HomeMy WebLinkAboutItem B - Toxics Program FeesEUGENE CITY COUNCIL
AGENDA ITEM SUMMARY
Work Session: Toxics Right-to-Know Program Fees
Meeting Date: January 10, 2005 Agenda Item Number: B
Department: Fire & EMS Staff Contact: Glen Potter
www. cl. eugene, or. us Contact Telephone Number: 682-7118
ISSUE STATEMENT
The Eugene Toxics Right-to-Know Program is funded by fees assessed to local businesses that are
hazardous substance users. A state-imposed fee cap of $2,000 per facility took effect last year, resulting
in a substantial fee increase for smaller participating businesses while reducing fees for larger
businesses. The council directed the Toxics Board to return with a proposed remedy for this perceived
inequity in time for the 2005 program billing cycle.
In response to the council's direction, the Toxics Board is proposing two methods of addressing the
perceived fee inequity. One is an ordinance that would add certain types of businesses to the program,
thus spreading the overall fee burden over a larger group of businesses and presumably reducing it for
each participating business (the proposed ordinance is attached). As an alternative or in addition to the
proposed ordinance, the Toxics Board is also proposing a surcharge on commercial solid waste hauling
fees in the city.
The Toxics Board voted unanimously to forward both of these proposals to the council, but requested
that the council be made aware that the right-to-know advocates on the board prefer to add businesses to
the program, while the business representatives on the board prefer the waste hauling surcharge. This is
because the right-to-know faction on the board views the current fee situation as an opportunity to
require additional public reporting of hazardous substance use, while the business faction would prefer
not to see any additional reporting required.
A third course of action to address the perceived fee inequity would be to pursue a legislative solution
consisting of a repeal of the cap. The Toxics Board and City Council are already on record in support of
such repeal, as stated in the City's 2005 Legislative Policies document. A principal point that the City
could make to the Legislature is that the fee cap, in its first year, had the effect of increasing fees for 62
local companies and reducing them for 11.
BACKGROUND
Through the citizen initiative process, Eugene voters amended the City Charter in 1996 to enact the
Toxics Right-to-Know Program (the "amendment"). Article VII, paragraph D of the amendment
requires that the Charter-created program be self-supporting. Fees have been assessed to each
participating business on the basis of full-time-equivalent (FTE) employees working at each business in
a calendar year. (Oregon courts have concluded that a program of this type may not assess fees based on
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quantities of hazardous substances reported.) The number employed by individual participating
businesses has ranged from 10 to 1,207.
The annual budget for the program has averaged about $100,000, which funds 0.5 FTE of direct staff
support, 0.25 FTE ancillary staff support, plus legal fees and materials and supplies. The total number
of FTE against which fees are assessed has ranged from approximately 6,000 to 7,000. Consequently,
fees have been about $13 per FTE, though this has varied somewhat based on actual program
requirements. The City Council approves the fees each year prior to billing, which normally occurs in
April.
For 2003, the fee was $13.92 per FTE. For 2004, because of the $2,000 cap, the fee was $31.65 per FTE
up to the $2,000 limit. Businesses with more than 63 FTE paid less than $31.65 per FTE, with the
largest, employing 1,207, paying $1.66 per FTE. Without the state fee cap, the recommended fee would
have been $14.35 per FTE for all participating businesses. In approving the 2004 fees, the council asked
the Toxics Board to return with a remedy addressing this perceived inequity.
The City's current Right-to-Know Program consists of elements that are required by the amendment,
elements that are not required by the amendment but are necessary for the program to be functional, and
others that may or may not be Charter-mandated, depending on how certain provisions of the
amendment are interpreted. Pursuant to Article VII, paragraph D of the amendment, only those
elements that are required by the amendment must be paid for by "hazardous substance users" as that
term is defined by the amendment. Any components of the current Right-to-Know Program that are not
required by the amendment can be paid for by businesses that do not fall within the amendment's
definition of "hazardous substance users." As such, while revenues collected pursuant to the proposed
ordinance and the commercial solid waste hauling fee surcharge can fund elements of the program not
mandated by the amendment, the revenues cannot fund Charter-mandated elements of the program.
