Department of Public Works Refuse Cost Initiative 7/21/2020 - - PowerPoint PPT Presentation

Department of Public Works Refuse Cost Initiative

7/21/2020

Topline

Due in part to loss of revenue caused by Covid-19, the City of Birmingham is aggressively exploring revenue generation and cost savings

• pportunities.

The Mayor’s Office charged a cross- departmental team with analyzing cost effective options related to the City’s refuse management process.

Topline

The resulting Cost-Benefit Analysis compares cost estimates for the following refuse management options with Current State estimates:

Engage an external partner to collect refuse on behalf of the City

Option 1: Engage an Experienced Refuse Management Service

Automate internal refuse management by purchasing 8 side loaders and adding tippers to existing fleet

Option 2: Automate the City's Refuse Collection Fleet with 8 Side Loaders

Automate internal refuse management by purchasing 20 side loaders and adding tippers to existing fleet

Option 3: Automate the City's Refuse Collection Fleet with 20 Side Loaders

Focus on Alabama Cities

Huntsville, AL Mobile, AL

Refuse

• Handles household garbage in-house.
• Picks up garbage once a week.
• Charges residential collection fee of $16.50/month

for a 96-gallon garbage cart.

• Additional garbage carts can be obtained for $3 per

month, per a one-year minimum contract.

• Handles household garbage in-house.
• Does not charge for household garbage

collection.

• Picks up garbage once a week.

Recycling

• Outsources recycling to the Solid Waste Disposal

Authority (SWADA).

• Collects curbside (by recycling partner Recycling

Alliance of North Alabama (RANA)) once a month. Recycling is collected in new 95 gallon rolling carts.

• Does not charge for collection but requires

registration for the service.

• Provides several local drop-off locations.
• Pays approximately $4.2million to SWADA for both

landfill and recycling services.

• Does not provide curbside recycling.
• Provides two local drop-off recycling

locations, then outsources the recycling and sends it to an out-of-state buyer.

Refuse Collection Cost Initiative Assessment

Current State

Current State 5-Year Projected Total Expense

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2020 2021 2022 2023 2024

$6.881 $7.444 $8.060 $8.737 $9.479

Millions

27.9% increase

5-year Anticipated Expense for Current State

$40,601,000

Refuse Collection Cost Initiative Assessment

Option 1: Experienced Refuse Management Service

Benefits

Experienced Refuse Management Service

ØReduction in

• overall costs
• personnel requirements
• equipment purchases
• Workers’ Compensation claims

ØRisk elimination including

• bodily injury to personnel
• damage to private property

Assumptions

Experienced Refuse Management Service

In Scope for this Option

• The City will advertise a bid for a refuse management service provider. The

winning provider will be engaged to handle recycling and refuse, including bulk trash and green waste.

• Estimated expenses for this option are based on a 25-30% savings over

current costs as reported by other Alabama cities using service providers.

• Current personnel will be reassigned.
• The service provider will provide two residential trash receptacles to each

Birmingham household.

• Refuse will be picked up once a week.
• Recycle will be picked up once every two weeks.
• The service provider will service alleys and streets.

Out of scope for this Option

• Current vendor-based refuse service in outlying areas of Birmingham
• Park and Recreation garbage trucks
• Landfill operations

Experienced Refuse Management Service Option 5-Year Projected Expense vs Current State

5-year Total Expense Option 1 vs Current State

$9,791,000 decrease

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2021 2022 2023 2024 2025

$6.881 $7.444 $8.060 $8.737 $9.479 $5.210 $5.642 $6.116 $6.635 $7.206

Millions Current State Refuse Management Service

Refuse Collection Cost Initiative Assessment

Option 2: Internal Automation – 8 Side Loaders

Benefits

Internal Automation – 8 Side Loaders

üPartial Automation of refuse collection üReduction in

• personnel costs
• Workers’ Compensation
• risk

üMaintain normal response time to customer needs and complaints

Assumptions

Internal Automation - 8 Side Loaders

In Scope for this Option

• Eight (8) automated side load trucks will be purchased for refuse collection.

