City leaders approve new trash rates for downtown, opt not to take action on over- and undercharged amounts
photo by: Journal-World File Photo
Close to 150 downtown businesses have been charged incorrect trash rates, some for several years, but city leaders decided they would not retroactively bill or credit those customers, saying that even if the errors had not taken place, the rate structure would still have been flawed.
As part of its meeting Tuesday, the Lawrence City Commission received a report from MSW Consultants about the billing errors and the special rate model currently in place for a 9.5-block area downtown, which has an irregular rate structure because businesses share dumpsters, and adopted a new model recommended by the consultants.
The consultants found that the city’s rates more than cover the downtown trash collection costs, meaning those who were not mistakenly undercharged would have actually been paying more than necessary.
“So under the old rate model, if we had been actually collecting it, we would have been exceeding our costs significantly,” Mayor Stuart Boley said. “So the new rate model is to simply balance.”
Specifically, if the city were to charge the current rate to all 185 downtown businesses in the special rate plan, it would have generated about $36,000 per month; however, it costs the city only about $19,000 per month to collect trash in that area. The report states that due to the city mistakenly undercharging most of the downtown customers, the city is currently collecting about $21,000 per month. The consultants recommend a rate model that generates about $24,000 per month, which includes the cost of collection plus a contingency amount, according to the report.
Because the amount charged to downtown businesses covered city costs, consultants and city staff did not recommend the city back-bill businesses to recover underpayments.
“While we definitely didn’t do it right, we did achieve a balance between our costs and revenues in that area,” Assistant Public Works Director Tamara Bennett told the commission.
The majority of downtown customers were charged rates much lower than what is laid out in the city’s rate model. There are 185 businesses that fall under the downtown trash rates, and the consultant report states that 127 were undercharged under the current rate model and 16 were overcharged. The consultant report states that city records show that the billing errors for “over 100 accounts” date back to a billing system conversion that occurred in 2013.
Commissioner Jennifer Ananda asked whether the city had considered the businesses that were overcharged, and whether it were possible to give those customers some kind of credit or temporary discount going forward to make up for their overpayment.
Bennett said that if there is a billing error, current city code allowed the city to go back and make corrections, but that one of the concerns is what rate the city would go back to, since the city now knows its current rates don’t reflect costs.
“Are we going back to the rate it should have been on our old model, (or) are we going to the rate it should be on our new model?” Bennett said. “And that was some of the discussions we had also with the back-billing. If we think there may be flaws in the model, do we go back to a flawed number? That’s a policy discussion.”
The commission then voted to receive that report, and none said they were interested in taking any action on the past billing discrepancies.
“It’s difficult, if it was a flawed model to begin with, to determine an appropriate amount,” Commissioner Leslie Soden said.
The consultants recommended the city abandon its current rate model, a five-tier system based on square footage and use, and adopt a new rate structure that determines charges based on the type of business, size of container and frequency of collection. As part of its Tuesday meeting, the commission approved that proposed rate structure, which covers the city’s costs and also generates an extra $5,000 a month as a contingency amount.
Bennett said that extra $5,000 is needed to cover variances.
“It has a reasonable contingency, because one of the challenges of downtown is the fixed costs are relatively constant, that truck moving down those alleys is relatively constant,” Bennett said. “(Trash) generation may vary by restaurant versus retail versus office, and there will be turnover and there will be vacancies, so the contingency covers that.”
The new rate model is scheduled to take effect in November.
In other business, the commission also proposed which northwest Lawrence property owners will be paying for the multimillion-dollar reconstruction of Queens Road. After reviewing three options for the formation of a benefit district for the project, the commission voted not to expand the benefit district as previously contemplated, but to increase the city’s contribution toward the project by about $290,000, or roughly the equivalent of what two city-owned properties would have paid if they were included in the benefit district. The commission also voted to set Oct. 2 as public hearing for the proposed benefit district.