City of Lawrence

City Commission

MEMORANDUM

DATE:          September 1, 2010

TO:              Mike Amyx – Mayor

                   Dave Corliss – City Manager

                   Aron Cromwell – Vice Mayor

                   Mike Dever – City Commissioner

                   Lance Johnson – City Commissioner

FROM:                   Rob Chestnut – City Commissioner

RE:              Options for Solid Waste Division

          I have reviewed a presentation made by Deffenbaugh Industries regarding the options to outsource portions of our solid waste services.  I believe we should consider putting out a RFP to have an outside vendor assume all municipal hauling operations.  This is not purely financial decision.

Future required investments

          The internal audit highlights a number of issues that will need to be addressed in coming months to ensure a viable enterprise.  If the fleet is to be managed properly, investment in technology will be required.  The department is already considering GPS systems on each vehicle.  As we progress down the path of improved solid waste activities, I believe we will find the need for other investments not yet identified to increase the effectiveness of the department.

Transition to pay-as-you-go (PAYT) systems

          There has been increasing public comment and comments by commissioners that we need to transition to PAYT systems.  This represents a large challenge for a department that has focused on picking up everything at the curb for decades.  Can such a dramatic policy change be effectively implemented in a timely fashion?  Do we have the structure and systems even accomplish this task? 

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Again, I believe significant investment will be required over-and-above technology identified to successfully track and bill a new type of service.  This is a transition that solid waste vendors have implemented in a number of communities.  I have concerns that we would struggle with so much transition in changing routes, tracking usage of customers, and successfully billing for a new service that will be scrutinized by customers.

Offering to commercial users for recycling

          It is my understanding the Deffenbaugh plans on offering a commercial recycling program that will take all waste and sort the recycling items at their facility.  If they are successful it will siphon off revenue from the solid waste department since commercial rates are volume-based. 

Can the solid waste division sustain itself exclusively with residential revenue?  I do not know the split between residential and commercial revenue, but loss of a substantial portion of commercial revenue could make it difficult to avoid significant increases in residential rates to cover fixed costs in the department that now need to be covered by fewer customers.

Sustainability

          Is it sustainable to have two large haulers in the city?  We now have one group hauling waste and another group hauling recycling materials?  Deffenbaugh is up to 3,500 households that have elected curbside service.  It is not unusual to see a large city hauler come down the street followed immediately by a Deffenbaugh truck.  Clearly, one group would economize on collection and reduce the route miles to collect both waste and recycling.

          I have seen examples of solid waste vendors coordinating outreach programs that extended to schools.  One example is the “One Earth, One Chance” school recycling program done by Deffenbaugh that could work well with our sustainability initiatives.  One of the goals of our sustainability coordinator position was community outreach.  Programs such as this can complement our efforts.

Ergonomic considerations

It is important to mitigate workers’ compensation costs for the City as well as create a safe and healthy environment for workers.  While the City has done an admirable job on this topic, it is logical to assume that a solid waste vendor exclusively focused on continuous improvement and investment in their industry

p.3 Solid Waste Options

to reduce workplace injuries will make an ongoing commitment to ensure the highest level of employee welfare.

          Solid waste vendors will be in a better position to leverage these investments due to the size of their operations.  They serve a number of municipalities, and large technology investments that will be developed in the future to automate processes and reduce employee injuries created by repetitive motion will be more cost-effective for an entity that can leverage it over a much larger employee base.         

Future Regulation

Federal and state regulations will continue to expand in this area.  EPA is redefining certain wastes and state regulation will continue to evolve.  In our current relationship, Hamm Industries managed changed impacting the landfill.  However, the City must manage any changes impacting the actual hauling.  This may be an area requiring more focus and resources in the future.

Summary

We are at a cross roads with solid waste operations.  The city is searching for a new director, the commission is hearing more comments on changing the service offering, and the commission will soon be considering more technology investment to upgrade operations management.  It seems like this is an ideal time to consider options.

Next Steps

I am requesting the commission consider a RFP as described, and that staff propose a process to analyze the impact that an outsource operation would have on solid waste services.  It would also be prudent to interview municipalities that have converted to identify the positive and negative aspects. 

          It will be important to decide how to put this proposal through the public process given the impact it may have on city employees.  A conversion would like result in employment opportunities for many of those in the solid waste department, but the uncertainty of considering this action will have an adverse impact on employee morale.  I would suggest that the initial financial feasibility analysis be done by staff, and that we would review that information to decide if it merited a public hearing.  We need staff direction on how to process.