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HomeMy WebLinkAboutItem 3: Ordinance on Solid Waste Administrative Powers ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: An Ordinance Concerning Solid Waste Administrative Powers and Amending Section 3.250 of the Eugene Code, 1971 Meeting Date: April 20, 2009 Agenda Item: 3 Department: Public Works Staff Contact: Kurt Corey www.eugene-or.gov Contact Telephone Number: 682-8421 ISSUE STATEMENT Tonight’s public hearing is for the purpose of gathering community input on a proposed ordinance amending sections of the Eugene City Code dealing with Solid Waste Administrative Powers. The proposed amendments would permit the establishment of a transportation surcharge on solid waste (garbage) haulers and further permit the transportation surcharge to be used for the repair, maintenance, operation and preservation of City-owned roads and streets. City Council action on these proposed amendments is scheduled for April 27. If the council approves the ordinance amending the solid waste hauler code provisions at that time, the City Manager would adopt by administrative order a 5% transportation surcharge on solid waste hauler license fees, effective July 1, 2009, with the intention that the revenues generated from the surcharge would be used to continue to deliver street operations and maintenance services in the upcoming fiscal year beginning July 1, 2009. Eugene lacks adequate funding to maintain current service levels for street operations and maintenance (O&M) activities in FY10. These are the critical street and traffic infrastructure services which keep the streetlights lit, the street signs and signals in good working order, the potholes and cracks patched, the alternative modes goals on track, and more. These services are paid from the city’s Road Operations Fund, which has experienced a 15% decrease in revenue over the last five years while expenditures have increased by 23% in that period, despite an organizational restructuring in FY04 and FY05 which resulted in service reductions, efficiencies and over $1.0 million in annual budget savings. Ongoing operating deficits are projected to deplete the fund balance to zero by late 2009. Without new revenue, the fund will be unable to support roughly one-third of current City street O&M services after June 30, 2009. In previous work sessions, the council has weighed the two available options for keeping the Road Fund solvent—to either stop providing the traditional number of street services in order to live within the available resources and/or to look for new ways to fund the services we decide to keep. The City Manager is finalizing his FY10 Proposed Budget to preserve existing street O&M services through a combination of cost reductions and realignments as well as options for using both existing and potential new revenue sources to preserve critical services. The new revenue source which the council has been discussing is a 5% transportation surcharge on solid waste (garbage) haulers. In addition to this one new revenue source, the council is also considering the use of two existing sources of revenue for preserving critical street O&M services for FY10, including the use of a portion of the local gas tax proceeds and a one-time contribution from the City’s stormwater and wastewater utilities. Z:\CMO\2009 Council Agendas\M090420\S0904203.DOC 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 private or nonprofit entities,” thereby acknowledging that the intention was to spread the impact of this surcharge broadly across the community, so that everyone would pay a little towards the funding for a well-maintained street system. Attachment A illustrates the estimated financial impact of the proposed 5% garbage surcharge on a range of residential and commercial customers at various levels of service, along with a list of seven actual commercial customers and the estimated financial impact of the proposed surcharge on their monthly bills. Current Budget Outlook - Under the most current projections, the Road Fund is expected to generate a $2.3 million annual operating deficit this current year (FY09) and, with no new revenues, that annual deficit would grow to nearly $5 million in the out years of the six-year forecast. In the absence of deliberate action, the fund will deplete all available fund resources and become insolvent sometime in the fall of 2009. On the other hand, a set of $3.8 million ongoing revenue solutions implemented by July 1, 2009, would eliminate the projected future annual operating deficits throughout the forecast period and As an alternative, a minimum of $2.8 restore the fund balance to the