LASAN Financial Rate Models for Solid Resources and Multi-Family Bulky Item Programs
Evaluating Financial Viability
LA Sanitation (LASAN)
Los Angeles, CA
LA Sanitation Solid Resources collection vehicles
Source: LA Sanitation
SHA Analytics, LLC is part of a team selected by the LA Sanitation (LASAN) to provide as-needed strategic management support services at a programmatic level for LASAN’s Watershed Protection, Clean Water, and Solid Resources programs through 2020. Our work includes reviewing and analyzing policies and capital improvement investments, evaluating financial viability of LASAN’s programs, and developing strategies to ensure long-term viability and rate sustainability. Under this contract, SHA Analytics, LLC has worked with LASAN on two major programs to date: Solid Resources and Multi-Family Bulky Items.
The Solid Resources program involves the collection and removal of refuse, recyclables, yard trimmings from more than 750,000 homes in the City of Los Angeles. SHA Analytics, LLC updated the existing Solid Resources program financial model to evaluate the implications of new program initiatives on customer rates. This financial model considers the sources and uses of funds for the program to determine if LASAN will face a funding deficit in near future and evaluate the program’s performance relative to debt service coverage tests. Using this financial model, we worked in conjunction with LASAN to develop and test customer rate scenarios with the objective of minimizing adverse financial impacts to LASAN customers while ensuring the Solid Resources program is financially viable in the future. Our analysis also included a sensitivity analysis to understand the key drivers of program cost increases. With this information, LASAN is able to develop strategies to hedge against potential deficits and less than satisfactory debt service coverage tests performances.
Under the Multi-Family Bulky Item program, LASAN collects household items such as furniture and items from customers residing in multi-family dwellings such as apartment buildings. SHA Analytics, LLC developed a new financial model the Multi-Family Bulky Item Program to study the cost of service and evaluate the need for customer rate adjustments to pay for this program. SHA Analytics, LLC conducted sensitivity and risk analyses on the financial model to determine the impacts of key variables on LASAN customer rate increases. This model is used by LASAN to test and evaluate new rate schemes for the program.