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CC - 07-12-83• MINUTES OF THE REGULAR MEETING ROSEMEAD CITY COUNCIL JULY 12, 1983 AT 8:00 P. M. 3:o vE, CITY O" NOStEA?EiA1) DATI"p I31'~ The Regular Meeting of the Rosemead City Council was called to order by Mayor Cleveland at 8:05 p. m., in the Council Chambers of City Hall, 8838 E. Valley Boulevard, Rosemead,.California. The Pledge to the Flag was led by Councilman Tury. The Invocation was delivered by Reverend Tom Phillips. ROLL CALL OF OFFICERS: Present: Councilmen Cichy, Imperial,.Taylor, Tury and Mayor Cleveland Absent: None APPROVAL OF MINUTES: June 28, 1983 - Regular Meeting MOTION BY COUNCILMAN TAYLOR, SECONDED BY COUNCILMAN IMPERIAL that the Minutes of the Council Meeting of June 28, 1983 be ap- proved. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. II. PUBLIC HEARING PUBLIC HEARING TO CONSIDER PROPOSED 1983-84 BUDGET Mayor Cleveland opened the Public Hearing and inquired if there was anyone in the audience who would care to speak regard- ing this matter. No one came forward, and-the Mayor closed the Public Hearing. The following Resolution No. 83-25 was presented for adoption: RESOLUTION NO. 83-25 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD ADOPTING THE ANNUAL BUDGET FOR FISCAL YEAR 1983-1984 AND MAKING APPROPRIATIONS FOR THE AMOUNT BUDGETED MOTION BY COUNCILMAN TURY, SECONDED BY COUNCILMAN IMPERIAL that Resolution No. 83-25 be adopted. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. III. LEGISLATIVE A. RESOLUTION NO. 83-26 - DENYING CUP FOR BEER AND WINE (OFF-SALE) AT 8625 E. GARVEY AVENUE RESOLUTION NO. 83-26 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD DENYING A CONDITIONAL USE PERMIT FOR THE SALE OF BEER & WINE AT 8625 E. GARVEY AVENUE (CASE NO. 83-259) MOTION BY COUNCILMAN TURY, SECONDED BY COUNCILMAN IMPERIAL that Resolution No. 83-26 be adopted. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. CM 7-12-83 Page N1 • • B. RESOLUTION NO. 83-27 - CLAIMS & DEMANDS RESOLUTION NO. 83-27 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD ALLOWING CERTAIN CLAIMS & DEMANDS IN THE SUM OF $121,030.51 NUMBERED 8616 - 8623/6967 THRU 7061 INCLUSIVELY MOTION BY COUNCILMAN TAYLOR; SECONDED BY COUNCILMAN IMPERIAL that Resolution No. 83-27 be adopted. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. C. RESOLUTION NO. 83-28 - OPPOSING RATE INCREASE OF TELEPHONE COMPANIES RESOLUTION NO. 83-28 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD URGING THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO TAKE POSITIVE ACTION TO CONTROL TELEPHONE RATES MOTION BY COUNCILMAN IMPERIAL, SECONDED BY COUNCILMAN TURY that Resolution No. 83-28 be adopted. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. D. RESOLUTION NO. 83-29 - ADOPTION OF 1983 SUPPLEMENT TO STANDARD SPECIFICATIONS FOR PUBLIC WORKS CONSTRUCTION 1982 EDITION Councilman Taylor inquired if the use of Polyethylene Pipe was the kind of plastic pipe that was involved in the tests that were done a couple of years ago. John Maulding, City.Engineer, stated that an EIR is being prepared at the State level investigating possible hazardous effects of plastic pipes on drinking water. The Plumbing Code only regulates the type of pipe that is utilized inside of buildings and on the house side of the meter, and does not re- gulate the type of pipe utilized in the public right-of-way. RESOLUTION NO. 83-29 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD ADOPTING THE 1983 SUPPLEMENT TO THE STANDARD SPECIFICATIONS FOR PUBLIC WORKS CONSTRUC- TION, 1982 EDITION MOTION BY COUNCILMAN TURY, SECONDED BY COUNCILMAN CICHY that Resolution No. 83-29 be adopted. Vote resulted: AYES: Councilmen Cichy, Imperial, Tury, and Mayor Cleveland NAYES: Councilman Taylor ABSENT: None ABSTAIN: None Whereupon the Mayor declared said motion duly carried and so ordered. E. RESOLUTION NO. 83-30 - REQUESTING ALLOCATION OF COUNTY AID TO CITIES FUND FOR RESURFACING OF GRAND AVENUE (CHARLOTTE TO IVAR AVENUES) RESOLUTION NO. 83-30 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD REQUESTING AN ALLOCATION OF COUNTY AID TO CITIES FUND FOR RESURFACING OF GRAND AVENUE (CHARLOTTE TO IVAR) MOTION BY COUNCILMAN TAYLOR, SECONDED BY COUNCILMAN CICHY that Resolution No. 83-30 be adopted. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. CM 7-12-83 The Mayor declared said motion duly carried and so ordered. Page N2 F. ORDINANCE NO. 560 - FLAG LOT DEVELOPMENT AMENDING MUNICIPAL CODE ORDINANCE NO. 560 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD ESTABLISHING DEVELOPMENT STANDARDS FOR "FLAG LOT" DEVELOPMENTS MOTION BY COUNCILMAN CICHY, SECONDED BY COUNCILMAN TURY that Ordinance No. 560 be adopted. Vote resulted: AYES: Councilmen Cichy, Imperial, Tury, and Mayor Cleveland NAYES: Councilman Taylor ABSENT: None ABSTAIN: None Whereupon the Mayor declared said motion duly carried and.so ordered. G. ORDINANCE NO. 561 - CITY COUNCIL SALARY ADJUSTMENT ORDINANCE NO. 561 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD SETTING CITY COUNCIL SALARIES MOTION BY COUNCILMAN TURY, SECONDED BY COUNCILMAN TAYLOR that Ordinance No. 561 be adopted and the reading in full be waived. Vote resulted: AYES: Councilmen Cichy, Taylor, Tury and Mayor Cleveland NAYES: Councilman Imperial ABSENT: None ABSTAIN: None Whereupon the Mayor declared said motion duly carried and so ordered. IV. CONSENT CALENDAR (CC-B and CC-D deferred) CC-A CLAIM AGAINST CITY ON BEHALF OF MORA,,ESTRADA & TORRES CC-C EXECUTION OF JOB BILL CONTRACT CC-E CLAIM AGAINST CITY ON BEHALF OF JANETTE BECK CC-F APPROVAL OF PLANS & SPECIFICATIONS FOR STINGLE & RIVER AVENUES ADJACENT TO WHITTIER NARROWS PROJECT "D" & AUTHORIZATION TO SEEK BIDS MOTION BY COUNCILMAN TURY, SECONDED BY COUNCILMAN TAYLOR that the foregoing items on the Consent Calendar be approved. