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Agenda Item
ASR
Control 06-000047 |
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MEETING DATE: |
03/07/06 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
All Districts |
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SUBMITTING
Agency/Department: |
Integrated Waste Management (Approved) |
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Department contact
person(s): |
Janice V. Goss (714) 834-4122 |
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Ronald Pierre (714) 834-4147 |
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Subject: Adopt a Resolution for an AB 939
Surcharge
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ceo Concur |
County
Counsel Review |
Clerk of the Board |
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Concur |
Approval Not Required |
Discussion |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
$179,000 FY 06/07 |
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Staffing Impact: No |
# of Positions:
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Sole Source:
N/A |
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Current Fiscal Year Revenue: N/A |
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Funding Source: Enterprise
Fund |
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Prior Board Action: N/A
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RECOMMENDED ACTION(S)
If the Orange County Board of Supervisors selects Option 4, the AB 939 Surcharge:
1. Find that Final Negative Declaration No. 456, previously approved by Director, IWMD on September 2, 2005, satisfies the requirements of CEQA and is approved for the proposed project.
2. Adopt the Resolution for the AB 939 Surcharge. The remainder of the landfill fee schedule is to remain unchanged.
If the Orange County Board of Supervisors selects Option 3, Ban C&D and Greenwaste:
1. Find that Final Negative Declaration No. 456, previously approved by Director, IWMD on September 2, 2005, satisfies the requirements of CEQA and is approved for the proposed project.
2. Direct IWMD to return to the Board of Supervisors no later than June 27, 2006, with an ordinance that bans the landfill disposal of construction and demolition debris and greenwaste and a plan for implementation.
SUMMARY:
CEQA COMPLIANCE:
The proposed project is covered by Negative Declaration No. 456, previously approved by IWMD on September 2, 2005.
BACKGROUND INFORMATION:
State Mandate
The Integrated Waste Management Act of 1989 (AB 939, Sher) requires cities and counties to reduce by 50% the amount of waste disposed in landfills by the year 2000 and beyond or face fines of up to $10,000 per day. More onerous than fines is the possibility that the State could issue a compliance order to the County requiring that it implement more stringent and expensive measures and diversion programs potentially leading to some loss of local control over how the County manages its waste. Additionally, with legislation proposing to increase the mandate to 75% diversion and the California Integrated Waste Management Board (CIWMB) adopting a policy of “Zero Waste”, AB 939 compliance becomes even more difficult to achieve.
City County Compliance Status
Meeting and sustaining the AB 939 50% diversion mandate has been a challenge for Orange County cities and the County. As shown in Exhibit 1 - Orange County Jurisdiction Diversion Rates, average countywide diversion has declined from 47.6% in 2000 to 45.6% in 2004. Despite implementing over 1,000 waste diversion programs among them, less than half (17) of Orange County jurisdictions met the mandate in 2004. The County recently had its diversion rate reviewed by the CIWMB and found its 2004 diversion rate had declined from 33% in 2003 to 29% in 2004. While 2004 diversion numbers are preliminary, they do serve as an indicator of the need for action to reverse this trend.
Barriers to Countywide Compliance
For over 8 years, self-hauled waste (SHW) has been viewed by cities and their franchised waste haulers as a barrier to meeting the unfunded mandate of AB 939. Since 1997, two Orange County Grand Juries and two ad hoc committees of the Orange County Waste Management Commission have also identified SHW as a barrier to AB 939 compliance.
The negative impact of SHW on city diversion rates arose when waste haulers and facility operators raised their rates to cover the increased costs of city compliance with AB 939. As compliance measures resulted in higher rates, many businesses discontinued using franchised waste hauler collection and/or processing services and instead began hauling their waste - much of which is recyclable - directly to the landfills. SHW is a barrier to AB 939 compliance for the following reasons:
· It is predominately unprocessed (not recycled) and is hauled directly to the landfills by contractors, clean-up businesses, landscapers, gardeners, roofers, and demolition contractors.
· It is approximately 15% of the total waste disposed of annually.
· It consists of more than 60% readily recyclable and compostable materials.
· SHW is not regulated by the State or by city permit or franchise.
· Self-haulers operate outside the recycling infrastructure and therefore do not pay their fair share of recycling costs as do residents and some businesses.
· It is difficult to accurately determine the jurisdiction of origin of SHW.
