MINUTES OF THE METRO COUNCIL REGIONAL ENVIRONMENTAL MANAGEMENT COMMITTEE MEETING

Wednesday, March 8, 2000

Council Chamber

Members Present:  Ed Washington (Chair), Rod Park

Members Absent:  Susan McLain (Vice Chair)

Others Present:  David Bragdon (Presiding Officer)

Chair Washington called the meeting to order at 1:34 PM. He announced that Councilor McLain was absent due to illness, and that Presiding Officer Bragdon would be sitting in on the meeting.

1.  CONSIDERATION OF THE MINUTES OF FEBRUARY 23, 2000

2.  REGIONAL ENVIRONMENTAL MANAGEMENT DIRECTOR’S UPDATE

Terry Petersen, Director of the Regional Environmental Management Department, gave a summary of the department’s recent activities. (The summary is attached to the meeting record.) Items included the following:

•  The REM Department will be reorganizing to improve coordination and efficiency.

•  Three hazardous waste disposal events have been scheduled for April 15 (Tigard), May 6 (Gresham), and May 20 (Aloha).

•  REM made the national news for two outstanding programs: the gas project at the old St. Johns Landfill, and the paint-recycling program.

•  “Zoo doo,” which until recently has been composted in Eugene for sale as fertilizer, will now be composted in Cornelius. The Eugene facility stopped accepting the material because transportation costs were too high. REM Waste Reduction staff moved quickly to find another compost facility, so this rich material would not go to waste and the zoo would not have to pay the high cost of disposal.

•  New Employees in the REM department include Michael Park, a new hazardous waste technician, and Amy Wilson, a new waste-reduction education specialist.

Chair Washington welcomed the new employees to Metro.

3.  TRANSFER STATION SERVICE PLAN WORK SESSION

Doug Anderson, Waste Reduction and Planning, REM, presented a series of overheads to summarize the status of the project and key policy decisions the Council will need to make. Of those policy decisions, he said the rate issue would be foremost. (Hard copies of the overheads have been attached to the meeting record.) The key questions underlying the whole study have been: Does the region need more transfer stations? If so what kind? How should they be regulated?

He said the REM department provisionally favored more stations and would be presenting recommendations to that effect to the committee and the Council. If more stations were determined to be needed, then should they be full-service and should they be public or private? If private, how should they be regulated? Should there be conditions on entry and/or conditions on operation—e.g., should there be conditions on hours of operation or types of customers?

Implementation plans would include looking at recommendations in June and assessing what ordinances might be necessary to change the RSWMP and Metro code.

He noted that those decisions would involve policy questions to be made by the Council. (Those questions, numbered 1-5, are included in the overhead hard copies attached to the meeting record.)

The RSWMP recommends expanding existing facilities rather than siting new ones. However, that would mean that some existing facilities would not have land uses that permit their being full-service. A procedure would need to be put in place to handle those situations.

Another question might be who should benefit from cost savings from increased efficiencies? In principle, it should be the ratepayer, so that principle would need to be ensured through policy.

Councilor Park asked about other impacts beyond financial (see question #2) .

Mr. Anderson said that non-vertically integrated companies would have the most to lose from, for example, diversion of tonnage.

A key question would be what fees and taxes should be imposed to fund any new transfer stations? How should those fees and taxes be imposed? Mr. Anderson said one objective would be to simplify the tax and fee system, to make it easier for the public to understand and for Metro to administer. In addition, the new system should promote recycling and raise the necessary revenue.

Councilor Park asked about other fiscal impacts, such as diversion of tonnage from the public transfer stations.

Mr. Anderson said that both Metro’s operating and disposal contracts operate so the more tonnage received the cheaper the disposal rate per ton. Diversion would push those rates up. Private, non-vertically integrated companies might also be adversely affected, as tonnage diversion represents a loss of business for them.

Chair Washington asked Mr. Anderson to provide hard copies of all his overheads to each of the Councilors. He also requested that Mr. Anderson annotate those copies with brief recommendations and explanations.

Mr. Anderson said he would like to focus on today on how fees and taxes should be structured if new transfer stations were to be added. He said he understood Councilors had requested a simpler system that would promote recycling and raise sufficient revenue.

Councilor Park said that in addition to those characteristics, he would like to see a system that is driven by economic principles rather than regulatory. The fee structure should promote recycling, but whether that would be best done by taxing at the back or front door remains to be determined.

Chair Washington reiterated the need to simplify the system.

Mr. Anderson said when the system was originally designed, there were only disposal sites and recovery sites; few hybrids existed. Metro’s revenue code was written for that system—i.e., when a load was delivered to a facility, that facility was required to collect fees and taxes from the hauler. As recovery grew in importance, Metro created an “out the door” policy—i.e., the facility did not collect on what came in, but on what remained after recoverable material had been removed. Disposal sites collect on what goes in the front door. “Dirty MRFs” are those that accept mixed waste as opposed to those that only accept dry, recyclables. When dirty MRFs were added, the exemptions were extended to them even though they do disposal as well. The basic concept remains that fees and taxes are collected on what is disposed of, not what is recycled. With the introduction of hybrids and full-service facilities, it becomes much more complicated to track and calculate the different waste streams, not to mention explaining fee structures based on them.