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. CC-B PROPOSAL FOR ENGINEERING SERVICES FOR HELLMAN AVENUE (SAN GABRIEL TO WALNUT GROVE) Councilman Taylor inquired if the normal fees have been running approximately 20% of the cost. Tom-Howard, Assistant City Engineer, stated that this cost in- cludes surveying, engineering, and construction observation. It runs about 10% on the engineering design and about:--10%-oh the:, construction observation and the surveying. MOTION BY COUNCILMAN CICHY, SECONDED BY COUNCILMAN IMPERIAL that the Engineering Proposal for Hellman Avenue between San Gabriel and Walnut Grove be approved. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. CM 7-12-83 Page #3 CC-D AWARD OF BID--HOME IMPROVEMENT PROGRAM Councilman Taylor stated that he had requested that this item be removed from the Consent Calendar in order to vote in opposition to it. MOTION BY COUNCILMAN TURY, SECONDED BY COUNCILMAN CICHY that the bid be awarded to Earl Casses Construction on the Langar property and to R.B. Terran on the Herrera property, which were the low bidders on the home improvement projects. Vote resulted: AYES: Councilmen Cichy, Tury and Mayor Cleveland NAYES: Councilmen Taylor and Imperial ABSENT: None ABSTAIN: None Whereupon the Mayor the declared said motion duly carried and so ordered. Councilman Taylor requested that the record show that his "no" vote was not a vote against either of these residents. It was because he felt that the money could be beneficial to more residents in a program such as the handyman program. The foregoing pages starting with Page N5 are the verbatim pages regarding the Modern Service Proposal/Counterproposal. CM 7-12-83 Page X14 V. MATTERS FOR DISCUSSION & ACTION A. MODERN SERVICE PROPOSAL/COUNTERPROPOSAL Kress: Mayor and Council, pursuant to discussion serveral meetings ago and you requested at your last meeting, the Counterproposal that was developed by your staff on the Modern Service matter is now in front of you for discussion. At your last meeting, I gave you a memo which addressed the point and in that memo I tried to point out how I believed the counterproposal does address the critical issues in litigation both those.raised by Modern and the ones raised by the City. You are well aware that this dispute has been with us almost three years now. I think the settlement that the staff has presented for your consideration would be an appropriate step given the need to re- solve the issues, the costs of further litigation and perhaps, most importantly, the significant chance that a judge simply is not going to decide these matters. Some of them are not subject to the type of judicial decision making where one side wins or one side loses. I have suggested to the Council throughout the long history of this matter that I rather expect once we are assigned to a particular judge, he is going to issue an order that the Counsels meet and confer with the franchisee in an effort to resolve these matters. The matter is scheduled for trial early next year. It was scheduled for trial later in the fall to give the Council time to consider this proposal, to give the parties time to implement the proposal if the Council choses to make this proposal, the trial was continued. So I imagine there will be some questions. I am here to answer them. Taylor: Mr. Mayor, the eight items that are listed on the proposal here or counterproposal, however you want to word it. I don't agree with the way it has been proposed now. The last time this came around some of them I was in agreement for, but I think there is two very specific items that I would like put on this list, and one of them would be, and worded into this so that there is no misunderstanding, one of them would be, the Contract is to be revised and clarified with all previous amendments incorporated into one contract. This shall be done prior to any rate increases. Everytime this comes up, the Council has a hard time going back over the last 4 or 5 amendments to the agreements,. misinterpretations, what was taken out, what was left in. It has been one big problem. So I would request that would be put in there so that it eliminates a lot of confusion. The other item that I would like put in is a statement that the City of Rosemead shall have.the right to audit the financial records of Modern Service at least once a year or if a contract dispute occurs. By that I mean if there is a problem, and we figure that we are not getting paid or Modern figures they are not getting paid, then we have the right to request the audit. Finishing that sentence, where a contract dispute occurs, such audit shall only pertain to service provided within the City of Rosemead. Modern Service shall keep separate records for the properties that are served in Rosemead in order to determine that Franchise Fees and other contract fees are proper. Failure to keep such records or denial of audit to the City shall be a breach of Con- tract. Now, the reason that I am asking for that is.... the next question.I have, have we ever received the financial information that we have requested when Modern filed this lawsuit? Kress: We have received some financial information attached to their latest proposal, you have that from Mr. Steadman. Taylor: Has the City been able.to audit any of their books? Kress: Well, the City hasn't requested that. Taylor: O. K. That is a very interesting statement. Kress: The City requested production of a number of documents. In that you may be using the term audit to mean that. We requested a production of a number of documents. A motion to quash that produc- tion was filed by Modern,, discussion ensued, negotiation at some level, we received the counterproposal or proposal from Modern, and now, you are looking at a counterproposal. That is a matter that was never resolved in Court. If we go forward in this litigation it will have to be. I guess that answers your question about the audit. CM 7-12-83 Page #5 ILI Tury: Mr. Mayor, I think what Gary is getting to,about two or three weeks ago in the paper, the Southern County Grand Jury accused Azusa of granting rate increases without ever seeing financial loss statements from their contractors and they were not really chastised for it, but it was a strong