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HomeMy WebLinkAboutEDCO Disposal Corporation - Modification Silver Bag Program - 1995THE SILVER BAG PROGRAM The requirement for MANDATORY trash service in National City was established in February 1984. Landfill fees were $7.32 per ton, and National City trash rates were $6.25 per month, with a seniors' discount rate of $5.00 per month offered. There were a few low income/fixed income seniors who generated very low volumes of trash. They were perceived to have difficulty in meeting the seniors' rate of $5.00 per month, plus it seemed disportionate for them to pay full freight for a very small quantity of trash. EDCO (unilaterally) devised the silver bag program, and priced it so that if one used 5 or less trash bags per month, it would be economical to use silver bags; if more than 5, the seniors' discount would be cheaper. Thus the program would be self policing in that if the total trash volume remained low, the silver bag system would benefit the citizen; while if the trash increased, the senior discount rate would be better. No means test was established to define income levels for senior discount or silver bag. It should be noted that to the extent that senior citizens discount users and senior citizens silver bag users paid less than full rate, they are subsidized by the other rate payers who are paying full fare. So long as the numbers were low, the differential amount being low, the amount of subsidy was small enough to be ignored in the overall scheme. In this way, a cost break was provided to the target senior citizens (i.e., seniors with low/fixed income who in fact had a low volume of trash). As time went by, and costs primarily driven by tipping fees went up, this silver bag rate being outside the annual review process was left at its original level. When the mandatory recycling program was established, blue boxes were provided to silver bag customers. The effect of this, however, was to increase the volume of rubbish under the program in that recyclables (which were originally included in the bag) are now "outside" the bag, and that space can be used for rubbish. The same impact occurred with the yard waste program. The "explosion" of senior citizens using the silver bag program is generating some significant problems: a) With the new automated system, silver bags are picked up along with recyclable items. When only 100 customers were silver bag, this was an acceptable solution. With the numbers going well over 500, this method is no longer cost effective. b) Cost for senior citizen discount rate is $13.04 (includes .38 reduction for automation). Normal silver bag customers (5 bags per month at .91 per bag), pay $4.55 per month average. This represents a net loss in the range of $8.49 per customer per month. With over 400 "unauthorized" users, the net loss is in the $40,000.00 per year range - not an inconsequential amount. If all senior citizen discount rate people were to go to silver bags, loss would be in the $150,000.00 per year range - an unacceptable situation. The Silver Bag Program Page 2 The system worked (with less and less efficiency as the fees escalated) so long as the total number of silver bag customers stayed in the 100 range. Significant increases started in July 1993 and have increased since then. This factor was noted in the back-up data presented to Council in support of the FY-95 rate increase (June 21, 1994), wherein it was noted that the silver bag rate was inconsistent with costs; and that the .91 cost should be in the $2.73 per bag range. The problem now is that we have over 400 non -targeted people using the underfunded silver bag program, a portion of whom are being subsidized by other rate payers, a portion of whom are being subsidized by EDCO. If no action is taken, all of the present senior citizen discount customers can shift to the silver bag program, and we will have between 1500 and 1600 customers being subsidized. This is patently unfair to normal rate payers. Some action is required. Alternatives: 1) Do nothing. Impact: Regular rate payers and seniors on senior discount rate will continue to subsidize non -targeted seniors. NOT RECOMMENDED. 2) Stop the silver bag program. Impact: Relieves the problem of inappropriate use of the silver bag program, and eliminates the subsidy, but it also makes the program go away for the targeted group. NOT RECOMMENDED. 