Andrew M. Thompson
Director, Financial Services

Rhea Rivera
Budget Manager, Financial Services

Issue Statement : The City recovers a portion of the annual cost of providing solid waste service through a Residential Solid Waste assessment which must be adopted each year.

Recommended Action : It is recommended that the City Commission adopt the Final Annual Residential Solid Waste resolution to authorize an assessment to fund a portion of the cost of FY 18 solid waste services.

The City's residential solid waste assessment was initially enacted in 2005.  The assessment at this time was limited to the recently annexed North Andrews Gardens and Twin Lakes South areas, which previously had their solid waste services billed by the County through an assessment on their annual property tax bills.  In 2010, staff proposed the assessment be expanded citywide for residential properties with fewer than five residential units.  This expanded program was subsequently implemented for the 2012 fiscal year.  Prior to implementation, the residential solid waste service costs were included in the monthly utility bills for residents. 

The solid waste residential service fee for fiscal year 2011 was $300 for a year, which was billed at $25 per month on residents' utility bills.  In 2012, the total annual fee -then appearing as an assessment on the annual tax bill- was reduced from $300 to $255, a reduction of $45, or 15 percent.  This rate was then reduced for the 2014 fiscal year, going from $255 to $205, a reduction of $50, or 20 percent.  From 2011 to 2014, the total reduction was $95, or approximately 32 percent

The ordinance establishing this program requires a preliminary rate resolution and an annual rate resolution be adopted during the budget process each fiscal year. The preliminary rate resolution was adopted by the Commission at the July 19, 2017 Commission meeting, R-2017-077. This agenda item is for the final annual rate resolution.

As part of the 2016 budget, 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 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,  firm performed a number of rate scenario forecasts.  These projections demonstrate that the major reductions to the rate structure in 2014 are not sustainable into the near-future and that the fund would exhaust reserves almost completely by 2021.

As reflected in the preliminary rate resolution, it is recommended that the residential solid waste cart service assessment rate be set at $217 for the 2018 fiscal year.  The proposed rate is $12 increase over the existing rate of $205, an increase of 5.85 percent.  This adjustment, in conjunction with similar adjustments to the commercial rates, would help stabilize the solid waste fund.  This would be the first adjustment to rate since 2013 and the proposed rate remains well-below the earlier assessment rate of $255.

The Annual Rate Resolution sets the rates for the residential solid waste assessment. The Resolution meets all requirements of the assessment program and the budgetary needs of the City. All property owners have been notified of the provisions of the Annual Rate Resolution through the “truth-in-millage” (TRIM) notice mailed by the Broward County Property Appraiser. As required, the notice of the public hearing on the Annual Rate Resolution scheduled for September 13, 2017 was published in the Sun-Sentinel on August 20, 2017.

The proposed annual assessment rate of $217.00 per dwelling unit will provide $2.2 million in revenue and along with the fees charged for other solid waste services, will maintain net unrestricted assets (fund balance) at levels in compliance with City fiscal policies.

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.  Future adjustments to the residential assessment rate will be needed in the future to accommodate changes in existing trends.