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City of Jellico
Solid Waste Study
By Ron Darden, Municipal Management Consultant
The University of Tennessee’s Municipal Technical Advisory Service
November 14, 2003
Jellico is a city of approximately 2500 residents located in Campbell County near Interstate 75 and the Kentucy border. The city operates a residential and commercial solid waste service. There are 897 residential garbage customers and 74 commercial customers providing their own commercial garbage dumpsters. The city rents dumpsters to 3 commercial customers. Residential customers provide their own garbage containers.
The city provides curbside recycling service once per week and pays a recycle business $125 per week to collect recycle materials. The city furnishes the truck for the recycling. There is no charge to the customer for recycling and the recycle contractor disposes of all materials and retains any revenues derived from the sale of the recycle materials.
Residential garbage is collected at curbside once per week at a cost of $9.90 per month. There are 5 residential routes and one commercial route. The minimum commercial rate is $12.90 per month for weekly service. Minimum commercial service is determined to be a comparable volume of garbage collected from a residential customer. A fee of $2.10 per cubic yard is charged for commercial customers requiring more than the minimum service with frequency computed. Commercial service is provided 5 days per week on an as needed basis.
The city deposits the garbage at the Laurel Ridge landfill located in Lilly, Kentucky at a cost of $22.15 per ton including a $1.75 per ton landfill tipping fee imposed by the State of Kentucky. The Kentucky tax is not charged on commercial deposits. Campbell County reimburses the city $18.75 per ton for residential and commercial waste deposited at the landfill. The net cost for residential deposits is $3.40 per ton after the county reimbursement. The landfill is approximately 2 hours round trip from the city.
The city solid waste division consists of 4 employees including the supervisor. Drivers have the required commercial equipment operator license. The city does not provide safety equipment for the employees and does not have an employee safety program.
The city has three rear loading garbage trucks:
- 1991 in good condition
- 1998 in good condition
- 2001 in good condition
The supervisor estimates that the trucks should serve for several more years at the current service level.
The budget includes the following:
The city deposited 1,776.47 tons of residential and commercial waste in the landfill during October 2002 through September 2003. This equates to 148.04 tons per month. The cost per ton is $131.84.
Based upon projected revenues for residential, light commercial and heavy commercial service the tonnage is as follows:
- Residential 1048.12- 59%
- Light Commercial 124.35 - 7%
- Heavy Commercial 583.60 - 34%
Note: The author did not have the actual tonnage breakdown deposited at the landfill but assumed that these figures were computed using estimated tonnage.
The residential cost per customer is:
1776.47*$22.15=$39,348.81*59%=$23,215.86 residential landfill cost per year.
Budgeted expenses of $234,203-$45,000 landfill tipping fee=$189,203 adjusted budget. Add the residential landfill cost of $23,215.86 and the adjusted residential budget amount of $111,629.77 and the total is $134,845.63 total residential garbage service expense per year based upon projected revenue estimates. This equates to $150.33 per year per customer or a cost of $12.53 per month using 897 residential customers.
Commercial expenses similarly are $93,706.24 annually or $1,266.30 average per year per customer or an average cost of $105.53 per month using 74 customers.
The proposed annexation will add 677 new residential customers and three light commercial customers. This study will use 700 residential customers for analysis purposes. The residential costs of $134,845.63 will increase approximately 43% from adding 677 new customers to the residential service and it will add approximately $80,427.60 in revenues.
$134,845.63 + $57,988.62=$192,829.25 new residential costs which equates to $122.51 per year per customer or a cost of $10.21 per month using a 1574 new customer base. Revenues will increase by $80,427 (677*$9.90). The supervisor states that he needs two additional laborers to provide the service to the proposed annexed area. It appears that the 43% increase in expenses will cover the cost of the new employees. The proposed annexation will be favorable in that the monthly cost per customer will be reduced from $12.53 per month to $10.21 per month. Commercial service in the area is not significant and the 3 identified customers are included in this analysis as residential. The cost per customer is reduced by $2.32 because of a larger number of citizens paying the cost even though a general fund subsidy is required to meet the expenses. The general fund subsidy is reduced from $20,861 to $17,917 as a result of the proposed annexation.
- Hire 2 additional garbage service workers.
- The annexation is favorable in terms of solid waste services.
- Develop an employee safety program.
- Provide sanitation workers with safety toed shoes and fluorescent vests.
- Establish an equipment replacement program for garbage trucks (Example ordinance attached).
- Increase the garbage fees over a period of two years to cover costs without a general fund subsidy.
- Redevelop residential and commercial routes.
Ordinance No. ___________
AN ORDINANCE ESTABLISHING A SOLID WASTE VEHICLE AND EQUIPMENT REPLACEMENT PROGRAM
WHEREAS, it is imperative that city have operable solid waste vehicles and equipment to provide the highest level of municipal solid waste services; and
WHEREAS, failure to maintain up to date solid waste vehicles and equipment often means that the city is unable to provide a high level of municipal solid waste services due to excessive operating and maintenance cost including down time, when vehicles are being repaired; and
WHEREAS, serviceable solid waste equipment is necessary for providing garbage collection services for the health, sanitation and safety of the citizens of the city; and
WHEREAS, it is desirable to spread out the costs for solid waste vehicles and equipment over a period of time instead of having high tax increases to make expensive equipment purchases; and
WHEREAS, it is also desirable that solid waste equipment funds be reserved in a separate fund to avoid high tax increases to make expensive equipment purchases; and
NOW, THEREFORE, BE IT ORDAINED by the Board of Mayor and Aldermen of the City of Jellico that the following vehicle and equipment replacement program is hereby established:
Section 1. There is hereby established a solid waste vehicle and equipment fund for the City of Jellico. Funds deposited therein shall be used for no other purpose than the purchase of new solid waste vehicles and equipment and as herein provided. Any interest accumulated in the fund shall become a part of the equipment reserve fund.
Section 2. Existing solid waste garbage trucks and pickup trucks shall have their use full life estimated and based upon the estimates depreciation values shall be determined. Beginning on January 1, 2004 an amount for the depreciation for each piece of equipment shall be deposited monthly into the solid waste vehicle and equipment fund for the City of Jellico.
Section 3. Upon purchase of a garbage truck, the annual depreciation value for the first seven years shall hereby be deposited in the solid waste equipment replacement fund. At the end of seven years the car garbage truck shall be sold, in accordance with city purchasing and disposal policies and procedures, and the sales proceed along with the accumulated depreciation value in the replacement fund shall be used toward the
purchase price of new equipment.
Section 4. Pick up trucks shall be replaced as follows:
A six-year usable life is hereby established for solid waste pickup trucks. Upon the purchase of a new pickup truck, the annual depreciated value over six (6) years is deposited in the equipment replacement fund established in Section 1. The pickup truck is
sold, in accordance with city purchasing and disposal policies, and the sales proceeds and accumulated depreciation value is paid out of the equipment replacement fund toward the purchase price of a new vehicle.
Section 5. The city recorder shall establish appropriate depreciation schedules and make monthly deposits from solid waste revenues. The recorder shall administer the fund as directed by the Board of Mayor and Aldermen.
Section 6. Use of solid waste cash reserves. The board may from time to time borrow from the cash solid waste reserves for cash flow purposes as long as it is repaid prior to the end of the current fiscal year.
Section 7. This ordinance shall become effective upon final passage, the public
welfare requiring it.