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. In FY 2022, the City engaged with Kessler Consulting to perform a financial analysis of the Solid Waste Fund; the results of this study were presented to Commission in June 2022, which outlined the need to adjust rates. These recommendations were incorporated into the Fiscal Year 2023 recommended budget, which includes an increase of the solid waste commercial rate schedule by 10%. An ordinance must be adopted to implement the revised rates.
Recommended Action: City Commission adopt an ordinance to establish rates for FY 23 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 and FY 22 saw a 6% and 5% rate adjustment, respectively.
Funding was approved in the FY 2022 budget for an update to the 2017 Kessler Consulting study of Solid Waste's finances. The study was presented to Commission in June 2022 and showed that the existing revenue structure is not sufficient to maintain existing operations. Modest changes to the residential and commercial rates were recommended, which were incorporated into the FY 2023 budget proposal presented to Commission in July 2022. The study recommended a 10% increase in commercial rates for FY 2023, with a minimum of 4% annual increases thereafter. A copy of the study presentation is attached for reference.