Memorandum

City of Lawrence

Public Works

TO:	Tom Markus, City Manager Casey Toomay, Assistant City Manager Bryan Kidney, Finance Director
FROM:	Charles F. Soules, Director of Public Works Tammy Bennett, Assistant Public Works Director
DATE:	June 6, 2016
RE:	Solid Waste Division rates for 2017

The solid waste rate recommendation is submitted annually to provide the City Commission 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, Stormwater 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 Solid Waste Division recommends a 3 percent rate increase in 2017 for commercial and residential customers. This is the first general rate increase, not related to adding curbside recycling, since 2012. The rate increase will result in an increase of $0.50 per month per residential account.

Solid waste collection is a labor and equipment intensive endeavor. Driving cost factors include wages, benefits (particularly health care and KPERS), and the overall inflation in the cost / complexity of equipment. Landfill rates increase 3.5 percent per year. Recycling tip fees increased less than 2 percent in 2016, and are projected to increase 3 percent in 2017. Revenues for recycling material rebates are extremely low due to depression in the international commodity markets. The division benefitted from decreasing fuel prices, which helped us hold rates steady for customers.

When the department presented the budget in 2016, no rate increase was requested, with the understanding that some fund balance may be required to meet operational needs in 2016. At this time, we project fund balance will not be needed in 2016.

As an enterprise fund, Solid Waste fund generates sufficient revenue to cover operations. Rates are set by ordinance and are not “elastic,” meaning revenues don’t rise as other prices do. Historically, we have tried to make small, consistent adjustments in our rates to minimize impact on customers. In 2014, we implemented curbside recycling, with an associated cost for customers. Commercial customers also saw a 2 percent increase that year. There have been no pricing adjustments for services since 2014.

Solid Waste rate information:

Recommended 2017 solid waste rate information is summarized below:

Residential Rates	Standard residential monthly (65G cart) Residential with 95G cart Residential with 35G cart Additional trash cart fees Low-income, elderly rate	$ 18.25 $ 20.25 $ 17.75 $   3.00 / 4.00 (65G / 95G) $  6.39
Commercial	Minimum commercial rate	$ 22.81
	Dumpster and roll-off rates by size and frequency of collection
Residential services include: · Weekly collection of solid waste · Bi-weekly collection of single-stream recycling · Weekly collection of yard waste (March thru December, plus holiday trees) · Up to five tires per year collected curbside · Bulk item collection, including appliances · Household hazardous waste disposal through drop-off program · Special services, such as electronic waste drop-off events

Critical capital expenditures are planned over the next five years. The Solid Waste Division continues to focus on equipment modernization, improving automation and worker safety. Capital expenditures for truck replacements range from $1.15 million in 2017 to $1.47 million in 2021. In 2017, the second phase of the facility project on Kresge Road will constructed, to co-locate all division functions except the compost site.

As a recap, there have been significant changes in solid waste services, following the recommendations of the Solid Waste Task Force in February 2012. The division implemented roll-out containers in 2012, to increase worker safety and move toward automation. At that time, we transitioned to a pay-as-you throw style system. In 2014, route days were changed for approximately 50 percent of residential customers and curbside recycling was implemented. Understanding these changes provides context for rates changes over the last few years.

	2017	2016	2015*	2014	2013	2012
Standard residential rates – 65G	$18.25	$17.75	$17.75	$14.94	$14.94
Optional service – 95 gallon cart	$20.25	$19.75	$19.75	$16.94	$16.94
Optional service – 35 gallon cart	$16.75	$16.25	$16.25	$13.44	$13.44
Residential trash services						$14.94
Minimum commercial	$22.81	$22.15	$22.15	$22.15	$21.71	$21.71

*addition of curbside recycling services; no other residential rate increase

A comparison of rates in other communities is attached. Most rates reported do not include anticipated changes to the 2017 rate schedules, as they were not completed at the time of survey.