March 31, 1999
REGULAR MEETING BOARD OF COUNTY COMMISSIONERS
Commissioners' Conference Room - 1:30 p.m.
Commissioner Bobby Green, Sr., presided with Commissioners Bill Dwyer, Anna Morrison, Peter Sorenson and Cindy Weeldreyer present. County Administrator Bill Van Vactor, County Counsel Teresa Wilson and Recording Secretary Melissa Zimmer were also present.
11. COMMISSIONERS' ANNOUNCEMENTS
Green announced he went to Birmingham, Alabama with Steve Carmichael, Judge Kip Leonard and other staff to look at the Birmingham site about "Breaking the Cycle" (the grant Lane County received) from the National Institute of Justice. He said he has a three ring binder in his office and encouraged the Board to look through it. He said he learned there was not a focus on incentives, and in Birmingham, there was more focus on sanctions. He said Lane County has a balanced approach. He noted in the adult jail population they have over 2,000 inmates and 80% of the population is still awaiting trial.
Dwyer stated he and Morrison had been asked to review the capital improvements.
12. PUBLIC WORKS
a. DISCUSSION & ACTION/Implementing System Benefit Charges and/or Waste Collection Franchising as Methods of Diversifying the Funding of the Waste Management System.
Ken Kohl, Waste Management, passed out a report and update (copy in file.)
Ken Sandusky, Waste Management, gave a brief overview of disposal practices. He reported that the components include disposal, transfer and the Glenwood Transfer Station. He added Glenwood serves the metropolitan area with about 86,000 tons per year, there are 15 rural transfer stations that do 27,000 tons per year and Short Mountain Landfill has 111,000 tons per year, for a total of 225,000 for the fiscal year ending 97/98. He noted they serve a large geographic area with the transfer sites from McKenzie Bridge to Florence. He said the second component of the system is the waste reduction recycling program and the third is the special waste program which includes permanent household and other waste collection.
Sandusky noted the crux of the problem was the landfill in Corvallis (Coffin Butte) that charges $18 per ton to franchised and licensed haulers and $28 per ton to the general public. He said they are paying $46 per ton in Lane County. He stated because of the disparity of fees and not being able to compete on price, he has seen revenue leave the system. He said in fiscal year 1997, $900,000 had left the area and it increased to $1.8 million in 1998. He said something has to be done to address the revenue going out of the system. He said if nothing is done, by fiscal year 2004, they will go into a deficit mode. He said they looked for alternative ways to fund the system and had identified several. He said they looked at a system benefit charge (SBC), flow control (all waste that is in the jurisdiction stay in the jurisdiction), site closures, franchising waste collection, special districts and privatization.
Sandusky reported there had been impacts to the system when the Material Recovery Facility ( MRF) came along. He said that loss of revenue from the recycling diversion is about $1.8 million. He said they made some fee increases and cost service cuts. He added that their largest customer indicated that unless they changed the way they funded the system, they would go north to take advantage of the lower disposal. He said it would be critical to sustain the system because they are 43% of the County's revenue, about $3.8 million per year. He said if the company walks away, the system would crash within two years.
Sandusky stated that the system benefit charge is a charge or fee intended to recover and maintain revenues that fund system services that benefit all County residents. He said it is projected in fiscal year 99/00 they will take in 218,000 tons of waste which gives a SBC calculation fee of $16.01 per ton. He said the fee would be charged to everyone in the system and everyone who leaves the system. He said the SBC would be part of the $46 ton fee and if someone leaves the system, a fee would be charged through a County ordinance. He added it applied to unincorporated areas of the County. He said for the metropolitan areas, there could be an intergovernmental agreement whereby the cities would make it a license or a franchise requirement to pay the fee. He said the ordinance had been reviewed by legal counsel and the written response is that it is structured properly and the fee does not attempt to subsidize the cost of the program. He noted that written into the draft solid waste plan is a system benefit charge. He said within a couple of weeks they would be ready to bring back a draft ordinance for a first reading. He added the SBC had been endorsed unanimously by the Citizen Advisory Committee.