Examples of Charter-mandated activities include audits of hazardous substance reports, public posting
of reports (at the library and on the Internet), investigation of complaints, invoicing and collections, and
at least some of the activities provided in direct support to the Toxics Board. Examples of non-Charter-
mandated activities include providing assistance to reporting businesses (both by individual consultation
and by annually issuing tracking and reporting instructions), legal work in response to litigation and
other legal issues, responses to public and media inquiries, technological updates to the program's
website and business reporting software, and supervision of program staff. The level of direct support to
be provided to the Toxics Board is not specified in the Charter, which provides instead that "[t]he City
Manager shall consult with the Toxics Board in order to jointly determine the appropriate support
services that shall be provided..."
DETAILS OF PROPOSALS
Ordinance adding businesses to the program: A subcommittee of the Toxics Board developed a list of
types of businesses which could and possibly should be added to the program, not only in order to
reduce the fee burden for currently participating businesses, but also to provide additional public
reporting of hazardous substance use in the community. Businesses to be added would include gas
stations, auto body and paint shops, dry cleaners, roofing contractors, painting contractors, any business
operating a spa and/or a swimming pool (including hotels and motels), photofinishing services (except
one-hour), and crematories.
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In addition, the proposed ordinance would reduce the FTE threshold for program participation from 10
to 2, meaning that smaller businesses in the already existing covered classifications (all manufacturing)
would now be required to pay fees and possibly to report. (It is not clear at this time how many
businesses would be affected in this way.) The quantity threshold for required reporting would remain
at 2,640 pounds of total hazardous substance inputs in a calendar year. It would remain the case, as it is
now, that a number of businesses would be required to pay fees but would not be required to report.
The potential overall effect that the proposed ordinance would have on fees is not entirely clear at this
time. As was the case when the program was first enacted, estimates vary. Staff has estimated the
number of businesses that would be added, the total number of FTE that would be added, and the
potential added cost of program administration, and has come to the very tentative conclusion that the
ordinance could have the effect of reducing program fees by perhaps $5 per FTE from the 2004 level of
$31.65 per FTE up to the $2,000 cap. To develop an exact determination, it will be necessary to
specifically identify all businesses to be added to the program, poll them to determine their 2004 FTE
levels, add these FTE to the existing FTE pool (polling to determine the existing FTE pool is being done
now), and then recalculate the FY06 program budget requirements and applicable fees.
Under the proposed ordinance, initial fees for new businesses would be payable in 2005, but the first
reporting year would be 2006, meaning that the first reports for new participating businesses would not
be due to the City until April 2007. As was done in 1997 under the original program, the initial year
would be used to identify and educate affected businesses, who would then be required to track and
report substance use in the following year.
Commercial solid waste hauling fee surcharge: In 2003 there were 3,519 commercial solid waste
container accounts in the City of Eugene, plus approximately 22,000 drop box (dumpster) "pulls." A
surcharge of 50 cents per month for each regular account, plus one dollar per dumpster pull, would raise
approximately $43,000 over a full year, and would create only minimal added Toxics Program
administration costs. To fund the Charter-mandated elements of the Right-to-Know Program (approx.
$60,000), given the existing FTE pool, fees would need to be between $15 and $18 per FTE, up to the
$2,000 cap, which would be reached somewhere between 111 and 133 FTE.
Imposition of the surcharge would add administrative (billing) costs for haulers, which would need to be
a covered expense in future rate reviews. It would take some amount of time to implement, and
decisions would need to be made regarding the timing of the "surcharge collection year" and which
"Toxics Program year" those funds would support. Additionally, staff in the City's Planning and
Development Department have raised concerns regarding the proposed surcharge, and have submitted
the following comments related to this issue for inclusion in this Agenda Item Summary:
"Planning and Development Department staff administering requirements for solid waste haulers
recognizes the toxics program funding dilemma, and asks that the option of attaching a new fee to
waste collection customer bills weigh several issues. First, the City already sets fees for collection
of hazardous wastes and Lane County assesses additional disposal fees. A new fee for all
commercial accounts may result in an appearance of redundant assessments for some generators.
For other accounts, the indirect connection between the toxics program and their waste composition
may raise concerns. The addition of toxics program charges on commercial waste collection
accounts might look like a tax to many generators and haulers, because it is not based on use. In the
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early 1990s, the City revised collection rates to cover service costs and set licensing fees to support
related City administration and recycling and waste prevention programs. The proposed toxics
program fee departs from that Council-established policy direction."
The surcharge could be established by administrative order of the City Manager. That process includes
a public comment period. Should the administrative order ultimately be executed, then, as licensees to
the City, solid waste haulers operating in Eugene would be required to add the surcharge to their
collection bills and remit that increment to the City.
