor or public works staff but one of the key components in the pilot that we did when we tested cans is the slim silhouette, which was the option we chose. add the most durability so that we anticipate maintenance costs to be significantly lower and the level of effort to be lower going forward with those new cans. okay? j. it's a. i think

that concludes presentations. alright, so i think that the formal presentations are concluded today. um, i know that we will likely enter into healthy conversation or discussion. um, but before we do that we want to open it up for public comment. thank you, chair choo. we will now take public comment. members of the public may address the board with comments specific to the current item item four and will be limited to two minutes of speaking time per person in a total of 20 cumulative minutes for this item. good afternoon church. you and directors. ah. by mark gleason. i'm retired secretary treasurer of teamsters joint council seven and i've been asked by our affiliate. the

executive board of teamsters 3 50, which represents the workers. that ecology and are very much. concerned about how this process is going to work going forward. um. the women and men that 3 50 represents. or essential as we know the essential workers working through the pandemic in very difficult circumstances. and we would like to highlight. the unique nature of this essential work specifically to how it is in san francisco. this includes specific challenges. that are affected by elements of street behavior, the difficulty of access and egress in some areas. and the unfortunate and unavoidable disturbance of our own housed residents. as our members and 3 50. performing the

retrieval of refuse can containers throughout the city. as you may know our members here , unlike other metropolitan areas, get out of their truck and have to move these containers to provide the service. there's going to be a need. and it's going to be an evolving and growing need for to work or trucks going forward. this will allow for worker's safety access functionality. and the retention is stability of the workforce itself. we thank you in your decision making and deliberating. to consider this factor. as this evolving issue is something that is unpredictable. but it is certainly going to be something we need to address going forward. thank you. thank you for your comments. i do want to clarify one thing that, um there will be unlimited amounts of public comments. it just might be 20 minutes in item four. so

we will have time for everybody here. is there anybody else in the room who would like to give public comment? i'm seeing nobody else in the room. um let's go to the phone lines. members of the public who wish to provide remote public comment on this item should dial star three on the phone. or click raise hand in webex. please note that you will have two minutes to speak moderator. do we have any remote public comments on the line? we have two collars. thank you, um, color. the first color. your time begins now. thank you. can you hear me now? we can hear you, mr bilbo. thank you. okay so if i only have two minutes and i'm going to have to run through my comments very quickly if i missed something at the end, you may want to ask me to complete my thought, because i want to be sure to get these items on the record. so starting

now i think that i understand this process pretty well. but i do not understand the proposed programmatic reserve at all. i would like a clear summary at its future hearing or elsewhere of the overall rate proposal, the balancing account the impound account the programmatic reserve, the special reserve under either the landfill agreement or the facilitation agreement, zero waste incentive account and any other accounts, funds, reserves or other fiscal arrangements. i think we need a grand recap on service level agreements i would require that they exist and that they be filed with the refuse ratepayer advocate, but i don't believe those terms should be dictated by this board. i would clarify that dpw and environment can only use impound account funds for rate approved purposes that they may not, um. them know that they may not keep funds and then

use them for other purposes not approved by the rate board that may not have been tested for nexus and proportionality, since i do not have time to cover other details here, i will discuss them with staff in the near future, including the contamination enhancement pension costs, corporate allocations. inflation inflation , zero. waste incentive account the impound account dpw mechanical street, sweeping and reporting requirements i am concerned about who does what in future studies and future work. i think it's important to keep lines clear and avoid conflicts or conflicts of interest. i still think that facilities plants your public comment. um moderator, please activate the next color. your time begins now. they put their hand down. so we have no more colors. thank you very much, um, chair shoot that can concludes public comment on item four. thank you

very much. clerk stone. why don't we open this item up for discussion amongst the board? i want to give. um general manager herrera an opportunity to start off since i can't see if he has his hand raised. um. thank you, madam chair. i you know, i think that, uh, first i'm appreciated the presentation. uh, very much, and, uh i think that. we sort of got a sense for the direction of where things are, and i'm glad we had that the opportunity to, um, you know, raise the questions that we did in the various areas that we did to get clarification. so um, you know, i know that there's an additional meeting scheduled and, um you know, i look forward to seeing, um. the refinement of

