City mulls contracting out for refuse collection

The City of Sisters may be getting out of the refuse business.

Sisters is the only local municipality that has an in-house refuse operation. Redmond, Bend, and Deschutes County all contract with High Country Disposal (HCD) for their refuse services.

It appears that Sisters may be headed in that direction, too.

Earlier this year an "improvement analysis" was done on the city's refuse operation. One of the key findings was the need to lease or purchase a new front loading truck, making collection safer and more efficient. The city subsequently included the lease/purchase price of $240,000 for the vehicle in the proposed FY 08-09 city budget.

The improvement analysis caught the attention of High Country Disposal, who expressed a desire to become the provider of Sisters' refuse operations. So, in January, HCD formerly proposed becoming Sisters' franchisee.

Sisters City Council is considering the proposal now. The dilemma is that Sisters' in-house refuse operation is a revenue generator, helping to fund many other areas of the city's operations.

"At first HCD wanted to give us a small franchise fee, a percentage return based on their total revenues in Sisters. This was a sticking point early on and they've since come back to us with much better revenue proposals," said Eileen Stein, Sisters City Manager.

If the city maintains an in-house operation, an analysis of the city's Refuse Fund for the next five fiscal years initially shows a budget surplus through fiscal year 08-09, then a growing deficit for the next four years.

"The deficit projections are a direct result of future operating and capital equipment needs - vehicles, equipment, labor costs, gas prices and landfill fees," said Stein.

These projections include a 12.5 percent increase in existing rates for FY 08-09. And not much will change with the services currently provided, meaning no curbside recycling. Containers will be provided for yard debris, however, eliminating the need for the backhoe and truck collection method currently used.

Either the city raises rates much higher to account for growing costs over the next five years - perhaps as much as 40 percent - or they consider the services of an outside company like High Country Disposal. High Country Disposal is also proposing a 12.5 percent increase in fees if they acquire the franchise.

HCD offers several more services than those currently provided.

The addition of curbside recycling (except glass) and bulky waste collection, the purchase of all the city's refuse equipment, and the various revenue streams, seem to be tipping the scales in HCD's favor.

But what's to keep HCD from raising rates 40 percent over the next five years?

"Any proposed yearly rate increases will have to be approved by the city council," said Stein. "My information from surrounding communities tells me that HCD has been very clear and honest in their communications with cities."

The contract with HCD, if approved, will span seven years.

City staff is recommending to the city council that HCD become the service provider. They cite the fact that the city's refuse operation is the least favored task among staff, made even more unpleasant and more difficult by the lack of modern and efficient equipment.

"As customer demand picks up due to growth, and particularly for recycling and yard debris collection, refuse is becoming an increasingly specialized and demanding service. There is a willing private-sector service provider who can meet the needs of the city's customers, and for less money in all likelihood, particularly in the near term," said Stein.

Another benefit of giving HCD the service contract is increased staff attention on other city utilities. Refuse collection generates the largest call volume of all city utilities, taking attention away from the water, sewer, street and park maintenance.

The city has also indicated that no staff positions will be eliminated as a result of HCD becoming the refuse service provider.

"From a staff perspective, one of the benefits is that utility workers can grow and be challenged by interesting projects other than refuse collection. Our desire is to have workers cross-trained and multi-skilled, available to handle any task that may come up," said Stein.

Decisions will be made soon. If HCD's proposal is accepted, the new service could begin within 90 days.