The Olympia City Council showed little interest in pursuing privatization of solid waste collection earlier this week, instead directing staff to move forward with the long-planned Carpenter Road maintenance facility.
At a city council study session on Tuesday, Aug. 18, Public Works Department Director Mark Russell and Waste ReSources Utility Director Ron Jones presented information on the facility, projected utility rates, and potential advantages and disadvantages of municipal and private collection.
The discussion followed an April study session in which council members asked staff to examine privatization as an alternative to building the proposed facility.
Russell said Waste ReSources is functioning well, but its current maintenance center on Eastside Street is seismically deficient, lacks adequate space, and needs at least $6 million in mechanical and electrical repairs. The facility also does not meet seismic and American with Disabilities Act requirements.
The Carpenter Road facility has been in the works for more than a decade with about $2.6 million spent on preparing for the project.
The proposed facility is estimated to cost just over $40 million. Russell said financing the project over 30 years would require about $3 million in annual debt payments.
Pros and cons
Russell discussed the tradeoffs between keeping solid waste collection municipal and contracting with a private hauler.
He said municipal operations give the city control over routes, rates and service policies, while allowing Waste ReSources to provide community programs, such as Clean Team, downtown litter can service and special event support.
City-run collection also allows for close customer service and coordination with other Public Works Department functions during emergencies. More than 40 experienced employees would also retain their jobs.
However, the city would continue to bear the operational, financial and legal risks of running the service. Russell said major capital projects could also lead to steep rate increases because the costs are spread across a relatively small customer base.
A private collection service could offer weekly garbage pickup, smaller carts and access to larger fleets. But contracting out the service would reduce the city’s control over routes, service standards and customer service.
The availability and cost of specialized community services, emergency response and the impact on existing employees would also depend on the contract.
Russell said the city would need to issue a formal request for proposals (RFP) to determine what private collection would cost.
During the discussion, Council member Kelly Green urged the city to issue an RFP before committing to the Carpenter Road facility, saying the council should compare the known costs of municipal collection with unknown costs of privatization.
Green acknowledged an RFP would not guarantee a cheaper option, but said it could show private collection would be more expensive or create other challenges, giving the council a stronger basis for making a decision.
However, other council members were less inclined to pursue an RFP.
Council member Clark Gilman said the city has spent years studying the facility and conducted enough due diligence to make a decision. He said an RFP would be expensive, time consuming and would not guarantee meaningful responses.
He also cited loss of local control and the city’s ability to coordinate waste collection with other municipal services as reasons to keep the operation in-house.
After hearing the presentation, Mayor Dontae Payne said the lack of a clear problem was one of the biggest reasons he opposed privatization.
“We don’t have a problem that we are trying to fix," he said.
Payne also pointed to the city’s more than 40 long-term Waste ReSources employees, who could potentially lose their jobs if the city decides to privatize the waste collection.
“It is very hard for me to justify when I look at it here, a con just all by itself, is to lose 40-plus, long-term valuable employees,” Payne said.
He also noted most public feedback the council received favored keeping the service in-house.
Projected rates
In keeping the plan for the Carpenter Road facility, staff made a 10-year projection for rate increases.
A typical residential bimonthly waste bill for this year is $65. It would increase to $69 in 2027.
Rates would then increase by 17 percent in both 2028 and 2029. About 12 percent of those increases would cover debt payments for the Carpenter Road facility, while the remaining 5 percent would account for inflation, employee costs and other expenses.
In 2030, Russell said, rates would increase another 15 percent, including 10 percent to cover expanded organics collection and 5 percent for inflation and other costs.
From 2031 through 2037, the city projects annual increases of roughly 4 percent, bringing the typical bimonthly bill to about $143 by 2037.
Payne said the end result would be higher customer rates.
“Regardless of whether or not we keep it in-house or privatize, when we look at the rates in terms of projection, they will go up,” Payne said. “I think it’s a matter of by how much and how fast.”