policy-recommended level. million in one-time revenue would be needed for FY10 to fully fund the current operations of the Road Fund for one year while the council continues to work on a comprehensive, sustainable funding strategy. Program Cost-Cutting Measures - Responding to the challenge of identifying opportunities for ongoing cost savings, the Public Works Department is implementing $178,000 of reductions in the FY10 Road Fund operating budget through the redeployment of several employee positions from traditional Road Fund work (street debris removal, development review, night call response) to address emerging needs in other City programs. Staff believes these cost savings are both achievable and sustainable without significant reductions in service or public response. Across the City, staff continues to explore other opportunities for increasing efficiencies and reducing costs. Some of these budget-saving strategies, such as voluntary furloughs, deferred replacements and reductions in the fleet of equipment and vehicles, and reduced use of outside consultants and services, are anticipated to benefit funds and operating budgets across the organization. One-time Funding Strategy - Responding to council direction to bring back a one-time funding strategy to maintain street O&M services through FY10, the City Manager is proposing a three-part funding package as a FY10 stop-gap solution, comprised of the following three elements: Redirect up to $1.4 million of the FY10 local motor vehicle fuel tax revenue 1) from capital pavement preservation to critical street O&M services and back-fill the pavement preservation program funding with the $3.0 million of federal stimulus payments dedicated to that purpose; Authorize a transfer from stormwater/wastewater reserves 2)by including in the final FY10 Adopted Budget a one-time $500,000 contribution for FY10 from existing reserves in City-owned wastewater and stormwater utilities; and Impose a 5% transportation surcharge on solid waste haulers. 3) ? It is this third element of the City Manager’s stop-gap funding strategy to keep the Road Fund solvent through FY10 that is the subject of this public hearing. RELATED COUNCIL GOALS AND POLICIES The goal of the council’s Transportation Initiative is to “Develop mechanisms to adequately fund Eugene’s transportation system for cars, trucks, bikes and pedestrians, including maintenance and preservation and capital reconstruction.” Z:\CMO\2009 Council Agendas\M090420\S0904203.DOC COUNCIL OPTIONS The two principal strategies available for balancing the FY10 Road Fund budget are the following: 1) to reduce the current service system to the level of existing and projected resources; or 2) to increase the level of revenue, on at least a short-term basis, to adequately fund the current street O&M service system through June 30, 2010. No action is required of council at this time, as this is a public hearing. However, on April 27, councilors will have the following options before them with regard to this proposed ordinance: Option 1: The council could choose to approve the proposed amendments to the Eugene Code to permit the establishment of a transportation surcharge for use of the public right-of-way by solid waste hauler licensees and to offset the damage to the street system caused by collectors’ vehicles, with the revenues from such fees to be dedicated to helping keep the city’s Road Fund services intact for FY10; or Option 2: The council could choose to not approve the proposed amendments to the Eugene Code and decline to permit the establishment of a transportation surcharge on solid waste hauler licensees, requiring either $900,000 of street operations and maintenance service reductions for FY10 or the need for replacement revenues from other sources. CITY MANAGER’S RECOMMENDATION No recommendation is offered for this discussion, as this is a public hearing. SUGGESTED MOTION None offered. ATTACHMENTS A. Projected Financial Impacts by Customer Category of a Proposed Transportation Surcharge on Solid Waste Haulers at the 5% Level B. An Ordinance Concerning Solid Waste Administrative Powers and Amending Section 3.250 of the Eugene Code, 1971 FOR MORE INFORMATION Staff Contact: Kurt Corey Telephone: 682-8421 Staff E-Mail: kurt.a.corey@ci.eugene.or.us Z:\CMO\2009 Council Agendas\M090420\S0904203.DOC ATTACHMENT A Projected Financial Impacts by Customer Category of a Proposed Transportation Surcharge on Solid Waste Haulers at the 5% Level Current Rate5% Residential ServiceLess RebateSurcharge 20 gallon$ 10.75$ 0.54 32 gallon monthly$ 4.75$ 0.24 32 gallon every-other-week$ 12.90$ 0.65 32 gallon $ 19.70$ 0.98 60 gallon $ 35.45$ 1.77 90 gallon $ 44.20$ 