Follow Up Community Meeting on the 2023 Solid Waste Utility Rate Study

Town of Lake Park, Florida Follow Up Community Meeting On the 2023 Solid Waste Utility Rate Study Thursday, June 08, 2023 at 6:00 PM Commission Chamber, Town Hall, 535 Park Avenue, Lake Park, FL 33403 PRESENTATION/REPORT: Follow-Up Meeting Associated with the 2023 Solid Waste (Sanitation) Utility Rate Analysis. Public Works Director Roberto Travieso provided a summary of the study (exhibit A). Mr. Shawn Ocasio, Manager from Raftelis Financial Consultants and Mr. Murray Hamilton, CPA from Raftelis Financial Consultants provided a detailed presentation on the rate analysis. (Exhibit B). Public Works Director Travieso provided a timeline for the roll-out of the new utility rate. PUBLIC COMMENT: Susan Ray, 301 Lakeshore Drive asked why the town would be billing the condominium association monthly instead of annually. Public Works Director Travieso stated that it is being streamlined for condominiums because of utilization and service of dumpster use, to be billed monthly, unlike residential sanitation. She asked when the condominiums will be given the final monthly amount they will need to pay. He stated that on June 21, 2023 there would be feedback from the Town Commission on what the maximum proposed rate would be and detailed information would be provided at that point. Mayor Roger Michaud asked if in the first year the intention would be to influx the reserves, the operating costs, or both. Mr. Hamilton stated that it would be a combination of both. Mayor Michaud asked if the proposed maximum rate could potentially get any higher. Public Works Director Travieso stated that no, the maximum proposed rate would be the highest possible rate. Mr. Hamilton explained that if the rate in the first year was less than the highest proposed rate of 48%, then there would be services or equipment that would have to be given up. Public Works Director Travieso stated that this proposal is absolutely necessary. He also stated that in order to cut expenses, there would need to be a reduction in services. Town Manager John D’Agostino explained that operations have not been adequately funded for a very long time and that if we are not willing to fund the service at the appropriate level we would Follow-up Community Meeting June 08, 2023 Page 1 continue underfunding and never get out of the rabbit hole. Mayor Michaud thanked staff for the information. Public Works Director Travieso stated that the calculations used in the rate analysis would be available for review by the public along with the reports. Commissioner Mary Beth Taylor asked about the proposed amount that would be assessed per year. She stated what the amount would be per month and then broken down by services equates to approximately $2.70 per month per service. Commission Taylor stated she would be happy to pay that amount to have those services. She asked if there were any other areas within the town services that could be cut a little bit. Julie Sarcosi 301 Lake Shore Drive asked if the rates for condominiums are for single family or for commercial. Public Works Director Travieso explained that as of October 1st, 2023 condominiums would begin to be billed as commercial. He also stated that the rate chart would be posted once the rate is approved. Commissioner John Linden asked why there is a new code officer position being requested in the proposal. Public Works Director Travieso explained that we need more enforcement of the town ordinances. This officer would be dedicated to focus only on sanitation, not only for enforcement but also for educational purposes for the customers and residents so that they know what the policies and guidelines are. Commissioner Linden also asked about the possible use of ad valorem. Mr. Hamilton explained if we moved these costs to a tax roll, there would be many residents that would be exempted while still contributing to the service need. Unidentified speaker asked if Palm Beach County has plans to reduce recycle bins to one bin only. Public Works Director Travieso stated that the Town makes that determination. Finance Director Jeffrey Duvall spoke about the cost to move to single stream recycling far outpaces the materials that would be pulled out. He went on to say that combining recycling materials can cause some of the materials to degrade and have to be thrown away. Public Works Director Travieso spoke about a recycling initiative that will help educate residents through workshops and booths at events. Public Works Director Travieso recognized Mr. Paul Mathis and Mr. Henry Rossario for their hard work maintaining the Town’s vehicles. He also recognized former Mayor Michael O’Rourke for his support. Follow-up Community Meeting June 08, 2023 Page 2  EXHIBIT A Town of Lake Park Town Commission Agenda Request Form Meeting Date: June 8, 2023 Originating