PowerPoint Presentation (Added on 6/28/22)
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Fuel Crisis Impact on Solid Waste Forecast 6/23/22 – 6/27/22 Presentation Overview –Background –Current rate plan –Trend in fuel costs –Trend in insurance costs –Interfund loan prepayment –Commercial Overview –Recommendations 2 Solid Waste Rate Review - Residential November 23, 2021 – 5-year Rate adjustment First adjustment $1.75 was effective February 2022 Council approved upcoming adjustments: 3 Fiscal Year Rate Adjustment 2023 $1.25 2024 $1.00 2025 $1.00 2026 $0.90 Residential Rate Adjustment Impact – November 2021 -$2,251,812 -$888,843 $1,001,185 $1,484,560 $1,827,919 4 Solid Waste Rate Review – Commercial January 25, 2022 – 5-year Rate adjustment presented First adjustment of 10% effective March 2022 Council approved upcoming adjustments: 5 Years Front Load Roll Off Fees Pull Charge Disposal Per Ton 2023 8% $240 $30 2024 7% $250 $31 2025 5% $260 $32 2026 5% $270 $33 Residential Cost Factors Comparison Major Drivers FY20 FY 23 Forecast Difference % Difference Fuel Cost $569,948 $1,260,500 $690,552 121% Insurance/Indirect Costs $366,532 $1,302,260 $935,728 255% 6 Fuel Cost Impacts 7 National Trend in Fuel Prices 8 National Trend – Diesel Prices 9 $2.25 $2.75 $3.25 $3.75 $4.25 $4.75 $5.25 $5.75 $6.25 Jan Feb March April May June July Aug Sep Oct Nov Dec West Coast Diesel Price Comparison 2019-2022 2019 2020 2021 2022 $3.86 Nov. 2021 $6.02 Residential Solid Waste – Fuel Cost Impact 10 $600,845.00 $668,485.00 $542,567.00 $567,635.44 $958,955.00 $1,260,500.00 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Annual Fuel Cost FY18 FY19 FY20 FY21 FY22 FY23 Projected Residential Solid Waste – Fuel Cost Impact 11 FY22 - $364,535 unrecovered FY23 - $492,833 projected unrecovered FY24 - $445,636 projected unrecovered $594,420 $767,667 $940,914 $958,955 $1,260,500 $1,386,550 $364,535 $492,833 $445,636 -$100,000 $100,000 $300,000 $500,000 $700,000 $900,000 $1,100,000 $1,300,000 $1,500,000 $1,700,000 FY22 FY23 FY24 Budget Actual/Projected Unrecovered Amount Fuel Cost Recovery 12 Implement a temporary “Fuel Surcharge”, to be reviewed annually during budget process. Recover FY22 actual shortfall ($364K) and FY23 projected ($492K) with a fuel surcharge from Sept. 2022 to June 2023 ($857,000 total over 10 months) Temporary adjustment: $1.54/household per month Insurance Cost Impacts 13 Risk Mgt & Workers Comp – All Solid Waste 14 $344,493 $460,947 $612,410 $991,822 $1,621,704 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 Insurance Costs FY19 FY20 FY21 FY22 FY23 FY23 Projection: $1,091,005 FY23 Current Budget 5-Year Cost change - $1,277,211 Projection to actual - $530,699 Insurance Impact – Difference from Forecast 15 FY22 - $0 FY23 - $530,699 FY24 - $557,234 $991,822 $1,091,005 $1,145,555 $991,822 $1,621,704 $1,702,789 $0 $530,699 $557,234 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 FY22 FY23 FY24 Budget Actual/Projected Unrecovered Amount Current Residential Services Rate Comparison How do we measure up? City Services Provided Base Rate per month per house Additional Container rate Phoenix** Basic service and quarterly bulk trash $34.47 $16.90 Tempe** Basic service and monthly bulk trash $30.32 $20.17 Mesa** Basic service and an additional fee for bulk trash $29.92 $14.13 Glendale Basic service, monthly bulk trash, monthly street sweeping, litter patrol services, and illegal dumping team $23.55 $8.70 Scottsdale**Basic service and monthly bulk trash $22.54 $11.45 