HomeMy WebLinkAboutItem B: Ordinance Concerning Solid Waste Administrative Powers
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Action: An Ordinance Concerning Solid Waste Administrative Powers and Amending
Section 3.250 of the Eugene Code, 1971
Meeting Date: June 10, 2009 Agenda Item: B
Department: Public Works Staff Contact: Kurt Corey
www.eugene-or.gov Contact Telephone Number: 682-8421
ISSUE STATEMENT
This item is to take action on a proposed ordinance amending Section 3.250 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) hauler collection revenue and require
that the revenue generated from the surcharge be used for repair, maintenance, operation and preservation
of local streets. If the council approves the ordinance amending the solid waste hauler code, the City
Manager would adopt by administrative order a 5% transportation surcharge on solid waste hauler
collection receipts, effective August 1, 2009, with the revenues generated from the surcharge dedicated to
street services on local streets.
Following a public hearing on April 20, the council voted 5-3 on April 27 not to adopt an ordinance
establishing a solid waste surcharge, similar to the ordinance which is the subject of this public hearing.
In the course of the debate on that ordinance, several councilors requested that the full Eugene Budget
Committee be engaged in discussing the FY10 Road Fund issue in the context of broader City budget
issues. That discussion took place on May 18, where the Eugene Budget Committee approved on a 10-4
vote the following motion:
“Move that the Budget Committee recommend that the City Council impose a 5% transportation
surcharge on solid waste haulers to generate an estimated $900,000 for road maintenance and
operations. All monies collected are to be designated to local streets for O & M. Should the City
receive any extra road funding from the state or other sources in the year 2010 budget cycle, that
money should be used first to offset the fees as a priority in order to rescind the surcharge.”
Based on that strong recommendation by the Budget Committee, this is an opportunity for the council to
take action on the revised ordinance, which would restrict the use of the revenue to providing services on
local streets. The City Manager’s rationale for moving the decision on this issue along in an expedient
manner is to allow this matter to be resolved in advance of the public hearing and action on the FY10
Adopted Budget, which are currently scheduled for June 15 and June 22, respectively. The council’s
ultimate decision on this ordinance will have a significant bearing on the FY10 Road Fund budget and the
level of street operations and maintenance services which the City will be able to provide in the upcoming
year. For that reason, it is important for the City Manager to have the council’s decision on this proposed
ordinance and the FY10 road funding issue by the time the FY10 City budget comes to the council for
formal adoption.
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BACKGROUND
Previous Council Action and History
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.
The critical nature of the shortfall in funding for Road Fund operations and maintenance became evident
last fall, when projections showed that with no new revenues the Road Fund was expected to generate a
$2.6 million annual operating deficit in the current fiscal year (FY09), and that without deliberate action,
the fund would deplete all available fund resources and become insolvent sometime in late 2009. In
response to this projection, the City Manager presented several options to the City Council in a work
session on November 12, 2008. At that meeting, 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 the need for two different sets of funding strategies: a one-
time, “stop gap” plan for fully funding critical Road Fund services in FY10, and a comprehensive “road
map” for solving the City’s overall transportation funding problems in the long term. At that meeting,
interest was expressed in a garbage hauler surcharge, but at a level lower than the proposed 10%. 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. This strategy included a new 5% transportation
surcharge on solid waste hauler collection revenue and amendments to the Eugene City Code to expand
the allowed uses of stormwater and wastewater user fees for road-related purposes to allow a one-time
transfer of $500,000 from existing City stormwater and wastewater fund reserves to the Road Fund for
FY10. On April 20, the council held public hearings on the two proposals. Eleven speakers testified on
the proposed solid waste surcharge and one speaker spoke regarding the use of stormwater and
wastewater funds. Through this community input and subsequent council and Budget Committee
discussions, a number of questions and concerns were raised regarding the proposed solid waste hauler
surcharge. Attachment A represents the City staff response to those questions and concerns.
On April 27, the council unanimously approved the ordinance changes allowing the use of stormwater and
wastewater funds for Road Fund purposes and authorizing a one-time transfer of $500,000 from the
utilities to the Road Fund. At the same time, the council voted 5-3 not to adopt the proposed solid waste
surcharge ordinance. As indicated above, the council asked the Budget Committee to provide
recommendations to the council and City Manager on whether to enact a solid waste hauler surcharge to
balance the Road Fund budget in FY10.
