HomeMy WebLinkAboutM-92-047634
INTER -OFFICE MEMORANDUM
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-D The Honorable Mayor and DATE June 3, 1992 TILE
Members of the City Commission
SUEJECT Curbside Recycling
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Cesar H. Od ot�,
?Ot'. REFERENCES
City Manager
ENCLOSURES`-
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Pursuant to the City Commission's request at its meeting of April
2, 1992, please find attached an economic analysis assessing the -_
costs and benefits associated with a City -operated 100% curbside
recycling program compared to a private contractor operation.
ECONOMIC ANALYSIS
OF
CURBSIDE RECYCLING
COMPARISON
OF
CITY VS. PRIVATE
Prepared
By
Guillermo Valls
Department of General Services Administration
and Solid Waste
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PURPOSE.........................................................1
PARAMETERS......................................................2
ALTERNATIVE I. CITY OPERATING CURBSIDE RECYCLING...............3
ALTERNATIVE II. PRIVATE OPERATING CURBSIDE RECYCLING ........... 4
COMPARISON OF FIRST THREE YEARS - CITY VS. PRIVATE..............5
'S TO THE CITY IF GOING PRIVATE................6
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PURPOSE:
To perform a preliminary economic assessment of the costs and
benefits associated with a City -operated 100% curbside recycling
program in residential areas compared to the same program
operation provided under a private contractor.
Metro -Dade County unincorporated residential areas and
approximately twelve (12) other cities in Dade County are
presently provided with weekly curbside recycling service through
a private contractor. This contract provides for education,
commingled collection, processing and marketing of recyclables.
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PARAMETERS:
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The attached analysis compares the City of Miami with private
contractor program benefits for Fiscal Years 1992-1994 and future
years, when the State of Florida will no longer contribute to the
program.
Sixty thousand (60,000) households in the City.
City proposal to bypass 1,000 homes per route per day, using 14
trucks and 28 operators daily.
Disposal cost avoidance based on projections from actual (March
1992).
Material sale revenue would go to a special fund.
After 1994, the State Recycling Grant would be eliminated.
Start-up fee of $3.56 per household (private).
Monthly charge fee of $1.57 per household (private).
Contractor would purchase all recycling equipment from the City.
Fourteen (14) employees would be assigned to other functions
within the department.
Operating expenses of $15,000 per truck per year.
Replacement cost of City equipment (Cost per truck is $53,000,
life of truck is 7 years, depreciation per truck is $7,571).
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Operating Expenditures:
Manpower costs:
28 Operators
1 Supervisor
Sub -Total Manpower Costs:
Equipment operating cost:
15 trucks @ $15,000/year
Total Operating Expenditures:I
Equipment Depreciation (15 trucks):
Capital Expenditures:
(Purchase of 22,000 Bins)
Total Cost of Operation:
CREDITS:
State Grant
Disposal Cost Avoidance:
NET COST OF OPERATION:
$1,225,000
50,000
$1,275,000
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$1,225,000
50.000
$1,275,000
$1,225,000
5.0,000
$1,275,000
$1,500,000 $1,500,000 $1,500,000
113,565 113,565 113,565
$1,701,565
(600,000)
"A
$1,613,565
$1,613,565
0
1Total operating expenses will be adjusted in accordance with manpower cost
changes and other inflationary costs affecting equipment operating
expenses.
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ALTERNATIVE II - PRIVATE ENTITY OPERATING CURBSIDE RECYCLING
COST OF REDUCTION EY'92-93 FY'93-94
Operating Expenditures:
Start Up Costs: $213,000 $0
Operating Expenses: 1,130,000 1,130,000
TOTAL COST OF OPERATION: $1,343,000 $1,130,000
CREDITS:
State Grant
Disposal Cost Avoidance:
Sale of 15 Recycle trucks:
Sale of 40,000 Bins:
NET COST OF OPERATION:
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(600,000) (600,000)
(490,000) (490,000)
(600,000) 0
4133,,0� 0
(S480,000) S40.000
$0
1,130,009
$1,130,000
0
(490,000)
0
0
S640,000
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CQST OF OPERATION
Alternative I - City Operation
Alternative II - Private Operation
NET SAVINGS BY GOING PRIVATE
1Net Operating Savings to the City.
FY JOW FY . , THEEFLUTER
0•
NOTES:
- Savings by privatization of the recycling operation in the first
two years is $1,575,130.
- In subsequent years, the savings in the recycling operations is
$483,565.
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COHQMIC ANALYSIS DF CURBSIDE RECYLING
COMPARISON OF CITY VERSUS PRIVATE CONTRACTOR
ADDITIONAL BENEFITS TO THE CITY
1. Private contractor will provide 5% annual replacement of
containers to City residents for the term of the contract.
2. Private contractor provides a commingled materials
collection program. This provides for rapid and efficient
service that minimizes the amount of time that these -_
vehicles must spend traveling the streets of the City of
Miami.
3. Private contractor's material recovery facility processes
material to the highest standards and specifications
required by the markets, thereby providing the highest
revenues for the materials.
4. Private contractor has an expanded marketing network which
virtually guarantees the sale of collected materials.
5. Private contractor provides an ongoing public information
campaign throughout the life of the contract designed to
maximize participation.
6. Private contractor operates an information and problem
solving hotline which, through the use of bilingual
operators and a computerized database, enable quick response
to service problems.
7. Private contractor's contractual arrangements with the
County provides for monetary penalties for failure to
correct service problems within 24 hours.
8. With private contractor, the City can be confident that all
revenues are correct because they must provide the County
with a completely documented audit trail, including invoices
for materials sold. The City will have access to all of
these records.
9. With private contractor, the City has an opportunity to
participate in the Dade County Revenue Sharing Plan. The
City will share 25% of the profit from the sale of
recyclable materials after $0.50 per household (county -wide)
has been achieved with no ceiling on the revenue sharing.
The City will also share 25% of the loss (below $0.50 per
household) up to a maximum of $0.125 per household.
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10. With private contractor, the County is also responsible to
the City for program performance.
11. Private contractor has been able to achieve approximately a
54% set -out rate to date.
12. Private contractor currently services more than 248,000
residences in Dade County with curbside recycling.
13. The yearly increase with private contractor would amount to
95% of the Miami Consumer Price Index. The increase
forecasted for next year would amount to approximately $0.03
.per household. This increase is less than the operating
cost increase of the Solid Waste Division on a year-to-year
basis.
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