Cost of Service Study Results for Solid Waste Presentation

Council Conference Room
Thursday, October 14, 2021 | 4:00 p.m.
FY 2021-22 
Cost of Service Study Results for Solid Waste

Agenda
• Background Leading to Today
• Cost of Service (COS) Rate Study Process
• Solid Waste Financial Plan
• Raftelis Solid Waste COS Analysis
• Implementation Timeline

Background Leading to Today
City Financial Policy requirements
•Annually review the City Financial Rate Models
•COS reviewed every 4-5 years to ensure those using services
are paying their share
Changes that affect COS update
•Changes in overall customer usage/demographics
•Capital projects/system expansions
•Data improvements
•Rate structure changes

Background Leading to Today
Recycling Solid Waste Collection Center (RSWCC) History
RSWCC 
History
1979 
Opened 
Landfill
1998 
Landfill 
Reaching 
Capacity
2000 
Contracted 
with 
Butterfield
2003 
Regional 
Transfer 
Station 
Evaluated
2005 Chandler 
Landfill 
Officially 
Closed
2005 RSWCC 
Opened for 
Residents’ Use

Background Leading to Today
RSWCC History
Alternative Sites
Republic -
Chandler (Germann & Hamilton 2.5 miles away):  $68/1st ton; $68 minimum - $46.25 for additional tons, 
prorated (no tires, hazardous waste)
Weinberger - Gilbert (Cooper & Guadalupe 8 miles away):    $46.75/ton; $30 minimum (no tires, hazardous or food waste)
Services Provided
(Residential Only)
Trash and Landscape debris            
drop off
Freon Recovery
Household 
Hazardous 
Waste
Recycling Metal, 
Electronics, 
Appliances, 
Cardboard
Tire disposal
19,800 
Households
68,000 Visits
13,000 tons processed

Background Leading to Today
Recycling / Solid Waste History
• Recycling markets depressed since 
2018 / reduced recycling revenues
• New contracted curbside 
collection agreement provides more 
certainty for future cost projections
• New RSWCC scale and operating 
data available to analyze operations
• Important to periodically review COS as 
changes occur
6

Cost of Service (COS) 
Rate study Process

COS Rate Study Process
Primary Study Scope
• Validate financial projections / “Revenue Sufficiency” 
• Analyze COS and facility / service utilization
• Provide rate recommendations through FY 2025-26
Areas of Focus
• Mitigate planned rate increases 
• Increase rate payer equity by reducing subsidy to:
• RSWCC
• Bulk Collection 
• Alleyway Collection
Gross 
Revenues
Revenue 
Requirements
Landfill Post-
Closure Care
Capital
Expenses
Other Revenues / 
Fund Balance
RSWCC Tip Fees
Monthly Fee
Methodology to Assess 
Revenue Needs

COS Rate Study Process
9
City’s Financial Plan Review
Cost of Service Analysis
Rate Design Change 
Recommendations (If any)
What is the funding 
requirement?
Is everyone paying their fair share?
How can our rates help ensure fairness?

Solid Waste 
Financial Plan

Solid Waste Financial Plan
11
Baseline
FY 2021-22
FY 2022-23
FY 2023-24
FY 2024-25
FY 2025-26
%
6.0%
0.0%
5.0%
0.0%
5.0%
$
$1.08
$0.00
$0.95
$0.00
$1.00
Monthly Fee
$19.03
No change
$19.98
No change
$20.98
Results
City’s established financial model was found to be complete and accurate meeting forecasted 
expenditures with the projected revenue rate increases and planned fund balance drawdown
COS Study Objectives
•
Validation of City established financial model
•
Fully fund revenue requirements
•
Maintain fiscal policy goals

Solid Waste Financial Plan
12
Cost Drivers
• Contractual increases
• Collection, Landfill, Recycling, etc.
• Automatic increases for inflation
• On-going post closure landfill costs
• Major projects anticipated by FY 2024-25 for soil erosion 
mitigation and leachate
Study Recommendations
• Consider continuation of bi-annual rate increases
• keeps pace with inflation
• Slows fund balance drawdown
• Achieves study objectives and meets City’s fiscal policy
• Allows gradual drawdown of reserves towards policy 
minimum targets 
* Landfill post closure reserve of  $4.34 M until 10-1-35

Solid Waste COS 
Analysis

Solid Waste COS Analysis
COS and Rate Design
14
Number of 
Residential 
Households
How can our rates ensure fairness?
Total Actual Users
Guiding Principle
“Services used by all paid by all” & 
“Services used by few paid by few”

Solid Waste COS Analysis
COS Actions 
Performed detailed analysis of City facility and service 
utilization relative to the COS​
• Key Finding: 20% of households request Bulk Service / visit RSWCC​
• Not Feasible to recover full cost of RSWCC from direct user fees
Project team analyzed multiple alternatives and found  
consensus around two (2) fee policy options for consideration
• Fee policy option #1: A) Charge for use of RSWCC 
B) Limit “free” bulk collection 
• Fee policy option #2: Eliminate alleyway service
15
Monthly Residential Fee $17.95

