Summary:
Rate adjustments are being proposed in both the Front-Load service and the Roll-Off service programs within the Commercial Solid Waste Fund. Commercial Front-Load rates were last adjusted in FY2013, while the Roll-Off services rates were last adjusted in FY2016. The City provides both services to customers within the City on a competitive basis with other private providers. Revenues and expenses for each operation are managed independently so that one operation is not subsidizing the other.
Beginning in FY2017, state statute changed to provide multi-family customers (apartments, trailer parks, etc.) with the option of selecting private providers for waste-hauling services. As a result, a number of large properties elected to discontinue services with the City, resulting in an approximate 13% reduction in the program’s revenues. The program has since added a modest number of new commercial accounts, but the lower revenue from the account losses created an ongoing deficit that could not reasonably be covered by account growth. Staff explored opportunities for cost reductions and operating efficiencies and will continue to do so. However normal operating cost increases such as staffing, landfill and vehicle operating cost growth necessitate an increase in rates.
The City’s Roll-Off program services a wide variety of residential, commercial, and governmental accounts that require large bulk hauling that is usually short-term in nature. The program derives a large share of its revenues from servicing the Butler Water Reclamation Facility’s large-scale and regular hauling requirements. The program faces the same operating cost issues as the Front-Load program and is challenged in reaching a revenue level that will consistently offset its operating costs.
Staff is recommending that the Front-Load monthly container rates adjust by 5%, effective July 1, 2018. Since a customer’s monthly cost is based on several factors (the number of containers; their respective size; and the frequency of collection), the impact will vary by account. Staff is recommending three adjustments in the Roll-Off program: 1) the monthly rental rate be re-established at $50 per month for all size boxes; 2) the empty-return rate or pull charge be increased from $200 per pull to $210; and 3) the tonnage fee be increased from $28 to $31 for each ton of material hauled.
The Roll-Off program’s customer base varies between accounts who own containers and pay the City for pulls and those who both rent containers and pay for each pull. In the case of the former, an account would experience the $10 increase (or 5%) with each pull along with $3 additional for each ton. Those not owning a container would see an increase of $60 per pull plus $3 additional for each ton under the new rates.
Staff anticipates a second year of Front-Load adjustments similar to FY2019’s recommendation will be required to reduce its operating deficit, followed by more modest adjustments thereafter to keep pace with operating cost inflation. Staff projects that the Roll-Off program will require modest rate adjustments in future years to maintain pace with operating cost growth. The Commercial Solid Waste Fund has adequate fund balance and exceeds the City’s financial guidelines for enterprise operations outlined in its Principles of Sound Financial Management.