Savings seen as in-house team competes for contracts
Regardless of past financial performance, the city's in-house garbage collection team is likely to participate in future contract competitions partly as a tactic to drive down private-sector bids.
“When the city participates in a managed competition, we do find the bid prices do come in lower, so overall there is an advantage for the city to participate in this type of procurement endeavour,” Shelley McDonald, city director of solid waste services, said Tuesday after a meeting of council's standing committee on environmental protection, water and waste management.
Audit results on the meeting agenda revealed the continued operational deficits in the in-house collection division. Councillors received the reports without asking questions of staff.
The in-house team is responsible for collecting curbside garbage in two out of the five collection zones. Miller Waste Systems has the contracts in the three other zones.
The audits on in-house collection covering 19 months ending May 31, 2020, discovered a $1.8-million operating deficit in the downtown zone and a $2.2-million deficit in the east zone.
Council in 2011 sole-sourced the downtown collection contract to the in-house team, but the in-house team won the eastzone contract in a competition with the private sector. The east zone's cumulative operating deficit over seven years now exceeds the contract savings over the cheapest private-sector bidder.
The curbside collection contracts, which the city recently extended for three years, are in effect until the end of May 2023.
Coun. Scott Moffatt, chair of the committee, said he still sees a “good return” in the downtown collection zone. The finances don't tell the whole story, he said.
The city has often described the complex nature of garbage collection downtown as a reason to keep the zone as an in-house responsibility. The rate of service requests from the public has also been lower compared to the zones managed by the private sector.
Moffatt acknowledged that the east zone isn't achieving the value that council expected.
“I think what you might see in two years from now when we go back out and do the next round of contracting, you might see the likelihood of not having the city have more than the one zone,” Moffatt said. “We'll see how that bid structure ends up working, but you can see clearly the numbers weren't as good as we thought they were. Still better than No. 2, but it wasn't as good as what we expected.”
McDonald said another advantage of having a strong in-house collection team is that those workers can be redeployed to help other zones. It happened last year when the former west-zone contractor, Waste Management, struggled to maintain service levels.
The price of curbside garbage collection is poised to increase by $10 under the draft 2021 budget. According to the city, the proposed $106 price for the year would be the lowest fee for curbside waste collection among major Canadian municipalities.
The committee unanimously endorsed the draft 2021 budget covering environmental services, including waste management, forestry and drinking water, sewage and stormwater services.
The part of the operations budget supported by property taxes is about $150 million, while the budget funded exclusively by water bill rates to pay for the operations and upkeep of water and sewer systems is roughly $437 million.
The rate budget calls for the average water bill to increase by 4.5 per cent, or $37 over the year, for properties connected to city services. Rural properties not connected to municipal services would see a $7 increase in stormwater fees for the year.
Water consumption is on track for meeting the city's expectations for 2020, even with the changes in work culture during the COVID-19 pandemic.
It's been two years that the city has instituted a fixed price on water bills in addition to the usual consumption rate for water. The fixed price has provided certainty in budgeting water, sewer and stormwater work. Twenty per cent of the water bill revenue is tied to the fixed price.
Stephen Willis, general manager of planning and infrastructure, said the revenue from water bills is helping successfully maintain municipal assets.
Council will vote on the full 2021 budget on Dec. 9.
Outside of the budget decision, Coun. Shawn Menard during the committee meeting scored majority support for city staff to examine raising borrowing levels to fund environmental projects that can generate financial returns, and directing staff to look into the potential for the municipal government to stop making investments in fossil fuels.