HomeMy WebLinkAbout01/13/1998, 3 - RESIDENTIAL SOLID WASTE SERVICE LEVELS AND THE COMMERCIAL RECYCLING PROGRAM4
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CITY OF SAN LUIS OBISPO
FROM: John Moss, Utilities Directo %
Prepared By: Ron Munds, Utilities Cons ation Coordinator
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SUBJECT: Residential Solid Waste Service Levels and the Commercial Recycling
Program
CAO RECOMMENDATION
Consider a report concerning residential solid waste service levels, the commercial recycling
program and provide direction to staff on these issues.
REPORT -IN-BRIEF
With the passage of Assembly Bill 939 in 1989 which requires all cities and counties to reduce
the amount of waste going to landfills by 50 %, the City's solid waste programs have evolved
significantly to achieve this goal. The result of the City solid waste management efforts has been a
37% reduction in solid waste going to the landfill in 1996. With increased regulation and changing
technology in the field of solid waste collection, processing and disposal, the City must now look
to the future and analyze collection and processing alternatives which will provide cost effective
service and meet the mandated diversion requirements.
In an effort to control residential refuse collection cost, San Luis Garbage Company (SLG) has
instituted automated collection in most areas of the City. The goals of this collection method are to
reduce a refuse collection route, decrease the number of personnel per truck from two to one and
reduce the risk of injury to the collection crews thereby decreasing worker's compensation claims.
Currently, Orange Bag and Premium Service customers can not be collected by the automated
trucks. Staff is proposing adding a thirty gallon waste wheeler as an option to the Orange Bag and
eliminating the six can Premium service by changing the highest volume of service to a ninety -six
gallon waste wheeler which can be collected by the automated trucks. By approving the expanded
waste wheeler service options, SLG will be able to automate additional customers which will work
toward the goals previously mentioned.
A commercial recycling program was established in 1991. This coincided with the opening of the
Tank Farm Road material processing facility. Currently, the program services about 1,500
commercial establishments and recycles approximately 4,100 tons of material. Though the
program is highly successful, it is labor intensive because of the level of service currently provided.
The key components of the commercial recycling program are the collection of office paper and
cardboard. Four alteratives have been formulated to deal with the cost of the service versus the
level of service provided. Staffhas concluded the best solution is to continue with the current
integrated rate policy where rate increases are applied to all customer classifications but work with
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Council Agenda Report — Solid Waste Services
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SLG to analyze collection practices which will reduce cost but not discourage participationby
commercial customers in the recycling program.
DISCUSSION
Background
In 1989, the State legislature passed into law Assembly Bill 939 which required all cities and
counties to reduce the amount of waste going to landfills by 50% by the year 2000 or face the
possibility of civil penalties. Though the City has provided curbside recycling since 1977
(contracted with San Luis Garbage Company), the mandatory reduction requirements of AB 939
signified a major change in focus of the City's recycling program and solid waste services.
In order to meet the mandated diversion requirements, during 1990 the City intensified its
recycling efforts by expanding the materials collected and promoting the program to both
residential and commercial customers. Also in 1990, the City shifted to a volume based rate
structure by adding an Orange Bag level of service for low garbage producing customers.
Additional materials were added to the recyclable list in 1995 and in 1996 a green waste
collection program was instituted.
On the policy side, in 1994, the City adopted the Rate Setting Manual for Integrated Solid Waste
Rates. The manual provides a guide for the City and the franchisee to prepare and approve
adjustments to integrated solid waste management rates. Additionally in that year, the City
adopted the Source Reduction and Recycling Element (SRRE), Solid Waste Generation Study,
Household Hazardous Waste Element, Non Disposal Facility Element, Regional Siting Element,
Regional Summary Plan and approved the Joint Powers agreement establishing the Integrated
Waste Management Authority.
The result of the City solid waste management efforts has been a 37% reduction in solid waste
going to the landfill based on the City's 1990 base year calculations as reported to the State.
