AGENDA #1a
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Bruce Heflin, Public Works Director
SUBJECT: Commercial Garbage Collection – Fee for Service Option
DATE: May 2, 2001
This report responds to issues and questions raised by the Council concerning possible changes to the Town’s commercial refuse collection service that could include providing a basic service at no charge and setting fees to recover some or all of the cost of providing additional services. This option was originally presented to the Council at a budget work session on April 4, 2001. Attachment 1 is a copy of that report. In the April 4 report, the option under discussion tonight was identified as Option 3.
The following are issues raised by the Council at the April 4 work session and staff comments for each.
We have distributed a letter to all of the dumpster sites in town. In addition, we have mailed via letter and email a notice of the Council’s interest in possible changes to commercial service and reminders of key meeting dates. Please see Attachment 2.
Not for profit groups might be better defined as those who are tax-exempt. There are a number of such entities in town (we have identified approximately 70 dumpsters), including churches, schools, charities and others. We believe we could offer service to them at a reduced fee. State law however, stipulates that the lower fee for the tax-exempt could not result in a fee for others that would exceed our actual cost to provide the service to them.
In other words, if one of the goals of a fee was to attempt to recoup all of the marginal costs of collection, we could not discount the fees to some users and make others pay a premium to make up the difference in forgone revenue.
If the Council wished to provide a reduced fee for tax-exempt entities, we suggest that a rate of half that charged to others would be one option to consider.
We could calculate the cost of service for all of the Town facilities that might need extra service and charge the user department accordingly. We think that about half of the approximately 20 dumpsters at Town facilities would require extra service. We would need to complete a more comprehensive audit of the facilities to calculate the total cost to the Town for the needed extra service. We believe, though, that the administrative burden of calculating costs and effecting the transfer of funds from one budget account to another might outweigh the benefits gained by the exercise, as funds would simply be moved from one account to another within the overall budget.
4. How can we encourage commercial recycling?
We believe that a fee for service, especially if it is applied to marginal increases in the amount of waste collected, would function as a form of Pay As You Throw (PAYT) for the commercial sector. The presence of a fee should act as an incentive to waste generators to divert as much of their waste as possible, which should logically mean diversion to recycling programs. At present, commercial recycling programs are limited. There are some private recycling services (cardboard, for example) and some limited public programs (glass bottles and some waste collected at the drop-off sites, as well as a limited food waste collection program).
The County Solid Waste staff has recommended, as part of the adopted integrated solid waste management plan, new initiatives for commercial recycling. These initiatives depend upon the ability to handle more material, which the County staff interprets to mean the building of a materials recovery facility (MRF).
At the April 9 Council meeting, a citizen petitioned the Council to initiate mandatory recycling for the commercial sector. The petitioner was advised that the County Commissioners might be appropriate recipients of the petition. In response, the Manager drafted a letter to the County Manager, informing him of the petition and the Council’s interest in commercial recycling programs (see Attachment 3).
The Council could, as part of a fee-based system, create some sort of credit that would offset part of the cost of additional collection service for businesses that contracted for private recycling service. Such a system would need to include a means to verify that material is indeed being recycled and exactly how much.
We believe that the possible fees would be intended as a means of generating revenue to partially offset the costs associated with commercial garbage collection. The question of benefits received for taxes paid is very complex. For example, some businesses require significantly more police and fire protection services than others. Some may generate more traffic and thus greater wear and tear on streets. We do not know how to calculate a “balance sheet” of benefits received versus costs for services rendered, including how to factor in garbage collection as a portion of those benefits and costs.
In addition, we do not have a list of all businesses that use dumpsters. This is in part due to the lack of need of such a list in the past. Also, there are numerous instances of businesses sharing dumpsters throughout town, many of whom have informal arrangements of which we are not aware. Developing a list would be a significant undertaking. The list would then have to be compared to tax rolls to determine each business’s tax liability. Then some sort of estimate of benefits received would have to be calculated.
We welcome further advice from the Council on how to better respond to this question.
In our April 4 report, we suggested that one collection per dumpster per week could be established as the base level of service. We believe that is a reasonable level of service for most commercial entities and can be equated to the new level of service in the residential sector.
With respect to apartment complexes, we have calculated the capacity of dumpsters compared to the 68-gallon roll cart being offered to residents for curbside service and have determined that one dumpster per 25 units would be about the same as offering about 65 gallons of capacity per residence (assuming an 8-yard dumpster). We would therefore suggest that the base level of service for apartments would be once weekly service per dumpster per each 25 units.
