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Home My WebLink About20230809 - Sustainability Advisory Board - Compost Policy Evaluation and Cost of Service Work SessionPolicy Evaluation and Cost of Service Update July 18, 2023 Agenda Rate Study Update Rate DesignProject Overview Key Planning Details Questions for Commissioners Project Overview Fall 2022 Winter 2023 City Staff Engagement Presented to Commission on pilot organics collection and proposed rates Commission requested pricing strategies to increase diversion Evaluated financial impact of two plans and updated rates correspondingly Next Steps: Commission responds to key questions and adopts rate schedule Developed Policy Memo comparing practices of cities that influence diversion through base services/rates Spring/Summer 2023 Project Overview Key Planning Details Plan Options Key Factor Current Plan Bundle Plan Base Level of Service Trash Collection Trash, Recycling, and Organics Collection Service Options Customer may add recycling or organics for an additional (subscription) rate Customer receives all services within base rate Base Capacity Trash: 8 –450 gallons/week Recycling: None Composting: None Trash:8 –450 gallons/week Recycling: 33 –50 gallons/week Composting: 100 gallons/week Variable Rate Based on Trash Cart Size?Yes Yes Proposed Rollout Scenario Proposed Rollout FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Current Plan No change Begin organics collection pilot Ramp up organics No change No change Bundle Plan No change Begin organics collection pilot Citywide trash, recycling, and organics No change No change Questions for Commissioners 1.Do you support collection of recycling and organics for all City customers beginning in FY 2025 (i.e., Bundle Plan) 2.Do you support the proposed rates associated with the Bundle Plan? 3.(If No to Question 1 or 2) Do you support the Current Plan with a discount for recycling and organics subscribers (i.e., no City- wide service)? Questions will be repeated following rate study update and rate design discussions Rate Study Update Transition to Bundle Plan Increases Costs by $3.5M Through FY 2027 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Current Plan Cost $4,117,000 $4,473,000 $4,429,000 $4,645,000 $4,867,000 Reduced Disposal $0 $0 ($87,000)($89,000)($92,000) Increased Cost Additional Processing $0 $0 $141,000 $144,000 $147,000 Personnel $0 $0 $295,000 $303,000 $310,000 Vehicle $0 $142,000 $244,000 $249,000 $255,000 Public Education $0 $20,000 $20,000 $0 $0 Carts $0 $745,000 $356,000 $80,000 $87,000 Total Increased Cost $0 $907,000 $1,056,000 $776,000 $799,000 Bundle Plan Cost $4,117,000 $5,380,000 $5,398,000 $5,332,000 $5,574,000 Costs represent planning-level estimates and are subject to change. 10 Key Financial Considerations Factor Considerations Rates & Inflation •City previously adjusted rates two years ago, and costs have outpaced revenue Operating Reserve •Annual net revenue of $275k needed to build a 30-day reserve by 2027, with a goal of a 60-day reserve by 2033 Open Market •City competes with other haulers •Rates must maintain competitive, or the City risks losing customers Commercial Under-Recovery •Commercial services account for greater under-recovery Rate Design 12 Bundle Plan: Proposed Rate Schedule Customer Proposed Rate Changes FY 2024 FY 2025 FY 2026 FY 2027 Residential 12% Increase Implement Bundled Rates (Shown on Next Slide) 3% Increase 3% Increase Commercial 60% Increase (Roll-Off) 6% Increase (Dumpster) 20% Increase (Average) 15% Increase 12.5% Increase 12.5% Increase Proposed rate changes are subject to change in future years as the City monitors its net revenue actuals $37.38 $44.48 $51.06 $28.50 $37.50 $59.75 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 45 Gallon Weekly 65 Gallon Weekly 100 Gallon Weekly$ per Household per MonthRecycling Organics Trash Bundle Plan Incentivizes Smaller Trash Cart Sizes A La Carte Rate Bundled Rate Proposed rates shown are for FY 2024 (à la carte) and FY 2025 (bundle). Cart sizes shown are used by 90 percent of residential customers. Bundled rates for other cart sizes are provided in a back-up slide. Bundled Plan Rates Generate Revenue from Customers to Recover Respective Costs by FY 2027 ($2,000,000) ($1,500,000) ($1,000,000) ($500,000) $0 $500,000 $1,000,000 $1,500,000 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Net Revenue (Residential)Net Revenue (Commercial)Year End Working Capital 30-Day Reserve Bundled Rates for Large Trash Cart Allows City to Remain Competitive in Open Market Service City Company 1 Company 2 65-Gallon Trash $20.86 $24.05 $24.33 100-Gallon Trash $26.73 $29.37 $28.67 100-Gallon Trash and Recycling $36.66 $51.26 N/A Proposed 65-Gallon Bundle Rate (FY 2025)¹$37.50 N/A N/A Proposed 100-Gallon Bundle Rate (FY 2025)¹$59.75 $61.26 ²N/A Delivery Fee (per cart)N/A $42.37 N/A 1.Customers would receive weekly trash, every-other-week recycling, and weekly organics collection. 2.For comparison purposes, assumes a customer using a private hauler would receive third party organics collection from another service provider for an additional $10.00 per month. $11.12 $11.12 $29.94 $23.36 $5.00 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 100 Gallon Weekly 65 Gallon Weekly Recycling Trash Organics Current Plan: Discount Similarly Incentivizes Downsizing of Trash Carts $5.00 Discount Proposed FY 2024 rates shown $41.06 $39.48 Bundle Plan Provides Lower Rate for Highest Level of Service Current Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Description No change in service Begin organics collection pilot Ramp up organics collection No change in service No change in service Base Rate (65G Trash Customer) $20.86 $23.36 $24.06 $24.79 $25.53 Discounted Trash, Recycling, and Organics Rate N/A $39.48 $40.52 $41.58 $42.68 Bundle Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Description No change in service Begin organics collection pilot Citywide trash, recycling, and organics No change in service No change in service Base Rate (65G Trash Customer) $20.86 $23.36 $37.50 $38.63 $39.78 Questions for Commissioners Questions for Commissioners 1.Do you support collection of recycling and organics for all City customers beginning in FY 2025 (i.e., Bundle Plan) 2.Do you support the proposed rates associated with the Bundle Plan? 3.(If No to Question 1 or 2) Do you support the Current Plan with a discount for recycling and organics subscribers (i.e., no City- wide service)?