HomeMy WebLinkAboutItem 6 - Ord.on Toxics RTK FeesEUGENE CITY COUNCIL
AGENDA ITEM SUMMARY
Action: 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
Meeting Date: March 7, 2005 Agenda Item Number: 6
Department: Fire and Emergency Medical Services 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 approved fees on that basis in 2004, but directed the Toxics Board to return
with a proposed remedy for the perceived inequity.
In a work session on January 10 of this year, the council considered two proposals brought forward by
the board, and scheduled a public hearing on one of them, an ordinance that would add certain types of
businesses to the program and would also reduce the threshold employee level for manufacturers from
10 to 2. The hearing on the proposed ordinance was held on February 14. The proposed ordinance is
attached.
BACKGROUND
In 1996, through the citizen initiative process, Eugene voters amended the City Charter 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, nor
determine who pays fees, based on quantities of hazardous substances reported.) The number employed
by individual participating businesses has ranged from 10 to 1,207. At this time, 72 local manufacturing
facilities are required to pay fees, and 40 of those are required to file reports because they exceed the
program's quantity threshold for reporting.
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 & 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 to $14 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.
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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 $2,000. Businesses with more than 63 FTE paid less than $31.65 per FTE, with the largest
business, 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 2004, and $14.84 this year.
Polling of businesses for their 2004 FTE levels is now complete for purposes of determining 2005 fees
under a status quo scenario. That fee would be $30.94 per FTE, again up to the $2,000 cap.
DETAILS OF PROPOSAL
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, certain businesses operating a spa and/or a swimming pool (hotels,
motels, and fitness centers), photofinishing services (except one-hour), and crematories.
In addition, the proposed ordinance would reduce the FTE threshold for program participation from 10
to 2 (more precisely, "more than 2"), meaning that smaller businesses in the already existing covered
classifications (all manufacturing) would now be required to pay fees and possibly to report. 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.
Staff has conducted preliminary research regarding the potential fee and reporting impacts of the
ordinance. This research included interviews with principals of potentially affected businesses, requests
for information from the Oregon Construction Contractors Board, actual counts of potentially affected
businesses, and in some cases, estimates of their FTE levels and their probability of being required to
report. The results, which remain preliminary pending actual implementation of the ordinance, are:
EXISTING PROGRAM:
Number of fee-paying businesses: 72
Number of covered FTE: 6,692
Number of reporting businesses: 40
2005 fee: $30.94/FTE up to $2,000
WITH PROPOSED ORDINANCE:
Number of fee-paying businesses: 240
Number of covered FTE: 8,300
Number of reporting businesses: 90
Estimated 2005 fee for all program participants: $25.67/FTE up to $2,000
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Fee examples for this year, based on the above:
Without proposed ordinance With proposed ordinance
Rate per FTE 2005 fee Rate per FTE 2005 fee
20 FTE $30.94 $618.80 $25.67 $513.40
50 FTE $30.94 $1,547 $25.67 $1,283.50
500 FTE $4 $2,000 $4 $2,000
The research found that photo processors, dry cleaners, and crematories probably would not be required
to report, while some of the other businesses listed (in particular, gas stations, pool operators, and
possibly some auto body and paint shops) probably would be.
The estimated 2005 fee assumes an FY06 program budget of approximately $130,000, which includes
additional staff support and additional legal assistance for the initial fiscal year under the proposed new
scenario. It is possible that the necessity of this additional help may decline in future years, after the
program restabilizes.
To develop an actual 2005 fee recommendation under the proposed ordinance, it would be necessary to
specifically identify all businesses to be added to the program, poll them to determine their 2004 FTE
levels, add those FTE to the existing FTE pool, and then recalculate the FY06 program budget
requirements and applicable fees. 2005 billing would be delayed.
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
(2005) would be used to identify and educate affected businesses, who would then be required to track
substance use for the following year and report it by April 1 of the year after that.
If this ordinance is adopted, the Toxics Board also anticipates spending time in 2005 to work through the
various policy questions that will be raised, including treatment of mobile operators (contractors),
appropriate FTE allocations for businesses required to participate by virtue of only a part of their overall
operations, and other issues.
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, adopting ordinances as necessary to
continue the program under altered circumstances created by litigation and legislation. The 2003-2004
City Council Goals call for a safe community 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.
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COUNCIL OPTIONS
1. Adopt the ordinance. Should the council adopt the ordinance, the fee recommendation and 2005
billing will be postponed pending the completion of staff work necessary to identify affected
businesses and their FTE levels, and to revise the proposed budget to reflect the additional cost of
administering an expanded program.
2. Take no action. Should the council take no action, staff will return with a status quo program budget
and fee recommendation for this year to continue the program in FY06.
3. Provide other direction.
CITY MANAGER'S RECOMMENDATION
The City Manager recommends Option 2, take no action.
SUGGESTED MOTION
None.
ATTACHMENTS
1. Proposed ordinance concerning hazardous substance user fees
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. (CB #4894)
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 definition of "hazardous substance user" be revised to reduce
the FTE threshold from 10 FTEs to "more than 2 FTEs" 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 [msolut4on] 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 ,, 2005 __ day of ,, 2005
City Recorder Mayor
Ordinance - 3