For side-loading dumpsters (that are all 4-yards each), we would suggest a base level of service of twice-weekly service per dumpster per each 25 units. Most of the remaining side-loading sites would not have the space to add additional dumpsters. Also, many of the sites lack the space necessary to provide access from front-loading trucks, which could service larger dumpsters. The side-loading sites are effectively limited to 4-yard containers and cannot add containers, so twice-weekly service seems reasonable.
We suggest that it would be advantageous to grant the Manager the authority to make exceptions in this and other cases, depending upon individual circumstances.
Colony Lake is a neighborhood of attached and detached town homes, which are all contained on a single zoning lot. The development is, therefore, considered a multi-family development and is required to have dumpsters. There are currently 256 units in Colony Lake, served by 11 dumpsters. There are different areas within Colony Lake with differing densities of residences. There are also several homes along Standish Drive that are detached and are served by residential crews. They were mistakenly offered residential service when they were initially occupied in the mid-1980’s and have continued with that type of service since. Their collection is now weekly at curbside. We believe that although it can be argued that Colony Lake constitutes a somewhat unique situation, we would propose that, if the Council decides to implement fees, that Colony Lake receive the same service as other multi-family developments with dumpsters, that is, once weekly service at no charge and additional service per the putative fee schedule.
In the case of Coventry, which is also a multi-family development but has roll cart service, we believe that we should continue to provide roll cart service.
8. What about shared dumpsters?
We estimate that there are about 30 or more dumpsters in town that are shared by two or more entities. Examples are downtown merchants with extremely limited storage and access space, fraternities and sororities with similar space constraints and some residential units that lack the space they need for individual dumpsters. Some of the shared arrangements were “brokered” by the Town to solve particularly difficult collection problems. Some of the arrangements are formal, with signed agreements detailing the terms of the arrangement. Many of the arrangements are informal; it is likely that we are unaware of all that exist.
The presence of these shared dumpster arrangements presents difficulties in terms of potential billing. As we do not know all of the users of all of the dumpsters, there would be no way that we could accurately bill all users. We suggest instead that we would bill the entity responsible for each dumpster, and let them sort out the sharing of any financial burden among themselves. One exception might be shared arrangements that include written agreements that would permit us to determine how many users are involved and the terms of the involvement.
We believe that continued sharing of dumpsters, particularly in downtown areas, should be encouraged. It represents the most efficient use of space and of collection resources. Accordingly, we propose that the Town Manager be authorized to accommodate such businesses that have agreements to share dumpsters. For example, we could provide twice weekly collections at shared dumpster sites as part of the basic commercial refuse collection service at no fee.
9. What type of billing and collection system would be needed?
We believe we could accommodate the billing and collections workload in-house, in the Finance Department. Additional staff hours and overhead expenses would be about $18 – 20,000. These costs could be covered by revenue from the fee.
10. Review the fee structure and estimate possible revenue
We have reviewed the possible fees as suggested in the April 4 report. We believe they are reasonable. The fees are discussed in some detail in that report, attached. The proposal included the following:
Possible Fee Schedule
|
Proposed monthly fees for service (collection and disposal) – illustrative only |
||||||
|
Basic Service (Front Load) |
||||||
|
Container Size |
1x/week |
2x/week |
3x/week |
4x/week |
Extra Lift |
|
|
2-yd |
0 |
$12 |
$19 |
$44 |
$17 |
|
|
First |
4-yd |
0 |
$23 |
$41 |
$77 |
$18 |
|
Container |
6-yd |
0 |
$34 |
$63 |
$110 |
$20 |
|
Costs |
8-yd |
0 |
$50 |
$85 |
$143 |
$22 |
|
Basic Service (Front Load) |
||||||
|
Container Size |
1x/week |
2x/week |
3x/week |
4x/week |
Extra Lift |
|
|
2-yd |
$5.84 |
$5.84 |
$9.25 |
$21.42 |
17 |
|
|
Additional |
4-yd |
$11.79 |
$11.79 |
$19.96 |
$37.49 |
18 |
|
Container |
6-yd |
$16.55 |
$16.55 |
$30.68 |
$53.57 |
20 |
|
Costs |
8-yd |
$24.35 |
$24.35 |
$41.39 |
$69.64 |
22 |
This fee structure could generate as much as $690,000 annually (net of billing and collection costs). We believe, though, that service recipients would endeavor to minimize their exposure to additional charges through various means (e.g., additional recycling, waste diversion, over-filling dumpsters, etc.) and that actual revenue would be considerably less. The first year of such a program might generate only a fraction of the maximum amount possible.
