Item 6: Ordinance Concerning Solid Waste Powers

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Staff believe that the 5% transportation surcharge on solid waste haulers is a fair and equitable way to contribute to funding for road operations and maintenance for a couple of reasons. First, there’s the fact that garbage trucks place a heavy load on nearly every residential street in Eugene on a weekly basis. In addition, this regular and heavy loading is unique to garbage haulers, as no other class of heavy trucks regularly runs on virtually all of the city's streets. Concern Around Subjecting Nonresident Garbage Fees to the Surcharge Another concern raised by a resident of unincorporated Lane County was that this was really a pass- through tax to nonresidents who are served by those garbage haulers who also provide service within the Eugene city limits, because he believed he would also see his garbage rates increased to accommodate the proposed 5% city surcharge. Council is reminded that this is not a surcharge on garbage customers, but on the revenue generated by solid waste haulers who are licensed to operate in Eugene. There is no requirement that the haulers pass on the surcharge to customers, whether or not they reside in the city limits. Furthermore, subject revenue for the surcharge is determined by the same method as is used to calculate the City’s solid waste licensing fee and the annual rate analysis, which is only that revenue generated within the Eugene city limits. The surcharge would not apply to revenues generated in other communities or in unincorporated Lane County. Finally, solid waste haulers who do business in Eugene are required to identify whether the property being served is within the Eugene city limits. This requirement, plus the city’s review of hauler financial records over the years, leads staff to conclude that haulers have the ability to bill different rates to their customers, depending on whether those customers are in the city or not. It should be noted that the City does not regulate rates, billings or hauling services outside the city limits. Perceived Lack of Nexus Between Hauler Surcharge and Damage to Roads Both haulers and customers opined that there is not a sufficient nexus between a transportation surcharge on haulers and the damage caused by garbage trucks--and specifically between the different amounts of surcharge that would be passed through to garbage customers relative to their use of city streets. One of the underlying premises of this fee is that it would be assessed against solid waste hauler fees to better reflect the physical and financial impact that their operations impose on city streets as a result of heavy hauler vehicles running weekly on nearly every street in the city. The surcharge would be assessed on the revenues of garbage haulers on the premise that their heavy vehicles 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, which is a public asset upon which haulers rely to deliver services. It was further asserted that there is no equity between the different levels of surcharge which would be passed through to different garbage customer categories and no connection to the use of city streets by those customers. In the 2007 Council committee discussions of this potential surcharge, it was noted that the solid waste surcharge, because it is based on volume, is also based on weight. Since weight is one of the primary factors in the damage caused to city streets by garbage hauler vehicles, there is a relationship between the level of surcharge paid and the damage done to streets, because a customer who utilizes a smaller garbage container would also pay a smaller share of the surcharge. Furthermore, the council committee liked the idea that the garbage surcharge was one which would be paid by nearly every residence and business in the city. The Need for a Comprehensive Transportation Funding Solution The effort to arrive at a universally acceptable method to address the chronic shortfall in street maintenance funding has been under way for several years. While we continue to make some progress,