· Out-of-county self-haulers illegally dispose of their waste at Orange County landfills because of its low disposal rates and attribute their waste to Orange County cities.
County of Orange Response to Countywide Non-Compliance
At its March 11, 2004, meeting, the Orange County Waste Management Commission/AB 939 Local Task Force (WMC) established the Self-Hauled Waste and Landfill Ordinance Committee (SHWLO). The purpose of SHWLO was to investigate the impact of unprocessed (not recycled) SHW on Orange County cities’ and the County’s declining diversion rates as well as increasing occurrences of landfills exceeding their permitted daily tonnage limits, and report back to the WMC with its findings and recommendations. The WMC Final Report on Self-hauled Waste, which details the SHWLO Committee fact-finding process, is included as Exhibit 2.
SHWLO Process
To assist SHWLO in its investigation of SHW and to provide the committee with a technical foundation from which to make its recommendation, the Integrated Waste Management Department (IWMD) conducted four technical studies/surveys: 1) Self-haul Waste Characterization Study, 2) Facility Capacity Study, 3) AB 939 Program/Fee Survey, and 4) Elasticity Study. A summary of the studies is included as Exhibit 3. The WMC also conducted a Public Hearing on August 11, 2005 to accept comments from impacted entities such as businesses and non-profit organizations. Comments and responses from the public hearing are found in Exhibit 2, WMC Final Report on Self-hauled Waste.
Options Evaluated
Based on the above technical studies and comments received from the Public Hearing, the WMC evaluated four options that would reduce the amount of recyclable materials currently being disposed of thereby increasing the diversion rates of cities and the County. Those four options are:
· Option 1 - Ban SHW from Orange County landfills.
· Option 2 - Partially ban SHW from Olinda Alpha and Frank R. Bowerman Landfills and site a C&D processing facility of “last resort” on the Prima Deshecha Landfill.
· Option 3 - Ban construction and demolition (C&D) debris and greenwaste from landfills.
· Option 4 - Implement an AB 939 Surcharge on SHW.
Options 1, 2 and 3 apply the regulatory powers of the County to either prohibit the disposal of specific waste types or prohibit certain classes of customers from using the landfills. These three options do not generate any funds to pay for diversion programs. Option 4 is a market-based, economic approach that generates approximately $160,000 to $179,000 annually over the next four years to pay for diversion programs and administration of the surcharge.
Proposed Options Selected
At its November 10, 2005, meeting the WMC selected Option 4, the AB 939 Surcharge, as the preferred option. IWMD also supports the WMC’s recommendation to select Option 4. The WMC also selected Option 3, Ban C&D and Greenwaste as its second ranked option. Option 3 was selected as it targets readily recyclable materials found in SHW as well as those materials found in franchised waste haulers roll-off boxes.
Option 4-AB 939 Surcharge
Option 4 is the preferred option as it is a market-driven, economic solution; provides self-haulers with facility choices; stimulates private sector market and diversion facility development; equalizes competition among self-haulers; has minimal impacts to landfill operations and administration; and generates revenue to administer the program and operate countywide diversion programs.
The AB 939 Surcharge would add $19 to the current $27 per ton posted landfill rate for a total rate of $46 per ton. The total rate approximates the median rate charged by private material recovery facility (MRFs). The AB 939 Surcharge would be added, on a prorated basis, to the current charge of $5 for autos, vans and sport utiltility vehicles, and $12 for light weight trucks for total disposal fees of $8 and $20, respectively.
The purpose of the proposed surcharge is to reduce the disposal of recyclable materials in the landfills by diverting SHW to MRFs and other recycling facilities. The surcharge option will stay effective if total rates at County landfills keep pace with the rates of private processing facilities. It is proposed that your honorable Board authorize the Director of IWMD to adjust the surcharge on an annual basis. Each January, subsequent to the first anniversary of the surcharge, IWMD would survey all Orange County MRFs to determine the median posted rate. The Director would adjust the surcharge, as necessary, so the total rate would be equal to the median posted rate at MRFs.
There was concern that the surcharge would impact non-profit organizations such as Goodwill Industries and the Salvation Army. Facilitating resolution of this concern was a major issue for the WMC. The franchised waste haulers responded to the WMC by contacting the non-profits to develop mutually beneficial arrangements to use the MRFs instead of the landfills for materials that the non-profits could not sell.