If the Council wishes to adopt a program of basic service plus fees for additional service, we would propose starting the billing no earlier than October 1of next year. That would generate ¾ of a year’s revenue. The later start, plus waste minimization efforts, at least initially, could reduce the first year’s revenue significantly. We would suggest therefore an initial revenue estimate of about $275,000. We would expect future years’ revenue totals to rise, but would be in a better position to make estimates of future years after some experience with the implemented fee structure.
If the Council decides to proceed with fees for commercial service as described in this option, we would propose to return to the Council later this year with an implementation plan. Since collection methods would not change, the primary task will be to inform the users of the changes and to develop a comprehensive list of customers and assess their collection needs. We believe these tasks could be accomplished by the end of the first quarter of next fiscal year.
NEXT STEPS
We await further direction from the Council as to how to proceed.
ATTACHMENTS
1. Budget Working Paper dated 4/4/01 “Commercial Garbage Collection” (p. 7).
2. Notice to commercial dumpster users about Council consideration of service changes(p. 22).
3. 4/23/01 letter from Cal Horton to John Link (p. 23).
AGENDA #2c
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Bruce Heflin, Public Works Director
SUBJECT: Commercial Garbage Collection
DATE: April 4, 2001
This report discusses options for collection of commercial solid waste.
Option 1 – Continue present commercial refuse collection services. Savings in fiscal 2001-02: $-0-.
Option 2 - Eliminate Town collection of commercial refuse. Savings in fiscal 2001-02: up to $806,000.
Option 3 – Establish a basic service at no charge and set fees to recover cost of additional commercial refuse collection and disposal services. Anticipated revenues in fiscal 2001-02: up to $708,000
Option 4 – Establish fees to recover all commercial service costs. Anticipated revenues in fiscal 2001-02: up to $1,034,000
Currently the Town of Chapel Hill provides commercial garbage collection (defined as dumpster collection) to businesses, apartments and selected condominiums/town-homes. The basic service is twice weekly pickups, with an option of two additional collections per week for an annual fee of $1,200 per container (proposed to be increased to $1,400 effective July 1, 2001). There are currently 699 total containers, of which 582 are serviced by front-loading trucks and 117 by side-loading trucks. The commercial operations consist of the following resources:
One Supervisor
One Inspector
Four Solid Waste Equipment Operators III
Four front-loading garbage trucks
Two side-loading garbage trucks
Two pickup trucks
In addition, the Town maintains two 30-yard compactors in the 100 block of East Franklin Street and pays the disposal fees for the compactors and roll off containers at Michael Jordan’s restaurant and Big Fraternity Court.
The total cost of commercial operations in fiscal 1999-2000 was $973,000, independent of program revenues. Disposal costs represented 57% ($554,700) of total commercial expenditures.
During budget discussions last year, the Council requested options related to commercial garbage collection for consideration during the budget process for fiscal 2001-02.
The following four options are presented for the Council’s consideration.
We also considered a fifth option involving use of a private vendor, either by contract or through franchise arrangement, for commercial services, but do not recommend it for two reasons. First, there likely would be few, if any, cost advantages relative to the tax rate. Instead of using general fund revenues to pay for Town resources labor and equipment, we likely would have to pay an equal or higher amount to a private company. Second, with Town crews providing the service, we have direct control over its delivery. Under a private contract or franchise arrangement, our control would be less direct because private labor and trucks would be used.
In addition, case law in federal courts holds that local governments cannot dictate through franchise agreements disposal sites for waste. As long as a local government is contracting for its collections (so the contractor is performing the function for the government), disposal sites may be designated. If the contractor is merely franchised, without respect to whatever other franchise limitations may be effected, then the disposal site cannot be designated. This is considered in violation of the commerce clause of the U. S. Constitution and is called “flow control”.
This is particularly relevant to the Town. In our intergovernmental agreement with Orange County and the Town of Carrboro, we agreed to deliver all waste under our control to the County landfill. We believe that the only way to not pay for collection (either using our own staff or by contract) and be sure that we do not violate the agreement would be to leave the business as a provider or as a franchiser altogether.