Refuse pickup with new trucks to begin on or before January 1, 2021. * AutoCar 22-yard truck is recommended by Equipment Management.

• Extended engine, transmission and body warranties will be purchased for each

new vehicle.

• Existing trucks will be retrofitted with tippers. Tippers will be in place before

January 1, 2021.

• A Municipal Lease will finance this purchase.
• The City will provide each household with one 96-gallon refuse bin. No bin will

be provided for recycling. Preferably, bins will be delivered to households on September 1st but no later than October 1st.

• Refuse will be picked up once a week.
• Recycling will be collected once a month through mid 2021 or longer.
• A subset of current personnel will become available for reassignment.
• Routes will be analyzed and reconfigured for most efficient collection by DPW

leadership with the assistance of expert consultant.

* Time frame details: Truck chassis should be built and subsequently delivered in September 2020. However, truck bodies will not be completed until at least 60-90 days after chassis delivery.

Assumptions

Internal Automation - 8 Side Loaders

Out of Scope for this Option

• Current vendor-based refuse service in outlying areas of Birmingham
• Park and Recreation garbage trucks
• Landfill operations

Internal Automation – 8 Side Loaders 5-Year Projected Expense vs Current State

5-Year Total Expense Option 2 vs Current State

$819,020

decrease

$4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2020 2021 2022 2023 2024

$6.881 $7.444 $8.060 $8.737 $9.479 $6.871 $7.389 $7.957 $8.581 $9.266

Millions Current State Internal Automation

Refuse Collection Cost Initiative Assessment

Option 3: Internal Automation – 20 Side Loaders

Benefits

Internal Automation – 20 Side Loaders

üAutomation of refuse collection üReduction in

• personnel costs
• Workers’ Compensation
• risk

üMaintain normal response time to customer needs and complaints

Assumptions:

Internal Automation – 20 Side Loaders

In Scope for this Option

• Twenty (20) automated side load trucks will be purchased for refuse

collection.

• Extended engine, transmission and body warranties will be purchased

for each new vehicle.

• Existing trucks will be retrofitted with tippers.
• The City will provide each household with one 96-gallon refuse bin

and one 96-gallon recycle bin.

• Refuse will be picked up once a week.
• Future recycle will be based on current pilot recycling program.
• This option may be financed by a reallocation of personnel costs.
• Routes will be analyzed and reconfigured for most efficient collection

by DPW leadership with the assistance of expert consultant.

Out of Scope for this Option

• Current vendor-based refuse service in outlying areas of Birmingham
• Park and Recreation garbage trucks
• Landfill operations

Internal Automation – 20 Side Loaders 5-Year Projected Expense vs Current State

5-Year Total Expense Option 3 vs Current State

$5,607,000 decrease

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2020 2021 2022 2023 2024

$6.881 $7.444 $8.060 $8.737 $9.479 $6.114 $6.154 $6.555 $6.995 $7.478

Millions Current State Internal Automation

Internal Automation 20 Side Loaders Projected Payroll Expense vs Current State

5-year Payroll Expense

28%

decrease

$5.520 $5.019 $4.562 $4.148 $3.771 $7.877 $7.161 $6.510 $5.918 $5.380

$0.0 $2.0 $4.0 $6.0 $8.0 $10.0 2024 2023 2022 2021 2020 Millions Current State Internal Automation

Internal Automation – 20 Side Loaders Option Projected Workers’ Compensation Expense vs Current State

5-year Workers’ Compensation Expense

36%

decrease

$239,121 $233,289 $227,599 $222,048 $216,632 $154,049 $150,292 $146,626 $143,050 $139,561 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2024 2023 2022 2021 2020 Internal Automation Current State

Internal Automation – 20 Side Loaders Projected Operating Expense of Equipment and Vehicles

