Item 3: Ordinance on Solid Waste Administrative Powers

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BACKGROUND On May 23, 2007, the Council Committee on Transportation Funding Solutions presented its report, Operating which stated that the first priority use of new revenue generated from this initiative should be “ and maintaining the existing transportation system , including on-street and off-street bike and pedestrian pathways.” One of the five sources of new revenue specifically identified to address critical shortfalls in City transportation system funding was “a solid waste collection fee surcharge…estimated to cost the average household $1 per month”. On November 12, 2008, the City Manager provided the council with an update about the status of the Road Fund as well as his intended interim funding strategies to keep these critical City services funded for FY10 and beyond. At that meeting, individual councilors acknowledged that the Road Fund funding shortfalls could not be found in service reductions alone and that the need to find new sources of City revenue for transportation systems was great. On February 8, 2009, the council discussed two new potential revenue sources for preserving existing street O&M services—a right-of-way use fee (similar to a franchise fee) on City-owned utilities, and a transportation surcharge on solid waste (garbage) haulers. Councilors discussed the need for two different sets of funding strategies, with the first being a one-time, “stop gap” plan for fully funding these critical services in FY10. The second funding strategy set called for was in the form of a comprehensive “road map” for solving the City’s overall transportation funding problems in the long term. The council acknowledged that developing the longer-term solutions, including a potential Street Utility Fee and a potential Street Lighting Fee, would need to involve more public input and buy-in over the coming months. On April 8, 2009, the council discussed the City Manager’s proposed one-time funding strategy to maintain street O&M services through fiscal year 2010, which included as one of its elements a new 5% transportation surcharge on solid waste haulers. After extended discussion, a council majority voted to send this proposed new transportation surcharge on solid waste haulers forward to a public hearing in order to gather community input on the proposal. Financial and/or Resource Considerations Garbage Hauler Surcharge – Nexus to Roads, Estimated Yields, Who Pays and How Much Nexus to Roads - The transportation surcharge would be assessed against solid waste haulers to better reflect the physical and financial impact that their operations impose on the city street system as a result of heavy hauler vehicles running on the majority of city streets every week. This surcharge would be assessed against solid waste haulers on the premise that heavy solid waste trucks cause significantly more damage to city streets than do other categories of lighter vehicles and run largely on local streets, which do not hold up as well under heavy vehicle use. The surcharge also represents fair compensation for private use of the right–of-way, a public asset that haulers rely on to deliver their services. Estimated Yields/Who Pays/How Much - At the level of a 5% fee, the transportation surcharge is projected to generate an estimated $900,000 for the fiscal year beginning July 1, 2009. A 5% surcharge applied to both commercial and residential garbage customers would result in slightly more than half of the new revenue projected to be generated from fees paid by commercial garbage customers. A 5% surcharge on the bill of a residential customer with a weekly 32-gallon service (the most common level of residential service) would increase the customer’s bill by 98 cents per month, or $11.76 annually. Commercial customers would see a proportionate 5% increase in their bills for garbage service. In its 2007 recommendation for a package of road funding solutions, the council committee noted the fact that “garbage services customers from all sectors would pay this fee, regardless of whether they were public, Z:\CMO\2009 Council Agendas\M090420\S0904203.DOC