Interoffice Memorandum
DATE: May 13, 2026
TO: Mayor Jerry L. Demings and County Commissioners
THROUGH: N/A
FROM: Kerry Kates, P.E., LEED AP, Deputy Director, Utilities
CONTACT: David Gregory, Manager, Solid Waste Management Division
PHONE: 407-254-9622
DIVISION: Solid Waste Management Division
ACTION REQUESTED:
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Approval to establish the Haulers’ compensation rates as listed, set the MSBU rate of $430 for Program Year 2027, and authorization to include the Tentative Mandatory Refuse Collection Program Rate of $430 on the 2026 Notice of Proposed Taxes. All Districts. (Solid Waste Management Division)
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PROJECT: N/A
PURPOSE: Orange County contracts with waste hauling companies (“Haulers”) to provide residential solid waste and recyclable materials collection service through the Mandatory Refuse and Recycling Program (“Program”). Section 32-183 of the Orange County Code requires that the Board set the annual compensation rate to the contract waste hauling companies for collection of solid waste and recyclable material by July 15 of each year. Additionally, in order to include the Municipal Services Benefit Unit (MSBU) assessment for the Program on the Notice of Proposed Taxes, the Board also needs to set the tentative MSBU rate per household. This memo outlines the Program cost components, the Hauler compensation, and the MSBU rate recommendation for Calendar Year 2027. The final approval of the MSBU rate will occur during the first budget public hearing in September.
The MSBU rate has five main components: Hauler Compensation, Disposal, Program Administration, Recycling, and Reserves/Rate Stabilization.
Hauler Compensation Component
In accordance with Exhibit A, Section 23 Compensation, of the Residential Solid Waste and Recyclable Collection Services Term Contract, the Haulers shall receive an annual adjustment in the compensation per household based on changes in the Consumer Price Index, as explained in Attachment E of the collection contract (the index used is the Consumer Price Index for All Urban Consumers, Garbage and Trash collection in U.S. city average - Series ID CUSR0000SEHG02). The compensation to the contract haulers for calendar year 2027 will be as follows:
Zone 1 $312.03 per Residential Unit
Zone 2 $344.49 per Residential Unit
Zone 3 $339.71 per Residential Unit
Zone 4 $288.50 per Residential Unit
Zone 5 $321.84 per Residential Unit
Zone 6 $318.19 per Residential Unit
The system weighted average for the 2027 Hauler compensation component is $320.93 per household. This is a $15.01 or 4.9 percent overall increase from the 2026 Hauler compensation component.
Disposal Component
The disposal component of the MSBU represents the cost for disposing of residential solid waste material. The projected system average disposal per household is 1.14 tons of Class I and 0.26 tons of yard waste per household. The average system disposal cost is increasing primarily because of a budgeted increase in tipping fees. The annual disposal component for 2027 is projected at $79.02 per household. This represents a $2.72 or 3.6 percent increase from the 2026 disposal component.
Program Administration Component
The program administration component represents the cost per household for operation and administration of the Program, including customer service support. The principal causes for the decrease to this component are adjustments to intradepartmental personnel charges for customer service call center services as well as managerial and administrative support provided by Utilities Department staff in the Water and Wastewater System (Fund 4420) to the Program (Fund 1006). For 2027 program administration costs are $15.96 per household, a decrease of $2.28 or 12.5 percent from the 2026 cost component.
Recycling Component
The recycling component represents costs associated with processing collected recyclables and recycling education and outreach. Cost increases in this component principally reflect increased funds budgeted for recycling processing. For 2027, program recycling component costs are $36 per household, an increase of $5.78 or 19.1 percent from the 2026 cost component.
Reserves/Rate Stabilization Component
The reserves/rate stabilization component was established to provide funding for reserves that were to be used to replenish the initial $20 million cart purchase in 2015 and to help smooth out any required future rate increases. Because the cart responsibility transferred to the Haulers in the new contract, funds will be used to smooth the required rate increase. For 2027, the reserves/rate stabilization component costs are ($21.91) per household, thus reducing the annual MSBU rate by this amount.
MSBU Rate Recommendation
The total cost of the program for 2027 is $451.91 per household. When the reserves/rate stabilization component is applied, this amount is reduced to $430 per household, an increase of $30 or 7.5 percent from 2026. Staff recommends setting the MSBU rate for 2027 at $430 per household.
A summary of rate components is shown in the table below.
2027 Tentative Mandatory Refuse Collection Program MSBU Rate Components
Component CY 2026 CY 2027 Change
Collection $305.92 $320.93 $15.01
Disposal $76.30 $79.02 $2.72
Administration $18.24 $15.96 ($2.28)
Recycling $30.22 $36.00 $5.78
Reserves/Rate Stabilization ($30.68) ($21.91) $8.77
Total $400.00 $430.00 $30.00
BUDGET: N/A