The Centerville City Council on Tuesday narrowly approved a financing plan to raise $175,000 to buy garbage containers for residents and businesses.

Two council members, Bruce Erickson and Douglas Nielsen, oppose the city's plan to initiate automated garbage pickup starting July 1. Erickson voted against the financing plan and Nielsen abstained.Councilwoman Nancy Gibbs at first didn't vote, leaving councilmen Kent Lindsay and Michael Barton to cast the deciding votes to pass the financing proposal. After further consideration, Gibbs voted for the plan, making it a 3-1 tally.

The city will borrow about $175,000 to buy 2,600 90-gallon cans for residential users and a number of 300-gallon cans for commercial and business use. The loan, at 8.25 percent interest, will be paid back over seven years from fees generated by garbage collection fees. The interest will total about $55,000.

Centerville residents will be assessed a monthly fee of $1.05 over the seven-year span of the loan to pay for the containers, which will be city property. Homeowners who need two cans will pay a $2.10 monthly fee.

The city, at the request of some residents, is studying a plan where they can pay one initial, lower fee for a container and save about $20 over the seven years in interest costs. They would pay a one-time fee of about $65 up front instead of the monthly fees, which total around $88 over the loan's life span.

City Manager David Hales said the one-time assessment has been requested by several residents, and the city may offer it for a limited period of 30 or 60 days when the automated garbage system begins.

The city will set up an enterprise fund in its 1989-90 budget, starting July 1, to collect and audit the garbage fees.

Hales said some residents have asked about obtaining a second container only for the summer months, for grass clippings and yard debris. That proposal is being examined, he said, but no decision has been reached yet.

The city manager said a study of Centerville's finances shows the city does not have enough in uncommitted reserve funds to front the $175,000 needed to buy the garbage containers.

The city is getting an 8.5 percent interest rate on the loan but is earning 9.2 percent on its money in the state investment pool, Hales said. Over the long run, he said, a financial analysis shows the city would lose money by financing the purchase itself.

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Garbage fees

For persons with one container, the city estimates monthly garbage fees will be $8.76. That includes a $4.38 dumping fee at the county's garbage-burning plant, a $2.83 fee to the hauler, $1.05 for the container, and a 50-cent monthly administrative fee.

For homeowners who pay the $64.82 container fee up front, their monthly fee will be an estimated $7.71 - the total of the dumping, hauler's, and administrative fees.

and for households with two containers, the monthly fee is estimated at $12.75. The hauler's fee increases by 50 cents to $3.33; the dumping fee rises to $6.57; the per container fee doubles to $2.10; and the city's administrative cost goes up 25 cents, to 75 cents a month.