City staff are proposing a fee increase for trash pickup services and the City Commission will hold a public hearing on the proposal during their April 19 meeting.

Paul Skubinna, the public works director, walked commissioners through the sanitation program’s costs, needs and operations and the fee increase proposal during their April 5 meeting.

The city public works department annually reviews and analyzes the financing needs of the sanitation fund to ensure adequate funding for daily operations, capital improvements, debt service and emergencies.

City proposing trash pickup rate increase

The last residential and commercial rate increase for trash pickup services was in March 2020.

In the meantime, the department’s costs have increased due to increased operations, equipment, fuel and landfill costs, Skubinna said.

Staff is recommending a $1.35 increase for residential trash pickup from $13.65 to $15 monthly.

The senior citizen rate would increase by 93 cents from $9.57 to $10.50 monthly.

Extra pick-up fees would increase $4 from $11 to $15 monthly. Pick-up of a large appliance would increase $4 from $16 to $20.

The cost of a 3-yard commercial container, which is the most commonly used in the city, would increase by $6.60 from $66.20 to $72.80 monthly.

Cardboard recycling would increase $2 from $20 to $22 monthly.

City considering study of landfill options

Staff is recommending that the city maintain the monthly vacant business rate of $5 and increasing the flat rate surcharge for overweight containers by $10 from $105 to $115 monthly, as well as increasing the dry run fee by $5 from $50 to $55 monthly.

If approved, the new rates would go into effect May 1.

Skubinna said that about 87 percent of city residents use city sanitation services, leaving about 13 percent of residents as Republic Services customers. Republic is the private company in town that owns the landfill. It was formerly Montana Waste Systems.

Skubinna said he believes the city’s market share has been increasing over the years and that the upcoming merger of the sanitation and utility bill will entire more customers for that convenience.

The city’s sanitation rates remain among the lowest in the state, according to a chart from the city public works department.

The city utilities division is also recommending a change in the late payment penalty from 60 days to 30 days, meaning an unpaid utility bill would receive a penalty before the generation of the next bill, according to city staff.

“The increases are necessary to continue to provide required pickup and disposal services as well as fund capital improvements, specifically the replacement and maintenance of the fleet, and meet debt service requirements. Additional staff may be needed in the future. Rate increases will provide flexibility to hire staff as needed,” according to the staff report.

According to city staff, the cost of fuel has increase 24 percent and will continue to increase. Staff is anticipating that fuel expenses will increase by about $100,000 this year.

The cost of equipment has also increased, according to staff.

Rate increase proposed for city trash collection [2019]

The sanitation department needs to purchase one residential side-loader and one commercial roll-off truck and the cost of those two vehicles was $400,000 in the past.

That cost is now $506,000 and the price continues to increase, according to city staff.

Skubinna said that sanitation vehicles are “notorious” for high wear and tear given their use and that maintenance costs can be high so they’re working on developing a fleet replacement cycle to lower the average age of their vehicles.

In 2016, the city took out debt to purchase a chunk of new vehicles at one time since interest rates were low and their maintenance costs were high.

That has brought the average age of the residential sanitation fleet down to about five years, which Skubinna said is a good spot to be.

City sanitation division updating fleet to cut maintenance costs, proposing rate increase [2019]

Skubinna said their projections from 2016 at the savings in maintenance costs by purchasing new vehicles have stayed pretty close and the city saved about $1.5 million.

But now interest rates aren’t as low and costs continue to increase, so they’re working on a plan to purchase a few vehicles per year and adjusting the rates is part of that equation, he said.

Landfill costs are also increasing and driving up costs to the city.

The city contracts with Republic Services for use of the landfill and the current contract expires in 2024 with a few options to extend. But the contract comes with automatic inflation factors based on the Consumer Price Index.

The stipulated compensation owed by the city for disposal is a base rate plus an annual escalation of 1 times the consumer price index times the base rate for the preceding year, according to city staff.

The pandemic resulted in an increase in the CPI, and per the February 2022 news release from the U.S. Bureau of Labor Statistics, “The all items index rose 7.9 percent for the 12 months ending February. The 12-month increase has been steadily rising and is now the largest since the period ending January 1982.”

Rate increase proposed for city trash collection [2017]

The landfill agreement stipulates that the base rate escalation percent increase cannot exceed 7 percent.

“Thus, the city could be facing significant base rate escalations for disposal in the forthcoming years due to an increasing CPI,” according to city staff.

During the April 5 meeting, commissioners also approved a professional services agreement with Advanced Engineering and Environmental Services, Inc., AE2S, not to exceed $155,217.

AE2S and their sub-consultant Jacobs, formerly CH2M Hill, will conduct the first phase of a solid waste study.

The overall study is a “planning level feasibility study which evaluates alternatives for city solid waste disposal,” according to the staff report.

The disposal fees at the landfill have increased and are projected to continue increasing, according to city staff.

Lease approved for city-owned property near Manchester exit [2019]

“Therefore, the city would like to compose a report that presents and evaluates alternative options for the city’s consideration for solid waste disposal, including privatization, maintaining the status quo, or constructing a new municipal landfill. Phase 1 of the study consists of a composition of feasible alternatives and performing a fatal flaw analysis or initial screening,” according to the staff report.

Skubinna said they hope to have that study completed by the end of the year and will present it to the commission during a work session to discuss the results and consider options.

The tonnage of trash being collected by the city has also increased, according to city data.

In the first two months of 2022, the city has taken almost the same tonnage of trash to the landfill as all of 1992, Skubinna said.

The landfill are now $2.33 per ton more than 2020 at $30.31, or an 8 percent increase, according to city staff.