2006-185-Minutes for Meeting December 14,2005 Recorded 3/2/2006Deschutes County Board of Commissioners
1300 NW Wall St., Bend, OR 97701-1960
(541) 388-6570 - Fax (541) 385-3202 - www.desehutes.ora
MINUTES OF DEPARTMENT UPDATE - SOLID WASTE DEPARTMENT
DESCHUTES COUNTY BOARD OF COMMISSIONERS
WEDNESDAY, DECEMBER 14, 2005
Commissioners' Conference Room - Administration Building - 1300 NW Wall St..., Bend
Present were Commissioners Michael M. Daly and Dennis R. Luke.
were Mike Maier, County Administrator; Timm Schimke, Solid Waste Department;
David Givans, Commissioners' Office; and various representatives of the solid
waste industry. No representatives of the media were present. The meeting began
at 2:15 p.m.
A copy of the agenda is attached for reference.
No formal action was taken by the Board, although the Board indicated support of
a proposed collection rate increase that is being considered.
Being no further items addressed, the meeting adjourned at 3: 00 p.m.
DATED this 14th Day of December 2005 for the Deschutes Countv Board of
Commissioners.
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Also present
Dennis R. Luke, Commissioner
Department of Solid Waste
12/14/05
2:15 p.m.
Commissioners' Office
Agenda
1. Franchise Rate Request Discussion.
2. Other
Y
FRANCHISE RATE REQUEST DISCUSSION
BACKGROUND
• Deschutes County sets the rates for the collection of solid waste in unincorporated
areas of the county. Bend, Redmond, and Sisters set their own rates. Our intent is
to set a rate that allows the collection company to operate in a 9% to 12% profit
range.
• We have two zones established in the county with different levels of service in
each. The Rural Zone where curbside collection of recyclables is part of the
service, and the Distant Rural Zone where there is no curbside recycling
requirement.
• The rates in the zones differ due to the different service levels
• Wilderness Garbage in LaPine falls entirely within the Distant Rural Zone. All
other companies have both zones in their service area.
• Under the current structure, we establish a maximum rate that can be charged in
each zone, and that maximum applies to all companies operating in that zone.
• We have received a request to increase collection rates from 2 of the 4 franchised
collection companies.
• The request has been reviewed by an accounting firm and our internal auditor
• The accounting firm concluded that the rate requests are reasonable and prudent.
• The accounting firm also submitted additional suggestions regarding the franchise
system for us to consider that would improve our ability to evaluate the financial
reports and rate requests.
ZONE CURRENT RATE
Distant Rural $13.85
(Wilderness Request)
Distant Rural $13.85
Rural $15.30
(Brownrigg Request #1)
Distant Rural $13.85
Rural $15.30
(Brownrigg Request #2)
NEW RATE CHANGE
$16.90 $3.05-22%
$15.50 $1.65-12%
$17.15 $1.85-12%
$15.95 $2.10-15%
$15.30 0
One of the principals that most communities across the state strive for is rate uniformity.
Two citizens who are receiving the same level of service should pay the same rate
regardless of the company providing the service. Many times this is at odds with in a
system since where each company has significantly different customer bases and
geographic conditions in their area, and each company expects to operate within the
prescribed profit range.
OPTIONS
Given the fact that the citizens in the Rural Zone received a substantial rate increase last
year with the introduction of curbside recycling, the following scenarios do not consider
an increase in the Rural Zone at this time.
Continue to follow current practice. Wilderness justifies a need for a 22%
increase in the Distant Rural Zone. That new rate represents a maximum rate for
the Distant Rural Zone for all companies.
This can result in different actual rates for each company, or an incentive to
increase expenditures by the more profitable companies.
2. Recognize that Wilderness Garbage has a unique customer base and service area
and establish a separate rate for them. The remaining three companies would be
treated in the established manner.
This results in different rates for Wilderness and Brownrigg when their customers
have the same service level. Brownrigg, Bend Garbage and High Country have a
closer range of profits so existing practice works better between them.
3. Blend revenues and expenditures of all companies and look at profitability as a
whole. The blended information would determine the need for and amount of any
rate increase.
While we achieve rate uniformity, one company will probably always fall below
the profit range, and one company will probably always be more profitable. In
worst case, the less profitable company may not be able to stay in business. This
approach is similar to what we see in larger communities. I am not sure this is
desirable in Deschutes County.
The accounting firm who reviewed the rate request noted that the expenditure projections
were very conservative in nature. In other words - underestimated. Whatever the
decision we make on this rate request, it is likely that we will be looking at another
increase sooner rather than later. They recommended that the County consider an annual
cost of living adjustment.