Lower trash fees of Wichita's neighbors are result of bidding
02/21/2011 6:26 AM
08/05/2014 2:00 PM
Residents in other communities pay less for trash and recycling than Wichita residents would pay under a proposed trash cooperative. Wichitans could pay less than the $20 monthly fee recommended in the proposal, but a cheaper price would likely mean all but one hauler would be run out of business, say those who helped craft the plan.
And that's not the message the City Council has delivered, said Joe Pajor, interim director of public works.
"They don't want to see (21) losers and one winner," he said.
The main way to drive the fee down would be open bidding to select the one hauler offering the best deal.
That's what Derby did, and its residential customers pay $15.14 a month for a plan similar to the one proposed for Wichita. Park City is at $14.75.
Valley Center will start with a new contract with one hauler Jan. 1 that will have its residents paying $12.95 monthly.
Wichita's council heard about the proposed plan last week from City Manager Robert Layton.
Layton said he would resume talks with trash haulers this week and then present the idea at district advisory board meetings citywide, most likely in January, for additional feedback.
But as for the monthly fee, Pajor and others know one answer.
"There's no question that if we did what Derby did," Pajor said, "we would have a lower price."
That's not all.
"The lowest bid is going to get the contract," said David Lies, vice president of Lies Trash Service and president of the Independent Trash Haulers Association, "and everybody else is going to be out of business."
But Wichita's plan is to use a cooperative of the city's 22 trash haulers to serve its estimated 110,000 to 115,000 residential customers.
Residents would have a weekly trash service, bi-weekly curbside recycling and annual bulk waste pickup. The $20 monthly fee would show up on the city's water bills.
A cooperative also means spreading out the cost of doing business for all haulers — large and small.
"If you're getting all 100,000 homes, the efficiency is going to be greater," Lies said. "But some of the real small haulers have only 500 to 1,000 homes. Their cost to operate 1,000 homes is going to be greater than my cost to operate 31,000 homes.
"We had to have a price that fit the small haulers. You can't expect them to haul for 16 bucks. If you don't have that concession, then we're going to put all the small haulers out of business."
Nearby cities' approach
Layton has said the $20 fee would lower the cost for 80 percent of customers.
Most haulers bill on a quarterly basis now. Lies said he's heard of haulers charging from $51 to $109 a quarter for trash pickup alone. Recycling and bulk pickups are extra.
In Valley Center, residents have used several different haulers and paid $45 to $98 quarterly, City Administrator Joel Pile said. Starting Jan. 1, the town's 3,900 residential customers will begin a five-year contract with Waste Management.
In 2009, Waste Connections won the bid to handle Derby's trash and recycling and signed a seven-year contract. The rate was $44.25 per quarter for a 95-gallon cart, but it will be bumped up to $45.43 — or $15.14 monthly — effective today.
Waste Management also sought the contract for Derby's 6,9000 residential customers, but its bid was $68.70 per quarter, said City Manager Kathy Sexton.
It was an obvious decision to go with one hauler, even if it meant others would lose their Derby business, she said.
"We all deal with politics," Sexton said. "But it's pretty easy to argue from a financial standpoint for the customer."
Some homeowners associations have discounted agreements with trash haulers. Under the city's proposal, those agreements would be honored until they expire.
For example, Willowbend Homeowners Association has a trash and recycling deal for its 523 members that runs through February 2012. The quarterly charge is $44.25 — or $14.75 a month.
David Babich, who lives in Willowbend and takes part in the association's trash service, said no one should pay more than $15 a month.
"I'm all for the agreement the city is proposing," he said, "but the amount is obscene. Wichita is larger, so it should be getting an even better deal."
Babich said it's important to get the fee "right on the front, because you know it's going to escalate over time."
Waste Connections has about half of the 100 homeowner groups that have trash-hauling agreements, said Jim Spencer, the Folsom, Calif.-based company's division vice president for Kansas and Oklahoma.
Spencer wouldn't release details of contracts, but he said the cost of deals depends on such things as an association's participation rate, how the recycling is done and who is doing the billing.
Waste Connections owns and operates the landfill in Harper County, where trash is taken.
Spencer said what the company charges haulers to take trash there isn't public information. Nor is how much it costs Waste Connections to dump its trash at its facility.
There are variations in the trash deals in area communities.
Fees depend on the size of the carts for both trash and recycling.
Cities that do the billing as part of their water bills have an administrative fee that is included in the overall charge. Wichita's plan proposes a 5 percent charge — or $1 monthly at the proposed rate.
At Valley Center, the administrative fee is $1.05. Bel Aire's fee is $1.15.
Park City, now in its third year with Stutzman Refuse Disposal, has dropped its fee from 50 cents to 25 cents.
"We found it didn't cost us quite as much," said City Administrator Jack Whitson, "so we brought it down."
Derby doesn't have an administrative fee; the billing is done by Waste Connections.
Even the haulers don't stay the same. Hutchinson-based Stutzman was bought out in October by Waste Connections, although it continues to operate under the Stutzman name.
Bel Aire's contract is with Stutzman, which charges residents $17.55 monthly.
Arrangements for bulk trash — or picking up items such as sofas that are too large to fit in a trash cart — also vary. Some don't have any provision.
Wichita's proposal calls for an annual bulk pickup. Valley Center residents can have one bulk item picked up weekly. In Derby, residents receive two coupons annually that they can use for curbside pickup or to take a pickup load to Waste Connections' transfer station.
Lies said a good way to drive down rates would be to lower the tipping fee — the cost a hauler pays to dump trash at one of two transfer stations in Wichita.
The transfer station owned and operated by Waste Connections charges $55 a ton. Houston-based Waste Management operates the other station and charges $54.75.
As part of the city's plan, the tipping fee at both transfer stations would drop to $50.
"Lowering it to 50 isn't going to do a whole lot of anything," Lies said, "but at least they're doing something."
He said the tipping fee should be $35 a ton. He said that's what he is charged to haul Mulvane trash to a transfer station in Wellington.
"Wellington does about 5 percent of what goes into the two Wichita transfer stations," Lies said. "When I took economics, the more you had the cheaper the price was. But it's the opposite here."
Lies estimated if the tipping fee could be reduced to $35, the monthly fee for the city's plan would be about $17.
In Des Moines, Iowa, the city operates trash service for its 63,000 households. The trash is taken directly to a landfill with a tipping charge of $32 a ton, said Sara Thies, the city's sanitation administrator.
That's a big reason why Des Moines residents pay only $12 a month for trash hauling and volunteer recycling.
"I think $12 is probably reasonably priced," Pajor said. "That's probably the difference between government and the private sector."