recommendation that in good business practice, that profit and loss statements from a business should be included in any request for rate in- creases, before the granting of any rate increases. I think that would be an important tool to us. If it is not in the Contract as it is,I would certainly agree that it should definitely be in it. I realize that the Contractor is wide spread and his invest- ments are far flung, but certainly he has a handle on Rosemead's operations. It has been going along much too long and he is too good a businessman not to know exactly what Rosemead's operation nets him. It would be nice information to have. Taylor: Mr. Mayor, it goes back beyond just a couple of weeks. As far as, we have never really, to my knowledge, had the authority or ..maybe we have the power to request this audit or check into financial records, but the time that we did ask to review these a couple of months ago, we were told that this business is incor- porated in with all of Mr. Griegorian's businesses combined. It cannot be pulled out, and that was what we were told direct, and I know that we asked for their records on it. So, it is not some- thing that we didn't ask for. Tury: What l .was trying to say, Gary, was there was an article in the paper about that in Azusa, and that's why I think the offer is basically fair, but it would be nice to have something to back us up in saying that. Taylor: I would like it in there concrete so that there is no question later. If the man tells us later that I can't give you that breakdown. Well,there is no way. We would just have to accept what he says and it may be true. All I am saying is that there is no way to audit it and we could get chastised the same way. I am sure we would if they came to see how we were auditing. We have never audited. There has been nothing there. I would like to ask the City Clerk if she could read back the two items I asked to put in there. Clerk: The two items to be put on this list, the contract has been revised.. Taylor: No, excuse me, the Contract is to be revised... Clerk: has to be revised and clarified before any rate increase is granted. Taylor: Now, I would like it specific, Ellen, it should be contract should be revised and clarified with all previous amendments to be incorporated into one contract. This shall be done prior to any rate increases. The second item is the City of Rosemead shall have the right to audit the financial records of Modern Service at least once a year or if a contract dispute occurs. Such audit shall only pertain to disposal service provided within the City of Rosemead. Modern Service shall keep separate records for the properties that are serviced in Rosemead in order to determine total franchise fees and other contract fees. Failure to keep such records or denial of audit to cities shall be a breach of contract. Those were the two strongest items that I would like for future benefit for anyone or any councilmember that may be on this Council. There were a couple of other items..getting back to the other eight items ...Item number 5. Modern shall waive all pending claims regarding commer- cial accounts not on service. Item #7. Modern shall agree to waive in writing all of its other claims and assertions regarding the contractural interpretation for the duration of the contract. Now, the duration of this contract is another 8 years. Is that correct? I don't believe that anybody, and this is why I am asking the ques- tion, can you waive your rights for 8 years on a contract of this nature? I have had the understanding that if something is not clear in it or you misinterpret it, that is why we are in this thing right now. We are interpreting it different than what Modern is. Is that a valid clause that we could really uphold for the next 8 years and he couldn't challenge it any more? CM 7-12-83 Page k6 Kress: That is the intention, yes. Again, there are ambiguities and read that if you will, that all of those ambiguities that are out there are not specifically dealt with in these eight points, would be resolved against the contractor for the duration of the agreement. Now, the point on putting the whole single agreement together. You have that document. I have prepared it years ago. Bob Andrews has looked at it and I believe he agrees with it. I have no problem putting it and incorporating these terms into it, but understand, that you are not really starting from scratch. There are a lot of provisions in there that if we were starting from scratch, I would certainly have some different recommendations. And, by putting that document..by requiring that document to be put together and also framing it that there be no rate increases until that agreement is agreed on, that is very iffy and it is fraught with problems. I understand why Councilman Taylor is suggesting it, and I think it can be done, but I guess I am just sounding a warning at this point that a 35-40 page document is going to come before this Council if you chose to go this route and we are not going to be able to simply dictate line by line the terms. It is not a from scratch grant of a franchise. So if that is understood, then I believe that in essence I have already done the work to put together a document which incorporates all the amendments through 1978, I believe was the last amendment that we entered into. We can provide that as a starting point. As to the audit, you may recall that the agreement presently calls for the franchise fee in residential units to be as to an agreed number of houses. We questioned this, the Planning Department and Modern Service did a complete survey of the City, when was that John? About a year and half ago? John: 1981. Kress: So that agreed housing number has been reached and verified. The authority for that is there. The audit requirement as worded by Councilman Taylor, you talked about fees, I think that the more important part of that in looking to the future, we are building in a 7% annual escalation with the knowledge that if some of the dire consequences