City releases trash collection rates options

BY PRU SOWERS

KONK LIFE STAFF WRITER

If you were wondering how much the controversial new trash contract will cost you, the Key West Utilities Department released four rate options Wednesday from which city commissioners will ultimately choose.

The rate plan recommended by city Utilities Department staff would boost the annual residential collection bill by $37.23, from the current $319.05 a year to $356.28. For business customers, the recommended rate per ton would rise from $165.90 to $168.11.

Once commissioners vote to approve a new collection rate, it would go into effect in November when the annual trash bills are sent out with property tax bills.

Four different rate options are being presented to commissioners, according to Mike Turner, Utilities Department Collection Manager. All four options were developed by Turner, former Utilities Manager Jay Gewin and an outside rate consultant hired to help evaluate the different cost scenarios.

In addition to the recommended rate plan, one option proposed no rate increase, despite the new $53 million contract with trash hauler Waste Management that calls for $14 million more in costs spread out over the life of the seven-year contract. Turner said the “no increase” option would take the extra funds needed out of the existing solid waste reserve fund. The current reserve level is approximately $4.9 million above the $2.5 million required under city regulations. However, the no increase option “doesn’t look good” for the reserve fund, Turner said, saying it would deplete the fund too quickly for prudent financial management.

The second rate option only increased residential costs enough to cover the one extra day of trash collection each week. One of the objections to the new contract was that it increases weekly residential collection from one to two days a week. Under this option, the annual residential rate would have increased $34.56, to $353.61.

The last of the four options would include 100 percent of the higher residential rates in the new Waste Management contract, plus all of the added cost for the company to take over management of the transfer station from the city. One of the questions revolving around the contract is why the city would turn over the transfer station to Waste Management when the company would charge $853,464 annually for the service as compared to the city’s cost of $550,000.

Turner said that instead of passing on 100 percent of the new collection costs to customers in the first year, it made more sense to use some of the reserve fund, since it is almost $5 million more than required. The recommended rate option would draw down the reserve fund approximately $600,000 each year over the next five years, Turner said.

“We generally come in under budget on [annual] haul out charges. But if it’s a year with a storm, then there’s more we have to haul out. So we need to keep a healthy reserve,” he said.

Trash collection rates are also evaluated each year, Turner added, and any new rates associated with the Waste Management contract can be adjusted once more specific data is collected.

“Next year we’ll have a better idea because we’ll have more specific numbers on what the actual costs were for that contract for the whole year. It gives us the ability over time to assess the [reserve] fund,” he said.

The $53 million contract with Waste Management was signed on June 25. Waste Management has been the city’s trash hauler since 1999. However, during the bidding process, Utilities Department staff recommended that the other bidder, Advanced Disposal Services, be awarded the contract because it was the low bidder on three of the four rate options requested by the city.

A majority of city commissioners, however, went against the staff recommendation and awarded the contract to Waste Management, selecting the rate option that, while being lower than Advanced Disposal Services, boosted the cost of the overall contract $14 million by adding a second weekly collection and taking over the transfer station.

Two members of the city Sustainability Advisory Committee resigned in protest of the twice-weekly collection schedule, saying it would hurt efforts to increase recycling rates in the city.

 

 

 

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