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RELATED COUNCIL GOALS AND POLICIES
The goal of the council 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.”
COUNCIL OPTIONS
The options before the council with regard to the proposed code amendments are as follows:
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 and
to dedicate the revenues from such fees to delivering street services on local streets; 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
redirection of existing revenues from other sources, such as the $1.0 million special allocation from
General Fund resources intended to be used for enhanced pothole and street repair services in FY10.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends Option 1.
SUGGESTED MOTION
Move to adopt an ordinance concerning solid waste administrative powers and amending Section 3.250 of
the Eugene Code, 1971.
ATTACHMENTS
A. Staff Responses to Commonly-Asked Questions on the Proposed Solid Waste Hauler Surcharge
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
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ATTACHMENT A
Staff Responses to Commonly-Asked Questions
on the Proposed Solid Waste Hauler Surcharge
How much would the proposed garbage hauler surcharge raise and what would it be used for?
A 5% transportation surcharge on garbage hauler collection revenue is projected to generate an estimated
$900,000 for the fiscal year beginning July 1, 2009. Assuming that the surcharge on hauler collection
revenue is passed on to the customer, slightly more than half of the revenue from a 5% surcharge would
come from commercial garbage customers, with the remainder coming from residential customers.
Revenues from the proposed garbage hauler surcharge would be used by the City of Eugene in the
upcoming fiscal year to maintain current services levels for traditional street operations and maintenance
(O&M) activities. In the most current version of the ordinance, those monies would specifically be
designated for maintaining street services on local streets (i.e., those not designated as either arterial or
collector streets by the City). Specific examples of the critical street services which this revenue will fund
for local streets include keeping the street lights lit, the street signs and signals in good working order,
and the potholes and cracks patched.
What is the likely financial impact on my monthly garbage hauler bill from this 5% surcharge?
Assuming that the 5% surcharge would be passed on to a residential customer with a weekly 32-gallon
service (the most common level of residential service), that typical customer would see an increase in
their monthly bill of approximately 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 on Transportation Funding Solutions noted
the fact that “garbage services customers from all sectors would pay this fee, regardless of whether they
were public, 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
Exhibit 1
funding of a well-maintained street system. to this Attachment 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.
When would I likely see the impact of this proposed surcharge on my garbage bill?
It is the Manager’s current intention that this new surcharge would take effect on August 1, 2009,
assuming that the administrative rule-making and customer noticing processes can reasonably be
completed in that timeframe. Likely, most customers would see the change in their garbage fees on the
next subsequent billing cycle.
What would happen if the garbage hauler fee is not approved by council?
The portion of the city budget that pays for road operation and maintenance services such as keeping
streetlights lit, street signs and signals in good working order, and potholes and cracks patched currently
faces a shortfall of about $900,000 in the fiscal year that begins July 1, 2009. To balance the road
operating budget for FY10, the city must increase revenue to the Road Fund, decrease road services, or
some combination of the two. The garbage hauling surcharge, which would raise an estimated $900,000 a
year dedicated to maintaining local streets, would fill the gap and avoid the need for road service
reductions. If the surcharge or some other form of additional revenue is not secured for the FY10 Road
Fund budget, then the Manager will have to cut road services by an offsetting amount. $900,000
represents approximately 10% of the city’s proposed FY10 Road Fund operating budget. While specific
service cuts have not been identified at this time, it is likely that significant road service reductions would
have to be made to accommodate a budget reduction of this magnitude.
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Why is the city singling out a specific category of heavy vehicle operator for this surcharge, when
other heavy vehicles, such as those operated by EWEB, LTD, the school districts and local
construction companies, would not be subject to the surcharge?
