Memorandum
City of Lawrence
Public Works Department
MEMO TO: David Corliss, City Manager
Diane Stoddard, Assistant City Manager
Cynthia Boecker, Assistant City Manager
Chuck Soules, Public Works Director
Tammy Bennett, Assistant Public Works Director
FROM: Bob Yoos, Solid Waste Division Manager
SUBJECT: 2010 Solid Waste Rate Study
DATE: June 4, 2009
The solid waste rate study is submitted annually to provide the City Commission recommended refuse collection rates for the following year. Solid waste management is a City enterprise that entails a wide variety of services. Services are provided by charging a fee as is done in the Utility, Storm water and Parking Services Enterprise Funds. No sales tax, property tax, franchise fee or other general taxes are used to fund the solid waste management system.
The recommended increase for 2010 is $0.66 monthly per residential customer, or a residential monthly rate of $13.85.
The recommended increase will assist the Solid Waste Division to maintain the quality of services that resulted in an 86 percent overall approval rating in the 2007 Citizens Survey. This approval rating was second only to fire and emergency medical services.
Primary Factors Affecting Rates: The Solid Waste Division works diligently to provide efficient and excellent services without large or erratic rate increases. The solid waste rates are non-elastic, and need to be adjusted annually. There are a variety of factors that impact rates, as outlined below. For easy reference, a 1% rate increase results in approximately $70,000 additional revenue in the Solid Waste Fund.
§ Fuel and maintenance costs: Solid waste collection is a very fleet intensive operation. The increasingly high costs of fuel have a huge impact on operational costs for the division annually.
§ Annual inflation rate of 3.8% in 2009.
§ Equipment replacement:
o Replacement schedule: The division maintains a rigorous replacement schedule for large equipment to ensure the equipment is replaced at the most cost-effective time. Equipment replacement can vary widely from year to year. 2010 should be a very large equipment replacement year in terms of number of pieces that were scheduled for replacement. However, staff has deferred 2 rear loaders, 4 pick ups, 1 maintenance utility vehicle, 2 hook-lift trucks, and 2 roll-off trucks (roughly $1,000,000 in equipment) from replacement in 2010 because the funds simply are not available, even with the rate increase proposed. Additional deferral of equipment replacement will result in decreases in the quality of service delivery (equipment downtime, crew overtime, maintenance costs).
o Replacement costs: In addition to the number of pieces of equipment scheduled for replacement, there has been significant inflation in the cost per unit over time, primarily due to steel prices and regulatory changes. An additional $15,000 is budgeted per rear loader and roll-off replacements to meet new EPA emissions standards. This is just one example of equipment cost inflation.
§ Personnel costs: Personnel costs account for approximately 58% of the solid waste budget in 2010. Personnel costs have increased significantly over time, including wage adjustments, overtime, health care and benefit costs. The health care line item increased 16% in 2010. The recommended rate includes minimal wage adjustment.
§ Recycling materials markets: The division collects, processes, and markets a variety of fiber materials – cardboard, newspaper, mixed paper, and sorted office waste paper. Some revenue is generated annually from the sale of these materials. The materials markets in 2009 have been exceptionally low, even for a “down market,” with some materials generating zero revenue per ton for certain shipments. While the markets may begin to rebound in 2010, this is not a stable revenue source in relation to the services expectation of the community.
§ Fund balance forward: It is critical for the division to manage the fund balance forward in a conservative manner, due to fluctuating capital expenditures (referenced above) and the possibility of an increase in landfill tipping fees due to higher operating costs or an increase in the current state surcharge on tonnage. The fund balance forward has declined in the last few years due to increasing costs.
Recommendations For Refuse Service Rates In 2010:
Residential:
a. Residential rate of $13.85 per month which is an increase of $0.66 per month (present rate is $13.19 per month). A comparison of Lawrence's proposed rate and that of other cities is contained in Attachment I.
b. Low-income-elderly rate of $4.85 per month which is 35 percent of the residential rate as established by Ordinance 6618. Criteria for eligibility for the low-income-elderly rate are based on the federal poverty guidelines for 2009. The maximum annual income from all sources has been adjusted based on the 2009 Federal Poverty Guidelines.
Commercial:
a. A minimum commercial rate of $20.13 per month which is an increase of $0.96 per month (present rate is $19.17 per month).
b. Increase commercial dumpster and roll-off service rates 5 percent. (Individual rates vary according to size of container and frequency of collection.)
A comparison of annual rate increases since 1988 is contained in Attachment II. The division remains firmly committed to small and consistent annual rate increases approximating changes in inflation and personnel costs, and avoiding the erratic and large rate increases as much as possible.
SERVICES PROVIDED as part of the monthly rates
The Solid Waste Division provides once-a-week solid waste collection and once-a-week yard waste collection for residents. To minimize illegal dumping and the safe disposal of materials, the division provides a wide range of services with no additional charges to residential customers, such as collection of bulk items, tires, and appliances and programs for household hazardous waste and used oil. The division performs weekly alley cleanups in neighborhoods and downtown and schedules broad-based neighborhood cleanups through Neighborhood Associations at no charge if they are scheduled on a Friday.
Recycling Rates and Services: The Lawrence community, through public and private endeavors, has achieved a recycling rate of 34 percent in 2007 of municipal solid waste generated. This is recognized as the highest recycling rate in the state and surpasses the national average (about 32 percent) which includes communities with city-wide curbside recycling programs. The Solid Waste Division is increasing the focus on waste reduction in addition to recycling. The division operates a compost facility which has enabled recovery of grass, leaves, and other plant and wood debris.
Commercial Cardboard Recycling Program: The Solid Waste Division implemented a commercial cardboard recycling program in 1997. The program targets commercial customers (currently serving more than 500 customers) who generate small to medium amounts of cardboard, specifically those that do not have access to storage space or balers for their cardboard. The cardboard recycling program targets the second largest volume of material generated in the community (after yard waste). Cardboard drop-off boxes, similar to the newspaper drop-off boxes, were tested in 2002 and the first drop-off location for cardboard was sited in 2003. Currently there are seven city-operated cardboard drop-off sites in Lawrence. Drop-off sites enable businesses and residents who don’t have access to the current collection program to have a convenient opportunity for recycling cardboard.
Newspaper Collection Program: The Solid Waste Division has a newspaper drop-off program. Currently there are ten city-operated newspaper drop-off sites in Lawrence. Newspaper is the largest single material generated from residential sources after yard waste.
Office Waste Paper Program: The Solid Waste Division implemented a recycling program for office waste paper in 2002 serving a pilot core of businesses, offices and schools. The program expanded to a fully functional program serving the community in 2003. Currently more than 140 offices or businesses are participating in the program.
Mixed Waste Paper Program: The Solid Waste Division implemented a recycling program for mixed waste paper in 2008. Currently there are seven drop-sites for mixed waste paper.
Hazardous Waste Programs: The Solid Waste Division implemented a Small Quantity Generator (SQG) program in 2000 which targets smaller businesses with hazardous wastes needing proper disposal. Also, the Household Hazardous Waste collection times have been expanded to weekday times “by appointment” to make the program more “user friendly” and service oriented.
Electronic Recycling Collection Events: In 2008, two pilot collection events were hosted for the collection of electronic waste (spring and fall). Two events are planned for 2009, as well.