that have been reported and forecast by the Times in its recent articles about landfill. If that comes to pass, then certainly this franchisee as well as all of them, will be coming in and asking for larger increases. I think the point that you were trying to reach was the cost of the franchise, the expenses and charges should be kept in a way that they can be allocated towards the Rosemead franchise. Taylor: That's fine. My words were opening comments to...if we need to refine it, that's what we are looking for. Kress: 0. K. but that's... Taylor: Something has got to be in there,though, that franchise fees, percentages, and it brings up an interesting point. A couple of things that I would like to clarify that I disagree wholeheartedly with portions of your first comment pertaining to the entire con- tract. I am not asking that it be rewritten in the sense that you did it in 1978, I must ask that I need another copy of that if it has been that long. The point being that part of this dispute, the 1978 amendment, I believe it was that one, 1976-78, the latest amendment that we had took priority and this goes back to the 7% increase, if I recall correctly. It stated that Modern shall re- ceive a 7% increase, but the agreement before that,two years prior, stated that they could have some where, I believe, from 4-10% or 6-10%, well, for me the latest amendment supercedes all other prior amendments. This is why it has to be incorporated into one contract. Don't go pull out the first, second or third amendment. You go with the latest amendment that agrees with whatever we are discussing. I feel very strongly that the last amendment that we had stated that it shall be 7% and it is interesting that the last two years Modern has sent letters to the City that they are going to take ad- vantage of their option and raise the rates 107 and we went right around and sent them a letter and say "you do it and you are in breach of contract"and that's it and they back off. For the past two years they haven't raised it. Now for whatever reason, I think we are on,pretty solid ground. They are trying to get it and we are saying the Contract says one thing. They haven't done it and yet they filed the lawsuit against us. So, the discrepencies that g CMPage2 W we have are in all these different amendments. They interpret it in one way and we interpret it another. There are a couple of other important items that we were brought up. The barrels rate. The contract says one thing. It goes back maybe to the 1976 amendment. It says that barrels shall be out. But I feel that Modern has set a precedent, they never took the barrels out. They pick and chose. They let whoever they want to use them. That issue has not been resolved. The other thing was vacant homes where people had died, deceased owners, moved out, month in and month out they got the bills. I have had phone calls and requests come to me.."my mother died and the house is in probate and its been there for months, and we are getting bills from Modern Service". People that are deceased, Modern doesn't care. Every resident gets a billing. In the shopping center, they wanted to bill every small individual proprietor there at a business rate even though the shopping center provide the bin service. How do we get around that? This says he waives all claims and such. If it is not in one contiguous contract, I don't want him to go back and say well, no, I didn't mean that. We were talking about the 78 amendments, this is in the 76 amend- ments. Everyone of us can pick one document and read right through it and say hey, this is where I question it, but when you have to lay out four or five of them and find every page that is a poor way to do it. That is the-two items that I.would like in there, no matter what we decide. That is all I have at this time, Mr. Mayor. Tury: Mr. Mayor, at what point did we give up the right to audit his books? It was part of the original contract was it not? We have never seen an amendment that takes that right away from us. Kress: I was trying to listen and also trying to look at the agreement and certainly, Gary, I agree with you, it is a confus- ing document and that is the whole point to try and resolve some of these things. My recollection on the actual audit is that there is one portion of the agreement that gives the City the right and another one that takes it away. It is internally con- fusing. Again, that is why I have, and this was given to you, I remember I bunched together all the documents on this matter the first time that Bob Andrews stood before you and said a few things that I didn't think were exactly true and so I got all of my paper work. It is the long sheets that were attached to that. I will give you each another copy of what I consider to be the agreement that we have now, but just because you get that from the City Attorney doesn't make that document internally consistent because all these amendments aren't internally consis- tent. Last in time and last in right is one way of interpreting these things, but there are portions of that agreement that other Council's have approved that again, if you see it as a fresh docu- ment, you may not wish to approve. This particular portion on the audit is now being suggested by Councilman Taylor is a strong point that we should add to our counterproposal and be insistent on it. I am not disagreeing with that, but I think that could be worded and it can be done. Tury: I have a couple of more Tripepi: Councilman Tury before you go on, I ;just wanted to add... your recollection is about as good as mine,in the original con- tract when it talks about the audit, or basically a view of the books. In that time, when the contract was originally drawn or drafted, increases were set up on a different schedule. I think the audits that you are thinking about are the same ones that I have in mind. They refer to an audit in order to insure the pro- per payment of franchise fees on a percentage basis. I think there is a section in there that specifically provides