Furthermore, the San Luis Obispo Integrated Waste Management Authority (IWMA) touts the
City's programs as being the model for other communities in the county to follow to meet the 50%
reduction mandate by the year 2000.
With increased regulation and changing technology in the field of solid waste collection,
processing and disposal, the City must now look to the future and analyze collection and
processing alternatives which will provide cost effective service and meet the mandated
diversion requirements.
The Future ofSo[id Waste Services
In the near future, staff will be bringing the base year, solid waste rate application from San Luis
Garbage Company (SLG) to the Council for consideration. A base year applicationprojects costs
of service and operations for three years. The Utilities Departmenthas formed a committee to
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Council Agenda Report — Solid Waste Services
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review the rate application. The committee members are:
1. Bill Worrell, Manager of the IWMA
2. Patricia Goldman, County's Auditor's Office
3. Carolyn Dominguez, Accounting Manager
4. John Moss, Utilities Director
5. Sue Baasch, Administrative Analyst
6. Ron Munds, Utilities Conservation Coordinator
Prior to Council examining the rate application, a Council discussion regarding modifications to
residential service levels and the commercial recycling program would be beneficial to ensure the
base year analysis reflects the desired service levels.
Residential Service Levels
As previously mentioned, the City established a volume based rate structure in 1990. Currently
there are three levels of residential service as shown in Table 1:
Servicel-evel
ContainerSize in Gallons
Customers
Orange Bag
32 gallons/bag
3,600
Standard
64 gallon waste wheeler
5,700
Premium
up to 180 gallons (owner supplied
185
cans)
Table 1
In an effort to control refuse collection cost, SLG has instituted automated collection in most areas
of the City. The goals of this collection method are to reduce refuse collection routes, decrease the
number of personnel per truck from two to one and reduce the risk of injury to the collection crews
thereby decreasing worker's compensation claims. As indicated in Table 1, 98% of the City's solid
waste customers either subscribe to the Standard or Orange Bag levels of service. Since Orange
Bag and Premium service customers can not be collected by an automated truck, staff is proposing
adding a thirty-two gallon waste wheeler as an option to the Orange Bag and eliminating the six can
Premium service by changing the highest volume of service to a ninety -six gallon waste wheeler. It
is not proposed to eliminate the Orange Bag service option at this time, but monitor the migration
of customers to the more convenient thirty-two gallon waste wheeler service.
Council Agenda Report — Solid Waste Services
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Additionally, to increase flexibility for our residential customers to "customize" their service level,
it is suggested that additional waste wheeler rates be established to accommodate varying refuse
disposal needs. For instance, if a customer has a ninety -six gallon waste wheeler and find they need
additional disposal capacity, set a rate that allows them to add a thirty- three, sixty -four or ninety -six
gallon container to their service.
At four community meetings the Utilities Department held in 1996, the public attending expressed
that they were generally satisfied with the solid waste service levels offered and the service
provided by SLG. Those that subscribed to Orange Bag service did say they enjoyed the economy
of this service level but the bags were cumbersome and prone to breaking if filled incorrectly or
with too much material. On the collection side, SLG has reported incidents of employee injury due
to sharp objects protruding from the bags and back injury due to excessive weight and the fact that
there is no easy way to lift the bags. Many Orange Bag customers in attendance said they would
consider changing to a waste wheeler service if such service was priced comparable to the amount
paid for placing one bag per week at the curb. Others who place less than one bag per week out for
collection were not so inclined.
By approving the expanded waste wheeler service options, SLG will be able to automate additional
customers which will work toward the goals previously mentioned. Additionally, the proposed
changes will support the City's adopted SRRE which states in Volume 1, Section 3.6.5 that the City
will analyze variable can rates which put the cost burden on the second and third levels of service
and consider adding a " mini -can" rate. All this will ultimately serve to reduce the cost of service.
