AGENDA #5L

BUDGET WORKING PAPER

TO:                  W. Calvin Horton, Town Manager

FROM:            Bill Terry, Interim Public Works Director

SUBJECT:       Report on Potential Increase in Commercial Collection Fees

DATE:             March 30, 2004

During recent budget discussions, we were asked to evaluate the feasibility of increasing  fees for collection of commercial refuse.

BACKGROUND AND DISCUSSION

Fees for collection of commercial refuse from businesses, apartments and selected condominiums/town-homes were adjusted in October, 2001, to establish fees for collections more frequent than once per week. One year later, in October, 2002, another adjustment was made to include a charge for once weekly pickups. The fee schedule is based on type of truck servicing container, size of container and number of weekly collection times. A recent history of actual and projected fee revenues for commercial services is presented below.

            FY 2001-02                             $100,400

            FY 2002-03                             $201,887

            FY 2003-04 (est)                     $253,000

            FY 2004-05 (est)                     $250,000

Starting in July, 2003, fees were increased by 10%, which is reflected in the estimate for the current year and in the budget request for fiscal year 2004-05. Given current users, an increase of 5% in present fees across-the-board could yield an additional $12,500 next year. An increase of 10% could yield $25,000. We do not recommend a further increase at this time because of the recent 10% increase and our concern that we might actually lose revenues if our fee structure is increased beyond a certain level.

One element of the overall fee system for commercial service could be considered for change. The town’s policy was changed starting in fiscal year 2003-04 with respect to charging commercial fees for apartments and multi-family units. These businesses were exempted from paying commercial fees. In the current fiscal year, this exclusion results in an estimated loss of approximately $118,000. If this exemption were eliminated, then we believe the estimated commercial revenues to be collected in fiscal year 2004-05 could be increased by about 47%, for a total of $368,000.

RECOMMENDATION

While we do not recommend an adjustment in the present fee structure, we support consideration of establishing commercial fees for apartments and multi-family units, which could result in an additional $118,000 next year.