AGENDA #4d

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Consideration of Resolution Establishing Commercial Refuse Collection Fees

 

DATE:             September 24, 2001

 

The attached resolution establishes fees for optional commercial refuse collection services beyond the basic service level of once weekly collections per container at no fee.

 

BACKGROUND

 

During the budget process for fiscal 2001-2002, the Council adopted a policy change related to providing commercial refuse collection services.  Under the new policy, a basic service level of one weekly collection per commercial container was set at no fee.  For those businesses needing additional collection services, fees are to be charged based on the number of containers and the frequency of collections.  The effective date of this service change was set for October 1, 2001.

 

As part of the implementation of this new policy, the staff of the Solid Waste Services Division was to conduct an individual commercial waste audit of each business to estimate the level of service each business likely will need.  If the audit indicated that a business would need to supplement the basic non-fee service of one weekly collection per commercial establishment, then that business would be invoiced based on the level of service estimated.  Each business was to be asked to return a service agreement with the Town indicating the level of service to which they had agreed.

 

Each business that was using additional collections beyond the existing service level of twice weekly collections per container at the start of the new fiscal year on July 1, 2001, received an invoice for the first quarter of the new year.  We also included information that the policy establishing new fees would be effective October 1, 2001, and that some businesses would receive an invoice based on their respective service needs for the last three quarters of the current fiscal year.

 

Under the new policy, special considerations were to be given 1) to those businesses sharing dumpsters and 2) to those businesses with a tax exempt status.

 

 

DISCUSSION

 

Solid Waste Services Division staff members have been conducting the individual commercial waste audits since July 1, 2001.  The attached fee table has been used to determine what fees each business will be assessed based on the findings from these individual audits.  These fees have been set based on recovery of estimated operating costs associated with our commercial refuse collection program.  The basic service of collecting one container once each week for each business has been set at no fee.  Each additional collection and/or each additional container will determine the amount each business will be billed for the remainder of fiscal 2001-2002.

 

If two businesses share a dumpster, then the basic service level for that shared container will be two weekly collections.  The main advantages to the Town of having businesses share dumpsters are 1) the relatively fewer commercial collections necessary and 2) positive aesthetics from fewer dumpsters town-wide.  Those businesses with a tax exempt status will not be assessed a full fee for service.  They will be charged one half of the normal fee.

 

We propose that the fee schedule be set annually as part of the budget process, based on estimated operating costs for each new fiscal year.  This is the common practice for most of the Town’s fees for services.

 

Current Status

 

At the time of budget preparation, we estimated that revenues for commercial service would be $293,400.  Of this total, the amount that relates to the new fee is $275,000.  The remaining $18,400 covers the first quarter revenue from those businesses opting for the extra two weekly collections at the annualized fee of $1,200 in effect last year.  To date, we have received about $14,800, or 80%, of this first quarter total.  The estimated additional $275,000 was based on 1) an assumed mix of businesses that would need additional service beyond the basic non-fee service of once weekly collection and 2) a combination of businesses sharing dumpsters and those with a tax exempt status.

 

Thus far, we have completed contacts with all businesses for the waste audits, but have received responses from only about 100 of the total of approximately 340 businesses, or a return of 29%.  We note, though, that this figure changes virtually hourly as service agreements are received by fax and mail, and we would expect to have better information by the time of this meeting.

 

While the likely revenues that would be generated based on these incomplete survey results of this audit would fall far short of the budgeted amount, we believe that many businesses that have indicated they will not need extra services are underestimating their requirements.  For example, of the 100+ responses received to date, only 25 (or 25%) have agreed to the need for extra service.  The annualized total revenue for these 21 is about $25,000, of which we would receive 75%, or about $18,750, for the last three quarters of the current fiscal year.  Ten of the 100 or so businesses responding to the survey to date have indicated that they will require only one pickup per week.  We do not concur with their assessment based on known refuse quantities these businesses typically generate.  The remaining 68 responses are being analyzed to determine which would likely need extra collection service, which could share dumpsters and which are tax exempt.

 

We hope to have a better revenue projection after a couple of months, during which time we may receive more complete survey results.  We believe that many of the businesses that currently indicate the need for only basic service at no fee will realize that their service needs, in fact, are greater.  Also, many of the businesses yet to respond to the survey are high volume users of commercial service. 

 

We also believe that ordinance changes will need to be considered with respect to rules and enforcement procedures once we have implemented the change in service and several months have elapsed under such changes.  For example, we may need to consider requiring that those businesses producing food waste must receive multiple weekly or perhaps even daily collections.  If we find that such ordinance changes are appropriate, we will recommend them to the Council.

 

RECOMMENDATION

 

We recommend that the Council adopt the attached resolution establishing commercial refuse collection fees for the remainder of fiscal 2001-2002 based on service levels beyond the basic non-fee service of one weekly collection per container per business.

 

A RESOLUTION ESTABLISHING FEES FOR COMMERCIAL REFUSE COLLECTIONS BEYOND THE BASIC NON-FEE SERVICE LEVEL OF ONE WEEKLY COLLECTION PER CONTAINER PER BUSINESS (2001-09-24/R-3)

 

WHEREAS, the Town Council adopted a new policy establishing a basic non-fee service level and additional services for set fee(s) for commercial establishments; and

 

WHEREAS, the Solid Waste Services Division staff members have met with each commercial establishment to complete a waste audit to determine each business’s collection needs; and

 

WHEREAS, the accompanying table of fees establishes costs for services beyond the basic non-fee service level based on recovery of operating costs for providing commercial refuse collections;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that commercial fees are set according to the accompanying table of fees for businesses needing commercial refuse collection service beyond the non-fee service level of one weekly collection per container per business. Pursuant to this fee schedule, businesses sharing a dumpster will receive an additional non-fee weekly collection and tax exempt businesses will receive collections at one half of the applicable fee. Furthermore, these fees will be reviewed annually as part of the budget process and adjusted, if necessary, based on recovery of operating costs.

 

This the 24^th day of September, 2001.