Department: Public Works Follow-Up Meeting Associated with the 2023 Solid Waste Utility Agenda Title: Rate Analysis. Digitally signed by John D'Agostino Approved by Town Manager: John D'Agostino DN: cn=John D'Agostino, o=Town of Lake Park, ou=Town Manager, email=jdagostino@lakeparkflorida.gov, c=US Date: Date: 2023.06.07 10:12:28 -04'00' Cost of Item: N/A Funding Source: N/A Finance N/A N/A Account Number: Signature: Advertised: N/A Date: N/A Newspaper: N/A 1. Agenda Request Form (ARF) Attachments: 2. PowerPoint Presentation Please initial one: Yes, I have notified everyone Not applicable in this case Background\Summary Explanation: The Town of Lake Park operates a Solid Waste (Sanitation) Utility (the “Utility”) which collects solid waste from both residential and commercial properties. The Sanitation Utility is the first line of defense for the community. Additionally, the Utility protects the environment by reducing air and water contamination and by recovering materials for re-use through various recycling processes. Although relatively small, the Sanitation Utility is productive. In fact, in the last two years (2021-2022), the Utility collected and disposed of over 30.6 million pounds of garbage, nearly 9 million pounds of vegetation debris and bulky trash, and 2 million pounds of recyclable materials. Moreover, the Sanitation Utility operates as a self-supporting enterprise fund, but has historically used operating reserves to cover actual expenses that exceeded the budget amounts. Additionally, due to an aged fleet and staffing shortages, the Sanitation Utility regularly experiences collection delays and other operational disruptions. To continue to address these concerns and provide the highest possible level of service to its customers, in January 2023, the Town Commission engaged with financial consultant Raftelis to conduct a comprehensive fiscal analysis of the Sanitation Utility. The primary objectives of the analysis are as follows:  Develop a funding strategy to pay for Solid Waste Utility operations, maintenance, and vehicle replacement needs.  Emphasis on improving the fleet replacement schedule to provide higher service reliability, reduce costs related to service interruptions, and reduce maintenance expenses.  Proposed strategy may also result in higher auction values at the time of resale which may be reinvested in the system.  Estimate revenue requirements to be recovered from solid waste rates.  Identify the need for future rate adjustments. Finally, during the follow-up public meeting scheduled for June 8, 2023, Town and Raftelis Staffs will present information regarding the state of the Sanitation Utility as well as present the findings and recommendations associated with improving the Utility’s operation and fiscal standing. Recommended Motion: There is no motion associated with this Agenda item. For discussion only.  EXHIBIT B Town of Lake Park Solid Waste Utility Follow-Up Meeting on the 2023 Solid Waste Rate Study Public Works Department June 8, 2023 1 Please Scan to View this Presentation on your Device.  Follow-Up Meeting Agenda 1. Introductions 8. Summary of Current 2. Solid Waste Utility Background Operations 3. Solid Waste Utility Operations 9. Conclusions and 4. The Solid Waste Utility Rate Recommendations Analysis 10. Q&A 5. Principal Cost Drivers 11. Closing Comments 6. Study Objectives & Tasks 7. Major Study Assumptions 3  Project Team • Members of the Town Commission • John D’Agostino – Town Manager • Roberto Travieso – Public Works Director • Jeff Duvall – Finance Director • Dwayne Bell – Public Works Operations Manager • Fensely Wisdom and Jackie Harris – Sanitation Foremen • Murray Hamilton – Vice President, Raftelis • Shawn Ocasio – Manager, Raftelis 4  Solid Waste Utility – Background • Collects solid waste from residential and commercial properties • First line of defense for the health of the community • Protects the environment, avoids air/water contamination, and recovers materials through recycling processes 5  Solid Waste Utility – Background • 2021/2022 Mixed-Solid Waste Collection and Disposal Production: › 30.6-Million pounds of garbage › 8.9 Million pounds of bulky trash/vegetation debris › 2.3 Million pounds of recyclable materials 6  Solid Waste Utility – Background • Provides a variety of educational opportunities during public outreach events • Provides Roll-off disposal services through franchise agreements with three (3) haulers • Partners with national, regional and local public/private organizations for continuous process improvement 7  Solid Waste Utility – Background • Where does your trash go? › All solid waste and vegetation debris is transported to Palm Beach County Solid Waste Authority’s (SWA) North County Transfer Station › Recyclable materials are sorted, packaged and commercialized › Solid waste is incinerated to generate electrical energy; leftover materials are neutralized stored underground. 