Option
3-Ban C&D and Greenwaste
The WMC’s second-ranked option, the ban on C&D and greenwaste, has some benefits similar to the surcharge. Both options would divert recyclable materials from landfill disposal. However, there are significant differences between them. The ban is a regulatory approach to AB 939 compliance rather than the market-based, economic approach of the surcharge. The proposed surcharge applies only to SHW while the ban applies to both SHW as well as franchised waste hauler roll-off boxes. A ban also does not offer customers choices, as does the surcharge.
FINANCIAL IMPACT:
There are financial impacts to the IWMD Enterprise Fund with either option. As shown in Exhibit 5, Self-Haul Surcharge Spreadsheet, the estimated revenue reduction to the IWMD Enterprise Fund under the surcharge option would range from $6.8 to $7.4M annually for the next four years. The material ban option would result in an annual revenue reduction of approximately $10.6M. Revenue reductions from a ban could be greater than reductions from a surcharge, but still sustainable through June 30, 2010. Exhibit 6 – Material Ban Revenue Effects, is a representational depiction of the year 2003-2004 using best available data and information derived from the Waste Characterization Study, a summary of which can be found in Exhibit 3. The Enterprise Fund can absorb the revenue reductions of either option.
The ability to absorb revenue reductions is due to circumstances arising out of the County negotiating Waste Disposal Agreements (WDAs) with cities, solid waste haulers and sanitation districts in 1997. At that time a County goal was to stablilize the landfill system and maintain a consistent level of tonnage delivered to the landfills. The rate of $22 per ton was negotiated to accomplish this goal and build up cash to pay for capital improvements in later years. However, due to unanticipated levels of economic growth and development, tonnage deliveries to the landfill system and the resulting revenue exceeded original estimates. As a result, sufficient working capital now exists in the IWMD Enterprise Fund to offset the potential revenue reduction through the short term - June 30, 2010, if an AB 939 Surcharge or landfill ban on C&D and greenwaste should be approved. For the longer term, IWMD has recently engaged a financial advisory firm to study and evaluate all of the administrative and operational costs and liabilities of the solid waste disposal system, and to provide recommendations on future disposal fees.
Revenue Effects
An IWMD financial analysis based on the IWMD 15-Year Financial Plan (Exhibit 5 - Self-Haul Surcharge Revenue Effects), determined that approximately $160,000 to $179,000 could be generated annually from the AB 939 Surcharge. However, Public Resources Code 41901 stipulates that although cities and counties can impose AB 939 fees or surcharges, those fees can only be used to pay for the costs to prepare, adopt, and implement a countywide integrated waste management plan and the setting and collection of the fees. Therefore, any revenues realized from establishing an AB 939 Surcharge cannot be used to offset losses to the Enterprise Fund.
Costs of Proposed Surcharge:
Costs to implement the first year of the proposed surcharge are approximately $179,000 (Exhibit 7 - Surcharge First Year Start-Up Costs). IWMD has included the costs to implement the surcharge in its 2006-07 budget. Initial costs are to coordinate the program with stakeholders, develop computer system reports, track and account for the funds separately, develop recycling facility brochures and customer mailings, conduct public outreach, revise IWMD website, and respond to questions from residents and businesses. To the extent that funds are generated, IWMD will develop and operate countywide recycling programs. Administrative costs for future years are expected to diminish as IWMD gains efficiencies and self-haulers learn to use recycling facilities. As those costs decline, revenues will be used to expand existing or develop new countywide diversion programs.
Costs of Ban on C&D and
Greenwaste:
If this option is selected, IWMD will return to the Board with an ordinance to ban C&D and greenwaste from landfill disposal, a plan and schedule of implementation as well as costs to implement the ban.
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
County Counsel, CEO Budget, Auditor-Controller
EXHIBIT(S):
Exhibit 1 - Orange County Jurisdiction Diversion Rates
Exhibit 2 - SHWLO Final Report
Exhibit 3 - Summary of Four Technical Studies
Exhibit 4 - Fee Checklist
Exhibit 5 - Option 4 - Self-Haul Surcharge Revenue Effects
Exhibit 6 - Option 3 – Material Ban Revenue Effects
Exhibit 7 - Surcharge First Year Start-Up Costs
ATTACHMENT(S):
Attachment 1 - Resolution to Adopt the AB 939 Surcharge.