spaces. jury room report is called to order monday june 26, 2023. and the time is 9. . 04 a.m. if -- please respond with here or present >> chair chu >> here >> herrera. >> here >> with 2 present we have a quorum for refuse rate board and now the land acknowledgment. we are on the unseed home lanltd of the ramaytush ohlone the original inhabitants of the san

francisco pel anyone slachlt as stewards in accordance with traditions ramaytush ohlone never ceded nor lost responsibility as care takers of this place. as guests we benefit from live and working on their home land and we wish to pay respects acknowledging theelders of the recommend ram community by affirming their sovereign rights as first peoples. >> thank you very much, clerk. next item. >> thank you. item 2 is the presentation from the refuse ready add administrator on the proposals. a discussion item and a possible action item. now we'll receive a presentation from jay. >> >> good morning.

chair chu and member herrera. jay with controller's office before we start i want to thank everyone for the time and attention to the work. i share my appreciation for the time and collaboration from public works and environment and ricology. this was a staff process where we pushed for a lot of information in a short time i appreciate the responsiveness. and i think this process in terms of the lines of communication we established set us up well for the next rate cycle. pull this presentation up, please. >> quickly through this agenda for this item our presentation has 2 parts a standing rate report. we will share what we are seeing with written objections and comments to date. i will update you on the prop 218 protests and response to try

in standardize rate comparrisons or the question about standardsizing rate comparisons with other jurisdictions. consultants and will share a bit about an prop they will take with the board. and i will share remainder for the rate setting process. the next per it hear our rate order. we issued written rate order last week. presented on the rate order during the previous hearings. so for this hearing we give a summary of the proposed rate changes. and request sum row of the investments. we will share changes to service level agreements since the left hearing for materials, collection and public receptacles. they were working finalized in a couple weeks. remaining items are responses to requests from the board from the previous hearing. with these items looking for direction from the rate board to draft a final rate ord. that the board could adopt in

july. these include the contamination enhancement alternatives. pension prefunding, corporate allocations. the program reserves. balancing account. the automatic cola and is a new item requested to look in a zero waste capitol reserve and the left 2 one i want to share about is the reporting requirements included in the rate order. and then a summary request for sum row. accounts the last 2 itemers from ricology request for cost detail on the weekend clone up or district clean up. and in addition changes to the organic preprocessing proposal. changes we agree with but recology will

shareit@cbsaustin.com update for this. so, as of last week june 15 of 23 we received 109 written comments or objections. these other prop f written comments or objections. we did coding and the themes for 86% object in the the rate increase. for those who did not object rate increases 5% of some had a mix here but for some of those who did not object the rate increases and some supported the refuse ready administrator proposal had no rate increase in 2024 but 3 opinion 9% increase in 2025. other costs were focused around

requests for lower minimum service options they thought they were too large for the level of waste generated and other comments were around service issues miss pick ups or debris after pick up. >> focusing in on the reasons from the rate increase. some of those response who objected cited the rate increase compounds other costs making san francisco a difficult accomplice to live at 38% sited that reason. already raised rate this is is a reference to the cola received by recology in last january of 8.86%. some felt the current rates were

too high. 21% and 14% the scandal of the reason not to raise rates. this is a selection of quotes from the comments and i will read a couple of these. there is a conditioning increase on rates in every aspect of the economy, food, gas, interest rates and hurting everyone stop this increase will impact families who are already struggling. i will jump to i'm sure that you may not be reminded of the ricology increase of 8. 86% in 2023. any increases in rates cola or otherwise is cannot be justified. i advise against rate increase. and left rising costs are expected 6.15 over 2 years is unreasonable if the company guess another 2 years without a

scandal i will be in favor of resetting rates for costs. >> next is an update on prop 218. it requires notification of changes to rates for service sent 45 days prior toy scheduled public hear. prop 218 notice cent june of 2023. hearing for for this will occur on july 24th. that puts us outoutside of the 45 day period. as of june 21st we received 141 prop 218 protests. if a majority protest exists no rate changes may be imposed that threshold will be 73,000 protests. >> so, in our next slide i was

going to invite consultants h/f and h to share remotely a bit about future analysis around jurisdiction comparrisons. can we pull dave up? >> can you hear me? . s we can hear you. >> thank you, good morning, as jay discussed we have been in discussion after comments. regarding our rate comparison survey and how it could be improved. in addition to some of the requests discussed later that should help us get bench marks with other jurisdictions. but as well as looking at other metrics in terms of rate

comparrisons. our initial comparison look the at minimal service level and equal to per gallon equivalent noted that it is hard to do an apples comparison the different jurisdictions even if you do that per gallon equivalent. weepmented look at not just the minimum service rate or standard service rate but noting the all of the different service offerings that are available in jurisdictions have different rate structures and different ratings of costs in the structures long with what the upon know different subscription rates are. so there are jurisdictions where it is standard service rate is lower or higher 96 rate or in some instances the 96 gallon is the standard service and this 96 rate is lower than other jurisdictions where the 96 gallon rate is not the standard.

we wanted look at a different span of the residential rates as well as what that includes. how much recycling and trends and food crepe services. if there are other programs included in the costs such bulk pick up or provisions about getting to small are trucks for heard to service areas. another thing we like to look at in addition to profit margin analysis is if available do we have the percentages for other jurisdictions are there fees included in the rates for city service or environmental programs the rates are funding and what that looks like. we plan to look at the larger stand and will not give you any back here is hat rate would be if we stepped out the additional programs for other places we believe with this additional

information and other report happening that we do requesting we may be understands better what dot tons per rout look like anymore per rout or hour to get a better understanding what the service for san francisco looks like and how it compares to other jurisdictions not just with the rate this a customer may pay but services offered and the efficiencies of the service. i will jump to the reminding calendar for the rate setting process. today or last week june 20, we issued our rate order. this was our written propose the rate order. june 26, today we are having our

hearing to -- official low hear that rate order and dress draegsz outstanding items. july 24 our next rate board hearing where we will hear the prop p objections and prop 218 protests. we will again hear the rate order and potential action to adopt one. and the last date july 28 is another refuse rate board hearing this is there if needed. jumping into our rate proposal just a quick recap of our proposed rate order or proposed rate adjustment compared to ricology. the annual percentage change by ricology in 2024 is 3.9%. we are proposing no change for 2024. ricology is proposing 2.17

increase in rate year 2025. this is the change between 2024 and 25 for ricology proposal 6.15%. our proposal is to increase rate s by 3.92% in 2025. there was a request in the board to sum rise what we are investing in with our rate order. and we categorize third degree in a few ways. essentially our proposal maintains cost to rate payors in the first year and collection levels are min tained. in addition to enhancing other service, so that first category maintaining service levels when you strip out enhancements we

mate that we see a cost increase of about 3. 4% in 202 and additional 1% in rate year 2025 accounts for increases to negotiate salaries, benefits and growth to other cost in prescriptions. enhancing service levels first band material collections adding 2 new drivers and additional zone by 20 pvrps public receptacles we are working on the service level agreement but adding 2 new drivers and 2 additional routes. now we are expecting this increase capacity for double historical levels of responding to notices. and then enhancing operations and administration we add 2 relief drivers to ensure regular collection. 2 cardboard drivers this is a response to the recycling price

following in fewer pick ups from the float and the need to pick upon more abandoned cardboard on streets. additional supervisors and managers support the new drivers. improving safety and collections and maintenance and then administrative adding analytical support for new reporting requirements. next, safety. adding 3 drivers to establish 2 person routes and new supervisor for increased supervision. this is related to tenderloin routes where just looking at the incident reports it -- there was a need to add other drivers to ensure safety of the of the -- the -- collectors on the routes. the flexibility we are adding a sorry. i skipped improving contamination and diversion.

