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HomeMy WebLinkAboutCurbside Recycling Fiscal Year 2009 Report Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Debbie Arkell, Director of Public Services Chuck Winn, Assistant City Manager SUBJECT: Curbside Recycling FY09 Report, December 1, 2008- June 30, 2009 And FY10 Budgeted Income Statement MEETING DATE: October 19, 2009 AGENDA ITEM TYPE: Action RECOMMENDATION: Authorize an amendment to increase the FY10 Curbside Recycling Budget to hire an additional half-time employee once curbside accounts reach 870, and direct staff to bring back a Resolution to increase the Curbside Recycling Collection fees by $2.50 per month. BACKGROUND: On January 14, 2008, a Curbside Recycling Program Business Plan was approved by the City Commission. Of the four scenarios that were proposed in the Business Plan, Scenario D was chosen and offered curbside recycling service to customers at $10/month. A $10/month subscription fee with 800 customers in the first year of operation was least likely to break-even that year, and would not likely fully-fund an additional truck purchase when customer accounts grew beyond the 1600 account capacity. The Commission recognized that Curbside Collection losses would decrease cash in the Solid Waste Fund. Start-Up Costs: The startup costs of the program were taken from the Solid Waste Fund cash reserve. The Business plan allowed $230,000 to purchase the recycling truck, the recycling bins and initial advertising. A total of $192,313 was expended, leaving $37,700 unspent. The Business Plan estimated this balance would be approximately $18,000. 175 Advertising: · Curbside Video $5,737.25 · Decals for Truck $1,499.50 · 1,500 Brochures $1,430.18 · Bumper Stickers $1,490.00 · Yellow Pages Ad $180.00 · Legal Ads $60.00 Total Advertising Costs 10,396.93 Recycling Truck 169,354.00 Bins and totes 12,562.50 TOTAL START UP COSTS $192,313.43 Customer Accounts: The Business Plan projected 800 customers after one year of operation. Although originally planned to begin in between July – September 2008, the Curbside Recycling Program started on December 1, 2008. This was due to delays in the delivery of the Recycling Truck. On June 30, 2009, the Program had 742 customers. During these first 7 months of the curbside recycling program, the City received $44,387.28 in revenue from the monthly fee that residents and businesses pay for their service. As of October 12, 2009, after a little over 10 months of operation, we have 832 customers. Commodity Sales: The Business Plan estimated each curbside customer would generate approximately $30.00 per year in commodity sales revenue, with the first 6 months of operations generating $3,375. In FY09 (seven months of operation) we received $518.87 on the sale of commodities. This extremely low amount is due to: 1) the significant declines that have occurred in the market for recycled commodities, and 2) lower than anticipated commodity volume from each of our customer accounts. Our recyclables are taken to Four Corners Recycling for processing. The commodities market varies each month. From December through May, after paying the processing fee, we received $260.00/ton for aluminum and an average of $9.67/ton for paper. We are currently losing money on the following commodities: cardboard, paying an average of $19.50/ton; plastic, paying an average of $15.00/ton; and steel, paying $12.00/ton after the processing fee. Commercial Cardboard Revenue: One element of the original financing plan was to include $30,000 in commodity revenue from the recycling of Commercial Cardboard. As it has functioned, the recycling employee has no time to service commercial cardboard accounts. Because those accounts are serviced by Collection division employees and equipment (expenses), we have allocated the Commercial Cardboard revenue to the Collection division. Going forward we have eliminated any Commercial Cardboard revenue from the Curbside Recycling plan. 176 Personnel Costs: During the delay of the Recycling Truck, our recycling truck driver worked in the Solid Waste Division doing various solid waste collection duties, along with coordinating curbside customer routes and delivering curbside recycling totes. The full costs of this employee are included in the Income Statements attached. FISCAL EFFECTS: An Income Statement for FY09 and a Budgeted Income Statement for FY10 are included as attachments. The FY09 income statement shows an operating loss of $86,104. This FY09 operating loss equates to $8.65 per month to 830 customers. This net loss occurred for a number of reasons including the removal of commercial cardboard income and the decline in the