AGENDA #4A(1)
BUDGET WORKING
PAPER
TO: W.
Calvin Horton, Town Manager
FROM: Bruce
Heflin, Public Works Director
SUBJECT: Curbside
Residential Refuse Collection
DATE: April
12, 2000
The Council has requested that the option of
curbside collection of residential refuse be considered. We have updated previous reports that
discussed this option in detail.
DISCUSSION
The attached spreadsheet (page 6) shows the estimated cost savings from implementing weekly curbside refuse collection. Under this program, the Town would provide the carts, which the residents would have to roll to the curb. An exemption rate of 7% has been assumed to allow for continued rear yard service due to special needs of residents. The first year saving for a two-year phased implementation beginning February 1, 2001, is estimated at about $53,000. Estimated cost savings by fiscal year are as follows (in current year dollars, except where noted):
2000-01 $ 52,900
2001-02 $
128,900
2002-03 $
173,400
2003-04 $
194,600
2004-05 $
298,700
2005-06 $
402,300
Town-wide curbside collection could be in place the
second half of fiscal 2002-03; fiscal 2003-04 would be the first full year of
town-wide curbside collections. Fiscal
2005-06 would be the first year without lease-purchase costs related to roll
cart acquisitions. The following
discussion notes how cost savings were calculated for important line items.
Staff Reductions
Conversion to weekly curbside collections would
allow for a net staff reduction of 9 employees. The employee reductions are based on a change from the current
6.5 crews to 4.5 crews, with one of the crews comprised of two, rather than
three, employees on a trial basis.
Personnel reductions are assumed to occur through attrition, with full
savings occurring in the third year.
The average salary and benefits for each position were used to estimate
savings. The estimated savings through
staff reductions are cumulative; once a position is reduced, savings are
reflected in all following fiscal years.
The staff reduction savings were calculated (using annual adjustments of
4.5%) as follows for each fiscal year.
Fiscal
Year
Portion Salary and Benefits
FY Position
Reductions of Year Savings
2000-01 1- Equipment Operator II 5 months
3 - Collector I’s 5 months $ 56,000
2001-02 1-
Equipment Operator II 5 months
1- Equipment Operator I 5 months
3-
Collector
I’s 5 months $211,800
2002-03 All
above positions Full
Year $325,600 (+)
& beyond
Increased Overtime
With once weekly collections, employees would be
required to work additional hours during holiday weeks to insure town-wide
collections. The overtime estimates
assume paying overtime at 1.5 normal salaries for the 3 weeks per year that
employees would be required to work on an actual holiday. For the remaining 5 holidays, a shifted
workweek was assumed and overtime was calculated at the regular rate. Overtime totals include supervisory wages.
The saving in operational expenses results from
reduction in uniform rentals, safety shoes, medical testing and general
supplies. An increase in advertising is
included to cover increased holiday schedule promotion.
Lease purchase of roll carts
In order to reduce the initial capital costs of converting to curbside collections, a two-part three-year lease purchase is used to estimate acquisition costs for roll carts. The initial need for roll carts is estimated at 9,020 to service the estimated 9,700 households (including Southern Village), less the estimated 680, or 7%, exemptions that would be serviced by a scooter truck. The cost estimates assume lease purchasing 4,510 carts in January of each of the first two years. Lease payments include a 5.5% financing cost and are made 6 months in arrears. Implementation in January, rather than December, of each of the first two years of phasing in the service change would result in no capital outlay for the carts in the fiscal year in which they are lease purchased.
Replacement roll carts
Beginning in year three, after all roll carts are
acquired, we have budgeted the purchase of additional roll carts to replace
carts that are damaged or lost.
Fleet reduction
The net fleet reduction due to conversion to weekly
curbside collections is three rear loading sanitation trucks and a scooter type
pickup truck. The fleet reduction
savings for years 1 through 5 indicate savings that result from not purchasing
equipment scheduled for replacement.
Annualized fleet savings
Once a piece of equipment is eliminated from the
fleet, an annualized replacement cost is included as savings during all later
fiscal years. The replacement cycle is
five years for rear-loading sanitation trucks and the scooter truck. The first full annualized savings from
eliminating a rear-loader from the fleet is $17,859, while that for the scooter
truck is $6,595. Under Finance’s
accounting guidelines for the fleet replacement fund, one half of one of the
annualized payments is budgeted up front (i.e., year of acquisition) and one
half at the end (i.e., in the 6th year). With full fleet reduction accomplished in fiscal year 2002-03,
annualized savings would reach their maximum in fiscal year 2005-06.