an investment for organics and pilot. there will be inflexibility. we are proposing a reserve to allow for city asks beyond the order. finding cost savings. when we find cost savings are places wield not impact service delivery this would be it is pension, the -- the pension costs and removal of the account the large factors. and improving reporting. there is increased reporting requirements for trackful prescriptional financial performance. so the next slide is an up up to the new material's collections the reason why we want to bring agreement to the board's attention i thank you is for an establishing performance

standards. so the we are our office reviewed historical data on calls ricology meeting needed at call levels current staffing levels ricology meeting needos time is 100,000 calls per year. the change in the proposal is this we would -- add a sixth zonal. so this is -- not expanding the coverage but splitting the current 5 zones to 6 and added with the additional zone added 2 new fta, drivers. estimate third degree should increase capacity by 20%. under the previous service level agreement you saw in initial requests a cap of 113,000. or 310 per day assuming they increase capacity by 20% over

their -- 100,000 calls where we mead meet them on time. the 100,000 versus dobb 120 thousand what are the material calls. is 100,000 the actuals. 120 is when you project? >> last year the actuals the cap in the order the actuals were 113,000. that's what they set the sla. if you look at previous historical numbers it is -- it has been above 100,000 since the pandemic in 2018 and before 100,000 or below. that period they were able to meet the on time the 4 hour --

pick up time. and since them since it has gone over the average it is above. what is the recent number. >> 113,000. >> got it. >> we looked when they were previously able to meet the on time service needs. and since we increased resources by 20% the assumption is than i should meet the 120,000 going forward. >> to follow up on that. if our current cap is 113 thousand upon why is the 20% increase not based off the 113,000 cap? >> i think for now they are not able to meet service needs on time at the 113,000. and so -- we are basically off of when they meet it and what level service -- what level

service what cap appropriate for where they meet on time. service needs. i think the assumption and i would defer on this is that -- likely the moving forward they are projecting that will be below the cap. below this 113 as well. buoy can -- defer to them in terms of they are projecting that. so a note the importance of this if we have a reserve if they go over the cap, and there is a need for additional service beyond the cap, likely they need to tap in the programmatic reserve. society next items the public receptacle collections were

working on this proposal, from ricology right now is a cap of 43, 800 requests. 120 per day. projected figures is that in this year the current year, there will be over 87,000 requests. and so if this continuous likely the new senseors the sla cam be belocality number of requests so -- i think we need to work out -- first understand exactly how they are meeting this level of requests and what the on time performance is and w out a different service level agreement that gets us close to

when the need is. >> on this point on the public receptacle collection this is is worry some it is so on the other hand the cap is below when we see in 23. that, that tells me we are going to hit the programmatic reserve i'm curious huflon bring and whether the d., public works and ricology bring more clarity on the figure and estimates at the next hearing. this is a big challenge if we are under by half. >> agreed. >> the next item is the contamination enhancement. ricology proposed 2 way zero specialists and out reach investments and 30 [inaudible]. and so that would be a cost

640,000. this enhancement assumed 5 million in additional revenue due to that investment. and our office included no new investments to can tammyination enhancements means that assumes no additional revenue. board asked this we look at an alternative that bring back investment but not all. working with the environmental department and ricology, we came to an alternative principle that would bring back a waste zero specialist and out reach investment and currently 6 turbo cameras on trucks replace the 6 cameras with 6 new cameras. the assumption here is that this would -- generate 205 thousand dollars in revenue. and then -- so a bit more detame

hat waste zero specialists would do the 2 way somist one devoteed low diversion account and wills other devoteed the 38 cameras. since we have 6 cameras here the one way zero specialist would do both. and so00 autoupon difference from this alternative proposal to our proposal is there would be a reduction of a thousand dollars in 2024 and increase of 5,000 in 2025. the next item is another request from the board of what the retention might look like. we are presenting a 3 year fully funged target. this 16.9 million for 5 year

fully funded. the sheer for the 3 subsidiaries in san francisco in golden gate special ricology san francisco. the 3 year fully fund 15.9 million of 5 i don't remember 11.3. this would 3 year fully fund target increase costs 4.6 million. however if you go to the last column the shared the total cost over the fives would be 47.74 million in 3 year fully fund 56.5 funded 5 year. an estimated 8. reduce contributions the next 5 years by 8.8 million.

estimate thags would have a 1.3% increase rates over our current proposal. we are recommending the 5 year fully fund target. provides cost savings during years 24 and 25. and this will adjust our rate payor contributions aline with the target of costs reported by ricology and form. okay. next item is around corporate allocations or requests to share a little bit more about corporate allocations. so corporate allocations recology ag incorporated provides services basically overhead to its subsidiaries, including the three san francisco subsidiaries . this includes legal, administrative, human resources support. the current allocation is revenue base, which we

believe just based on our rates, is not to the benefit of san francisco ratepayers. we would like to see more detail, line item detail for corporate allocation costs, including fte spending time on san francisco companies work and why additional overhead is needed over the existing local administer of support. and also we would like to look at other allocation methods. we think there are other allocation methods with a higher correlation to costs such as tonnage based bike count or based on routes, the last of which we understand is how overhead costs are allocated by recology and pacifica. so we know, we do know there is other methodology being used. so at this time we're recommending 5% cut that would amount to about 783,000 in write year 20, 24 and 807,000 write year 2025. next

item is a programmatic reserve. and this this reserve is intended to provide flexibility to the city to make incidental public purpose request for additional services beyond the baseline service levels already funded and provide id under the rate order. the funding amount we are would be the equivalent of that 5. corporate allocations cost cut as proposed in or equivalent 5% of the corporate allocation costs proposed in recology rate change request submission. so that would be that seven 883,000 and rate year 2024 and the 807,000 or 8 year 2025 that we're looking to cut in that previous slide, the withdrawal mechanism upon request of service from a city department recology will estimate the cost and demonstrate why this service is beyond baseline service levels for approval from our office. any unused balance we're

proposing that any unused balance in rate year 2024 will roll over into rate year 2025. beyond 2025, a decision can be made to either roll it over into subsequent rate years or use to lower rates for subsequent rate years. jay what has been i'm just curious about the programmatic reserve in previous years. what is it? what's it generally been? this is new. so there hasn't been a programmatic reserve, so this is something we're proposing under the current regulatory structure that we've set up. it doesn't allow for much flexibility in costs outside of or requests outside of the rate order. and so this is something we've heard from the departments that there needs to be some kind of flexibility built in for additional service.

so next item is the balancing account. i was asked to walk through this again, so this is just an illustration. these aren't real numbers. and what this looks at is a base case of 100 million in revenue. and so the way this is calculated that operating ratio, the way that rates are usually set, are you have we have a 91% allowable operating ratio. so if we have 91% or 91 million in operating ratio eligible expenses that means we would have an allowable revenue of 100 million. if recology hits the numbers. exactly that would leave a net operating ratio or net profit margin of net profit of 9 million. and this would meet that or profitability margin of

