13.25.120 Establishment and modification of service rates and fees.
A. Except as set forth herein, the city council may review and set rates on an annual basis by council resolution that considers the following goals:
1. Rates shall be established to the greatest extent practicable on a cost of service basis based on the ordinance established cost allocation methodology.
2. Rates may be adjusted annually as provided in the rate resolution adopted by the city council.
3. Rates shall be adequate to provide an operating margin equal to 10 percent of franchise-wide gross revenues; however, the city shall not be required to change rates if the expected operating margin in the next future year falls between eight and 12 percent of gross revenues. The 10 percent target return on gross revenues is considered sufficient to reflect the level of business risk assumed by the franchisee, to allow investment in equipment, and to ensure quality collection service.
B. Accordingly, the city shall have the authority to commission audits, reviews, or analysis of franchisee annual reports to validate submissions. The expected operating margin in a future year would incorporate expected inflation factors, and the effect of known or expected increases or decreases in expenses or revenues.
C. The rates charged by franchisees shall conform to the most current council resolution. Prior to implementation of this chapter, the council will approve any interim rate for services not included in the current resolution.
D. If the franchisee notifies the city in writing that it believes a material change outside the franchisee’s control has occurred, and the change will have an adverse effect on operating margins, such that the next future year operating margins will be less than eight percent, a material change will be deemed to have occurred. At that time, the city may undertake any type of review it finds necessary to validate the existence of the material change and estimate its effect on the operating margin. If the results of the review are such that no rate adjustment is warranted, the franchisee shall reimburse the city for reasonable costs incurred during the investigation at the time the next payment of franchise fees is due.
If the city believes that a material change has occurred that will result in next future year operating margins falling under eight percent or over 12 percent, the city may undertake an abbreviated rate review at its own expense. [Ord. 872 § 5.8, 2014.]