3) Increase the price of the silver bags sufficient to curb excessive use of this subsidized rate now, while continuing to provide a reduced rate for targeted seniors. This would require raising the silver bag rate to $250 per bag. Impact: While this would minimize the inappropriate use of the silver bag program, it would require a substantial increase for targeted seminars. This is a viable choice, but is NOT RECOMMENDED. The Silver Bag Program Page 3 4) Increase the price of the silver bags sufficient to curb excessive use of this subsidized rate in two steps --one now, with final adjustment at normal rate review effective 1 July 1995. The immediate rate would be at $1.97 per bag, with the 1 July 1995 amount being based upon overall charges including tip fees, etc., but estimated generally in the $2.40 to $2.50 per bag range. Impact: Permits return to an appropriate 37% subsidized rate to targeted seniors in two steps to ease the transition rather than a one step change. Bags on hand would be honored, but purchase of new bags would be limited in quantity to prevent "stocking up". This is RECOMMENDED. 5) Implement the increase in silver bag cost to arrive at a 37% subsidy (from the regular customer rate as initially established at program inception) in three steps --one now, one at the 1 July 1995 normal rate increase time, and the final increase 1 January 1996. Under this scenario, the rate would go to $1.44 per bag now, to about $2.00 per bag 1 July 1995 (depending upon level of regular customer rate granted), and about $2.50 per bag 1 January 1996. Impact: Although this lessens the impact on targeted seniors, it also extends the time period for regular customers and senior discount to continue to subsidize the non - targeted group using the silver bag program. This method simply continues to permit some seniors to pay less than their fair share cost. Requiring these non -targeted seniors to revert to the senior discount rate will still provide them with a subsidized 20% discount of the regular rate. NOT RECOMMENDED. The potentiality for seniors' to use the silver bag program to escape payment for trash services will be severely reduced if EDCO will periodically spot check purchase of bags with sufficient frequency to ensure that the program is not abused in this manner. EDCO has agreed to make such frequency of purchase checks. c Hauler Coast Laidlaw EDCO Coast Waste Mgt Mashburn ' scondido - EDI Fallbrook FRS(EDCO) Imperial Beach. Laidlaw La Mesa Mesa FDCO Lemon Grove EDCO ational City EDCO Coronado El Cajon eanside oway — Ramona Santee Spring Valley pring Valley Waste Mgt Mashburn Ramona Mission EDCO Laidlaw Mashburn SR Disc ,.uaue 20.00% 13.53% 20.00% awe 20.00% 20.00% 20.00% Age 62 65 65 62 Income $14,450 $14,450 SENIOR POnr ANA[' SIS Comments Full Service Trash & Recycle only. Full Service 62 $14,450 Full Service 62 $14,450 Full Service 60 rt/a Full Service 12.00% 65 13.73% 55 20.00% 62 $14,450 n/a $14,450 vtJRI6i'tC?C 101\K-, �12%107.Oj� 3 , t L U 1'°.:* Full Service Full Service Full Service Prgrm Yes Yes Yes 11/4/9 Supplemental Program Description Senior bag program. Includes recycle & max of 5 cans yard waste per pick up. 26 bags per roll. Sold in full rolls only. (6 month supply) $2.51 per bag/$65.26 per roll Senior bags available @ $3.08 ea. No yard waste. Same qualifications as Senior rate. Senior bags available @ $.91 ea. Saute qualifications as Senior rate. Includes Rubbish and Curbside Recycling. (Proposed: No yard waste) ®®S3=D®SAIL— CO- - - - —111 1 rsj 6670 Federal Boulevard, Lemon Grove, California 91945 (6191 287-7555 Fax (619) 287-5242 National City Senior Rate Analysis Month Year Senior Discount Customers Silver Bag Customers Jan 93 1336 Feb 93 92 1335 92 Mar 93 1336 Apr 93 1337 91 May 93 91 1341 92 Jun 93 1340 95 Jul 93* 1356 Aug 93158 1369 173 Sep 93 1367 181 Oct 93 1315 244 Nov 93 1313 Dec 93 245 1306 258 Jan 94 1265 Feb 94 1240 315 Mar 94 5 346 12 05 3 71- Apr 94 1245 May. 94 1232 380 Jun 94 1242 389 399 Jul 94* 1222 Aug 94 1221 451 458 Sep 94 1235 502 Oct 94** 1178_ 5 2 542 — i71O * Annual Rate Adjustment "* Automated Collection Implemented bC l J01• 14 oCG`C' �SlSZ�� rT7(o9oj A WASTE COLLECTION AND RECYCLING COMPANY ct2\ SILVER BAG COST VERSUS SENIOR DISCOUNT COST Current Rate: Regular: $16.30/month Senior Discount: $13.04 At $.91 At $1.97 At $2.40 4 bags = $ 3.64 4 bags = $ 9.60 5 bags = $ 4.55 5 bags = $12.00 6 bags = $ 5.46 6 bags = $11.82 6 bags = $14.40 10 bags = $ 9.10 7 bags = $13.97 14 bags = $12.74 15 bags = $13.65 At $2.50 4 bags = $10.00 5 bags = $12.50 6 bags = $15.00 City of National City, California COUNCIL AGENDA STATEMENT MEETING DATE January 17, 1995 AGENDA ITEM NO. 6 1- ITEM TITLE Recommendation. for Modification to DCO Silver Bag Trash Program PREPARED BY C.R. Williams, Jr. DEPARTMENT Public Works EXPLANATION. See attached Environmental Review X N/A Financial Statement Limiter' impact on City. Trash payments paid by citizens directly to Trash Hauler. Account No. N /A STAFF RECOMMENDATION Raise price of silver b in 2 steps - to $1.97 per bag immediately, and 2nd step as part of rate review effective 1 July 1995. Limit quantity of bags purchased. BOARD/COMMISSION RECOMMENDATION N/A ATTACHMENTS (Listed Below) Resolution No. N/A 1. Senior Program Analysis - Cities 2. Silver Bag Customer Counts 3. Silver Bag versus Senior Discount A-200 (Rev. 9/80)