9.89, which were allowing so in this, we'll just look at one scenario here where there's a. revenue a revenue shortfall of 2.5% so if there's a revenue shortfall of 2.5, if you go right one, one, one column right of the base case, your revenue would. be 97.5 million. we are holding expenses constant at 991 million. this would leave you with. a $6.5 million profit. and so this is short of the 9 million allowable profit. so if you go down a few rows, you'll see that that difference between the 6.5 and the 9 million is two. and a half million. so they are under they're allowed profit by 2.5 million under our

proposal, we have a 50. we have a 50% adjustment. so half of the two, 2.5 million is 1.25 million. that -1.25 million would fall into the balancing account. so the balancing account would be negative 1.25 million, which you can then spread that 1.25 million costs, which would be a cost to the ratepayer over five years in terms of the timing of this for rate year 2024, we won't know. we won't do the true up until the middle of rate year 2025, which means we can use that. we would spread that negative 1.25 million cost starting in rate year 2026. just the flip side of this, if there were a 2.5% revenue surplus, that would be a positive 1.25 million that we can use to lower rates and spread across over the same

period of time. just a note. so recology is proposing 100% adjustment for our biggest concern with the 100% adjustment is the incentive control costs under this bounds in account. i won't go into detail. the next one. this is just an example of if we held revenue constant and had expenditure savings or shortfalls in expenditures. so the mechanism is the same, it would just be applied to the expenditure side but wanted to keep it in the presentation for posterity. so the next item is automatic cola for subsequent rate years. recology proposed to continue their automatic

adjustment if no new rates are set beyond rate year 2025. the proposed methodology is same as the rate order 2017 cola, which uses an eight weighted eight factors weighted factors and just as a note, under this methodology, recology received an 8.86% increase last january. if no right order is set for rate year 2024, the rate year the rate order from 2017 would continue and they would were estimating they would receive an additional 1.75% beginning rate year 2024. our proposal includes no automatic cola adjustment from the last rate board hearing. there was a request to consider an automatic adjustment in the case of certain extraordinary circumstances, or if there would be a delay. so

this is the proposal for the board. consider if there's a rates rate setting process delay trigger would be if the next rate setting process has not been initiated by february 1st, 2025, our office and comptroller's office shall request to convene with the rate board to consider the application of a cola adjustment and consideration for that cola adjustment would need to include balancing count reserve balances and public record and cpi and cpi indices that could serve as a potential cap for that rate adjustment. this last line here, along with associated components weighting as reported by recology in the same form format is just a request that recology continue report what their cola would be in intervening years. also note of note for the board is that because our prop 218 noticed not include an automatic

cola adjustment that any any proposal for an automatic cola would require a prop 218 notice and hearing this can be done any time before the next rate cycle. so we're not recommending it for this to be adopted in this in the next hearing. but that if the board wishes to we can bring this up in the next rate board hearing. the board is required to meet once a year. we can bring it up for consideration in a future hearing. so this is a new item that was at the request of the board between hearings. this is a zero waste capital reserve in lieu of a zero waste incentive account, an option for consideration would be to begin funding a zero waste capital reserve that could support future capital infrastructure investments,

prioritizing, prioritizing our zero waste goals. as we noticed in the last hearing or as we note in the last hearing, the zero waste incentive account in the past, some of the unearned unearned funds in that account were used to support infrastructure investments. so this would we're anticipating some infrastructure investments needed in beyond this rate cycle. and so this would begin initial fund, initial funding for zero waste capital reserve. the initial funding would be 1% of net revenue, approximately 3.6 million and rate year 2024. we're recommending this be a one time funding, which means in write year 2025, we would be reducing rates by about 1. the timing, the rate increased fund , this zero waste capital

reserve will become effective no earlier than january first, 2024. this would allow at least one year with no rate adjustment for ratepayers because they had the increase last january. and lastly, the use capital investments will be determined in the next rate cycle. this reserve fund may also be used for rate stabilization if needed . adjust reporting requirements . we just wanted to make the board aware of some of the additions and of reporting requirements that we've made in this rate order. there are seven categories of reports and metrics. most of these a lot of these reports are existing, but we're trying to memorialize some of these reporting requirements. and then there's some new reporting requirements to help monitoring, help with monitoring performance and to help establish future performance standards. so financial reports

, annual audited financials is existing as an existing report. we're requesting an additional pension report rate reports. the quarter annual rate reports are existing reports. we're adding some modifications such as a balancing account schedule, operations reports, a monthly root collection reports exist. we're we're requesting a report by line of business. this is a request for metrics around lifts, halls and things that would help us analyze operational efficiency. customer ports. this includes customer communication, tracking, noncompliant accounts, customer outreach for source separation, special event service. and so these are mostly existing reports that we're trying to memorialize that weren't in the past processing and disposal reports, compost procurement, distribution exists, but the recyclables and weight scale records are ones that we want to

include program reports. i don't there are some programs that were previously being reported out, such as household hazardous , hazardous waste with our new slas on abandoned materials and public receptacles. we would like additional reporting for those for those services. and then we've worked with recology on metrics for all their 26 programs and lastly, contamination report. lastly, is a delinquent account reports. these are reports received by public health for delinquent accounts. we'd also like those to come to the refuse rates. administrator. our last item for our presentation there was a request from the rate board to summarize all our various accounts. so there currently are four existing account. the first is impound account, which funds selected city services, allowable use is the program

that it funds has a direct relationship to residential ratepayers and benefits. residential ratepayers in a manner that is different from how the program may benefit the public at large. this funding, it's funded through the rates we're proposing 24.2 million and write year 2420 4.6 million. rate year 25. there is a balance from previously spent allocated funds is projected around 23.8 million. there's proposed use of that of 15 million of that for new trash cans, a little over a million for refuse rates administered around 2 to 3 million for work supporting the next rate cycle. a $1 million seismic study that was in recology rate order that we're pulling into for that recology had proposed in their rates. and we're proposing to pull that out into the impound count balance as well as a $500,000 trash

processing pilot. again that was in recology proposal in the rates we're pulling that into the impound account balance as well. so the estimated net of after all these proposals in terms of balance would be around 2.4 million. the second account is a zero waste incentive account. this is a financial incentive account that we're college can draw down on if certain targets are met under our proposal, this fund will wind down. we'll see some repayment. to ratepayers and rate year 2024. but after that, this account would not exist under our proposal. however, it does if it does, continued any unearned any unearned earned funds are returned to ratepayers . however, the tier three and tier four, which accounts about which is about 1% of net revenue to those funds, could possibly be used with approval from the

environment department. funding this is funded through the rates equal to about 2% profit, approximately. 8.25 million. balancing account 2023. this is the remaining balance from a $25 million balance account. create bid through the december 2022 settlement agreement. this fund is also will also wind down this the balance from this will be used to lower rates between per the settlement agreement between rate year 2025 and 2029. and as of march 31st, 2023, the balance was 4.95 million. the last account will mention here that exists is the landfill agreement special reserve. this is to reimburse recology san francisco for landfill disposal costs incurred but cannot fully recover through the rate setting process. so costs include certain fee and costs relating

to performance of the agreement and the balance. as of june 30th, 2022 was 9.9 million. and then we have in our proposal to proposed accounts the programmatic reserve that we went over in the previous slide . so i won't go into that. and then the balance account, which we also went over. so this ensures that any surplus are used to offset subsequent years costs and shortfalls are smoothed over time. i won't go into that detail because we talked about that already. and then lastly was the zero waste capitol reserve that was also in the previous slide. so that concludes our presentation. we did want to invite the departments for comment and recology as well. i think it's just recology presenting. thank

you, jay. good morning. chairman chiu, member herrera. thank you for the opportunity to speak with you this morning. first, with respect to the draft rate order that the ra referred to, we've reviewed and provided some input and comments to them, continue to work with them on on language, do have a shared goal of making sure that the rate order is a clear outline of our role and responsibility is given all of the complexity that's here, we believe that a more prescriptive rate order is to everyone's benefit. one of the things that we found is because there's a lot of complex issues , we believe that in certain areas, some additional language

would be warranted. and we have submitted some alternative language to the comptroller's office. and again, we'll continue to work with them to make sure that as we get to the end of this process, we've got a good detailed and comprehensive rate order. we want to talk about primarily this morning is some cost control mechanisms. we heard the input from the rate board and the comptroller's office about some concern about cost controls. so we believe that there's some effective mechanisms built into this proposed rate, new and existing mechanisms that can help can help affect cost controls. the first one is the programmatic reserve. we heard from the ra

that that's a fund to pay for service requests that are outside of things that we contemplate and speak about in this rate order. it can controls costs because there's a limit to those activities to the amount that's funded into that account. and that account is forward looking. so the second piece is elective reserve elective expenses, also called substitute costs. in our current reporting . so elective expenses would be a mechanism that allows. for allows for review of costs incurred and reported by recology. it's a backward looking it's a backward looking measure and something that's designed to allow for the ra to review costs and identify things as that they may ultimately

disallow the final piece is the balancing account. again, as we've spoken about many times, the balancing account is intended to cap the profit at the level prescribed in this process. as long as it's adjusted at 100% there's a visual representation of the three pieces. again the programmatic reserve that's a forward looking mechanism, elective costs that is a backward cost control mechanism . and then those both feed into the balancing account which again is intended to hold recology to the profit level that's approved through this process and a little bit more detail about the programmatic reserve. as you heard earlier this is a new mechanism in intended to provide support for active cities off the rate cycle