Table 2 shows the proposed residential service structure:
Table 2
The intent of the proposed changes are to provide flexibility to our customers but move toward a
more efficient collection system in an effort to control future costs. Currently, it costs an Orange
Bag customer who places one bag at the curb each week $7.20 per month for service. SLG has
proposed that the rate for the thirty-two gallon waste wheeler be set between $8 and $10. If Council
chooses to move in this direction, a final decision on the rate for the proposed levels of service will
be part of the review of the base year rate application at a future meeting.
Suggested Direction: Direct staff to include in the solid waste rate application review the addition
of a thirty-two gallon waste wheeler level of service, eliminate the current Premium service and
direct staff to return with a rate structure for the Orange Bag and 32, 64, 96 gallon waste wheeler
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service levels, as well as the additional waste wheeler option as part of the base year rate
application review.
Commercial Recycling
The City required SLG to establish a commercial recycling program in 1991. This coincided with
opening of the Tank Farm Road material processing facility. Currently, the program services about
1,500 commercial establishments and recycles approximately 4,100 tons of materials. Though the
program is considered a very successful component of the overall recycling program and
instrumental in achieving the City's AB 939 goals, it is an expensive program because of the high
level of service currently provided to our customers. The purpose of this section is to review the
current program and determine if there are any changes or adjustments to the program or system of
fees Council would like included in the review of the base year solid waste rate application.
The key components of the commercial recycling program are the collection of office paper and
cardboard both of which are labor intensive under the current system. When SLG began its
commercial recycling program in 1991, the program utilized two people, one commercial
cardboard driver and one white office paper collection person. Currently, SLG has eight full time
employees designated to the commercial recycling program which collects cardboard, office paper,
mixed paper and co- mingled materials such as aluminum and plastics. The staffing increases are
directly related to the increase in service requirements from the commercial sector and the
significant increase in volume of material collected. This increase in material volume collected is
exactly the goal of the program, however there is a down side. The cost to provide this expanding
service has grown while revenues which help offset the cost of collection from the sale of recycled
material has declined.
The following table illustrates variance between the tons processed versus the revenue for the sale
of recyclable materials for the past three years:
Table 3
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19 95
,
1
Residential Tons
2,443
2,899
3,246
Commercial
Tons
3,110
3,690
4,130
Material Sales
Revenue
$929,252
$524,870
$530,260
Table 3
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While the sales revenue from recycle material have decreased by 43% during this period, the
amount of recycle material that has been collected and processed from both residential and
commercial customers has increased by approximately 25 %.
The focus of the following discussion is to examine an inequity between the cost of service versus
the service provided. Businesses which aggressively recycle typically can lower their level of
refuse service and/or frequency of pick -up thereby decreasing their monthly refuse bill. These
same businesses often require more frequent recyclable material collection which comes at no
direct additional cost. Essentially these businesses are creating the same amount of waste but are
able to reduce their cost by shifting the material to the recycling side of the collection equation.
While this scenario is achieving the City's solid waste reductions goals, the effect of this trend is
that commercial refuse collection revenues from rates have not increased as projected.
The following table illustrates the trend in commercial refuse collection rate revenue for the past
three years:
1995 1996 1997
Number of Commercial 1,524 1,609 1,670
Accounts
Revenue $2,010,757 $1,924,205 $2,100,204
Table 4
Though revenues recovered slightly in 1997, the dollar amount is not keeping pace with expected
income based on the rate increase enacted during that time and the increase in number of customers
to be serviced. The above numbers indicate that while the customer base between 1995 and 1997
increased by approximately 9 %, revenues only grew by about 4 %.
An example of the discrepancy of service versus cost of collection is a downtown clothing store
which has seven day a week collection of refuse and six day a week collection of cardboard.
Though the store produces an equivalent volume of material as it did before recycling, their
payment for service has been significantly reduced. Additionally, it takes the recycling crew more
time to load the cardboard than the refuse crew to collect the garbage thereby increasing the actual
labor cost.
A similar situation exists in the office paper collection program. Many large office complexes have
been able to significantlyreduce their cost of refuse service by recycling office and mixed paper.