the ongoing work done by the raid administrator and you know, i'm i'm comfortable with the direction that appears that we're moving. thank you very much. general manager. um i do want to add some comments first . i want to just thank and appreciate the work of our rate administrator. i know that this has been a very quick process to get up to speed and to quickly pour through quite a lot of information in a short amount of time in order to staff and allow this process to happen, so i want to thank you. j and your entire team. i know it's been a significant amount of work. i do want to note. it's pretty. it's pretty probably unusual and remarkable that even in this time of cost inflationary pressures were seeing potentially an instance where we have a rate increase of zero going forward for a year. one that is quite remarkable, and quite strange, perhaps, and i do want us to take a look at at that. i don't necessarily want us to increase rates for the

purpose of just making sure that we increase rates, but i do want to make sure that we're keeping an eye out on the long run of our rates and volatility. um, so to the extent that we can review a few things that would be really appreciative. um first off. i do want to also thank rick ology as well. i should thank you for your time and effort put into this process to our department of the environment as well as public works for your partnership in this as well. overall i really like the direction of where we're going with increasing services for abandoned materials , as well as for the public receptacle bins. i think these are pain points. we continue to see across our city and i think that that's important for us to be addressing. especially as we're thinking about. the service ultimately provided to our customers and to our taxpayers and residents. people expect and want to see clean streets and we want to see that as well. so i want to appreciate the thought that's been put into making sure that we think about what those processes look like. i'm appreciative of the fact that we have within this potential rate order the flexibility to implement our garbage plan. garbage can plan

so the ability to make sure that we have the ability to gather data and understand where we're seeing some significant bottlenecks or challenges to our public trash pickups. i think that that's really important for us to continue to do and i'm also appreciative of seeing that our rate administrator is also funded by the impound account. um i would consider and ask us to be thinking about how it is that we start to implement those costs. on an ongoing basis to expenses. generally, right now we're using utilizing this impound account and these funds that we have reserve er or sits in in in a reserve to fund these expenses, but in the long run, this is likely an expense that we want to make sure that we're rolling in and appropriately doing so because this is an ongoing ability for us to run a good process to have institutional knowledge about how are rates are set and i think that's an important function for us to continue to invest in overtime. so while we might not include that in the upcoming two year rate cycle, and we're using the impound account to do so, i do think we should consider how we're going

to roll this in for the future. um, i think for me, there's a few things that i would like us to consider, especially since we're dealing with a situation where we're seeing potentially a 0% increase in year one. i would like us and j. if you could put some thought into pension, pre funding and whether or not we want to reevaluate that, i think while in a feel like a savings for taxpayers in year one, it actually results in higher costs. in the out years. and so i think this is something we want to be considering whether there's something that's reasonable for us to be able to do some pension pre funding here . um, for myself. i would like to see us try to advance some of our zero waste. um goals. um and i don't. i don't necessarily buy into per to purchasing all of the requested um, uh uh. programmatic enhancements that have been requested, but i would like to see within that spectrum of requests, whether there are any, um, interim measures that we can put in place to begin advancing some of the zero

waste, um, goals that we have as a city. um in the future when we take a look at the diversion rates, and we see the 36% or 39% compared to the 60 plus percent in past years, we should role in the public works number because it's not a true it's not really accurate. if what we're seeing we're just talking about the ecology number, and we're diverting through through public works, but we're not capturing that number because we really want to be comparing like for like, so i think that if i take a look at that, as a member of the public, i'm saying what what's going on? there is a significant drop off. we need to make more investments. but if, in fact what we really are is at 59% you know that's a very different number. once we factored in the public works component, so i think we really should endeavor to try to give the taxpayers that apples to apples comparison as much as possible. to the point that rick ology made and was observed in the comments earlier as well, when we spoke about the comparisons across jurisdictions i do think that it is important for us to be detailing ensuring

where some of the major cost differentials and service differentials are because i don't want our residents to get the wrong impression that, um, we should be having trash services at $26 a month when in fact we have a whole lot of other services that are taxpayers and our residents enjoy and appreciate and need that is built into our costs. i think to the extent that in the future we had the ability to provide more nuance information. nation about the services that are provided in comparable jurisdictions. i think that would be helpful. ah and i would endeavor to ask our consultant to make sure that we provide some of that information so that our taxpayers has transparency about what those services are i for one as a residential, um, account holder really do appreciate my bookie item pick up and so i have to say that that is an added benefit that i really do appreciate in our in our city. some of the other areas. i would like some more detail on and this perhaps can be either done through briefings