The idea of a surcharge on garbage haulers to generate revenue for road funding was recommended by a
committee of the City Council which spent several months in 2007 on the difficult task of identifying
viable funding for street maintenance and preservation. The suggestion that all heavy trucks should be
included is a common one that was, in fact, considered as part of the Council committee's review by
looking at the potential for charging road fees to a broader group of heavy commercial vehicles operating
in the city. The conclusion at that time was that the broader fee structure would be problematic for
several reasons. The first concern is with regard to legal defensibility, in that if a fee were to be imposed
as a requirement for operation of a heavy vehicle within Eugene, there is a high probability that it would
be seen as a vehicle registration fee. Under current state statutes, only counties may impose a local
vehicle registration fee. Furthermore, charging the fee to the broader group of heavy truck haulers was
also viewed as neither efficient nor cost effective, as there is currently no practical way for the city to
identify, track and assess the fee. Finally, there would likely be a disproportionate administrative cost
associated with assessing a broad range of heavy trucks since there are no practical sources to obtain the
needed data and bill for the fee. These are the primary reasons the Council committee determined that the
broader heavy vehicle fee would not be feasible at this time.
Staff believes 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 city streets. Most cities in Oregon levy some form of fees or taxes on
garbage haulers and use some of that money for a broad range of general government purposes, including
road repair.
I don’t live in Eugene but am a resident of unincorporated Lane County. Will I also see my
garbage rates increased as a direct result of this proposed Eugene garbage surcharge?
The proposed surcharge is not a charge on garbage customers, but on the revenue generated by solid
waste haulers who are licensed to operate in Eugene. Under this proposed ordinance, the solid waste
haulers would be required to apply the surcharge only to garbage collection revenue generated within the
city of Eugene. The Eugene surcharge would not apply to hauler collection revenues generated in other
communities or in unincorporated Lane County. Solid waste haulers who do business in Eugene are
already required to identify whether the property being served is within the Eugene city limits, so the
garbage haulers should 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 of Eugene does not regulate rates,
billings or hauling services outside the city limits.
What’s the connection between this surcharge on garbage collection fees and the condition of city
streets? How is it fair that the amount of garbage I produce impacts the amount of surcharge likely
to be included on my garbage bill?
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 collection 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 their
services.
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Another concern which has been expressed is that there is no equity between the different levels of
surcharge which would likely 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 (higher revenue means
more customers and more tonnage of solid waste transported on city streets) and the damage done to
streets.
Given the current economic situation and the financial stress people in our community are
experiencing, why is the city looking to impose a new fee or charge?
The lack of sufficient resources in the Road Fund to maintain existing levels of street services has
prompted several studies and a number of proposed solutions (including a solid waste hauler surcharge)
over the past decade. Despite these efforts, and through a period of economic expansion and relative
prosperity, the funding gap in the Road Fund has grown to nearly $4 million per year. Chronic operating
deficits are now projected to deplete the fund balance to zero by the end of this year. Time has run out,
and the Council must decide whether or not the city continues to deliver traditional street operations and
maintenance services in the upcoming fiscal year.
Why can’t this road O&M funding gap just be funded from the city’s General Fund?
The city’s General Fund is also facing substantial financial challenges in the form of a projected $12
million budget shortfall for FY10, which will require significant changes in the way the city delivers
traditional General Fund services, as well. To the extent that the General Fund budget currently reflects
community priorities, it is unlikely that the General Fund will be in a position to offer even one-time
financial assistance to the Road Fund, let alone contemplate being part of a long-term, sustainable funding
solution for transportation system service needs.
I’m a garbage hauler, and I am concerned about how I’m going to implement this new surcharge,
exactly how I’m going to sort through which collections are subject to the surcharge, and what
changes I might have to make to my systems to comply with this new fee. When am I going to have
answers to some of these questions?
City staff in the Solid Waste Program and in the Public Works Department are committed to working
with city-licensed garbage haulers to develop administrative rule changes and implementation agreements
that are reasonable and practical for all parties concerned. Staff will be inviting suggestions and
proposals from the hauler community as to how they would suggest we approach some of these
implementation and administrative issues.
How much are the hauler administrative costs expected to be to collect this fee?
Administrative costs per customer billing are anticipated to be very small. Minimizing administrative
costs will be a strong consideration when the City Manager develops the administrative rules for this new
surcharge. There is likely to be some variance in administrative costs among the haulers, depending on
what types of collection systems they currently have in place. A hauler’s additional expense to administer
and collect this fee will be reported as an operational expense for the 2009 calendar year, which will then
be incorporated into the next rate-of-return and collection rate review, scheduled to be performed by city
staff in the spring of 2010.
