| Synopsis: |
The City of Ashland has granted a franchise agreement to
Ashland Sanitary & Recycling to collect residential and commercial solid
waste and recyclable materials within the City. The franchise agreement,
Ordinance 2582, provides that Ashland Sanitary can petition the City Council
to increase rates. The ordinance requires that fees be approved by resolution
of the City Council.
Ashland Sanitary & Recycling is requesting a 7.2% increase in the residential
and commercial solid waste rates. For example, the rate increase for a trash
pick-up of a single residential trash can is currently $13.20 and would increase
to $14.15 or 95 cents. The rate increase reflects the increased cost of providing
solid waste collection and disposal service, including residential, commercial,
medical waste, green waste and recycling services. A complete list of proposed
rate increases is included in the packet, refer to Exhibit "A" and a rate
comparison chart is also included, refer to Attachment II. Included in the
rate comparison, are current rates charged for similar services in Medford.
It is interesting to note that Medford residential rates are lower than
Ashland's, but some commercial rates are higher while others are lower.
The franchise agreement, Ordinance 2582, does not specify how a proposed
rate increase should be evaluated or the criteria to use in approving a rate
increase. This report identifies changes in the CPI as well as increases
in operational expenses over the past five years, which may be helpful for
Council.
Ashland Sanitary & Recycling would like to implement the new rates in
March 2004. |
| Background: |
The City of Ashland entered into a franchise agreement, Ordinance 2582,
in 1990 with Ashland Sanitary & Recycling and Council extended the franchise
agreement in 1998.
The only rate increase since 1990 occurred in 1995 when Council approved
a 10% increase. In 1995 Council asked that customers not be given a discount
for each additional trash can as a means of encouraging people to recycle.
As stated above, the ordinance does not indicate how a proposed rate increase
should be evaluated or the criteria to use in approving a rate increase.
The following information addresses changes in the CPI over the past five
years as well as expenses incurred by Ashland Sanitary & Recycling.
Consumer Price Index (CPI)
Ashland Sanitary & Recycling uses the Portland Area CPI to calculate
its proposed rate increase.
The Portland Area CPI, the only CPI published for goods and services in Oregon,
has risen 23% since 1995. (Source: The US Department of Labor west urban
area, series ID: CUUR0400SA0, CUUS0400SA0).
Ashland Sanitary & Recycling Expenses
The following information reflects expenditures incurred by Ashland Sanitary
and Recycling, which cannot be recuperated under the current rate structure.
Insurance
| Health Insurance |
$18, 814.03 (2004) |
|
$16, 208.02 (2003) |
|
$2,6060.01 (16% increase) |
| Truck Insurance |
$7,681.03 (2004) |
|
$6,841.00 (2003) |
|
$ 840.03 (12% increase) |
Equipment
| Convert existing recycle truck to new pick-up |
$ 50,000 |
| Purchased used 1998 recycling truck in 2003 |
$ 60,000 |
| Purchased new recycling truck in 2003 |
$ 91,000 |
| Purchased 4,250 65-gallon curbside recycle bins |
$178,500 |
|
$379,000 |
Fees
Disposal fees at Dry Creek $700,000 per year
Dry Creek charges by the ton. In 1999, the cost was $27.37 per ton, in 2003
the cost increased to $30.62 per ton, an increase of $3.25 or 11.87% increase.
Ashland Sanitary and Recycling disposes approximately 23,000 tons per year.
Each year this rate increases by .85 of the current CPI. Over the past four
years, the increase costs for disposal fees represents an additional cost
$15,000 - $18,000 of disposal fees per year over the period.
Labor
Ashland Sanitary & Recycling have 32 full time employees. In 1995 the
hourly rate was $13.25, in 2003 the hourly rate was $16.58. This represents
a 25% increase in wages.
Staff
1 new employee $21,000 per year.
The above information is meant to be a guideline to assist Council.
It appears that the rate increase can be justified given the rate of inflation
since the last rate increase and the actual increases in costs incurred by
Ashland Sanitary & Recycling. While it would be preferable to have rates
similar to other local jurisdictions such as Medford, Ashland Sanitary &
Recycling has indicated that Ashland's lower commercial customer base relative
to the residential customer base makes it difficult to achieve this objective.
Further, the Council direction in1995 to Ashland Sanitary & Recycling
was not to discount the rate for multiple residential trashcans, thereby
making Ashland's residential rates for multiple cans higher than Medford
residential rates for multiple cans.
In the future, the franchise ordinance should be reviewed and amended to
clarify the criteria to be used for evaluating and justifying a rate increase. |
