Operational Assessment of the
City of Brentwood Solid Waste Department
2007
Client Needs
The City of Brentwood (City) has been providing solid waste collection services to residents and businesses since 1994. In 1998, a small transfer station was built to improve the efficiency of the collection operation.
The City’s population has increased by 75% in the past five years. Along with that growth in population, the City has experienced a 120% increase in costs of providing solid waste services during the past five years, resulting primarily from additional personnel, equipment and disposal costs. Due to the increase in the volume of waste processed by this increasing population as well as commercial businesses, the existing transfer station is not adequate to serve the needs of the City.
In 2004, the City retained another consultant to develop a schedule of annual rate increases for the period from FY 2004-2005 through FY 2008-2009. The City Council approved the consultant’s recommendation and the City has implemented the corresponding rate increases to date. During FY 2004-2005, the City did not generate the additional revenue that was expected to provide the funding for the transfer station. Additionally, the estimated costs for the construction of the proposed transfer station grew by $3.2 million to approximately $8.0 million due primarily by site constraints and escalations in the construction industry.
In order to better understand the operational and financial conditions surrounding the Solid Waste Enterprise (SWE), the City engaged HF&H Consultants, LLC (HF&H). HF&H was asked to conduct a preliminary review of the operational and financial conditions of the SWE. That preliminary review identified four major areas where further analysis was warranted. The City then requested that HF&H work with City staff to provide:
An assessment of the current operations of the SWE subject to limitations of the scope of the engagement;
An assessment of the historical financial operations of the SWE;
A summary of requirements of the new transfer station and our assessment of the current plans to meet those needs; and,
A financial projection for the SWE and our determination of the feasibility of financing the construction of a new transfer station.
Results
Upon completion of our review of the SWE operational and financial performance and plans, subject to the scope of the review and the limitations of that review, HF&H found the following:
The SWE is operationally efficient and well managed;
There has been a net increase to assets in recent years and the operations are cost-effective;
The plans for the new transfer station are generally consistent with the future needs of the City’s residents and businesses; and,
Based on recent financial trends and reasonable projections, the SWE should generate sufficient revenue to finance the new transfer station.
Based on HF&H’s review of the financial and operational information for the SWE, HF&H made the following recommendations:
The City should, as soon as is practical, focus on reducing the level of solid waste materials included in generator’s recyclable materials containers to increase the value of the recyclable materials and generate revenue from them. City staff represents that an effort is being made to this end. Also, the City and HF&H are currently negotiating a contract for recyclable materials processing which should generate revenues to the City, if contamination rates are reduced.
The City should establish a long-range plan for diversion programs with specific milestones for adding additional materials and programs in order to improve the level of diversion being achieved. This plan should evaluate the benefits of new programs against the costs of those programs to the City. While this study did not evaluate specific programs, as the long-range plan is intended to do, additional gains in diversion could potentially be found through programs which have become common in California such as food waste collection, improved C&D materials management, and commercial recycling.
The City Finance Department should explore the possibility of accounting for the solid waste collection operational costs by line of business in order to better analyze the true cost of service and thereby evaluate the City’s operations against industry benchmarks. The City is currently collecting the revenue by line of business. Such benchmarking can be a helpful tool in improving and maintaining high levels of cost effectiveness.
The SWE should begin tracking their operational efficiency, relative to the benchmarks established in this study, and reporting to senior City management at regular intervals.
The current Compensated Time Off (CTO) practice causes difficulties in staffing and can adversely affect productivity. The City is reviewing its current practice of granting CTO to determine its effects on the cost effectiveness of SWE operations. The City has met with the SWE employees and is exploring alternatives.
The SWE should add one operational staff person, as soon as practical, to relieve the current supervisory staff of their operational activities (e.g., driving collection trucks), allowing them to focus on their supervisory functions and thereby improve overall performance.
Once the financing of the transfer station construction is complete, the increase in rates that was necessary for this purpose will not likely be needed. HF&H recommends the City review its rates once the transfer station is completed.
City of Brentwood