Sanitation fee hikes killed after council questioning

May 10--CHEYENNE -- For the first time in three years, Cheyenne sanitation customers may be getting a reprieve from annual fee increases.

The Cheyenne City Council voted 5-5 last night on second reading of an ordinance that would have codified the third sanitation fee increase in as many years.

Since any City Council ordinance requires a majority vote for approval, the fee increases effectively died on the second of three readings.

Sanitation rates were previously bumped 8 percent in 2015 and again in 2016.

In explaining the reason for the further increase Monday night, Public Works Director Vicki Nemecek described the steps city sanitation has been taking to prepare for the future during the past four years.

In July 2013, she said, the council tasked Public Works with conducting a study of its rates and fees. One year later, Public Works presented the findings of the study, which was performed by HDR Engineering. The study gave four recommendations for stabilizing and sustaining the sanitation department, as well as for preparing for future growth.

"(The recommendations were) one, establish a solid waste enterprise fund to create a financially self-sustaining fund," Nemecek said. "Two, establish cost-based rates based on volume of waste disposed and frequency of pick up."

The third recommendation was to establish a reserve fund to meet operating and future capital needs of the department, such as expanding the Happy Jack Landfill or purchasing new vehicles with cash.

The last recommendation -- and the one that applied to Monday's meeting -- was to increase sanitation fees and rates by 8 percent a year for five years to address financial needs of the utility while minimizing impacts to customers.

"The study found that rates were deficient, but increasing the rate by 40 percent in one year was too great a burden on our customers," Nemecek said.

In the years since that 2014 report, Nemecek said a solid waste enterprise fund has been established and large transfers of revenue from sanitation to support the general fund have ceased. Previously, as much as $1.6 million a year was being transferred from sanitation, causing a shortfall for the utility in order to stabilize the general fund.

In addition, Nemecek said a fee schedule based on volume of waste and frequency of pickup was implemented in July 2015, and a reserve fund has been established to pay for short- and long-term equipment and capital project needs.

She further noted that the 8 percent fee increase she was asking for Monday would have translated to an average monthly increase of $2.05 -- from $25.70 to $27.75 -- for residential customers using the standard 95-gallon trash and recycle bin setup.

But Julie Gliem of the Cheyenne Landlords Association said the last two years of sanitation fee increases have already been hard on larger multi-family rental properties, and additional increases would only deepen that pain.

"I have one rental property -- Windwood Manor sitting out on Windwood Drive in eastern Cheyenne -- and when the rates started going up they were paying $30,000 a year for trash," Gliem said. "This company will be paying closer to $45,000 a year if we continue to increase their rates, and they're not the only entity with this problem."

Gliem said numerous developments in Cheyenne are facing similar issues, and if rates keep going up, the landlords will have little choice but to pass the cost on to their tenants -- many of which, she said, are among Cheyenne's poorest residents.

"Many of these are tax credit properties, in that the citizens living there are on earned-income credit and other things," Gliem said. "The landlords have taken a lot of heat for raising rents, but they're going to pass on the rate. We're asking you please, before you do this, look at the rate on multi-family dwellings and bring it back down to the residential rate."

Two council members also voiced their opposition to the fee hikes, from differing perspectives. Councilman Mike Luna has voted against previous sanitation fee increases, arguing that they do more harm to ratepayers than good for the city.

Dicky Shanor, however, took aim at Nemecek's reliance on the 2014 study as the basis for the continued fee increase requests.

"I've been troubled by the consultant study every year it gets brought up," Shanor said. "Eight percent (a year) over five years (was deemed) necessary, but that was before we capped the slush fund. When we did that, more money stayed in sanitation."

Since the $1.6 million in transfers to the general fund are no longer happening, Shanor said the department should have more money to save for future needs, and questioned whether it was really necessary to keep agreeing to more fee hikes.

Nemecek countered that while the sanitation reserve fund has built up about $15 million to date, without fee hikes it won't grow quickly enough to meet future needs -- particularly the costly process of expanding the Happy Jack Landfill and closing the existing landfill once it hits capacity.

"We would still need to increase rates. It was all a package deal," Nemecek said. "We still do an annual review of the fund and we still show a shortage in that fund."

Nonetheless, Shanor and Luna were joined in their opposition by Councilmen Bryan Cook and Rocky Case, along with Mayor Marian Orr. Their five votes were enough to kill the fee increases, at least for now.

Though she didn't comment on her vote Monday, in an interview Tuesday, Orr said she was sympathetic to both Shanor's and Luna's points of view.

"I've heard concerns from constituents regarding the way the schedule is proposed and has been carried out as far as users, especially commercial or multi-family complexes," Orr said. "And I think that more discussion is certainly warranted as far as the former consultant's recommendations -- not only for myself, but there are also two new members on council who weren't a part of this original decision, and I think there are still a lot of questions that remain.

"At this time, I guess I just haven't been sold that 8 percent is truly needed," she added.

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