Sandusky discussed different scenarios for dealing with the situations that were included in the report that was handed out (copy in file.)
Sandusky stated they were recommending scenario #3, a SBC and several funding mechanisms that they had identified as options.
Kohl said when substituting 11 site closures of the rural transfer stations as opposed to maintaining the existing system of rural transfer stations and the recycling program on special waste, there would be an impact on the status quo if Sanipac were to leave. He discussed the different costs from a chart. He said when the cost of disposal is added to their costs at the Short Mountain Landfill, all of the transfer sites end up costing money. He said for the status quo and evaluating the current system, they have a net that goes into reserves of $1.2 million dollars.
Sorenson questioned the benefit of having rural transfer stations.
Dwyer said it is easier for people to use the transfer stations if they live in a rural setting.
Sandusky noted that on occasion there are times when people from the metro area do use the close-in rural transfer stations in Marcola, Creswell and Veneta because they can get in and out quicker.
Morrison said with regard to the transfer sites, she didn't totally agree that people would start dumping garbage in the brush. She said there is not garbage laying in the roads in other counties that do not have transfer stations. She said there will not be an increase of garbage in the rural areas if the transfer stations are closed.
Sorenson said in counties that do not have rural transfer sites, they have franchise systems that spread the cost in rural areas and guaranties (through the franchising system) of a rate to the hauler that takes away the need for a transfer site.
Green said that economically, the rural transfer sites are losers.
Kohl responded they do not pay for themselves.
Kohl said to evaluate which sites they were going to close, they looked at the geography and the volume of waste that was handled at each site, and they drew an arbitrary line at anything that handled less than 2000 tons per year to be projected to be closed. He said the waste from Mapleton and Swiss Home would go to Florence. He said they would create more regional sites instead of transfer sites. He said the regional sites would be Florence, Veneta, Cottage Grove, Glenwood and Oakridge. He added it would increase their bottom line per year by about $600,000 and from $1.1 million net to $1.8 million net, an increase that resulted from the site closures. He said it was important to note that it included overhead. He noted if they closed the 11 sites and the waste that is in Lane County stays in Lane County, they could maintain the system without the SBC.
Peter Divler, Brown, Vence & Associates, said they were hired to do a system evaluation. He said the situation in the County is not that unusual. He said they went through the projections that staff had made electronically, and concurred that the picture is an accurate one. He noted there were significant impacts to the County (both direct and indirect) should the system disappear, in the terms of the County's budget and legal obligations.
Divler reported that based on their knowledge of the industry and other facilities, (transfer stations and landfills) they looked at the two largest single facility components of cost, and their determination is that the costs have risen and they are in the ballpark. He pointed out that Short Mountain is a valuable resource as it has decades of capacity for the future. He said with regard to closure and post-closure, it is the largest uncertainty because of groundwater contamination under phase 1 and 2 areas of the site. He said they took a survey of other Western Oregon counties, and based on the surveys (they focused on transfer and disposal) in terms of tip fees, commercial tip fees coming to the landfills vary from $35 to $67.50, and Lane County is the second lowest of the public systems. He noted that Deschutes County had four transfer stations. He said that the SBC is a logical approach and makes sense in terms of a goal or providing a set of services that are available countywide.
Tom Brown, Brown, Vence & Associates, explained that the SBC alone cannot be a viable solution, that the waste needs to be kept in the County. He said right now with the 38,000 tons that leave, the County will be in a deficit by 2004, but with the SBC, it could still be viable. He added if Sanipac leaves even with the SBC, it will die. He said they recommend intergovernmental agreements, franchising, or any means that can be implemented to keep the waste in the County.
Kohl said for closure and development of the landfill, Lane County has collected enough money to pay for the next cell construction and closure of the old cell. He added with regard to post-closure, they are collecting the money over the life of the active landfill so when the landfill closes, there will be a pool of money that will last a minimum of 30 years, to maintain the land.
