Andrew Thompson, CGFO

Director, Financial Services

Rhea Rivera, CGFM
Assistant Director, Financial Services

Issue Statement: All solid waste commercial and miscellaneous rates are established by ordinance, with the exception of the residential solid waste assessment, which is set by resolution.  Adjustments to the rates are needed from time-to-time to reflect the financial needs of the Solid Waste Fund.  As part of the Fiscal Year 2022 budget, adjustments are recommended to the solid waste commercial rate schedule, increasing rates by 5%.  An ordinance must be adopted to implement the revised rates.

Recommended Action:  City Commission adopt an ordinance to establish rates for FY 22 for all solid waste commercial collection services.

Background: The Solid Waste Fund is one of the City of Oakland Park's three Enterprise Funds.  Enterprise Funds are "business-like" in nature and are intended to be self-supporting, relying on service charges for funding. The City sets all solid waste service rates by Ordinance other than the annual residential service assessment, which is adopted annually via resolution by the Commission. These non-residential rates are generally in reference to commercial accounts and are charged through utility billing on a monthly, or as-needed, basis.  These rates are adjusted from time to time to ensure the financial stability of the Solid Waste Fund. 

In September 2013, the City Commission approved adjustments to the commercial rates for FY 2014.  At that time, the City Commission adopted an ordinance establishing the non-residential solid waste rates for the 2014 fiscal year.  Based on projected cost savings, rate reductions of approximately 19.6% were adopted for these rates.  This was intended to match the reduction in the residential rate, which was decreased from $255 per residential unit to $205, also a reduction of approximately 19.6%.  These rates were unchanged for fiscal years 2015 thru 2017.  The rate reductions adopted in 2013 resulted in a major decrease in the solid waste fund's revenue. 

In 2016, the City Commission approved a comprehensive review of the City's solid waste operations, including an analysis of service rates charged to residents and commercial customers. This study was awarded to Kessler Consulting, Inc. in May 2016 and results of the study were presented to the City Commission on May 3, 2017.  In the presentation and the study, Kessler Consulting recommended the City consider potential operational changes to reduce expenses in addition to commercial and residential rate adjustments to maintain a healthy and self-sustaining Solid Waste Fund. As part of the study, the firm performed a number of rate scenario forecasts. These projections demonstrated that the major reductions to the rate structure in 2014 were not sustainable into the near-future and that the fund would need to make revenue modifications to ensure long-term stability.

The Commission approved an increase of 5.5% for all commercial rates for  FY 2018 based on the results of the FY 16 study.  In FY 19 & 20, 3.5% adjustments were adopted.  FY 21 saw a 6% rate adjustment.

Adjustments are needed to provide increased stability in the fund's reserves and to cover increasing disposal, fleet, and other operating costs. To ensure sufficient financial resources for the fund, adjustment to the commercial rates are recommended. 

The following rates are recommended to be adjusted as follows:

The proposed adjustments would be effective beginning October 1, 2021, the beginning of the 2022 fiscal year. With the exception of caster roll out service, all other rates are very comparable to the 2013 rates reflecting an increase of only 26 cents or less.

With the proposed 5% rate increase in commercial solid waste services, it is expected to generate approximately $4.2 million in revenues in FY 22. This is approximately $0.2 million more than the revenue being forecast for commercial services in FY 21.

As discussed in the study, the rates in the solid waste fund will need to be reviewed regularly to ensure the longer-term stability of the fund. Solid waste costs are highly driven by three main factors: vehicle replacement, personnel costs, and disposal fees.  Future adjustments to these  rates may be needed in the future to accommodate changes in these costs should they deviate from projected changes.  The FY 22 proposed budget includes funding for a financial review of the solid waste fund.

It is recommended the City Commission pass, on first reading, the ordinance to adjust certain solid waste commercial service rates.