Dive Brief:
- The Memphis City Council unanimously approved the transfer of $15 million from a reserve fund on July 24 to help stabilize ongoing collection issues. This is part of a broader plan proposed by Mayor Jim Strickland that also includes splitting the Division of Solid Waste back off from the Division of Public Works. "Our citizens deserve a cleaner city and it's time for bold action," said Memphis COO Doug McGowen during the meeting.
- Up to $8 million of that funding will go toward subsidizing an 11-month interim contract with Waste Pro for one of the city's five collection districts. Strickland recently notified Inland Waste Solutions — a subsidiary of Bobcat North America — that he would be terminating its contract for that service within 30 days after ongoing collection issues. According to McGowen, additional funding was required because Inland had significantly underbid.
- The remainder will go toward improving municipal collection service in the city's other four districts, an area in which McGowen recognized "we don't have a great track record." Memphis plans to hire 54 new employees and purchase about two dozen pieces of equipment, with the goal of guaranteeing service "at least biweekly" by this fall.
Dive Insight:
Collection has been a problem in Memphis for months, though Strickland has sought to create a reputation as someone who can fix essential city services as he is up for re-election next year.
While the city had already announced its intention to rebid the Inland contract later this year, the move to cancel even sooner reflects a growing level of constituent pushback in the affected neighborhoods. After selecting Waste Pro over two other companies that provided interim price quotes, Memphis plans to release a standard RFP for a new contract in FY19.
All of this comes as the city works to improve its own collection efficiency in the remaining districts, particularly for yard waste, while trying to avoid raising the $22.80 monthly rate paid by households to fund the system. According to McGowen, the solid waste reserve fund has been losing about $3 million per year and is already set to be depleted in the upcoming fiscal year based on other needs. He said this "one-time injection" of $15 million - from a larger $90 million city reserve fund - would help avoid any potential rate increase discussions for the time being.
As is often the case, labor appears to be a key factor in these collection issues. Memphis let 76 solid waste positions go unfilled following budget cuts in prior years and has been hesitant to stop contracting out service in the fifth district due to additional labor costs. Inland has cited the national truck driver shortage as a primary factor behind its own problems. Such hiring challenges have come up in city after city during recent years and remain a major focus for the industry's largest companies.