Divler said the SBC is the only way to immediately recoup revenue that had been lost to the system, whether the tonnage leaves or not. He said a key aspect of a SBC is to not subsidize a low tip fee for disposal. He said post MRF fees are important. He said recycling is considered to be a benefit to the County worthy of a subsidy.
Weeldreyer stated if the County kept a lower MRF fee for post waste, and achieved a certain level of recycling recovery rate, there are local haulers who have customers who are doing self-sorting, so their recycling recovery rate comes close. She said she wants equity in the system with the MRF fee that doesn't currently exist.
Divler responded that the equity does need to exist.
Brown acknowledged it is an equity issue as there are haulers that are concerned. He recommended looking at the post MRF fee, for some approach to address the issue of a company putting in an investment and requiring a fair profit. He said there could be a way that a subsidy increases higher levels of recovery. He said another issue that needs to be looked at from a legal perspective is a tip fee. He said franchising would keep waste in the County and that needs to be the County's main objective and the haulers get something in return. He said that franchising assures that commercial service in every portion of the County is available and there is certainty of having a business.
Green asked what the benefit was to the public.
Brown responded that with an exclusive franchise, one benefit in terms of residential collection is that it is more cost effective to have one hauler operating than three or four, picking up isolated accounts. He said with the commercial sector, it is less crucial. He added in much of the County, there are exclusive services because there is only one hauler. He said that service needs to meet minimum standards and those could be in the agreement.
Weeldreyer wondered what if rural residents who are without a choice won't get good service. She doesn't want to put the message out that this will happen.
Brown said they are recommending a franchise fee to save the system.
Sorenson stated it focused on the SBC and not on franchises.
Divler said they are suggesting that the SBC be implemented immediately and franchising and intergovernmental agreements be put into place to ensure the waste stays in the County. He recommended that residential be exclusive. He suggested the unincorporated areas have three set of rates based on the topography and the population concentration. He said the lowest rate would be where the concentration of population would be high to provide service. He said the most expensive service would be residents living off of dirt roads by themselves that want service. He said intergovernmental agreements with the cities would be recommended.
Sorenson questioned if unilaterally the Board of Commissioners could oppose the system benefit charge on commercial garbage collection within an incorporated city.
Vorhes said if it is imposed as a user fee, as a regulatory function of their authority it would take consent of the cities to allow to position that fee within the city. He added if they do a business license tax, they could do something without the consent of the cities that would have application within the city limits. He said a system benefit charge or fee is designed to be paid by the users or generators of the solid waste. He said if it is a tax, it could be imposed on anyone whether they are generating waste or not.
Divler reported they did not find anything to turn this to privatization. He recommended that for the SBC, the County endorse the approach and it would be valuable to send a signal of intent that they want to preserve the system, and the best way is to say the SBC is an approach that makes sense. He wanted to set a date certain for the ordinance to take effect and collect the SBC. He said that during that time to take public testimony and refine the approach as necessary. He said with regard to franchising, they recommended the division to proceed with the process with the goal of having franchises brought back to the Board for ratification in a four to six month period. He also recommended discussions begin on intergovernmental agreements with Eugene and Springfield with the goal of having it in place and to continue the types of cost reductions that had been done in the past and revisit the closure, post-closure.
Commissioner Green recessed the meeting to 3:30 p.m.
b. Public Comment from Private Haulers Only.
Jim Walpold, Northwest Resource and Recycling, 2034 W. 2nd, Eugene, said he is responsible for MRF's in Lane County at this time. He said the MRF concept is the only one he had been involved with that provided a totally win-win situation. He said his is a facility that removes recyclables and only takes garbage to the landfill. He said the major benefit of the MRF's have been over $10 million in combined investment in property, buildings, and equipment without tax incentives or controversy. He said he has over 50 full-time employees in various positions resulting in the capability of diverting more than 2,000 tons per month out of Short Mountain and into recycling. He added as positive and beneficial as MRF's are, the market value of the recyclables is diverted and cannot be relied upon to cover the cost of separating the recyclable material from garbage. He encouraged the County to continue to support the opposite. He said MRF's have not peaked out and they have not attained the maximum amount of separation possible, but they are established and continually working toward the potential.