for that and later on there is conflicting language because I don't think there is a clear interpretation as to what the review..does the review also cover books when it comes to a rate increase or does it only apply to a clarification of the franchise fees which are a percentage based on receipts paid to the City. Tury: I think that Mr. Taylor's suggestion would be a very im- portant one to have in there. Under Item N2, I would like to see them retain the option of having a bin, instead of 907 of the single rates for multiple units which I think they have CMa7-I2-hhis time C 33 Page P8 Tury: The way I see is that if we were to approve this tonight as it is written, they would probably take that right away from the multiple owner. I think that the retention of the optional bin should be in there. I think that under section #7 where it says that Modern shall agree to waive in writing all its other claims and assertions and I think we should have at the end of that i.e. and say exactly what we are referring to, multiple users of large bins', so on and so on. Not lay out our interpre- tations, but those are every point that they have addressed in the lawsuit should be specifically laid out. That is what this section is applying to. That leaves no question. No open holes for anybody. It doesn't have to specify what the answer is, but that has to say that is what that particular section is applying to. I think if we were to be able to get that together, that would at least have the intentions of showing that we are trying to resolve the bin service, that we are trying to resolve the barrel service, we are trying to resolve the sharing by large users of a single bin, and some of the other things. I think there was some reference made to vacant housing in one of the memos we had here, maybe it is on.this one. I am not sure which one. Kress: Vacant housing is a tough one. Tury: Maybe there would be a way of finding an alternate fee scheduling for vacant housing. Like Edison has a rate if you have a vacant house that you are just going to show for rent, they charge you a flat rate. There might be a way around that. I doubt if this proposal will be accepted in its present form, if we were to send it. They would probably be some more negotia- tions back and forth, but I think before we send off an offer, we should include those items that Gary has, I would like to see the suggestions that I have made into it, and then put into a proposal written in front of us to see it. Taylor: Mr. Mayor, I think the comments that Mr. Tury made are very well taken and every item that we can get clarified, the disposal services for the small businesses, the vacant homes, the barrel rates, whatever it may be. This is the time to do it. Every two years without fail, this Contract comes back for amend- ments with anywhere from a half dozen to nine,twelve items. It is just given to the City for amendments. For the fact that Modern has filed this lawsuit against the City, this is the only real opportunity that we have to get it corrected. The-the thought crossed my mind as far as the fees that are being charged, if we don't get it cleared up now, we will never get it, and we had asked for information. Mr. Tury made the comment as far as the right to audit and such. Now, this is the most powerful or the most recent time that we have asked for an audit, and the only thing I can say in answer to that is that we were told we can't give you those figures because it is in all of Mr. Griegorian's total enterprises. So we need to get that bug out of the way, where from here on out it won't be acceptable. You have to take out the services in Rosemead so that we have the right to audit it. That was what I was trying to think of Lou. We do supposedly have that right, but we couldn't do anything because he didn't have the information. Tury: Well, the information was not made available. Let's put it that way. Taylor: Right now, we are saying you got the franchise now show us. The other point is whether we get the total increase or not, whether it be $6 for a single family rate and we could argue from here on out on what is a fair rate. In this proposal we had the different cities that were listed and two meetings ago there was another article in the paper about Azusa again. There rate was like $3.85 and ours is somewhere around $5.85 and I question their doing it for 50% or we are charging 50% more than their rate is. In this proposal tonight, it states the E1 Monte rate is $6.75 and San Dimas is $6.85, Temple City is $6.35. As'far as I am concerned that doesn't make it right. When you go back down the other way, you take the bottom, whether it.be Azusa at $3.85 or there is City of Covina, residential handled by the City themselves. There are a couple fees in here at $4.50 and $5.5 a month. We have a pretty good average. CM 7-12-83 Page #9 ~cl 0 0 Taylor: By being able to look at the books, what Mr. Griegorian and his fees are in relation to what the industry is charging. I could be wrong, but I am told that his drivers are not paid as much as some of the other cities are. If he is not paying them yet he is giving us the...he wants the same fees that are charged, the higher fees and he is not paying is drivers what the other cities are paying then where are these higher costs. That is why, if he is entitled to a raise, that is fine, I don't want to put anybody out of business. But, it has got to be a point where he has got a monopoly or a franchise for all the residents, we have got to have the right to review that. Tury: Mr. Mayor, I think we are probably in the strongest position in coming to a settlement than we have ever been as long as I have been on this Council anyway. I think for once we are dealing from a reasonably united front and we have drawn the line in how far we can be pushed. Now, I think this request as proposed here is not in my opinion out of line. In return for those I think this is the time, to resolve as much, as many of the issues as at all pos- sible. The way the contract