The city’s solid waste fee is $29.96 a month per household, collected for the city by Memphis Light, Gas and Water Division and included on MLGW bills for Memphis residents.

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Waste Pro was paid $14.92 a month per household under the terms of its $33.9 million five-year contract with the city to pick up trash in Area E. Mayor Jim Strickland in April ended the contract three years ahead of schedule.

A short history of Area E

Team Waste, which has the emergency contract probably for the rest of this year, is being paid at a rate of $25.44 a month per household. Team Waste was among the unsuccessful bidders for the contract that went to Waste Pro starting July 1, 2019.

City Chief Operating Officer Doug McGowen is aware of the differences between the fee and what private contractors are paid per household by the city. That difference is part of what is being examined by the administration.

“You always have to watch the cost to deliver the service versus the revenues that are coming in to deliver that, and sometimes something that seems too good to be true, is,” McGowen said. “I think that’s the case when vendors say they can deliver it for a cheaper price than city crews and then they can’t sustain that level of service for the revenue they are receiving.”

McGowen said comparing the city’s solid waste fee to what the private contract has paid isn’t an apples and oranges comparison.

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“We also offer to every citizen, wherever they live, the opportunity for free solid waste disposal at the landfills that serve the City of Memphis. That’s a fee that Waste Pro does not get to collect. But the city still has to fund that,” he said. “There’s always going to be a little bit of a difference between what we pay a vendor and what we collect as a city because there is a more global fee there.”

The city offers recycling at no net income for the city, which McGowen said “is going to drive the fee for the city higher so we can offer that convenience.” Recycling tires, a major part of the city’s blight problem, also involves paying a recycling company to take the tires no matter who collects them.

Strickland proposed raising the solid waste fee in 2019 by $7.16 under the premise the city would not raise the fee for the next decade. He also said the fee would generate enough revenue to make the solid waste division self-sustaining as well as generating a 10% operating reserve each year.

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That included building up enough cash over several years to build a new waste transfer station – a place where trash can be brought temporarily on its way to a landfill.

The self-sustaining part of the fee was a set of services that Strickland had earlier revamped, before the city and private contractors had 21 days to make up a missed pickup.

Strickland said he was unaware of the three-week grace period and doubted most citizens knew of it.

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“It needed to be changed and most of the public could not understand our current system,” Strickland said in April 2019, ahead of the May rollout of twice-a-month pickup of garbage inside the cart, recycling, two bags of yard debris and other debris and trash outside the cart.

With the change, the city used $15 million from its reserves for new equipment and hired 70 more employees. Waste Pro’s five-year contract for Area E under those terms began two months later.

With council approval, solid waste services were removed from the public works division and made a separate city division with its own director, Al Lamar.

The city temporarily absorbed the cost of the new system at the monthly fee of $22.80 as it gauged what the real cost would be. Strickland then proposed a $7.16 increase in the fee based on that.

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Prior to that, McGowen said the waste fee fund was in danger of becoming insolvent, in some fiscal years requiring $20 million to $30 million from the city’s general fund to balance revenues and expenditures.

It was still a difficult decision for the council, even timed two months after city elections. The council originally rejected the hike at its next-to-last meeting of 2019.

Strickland took a hard line in his response, saying unless the council changed its mind he would be forced to cut back solid waste pickup in bins to once a month, do away with any curbside pickup of trash not in containers and lay off 199 full-time solid waste employees.

With much grumbling, even among council members normally aligned with Strickland, the council reversed course and approved the fee hike at the last meeting of 2019, before the present City Council took office the next month.

McGowen said so far, the fee is paying its way. The future of that goal, with more realistic pricing if there is another contract for Area E, is also being examined by the administration.