Avondale** Basic service and monthly bulk trash $22.00 $13.00 ** Rate increased since last presentation 16 Year Adjustments Increase Amount (Council Approved 2021) Recommendation 2023 $1.25 $2.25* 2024 $1.00 $1.00 2025 $1.00 $0.90 2026 $0.90 $0 Recommendation: Early Implementation of Approved Increases 17 *Combine 2023 and 2024 rate adjustments, move 2025 to 2024, and 2026 to 2025 (Sep 22) (Jan 24) (Jan 25) (Jan 23) (Jan 24) (Jan 25) (Jan 26) Recommendation: Early Implementation of Approved Increases 18 Year Adjustments Council Approved Rate Adjustments Council Approved Monthly Rate Recommended Rate Adjustments Recommended Monthly Rate 2023 $1.25 $24.80 $2.25 $25.80 2024 $1.00 $25.80 $1.00 $26.80 2025 $1.00 $26.80 $0.90 $27.70 2026 $0.90 $27.70 $0 $27.70 Rate Comparison with Option 1 (Sep 22) How do we measure up? City Services Provided Base Rate per month per house Additional Container rate Phoenix** Basic service and quarterly bulk trash $34.47 $16.90 Tempe** Basic service and monthly bulk trash $30.32 $20.17 Mesa** Basic service and an additional fee for bulk trash $29.92 $14.13 Glendale Basic service, monthly bulk trash, monthly street sweeping, litter patrol services, and illegal dumping team $25.80 $11.26 Scottsdale**Basic service and monthly bulk trash $22.54 $11.45 Avondale** Basic service and monthly bulk trash $22.00 $13.00 ** Rate increased since last presentation 19 Residential Rate Adjustment Impact – November 2021 -$2,251,812 -$888,843 $1,001,185 $1,484,560 $1,827,919 20 Fuel and Insurance Impact on Residential Fund 21 Interfund Loan Prepayment 22 Advance Interfund Loan Payback 23 •FY22 - Transfer $1.8M from General Fund to prepay “Interfund loan” •FY23 – Payment of $385,000 •FY24 – Payment of $390,000 oCurrent balance $3.4M oRemaining balance of $825,000 to be paid off by FY2028 o$75k (est.) General Fund interest savings Advance Interfund Loan Payback 24 Year FY22 FY23 FY24 FY25 FY26 Balance (1,219,335) (2,695,587) (2,904,513) (3,412,767) (3,222,038) Year FY22 FY23 FY24 FY25 FY26 Balance 419,595 689,664 1,676,004 2,037,303 2,851,725 Year FY22 FY23 FY24 FY25 FY26 Balance (1,193,205) (1,098,136) (286,796) 74,503 879,261 Fund Balance without rate implementation and without loan prepay Fund Balance with rate implementation and fuel surcharge and without loan prepay Fund Balance with Rate Implementation, fuel surcharge, with loan prepay of $1,800,000 YR1, $385,000 YR2, and $390,000 YR3. Council Policy: Ending Fund Balance Commercial Solid Waste Rate 25 Commercial Solid Waste 26 Cost Drivers • Fuel • Insurance/Risk Management Recommendation: Recover FY23 projected and FY22 actual shortfall - 3% per customer per month • Will ensure that commercial operations is not being subsidized by residential customers Commercial Fuel/Insurance Recommendation Years Approved Rate Increase Fuel/Insurance Adjustment Roll Off Fees Pull Charge Disposal Per Ton 2023 8% 3% $247 $30 2024 7% *budget review* $258 $31 2025 5% *budget review* $268 $32 2026 5% *budget review* $278 $33 Recommendations 28 •Continue current level of Solid Waste Service •Implement Fuel Surcharge $1.54 per household per month Reviewed as part of budget process starting in December •Implement Rate Adjustments Combine Jan 2023 and Jan 2024 rate increase (Implement Sep 2022) Move Jan 2025 increase to Jan 2024 Move Jan 2026 increase to Jan 2025 Recommendations Continued 29 •Prepay “interfund loan” FY22 - $1.8M FY23 - $385K FY24 - $390K •Commercial Fuel/Insurance Rate Adjustment 3% per account per month 30 •Consensus