. so as an example, in the last few years, recology was asked to provide some additional service to collect cardboard when the markets changed and cardboard started appearing on the street, the mosquito fleet no longer picked it up and so there was a requirement or a request to go through and do that. that's the kind of thing that would be that would be contained under that that program. again it's a cost control measure because the way that that we believe it would operate is it's limited to the amounts that are used to fund that fund that program. one of the things that we wanted to point out is we believe that we support the idea. we think it should be tied to revenue and not tied to corporate allocations. as you heard earlier, we use the amount that was identified as a corporate

allocate, an adjustment and use that same amount to fund the programmatic reserve. but they're really unrelated. so we feel that it's important we support the mechanism, but we believe that it's unrelated to any corporate allocation adjustment and we should we should recognize it as such. we propose that it would be funded as a percentage of revenue that way, as revenues change, if they grow, then the amount that would be put into the fund as a percentage of revenue would grow along with it. the next part of the cost control mechanisms is elective expenses. it's currently called substituted costs, but the semantics are not are not important. they're the idea of elective expenses is it

allows the ra, the comptroller's office, to review those expenses and determine whether they should be included or excluded from the target profit calculation. it's a mechanism that exists today in our reporting. it came out as part of the 2022 settlement agreement . we have had some some back and forth and some work to try to identify, really defined what substituted costs are and how that flows. we believe by a slight repurpose of this cost, we provide the comptroller's office and the regulators with a mechanism that will that will effectively be a cost control. the idea is to do an annual review of our results as measured against the projections

that are included ultimately in the rate order and identify those places where there is significant variance is and then that's up to the ra to determine whether or not, again, those are appropriate to include in our cost base. can we pause here for just a moment? of course, this is a question for both recology as well as their rate administrator on on how it is that we will move forward with reviewing elective expenses. are we in agreement with the methodology and exclusions? et cetera. that might be embedded within the rate order. are there or are there continued areas of contention in how we will move forward with calculating these elected or deciding upon elective expenses? i'll. so in our rate order, we are the exclusions and the way elective expenses are defined are based on the december 2022 settlement.

so we're proposing no changes to that. the only thing is really the materiality threshold, which was much lower in the settlement agreement or 150,000. we've increased that to 500,000, which we feel like, you know, gives some gives them some room to for any other costs below that threshold. thank you. and i think that the mechanism was intended in part to be forward looking and the language and the draft rate order in dictates that in working with substituted costs that there would be a request that came in to be able to spend money and then there was an approval period. so it's really ultimately the way it's described is more akin to the programmatic reserve. that's a forward looking mechanism. we believe by really slightly reordering this to a backward

looking mechanism, which is the way that we're currently reporting turns it into an effective cost control mechanism . it's something that i'm sorry, go ahead. no. so i just want to note that we agree with that. i think we just need to change some language in the right order. so great. thank you. so again, i think i think our our position is ultimately that we think it's a mechanism that we can use as an effective cost control. it's structured so there's carve outs for changes in volume or fuel costs because their volatility, some of the things that are included in the settlement agreement. let's see , and we've requested as as you see here, we've requested an increase in the materiality threshold. and one of the things we've found is that it's a measure that we believe is much

more effective to do on an annual basis. we set rates on an annual basis as opposed to quarterly. there's volatility with seasonality and some other things that that move the numbers between quarters and doing it on an annual basis as part of the final reconciliation , we believe is the right the right approach, the final piece of the cost control mechanisms is the balancing account. and as we've talked about many times, the balancing account is intended to hold recology at the profit level. that's included in the approved rate order. we believe that works. if it's the balancing account is at 100, if it's at less than 100, then then there's profit that's outside of outside of the balance and outside of the approved rate

order. it could be additional profit if either costs come in lower or revenues come in higher than the projection. and likewise, it could be lower. but it's something that, again, in for it to work effectively, it needs to be at 100. we heard that the primary concern, one of the controller's office and of this process is having an effective cost control mechanism. so we believe that repurposing that elective costs and putting those three these three mechanisms together with the balancing account at 100% will effectively incentivize us to control our costs and to keep recology profit at the target profit level. there were some instances, as an example, and the pension costs where in discussions with the ira that

they propose that any variance to what's in the rate be adjusted in the balancing account at 100. so there were some instances where they said 100% is appropriate. we believe that that is appropriate overall to cover both revenue variances and expense variances. again, as we've talked, there's a lot of the movement is outside of recology control and we believe that is a fair approach for the ratepayers and allows us to have the funding we need to provide the service. next thing i wanted to touch on briefly is the pension. you heard you heard briefly from the ra that in response to some comment at the last rate board hearing, we looked at the three year and the

five year funding funding level. what you see in front of you is the funding at three years. these numbers are are rounded slightly at at $17 million allows the plan to be 100% funded at three years to remain funded at five years. and then in the long term that funding goes back down and under any funding scenario, that number will go down over the long term . it's important because we believe that over the long term there will be additional pension pension plan contributions required. as we've talked in in previous meetings, there's two things that that recology is concerned about with respect to the funding level. and they're both triggers for future funding that we believe once we get to

100% funding, whether that's in the three year cycle or the five year funding scenario, that when the plan drops down below 98, that that funding should should then restart. so that we can maintain the health of the plan , continue to move back towards that 100% target that we've all acknowledged is a good target. the second trigger is in the event that there's an erisa requirement, we believe that it's appropriate for any funding requirements that are beyond those included in the then approved rate order to be in to be included. oops. one more issue you heard a little bit this morning about the cost of living adjustment and the

alternative proposal as we've as we've discussed earlier, we support a cost of living adjustment mechanism. we believe that unforeseen events could create a delay in the next rate process. we've seen that historically, and we believe by having a cost of living adjustment that it allows the expenses to be adjusted, essentially adjust the rate to keep up with expenses. so when you go through a broader rate cycle that there's less of a rate shock to ratepayers. so again, as as you saw, as the ra spoke of earlier, the current cola mechanism has a number of weighting factors. it's been adjusted and evaluated over time

. we believe that it's a good approach and one we would continue. we would urge the board to adopt the mechanism into this rate order. so there's clarity and some certainty going forward. we understand there's some concerns about 218 notice and would request that our council have an opportunity to meet with the city attorney's office and talk through that just so that we can understand and what those limitations are and he questions at this point. okay then i will turn it over to kevin flanagan, the general manager of golden gate. good morning, chair chu and

member herrera. as john mentioned, my name is kevin flanagan. i'm the general manager for golden gate. as you know, recology is proposing to hold a weekend cleanup events for residents. our proposal includes 22 saturday cleanup events with each district receiving two events per year. the proposal costs include outreach for the events driver labor supervisor, headcount, traffic control and disposal for a total estimated cost of 608,000 per year. and under this initial proposal, i wanted to point out that the material that's collected there would be sorted and processed after the event to increase recovery. in previous discussions, we were asked to come up with an alternate proposal that included the three bin system. so as we shared last time, there are several barriers for recology to offer this type of event due to space constraints in the city

and other logistical complexities. the cost of the alternate program is estimated to also be higher due to the additional labor and other resources needed to conduct the event. the annual cost of the three bin program is estimated to be 850,000 per year and assumes a third party like goodwill would cover the reuse and e-waste component of the event. so in summary, the main difference between the two proposals is the material would be sorted in process after the event and the initial proposal, whereas the alternate alternative proposal accounts for the material being sourced, separated at the event itself. just a clarification. do we currently hold 22 events as is or is it 11 events currently? from what i understand, these were we don't offer these any longer. this was prior several years prior. so we're we're proposing to reintroduce that. and i believe it was two events per district for a total of the