Fuel savings
The fuel savings estimate is based on a reduction in
total miles traveled by the rear-loading sanitation fleet. Due to once weekly collections versus twice
weekly collections, total miles traveled by rear-loading trucks should be about
40% less than current levels. The
decrease is not a full 50% savings due to increased travel to and from the
landfill. Fuel savings are based on
$1.00 per gallon and a 2.9-mpg average for rear-loaders.
Maintenance savings
Maintenance savings result from a reduced
rear-loader fleet size and estimated costs of parts and sublet labor related to
a vehicle which are currently around $1,500 per year. Maintenance savings estimates do not include labor hours for Town
mechanics. Maintenance savings do not
include any reductions due to the reduction in fleet miles.
Transition from 3-person to 2-person Crews
Once curbside collection is fully implemented,
potential future savings would be from further reducing crew size from the
current 3-person to 2-person crews.
This could be accomplished by replacing the current rear-loader fleet
with dual-drive trucks, and converting routes to 2-person routes (2 equipment
operators) as attrition and equipment replacement allowed. The additional cost of dual-drive trucks
currently ranges from $8,000 to $20,000 more than a standard rear-loader. The average current 3-person crew would cost
around $28,000 more per year than a 2-person crew. Consideration of this additional cost saving measure would be
appropriate once actual productivity data are available from 3-person curbside
collections. The cost data in this
analysis assume use of one of the crews with 2, rather than 3, employees on a
trial basis.
There are many ways a Pay As You Throw (PAYT) system
might work. To date, we do not have
direction from the Council as to whether or not a PAYT system is desirable, nor
has the citizens’ Advisory Group made its report to the Council with any
recommendations on such a system.
Depending upon the method selected, there may or may not be important
implications with respect to curbside collection. For example, most systems that would require billing residents
for the amount of waste placed for collection become relatively less efficient
if the waste is handled behind the house.
This is due to the fact that a system with billing requirements would be
one that would have characteristics of choice on the part of the resident and
therefore some active assessment of conditions on the part of the
collector. For example, billing could
be based on the number of containers or bags, or on the size of container used,
or a mix of containers and bags. In
most of these cases the collector would be required to either check to see if
the resident has appropriately prepared waste for collection, or to convey some
information back to the truck for recordation.
Other methods that would not require billing, such
as a bag or tag system, could be implemented regardless of where the waste is
collected, with few if any effects on efficiency related to where waste is
collected.
The main body of this discussion on curbside has
assumed the use of one size of roll cart to be rolled to the curb by residents
for collection once each week. If the
Council were to select a pay-as-you-throw system, then the cart selection for
overall program implementation could become a key variable. For example, while the system described
above assumes lease purchase of 9,020 roll carts of 68-gallon capacity, we
could select a smaller container size as the standard can for our community or
could offer options for the size of cart selected.
The 68-gallon container used in this analysis was
included at an estimated unit cost of $55.
If we were to opt for other size(s) of containers, then our costs could
vary. The container costs used were
predicated on our acquisition of one type of container only from a selected
vendor. If we were to place an order
for a combination of containers at various sizes, then we would not realize
benefits of economies of scale and would have to pay relatively higher prices
for the mix of carts.
We note that a pay-as-you-throw system could result
in some net costs and/or savings, depending upon the type of system
adopted. For example, any system with
variables associated with the handling of waste, such as a system using
variably sized carts, would necessitate a billing system, which would add
costs. If the pay-as-you-throw system
were successful in reducing the quantity of waste, then total tipping fees
would be reduced, producing savings.
Likewise, if the system were successful, then additional quantities of materials
would likely enter the recycling collection stream, necessitating additional
costs associated with the collection contract.
Actual net costs and/or savings would have to be determined as part of
an analysis of options for a pay-as-you-throw system if requested by the
Council.
If the Town annexes Southern Village effective July
1, 2001, the Sanitation Division would have to budget for an additional
residential refuse collection crew (three positions) for the last three months
in FY 2000-01, in order to be ready to provide services to the annexed area on
July 1, 2001. Costs for the annexation
from the Sanitation budget would be as follows:
Fiscal Year Cost
for Annexation Sanitation Services
2000-01 $ 34,000
2001-02 $117,000
2002-03 $121,300
2003-04 $125,800
2004-05 $130,600
2005-06 $135,500
In 2001-02 and succeeding years, we project that the
cost of all services to the annexed area would be entirely offset by revenues
from the area.
1. Table of Conversion from Twice Weekly Rear Yard to Once Weekly Curbside Residential Sanitation Collection