is written there is always going to be issues that we are going to have problems with. The ones that we are aware of now, the ones that are major, the ones that have been around for five years or probably -longer than that, if we can resolve those now, or at least make a good strong attempt to resolve those. The only way to get those resolve, I think is going to be to try to come to an accomodation with him. They do give us excellent service and I would like to not see us change for that reason. I think that we can resolve the differences. I think Bob Kress mentioned that the dump fees are going up out of sight. I think there is a provision in the contract that if dump fees escalate radically, the whole thing is thrown back open any- way. Which may happen in a year. Who knows. But I think that in return for an increase in compensation to the Contractor we have the right to try to resolve as many of the discrepencies as we can. I would be very surprised if it were accepted the first go around, but who knows. They may come back with a counterproposal and it may go back and forth, but I think we should get as much in there as we can. Kress: Mayor and Council, it was the intention of staff to re- solve all these matters. Number 7 though be it shorthand, every- thing that has been discussed it was certainly our intention to resolve it that way. We wanted to give the Council a document that put forth in critical terms and not necessarily contract lan- guage. That is why we , Tury: I can agree with what you did, Bob, but I think with the addition of few things and not leaving a whole lot to someones imagination, you know exactly what that statement applies to. There will be no question. They may not agree on it, but there will be no question as to what that statement means. Otherwise, written like it is, I think it does leave a few things open, and I think if we spell those out, we don't have to go into great de- tail about them. Simply referring to those particular items, I don't think it would add a whole lot to it, but I think it would give a little more credibility to the proposal. Taylor: Mr. Mayor, from what we discussed tonight then, I am going to ask or maybe that this will be reworded and rewritten and be more specific and be brought back at the next meeting then. If the other Councilmembers have something hopefully, they may have it now or think of.-it by the next meeting. As Mr. Tury said we are at the best point that we have been. I have been on the Council nine years, this is the best time. We were forced into a lawsuit. Now we have got an opportunity to get down to the nitty-gritty and we have never had such an opportunity as we have now to get it straightened out. Mayor Cleveland: Mr. Kress could we legally demand an audit of their books? I don't believe we could do that, can we? Kress: Well, again, there is a question of how far the authority is in there right now. Councilman Taylor is suggesting that as part and parcel of all the good things that we are proposing for Modern, that we insist in future years that they maintain their 7-12-83 books in such a way that if they ask for rate increases more thanpage#10 the 7% standard automatically they are going to have to prove it. Kress: I think that is the key. Taylor: That is correct, Mr. Kress,but this gives us something to look at. Kress: I would even suggest to the Council that it be worded that way because I think your protection is already in the Contract as to the franchise fee and on the residential that is on a housing unit count and we have got that verified once and John Carmona can put the pluses and minuses in that cause we are not...we are a developed City now. We are not changing that many housing units. On the commercial side, again that has been verified and it doesn't fluctuate very much. I think what you are really getting at is... o.k. we are going to change the rates, we are going to agree.... tear up a lot of amendments to the contract, Modern Service if you get this proposal you are going to get 7% increase April 1st of-each year, however, if you ever come knocking on the Council's door again and you want a larger increase, be prepared by keeping your books so that-we can know what the profit margin is on the Rosemead franchise. I think that's the important part of Council- man Taylor's point on the right to audit. It is not a matter of really going in there once a year and finding out whether the trash collector is really a good guy or a bad guy. It is we don't want to get stiffed again and go through this whole mess, and months and years of litigation. We have the opportunity to set some ground rules for the future. The 7% increase. I don't know how long that will be realistic. We have plugged it into the contract but again, things may happen. Councilman Tury, I don't believe the contract presently has the safety valve you were talking about. I don't think if dump fees go up, I think he has to come up and ask for a rate increase. Taylor: I was going to say that we all have to be realistic about it and if we.know that the dump fees are going up, they have talked about it statewide, countywide and they have closed the dumps. We know that is a realistic potential, and I don't question that. I would not have any quams about it. We know that it is going up for everybody. So that is a litigimate basis to come back on. If he says my dump fees are going up, how much are they going up, and he lays it on the table. We look at the books and we say o.k. that is fine. That is the gist of the argument. Get it out where we can see what it is. I have stated in here, I have asked for the phrase to be put in here, that it only pertains to the services for Rosemead. I am not going to be asking for auditing for any other city trash contract. I don't really care. So his private affairs and his financial matters have no bearing on it. It is very specific in here that we only want to audit what pertains to Rosemead. Tury: Government contracts in our work works that way. They will come in and