Commercial garbage operations for the Town of Chapel Hill presently are provided by the Solid Waste Services Division in the Public Works Department. We use four employees working a ten-hour day task system, four days a week. Operations begin at 4:00 a.m. on Monday, Tuesday, Thursday and Friday, with front-loading trucks serving 2.5 routes and a side-loading truck serving .5 route. Commercial garbage collection is predictable, customer-service oriented and relatively efficient. The three commercial crews collect about 59% of the total waste stream (23,572 tons) in Chapel Hill using only 36% of the Solid Waste Division’s budget. The only Town holidays not worked by commercial crews are Thanksgiving, Christmas and New Year’s Day. The Orange County Regional Landfill is closed on these days.
The base budget request for fiscal 2001-02 includes a total of $1,034,000 for commercial collection and disposal services. This total, which assumes an average salary adjustment of 4.5% and a tipping fee increase of $2/ton, is comprised of the following:
Personal Services $277,200
Operations $ 43,000
Equipment – Fleet Replacement Fund $113,400
Disposal – Tipping Fees $578,100
Downtown Compactor Service $ 22,200
Total Projected 01-02 Budget $1,034,000
This total is offset by projected revenues for extra dumpster collections of $57,000, for a net total cost next year of $977,000.
The four Equipment Operators III who operate the commercial equipment collectively have 62 years of service with the Town. They are long-term Town employees who, in most cases, started out as Collectors. Within the Solid Waste Services Division, the Equipment Operator III position is the last career progression step before management. Because of their heavy equipment expertise and long years of service, these individuals have proven invaluable during storm-related events and special cleanup events. They are capable of operating all the equipment within the Solid Waste Services Division.
Advantages
· Would continue relatively high level of service to business community at low cost to that sector
· Would not require a reduction in work force
· Would not require operational or administrative changes
· Likely that existing commercial garbage collection assets would be able to absorb workload increases related to Meadowmont and Southern Village.
Under this option, the Town would discontinue its commercial solid waste collection program. The routes would be eliminated, with a concurrent reduction in the Solid Waste Services Division’s work force and sale of its fleet assets. Businesses, apartments and condominiums/town-homes presently served by the Town would have to obtain refuse collection services from the private sector, at significantly higher cost.
If the Town discontinues collection of commercial waste, then the projected savings could range between $807,000 and $928,000 annually. Details of the cost projections are shown in the Appendix.
The saving primarily results from a reduction of four positions for nine months next year, deletion of disposal costs and removal of related garbage trucks from the fleet replacement fund. Proceeds from the sale of the garbage trucks would be used to pay off the balance of debt related to such trucks.
Sub-total of cost savings: $826,000 (1st year); $945,000
The Town would have to continue service for its own commercial waste, either through in-house collections or through private contract. The estimated annual cost is about $20,000 (depending on tipping fee).
Less Town waste
Collection/disposal ($20,000)
Sub-total $806,000 (1st year); $925,000 (2nd year)
The noted annual saving could be increased if the Town either 1) eliminates its involvement in downtown compactor services, or 2) recovers costs through fees. Another way this saving could occur would be the transfer of the compactors to some entity, such as the Downtown Commission. Then that entity would be responsible for hauling, maintenance and disposal costs associated with the two compactors. In any event, the costs of $56,200 the first year and $58,600 the second year could be avoided.
The potential cost saving discussed above would be offset by the loss of revenues paid by businesses for two extra weekly dumpster pickups. The account summary in the appendix varies because accounting for these revenues is on a cash basis.
If the Town were to eliminate commercial garbage operations, then the following considerations would have to be reviewed.
1. Would all commercial garbage collections be abandoned?
Currently, selected condominiums/town-homes receive commercial service by Town crews based either on special use permits or Town ordinance (cf., Sec. 8-35 of the Town Code – Bulk containers for multiple residential units). Examples include Colony Lake, Winchester Court and others. If the Town no longer operates commercial equipment, then we could either contract with a private hauler for such collection; provide once weekly residential service using Town crews; or not participate in provision of such services at all, consistent with the possible withdrawal from commercial refuse collection altogether.
In addition, about 20 businesses Town-wide are serviced by residential crews, because there is not enough room to place commercial containers in these locations. These include churches and homes converted to business uses. We could use the same options as noted above for selected condominiums/town-homes.
