Austin Resource Recovery outlines 5-year forecast, cites Northeast Service Center and vehicle replacement as drivers of rate increases

Austin Resource Recovery presented its five-year financial forecast to the commission on an April meeting, projecting a fiscal 2026 budget of about $144.1 million, a roughly 9.5% increase from fiscal 2025 and citing the city’s planned Northeast Service Center as a key driver of future rate increases.

The forecast covers operating costs, planned capital spending and rate assumptions that the department will propose to the City Council in July. "This is the forecast. This is not the proposed budget," Victoria Reer, finance division manager for Austin Resource Recovery, told commissioners. She said the proposed budget will be presented to council in July and that ARR plans to return to the commission with the formal proposal for a recommendation vote.

Why it matters: the forecast shows how ARR expects to balance service needs, vehicle replacement and debt service while meeting the city’s 30-day operating reserve policy. The construction and subsequent debt service for the Northeast Service Center are the largest single drivers of the projected rate changes over the five-year period.

Key forecast details and context

- Forecast totals and drivers: Reer said the department’s fiscal 2025 budget was $134.5 million and that the department’s forecasted fiscal 2026 budget is $144.1 million (a 9.5% increase). The forecast includes about $13.4 million dedicated to vehicle replacement in 2026 and, on average, about $13 million per year for vehicle replacement over five years.

- Rate changes: ARR’s cost-of-service model in the forecast calls for a $4.10 increase in the base rate over the five-year period and a $0.60 increase in the residential clean community fee across the forecast. Reer said the construction of the Northeast Service Center is a major factor driving a $2.10 increase in the base rate when that project starts to affect rates.

- Debt service and timing: Reer said the city will issue general obligation bonds to pay for the Northeast Service Center and that ARR’s portion of debt service is estimated at $8.7 million in total by fiscal 2028, with an estimated $1.6 million in FY26, $3.4 million in FY27 and $3.7 million in FY28. The presentation projects a base fee increase from $23.40 in 2027 to $25.15 in 2028 as debt service becomes fully reflected in rates.

- Staffing and capital: The forecast includes 28 positions across the 2026–2030 period "to maintain core operations" plus five positions to support the department, Reer said. The forecast also includes provisions to meet the ARR target for a 30-day operating reserve.

Operational updates and programs discussed

- Fleet electrification pilot: Reer and Director Richard McKell said ARR purchased its first fully electric rear-loader collection truck this year and is partnered with the Office of Climate Action and Resilience, the Environmental Defense Fund and Fleet Mobility Services on a short-term fellowship to study fleet electrification. McKell said ARR wants additional operational experience with the electric truck before expanding purchases and that heavy-duty electric vehicle purchases are contingent on charging infrastructure.

- On-demand collection rollout: Reer reported that citywide on-demand collection for brush, bulk and household hazardous waste began in January 2025 and has reduced overtime and miles driven by allowing routing technology to schedule and optimize pickups.

- Litter abatement, encampment and creek cleanup: Amy Slagle, assistant director, said ARR’s Encampment team has been in place since 2020, the Clean Creeks team since about 2021–22 and that a Park and Recreation Department (PARD) encampment team was added this year to focus on illegal dumping and encampments in parks. Commissioners asked about diversion rates from encampment cleanups; Slagle said crews divert what they can (for example, metal frames and shopping carts) but that many items collected are soiled textiles, bulk items or contaminated materials that are not recyclable.

- Recycling and capture study: Richard McKell said ARR is working with a recycling partnership to fund a capture study across all 10 council districts (an approximately $605,000 effort) to measure recycling capture rates, contamination and to recommend education and outreach interventions.

- Reuse warehouse grant: McKell said ARR still expects to draw down an EPA reuse warehouse grant and that the grant remains available; the remaining work is finding and securing an appropriate property.

Quotations from staff

- Victoria Reer: "This is the forecast. This is not the proposed budget. The proposed budget will be presented to council in July."

- Richard McKell: "We are talking with some developers and Austin Energy about the ability of having solar at FMA 12 and there would be some sort of lease...so, yeah, there will be hopefully some revenue generated out of that project."

- Amy Slagle: "We work with APD to make sure that there's no stolen equipment in there. ... We do try to divert what we can, though."

Votes at a glance

The commission also handled routine procedural votes during the meeting. All recorded motions and outcomes were procedural and non-policy votes: approval of minutes, officer elections, subcommittee appointments and adjournment. The motions and outcomes recorded in the meeting transcript are:

- Approval of minutes for the April meeting: Mover — Commissioner Michael; second — Amanda; outcome — approved (vote not fully enumerated in transcript). Note: transcript records the motion and a second and the chair called for a voice/hand vote.

- Election of Chair (one-year term) — Motion to reelect Commissioner Acuna as chair: Mover — Michael; second — Amanda; outcome — approved with one abstention (chair Acuna abstained); recorded tally given as "6 0 1" (yes/no/abstain as stated in transcript).

- Election of Vice Chair (one-year term) — Motion to reappoint Jan Steyr as vice chair: Mover — (motion made by speaking commissioner); second — Melissa; outcome — approved unanimous (recorded as "7 0").

- Appointment of Construction & Demolition (C&D) subcommittee — Motion to retain Jan (chair), Amanda and Chair Acuna as the three members: Mover — Michael; second — Seth; outcome — approved (voice/hand vote recorded, no numeric tally provided).

- Adjournment: Mover — Ali; second — Michael; outcome — approved (voice vote).

Implementation and next steps

Reer and McKell said ARR will return to the commission with the formal proposed budget in July and seek the commission’s vote on a recommendation to City Council. Several commissioners asked for follow-up briefing material on items raised in the presentation, including a deeper look at the on‑demand collection pilot’s performance data, ARR’s injury‑prevention and safety initiatives, and more detail on the capture study and reuse warehouse property search.

Ending

ARR staff asked for and received several follow-up requests from commissioners and said they will provide slides and supporting materials from recent conferences and the department’s presentations. The commission proceeded to remaining agenda items and adjourned after the routine motions concluded.