The current paper collectionpractice is to service each individual office whether small or large.
Though this provides a high level of service and encourages participation in the program, it is labor
intensive. As previously stated, both of these programs are assisting in achieving the City's goals
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in encouraging recycling but do come with a cost, which is then reflected in the integrated solid
waste rate.
Commercial RecyclingAlternatives
The solid waste rate review committee developed four alternatives to the current system, along with
the advantages and disadvantages of each option, for Council to consider regarding the commercial
recycling program. The alternatives are:
1. No Change: continue with the current integrated rate policy where increases are applied to all
customer classes.
2. Volume based Commercial Recycling Rate: establish a commercial recycling collection
rate based on the volume of material being collected. It was discussed by the committee that
this rate could possibly be set at one half the refuse collection rate in order to continue the
economic incentive to recycle.
3. Recycling Fee: formulate a commercial recycling fee levied on every commercial account.
This could include both a flat fee to address fixed costs of collection plus variable volume
based rate for large producers of recyclable material.
4. Service Cost Reduction: change the commercial recycling services to place more
responsibility on the customer. The customer would be required to place the recyclable
materials in a central collection location or in containers approved by SLG.
The following is a listing of the advantages and disadvantages for each alternative:
1. No Change: continue with the current integrated rate policy where increases are applied to all
customer classes.
Advantages:
• Maintains the current service levels of the City's successful commercial recycling system.
• Simple to implement and understand.
• Avoids rate structure changes that other options may involve.
• Achieves revenue goals.
• Supports community-wide goals of reducing solid waste going to the landfill.
• Extends the rate increase to all customers thus lessening impact to a specific customer class.
Disadvantages:
• Does not address cost of service issues.
• Does not solve the issue of continuing decline in commercial refuse collection revenue.
• Does not separate refuse collection from recycling operations.
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2. Volume based Recycling Rate: establish a commercial recycling collection rate based on
the volume of material being collected. It was discussed by the committee that this rate could
possibly be one half the refuse collection rate to continue the economic incentive to recycle.
Advantages:
• Addresses cost of service issues.
• Continues to provide an economic incentive to recycle.
Disadvantages:
• May increase competition for lucrative large volume recycling customers thus leading to a
reduction in revenue from those accounts and compounding the current revenue problems.
• Could decrease the amount of recycling by commercial customers because of perceived
increased cost.
• More complex and potentially more difficult for customers to understand.
3. Recycling Fee: formulate a' commercial recycling fee levied on every commercial account.
This could include both a flat fee to address fixed costs of collection plus variable volume
based rate for large producers of recyclable material.
Advantages:
• Simple to understand and implement.
• Reduces the rate impact on residential customers.
• Encourages small recyclable material producers to participate in the program.
Disadvantages:
• Potentially not equitable for all customers thus not addressing cost of service issues.
• Perception that the fee is a tax.
• Possible legal implications.
4. Service Cost Reduction: change the commercial recycling services to place more
responsibility on the customer.
Advantages:
• Potentially help control rate increases by reducing the costs of providing services.
• Shift some costs from the solid waste services provider to the customer.
• Will enable staff and SLG to re- examine how we are currently providing commercial
recycling services.
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Disadvantages:
• Perception that service levels have decreased.
• Potential increased cost to the customer to participate in the program because of increased
staff requirements.
• Possibility of decreased participation in the recycling program.
• Uncertainty of affects on costs or participation, would require staff time to evaluate and
develop program changes.
Suggested Direction: Continue with the current integrated rate policy (Alternative 1) and direct
staff to work with SLG to determine if service cost reductions are possible without affecting the
effectiveness of the program (Alternative 4).
CONCURRENCES
The rate review committee concurs with the recommendations made in this report.
FISCAL IMPACT
There is no direct fiscal impact associated with the recommendations made in this report. Staff
will return to Council with the base year solid waste rate application in the near future, at which
time Council will consider the impacts to refuse rates of any proposed service changes.
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