Andrew Thompson, CGFO
Chief Financial Officer

Rhea Rivera, CGFM
Assistant Director, Financial Services

Issue Statement: A preliminary residential solid waste assessment rate must be adopted by the Commission to be provided to the County Property Appraiser by August 4, 2022. The current countywide average rate is $344 per residential unit; Oakland Park's current rate of $255 is the 5th lowest in Broward County and is lower than the City's earlier rate of $300 in FY 2012. 

As part of the FY 2022 budget, the City Commission approved a Solid Waste Rate Study as a Business Plan Initiative.  At the June 15th City Commission meeting, the results of the this study were presented by Kessler Consulting. Based on the study results, an increase of $25.50 per residential unit is recommended, which would result in a rate of $280.50. 

Recommended Action: The City Commission adopt a resolution establishing preliminary Fiscal Year 2023 residential solid waste assessment rate of $280.50 per residential unit and setting 6:00 pm on Monday, September 12th in the City Commission Chambers at City Hall as the time, date and place for a public hearing in regard to the adoption of the final FY 23 residential solid waste assessment rate. 

The City Commission established a Solid Waste Collection and Recycling Services Assessment Program in Fiscal Year (FY) 06. This program applied initially to residences in the areas annexed in 2005 – North Andrews Gardens, Twin Lakes South and the Sartori Area. Prior to annexation, these residents had been charged by the County for this service with a non-ad valorem assessment on their annual property tax bills, and the City chose to continue this practice. In 2010, staff proposed that the residential solid waste assessment concept be expanded to the remainder of the City. The City Commission approved this recommendation and provided direction to proceed with the expansion of this program. As a result, for FY 11 and going forward, the program was expanded to all residences citywide having less than five dwelling units.  The ordinance establishing this program requires a preliminary rate resolution and an annual rate resolution be adopted during the budget process each fiscal year. This agenda item is for the preliminary rate resolution.

The residential solid waste rate was $300 per unit in fiscal year 2012.  It was reduced to $255 for fiscal year 2013.  In fiscal year 2014, the annual residential solid waste cart service assessment rate was further reduced  to $205, a reduction of 19.6%.  Similar reductions were made for commercial accounts, which are billed monthly by the City rather than through an assessment. 

A comprehensive review of the City's solid waste operations, including an analysis of service rates charged to residents and commercial customers was presented by Kessler Consulting in 2017.  The firm recommended that 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 demonstrate that the major reductions to the rate structure were not sustainable into the near-future and that the fund would exhaust reserves almost completely by 2021.  Following the recommendations made in the study, the residential solid waste cart service assessment rate was adjusted to $217 in FY18, to $227 in FY 20, and to $235 in FY 21, and to $255 currently (FY 22).

During this fiscal year (FY 22), an update to the rate assessment study was made by the same firm, Kessler Consulting.  The study concluded with the presentation made to the City Commission during the meeting on June 15, 2022. Similar to the previous study done in 2017, the Firm performed a number of rate scenario forecast to see where the fund can be more sustainable into the future.  Consistent with Kessler Consulting's recommendation to adjust rates, it is recommended that the rate of $280.50 per residential unit will be adopted for FY 23, or an increase of 10%. 

A copy of the Kessler Consulting presentation is attached for reference.

The ordinance establishing this program requires a preliminary rate resolution and an annual rate resolution be adopted during the budget process each fiscal year. This agenda item is for the preliminary rate resolution. 

For FY 2023, it is recommended that the residential solid waste cart service assessment rate be increased to $280.50. 

For nine years (2014 to 2022), the City's solid waste rates have remained well below 2012 level of $300 even as the operating costs and capital needs of the solid waste fund have increased over the years.  

The proposed rate for FY 2023 still remains well below the countywide average of $344 per year for residential service.

The proposed residential increase for FY 2023 is also paired with an approximately 10% increase in the City's commercial solid waste rate structure.  Commercial billing rates are set via ordinance.  First and second readings of the commercial rates ordinance will be held in September.

The proposed residential rate will appear on the TRIM notice mailed to all property owners in August. There will be a hearing in regard to the final adoption of this rate on September 12, 2022, to establish the final rate that will appear on the property tax bill to be mailed to all property owners at the beginning of November. At the time of the final hearing, a lower rate may be adopted by the Commission if it so chooses, but a higher rate can be adopted at that time only with significant effort and expense.

The recommended assessment rate for residential cart service of $280.50  is expected to generate approximately $2.96 million. The increased rate generates approximately $280 thousand more than the previous rate, which will be used to offset the increase in operating costs. 

It should be noted that the proposed rate is predicated on recent costs and trends.  Solid waste costs are highly driven by three main factors: vehicle replacement, personnel costs, and disposal fees.  Vehicle replacements are planned many years in advance,  but changes to disposal fees can be subject to larger market forces, such as the decline in demand for recycling goods.  Likewise, personnel costs are affected by changes in pension costs, the insurance market, and collective bargaining.  As was noted in the the Solid Waste Fund Rate Study, additional increases in the rate structure will be needed in future years to ensure the fund has sufficient revenues to meet rising costs.