To: Mark Nuaimi

From: Brittney Ybarra

Date: December 1, 2014
For Council Meeting: December 4, 2014
Subject: Support or Opposition for trash collection outsourcing
Prior Council Review: Evaluation of Directors Report for City trash collection
Recommendation: City Council should take into consideration
1. If the city decides to go with contracting out to TrashBGone the monthly rates
would increase to $25/month which would equal $300.00 yearly. The first year
would entail the city receiving $300,000 from TrashBGone plus a $156,000 net
profit for outsourcing. For years to come after the first initial year would give the
city a 10% franchise fee or $200,000 from TrashBGone. Contracting out can
increase the citys revenue and therefore the extra income can put put forth
toward incentives for potential upgrades.
2. Retaining the Trash Department would that Septicville currently has would allow
them to budget their expenses down the road. They would giver their new
employees a 15% pay cut after the current employees retire. It also allows current
employees the opportunity to move up within the company and can offer a higher
promotion rate.
Current Situation: Scepticville is outweighing all options to save its city excess
expenses. Evaluating its option to contract out and go with a different company to
get rid of their wastes. TrashBGone offered to provide Septicville their service of
$25/monthly rate and to also pay the Town a 10% franchise fee, ending with an
initial onetime payment of $300,000 for the Towns trash trucks and cans. Also to
take into that account the current employees of the Trash Department are close to
their retirement (3 years until they retire). The current Trash Department Director
did not count for a number of expenses thus below showing the actual annual cost
to retain the department.

Discussion:
Contracting Out:

Below states if the Town were to contract out and raise the monthly rate to
$25/month, the total cost of contracting out to TrashBGone would be:

In the table below shows if we assume that TrashBGone pays the acquisition fee,
franchise fee, and employee severance in 2015. The future financial impact that would
happen with no employee severance and no acquisition fee would leave the franchise
fee left at 10% which would equate to an annual $200,000 stated below.

Retaining the Department:

First the town should give a 10% increase in current pay for the current
trash supervisors and promoting him to director while terminating the
current Director of Waste Management. This new plan would include two
current trash operators to retire to reduce financial costs. After
consultation from the union, In 2015 employees cover 8% of their
retirement costs compared to the current retirement costs of 25%.

If they have current operators retire

o

2 in 2016

3 in 2017 along with replacing them with new employees at a 15%

less pay and a new retirement cost of 10% which the employees
agreed to pay half, below the spreadsheet will show in these
numbers:

Trash rates would increase to $20.78, assuming these concessions are

accurate for 2015. Subsidies help cover costs for pension, benefit
increases, and salary increases by the end of 2017. New profits for the new
trash rates will be $96,659.40.