22. so prior to when the pause occurred, we only had we had two events every year and every district. let me get confirmation. i didn't remember that. i thought during my time as a supervisor was only one time per per district. so i just want to confirm. yes one time. my apologies. so this is doubling the current. if we were to go back to pre-pandemic pause, it would have been one event per district. that's what i'm. that's what i understand. can i ask what the logic was for doing more, more of these weekend cleanup events as opposed to adding service to public receptacles and districts instead? i know these events are popular. they're good way to get community together to help with beautifying our neighborhoods. they're very positive. right? but the complaints we often get are neighbors, neighborhood district corridors that where the public receptacles are overfilling understood. yeah. the idea was given the size of

the districts to offer to and different locations of the district. so it really it only markets a portion of that district in each of the two events. but then encompasses the entire district. so we chose to do two. is it safe to assume that if we were to have it hold steady to what our pre-pandemic pause was, it would be half the cost here? um it would be less cost for sure. half because it's half the events we would have to look at the number to give you an exact amount, but obviously since we wouldn't do as many it would be, it would be less. hopefully it would be half right . understood okay. thank you. all right. moving on to contamination. so we propose a modification to our initial proposal, which is essentially to extend the current pilot that

we have in place and replace those cameras with six enhanced genesis system cameras. the proposal also includes an additional fte to track the impacts of the cameras at the customer account level and to further assess the functionality and quality of the photos they produce. the fte would also be responsible for administer the program. essentially the warnings notifying customers of the contamination. and this would allow us to make a more informed decision and the next rate cycle on a system wide solution to improve behavior and diversion. we anticipate contamination revenue from the pilot to cover the cost. but at this time, we do not have a true understanding of the exact dollars that the cameras would generate. so as mentioned previously, the true intent of the pilot is really to understand the system a little better, track the impacts so we can make a more informed decision later on if this is a viable option. so the estimated

cost is 200,000 per year and the estimated annual revenue from the pilot is slightly over that at 205,000 per year. any questions here? okay a couple of things regarding the slas that came up earlier. so for city cans, as an example, the sla cap, i want i want to explain is it's not a cap of the amount of service that we can provide. it's a cap that basically says during a certain time frame of each day, which is about 8.5 hours, we have to respond to those requests within for city cans, it's two hours. any thing outside of that, it doesn't apply to that two hours. so we're not capping the amount of service we can provide for that or the abandoned material. we're just saying that during that

certain time period, there is a there's a cap when we can meet that time frame and then just to clarify for the public receptacles, typically recology would be clearing those cans on your normal route. and when we talk about the public receptacle sla, what you're talking about is the calls above and beyond that normal route service where you're responding within two hours, correct? it's on the second pass of those cans and the sla, just to put in perspective, is from, i believe, 10 a.m. to 6:30 p.m. so it's during those second pass routes and, you know, it's essentially a 120 cap per day. there's 12 routes on the city cans with the proposal. so each of those routes essentially would do ten additional requests outside their normal route, which is a static route, meaning it's the same. so ten dynamic requests that they would that they could

get within that sla. does it include weekends? it it does. however, that sla adjusts and accounts for that considering our route structure is a little different, we don't run as many it the route territories are a little larger things of that nature. when we bring this item back up on sla's for the next rate board hearing, i think it would be helpful to understand how that breaks down, especially for weekend services as well. understood. okay thank you. thank you. good morning, chair chiu and member herrera, morris, quillen , general manager for recology san francisco. and i'm going to discuss a minor change to the organics pre processing system that was proposed in our last hearing based on the performance testing that recology conducted in portland, we've selected a vermeer trommel screen in lieu

of the terex unit that was tested at dixon that we included in the rate application. we believe that this piece of equipment has a better end feed system and bag breaking technology and given that that this piece of equipment that we have selected and we can't, unfortunately source a rental powered trommel screen, so a long term rental option for the diesel powered unit is available. but unfortunately the bay area air quality management district will not allow us to run a diesel unit within the city and county of san francisco in order to meet our commitments to the composting facility. we must look towards purchasing a new piece of equipment in lieu of renting the piece of equipment as we had planned. additionally, we've encountered a bit of a permit hurdle with the bay area air quality management district. it has a direct impact on the programmatic costs associated with the recology rate proposal , the enhanced processing of organics will increase our facility emissions and recology san francisco will now be required to purchase pollution offset credits. calculated as

performed by our permit consultants indicate that the offset credits will cost recology approximately $150,000, purchasing the electrically powered trommel along with the offsets credits, will represent a savings to the ratepayers and the piece of equipment that is being procured will operate in the exact same fashion as diesel powered unit with identical throughput. the proposed cost of this change is as follows. we have the acquisition of the vermeer trommel screen screen at $328,000. the electrification of that screen $37,000, and then the pollution offset credits at $150,000, bringing us the $515,000, the annualized cost of the modified project will be $74,000 in the first year and $59,000 in eight years. 25 and beyond. as we depreciate and amortize the piece of equipment

. any questions. how much does that compare to what we had already included within the rate order, the rate administrator's previous rate order, possibly 118,000 of what we had put in the original proposal. initially we were looking at a 3.0. is that a 400,000 increase? no, it's a reduction. reduction reduction. thank you. okay. okay next, i'd like to talk about the zero waste capital reserve and recall the recology companies are very supportive of the concept of a capital reserve fund that would be established to assist with the funding of future facility related capital expenses. additionally, recology believes the capital reserve fund should not be limited to diversion related expenses. recology would like to have the reserve funding available for other facility development expenses associated with the modernization of our recycling facilities is based upon prior work performed by our facility design team, engineering geotechnical teams and equipment

vendors as part of our tunnel beatty facility modernization design study. the expenses could easily be in the $100 million range recall. do you understands that this significant capital expenses may potentially be incurred in future rate years? therefore, recology would like the rate board to consider enhanced capital reserve funding rates that would be used to offset a larger portion of the future infrastructure costs. we believe that establishing a 2 to 3% capital reserve would be reasonable and provide future ratepayer relief. thank okay. i think that concludes the formal presentation for the recology team and we are here to answer any additional questions. thank you. we have some comments from the environment department, so we'll invite them up. thank you.

catherine good morning. board members. my name is alexa kielty. i'm in the environment department and i wanted to in response to recology original proposal, i wanted to make a few comments around outreach and the weekend cleanups. uh environment department supports the funding of annual mailers to san francisco residents every other year. this would include single family residents. in the first year apartment residents in the second year and this brochure would cover the basic programing that recology offers, which include what goes in the bins, the household hazardous waste pickup, bulky item. and i hope to include additional messaging around generation reduction, which is part of our zero waste

goals, such as how to prevent food waste fixit clinic information. given that about a third of the city moves every year, it's this frequency of outreach is vital to keep the contamination low in our streams so folks know what to wear to put their materials and also to make sure all san franciscans are aware of the programs offered to them. so that would include, as i mentioned, a apartment dwellers as well. so they don't get a lot of messaging from recology because they're not bill payers. so it's really important that we communicate to apartment dwellers as well as environment staff or staff would cover the cost of design in house. and we're asking recology to cover the cost of the mailing in the printing, which we believe would run around 200,000 per year. so that's slightly lower than recology original proposal. and then in response to moving on to the other topic of weekend cleanups, environment department

support supports the propose alternative of three bin reuse events that that is in alignment with our goals. so this would provide a three stream source separated material stream where space is available. we understand space can be a constraint and partnering with a thrift organization, including an e-waste component. so thank you. uh, good morning. refuge board chair, current and member designer jack macy. the zero waste program at s of environment. i just wanted to make a few comments. we're just learning today about the revision for organics or compostable reprocessing that you just heard from reese quillen we support the use of