8  Solid Waste Utility – Background (cont.) • Authorized Staff: Nine (9) full-time employees: › Supervisors (2) › Sanitation Truck Operator I (3) (Some vacant 12 months) › Sanitation Truck Operator II (3) (Some vacant 12+ months) › Sanitation Truck Operator Trainee (1) 9  Solid Waste Utility – Background (cont.) • Fleet Inventory • The Solid Waste Division is assigned ten (10) collection trucks: Automatic Side Loader (FEL) › Primary Uses: Residential Garbage, Recycling › Inventory: Four (4) › Average Yrs. in Service: 6.5 Yrs. 10  Solid Waste Utility – Background (cont.) • Fleet Inventory • The Solid Waste Division also operates: Front-End Loader (FEL) › Primary Uses: Commercial Garbage, Recycling › Inventory: Four (4) › Average Yrs. in Service: 6.5 Yrs. 11  Solid Waste Utility – Background (cont.) • Fleet Inventory • The Solid Waste Division also operates: Clam Truck › Primary Uses: Residential Vegetation Debris and Bulk Trash › Inventory: Three (3) › Average Yrs. in Service: 5.75 Yrs. 12  Solid Waste Utility – Background (cont.) • Fleet Inventory › Recommended Equipment Backup Ratio per Solid Waste Association of North America (SWANA): 1:1.2/1:1.5 Needed for Asset (# in Fleet) 1:1.2 Ratio 1:1.5 Ratio Daily Operations Automatic Side Loader 2 2.4 3 Front-End Loader 2 2.4 3 Grapple (Clamshell) Truck 2 2.4 3 Rear Loader 0 1.2 1.5 13  Solid Waste Utility – Background (cont.) • Operates as a self-supporting enterprise fund with separate accounting from other Town departments and resources • Town has historically used operating reserves to cover actual expenses that exceeded the budgeted amounts while phasing in rate adjustments over time Historical Sanitation Annual Assessment- Residential Assessment Year Single-Family/Multi-Family <5 Multi-Family >4 2019-2020 $215.49 $145.93 2020-2021 $234.88 $159.06 2021-2022 $234.88 $159.06 2022-2023 $246.62 $167.01 2022-2023 $258.37 $174.97 14  The 2023 Solid Waste Utility Rate Analysis  Solid Waste Program Requirements • Total program needs through FY28 are estimated to exceed $20.0 million 16  Principal Cost Drivers • Current operating deficiency › FY23 operating expenses exceed current revenues by approximately $250,000 (12% of existing rates) • High costs, frequency and severity of mechanical, fleet repairs › Service Interruptions – Emergency contract operations / limited providers – Urgent and specialized repair needs / sole source providers with little competition  Unable to shop around repair costs 17  Principal Cost Drivers (cont.) • Compensation and Recruitment: › Highly competitive labor market › Some Sanitation Truck Operator positions vacant 12+ months › Recommended changes to operating salaries and associated benefits • Competition: long lead times for materials, supplies, equipment and vehicles › Inflationary increases on all business expenditures 18  Authorization • The Solid Waste Utility has almost exhausted its reserves › Unappropriated reserve fund balance at the end of FY23 is estimated to be less than $265,000 • On January 18, 2023, the Town Commission engaged Raftelis to prepare a Solid Waste Utility Rate Analysis 19  Study Objectives • Develop a funding strategy to pay for Solid Waste Utility operations, maintenance and vehicle replacement needs › Emphasis on improving the fleet replacement schedule to provide higher service reliability, reduce costs related to service interruptions, and reduce maintenance expenses – Proposed strategy may also result in higher auction values at the time of resale which may be reinvested in the system • Estimate revenue requirements to be recovered from solid waste rates • Identify the need for future rate adjustments 20  Study Tasks • Prepare a financial forecast › Fiscal years 2023 through 2028 • Develop projections of: › Disposal requirements and revenues › Operating expenses › Fleet replacement program & funding › Cash reserve requirements › Adequacy of revenues at existing rates 21  Discussion Topics Major Study Assumptions Revenues and Expenses Capital Leases and Minor Equipment Summary of Current Operations Conclusions & Recommendations 22  Projected Revenues • Annual revenues estimated at $2.2 million per year › Most residential property owners take advantage of the 4% discount by paying early • Assumed 1% growth in residential and multifamily cart services • Growth in dumpster accounts based on development projections provided by Town staff 23  Projected Operating Expenses • Based on the adopted FY23 budget of $2.2 million [*] › Adjustment made to disposal costs based on an estimated increase in the tonnage for 2023 of +$92K › Adjustment for operating and revenue contingencies of $27K • (1) Additional Sanitation Truck Operator II to be hired in FY25 › New operator required to support future customers connecting to the system based on planned development projects • (1) Additional Solid Waste Code Officer to be hired in FY25 • Projections include costs associated with fleet repairs and maintenance over the study period _____ [*] Excludes capital outlay, capital lease installments, and loan payments to General Fund. [K] Thousands 24  Projected Operating Expenses (cont.) • Budgeted expenses beyond FY23 were increased based on estimated inflationary allowances as follows: › Labor: 11% (FY24); then 4% per year › Health & Liability Insurance: 15% per year › Fuel & Utilities: 5% per year › General Inflation: 3% per year 25  Vehicle Replacements & Minor Equipment • Total vehicle replacement / capital program of $4.0 million › Replacement of 10 trucks - $3.9 million (proposed capital leases) – 3 Front end loader trucks – 3 Side loader trucks – 3 Grapple trucks – 1 Rear loader trucks › Other capital outlay - $0.1 million (rate funded) – Minor equipment and machinery 26  Proposed Vehicle Replacement Timeline 2023 2025 • FEL 45 • CLAM 66 (14 YRS.) (8 YRS.) 2029 • ASL 50 • REAR 42 • CLAM 68 (14 YRS.) (20 YRS.) (8 YRS.) 2024 2026 • FEL 44 • FEL 56 (8 YRS.) (7 YRS.) • ASL 51 • ASL 58 (8 YRS.) (7 YRS.) • CLAM 67 (8 YRS.) 27  Projected Loans & Lease Payments • Existing annual loan and lease payments of $161,000 in FY23 decreasing to $0 by FY26 › Existing Side Loader lease of $65,000 ends in FY24 › Existing Mack MD7 Grapple Truck lease of $65,000 ends in FY25 › General Fund Loan of $31,000 ends in FY26 • Proposed annual capital lease payments starting in FY24 at $239,000 and increasing to $768,000 by FY28 › All proposed capital leases assume 4-year payback term and interest rate between 5.99% - 6.75% 28  Projected Loan & Lease Payments (cont.) 29  Other Revenue Requirements • Based on discussions with Town staff, we established funding of an allowance account for contractual debris removal expenses for storm events › Transfer of $250,000 in FY24 as initial deposit › Nominal annual deposits of approx. $7,900 per year to keep pace with inflation (3% per year) • Minimum balance in unrestricted operating fund of 60 days of annual expenditures as minimum target in FY24 › Additional deposits to the operating fund over the study period to target at least 90 days of reserves 30  Adequacy of Existing Rates 31  Proposed Solid Waste Rates Description FY24 FY25 FY26 FY27 FY28 Funds Total Program Percent Rate Increase 48% 3% 3% 3% 3% Proposed Annual Charge per Cart $382.39 $393.86 $405.68 $417.85 $430.38 (Current Fee $258.37) Proposed Charge per Cubic Yard (CY) – Per Dumpster Size / Per Frequency of Pickup $16.74 $17.24 $17.76 $18.29 $18.84 (Current Fee $11.31) Sample – Monthly Fees for Dumpster Services 2 CY Dumpster – 1 Pickup / Week ($98.02) $145.07 $149.42 $153.90 $158.52 $163.28 4 CY Dumpster – 1 Pickup / Week ($196.04) $290.14 $298.84 $307.81 $317.04 $326.55 6 CY Dumpster – 1 Pickup / Week ($294.06) $435.21 $448.27 $461.71 $475.56 $489.83 32  Conclusions & Recommendations 1. The Solid Waste Utility should operate as a self-supporting enterprise fund with separate accounting from other Town departments › Town has consistently used operating reserves to cover actual expenses, but those reserves have been mostly depleted › Existing rates are not adequate to cover the current operations 33  Conclusions & Recommendations 2. On or about January 18, 2023, the Town Commission adopted an ordinance that moves multi-family dumpster accounts to the standard dumpster rates › The projected financial results were prepared based on the adopted service classifications › The Town Commission should consider adopting the proposed rates through FY28 34  Conclusions & Recommendations (cont.) 3. The Town Commission should consider adopting a reserve policy for the Solid Waste Utility to provide working capital and to help address unforeseen contingencies › We recommend a target operating reserve balance of at least 90 days of annual expenditures that may be achieved by FY26 if the adopted rates are implemented › A separate contingency fund of $250,000 for emergency, debris removal should also be established 4. This study should be updated within 5-years 35  & 36  Next Steps & Timeline • January-May 2023: Solid Waste Rate Analysis • June 8, 2023: Follow-up Meeting on the Solid Waste Rate Analysis • June 21, 2023: Presentation to Town Commission on findings and recommendations from Solid Waste rate analysis (for discussion only) • July 28, 2023: Town submits maximum proposed Solid Waste assessment rates to PB County (TRIM Notice) • August 2023: Fee Schedule Resolution presented for approval • August 18, 2023: TRIM Notices mailed to all taxpayers • September 2023: Town submits approved Solid Waste assessment rates • November 1, 2023: Tax bill sent to all taxpayers 37  Connect with Us! • New Service Request Portal › Request Service › Report Issues (561) 881-3345 publicworks@lakeparkflorida.gov SCAN AND BOOKMARK ME! 38