Additionally, Town departments would have to include budgeted funds for the disposal costs only of servicing dumpsters located within their areas. These include sites at Public Works, Housing, Parks and Recreation, Police and Town Hall. We estimate the total cost for contracted servicing would be about $20,000 annually.
2. How would the Town’s compactors be serviced?
The placement of compactors in the downtown area occurred during the time that Rosemary Parking Deck was completed in 1994. This structure resulted in the elimination of access to dumpsters in the alley behind several businesses fronting Franklin Street. At that time, the Town agreed to arrange for compactor services at the Town’s cost so that businesses formerly using the dumpsters would have a viable alternative for commercial refuse services.
Currently, businesses in the 100 block of Franklin Street are charged a fee to use the Town’s compactors. The Town pays for disposal and the hauling charges related to the compactors. The compactors experience high usage and provide a better collection method than front- or side-loading dumpster service. These compactors could continue with the present service or the Town could bid the complete service to a private company. As noted in the appendix, annual Town expenditures for hauling, maintenance and disposal activities associated with the two compactors are about $56,000.
3. What would happen to side-loading commercial operations?
There are currently 117 side-loading containers within Chapel Hill. This number has declined steadily over the past four years as businesses and apartments have converted to front-loading service. To our knowledge, there is no private company that provides side-loading services in this area. These remaining locations either would have to be converted to front-loading or commercial rear-loading service, or they would no longer receive Town services if the option is elimination of commercial service altogether.
We identified commercial service costs based on number and size of containers and frequency of service, using fiscal 1999-2000 actual expenditures. We used this expenditure history because it represents the most recent full year of actual known costs. These data were used as the basis for the following fee options.
We note that State law restricts local government from charging fees for service in excess of the cost for provision of such services. In other words, the Town could not establish fees for commercial refuse service that would generate revenues in excess of associated costs. The data used in the following options include administrative overhead.
The fees discussed under the following two options are illustrative only. Since we do not know what changes businesses might make in response to the fees, we are identifying the maximum amounts that fee revenues could reach.
Under this option, the Town would provide each business or commercial establishment a basic commercial collection service at no fee, but would charge fees to such businesses that choose additional service, either in terms of number of containers, frequency of collection or both. The basic service proposed for consideration would include collection of one container once each week per establishment.
Currently, the Town collects each dumpster twice a week at no charge, and charges a fee for collecting a total of four times per week. The current fee for extra collection is $1,200 per container for the year; the staff is proposing an increase of $200 to reflect our actual costs more closely. The projected revenue for this account in fiscal 2001-2002 is $57,400. We propose for consideration replacing this fee with a group of fees based on service levels beyond the basic one day/one container service.
Each business, apartment complex and town home/condominium presently receiving commercial front- or side-load service could have one container collected once each week at no fee as basic service. We believe that basic service also could be defined depending on the type of complex being served. For example, it may be more equitable for some complexes exceeding a threshold number of units to receive service at more than one container as basic service. We note that a more complex definition of basic service would require a more complex system for billing, collection and overall administration.
Each additional dumpster would be charged an additional fee based on the number of times serviced each week. For example, if a business had one dumpster and only received 1 dump per week, there would be no fee. If the business wanted 2, 3 or 4 dumps per week on this single dumpster, they would incur a fee for service. If the commercial site had multiple containers, the service plan would reflect one container at basic service, or no fee. Depending on the service requirements of the commercial site, additional container and service fees would apply.
We estimate that the basic service of one container once per week costs up to $265,000 a year, based on the current workload of 350 dumpster sites. We believe that most commercial sites will need at least twice a week service for one container. At this point, it is unclear how much revenue the Town could receive if a new fee schedule were adopted. Each time commercial collection fees have been increased in the past, the number of businesses paying for extra pick-ups has decreased. We could better estimate such revenue once the system had been in effect for one year. We then could estimate based on actual experience.
Possible Fee Revenue
If we used the total commercial cost of $973,000 in fiscal 1999-2000 and the estimated cost of $265,000 for basic service of one container collected once a week per business, then the maximum fee revenue could approach $708,000 (including the $54,700 requested for the existing extra dumpster fee) per year. The actual amount received likely would be less than that amount because some businesses would adjust their service options once they had experience with the new fee system.
