Item B: Solid Waste Collection/Fee Structure

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1 Chapter One Background City Regulatory System The City of Eugene (City) issues licenses to private hauling companies (haulers) to collect solid waste, recycling and yard debris from City residents and businesses. These licensed haulers compete among themselves for accounts within the City’s corporate limits. The City establishes the rates that licensed haulers may charge for their services. In addition, the City Manager establishes minimum standards for the provision of collection services by the licensed haulers. Historical Rate Setting Rates have been set by the City based on the criteria outlined in the City Administrative Rules. Historically, the City has set the rates to provide a reasonable rate of return above the average cost of service. During most of the 1990s, the City calculated rates on a cost-plus basis to provide a 6.5% after-tax return. However, since 1998, the City has calculated rates on a cost-plus basis to provide an 11% pre-tax return, consistent with most Oregon agencies. In 1989, residential and commercial services were separated to calculate rates. The City has adjusted residential and commercial rates independently to recover the estimated cost of service for each customer base. This was followed by a 1991 cost-of-service study that calculated rates based on the cost of service for each container size. The City established progressive rates in 1992 to encourage additional recycling. As customers have increased their source reduction and recycling activities, they have shifted from larger garbage containers (at higher rates) to smaller garbage containers (at lower rates). As a result, customers with smaller garbage containers are paying a greater share of the fixed costs of garbage collection service. Thus, residential rates have increased at a rate greater than inflation, in spite of the fact that the haulers’ expenses have increased at a rate less than the inflation rate. Rates Advisory Committee In 1994, a Department Advisory Committee, known as the “Solid Waste and Recycling Committee,” was formed to advise the City Manager regarding the City’s rates and rate policies. This Committee was disbanded after the 1994 rate review. A new Department Advisory Committee, known as the “Rates Advisory Committee” or RAC, was formed for the 1998 rate review. The RAC was disbanded after the 1998 review.