RELATED CITY POLICIES
A number of City policies are germane to this issue. The Toxics Program itself was enacted by
amendment to the City Charter in 1996. Previous City Councils have remained as faithful as possible to
the original intent of the voters in enacting the amendment, even as litigation and legislation made this
increasingly difficult. (The $2,000 cap is one example. In 1999, the Oregon Court of Appeals ruled that
the City's quantity threshold for requiring fees in and of itself constitutes an impermissible assessment
of fees based on quantity. This judgment caused the City to add about 30 businesses to the program
which were and still are required to pay fees but not to file hazardous substance reports.) The 2003-
2004 City Council Goals call for a safe community (to which, many would say, the Toxics Program
contributes) and for fair, stable, and adequate financial resources. Finally, the City's 2005 Legislative
Policies include support for legislative remedies to local Toxics Program fee problems stemming from
State law.
COUNCIL OPTIONS
Although this is a work session only, general council direction is requested at this time. Ultimately, the
council's options are:
1. Enact ordinance adding businesses to the program.
2. Direct City Manager to impose commercial solid waste hauling surcharge.
3. Pursue legislative remedy.
4. Any two of the above.
5. All three of the above.
6. None of the above. Continue with current fee structure. Possibly refer the matter back to the Toxics
Board for additional recommendations.
7. Provide other direction.
CITY MANAGER'S RECOMMENDATION
Option 3, pursue legislative remedy, is recommended. This is seen as the most direct and effective
solution available to the City. Intergovernmental Relations staff has indicated that such a solution might
be forthcoming in this year's session. Legislators willing to introduce remedy legislation have been
identified in both chambers of the Oregon Legislature. As the City works toward a legislative solution,
Toxics billing could be postponed. If the cap is repealed, then staff will make a Toxics fee
recommendation based on the pre-cap fee structure. If there is no repeal, the other options above remain
available, or the City could repeat the 2004 scenario. Under this recommendation, unless the Legislature
proceeds with alacrity, billing will occur later than the Charter-provided May 1 payment due date.
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However, precedent for this was set in 1999 when fees had to be recalculated due to the Court of
Appeals decision.
Should the council at this time choose to move forward with Option 1 and/or Option 2, a public hearing
is tentatively scheduled for January 24, and possible City Council action set for February 14.
S[IGGESTED MOTION
Move to table both Toxics Board recommendations and pursue legislative repeal of the fee cap.
ATTACHMENTS
A. Proposed ordinance adding businesses to Toxics Program.
FOR MORE INFORMATION
Staff Contact: Glen Potter
Telephone: 682-7118
Staff E-Mail: glen.d.potter~ci.eugene.or.us
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ATTACHMENT A
ORDINANCE NO.
AN ORDINANCE CONCERNING HAZARDOUS SUBSTANCES
USER FEES; AMENDING SECTIONS 3.692 AND 3.694 OF THE
EUGENE CODE, 1971; AND ADDING SECTION 3.695 TO THAT
CODE.
The City Council of the City of Eugene finds that:
A. Amendment IV to the Eugene Charter of 2002 was adopted at the general
election on November 5, 1996 (the "Amendment"). The Amendment provides in part
that hazardous substance users in Eugene shall file an annual materials balance report
that lists inputs and outputs of all hazardous substances obtained, used or generated
and that hazardous substance users shall pay an annual fee to Eugene sufficient to
jointly cover the implementation of the Amendment.
B. As a result of the Court's decision in Advocates for Effective Regulation, et
al. v. City of Eugene, 160 Or App 292 (1999), the City adopted Eugene Code provisions
3.690 - 3.696. These provisions separated the reporting requirement from the fee
requirement. To comply with ORS 453.402(6), as interpreted by the court, the
requirement to pay the fee is not dependent on the quantity (above zero) of hazardous
substances used. Currently, facilities that fall within the Code's definition of "hazardous
substance user" must pay the user fee. Facilities that fall within the Amendment's
definition of "hazardous substance user" must also submit the materials balance report.
The fee schedule adopted in the aftermath of the court ruling assesses a facility a
hazardous substance user fee if it uses any amount of hazardous substance (i.e., above
zero), employs more than 10 FTEs and is within a specific SIC code. The fee assessed
is based on the number of full time employees (FTEs) employed at the facility.