As a garbage hauler, I already paid an annual license fee to the City of Eugene based on my hauler
collection revenues. Doesn’t this separate 5% surcharge represent double-taxation by the city on
this same revenue? What is the difference in the two fees?
Under administrative rules, city staff exclude a number of expense categories from the License Fee
calculation, including county disposal fees, income taxes, interest expense, and political/charitable
contributions. Staff will exclude the collections generated from the transportation surcharge in
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calculating the annual Hauler License Fee; it will be considered a “pass-through” expense, similar to the
county disposal fees.
The annual license fee pays for a city permit which allows the haulers to conduct business in a regulated,
closed environment, includes minimum rates set by the City that provide an established rate of return,
and provides the privilege of a five-year rolling license. The license fee also pays for city program costs
related to solid waste and recycling initiatives. The transportation surcharge is a right-of-way fee that
helps compensate for the use and upkeep of city streets.
What is the potential financial impact on our local public schools, and what options are available to
the city to reduce or eliminate that impact?
Concern has been expressed about the financial impact of the proposed surcharge on local school districts
which are struggling with financial challenges of their own. The City has no control over the amount of
the surcharge which the haulers decide to pass through to particular categories of garbage customers, but
assuming the haulers do pass along the 5% surcharge, 4J School District would pay an estimated $1,100
more per month in increased garbage fees, and hauler testimony has indicated that Bethel School District
would pay approximately $450 more per month in increased fees. The primary concern is that a possible
effect of the new surcharge would be to reduce available funding for delivery of K-12 education services
in the city. While it is critical that the community address transportation funding needs, K-12 educational
services are also of vital importance.
The council may wish to consider a mechanism to offset or mitigate impacts of the proposed surcharge to
school districts while at the same time preserving the integrity of the garbage hauler surcharge as a legally
defensible funding source. Council may wish to direct the City Manager to develop options to offset or
reduce the impact of the surcharge on schools using another funding source. Assuming haulers do pass
through the surcharge to customers, establishing a funding source that would wholly offset school
transportation surcharge impacts is estimated to require around $19,000 annually. This special
appropriation could be established in the FY10 Supplemental Budget #1. If the council wishes to
consider taking such action, the following motion could be made only after the ordinance is adopted.
Potential Amendment 1: I move to direct the city manager to bring back options in FY10 Supplemental
Budget #1 for funding a Solid Waste Hauler Surcharge offset to reduce or eliminate the impact of the 5%
transportation surcharge on public school districts in Eugene.
The Eugene Budget Committee recommended that if the City were to receive any extra road
funding from the state or other sources in the year 2010 budget cycle, then that money should be
used first to offset these fees in order to rescind the surcharge. How is the City Manager
responding to that recommendation?
The solid waste hauler surcharge is intended to fill an estimated $900,000 gap in the city’s Road Fund
budget for the upcoming year. The Manager does not anticipate receiving any significant amount of road
operating revenue from the state or other sources in FY10 beyond the amounts already included in the
proposed FY10 budget. If the state increases the state gas tax under a proposal currently being considered
by the Legislature, it is unlikely that any additional revenue would flow to the City of Eugene in FY10
due to provisions in the state transportation bill that hold the gas tax increase in abeyance until the state
has gone through two consecutive quarters of economic growth, or January 2011, whichever comes first.
Federal transportation funding sources, including stimulus funding, typically are tied to specific capital
projects and cannot be used for operations and maintenance. City staff continue to talk with Lane County
staff about potential regional solutions, but it is highly unlikely that any regional solution could be
identified, implemented and begin to generate revenue in FY10. If a substantial amount of unanticipated
flexible road funding revenue were to be received in FY10, the City Manager would inform the City
Council of the unanticipated revenue and request direction from the Council as to how those funds
should be applied and what further action should be taken.
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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 local streets 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
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 local streets within the
city, local streets which the city is contractually or legally obligated
to operate and maintain, or local 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. As used in this subsection and subsection (1)(h) of
this section, “local street” means any street not designated as an
arterial or collector street on the adopted Street Classification Map.
(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
00228123.DOC