audit that particular job. Not the overall picture of the business, but you have to prove,if you ask for an increase, how much you are making on that particular job. So it is really a very simple matter to keep that kind of records. Actually, I believe that he probably has them anyway, to be very honest with you. I could not prove that and he has been honorable as far as paying the franchise fees and things so we have that going for us. Mayor: I can readily understand the way Mr. Kress has explained this. In other words, as long as he receives no more than 7% increase then we have no right to demand to see his books. Now, Mr. Taylor stated that we should audit those books once a year. Tury: He says that we have the right. Taylor: Mr. Mayor, let me read it to you again. It states that the City shall have the right to audit the financial records of Modern Service at least.once a year. We have the right,not that we need to. I don't have any reason to get in and audit those records and I don't even want to. Mayor: Don't you think it would be a little better to go a little further and state what Mr. Kress stated there, "if there is an increase more than the percentage spelled in the contract". CM 7-12-83 Page #11 Taylor: Well, that's another way to put it, "if there is any request for a revision of the contract or the agreement". That is fine. It could be two years. It could be three years, but the minute the request comes in...and your points well taken, but let's clarify that. I don't mind the wording. If we can get it for three years and not look at the records, that is fine with me, but the minute a request comes in for an increase in fees or so then we have the right to look at the books. Mayor: Over and above the allocated increase in the Contract. Tury: That sounds more than fair, and I'll bet that he would be willing to go along with that. Kress: That is an approach that I have put in several Cable T.V. Contracts. Where we know down the line that the Council is going to have to review the rates for the Cable operator in a traditional franchise. So when we word the franchise, we list all the data that we want, the rate application for increase must be supported by items number 1 through 15, and I really think that is an approach that you should give some consideration to here. We are establish- ing here if he agrees to it, how we are going to govern the relation- ship.between the parties for the final 8 years of the franchise, and I think it is totally acceptable and supportable to say o.k. this is something that we will give you and we won't look at your books, but again, if you ever come back, this is what we are going to look at and we won't even put it on the Council's Agenda until all this information is supported and verified under oath. Taylor: Let's clarify something though. How do we make a compari- son in the audit to what the prior rates were as far as justifica- tion if we have never seen the books. In other words when he comes in like right now as an example, he is asking for a fee increase. We ask to see the books. We can't see them. We are just told that he needs it. We can make no comparison. We have no idea or no records of any cost whatsoever. In other words, what we are doing is that we have no information to fall back on. So if we were to audit it once a.year, we could get a gist or trend if they have so many residents each year plus or minus, the franchise fee is based on that. Now, I don't honestly know if that has changed in all these years and if the franchise fees go up and down each year. What has happened in that. Can anyone tell me if it has fluctuated or is it a flat fee? Tury: I think there is a certain agreed upon counts of a X number of houses in the City, and I think that's..... Taylor: But that count has never changed that I know of, Louie. Tury: It changed about a year and half ago. Taylor: Right, when we had a big audit. Tury: O.k. it probably hadn't been changed for three or four years before that, and it probably won't change any major changes in another two or three years. Let's face it what are they building. They are building 20 new ones, and tearing down 7 old ones or some- thing like that. That is a pretty small amount. His franchise fee is based on his rate increases. When he get a 7% rate increase the franchise fee also goes up 7%. The franchise fee has escalated every year as the rates have escalated. The count could be off. Let's say the count could be off let's say 100 homes for some period of time. That is really a very small amount of money. We know if we are going to have a 200 house tract coming into town. We can be aware of that, but I think that just the minor changes of 3 or 4 houses here and there. I think there are as many built as go down. Taylor: No, that is not worth it. Tury: I agree with what you are saying it really isn't worth it. John knows what goes on around town. Anything major he can make us aware of that and I don't think Modern Service would argue over 100 houses either. I honestly don't. I don't think to tie him into an audit on that particular issue would be a good thing. CM 7-12-83 Page #12 T,. 