C. On July 1, 2003, amendments to ORS 453.370(2) took effect. The
amended statutory provision provides that fees for a local right-to-know program such
as the City's program may not exceed $2,000 for any single facility in any calendar year.
Thus, pursuant to amended ORS 453.370(2)(b), the City cannot adopt a fee schedule
that imposes a fee of more than $2,000 for any single facility in any calendar year. In
accordance with ORS 453.370(2)(b), the City's current fee schedule does not impose a
fee of more than $2,000 for any single facility.
D. Currently, the fee to be paid by hazardous substance users within the City
is $31.65 per FTE (not to exceed $2,000). With the fee capped at $2,000, the cost per
FTE must be set higher in order to fund the Program. The court requirement that the
fee not be quantity based and the statutory mandate that the fee be capped at $2,000
creates a variety of perceived inequities.
E. On March 10, 2004 the Eugene City Council asked that the Toxics Board
return to Council a "proposal to address the fee inequity and concerns caused by
Ordinance- 1
legislative actions and court decisions, while preserving the general intent of the voters
in adopting the program." In response to the Council's motion the Toxics Board has
recommended that the FTE threshold be deleted from the definition of "hazardous
substance user" and that the definition be expanded to include additional facilities. By
expanding the definition of hazardous substance user to encompass more facilities, the
cost to fund the program will be dispersed among a greater number of facilities, thereby
addressing the perceived inequities of the current fee structure.
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Section 1. The definition of "Hazardous substance user" in Section 3.692 of the
Eugene Code, 1971 is amended, and a new definition of "NAICS" is added thereto, to
provide:
3.692 Hazardous Substances User Fee- Definitions. Notwithstanding any
definitions contained in the amendment, as used in sections 3.690 through
3.696 of this code, the following words and phrases mean:
Hazardous substance user. Any business that operates a stationary facility
within the city limits of Eugene that:
(a) ,,r~oo,,.,., ! 0 .., ......,, ,.., ... ,~-r~°'], ._.., Has more than 2 FTEs; and,
(b) Has an NAICS or SIC code of any the following and falls within the
parenthetical descriptions provided herein: NAICS 23816/SIC 1761
(roofing contractors), NAICS 23832/SIC 1721 (painting and wall
covering contractors), NAICS 447/SIC 5541 (gasoline stations),
NAICS 71394/SIC 7991&7997 (fitness and recreations sports
centers operating a spa and/or pool), NAICS 72111/SIC 7011
(hotels and motels operating a spa and/or pool), NAICS 81112/SIC
7532 (automotive body, paint, interior and glass repair), NAICS
81222/SIC 7261 (crematories), NAICS 81232/SIC 7216 (dry-cleaning
and laundry services, except coin-operated), and NAICS 81292/SIC
7484 (photofinishing, except one-hour) and uses any quantity of
hazardous substance; or,
(b) Has a SIC code between 2000 and 3999 inclusive[~] and uses
[(c-~] any quantity of hazardous substances [6:~aeve-ze¢~] in its
manufacturing processes.
NAICS. North American Industry Classification system categories as
listed in the 2002 North American Industry Classification System
Manual.
Section 2. Section 3.694 of the Eugene Code, 1971 is amended to provide:
3.694 Hazardous Substances User Fee - Imposed. A fee is hereby imposed
upon hazardous substance users. The fee shall be an amount per FTE and
shall be paid annually no later than May 1 of each year [,
Ordinance - 2
late~]. Notwithstanding the provisions of section 2.020 of this code, the
specific amount of the fee shall be established by [reselutfie~] ordinance of
the city council.
Section 3. A new Section 3.695 is hereby added to the Eugene Code, 1971, to
provide:
3.695 Hazardous Substances User- Report Required. Hazardous substance
users with a total input of more than 2,640 pounds of hazardous
substances during a calendar year shall file an annual, public, materials
balance report in accordance with the requirements and definitions of
the amendment. Hazardous substance users not required by the
amendment to file a materials balance report shall file their first report
in 2007 and every year thereafter.
Section 4. The City Recorder, at the request of, or with the concurrence of the
City Attorney, may administratively correct any reference errors contained herein or in
other provisions of the Eugene Code, 1971 to the provisions added, amended or
repealed herein.
Passed by the City Council this Approved by the Mayor this
day of ,, 2004 __ day of ,, 2004
City Recorder Mayor
Ordinance - 3