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AGENDA #3d BUDGET WORKING PAPER TO: W. Calvin Horton, Town Manager FROM: Bruce Heflin, Public Works Director SUBJECT: Estimated Effects of Various Levels of Exemption Rates for Curbside Refuse Collection Services DATE: June 5, 2000 We have been asked to identify the impacts of using an age threshold of sixty-five years to qualify for an exemption under the proposed change to curbside residential refuse collection service. For purposes of this analysis, we have assumed that all residents sixty-five and older would be exempted, plus those that would qualify for an exemption based on physical disability. We know that, according to available demographic data (1990 Census), about 8.6% of the Towns population is sixty-five and older and that this is a rapidly growing age group. Since we do not know what percentage of those under age sixty-five would qualify for an exemption based on physical disabilities, we have identified the cost impacts at the following relative exemption levels (cf., the basic analysis of April 12, 2000, used an exemption rate of 7%): 9%, 11% and 13%. DISCUSSION We believe that the curbside program as proposed could absorb exemption rates up to 13% without additional cost. With a 7% exemption rate, we concluded that the existing 6.5 residential collection crews could be reduced to 4.5 crews, with one of these crews consisting of two, rather than three employees on a trial basis. In that analysis, we reduced the number of scooter routes from three to two. If we were to need additional resources because of the increased number of exemptions relative to 7%, then the scooter route would be the one that would have to be added back. We believe that the two remaining scooter routes that would be used to service those qualifying for exemptions would be able to absorb additional workloads associated with any of the three options under consideration. The key variable that is unknown is the physical layout of the exemptions. If we could develop a routing system with exemptions relatively evenly distributed throughout Town, then we believe that two scooter crews could accommodate the additional workloads at any of the higher exemption rates. If we were to need the third scooter route that was cut in the original analysis once the new service were fully implemented, then the following resources would be required: · Sanitation Equipment Operator I about $31,500 annually, including benefits · Scooter Truck current cost new = $19,000; lease purchase payment 1st year = $3,298; lease purchase payment 2nd year = $6,596 If we were to find that the actual exemption rate were closer to 7%, rather than to 13%, then the two scooter routes could have some capacity to absorb future growth in the number of exemptions granted. During the interim, the second route could be used to supplement other divisional work programs and services, primarily brush collection. The key belief at this time is that, regardless of the exemption rate of 7% through 13%, one scooter route would not be sufficient to collect from all exempted residents. In the analysis of April 12, 2000, we used a total of 9,020 roll carts that would be acquired over a two year period on a lease purchase plan with a unit cost of $55 per cart and an interest rate of 5.5%. This total was predicated on an exemption rate of 7% and a total number of residences being served of about 9,700. That total represented our estimated number of residences of 9,100, plus 600 single-family residences that would be included in the proposed annexation of Southern Village at build out. Since the time of that analysis, however, we have completed a house count and find we should be using the more accurate number of 10,300 residences, which includes our actual present workload of 9,700 residences and the 600 associated with Southern Village. The following cost impacts associated with the three rates of exemptions of 9%, 11% and 13% are discussed in relation to the base costs associated with 10,300 residences and a 7% exemption rate. 9% Exemption Rate A total of about 200 carts would not be needed at this rate. The cost avoidance of this total is $11,330, which would reduce the amount needed for lease payment by $2,100 in each year. 11% Exemption Rate A total of about 400 carts would not be needed at this rate. The cost avoidance of this total is $22,660, which would reduce the amount needed for lease payment by $4,200 in each year. 13% Exemption Rate A total of about 600 carts would not be needed at this rate. The cost avoidance of this total is $33,990, which would reduce the amount needed for lease payment by $6,300 in each year. We assume that the impact on the need for replacement carts would be nominal for each of the above options. Details related to the derivation of the costs cited for each of the above rates are shown below. Roll-cart Cost Calculations Original report dated April 12, 2000, assumed the following: · 9,700 residences · 7% exemption rate · $55 unit cost per roll cart · 5.5% interest rate and 3 year lease purchase schedule · two year phase in of service conversion · 9,700 x .93 = 9,020 (rounded) · 9,020 x $55 = $496,000 (rounded) · cost in 1st year in which lease purchase payments are required (half of roll carts, 2nd year) = $91,300 · cost in 1st year in which lease purchase payments are required for all of carts (3rd year) = $182,600 Revision to above total residences to include Southern Village at build out: · 10,300 residences, 7% exemption rate · 10,300 x .93 = 9,580 (rounded) · 9,580 x $55 = $526,900 · cost in 1st year in which lease purchase payments are required (half of roll carts, 2nd year) = $97,000 (rounded) · cost in 1st year in which lease purchase payments are required for all of carts (3rd year) = $194,000 Following three optional exemption rates are presented in terms of marginal differences compared to the preceding revised base data: 9% exemption option 10,300 x .91 = 9,373 9,580 9,373 = 206 carts, or marginal 2.16% fewer cost avoidance factor (206 x $55) = $11,330 reduction in one annualized lease purchase payment = $2,100 (rounded) 11% exemption option 10,300 x .89 = 9,167 9,580 9,167 = 412 carts, or marginal 4.31% fewer cost avoidance factor (412 x $55) = $22,660 reduction in one annualized lease purchase payment = $4,200 (rounded) 13% exemption rate 10,300 x .87 = 8,961 9,580 8,961 = 618 carts, or marginal 6.46% fewer cost avoidance factor (618 x $55) = $33,990 reduction in one annualized lease purchase payment = $6,300 (rounded) |