cleaner electric versus diesel and we think this is still a modest investment to address critical contamination that we're seeing in the organic stream. and the ability to continue sending this material to recology facility. because as you've heard, the county is putting a lot of pressure on recology facility around the level of contamination coming into that facility. also we appreciate and support the creation of a capital reserve fund that can be used in future processes or in the future to meet critical processing needs. and for us, making progress towards our zero waste goal is the most important part of that, and that plays and therefore then plays a part of the benefit and option role that we've had in the past a couple of decades of having a zero waste incentive

fund. i do. i would like to just make some more comments following up from the last hearing around the impact of and the need we see for having an incentive towards achieving zero waste. so a zero waste incentive. one of the so my first point that that i had not elaborated on before here is that recology we've had these zero waste incentives for over two decades and zero waste and recology met some or all of their zero waste incentive targets for 11 years from. 2002 to 2013. this is this is the decade before the last decade that you saw the rate administrator previous graphically show how disposal and zero waste incentive targets didn't exactly track. if we look at the 12 years of 2012 to 13, they actually track the decrease

in disposal with the zero waste incentives. so these these and achieving these targets really helps. san francisco achieve the high recovery rates that peaked in 20 1314. it earned us world recognition sustainability awards as a model and leader. and i saw recall since having i was there during this whole period, really stretch and make a concerted effort with their available resources to maximize diversion and reduce disposal. so the zero waste targets really have made a significant difference and were effective during that period, as in my second point is, as i stated before, the targets that were set in the 2013 and 27 rate process, these were especially ambitious, ambitious because we were looking at a goal of zero waste and sort of the short term. and so we had a very steep slope toward that. we had not

set the 2030 targets that we're focused on now. they were established in 2018 at the global climate action summit and then later embodied in our code . and that would, of course, was after the last rate process. so as a result of those ambitious targets in the booming economy, we had the closing of sustainable, crushing recology understandably, was not able to meet those targets in our mind. that doesn't indict the value of having targets. it was the context that we were in then. now we have the 2030 targets and that allows us to basically set our goals towards 2030. that we see are much more achievable. but they're still very important, more achievable, modest, but still very important to help us make us progress towards those goals. and setting the targets based on recovery rate versus disposal. where recology has more control also makes more sense. my third point

is as you've heard, recology is recovery has been dropping significantly over the last few years and it's more than just the even though it had a huge impact, the closing of sustainable, crushing and the big economic impacts. we've also seen a reduced recovery rate from there. processing, as you've heard of compostable and recyclables and all the and various other streams that recology collects and comes into their facilities as you've heard. recology, you know, basically peaked around 62% recovery, ten years ago. and now they're down around 39. and we're sort of still seeing that trend down. and correspondingly, the city's overall recovery rate , which actually includes everything including the non recology recovery and the alternatives that public works, is able to tap into for processing their concrete. that has dropped 12% over the last

nine years after after it had peaked in calendar year 2013. i just received our latest recovery data for 2022, just this last friday and that's that's where i can say the latest numbers looking. from 2013 to 2022, we've dropped 12. that's going in the wrong direction. so we need to reverse that. and we feel that the use of an incentive system will will help with that and the use of diversion, quote, diversion, that's sort of an older term. we've used, but still common out there. the use of diversion of recovery targets is an increasing practice use by many jurisdictions. i would say those that are more progressive and going for zero waste goals. so we're seeing them used in more and more contracts. having these targets or sometimes just straight out mandates and

they're associated with a reward or a penalty system. and that actually that award tends to kick in it, doesn't it? generally doesn't require upfront funding by ratepayers, but it it affects sort of future rates often the next year. but sometimes future. and we see so examples of that in the city of oakland, san jose, santa rosa, napa and i think that based on this i recommend that the rate board consider if it doesn't want to require ratepayers to fund a zero waste incentive up front and we have now less of a need with these other proposals . i think that an alternative, as i mentioned last time on alternative zero waste system where we still set targets that but we reward recology in the future. so i think the way this could work is we have our proposed targets based on

recovery rate and what we would then be saying is that in a in the next rate process, so in the subsequent two or more years, an adjustment would be made. it could either be made either an adjustment in the profit margin or simply a calculated additional could be considered a zero waste bonus or reward if we base it on the 2% for the entire all that all the incentive tiers that is equal to maybe 2 million. but as i mentioned last time, i think an incentive system based on a total of 1% profit. so that would be basically a million per tier achieved and i think because this is a growing practice, i think it's worth us pursuing an and i also will just also just

remind that the proposed incentive targets that recology proposed were ones that were based on my calculations, on where we need to be in 2030, which i figured recology needed to be at a 70% recovery rate and it's actually part of our 2030 pledge, is to have a at least a 70% recovery rate and basically looking at where we are now, which has been which has dropped down around 39 and potentially, you know, be 38 by the time the new rate year kicks in, looking at their ability to make incremental, modest progress with their existing resources. modest but but still important. so and that is a little bit more of a gentle slope in the first couple of years based on where they are acknowledging that bigger changes can happen in the future. so that's how those those rate proposals were done.

and i think if the board would like, we would be happy to work further on this concept and maybe create a more detailed proposal for your review before the next right hearing. so that's the end of my comments. and if you have any questions, thank you. so i think that concludes our presentations. i just wanted to reiterate, we were hoping to look to the board for guidance on some of these outstanding items. i'm counting there's 11 or so issues here. contamination enhancement, pension scenario, corporate allocations, programmatic reserve balance in account, the cola, zero waste capital reserve , we can clean up and then i think two new items, one environment department just

brought up of whether or not we want to consider alternatives as zero waste incentive account and then the organics preprocess proposal. thank you very much, jay. why don't we open this item up to public comment? thank you. chair chu um, members of the public who wish to provide input and public comment on this item , please line up at the podium now. each person will have two minutes to speak. okay. um your time will begin now. good morning, chair chu and member herrera. my name is john bouchard. i'm with teamsters local 350 and we're the representing union of over 800 recology workers in san francisco. i just have a few comments and concerns. one the juror jurisdictional comparisons that the consultant keeps referencing are a concern to us because san francisco is very

unique. there's no need for standardized 96 gallon containers. you don't have 96 gallon containers standards for a reason because you have a very robust curbside recycling program. and he also referenced the route structure of recology, the coast that would not work in san francisco. you could argue that it's confusing to make these kind of jurisdictional comparisons in general, but you can also argue that it's difficult to make comparison ins between different neighborhoods in san francisco, collecting in sunset or the richmond district is very different than collecting in bernal heights or the tenderloin. we're also in favor of the three year pension target. our members had to wait some 15 to 20 years for pension benefit improvements in their in their contract because there was funding level issues that had to be addressed before any improvements can be made to the plan. we're kind of past that

now, so i would hate to see us revert back to having funding issues in the pension plan. so the three year target is preferred. additionally, we're in favor of the programmatic reserve concept, although i think the balancing account needs to be at 100% because anything less than 100% percent could force reductions in headcount which could lead to job loss and significant service efficiency issues, which is going the opposite direction of what i think we need in san francisco right now. so thank you for your time and consideration on this matter. thank you for your comments. are there any additional in person public commenters seeing none? for the record, there are no additional in-person public commenters. i'm going to read this paragraph now about online public comment. i do see we have one hand raised members of the public who wish to provide public comment on this item should call. for 156550001

access code. 25947884193. a password should not be necessary, but if prompted, please enter 3228, then pound if you haven't already done so, please dial star three to line up 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 unmuted and you may begin your comments. please note that you will have two minutes to speak. um remote public comment from people who have received accommodation. um will not count towards the 20 minute limit on this item. moderator do i see we have one public commenter do we have, uh, that person lined up to speak. right. can you hear me okay, we can. mister bilbo, your time will begin now. surprised

