City close to raising rates for recycling
Amid seismic shifts in the recycling market, Wilsonville is close to approving a steady stream of charges and rate increases for garbage and recycling collection services. The City's intention is to smooth out the changes over two years to make the extra cost burden more manageable but also adapt to the market.
The new Solid Waste Franchise Agreement with Republic Services, which passed a first reading at the May 7 City Council meeting and would go into effect July 1 if it passes a second reading, includes multiple rate increases, changes in the city's policy for implementing rate increases, increases its franchise fee and adds a $2.50 monthly recycling surcharge for residential customers and a $1.50 surcharge per yard of recycling for commercial customers.
Under the current agreement, Republic Services, which contracts with the city for recycling services, would have requested a 6.5 percent service rate increase this year. To account for this, Wilsonville and Republic Services agreed to impose a 3.25 percent rate increase by July 1 and a second 3.25 percent rate increase October 1.
Combining the surcharge and the rate increase, the average residential customer's monthly bill would increase by $3.36, according to Wilsonville Assistant City Attorney Amanda Guile-Hinman said.
"Overall, it's not a huge expense. It's designed to offset the recycling increases that haulers are now experiencing," Guile-Hinman said.
The potential increase in recycling rates comes at the backdrop of China recently suspending imports of recycled good to the United States until June 4. Last year, China imposed new purity standards for recyclable scrap imports. U.S. recycling companies relied on China for much of their recycling exports and cities are having to raise rates to adjust to China's new policies. Portlanders, for instance, recently faced a 10 percent increase in their garbage bill.
"We're continuing to see those impacts and monitoring them as best as we can," Republic Services General Manager Jason Jordan said at the meeting.
Along with the upcoming rate increases, Wilsonville will also assess Republic Services' books to garner an accurate estimate of the company's profitability and could increase or decrease rates based on that assessment by July 1, 2019.
After these increases, rates would be updated on an annual basis via a Consumer Price Index (CPI) that is based on inflation and Republic Services' profitability.
Guile-Hinman said the CPI-determined rate increase will mean customers will face rate upticks more frequently but the long-term arc of increases would be similar to the current structure in which Republic Services periodically asks the City to implement specific rate increases. One year, the City increased rates by 7.5 percent. And others, it didn't increase them at all.
"This is to show council that staff's opinion is that going to the CPI is going to be pretty close to what Republic Services would otherwise ask for, but will give the benefit of being a more gradual increase rather than say, a 7.5 percent increase all at once," Guile-Hinman said.
The recycling surcharge would be a separate line item on a customer's bill and would be reviewed by City Council every six months. Customers cannot avoid the recycling surcharge regardless of the size of their containers and can't choose to only pay for solid waste services. Guile-Hinman said the surcharge is supposed to be temporary.
"(In the six-month review process) we can see what's been happening with the recycling markets because it's pretty volatile right now," Guile-Hinman said. "It will constantly be reviewed because it should ultimately be a temporary charge."
The City's franchise fee increase from 3 percent to 5 percent would go into effect Jan. 1, 2020.
Councilors suggested at the work session prior to the meeting that the City and Republic Services make a concerted effort to notify citizens about the rate increases.
"The City is taking on putting on a webpage for customers that explains everything that is going on with this new franchise agreement," Guile-Hinman said. "Republic Services is also doing some outreach as well."
Republic Services was set to give a presentation to City Council at the May 21 City Council meeting addressing the changing market and the rate increases.