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Solid Waste Services
Financial Considerations
Message from Finance Director Cathe Armstrong
March 11, 2008
Upper Arlington is in the final countdown to transitioning its Solid Waste Services to Inland Service Corporation, with Monday, April 7 approaching rapidly. It does however follow many months of research, community outreach, direction from City Council based on the findings, and most recently an intensive team effort by some City Staff to make the necessary financial and logistical preparations.
I wanted to take this opportunity to summarize some of the financial ramifications that are part and parcel to this issue.
First, we began to explore our options because the existing approach was no longer meeting its financial goals. Set up to be a self-funded program, as the Solid Waste sticker price was raised to keep pace with operations cost increases, refuse output declined, negatively impacting revenues.
When City Council considered program options, the move to privatized, at-the-curb service made financial sense. The five-year cost with Inland is approximately $8.4 million, and based on the contract terms will only be subject to factors outside Inland's control, such as landfill tipping fees. Other options before Council, such as keeping services in-house but moving refuse to the curb would have cost approximately $10.9 million, and making no changes to the service whatsoever would have cost the City approximately $13.4 million over that same five-year period.
Looking forward, had we continued on the current approach, projections indicated the need to drastically increase the sticker price, to a minimum of $3.78 in 2008 up to approximately $4.69 by 2012.
The known financial picture resulting from Council's decision has allowed us to develop a funding program that is equitable and stable for this five-year period. By implementing the $30 annual service fee to spread the basic operations costs for providing the service to all households in the community, we have been able to reduce the sticker price to $2.40 and are confident we can maintain this rate throughout the contract term.
As is the case in everything we do, our projections have allowed for some cushion to ensure the Solid Waste Fund remains solvent. Any revenue overages will be held within the Solid Waste Fund to cover unanticipated transition costs or increases in tipping fees over the five-year period, to help ensure we can hold steady the fees assessed to residents.
When considering costs to residents further, we have created an approach that will save the average household money. Annually, the typical household uses 54 stickers. At the 2007 rate of $3.10, this totals $167.40 per year, and by 2012 it would be $253.26 at the rate of $4.69 per sticker. Under the new approach of a $30 annual service fee and stickers priced at $2.40, this same home can expect to pay $159.60 per year, for the next five years. While it is known and accepted that not all households will save money, we considered the best interests of the community at large.
As your Finance Director, I take very seriously my role as the gatekeeper of your public monies, and I applaud City Council for its willingness to address this issue and set forth a direction that makes good economic sense for Upper Arlington.
Updated 5/08
City Manager's Office
City of Upper Arlington
3600 Tremont Road
Upper Arlington, Ohio 43221
Phone: 614-583-5040
www.ua-ohio.net
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