it is me, david powell. okay so within two minutes, unless you have follow up questions very quickly, the staff justification in the proposed rate order seems a little thin to me in some areas. i will read it in more detail on may follow up as to revenue and revenue generating positions. it is generally a good idea to fund and staff revenue generating positions. so i support adding the one at least the one analyst position with the six replacement cameras . that makes sense to me. i must admit i don't currently understand the difference between the existing cwa structure and the proposed programmatic reserve and capital reserve and the differences between those two proposed reserves. i may follow up on that. i would just note in general that underfunding by way of a rate freeze or the equivalent leads to stagnation and underinvestment in capital

and equipment. and i think we saw this most pointedly in the late 1990s at the puc, which general manager herrera and todd reads from who i see in the audience will remember. and that led to we cip and the cip and the need to invest in the just the delays and all of that. so, you know, rate freezes appear nice initially, but really they are bad for infrastructure and operations. the balancing account and incentives. i'm a little unclear on whether it creates the right incentives. normally the recology has had to control costs when revenues are short. i'm not sure if this proposed balancing account creates the incentive to control costs in that way, but i need to explore that a little more in again. in general, the operating

needs content. that's two minutes. that's two minutes. okay i, i have some further comments if you'd like me to finish. thanks for listening. thanks. mr. pill moderator do we have any additional callers in the queue? i do not see any chair to. that concludes general public comment on item number two. thank you very much. all right. this item is for our discussion now and i do have some thoughts about the presentation. first off, i do want to thank our rated administrator and of course, recology, department of the environment, public works and all the city entities in particular that controller's office for all of their hard work, getting us to this space. i think one thing to just keep in mind is that this is a rate order that covers two years, and so we're going to be actually be back before a rate process relatively soon. so i think that that is a good thing because this is the first time that we

are doing it in this method and this process. and i think so far we've been able to have a lot of transparency in the information in front of us. so i'm appreciative of that. and i also want to appreciate the rate administrators willingness to go back and look at some of the issues that this board has asked for and provide follow up information through presentations and additional materials. so i want to thank you for all of that hard work with regards to some of the outstanding issues that are out here. perhaps what i'll do is i'll just start with sharing some of my thoughts. and of course invite board member herrera to join in if he's got some perspective on on these areas as well in terms of the contaminate enhancement, alternative, i would be inclined to move forward with that investment in upgrading our six cameras and making sure that we have some level of direction movement towards contamination management within the contract. so i do like the alternative proposal that is being put forward. it's a far cry from

what was requested, the $5 million request. this is much lower, but i do think that that forward momentum is important for us to continue to make sure that we are not cross contaminating our trash stream and helping to move our zero waste goals forward with regards to the pension issue, i'm inclined to support the comptroller's office rate administrator recommendation to move forward with the five year fully funded target in accordance with some of the normal cost reported by recology with regards to the corporate allocations, given some of the understanding of how, i think this is an area where as a city we want to be understanding corporate allocations better and how that gets distributed to san francisco's share of costs. and so i think having a 5% to corporate allocations is something i would support. and i know that in the ensuing years we will continue to gather more information about the appropriateness of the allocation methodology to make

sure that we are in alignment with that. with regards to the programmatic reserve, i am supportive of us establishing a programmatic reserve to adjust to city needs and to be flexible in the instances where we may need additional service. i mentioned before that in our next rate hearing, i would like to hear more about sla's in particular because if we are grossly underestimating our sla's, we may have to really tap into this programmatic reserves more intensely than than we would otherwise like. i understand the point that recology has made with regards to the corporate allocation, not necessarily being a direct connection to a level of service in the programmatic reserve. completely agree. i think in the next rate cycle we can take a look at whether we want to continue a programmatic reserve and in which ways we might want to closely align the programmatic reserve with actual related services or factors. but this is really truly just a mechanism to fund the programmatic reserve and i am i

would be supportive of that. uh with regards to the balancing account, this is truly just a nominal balancing account. so it essentially is a space in which we're holding any either profits or losses above and beyond the target and are using that balancing account to adjust for the next in the next rate cycle . the i know that recology is proposing for 100% balancing account, whereas the rate administrator is proposing a 50% balancing account. i actually like the rate administrator's idea because i think it puts a little bit of skin in the game for both entities to control cost. frankly because with 50, that means any 50% of profit or losses are assumed by ratepayers, but also by the organization itself. and so to me, i think that that's a good place to start and we can always reevaluate the balancing account after a two year cycle. with regards to the automatic cola for subsequent rate years. i

like the language. the alternative proposal, and i want to thank the refuse rate administrator for considering a cola adjustment. i think no automatic cola doesn't provide the city enough flexibility, but having this alternate trigger in the case that we're not able to initiate a rate setting process quickly enough provides an opportunity for us to capture some of the adjustments we may want to make so that we don't in adverse impact our balancing account in a very negative way over a long period of time. so i appreciate the addition of the trigger for a cola consideration through this rate process. with regards to the zero waste capital reserve, i am supportive of establish a zero waste capital reserve. i think similar to some of the conversations that occurred in our last cycle or last rate hearing we spoke a lot about are there ways that we may want to make sure that we're making those investments much to the public speakers, public commenters point to make sure that we are funding things we know we're going to need to make

. infrastructure tends to be things that we under fund over time, but they tend to be things that if we had maintained or if we had started to build reserves, we would see less impact on ratepayers over time. so i am supportive of this zero waste capital reserve in particular as we are considering freezing the zero waste incentive account over this current cycle. and then with regards to the zero waste incentive account, i am in support of the rate administrator's position to evaluate this program and i would encourage the department on the environment to work with the rated administrator to propose alternate ways or best practices for us to incorporate perhaps into the next rate cycle. so those are just some of my preliminary thoughts. and of course i welcome the discussion that will ensue. thank you, madam chair. i agree with virtually all of your comments

and i would like to thank the rated administrator and recology for their hard work in getting us to this point. in terms of, i think, really having a healthy debate and discussion about issues that are important. and i'm going to make this a much more transparent process and one that enhances accountability, especially when it comes from my perspective in terms of reporting and documentation and the corporate allocations. i think that it makes it more definable and obviously coming out of our experience and my prior experience is in my prior role, i think that the enhanced reporting mechanisms and documentation along with the allocations are incredibly useful in ensuring that we have transparency, accountability and sort of a definite set of facts and criteria that we can look at. so i am very encouraged by

all of that and i think that the rate administrator has done a great job in terms of working through things. and i also want to thank recology for their comments and their willingness to work with the comptroller's office to get us to a place where i think we have a healthy debate on the on on what's out there, but actually a great deal of agreement on the importance and usefulness of having transparency and documentation for costs and expenses. so i think we've made a great deal of progress and i appreciate everybody's effort, especially i will say one thing that in terms of enhancing and ensuring. that we reduce contamination and that we do what we can to ensure that we have a system that can respond to the public's need out

on the street. i would share the chair's sentiment that the alternative proposal is something, but i really wish that we could do more and but it's a good first step and i think we have to continue to work and take the department of environment's concerns into account on how we ensure that we're meeting our important environment goals that we have here in the city and county of san francisco. and i know that's something that everybody takes seriously. but, you know, unfortunately, we are hampered. we do have financial constraints , but i think that we all need to make sure that we are making the investments that we need to make to ensure that we see real results in our trash trash collection, what's out on the streets. and i, i know that everybody in this room shares that sentiment and is motivated by the best of intentions. so i very much appreciate that. thank you. member herrera. i think

just for clarification, if i can ask jay to come on up for just a quick second. i believe that we have two additional meetings that are currently on our roster for july 24th and july 28th. from my understanding, please clarify it sounds like with some of the direction you've received today, you will be moving forward with adjusting and taking a look at some of the or noticing what our our potential rate package will look like, which we will consider for a vote on july 24th. and if necessary, we would have a vote on the 28th, and that would be in an instance where we are increasing rates. so if we happen to reduce rates even more on july 24th, that would not necessitate a continuance. but if we were to increase it, we would need to take action on the 28th. is that correct? i think if we are increasing rates over our proposal, i don't think we

