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5.4. SR 03-22-1993 ITEM 5.4. TO: MAYOR AND CITY COUNCIL \. LORI JOHNSON, FINANCE DIRECTOR~tyt\J FROM: DATE: MARCH 18, 1993 SUBJECT: GARBAGE BILLING Recently, several Councilmembers requested that staff revisit the possibility of transferring garbage billing responsibility to the Elk River Municipal Utilities. This issue was initially researched in 1990 when the City started organized garbage collection. For numerous reasons it was determined that it was most logical for the City to do the billing at that time. In response to your request, Gary Schmitz and I have met with Bill Birrenkott, Pat and Vivian of Elk River Municipal Utilities to discuss this issue. Based on those discussions, we offer the following cost estimates and other related items which also should be considered. . Before discussing costs it needs to be noted that garbage is currently billed on a bimonthly basis; if Utilities does the billing, it will be on a monthly basis. Second, there are 3100 garbage customers. Over 30 percent, approximately 1000, of those customers do not receive a bill from Utilities for water, sewer or electric service. Finally, the Utilities uses an envelope bill instead of a postcard bill. Each of these factors contribute to the reason it is more costly for the Utilities to do billing for garbage service. City Cost: Postage and bills Staff Time (15hrs/wk) $4,650 10,183 TOTAL ANNUAL COST $14,833 Utilities Cost: Postage and bills Staff Time (20hrs/wk UB Clerk) Additional phone line for customer service (1/2) $5,547 14,040 360 TOTAL ANNUAL COST $19,947 ONE TIME STARTUP COSTS $2,500 - 3,500 . It will cost approximately $5,114 more each year if Utilities does garbage billing; this is based on estimates from the Utilities. This increase equates to $1.65 per year per customer. This does not take into account the Utilities' start up costs of $2,500 to $3,500 720 Dodge Avenue N.W., Elk River, Minnesota 55330 (612) 441-7420 . and the City's costs to train in Utilities staff and transfer data. The City's cost has not been calculated; however, it is certain that Gary would spend a large amount of time dealing with the transition. As I stated earlier,. there are several other items to consider. First, those customers not currently billed by Utilities will have to mail a payment each month instead of every other month resulting in \additional postage costs of $1.74. Second, the garbage billing data base is used by the building & zoning department and for special assessment searches. The current billing system is set up to sort and inquire based on parcel identification numbers. This is\~eeded to certify delinquent garbage special assessments and to inquire when verbal or written special assessment searches are completed. This data base will be lost if the City discontinues billing; the information will still have to be used but it will be a much more time consuming process (for both the Utilities and the City). Building and Zoning would no longer have access to any parcel identification number data base. Unfortunately, the Utilities' computer system will not allow for a remote terminal which could be at City Hall for inquiry purposes. Additionally, this analysis does not take into consideration the time Gary currently spends on negotiations and general contact with the haulers, developing and establishing new programs, enforcement of the program, solid waste questions, education programs and the Garbage Appeal Board. Gary will continue to be responsible for each of these garbage related duties if the Utilities does the billing. . Finally, neither the City nor the Utilities have received customer complaints or inquiries lately regarding the possibility of writing one check for both bills. Most customers are now aware that as long as two checks are written, one to the City and one to the Utilities, the payments can be mailed together to either the City or Utilities or put in the drop box by the post office. In summary, garbage billing can certainly be transferred to the Utilities if the Council so wishes. Staffs concern is that it be done in the most efficient and least costly way possible. Councilmembers need to be aware that annual costs will increase and there will be some start up costs which the City will need to fund if the Utilities is to do the billing. Bill Birrenkott has indicated that the earliest Utilities could start billing would be January, 1994. There are, of course, other issues relating to garbage billing which are not addressed in this memo. If you have questions before Monday's meeting, please ask. I will be present at the Council meeting to address any questions you may have. .