Possible Fee Schedule
We propose consideration of the following fee schedule, using data calculated from fiscal 1999-2000 costs as noted above.
|
Proposed monthly fees for service (collection and disposal) – illustrative only |
||||||
|
Basic Service (Front Load) |
||||||
|
Container Size |
1x/week |
2x/week |
3x/week |
4x/week |
Extra Lift |
|
|
2-yd |
0 |
$12 |
$19 |
$44 |
$17 |
|
|
First |
4-yd |
0 |
$23 |
$41 |
$77 |
$18 |
|
Container |
6-yd |
0 |
$34 |
$63 |
$110 |
$20 |
|
Costs |
8-yd |
0 |
$50 |
$85 |
$143 |
$22 |
|
Basic Service (Front Load) |
||||||
|
Container Size |
1x/week |
2x/week |
3x/week |
4x/week |
Extra Lift |
|
|
2-yd |
$5.84 |
$5.84 |
$9.25 |
$21.42 |
17 |
|
|
Additional |
4-yd |
$11.79 |
$11.79 |
$19.96 |
$37.49 |
18 |
|
Container |
6-yd |
$16.55 |
$16.55 |
$30.68 |
$53.57 |
20 |
|
Costs |
8-yd |
$24.35 |
$24.35 |
$41.39 |
$69.64 |
22 |
For example, if a commercial site had six 8-yd containers on site and opted for once a week service, then that first container would be fee free. The remaining containers would receive service as follows:
5 containers @ $24.35 per container per month - annual cost: $2,045
Twice a week service for the same site would be as follows:
1st container $50 per container per month - annual cost: $600 (cf., the first container would be collected once each week at no fee, as “basic service”)
5 containers @ $24.35 per container per month - annual cost: $2,045
Total Cost: $2,645
We note that this example is not uncommon based on current experience. Such businesses currently receive this service at no cost relative to current taxes paid. If this option were adopted, then those businesses still would pay their current taxes, along with $2,645 per year.
Commercial sites would have the option to choose which level of service they would need for the containers on their site.
Advantages
Option IV – Fee for all services
Description
Under this option, the Town would assess fees for all commercial services, eliminating the basic service for no fee included under Option III above. Commercial sites would have the option to determine the level of service they wanted. If a business chose to increase the number of containers and/or the frequency of collection, then that business would be charged depending on the service level selected. By paying for the collection of their garbage, commercial sites could better monitor their disposal habits. All containers would incur a fee for service. Depending on the service requirements of the commercial site, additional container and service fees could apply.
|
Proposed monthly fees for service (collection and disposal) – illustrative only |
||||||
|
Basic Service (Front Load) |
||||||
|
Container Size |
1x/week |
2x/week |
3x/week |
4x/week |
Extra Lift |
|
|
2-yd |
$30 |
$60 |
$90 |
$120 |
$17 |
|
|
First |
4-yd |
$41 |
$82 |
$123 |
$164 |
$18 |
|
Container |
6-yd |
$52 |
$104 |
$156 |
$204 |
$20 |
|
Costs |
8-yd |
$63 |
$126 |
$189 |
$252 |
$22 |
|
Basic Service (Front Load) |
||||||
|
Container Size |
1x/week |
2x/week |
3x/week |
4x/week |
Extra Lift |
|
|
2-yd |
$17.72 |
$35.44 |
$53.16 |
$70.88 |
$17 |
|
|
Additional |
4-yd |
$24.21 |
$48.43 |
$72.65 |
$96.86 |
$18 |
|
Container |
6-yd |
$30.71 |
$61.42 |
$92.14 |
$120.49 |
$20 |
|
Costs |
8-yd |
$37.21 |
$74.42 |
$111.63 |
$148.84 |
$22 |
For example, if a commercial site had six 8-yd containers on site and opted for once a week service, then the following fees would apply:
1 container @ $63 per month - annual cost: $756
5 additional containers @ $37.21 per container per month - annual cost: $2,332
Total Cost: $3,088
Twice a week service for the same site would be as follows:
1 container @ $126 per container per month - annual cost: $1,512
5 containers @ $74.42 per container per month - annual cost: $4,465
Total Cost: $5,977
As we discussed under Option III, businesses would have to pay an amount beyond their present taxes and would receive no additional services. Again, we believe it would be difficult to estimate the revenues this option would generate. We do not know what combination of service levels would be requested by existing businesses. We could better estimate general fund revenues once such a fee system were operational for a year.
