SEASIDE Property owners in South County could pay from 13 to nearly 18 percent more to have their garbage hauled away beginning in July.
In the first of three visits to local city councils this week, representatives from Western Oregon Waste explained to Seaside officials Monday night why garbage rate increases are in the double digits this year.
WOW is proposing a rate increase of 11.29 percent for Seaside, 17.76 percent for Cannon Beach and 13 percent for Gearhart.
For Seaside residences, the cost increase could mean increases from 55 cents to $4 a month, depending on the type of can or cart used and the number of times it is picked up in a month.
Customers using containers could pay from $12.80 to $47.74, depending on the containers size and weekly service.
In essence, said Joe Cook, general manager of Western Oregon Waste, costs have gone up, and, for the past three years, the company has lost money.
Our rates are set to allow a reasonable return, Cook told the Seaside City Council during a work session Monday night.
Company representatives also are scheduled to meet with the Cannon Beach City Council tonight and with the Gearhart City Council Wednesday night.
Because the garbage hauling company is considered to be similar to a utility, such as an electric company, it is legally allowed to stay within a profit margin. Cook said WOW tries to stay within an 88 to 92 percent pretax return.
But the companys projections were too optimistic for the past three years, and revenue fell. To maintain the proper margin, a larger increase is required this year, Cook said.
While the company projected a profit margin in Seaside of 9.53 percent in 2009, it actually lost 2.95 percent. In 2010, the projected margin was 4.91 percent, and the result was a .12 percent loss.
Last year, the projection was 8.26 percent in profits, and the actual loss was 1.14 percent.
Although Seaside has more customers this year, there is less revenue because people are recycling more, and a fee isnt charged for recycling. Customers also are reducing their service and using smaller containers.
In 2011, there were 12 more customers in Seaside than in 2010. But 102 fewer customers signed up for weekly service. Although commercial business is also down by 3.5 percent over 2011, the number of hours haulers spend in Seaside is up by 1.7 percent.
In addition, Cook said, the company has experienced a $20,000 increase in health insurance costs and is paying $18,000 more for fuel than it did last year.
The proposed rate increase would keep WOW within a 90 percent operating ratio, which means expenses would be 90 percent of revenue.
If the increase is adopted, profit will make up 2.70 percent of that. The rest of the increase will be split by increased costs for labor, fuel, disposal and administrative costs and revenue from containers.
In addition, the company will continue to pay the city of Seaside a 3 percent franchise fee.
Seaside City Councilors werent happy with the proposed increase, but there was no discussion about the possibility of reducing it.
Mayor Don Larson asked about the sale of Western Oregon Waste to Recology, a California-based company, in 2010.
If you have been losing money for the last three years, Recology doesnt want you to lose money, Larson said.
However, Cook said the rate increases had nothing to do with WOWs purchase.
Larson also asked about the companys health care costs for the truck drivers.
You want us to pay for that. Why do you have to pass everything on to us?
Because the company is considered a type of utility, its costs are passed along to the customers, Cook said.
Its the same as what the government does, he added. My water rates are going up, and I still get the same water.
Councilor Tim Tolan said he noticed several trucks going up and down his residential street on garbage pick-up day and wondered if the system was inefficient.
But Laura Leebrick, government and community relations manager for WOW, said separate trucks picked up recycling carts and garbage cans on the same street.
What you are seeing is some of the rerouting we have done with an eye toward safety, she said.
Drivers are supposed to pick up cans and carts from the curb side of the road and not cross the street, so the trucks go up one side of the street and down the other. A separate truck also picks up carts from the side yards of houses that have signed up for the special service.
The company is switching to automated trucks, which automatically lift the cart into a truck and can provide more efficient service. With a nonautomated truck, only 450 to 550 collections could be made in a day, but an automated truck will take care of 1,200 collections, Leebrick said.
However, Cook noted, garbage trucks are getting more expensive. Three trucks can cost $1 million, he said.