0 0 Tury: I do think that we should have the right at some trigger point. Whether it be at an increase over 7% or it would be a whatever-at that point we should have the right to audit the books. That was my impression of what your intent was. Taylor: I think I found the answer in one sense, because when- ever those fees come in, the auditing of those books are not for the current billing period. It is going to be audited for one year back, two years back. So when I say it is going to be audited it will go back into that time span. Tury: I think as much as I have had my difficulties with the man in the past, I think he is honest. I think what we are going to have to do if we come to an agreement this time, we are going to have to assume that at this point and time he getting an honest return on his money, and as we audit that will be base year. If he comes back in a.year and wants an extra 3%, we'll ask him for last years operating cost and something to compare to what it was the year before. I don't see how we can do it any other way. We are really starting on this thing, even though we're not rewritting a new contract, we are going back a long ways in this relationship as far as changing the way things have been done in the past, and I think like Bob says we can't get everything, but I think the points we have made have been construction and I think that it will help,after we are all long gone, it will help some other guy sitting up here and he feels like he is trapped and he is in the very same situation that we are. Taylor: I was trying to think of rewording this then. The City of Rosemead will have the right to audit the financial records of Modern Service at any time there is a request for a increases in fees or other charges, whether they be dump charges or ...we have got to come up with ...if this one isn't acceptable at once a year, then let's get something proposed. Kress: What I would suggest that ...I am sorry.. Imperial: I would like to suggest that back and forth here, and I think pretty agreement on this thing. We could talk more. I would like to suggest that the and I am sure he knows the full intent it back to us at the next meeting. we have bantered around much the Council is in on it for quite a bit City Attorney word this :)f.the Council and bring Tury: I think, Jay, though, he is missing one bit of information that he needs. At what point do you want this audit to be triggered. I think that is something that we pretty well have to give him a little bit of guidance on unless he knows and I don't. Imperial: At any raise over his raise of 7%. Taylor: No, Mr. Mayor, point of clarification. It is not just the 7%. It could be any fee increases. Whether it be a cut in franchise fees that he doesn't want to pay the City, the big hang up seems to be where I stated at least once a year. If we strike that what do we put back in its place? Kress: If I could suggest something? Just to get away from that wording, think of it this way. As a prerequisite to any change in financial terms, that deals with Franchise fees, increases in fees over the.7% automatic, or anything at all financial, the contractor must provide financial statements subject to City Audits for the past blank years, 2 years, 3 years. That would provide the com- parison, it gives the City the right to audit. The information contained in these financial statements shall include...... and I can give you a pretty good list of what should be in-there. Taylor: Just as a point of information, though, rather than list it, I would like it general so that if it pertains to the disposal services provided for the residents or businesses. In case if we forget something, I don't want to get caught in that trap because we didn't specify it. CM 7-12-83 Page #13 Tripepi: Could I answer that question? I think what we are saying is that everything is going to be covered in the con- tract. The franchise fee is going to be a section of the contract. The rate charged to businesses is in a section of the contract. The bin services or barrel service is in a sec- tion of the contract. Anything that he proposes then, would it not be an amendment to the contract? Taylor: Excuse me. That's an excellent point Mr. Tripepi, we are talking fees or financial increases. What if the con- tractor deletes a certain service but the fee doesn't change? Tripepi: That is what I was about to ask. Why don't we just say that if any requested amendment to the Contract by the con- tractor shall be backed up with the right of the City to do an audit. Taylor: That's fine. General like that. Is that enough, Jay, or do you want to bring it back to the next meeting is that it? Tury: I think if you could put this thing together and have it back at the next meeting so that we can take some action on it. I think that we have pretty well thrashed it out and I think that it has been a very fruitful meeting tonight. I think we might finally wind this thing down. Taylor: I hope so. Mayor: Can you have it by the next meeting Mr. Kress? Kress: Oh, we will certainly try. I think so. Mayor: Then this will be set over to the next meeting. The rest of Councilmeeting continues on Page #15. CM 7-12-83 Page 1114 • B. CONTRACT CITIES LAWSUIT/AMBULANCE SERVICES Frank G. Tripepi, City Manager, stated that discussion.on the lawsuit against the County of Los Angeles Ambulance Service will take place tomorrow and Councilman Cichy.is interested in the posture of the Council regarding this lawsuit. Councilman Cichy stated that he was going to bring up the fee rates at the meeting tomorrow night. He did feel that the City of Rosemead should proceed with support of the litigation, however, he was going to let them know that the Rosemead City Council feels that.there may be realistic alter- natives and there may come a time that Rosemead will not sup- port it anymore. VI. MATTERS FROM OFFICIALS A. Councilman Tury.inquired about how many yard sales licensed over the week-end. John Carmona, Planning Director, stated that there were five or six. Councilman Tury.inquired if the residence on Walnut Grove and north of Hellman had been licensed. John Carmona stated that a letter had been sent to them requesting them to call back. Councilman Tury requested a memorandum regarding that parti- cular yard sale. B. Councilman Imperial stated that he had submitted a memo regarding the purchase of Beep Alert Systems for those on the Council. MOTION BY COUNCILMAN IMPERIAL, SECONDED BY COUNCILMAN TURY that Beep Alerts be purchased for any member of the City Council and City Manager at $149.95 each plus a $10/Month service charge. Vote resulted: UPON ROLL CALL ALL COUNCILMEMBERS PRESENT VOTED AYE. The Mayor declared said motion duly carried and so ordered. There being no further business to handle, the Council Meeting was adjourned to July 26, 1983 at 8:00 p. m. Respectfully submitted: City Clerk of the' City of Rosemead APPROVED: MAYOR CM 7-12-83 Page 1115