commodity market. The FY10 budgeted income statement projects a modest profit, but that profit is largely based on a rise in the commodity market. Shared Costs: It was noted and discussed that the original Program Business Plan did not include funding a proportional share of administrative personnel, internal allocations/charges, or office space/vehicle storage. Currently, those costs are estimated to total approximately $37,500/year. This amount represents a cost of $3.75 per month to 830 customers, and is not included in the table above. Additional Half-Time Employee: Based on the curbside program in Spokane, Washington, the Business Plan projected one truck and driver could service 1,600 customers. After 10 months of operation, it is obvious that we will not be able to reach this target number with only one truck and one driver. It is more time consuming than anticipated for the driver to empty the bins because not all customers properly separate the commodity. This requires him to hand pick each item out of the bin. It also takes approximately 2 hours to empty the truck at Four Corners Recycling. This is because the truck must weigh in, deposit the first commodity and then re- weigh; go back and deposit the second commodity and then re-weigh, etc. for all four commodities. We are researching other options to reduce the time this task takes. Fiscal Year Ended June 30, 2009 ACTUALS Revenue Commodity Sales $ 518.87 Customer Service Fees $44,387.28 Total Revenues (rounded) $44,906 Expenses Personnel $64,142.00 Operations $66,868.00 Total Expenses $131,010 NET INCOME (LOSS) ($86,104) 177 The driver currently incurs an average of 3.5 hours of overtime per month and as the number of customers increase, the overtime will continue to grow. We feel that once we reach 850 customers, one driver will no longer be able to complete the routes in one day without incurring additional overtime. The addition of this half-time FTE would allow us to more actively seek other customers. For these reasons, we are requesting the FY10 budget be amended to add a half-time city service worker once we reach 870 accounts. Wages and benefits to fund an additional half-time employee for curbside Recycling would cost approximately $25,000 per year. This equates to $2.50 per month to 830 customers. It is possible that a 25% increase will cause some current customers to drop the service. There will be additional overtime incurred until this position is filled. The adopted budget for FY10 results in a modest profit. It does not include any additional employees and trucks, any of the shared costs described above, and includes commodity revenue that we are unlikely to generate. If the budget is amended to add a half-time employee and the rates are not increased, the program would see a loss of approximately $12,500 (for a 6-month period). ALTERNATIVES: As suggested by the City Commission. Attachments: FY09– Curbside Recycling Income Statement for Year Ended June 30, 2009 FY10- Curbside Recycling Budgeted Income Statement for Year Ended June 30, 2010 Report compiled on: October 15, 2009 178 179 REVENUES: Curbside Monthly Charges 110,250$ Curbside Commodity Revenue 22,050$ Curbside Other Revenues -$ TOTAL REVENUES 132,300$ EXPENSES: Regular Earnings 42,198$ Termination Pay Vacation Sick Leave TOTAL SALARIES & WAGES 42,198$ TOTAL OVERTIME PERS 17,481$ Health/Dental Insurance Life Insurance Unemployment Tax F.I.C.A. Workers Compensation TOTAL BENEFITS 17,481$ TOTAL PERSONNEL COSTS 59,679$ Office Supplies Computer Supplies Clothing & Uniforms 300$ Road Supplies Vehicle Supplies Gasoline & Oil 10,500$ Small Equipment & Tools 7,000$ General TOTAL SUPPLIES & MATERIALS 17,800$ Repair & Maintenance-Equipment 10,000$ Repair & Maintenance-Buildings Repair & Maintenance-Other TOTAL MAINTENANCE 10,000$ Electricity Natural Gas Propane Gas-Buildings Telephone Refuse Disposal TOTAL UTILITIES -$ Consultants & Professional Serv. 5,000$ Maintenance Contracts Janitorial Contracts Engineers Medical Services General TOTAL CONTRACTED SERVICES 5,000$ In-State Travel Out-of-State Travel TOTAL TRAVEL/TRAINING -$ Administrative Overhead Vehicle Maint Fund Allocation TOTAL INTERNAL CHARGES -$ Advertising 10,000$ Postage Shipping & Handling Depreciation Expense 29,354$ Taxes & Assessments Insurance - Deductibles Closure Landfill Costs Rents & Leases General TOTAL OTHER 39,354$ -$ TOTAL EXPENSES 131,833$ NET INCOME (LOSS)$467 Curbside Recycling Program Only. For the portion of the fiscal year prior to December, staff was not driving the curbside truck, but were charged to this division, where they were budgeted. SOLID WASTE - CURBSIDE RECYCLING INCOME STATEMENT FOR YEAR ENDED JUNE 30, 2010 180