Ken Hunter, stated he owns McKenzie Disposal and covers the Springfield city limits to the parks that go to the pass. He expressed concern about the mind set reflected by some of the comments about rural haulers. He said his rates are set according to Eugene's rates and he is hauling farther than Eugene. He said he doesn't like to be told what to do when he doesn't have to do it. He said his service area is 50 miles. He said the franchising would give him a base that he could depend upon. He said he believed that Lane County's transfer sites were competition.
Lewis Rucker, Waste Connections, stated he owns County Transfer and Recycling (formerly Siuslaw Disposal in Florence) and West Lane Disposal. He added they also own Veneta Garbage Service, B & G Disposal and Sandy's Disposal Service. He said he differs with Ken Sandusky on the definition of solid waste. He said on the construction demolition debris, under Oregon State Statutes and the Lane County Code, solid waste is defined as all protrusible and non-protrusible waste including but not limited to garbage, rubbish, refuse, ashes, sewage sludge, septic tank and cesspool pumping or other sledge, commercial, industrial, demolition and construction waste, discarded or abandoned vehicles or parts thereof, discarded home or industrial appliances, manure, vegetable or animal solid and semi-solid waste, dead animals and other wastes. He said it contains construction and demolition waste that was addressed earlier at the meeting. He said there are other issues with demolition companies taking demolition contaminated soils out of the County to Coffin Butte Landfill. He said in the solid waste draft, the SBC is designed to be paid by all generators and his point is about equitability. He said when Ecosort starting taking all their residuals from their MRF to Coffin Butte, the County set a lower tip fee in order to entice them to come back and now that Ecosort is back, they are paying $20 per ton and other haulers are going to Coffin Butte in order to compete and keep their prices down, but there is not the same equitable options being offered to them. He said instead it sounds like they will be getting hit with a penalty and if the true SBC, is really $16 per ton and the post MRF is $20 per ton, then the residuals of the MRF's are being disposed for $4 per ton and that it costs the same to bury the trash, whether it is was from a MRF or someone's back yard. He suggested if the County wanted to encourage recycling, to give the haulers the $20 per ton tip fee. He said it is not an equitable system and the problem is more than just a few haulers going to Coffin Butte landfill.
Green asked if he was going to Coffin Butte.
Rucker responded that part of his waste was.
Green asked if his customers were receiving the benefit of the difference in cost.
Rucker stated his customers are receiving the benefit of keeping their costs down. He said if they have to implement the SBC, the cost will reflect that.
Morrison wanted to know if he was giving any kind of relief to his customers or had there been an increasing of rates.
Rucker said that when they bought the two companies in Florence, they were on their way to bankruptcy. He said the rates in the County outside the city limits of Florence went from $10.45 per month to $11.90 per month. He added the rates within the city limits of Florence stayed at $10.45 per month.
Morrison noted the difference between the $46 per ton in Lane County and the charge in Coffin Butte and Rucker was using the additional revenue or profit toward purchasing of other equipment
Rucker responded not only on purchasing other equipment, but keeping the costs down for the outlying areas of Western Lane County, where they serve. He noted the City of Florence hired someone to study their rates and found that in the City of Florence, the return was okay, but outside the city limits of Florence in the rural areas, the consultants found that their rates may be raised between 19% and 49%. Rucker stated it was his opinion that some people will like this and some will not and franchising contracts are restrictive to the haulers and governs how much they can make and their level of service. Concerning the $16 ton surcharge, he was not opposed, but he is opposed to the inequity of who will be levied.