would need to take additional action on the 28th. it's just as long as it's below. colleges proposal. it i might defer to the city attorney on that, but that's it, right? the question was, if the rates that we will be voting on or would be proposing is below recology rate , we would not need to wait until july 28th to be able to vote on the rates. we could continue to vote on it on the 24th, even if it was above the rate administrator's rate, but below our colleges. so the there's the prop eight notice that was published. yes. so i think the question is, if the rate increases above the refuse rate and proposal, but below recology is proposal, can we hold a vote in the next hearing on july 24th or do we need to

hold that hearing and then vote on the 28th? so if in terms of the prop 218, notice if the rate board wants to adopt a rate at or below the amount in the prop tweeting, notice then subject to the protest vote, you can adopt that rate board order on the 24th. but if you want to adopt something above what was noticed, it would require a re noticing which is and just to be clear, the 218 notice was recology rate. that's correct. okay thank you. um, i think with that j were there any other outstanding items? there might be a few more that you had on your list. the only one i would flag is the we can clean up. i heard a request for either reducing this to the one time in each district. uh, one thing i would like to perhaps request for the next service for the next rate hearing. i think it

would be really helpful for us to understand more the service levels that we would be to incorporate that would be incorporate within this rate model. so i understand we've got the normal pickups at the residential and commercial facilities, but in addition to that, there's the abandoned materials, the public receptacles component as well for, for me, i think the public receptacles service in particular, the cap is, is a piece that i really want to dig into a little bit more to understand what that really means for our consumers at the end of the day. so that piece i'd like to know more about on the weekend events right now as it currently is written, it's doubling the amount of these big weekend events and districts because our our status quo in the past before the freeze was one event per district. so 1111 events across the city. i would i understand that some districts are larger. i understand some of that. but i would say that when i've been to many of these events, they have been really

positive. they've been great, and there is a fair amount of community members that do show up, but they also tend to be the same corporate volunteers that come out to each of these events. so i'm not sure about the engagement with the community there. probably is more work that can be done in that area. but that being said, i would like us to consider whether we should have it just hold steady at 11 events across the city, but perhaps utilize the additional savings that that is associated from that change to increase public receptacle pickup. because what i have heard time and again from people across the city is that they see their public trash cans in their neighborhood, commercial corridors, just overfilling and in particular on weekends when we know people are going to be out and about. so i'd really like us just to consider it. i'm not suggesting we make the change now, but i'd like to see what that could potentially look like. okay. madam chair, i think i personally, from an operational perspective, i mean, obviously you were a district supervisor. you have a little

bit more of an appreciation for this than i do. i really would kind of like to understand the really the operational, the operating difference between, you alternative three been and like really, what do we see out on the street in terms of comparing that to the 22 events across across the. i really would like to understand nuts and bolts operationally the difference and what the bang you get for your buck a little bit. so and that's not something i have a real feel for perhaps because i didn't experience it in the district and i really kind of in preparation maybe that i could get we can get a little bit more on that into that. i would agree with that. i think that would be great. okay. with that, since there is no other discussion on this item, and i believe that our rate administrator has information that you knew you needed, i think on the organics proposal

you have what you need. it sounds like this is a cost savings to the city with the new proposal. so i, i don't see a problem with that with the same results. so with that, madam clerk would you read the next item? thanks. chair two um, we have two additional items. the next item is item three. item three 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 at this time ? um. thank you very much. clerk stone. i think we might have covered it already with some of the comments that board member herrera and i mentioned about making sure we're taking a look at service level and operations on the ground. okay. so we do have, um, should i take a vote for process? we need to take a vote on this item. no, i don't believe so. okay. should we call public and we should. yes, we should call public comment. okay. we'll call public comment on this item now, members of the

public who may or may address the board with comments specific to the current item and they'll be limited to two minutes per person. do we have anybody in person who would like to give public comment? please come to the podium now. for the record, there are no in-person public comments. i do see that we have one public commenter on the line. um public commenter. your time will begin now. can i get a 32nd warning beep? is that possible? yes great. thanks. david phillips again. so i had some further comments that may relate to future agenda items in general. i think the rates need to relate to operating needs, contamination and diversion equipment, facilities and real estate needs. i am interested in the quarterly and annual reports

and follow up meetings. i don't think i've actually received a customer bill for the june cycle yet. that's interesting and i don't know if there's a problem with recology billing system. i am planning to prepare and send a more detailed letter in the next month. i'm sure we're all looking forward to that. on prop 218, i think you've just addressed that in terms of the maximum rates, i would remind everyone about the nexus and proportionality requirements. i support having diversion targets for the weekend and clean up events, whether they're on site, sorted or offsite sorted. i agree with maybe only having one weekend clean up event per district at least in the first rate year, and i can think of several alternatives for how to redirect those funds. and finally, i support alex's comments about the outreach mailer and the content for that.

perhaps we might see. thank you . perhaps we might see a draft of the outreach mailer at a future hearing. those are my further thoughts at this time. thanks for listening. thank you. mr. pill. we have no additional remote public commenters at this time. so chair chu, that concludes public comment on item three. thank you very much. seeing that we will close public comment. and since this is just a discussion item, there is no other action we've taken on this one. we'll move on to item number four. thank you, chair chiu. item number four. this item is general public comment comments specific to this. specific to the item on the agenda may be heard when that time is considered general public comment may be continued to the agenda of speakers exceed 20 minutes. do we have anybody who would like to provide in public? uh in public, i guess

the public comment in person? yep. any members of the public who'd like to speak in person? this is for any matters that is not on the agenda today. seeing none. i do see we have one caller on the phone. caller your time will begin now. great. david powell, again, just wanted to thank everyone for their time and attention to this somewhat esoteric but incredibly important and complicated matter. i think the proposal will not perfect is better than the state it was at several months ago. i think there's more work that's going to be needed in the next month and i look forward to that. i think the weather, how well the public, the ratepayers, the environment , the companies, the world is served by this process remains to be seen. but i am hopeful and i just wanted to end on a positive note and thank everyone

for their time and attention. that's all. thanks. thank you. mr. bell. seeing that there are no other colors online. that concludes public comment on item four. item five is adjournment is there a motion to adjourn this meeting? chair chu thank you. i'll make that motion. thank you. we have a motion. do we have a second? second. thank you. we have a second. we are adjourned today at 10:59 a.m. thank you. and we'll see you next time.

. >> my name is ana renzi. i'm a fire investigator for the

city and county of san francisco. the job of a fire investigator is to go after the fire has been put out and to determine the origin and the cause of the fire. so we are the people who after the firefighters have come in and done their magnificent work to extinguish the fire, we go through the fire scene and we are able to find how the fire started. just showing up, being who you are can mean a world of difference to someone. when someone sees you as an identifiably queer person, an identifiable female presenting person or a person of color walk into their home, they can feel more comfortable and more trusting just knowing that you are around and that you may have some insight into their situation and to their

community needs that others may not have. the san francisco fire department i'm proud to say goes out of its way to recruit women, minorities, and to the lgbtq+ community, we are awaiting you and wanting you to come join us as a san francisco fire department. no one is going to represent us like you are going to represent us. no one is going to care for our communities and for our departments like you are going to come and represent our communities and our departments. i am a proud black queer member of the san francisco fire department and i'm especially proud to be part of an organization that respects and values our diverse communities in san francisco. [♪♪] .

>> thank you, everyone. um, for 32nd we're to grateful you've joined us more to historic mentally ill and in disability and affordable housing i'm already crying and we've not started yet (laughter) today it groundbreaking the kelsey civic center can i get another rounding. >> (clapping). >> wow. >> my name is ali and i used the pronounce and really proud to lead our policy work at the kelsey before we continue