Possible Fee Revenue
If we used the 1999-2000 actual commercial costs, then the revenues could approach $973,000 per year. Again, the actual amount likely would be less than this total because some businesses would opt to change their level of service once they adjusted to the new fee system.
Advantages
Disadvantages
The attached survey, completed in December, 2000, presents data indicating how commercial refuse collection service is provided in other jurisdictions statewide. Of the dozen jurisdictions responding to our survey, four provide the service using municipal crews, two contract with private companies, five do not provide the service in any capacity and one uses a combination of municipal crews and private contractor.
If the Council wishes to select any of the options representing a change from continuation of the present commercial refuse program, then we would need ample time to work with the business community to prepare them for a transition from Town collection of commercial refuse. Businesses would need sufficient time to prepare for private collection of refuse or for anticipation of new fees for service that they presently do not have to pay.
A transition period to October 1, 2001, at the earliest could be considered for any of the non-status quo options. During that time, we could meet with commercial establishments to develop an implementation plan and schedule. If the option selected were to continue providing services with new and/or increased fees, then we would have to prepare for administering such a fee system. For example, we would have to develop a financial system, including billing, collection and monitoring, to assure that in-house resources exist to make such a system work. Such a system likely would require additional staffing and equipment in the Finance Department. Associated costs would reduce the putative saving.
Attachment: Survey of Other North Carolina Jurisdictions
Personal Service Costs (assumes annual salary adjustment of 4.5%; starting date – 10/1/01)
4 SEO III’s $ 95,756
Longevity $ 2,650
FICA $ 7,478
Retirement $ 9,775
Insurance $ 11,672
Sub-total $127,331
Note: the Supervisor and Inspector positions would not be eliminated; they would be retained, along with two pickup trucks, for overall monitoring of services and enforcement of collection rules and regulations
Less Severance Pay $ 22,713 (varies per years of service)
Less insurance $ 13,987 (individual coverage – 1 year)
Total, Personnel $90,600 (1st year); $171,800 (2nd year)
Lease Payments
Front-load Equip. $ 91,500
Side-load Equip. $ 17,900
Sub-total $109,400
Maintenance & Operations $ 40,000
Uniforms $ 3,000
Total $243,000 (1st year); $324,200 (2nd year)
Disposal (assumes $2 increase in tipping fee in 2001-02 and $3 in 2002-03)
Front-loading $500,500
Side-loading $ 65,000
Michael Jordan’s $ 9,900
Big Fraternity Court $ 2,700
Sub-total $578,100 (1st year); $616,000 (2nd year)
Total $821,100 (1st year); $940,200 (2nd year)
If the Town discontinues enforcement of the cardboard ban, then landfill fines could be eliminated.
Landfill Fines $ 5,000
Sub-total $826,100 (1st year); $945,200 (2nd year)
The Town would have to continue service for its own commercial waste, either through in-house collections or through private contract. The estimated annual cost is about $20,000.
Less Town Waste
Collection/Disposal $20,000
Sub-total $806,100 (1st year); $925,200 (2nd year)
The noted annual saving could be increased if the Town either 1) eliminates its involvement in downtown compactor services, or 2) recovers costs through fees. Another way this saving could occur would be the transfer of the compactors to some entity, such as the Downtown Commission. Then that entity would be responsible for hauling, maintenance and disposal costs associated with the two compactors. In any event, the costs of $56,200 the first year and $58,600 the second year could be avoided.
Town Compactors
Hauling $ 9,900
Disposal $35,500
Maintenance $12,300
Sub-total $57,700 (1st year); $60,100 (2nd year)
Sub-total $863,800 (1st year); $885,300 (2nd year)
The potential cost saving discussed above would be offset by the loss of revenues paid by businesses for two extra weekly dumpster pickups. The account summary below varies because accounting for these revenues is on a cash basis.
Fiscal 1999-2000 Actual $83,022
Fiscal 2000-2001 Estimated $35,000
Fiscal 2001-2002 Requested $57,400
Net Total-Commercial Saving $807,000 (1st year); $928,000 (2nd year)
Lastly, proceeds from the sale of commercial garbage equipment would be used to retire the associated debt in the fleet replacement enterprise fund. The proceeds from sale of the commercial trucks are an estimated $204,000.