directly with the rate administrator or through our june 20/6 hearing. that's coming up. i want to understand a little bit more about the corporate allocations that i think deserves a little bit more detail for us to understand how that works and how we came to the 5. um, reduction. that's recommended. um i think a little bit more information about the balancing account would be helpful for me as well. and i would want to understand a little bit more about again the cost associated with the weekend cleanup events. uh, just some more detail on that, um, for me , and then with regards to the zero waste incentive fund i appreciate the idea that is something that we want to potentially invest in. i'm also compelled by us not understanding whether or not it has been an effective, um, usage of our funding. so um, i think some discussion on that, um perhaps some more information from the department of the environment about why this is such a, um, a priority for you

would be important for us to understand in the next the next process. ah so with that i'll reserve my comments for the rest because i've really talked about one of my bigger concerns, which is generally how we incentivize cost control for the long run, and that's where i want us to be focusing on if not in this particular two year cycle in the next one. so with that, i'll close out my comments and pass it on to my colleague. thank you. chair chew. um i think you covered most of the things that i would like to say. i do want to especially appreciate the work that's been done by the refuse rate administrator and their staff. um, i think from my interactions with them, they are clearly going through this proposal with a fine tooth comb. um and they have the well being of the rape pairs of san francisco and mind. so i've been very impressed with the quality of the work that they've been doing in a very short amount of time, and i think that's really worth calling out. i think one of the things that jumped out to me during this presentation was specifically the difference of opinion between the department

of the environment and the resolution that was passed by their commission on how to address contamination and what's included in the refuge rate administrators proposal and i would encourage the refuge great administrator to go work with the staff at the department of the environment who really, truly the experts on the idea of how we're getting to zero waste. and how we're going to meet all of our regulatory and policy goals that our city has set out to make sure that the proposal going forward is putting us on a path to achieving that, since that's obviously a real priority for our city. i also think it would be really helpful when talking about the new programmatic reserve as well as the balancing account. um, and the impound account to have some documentation and clarity on how those accounts are funded, and what the allowable uses are of them, as well as sort of our planned uses outside of what's just the bare minimum allowed, so i think that would be helpful for the board to here and, um, provide some clarity around those. that's all i have. thank you. thank you very much, and i

will echo the need for more information about those uses. i appreciate that comment finally won one item. i did forget to mention uh, as part of the recommendation. i think that it was recommended that we do not include any cola's for future years for this process, because the intention is to bring back a rate process here. i don't disagree necessarily with that, but i do want us to be thinking about. are there options or triggers where we might want to? in case that there is something that is unforeseen? um and i think i think that because operationally as a city, we have a lot of challenges around retention and people with j. we hope you have a long career here and stay here forever with us. but there are always opportunities that sometimes, um allow people to move on to other and better opportunities. and to the extent that we have challenges with running a rate process. one of the consequences that could happen is that we're going to see a build up potentially of the operating ratio not being at 91% and then because of real inflation. that's happening. so is there a

way for us to build in reasonable inflationary factors , possibly for interim periods, and not sure something that we should consider? only because the more that we don't do that the if there is a very long delay from when our next rate process will be. we're going to essentially have to carry that in out years. so it's something to think about whether there is something that's reasonable to assume for inflationary pressures if we can get to a re process in time. okay? should we call item five. yes, thank you. yeah five is the opportunity to propose future agenda items with discussion and possible action by the board. would any member of the board like to propose a future agenda item? i think we did that already. technically did that. okay um, but we can open this item up for public comment. okay i'm gonna take public comment on item five. we will now take public comment. members of the public that may, um may address the board with

comments specific to the current item and will be limited to two minutes of speaking per person. um is there anybody in person who would like to give public comment? seeing none. moderator do we have any, uh, colors on the line who would like to give public comment? we have one collar. thank you very much, um , color. you can begin your comments now. great david pill people, um, so as to future agenda item ideas. i still think that facilities planning and real estate needs more attention in order to improve diversion. those are possible topics i asked her to prior hearing if erin from the puc has information on the puc, suburban water balancing account and how that works, and perhaps in the context of today's presentation , how that balancing account works compared to the proposed balancing account. here. that

might be interesting to hear about. to chair chu. i suggest a c p i minus 1% idea to address inflation going forward and still have an incentive for efficiency. so that um, the assumption would be that cp. i drives costs. but if you take cp less 1% than the companies, and for that matter, city departments would have an incentive to find efficiencies within their operation. um period. that's an idea to discuss and finally i think that an additional meeting of this board on the rate order may be needed between june 20/6 and july 20/4 2 walkthrough more of the details of the proposed rate order, which i'm hoping comes out next week, and i'm very much looking forward to and reading and producing up with my findings to come and thank you for listening. thank you very

much. mr. pil pil moderator. do we have any additional colors in the queue? erin. no more callers . thank you, moderator. this concludes the public comment for item five, which leads us to adjournment. is there a motion to adjourn this meeting? made that motion. thank you. um, i will call the roll board member corvin ova. buy and share chu i thank you very much. committee staff members can be reached at con dot refuse rates at sf gov .org we are adjourned at this time. 12 48 pm thank you and have a nice day.