Scott Bales, Royal Refuse, stated he was co-owner and they are the second largest commercial hauler in the Eugene Metro area. He believed that the solid waste department should try exercising some cost cutting measures such as closing outlying transfer sites that are located within 15 or 20 miles, an option of $600,000 in savings. He said the County should cut off the rest of the commercial trucks using the Glenwood receiving station. He said if they are not forced to use the Short Mountain Landfill, they should pay a higher rate because the County has to reload the garbage and then transport it an additional seven miles to the landfill. He said in 1996 the County came up with 39 options to reduce costs to meet their $1.8 million deficit caused by the MRF's. He said those items need to be revisited. He said the idea of a SBC seems flawed to him, to make a garbage hauler subsidize MRF's who are not going to pay the surcharge. He suggested that the issue needs to be examined from the bottom up and it would be to his advantage to stop using MRF's if there was a SBC assessed to him.
Sorenson asked Bales what alternative he was suggesting.
Bales recommended revisiting the 39 options that were brought up in 1996, to see which of those options weren't exercised and if there is a benefit charge levied on the haulers, let it be on all municipal waste collected at the Short Mountain Landfill and not just the haulers who don't have a MRF, and close the rural sites and look at other options.
Green questioned if Bales' rate reductions were being passed to the rate payers.
Bales replied that the cost for getting the waste to Coffin Butte runs $20 per ton and gives him $8 per ton difference, so the revenue is not significant. He added his customers are getting some cost reduction because he isn't exercising the 10% upper end of the city's regulated rate.
David Twombly, stated he was proposing to open a garbage company, Central Coast Disposal. He addressed the issue of franchising vs. exclusive franchising. He said if a company is given exclusive franchising, it cuts up areas and no company will be able to expand or reduce their service.
John Hire, 3935 Spring Boulevard, said that Sanipac supports the SBC for trash staying in the County. He said his customers in Eugene and Springfield are paying up to $46 per ton and if the SBC charge is added, their rates will not change and their customers will not be affected in any way. He said their trash will stay in the County. Concerning trash leaving the County, he said if the disposal fee is lowered, they would be forced to leave. He noted they see this as a long-term competitive issue, not a short term one. He said they are not charging 10% more for their commercial rates. He said there is no connection between Sanipac and Ecosort. He said Sanipac pays $45 per ton to go into Ecosort, like any other hauler. He added there is no financial gain for Sanipac. He said the owners of Sanipac have ownership in Ecosort, along with other owners.
Sorenson said he was interested in the sequencing of the options.
Hire responded the SBC is trying to set up an economic decision by everyone who might not choose to stay in the County. He said the County is getting a minimum level of money that is covering costs. He said the SBC covers the costs in keeping the subsistence level of operations. He said the SBC could happen quickly, but franchising could be in six months. He noted that putting the franchising system into place does not change the franchises that are in Springfield, Cottage Grove or Eugene. He added it does not affect the question of choice.
Merle Lavine, General Manager, Ecosort, 3425 E. 17th, Eugene, said issues have come up about post MRF rate and Ecosort v. Sanipac. He noted that Ecosort and Sanipac are two different companies, there is different ownership. He said the owner of Sanipac is also part-owner of Ecosort and there are other owners of Ecosort. He said he charges everyone that comes in $45 per ton. He added the benefit for the post MRF rate accrues solely to Ecosort. He said he pulls 56 million pounds of materials that come from loads that are mixed. He said the material would have gone straight to the landfill had they not been there to intercept it. He said when they talk about MRF it is about what is coming out of the mixed stream. He said once they started operating, the County wanted the material to come back to the County, so they adopted a post-MRF rate and Ecosort came back to keep it in Lane County. He added he has been operating at under the post-MRF rate ever since. He said the draft plan relies on the MRF as does the City of Eugene. He said with the post MRF rate, it nearly doubles the cost of their disposal and reduces their profit. He said his recommendation to his Board if that happens, is to close the facility.