Solid Waste COS Analysis
Incorporating Options Lowers Needed Rate Increases
16

Solid Waste COS Analysis
Policy Option #1A:  Charge for Use of RSWCC
17

Solid Waste COS Analysis
Policy Option #1A:  Charge for Use of RSWCC
18
RSWCC 4/1/19-4/1/20
Qty/Loads
Net Wt
Tons
Trash - All
22,753.50 
8,846,140 
4,423.07 
Green Waste
15,163.50 
5,801,340 
2,900.67 
Recycle
20,954 
5,777,840 
2,888.92 
Trash-Construction $
1,828.25 
2,322,540 
1,161.27 
Trash-Concrete $
321 
796,980 
398.49 
Dirt $
138.50 
508,000 
254 
Green Waste-Bags
6,673 
507,900 
253.95 
Trash-Gravel/Rock $
143.50 
416,980 
208.49 
Recycle-Freon $
786 
300,460 
150.23 
Trash-Woodwaste $
198.75 
277,620 
138.81 
Tires - All
1,209 
252,120 
126.06 
Trash-Manure $
33.50 
64,620 
32.31 
Composter - All
44 
23,480 
11.74 
Other - All
4 
3,120 
1.56 
Totals
70,251 
12,950 
Equity Issues
• Only 10% of customers use RSWCC 
more than 1x a year
• Only 18% of materials assessed a fee
• 85% of cost to operate RSWCC funded 
from monthly user fee ($1.55/mth)
Proposal
• Charge for trash and green waste 
deliveries and adjust bulk collection to 
avoid shift in disposal

Solid Waste COS Analysis
Policy Option #1A:  Charge for Use of RSWCC
19
Existing
Proposed
Base Fee
$0.00 
$10.00 
Tip Fee Rate
$50.00 
$50.00 
Fee Notes
0 - 200 lbs free
0 - 400 lbs free
Fee 
Application
C&D/Manure 
only
All Waste Streams 
Except Recycling
Average Bill
Existing
Proposed
Avg. Load 
(lbs.)
Trash
$0.00 
$10.00 
283.58 
Green Waste
$0.00 
$10.00 
301.98 
Construction
$15.70 
$20.70 
827.96 
•Can eliminate 4% of 
identified rate 
increase needed 
over 5-year period
•Impacts 20% of 
Households

Solid Waste COS Analysis
Policy Option #1B:  Limit “Free” Bulk Collection
20
• 20% of households 
request bulk 
collections annually
• Approximately 5% 
of customers 
request service 
more than 1x 
per year

Solid Waste COS Analysis
Policy Option #1B:  Limit “Free” Bulk Collection
Equity Issues
• Contractor charges City bulk collection $30 
per pickup
• 5% of customers request service >1x a year
• $1.20 of the monthly user fee used to 
subsidize service
Proposal
• Limit “Free Service” pickups to 
accommodate 95% of households  
•
City currently charges $30 for add’l requests 
above once every 6 weeks
• Policy change can eliminate 2% of identified 
rate increases over 5-year period
21

Solid Waste COS Analysis
Policy Option #2:  Alleyway Service
22
Equity Issues
• Contractor charges City more for alleyway 
service
• Residential customers pay same amount 
as alleyway customers
• Alleyway receives higher level of service 
(larger bins / more convenience)
Operational Issues
• Illegal dumping, significant strain on staff 
time, reduced recycling, public safety 
issues, higher repair / replacement costs 
• Carts aging (purchased in 2006)
Proposal
• Eliminate alleyway service
• Net reduction of $120k annual cost
• Eliminates 1% rate increase over 5-
year period

Solid Waste COS Analysis
Option Recap
23
Fee policy option #1
• Charge for use of RSWCC
• Limit “free” bulk collection to 
accommodate 95% of 
households 
Fee policy option #2
• Eliminate alleyway service
        
             
        
      
        
             
        
      
        
             
        
      
         
             
          
     
         
             
          
     
         
             
          
     
          
          
          
        
        
        
         
         
         
     
     
      
      
      
      
             
             
           
                                      
$17.95                    $21.00                  $19.70

Monthly Residential Solid Waste Fee
Comparison Survey
*Based on FY 2021-22 rates for Chandler, with comparison cities shown at FY 2020-21 rates

Solid Waste Recommendations
Consider implementation of rate and policy options for FY22-FY26
•
Baseline – Increase monthly charges only
•
Option 1 – Charge trash + green waste deliveries at RSWCC + Revise bulk collection policy (1 free per year)
•
Option 2 – Eliminate alleyway collection
• Implement FY 2021-22 rates on July 1, 2022; then next two on Jan 1st of the fiscal year
• Review plan and rate needs the lesser of every 4-5 years; or as major changes occur
25

Implementation Timeline
Implementation Steps
Time Frame
Work Session with Mayor and Council
October 2021
Public outreach
Oct-Dec 2021
Feedback to City Manager/Council on results of outreach
February 2022
Adopt Notice of Intention to change rates
April 2022
Conduct Public Hearing for Water, Reclaimed Water, Wastewater 
and Solid Waste rate changes
May 2022
Introduce Ordinance to change Water, Reclaimed Water, 
Wastewater and Solid Waste rates
May 2022
Adopt Ordinance to change Water, Reclaimed Water, 
Wastewater and Solid Waste rates
May 2022
COS rates effective
July 1, 2022

Questions?