Includes Repairs and Maintenance, Supplies and Fuel

$500,000 $600,000 $700,000 $800,000 $900,000 2020 2021 2022 2023 2024

$710,239 $727,995 $746,194 $764,849 $783,971 $812,409 $832,719 $853,537 $874,876 $896,748

Current State Internal Automation Formula1

5-Year Equip/Vehicle Expense

$537,042

increase

Internal Automation – 20 Side Loaders Projected Repairs and Maintenance Expense vs Current State

$451,109 $440,106 $429,372 $418,899 $408,682 $563,886 $550,133 $536,715 $523,624 $510,853

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2024 2023 2022 2021 2020 Internal Automation Current State

5-Year Repairs/ Maintenance Expense

20%

increase

Internal Automation – 20 Side Loaders Projected Fuel Expense vs Current State

No significant change

Fuel Expense

Internal Automation – 20 Side Loaders Projected Supplies Expense vs Current State

No significant change

Supplies Expense

Internal Automation – 20 Side Loaders Projected Depreciation Expense vs Current State

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 2020 2021 2022 2023 2024 $783,590 $783,590 $783,590 $783,590 $783,590 $528,000 $528,000 $528,000 $528,000

$528,000

Internal Automation Current State

5-Year Depreciation Expense

$1,277,950

increase

Refuse Collection Cost Initiative Assessment

Expense Comparison

Expense Comparison Receptacle Expense Comparison

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $562,100 $562,100 $562,100 $562,100 $562,100 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2025 2024 2023 2022 2021 Internal Automation - 20 Side Loaders Refuse Management Service Current State

Based on 73,000 households

Total 5-year Expense Comparison

Greatest expense reduction

• pportunity:

Experienced Refuse Management Service

$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 2021 2022 2023 2024 2025 Current State Internal Automation 20 Sideloaders Refuse Management Service

Refuse Collection Cost Initiative Assessment

Potential Service Fee Collection

Fee Comparison Of Alabama’s Largest Municipalities

Municipality Fee for Refuse Collection

Auburn $23.50/month curbside $33.50/month backdoor Baldwin County $16/month Birmingham No Fee Dothan No Fee Hoover No Fee Huntsville $16.50/month Mobile No Fee Montgomery $27/month Tuscaloosa $21.35/month

Example: Potential Impact of Fee-Based Refuse Collection in Birmingham

Birmingham chooses to implement the Experienced Refuse Collection Service option and a $15/month service fee1. Assuming 73,000 rooftops in Birmingham, in year one the potential amount of total fees collected is $13,140,000. Of that amount, $5,210,000 would be used to cover Refuse Collection Service expenses. The additional $7,929,000 would be used for capital improvements related to solid waste disposal.2

Funds collected above what is necessary to cover

• perating costs would

provide a boost to the City’s aging fleet,

while freeing up other funds currently used toward fleet maintenance and other solid waste expenses to be used for the City’s general purposes.

1 Certain citizens and situations may be exempt from service fees. For Statutory exemptions to waste collection fees, see

• Alabama. Code, 1975, § 22-27-3.

2 For this service fee, amounts collected over and above the amount needed to cover operating costs may only be applied

to costs related to solid waste collection, transportation and disposal. This may include replacement of the City’s current fleet, landfill-related expenses, etc.

DESIRED BENEFITS FROM SOLUTION

→ Substantially reduce cost structure → Decrease refuse management expense → Eliminate need to purchase trash receptacles → Decrease fleet costs → Remain responsive to residents’ needs → Provide quality customer service → Improve employee morale → Mitigate or eliminate risk → Decrease personnel requirements → End equipment purchases

Comparison of Benefits

SOLUTION EVALUATION

Solution providing largest number of desired benefits:

Current State Internal Automation

û û

Experienced Refuse Management Service

ü

Refuse Collection Cost Initiative Assessment

City Ordinance Considerations

ØWith authorization from the Mayor, advertise a bid to potential refuse management service providers.

Next Steps