Discussion and possible action to adopt RES. 2023-72 regarding a proposed adjustment to the Residential Solid Waste and Commercial Solid Waste programs making the new rates effective July 1, 2023 and July 1, 2024.

Rate adjustments are proposed for both the residential solid waste and commercial solid waste programs. 

Residential Solid Waste

The current monthly residential solid waste fee of $17.96 includes once-a-week collection of customer refuse and recycling materials, two curbside bulk trash collections per year and three household hazardous waste collection opportunities per year.

Over the past year, city staff have been working with FCS Group on a rate study for solid waste services. The study confirmed that the residential solid waste program’s operating costs are increasing. The primary factor behind this cost growth is inflationary pressure. For example, inflation is driving up the cost of fuel, trucks, and other fleet expenses. In addition, the cost to dispose of solid waste and process recyclables has grown significantly. The anticipated annual increases to the Residential Solid Waste Fund’s primary cost inputs exceed what the fund can support without additional rate revenues.

As shown in the attached Table 1, the study recommends a monthly residential solid waste rate increase of 15% per account in FY 2024 and 14% per account in FY 2025, an increase of $2.69 in FY 2024 and $2.90 in FY 2025. The new rates would become effective at the beginning of each fiscal year. The adjustment would result in a resident’s monthly cost for service being $20.65 in FY 2024 and $23.55 in FY 2025.

Commercial Solid Waste

The City provides commercial solid waste services to customers within the City on a competitive basis with private providers. Commercial solid waste services include front-load, compactor, side-load (90 gallon barrel), recycling and roll-off services.

Similar to residential, the rate study verified that the commercial solid waste program faces cost increases associated with landfill rates, inflation and recycling costs.

The study generally recommended a rate increase of 7.0% for commercial solid waste in both FY 2024 and FY 2025. However, the city is in the midst of a 7-year plan to align the rates charged to the different customer classes with cost of service, so rates are slightly higher for font-load customers and lower for roll-off customers. Because recycling rates are generating revenue significantly below the cost to provide the service, rate increases are higher for recycling than the other customer classes. Finally, side-load rates for a 90-gallon barrel are based on the residential solid waste increase. Proposed rates are as follows: 

FY 2024

• 7.3% - front-load
• 7.0% - compactor
• 15.0% - side-load
• 20.0% - recycling (note: rate increases range from 3.4% to 25% depending on service level)
• 4.0% - roll-off
• 7.0% - special haul
• 7.0% - miscellaneous fees
  
  

FY 2025

• 7.2% - front-load
• 7.0% - compactor
• 14.0% - side-load
• 20.0% - recycling (note: rate increases range from 3.4% to 25% depending on service level)
• 4.0% - roll-off
• 7.0% - special haul
• 7.0% - miscellaneous fees

At Council Study Session meetings on February 21, 2023 and March 7, 2023, staff presented an overview of the recommendations for solid waste rate adjustments in FY 2024 and FY 2025.

In accordance with Section 9-499.15, Arizona Revised Statutes, the City provided public notice on its website and through publications available in the City Clerk’s Office, that the Council would consider these adjustments at its May 16th meeting.

Solid waste rates were last adjusted on January 1, 2023 for FY 2023. 

A: The Mayor and Council adopt the resolution adjusting the solid waste rates, making the new rates effective July 1, 2023 and July 1, 2024.

B: The Mayor and Council elect to not adopt the recommended solid waste rates planned to be effective on July 1, 2023 and July 1, 2024. Not adopting the recommended rates, would continue the rates currently in effect.

Staff recommends that the Council adopt the recommended solid waste rate adjustments, making the new rates effective July 1, 2023 and July 1, 2024. 

The proposed solid waste rate adjustments provide the revenue necessary for the service to address operational requirements for the next 2 years. The proposed residential solid waste rate adjustments are estimated to increase program revenues by approximately $2,118,000 in FY 2024 and $2,324,000 in FY 2025.

The proposed commercial solid waste rate adjustments are estimated to increase program revenues by about $180,000 in FY 2024 and $191,000 in FY 2025.