2.21 Commercial Service 1 cubic yard$ 66.90$3.35 1.5 cubic yard$ 96.60$ 4.83 2 cubic yard$ 127.20$6.36 3 cubic yard$186.00 9$.30 4 cubic yard$ $ 12.09241.85 5 cubic yard$ 294.75$ 14.74 6 cubic yard$344.85$ 17.24 Residential Total Revenue $437,695.35 NOTE 1: These numbers represent estimates based on financial information from calendar year 2007. The economic impacts will likely decrease this amount of surcharge revenue. NOTE 2: On commercial accounts, a customer may have multiple pick-ups per week. They may also have more than one container. Additional containers are charged at a lower rate. Customer Categories & Typical Bills Typical MonthlyEst. Monthly * Hauler Charge Example Customer5% surcharge Dari-Mart$ 241.85$ 12.10 Capella$ 547.80$ 27.39 Safeway$ 1,100.00$ 55.00 Albertsons$ 1,400.00$ 70.00 ** Target$ 900.00$ 45.00 4-J Schools$ 22,000.00$ 1,100.00 Valley River Center$ 5,900.00$ 295.00 * Example customers and monthly charges provided by Sanipac ** These are averages and change from month to month, based on compactor/ drop box weights and seasonal services. Revised 3-30-09 ATTACHMENT B ORDINANCE NO. _______ AN ORDINANCE CONCERNING SOLID WASTE ADMINISTRATIVE POWERS AND AMENDING SECTION 3.250 OF THE EUGENE CODE, 1971. THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS: Section 1. Section 3.250 of the Eugene Code, 1971, is amended to provide as follows: 3.250 Solid Waste, Yard Debris and Recycling - Administrative Powers of the City Manager . (1) The rules adopted by the city manager under section 2.019 of this code concerning solid waste and recycling licenses may address, but are not limited to: (a) Minimum identification, maintenance and sanitation standards for collectors' vehicles; (b) Minimum standards relating to the qualifications, training and identification of collectors’ employees; (c) Minimum standards for all information to be included in collectors' records; (d) Minimum standards and procedures for collection service to assure quality of service to customers; (e) The establishment of rates for service and the procedure to be used in recommending and revising solid waste and recycling service rates; (f) The establishment of application requirements to be met before a license may be issued or transferred; (g) The establishment of application, license and license transfer fees that allow the city, at a minimum, to recover regulatory and enforcement costs associated with solid waste and/or recycling collection; (h) The establishment of fees for use of the public right-of-way by licensees and to offset the damage to the street system caused by collectors’ vehicles; (hi) The establishment of procedures, policies and operating practices which are required for implementation of this code; and (ij) The establishment of customer responsibilities that include, but are not limited to, payment responsibility; location of receptacles; time and manner of placement and retrieval of solid waste, recyclable materials and yard debris receptacles; the manner in which receptacles are loaded, and acceptable and unacceptable Ordinance - Page 1 of 2 ATTACHMENT B materials for specific receptacles, and the maximum weights for each. (2) Revenues from fees authorized pursuant to subsection (1)(h) of this section shall be deposited in the appropriate fund for road operations, to be used for the reconstruction, repair, maintenance, operation, and preservation of city-owned roads and streets within the city, roads and streets which the city is contractually or legally obligated to operate and maintain, or roads and streets for which the city has accepted responsibility under intergovernmental agreement. Revenues from fees authorized pursuant to subsection (1)(h) of this section shall not be used for capacity-enhancing street improvements. (2) 3 The city manager may adopt a solid waste systems benefit fee under section 2.020 of this code, or may enter into an intergovernmental agreement with Lane County to authorize Lane County to impose and collect within the city a solid waste systems benefit fee in the same amount that applies outside the city, to fund the cost of waste management programs and community services, including but not limited to recycling education, recycling drop-off facilities, special waste programs and facilities, solid waste transfer sites and technical assistance services for businesses. Section 2. The City Recorder, at the request of, or with the consent of the City Attorney, is authorized to 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 _____________, 2009 ____ day of ___________2009. ____________________________ _____________________________ City Recorder Mayor 00219897.DOC;1 Ordinance - Page 2 of 2