Chair Washington asked that the Councilors be provided with a list of the different types of facilities—the transfer stations, dirty MRFs, composters, and hybrids—by name and location. That will help understand the transportation issues involved.

Mr. Anderson said one of the main points he wanted to make was that the fee structure would be integral to the structure of the whole system. The questions would be whether the fees needed to be structured before or at the same time as the service plan was designed. He said he would like to get some direction in the next two weeks.

Councilor Park asked how a rate would be calculated for Metro’s transfer stations if the fee were charged on material going out the door.

Mr. Anderson said it would be based on estimates of tonnage expected and the percentage expected to be recycled and disposed of. He speculated that if $6 million in revenue were to be raised, the Metro rate might be a share of the excise tax divided by the tonnage expected to be sent to the landfill. That might be levied either through adjusting the tip fee collected at the front door or imposed directly. He emphasized he had not worked up the numbers; he was only speculating.

Councilor Park said it would appear that if Metro were to go to the back-door policy, it would apply to everybody but Metro’s own transfer stations. The implications of that are not clear at this time. He asked if the department had an idea of the quantity of recyclables expected for the coming year.

Mr. Anderson said the department has a pretty good idea. It tracks data monthly.

Councilor Park suggested a system that would involve stimulating competition among facilities to both increase recycling and keep the tip fees low.

Mr. Anderson said the fact that most jurisdictions regulate collection rates keeps a fully competitive system from existing among facilities. He cautioned against counting on competition only to achieve the balance. He said a great deal of analysis would need to be done to structure the fee system.

Mr. Petersen said it appeared that the same out-the-door tax on the landfill waste could apply to both the public and the private facilities. It would require the owner of the facility to estimate the recovery rate in order to set the posted gate price at the front door, but the same process could apply to both public and private facilities.

Councilor Park said that if such a system were to be implemented, then the competition to the Metro-owned transfer system would be pegged to compete at $62.50. He said they would quickly figure out that if they were to increase the recycling rate, they would pay less excise tax and increase their profits.

Chair Washington asked how accurate the forecasts have been on the amount of waste going into the transfer facilities.

Jim Watkins, REM Engineering and Analysis, said the variation in total tons has been less than 1% off. The actual distribution between facilities and the amount recovered has put the forecasts off by about 3%, but that part does not affect the rate.

Chair Washington asked regarding the one-rate scenario, how large a difference would there be between those who pay more and those who pay less?

Mr. Anderson noted that last year, the effective rate paid by different facilities ranged from $2 to more than $5 per ton. He suggested looking at who pays more and who pays less under a one-rate scheme. A one-rate scheme would be simple, but perhaps not equitable. Differences between $2 and $5 are noticed by taxpayers.

Councilor Park said the effect on the recycling rate was the top priority for him and ought to drive all other considerations. In addition, he wanted to be sure hazardous waste would be dealt with so it didn’t end up dumped illegally.

Mr. Anderson said he understood the committee to say that a certain amount of revenue had to be raised—it has been about $6 million. To raise that, the fee system should focus on recycling and simplicity. He said the next round of analysis would focus on the ramifications of various scenarios.

Chair Washington said dealing with recycling was a top priority for him, too. But he understood that it could not be done cheaply or simply. He said that although he was willing to address the complexities, he thought the system should be simple enough to explain to ratepayers. He said policy-makers have an obligation to devise a system the public can understand.

Councilor Park said the stakeholders understand the systems, the regulators drive it, but the economics determine whether it works. His preference would be to make the system work using economic incentives, with the least amount of regulation. He also suggested re-examining policies that have been in place, to see if they were still valid.

He asked that the staff consult one-on-one with individual members of the industry to help devise a process for achieving Metro’s goals. He said that SWAC brings together members of the industry, but that venue does not always facilitate openness, as individual members can be competitors who might not want to speak frankly under those circumstances. Nevertheless, the REM department needed to hear what they had to say.

Mr. Petersen said the department would do that. Regarding whether the service plan work should be conducted in concert with the fee-structure work, he thought they should be considered separately but in parallel.

4.  RECYCLING BUSINESS GRANT WORK SESSION

Chair Washington asked that this discussion be postponed until Councilor McLain could be present. He noted that this was a particular interest of hers.

5.  COUNCILOR COMMUNICATIONS

None.

There being no further business before the committee, Chair Washington adjourned the meeting at 2:40 PM.

Respectfully submitted,

Pat Emmerson

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF MARCH 8, 2000