Trash rates could jump 15 percent, more services added

The city of Mercer Island is discussing a new 10-year contract with Allied Waste, which proposes a base rate increase of 15 percent. Yet the level of service, according to Allied, will increase alongside household rates. The former solid waste contract expired on June 30.

Allied waste has promised to provide back-up service during inclement weather, such as last winter’s six-day snow storm. Additionally, the contract states that Allied will collect yard waste every other week for three months during the winter instead of monthly.

During last year’s winter storm, Allied was unable to collect trash between Dec. 18 and Dec. 28 due to icy buildup on residential roads. Allied resumed its Mercer Island routes the following week, after rain washed away most of the snow. Yet many Island residents, whose bins were overflowing with holiday trash, were exasperated by the time Allied arrived. Thus, the company has made inclement weather pick-up a priority in its new contract with Mercer Island.

“The biggest deal is service. When the weather was inclement, Allied services were impacted and the solution for the service wasn’t adequate. We had recycling that built up for two weeks,” said Mayor Jim Pearman during a City Council discussion of the contract.

The City’s solid waste consultant, Chris Bell, was asked to evaluate the city’s current rates, the quality and level of service provided by Allied Waste. The Utility Board discussed the scope of Bell’s evaluation at its May 13 meeting. Bell brought this data to Allied representatives and together, the city and Allied developed a new contract plan.

On top of improving service during inclement weather, the contract focuses on sustainability -- a growing priority for both Allied and the city of Mercer Island. Specifically, Allied Waste is aiming to reduce truck trips and idling. It also hopes to ad hybrid trucks to its fleet as soon as the technology becomes available. According to the company, a hybrid truck could be operating on the Island as early as 2010.

Other focuses of the new contract include more aggressive outreach and education, better customer service and phone operating systems, a more comprehensive Web site and higher performance standards.

All of these improvements however, will come with a cost.

It was Allied Waste that determined the rate increase of 15 percent, based on a number of proposed improvements.

According to the company, the new rates would “provide a projected profit margin of 9.7 percent and a return on invested capital of 16.9 percent, both of which are within accepted norms for the solid waste industry.”

The city’s current contract has been “quite effective” at limiting rates, with an average annual increase of 4 percent and a combined increase of 19 percent over the past six years, according to Allied data. At the same time the company says that costs have increased 35 percent over the past six years.

Allied also cited the current recesion, pointing out that recycling commodity prices have followed the national economy into “free fall.” As for Mercer Island’s request for services during snowy or stormy weather, Allied will have to purchase a specialized truck for the Island’s many “hard-to-serve” areas, which include steep hills and winding roads.

If the new contract is adopted by the city, rates would be adjusted annually based on the Seattle-area Consumer Price Index (CPI). The CPI adjustment would not be applied to disposal charges for garbage or processing fees for recycling or yard waste.

Despite much discussion over the details of Allied’s proposed contract, Councilmembers agreed that the 15 percent rate increase was worth the additional services.

“Nobody wants a 15 percent increase on anything, but service is the most important thing here,” said Pearman.

Councilmember Bruce Basset echoed this point.

“Allied created a contract that didn’t keep up with costs for them. Now they’re trying to set a deal with us that is acceptable. This isn’t an effort to recoup money. It’s an attempt to set a level that is fair going forward,” Basset said.

During the process of evaluating Allied’s rate proposal, the Utility Board discovered that there are more than 1,500 customers who provide their own garbage cans, while fewer than 1,000 have the equivalent 32-gallon cart that the company provides. Islanders currently pay an additional $0.65 per month to use a cart provided by Allied. The Utility Board hopes to change this under the new contract. Its goal is to eliminate the customer-provided cans by educating residents about the benefits of carts and by removing the “financial disincentive” to use the Allied cart.

Pearman, for one, supports this initiative.

“We want to develop a program where staff can get rid of glass [recycling] bins if customers don’t want them anymore. That way customers can throw glass in with the regular bins,” he said.

Before approving the new 10-year solid waste contract, the City Council wants the Utility Committee to bring its recommendations -- some of which include rating options and further details on pick-up during inclement weather -- back to Allied Waste to re-examine. Solid waste consultant Bell will discuss the City Council’s directions with Allied representatives and return to the City Council with a second contract proposal in August.

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