>> we can sweep by in front of a house in a matter of seconds. the only people who don't like it are the people who get the tickets. >> this is a street sweeping sign. don't let it get you. pay attention. [♪♪♪] >> in the morning, when we first go out, we start at six in the morning or seven in the morning. we call that our business run. we sweep all the main arteries of the city. after 8:00, we go into the residential areas and take care

of all the other customers. >> the idea with the street sweeping program is to get the leaves and the debris off the ground. >> we -- for not only appearance and cleanliness but safety as well. >> we will get anywhere from 2- 7,000 pounds per truck depending on the season and the route. the street sweeper and the choice of the use right now is an error sweeper. they have a motor in the back and it blows winds down one side and carried by air into the hopper. what will mess this up is new -- large pieces of cardboard or sticks or coat hangers. anything that is more than 12 inches. the tube on the tracks is only 12-inch diameter. >> people asked what they can do to help to keep the city clean.

there are people that letter. leaves are one thing. any of the garbage you see is from people being careless. [♪♪♪] >> one cars parked in the way, we can't sweep under the congress. to deal with this, we have parking control officers that are provided by m.t.a. and they go in front of our sweepers and pass out citations to people that are parking the wrong way. once the sweepers sweep past in san francisco, you may park behind the street sweeper. we all know parking is a big issue. north beach hasn't been swept since the eighties because of opposition. but we are getting a lot of requests to sweep. basically our trucks are 10 feet wide. we stick the brooms out and they are may be 12 feet wide. >> there are a lot of blind

spots when driving a large truck pedestrians and bicyclists and cars. and navigates this 22,000-pound truck through the city. >> we involve the public here -- to adhere to traffic laws. these routes were developed back in the eighties around the capability of the sweeper. things have changed since then so we have to adapt. luckily, public works is embracing technology and working on a system to alter our maps. this is literally cut and paste -- cut and paste. we will have a computer program soon that will be able to alter the maps and be updated instantly. we will have tablets in the checks for all of the maps. we will send a broom wherever it needs to go and he has the information he needs to complete the safety. what is needed about these tablets as they will have a g.p.s. on it so we know where they're at. you do get confused driving along, especially the inner

sunset. recall that to the be made a triangle. >> thanks for writing along with us today. i enjoyed showing you what we do and i urge you to pay attention to the signs and move your car and don't litter. with all(music).

>> i started the o was with a financing and had a business partner all ended up wanting to start the business and retire and i did was very important to me so i bought them oust and two weeks later the pandemic h-4 one of the moments i thought to myself we have to have the worse business in a lifetime or the best. >> we created the oasis out of

a need basically so other people bars and turning them into a space and when the last place we were performing wasn't used turned those buildings into condos so we decided to have a space. >> what the pandemic did for us is made us on of that we felt we had to do this immediately and created this. >> (unintelligible). >> where we would offer food delivery services with a curbside professionalism live music to bring spectacular to lives we are going through and as well as employ on the

caterers and the performers and drivers very for that i think also for everyone to do something. we had ordinary on the roof and life performances and with a restaurant to support the system where we are and even with that had terribly initiative and hundreds of thousands of dollars in debt had to pay our rent we decided to have an old-fashioned one we created club hours where you can watch to online and or be on the phone and raised over one quarter of a million dollar that of incredible and something that northbound thought we could do. >> we got ourselves back and

made me realize how for that people will show up if i was blown away but also had the courage but the commitment now i can't let anyone down i have to make the space serviceable so while this is a full process business it became much more about a space that was used by the community. and it became less about starting up a business and more about the heart of what we're doing. this building used to be a- and one of the first one we started working on had we came out what a mural to wrap the building and took a while but able to raise the money and pay 5 artists to make a design around many this

to represent what is happening on the side and also important this is who we are this is us putting it out there because satisfies other people we don't realize how much we affect the community around there when he i want to put that out there and show up and show ourselves outside of those walls more fabulous. and inspires other people to be more fabulous and everyone want to be more fabulous and less hatred and hostility and that is how we change the

[applause] >> my name is (indiscernible) the director of the office of civic engagement and affairs. before we start our evening program, i would like to introduce to our opening performance. please give a welcome to bango (indiscernible) dance company performing the west african rhythms. [applause]