Sam Miller, Lane Garbage, P. O. Box 40097, Eugene, commenting on the SBC, said he would agree on something that could be implemented quickly and help the County solve some of its problems. He added it is not totally equitable presently. He said there will be problems down the road with a heavy guaranteed stream of tonnage coming in. He said he hauls a lot of urban residential accounts and to him, those customers do not benefit from a rural transfer site. He added there are benefits from the County system with closure and post-closure of the landfill and recycling. He said his commercial waste goes north because he loses money on commercial waste, so he can be competitive. He believes in franchising as it works everywhere else in the state and serves to make haulers financially viable. He said for a quick fix, the SBC looks more viable. He said he goes north with his commercial customers, and they are the ones who had not received a rate increase for about ten years.
c. DISCUSSION AND ACTION Implementing System Benefit Charges and/or Waste Collection Franchising as Methods of Diversifying the Funding of the Waste Management System.
Sorenson wanted to discuss the SBC so the Board could ask the staff to prepare an additional ordinance for implementation.
Dwyer said with regard to the MRF, it is an important public policy that needs to be retained because there are benefits to encourage recycling but not at a negative cost. He said he had no problems with the SBC and on the franchise fee, he would like to go to a non-exclusive franchise fee because he believes in competition and believes if a person has an alternative, they are treated better because there is an alternative. With regard to the rural transfer site, he said he has none in his district so he wouldn't be impacted if they were all closed.
Weeldreyer agreed that the status quo needs to be changed. She supports recycling efforts in Lane County by both the MRF's and to provide incentives in the system for the local haulers to increase their levels of recycling and make it affordable for them. She wanted to direct staff to look at options to do that and if necessary, trade off the closure of some of the more remote transfer sites and be more centralized as a way of offsetting. She said she wanted to explore a non-exclusive rather than exclusive franchise and the SBC is something that needs to move ahead and with the staff recommendations for closures of transfer sites, they look at keeping one of the two in the McKenzie Valley open. She said she would look at closing some of the rural transfer sites as long as they all will not be closed.
Morrison said she would like a final order brought back on the SBC and is not opposed to going forward with it. She stated with regard to the MRF issue, there are benefits. She said with regard to the rural transfer sites, she is not opposed to closing them. She stated on the franchising issue, she wants it to be non-exclusive, but she also wants to look at privatization.
Green stated he wanted to build incentives for the haulers. He said a majority of the Board is supportive of the consultant's report. He said that Weeldreyer asked someone to speak on the flow control ordinance (no one did) and the consultants did not recommend that, and he supports that recommendation. He stated intergovernmental agreements need to be pursued as well as a non-exclusive franchise.
Dwyer noted that post closure costs needed to be built into the rate so the taxpayers are not stuck with the liability at the end of the life span.
Green added that evaluations need to be revisited. He said there needs to monitoring of the self-reporting system and how that would be built in. He said the Board is endorsing the consultant's report and going with Scenario #3.
Van Vactor stated Lane County will need the cities and staff to work on a letter for Green's signature addressed to the city, so they could start to initiate the process. He said what was not clear to him about franchising is that it is not long-term.
Sorenson said it was important to deal with the SBC and the necessary ordinance and public hearing on the ordinance.
Sandusky said he can come back in three weeks with the SBC. He added they will talk about closing the sites.
Green stated the underlying message from the Board is not to set up a system to fail.
13. OTHER BUSINESS
Van Vactor noted the assignments included: to Public Works with regard to the audit to report back in three weeks on the action items to be worked on and respond to that. On Land Management, to amend the sign code with regard to tour routes, to report back in 30 days to the scope, the residential land study and return back in three weeks with a SBC, first reading of an ordinance.
Vorhes noted that the Comprehensive Solid Waste Management Plan has the policies that were underlined and the SBC will become part of the rural comprehensive plan and has a planning process. He said the Board will adopt the SBC ordinance and the fees simultaneously. He noted the difficulty with doing it in a different way is hard and coming back in three weeks is not realistic as it needs to go through the Planning Commission.
Dwyer asked if there was any conflict between the plan and not adopting franchising fees at the same time
Vorhes said to take a close look at this so it doesn't limit options or specify a time frame for the actions that the policies talk about. He said if the policies are written in a way that gives flexibility, there shouldn't be any problem.
There being no further business, Commissioner Green adjourned the meeting at 5:20 p.m.
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