MINUTES OF THE METRO COUNCIL REGIONAL ENVIRONMENTAL MANAGEMENT COMMITTEE MEETING

Wednesday, June 7, 2000

Council Chamber

Members Present:  Ed Washington (Chair), Susan McLain (Vice Chair), Rod Park

Other Present:    Bill Atherton, Rod Monroe

Chair Washington called the meeting to order at 1:34 PM.

1.  CONSIDERATION OF THE MINUTES OF MAY 17, 2000

Chair Washington postponed consideration of the minutes until the next meeting.

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:

•  A conditional award for a contract with SSI has been issued for replacement of two compaction systems at Metro Central Station. The contract amount came to $1,312,607—more than $500,000 less than the $1,845,600 that had been budgeted.

Mr. Petersen recognized Chuck Geyer, REM, Engineering and Analyses, for his work on the RFP.

•  Regarding the 10% of disposal services not contractually committed, the REM department has been reviewing a draft procurement for services and was considering narrowing the waste-reduction criteria to include only organics recovery.

•  River City Disposal and Recyling, which had been disposing of waste without a Metro franchise or license and disposing of the waste without paying appropriate fees and taxes, has been assessed monetary penalties. The company has not responded, but Metro will pursue the matter aggressively.

•  The REM department, working with BFI and STS, has increased payloads in transport trailers, resulting in a $210,000 savings per year in transport costs.

•  Metro’s sixth annual compost bin sale sold 9,000 bins this year, 500 more than last year. Each bin diverts about 500 pounds of garbage from the waste stream every year.

3.  ORDINANCE NO. 00-865, FOR THE PURPOSE OF AMENDING THE REGIONAL SOLID WASTE MANAGEMENT PLAN RELATED TO DISPOSAL FACILITIES

4.  ORDINANCE NO. 00-866, FOR THE PURPOSE OF AMENDING CODE CHAPTER 5.02 RELATED TO SOLID WASTE FACILITIES

5.  ORDINANCE NO. 00-867, FOR THE PURPOSE OF AMENDING CODE CHAPTER 5.02 RELATED TO REGIONAL SYSTEM FEE CREDITS AND MAKING OTHER RELATED CHANGES

Mr. Petersen asked to give one overview for Ordinances 00-865, 00-866, and 00-867, as they were all closely related. (More details on all three ordinances can be found in the executive summary and staff report that accompany this legislation, included in the meeting record.)

Chair Washington agreed.

Doug Anderson; REM Waste Reduction, Planning, and Outreach; gave a PowerPoint presentation summarizing the three ordinances. (A hard copy of the presentation has been attached to the meeting record.) In brief, Ordinance No. 00-865 would amend the Regional Solid Waste Management Plan (RSWMP), and Ordinances Nos. 00-866 and 00-867 would implement the changes contained in 00-865. He emphasized that approval of these ordinances would not it itself approve any new transfer stations; that would require Council approval of individual applications.

Mr. Anderson explained that the need to consider allowing more transfer stations had arisen because congestion throughout the region has significantly increased transport times for waste haulers. That, in turn, has increased the cost of disposal at the curbside. He showed maps to illustrate the increase in haul times throughout the region for wet garbage.

He emphasized that any new transfer stations would need to provide public services similar to those provided by Metro’s existing transfer stations, although a variance process would offer some flexibility in that. They would also need to improve the overall system, not just increase profits for the company. In addition, material recovery requirements would be the same at any new stations as those at existing ones. New stations would need to host hazardous waste collection events, although Metro would continue to handle the actual disposal. Any new station would have to meet a several strict criteria including a 25% minimum recovery rate, and be approved by the Council.

Mr. Petersen emphasized that the ordinances would create opportunities for the Council to be flexible in responding to changes in the industry. In addition, the changes should increase recycling, free up space at existing facilities, and promote system savings that should result in lower customer costs.

He said that although these ordinances represented opportunities, they also signaled caution. For example, some neighboring cities had expressed concern over increased traffic if new transfer stations were sited. He said he believed those issues could be addressed during the franchise process, as the issue of impact on the public represents a legitimate criteria upon which to base a licensing or franchising decision. He said that with the mergers occurring in the industry, smaller haulers had expressed approval of Metro’s continuing to operate scale houses, as they felt comfortable that the rates were applied fairly and in a non-discriminatory manner. He said he did not believe Metro needed to operate scale houses at all private facilities, but it should be taken into consideration during the franchise process. Regarding the full-service requirement for the new regional facilities, he thought the Council would need to consider individual cases and exercise judgement to avoid requiring services in areas where those services are not needed. The variance process was included to allow the Council to do that.

Mr. Petersen thanked Bill Metzler, Penny Erickson, Bob Hillier, and Chuck Geyer, who had worked for the past year on this plan. He also thanked those on the SWAC subcommittee who had attended numerous meetings over the past year to work on this plan.

Councilor McLain said she had had many concerns that she had asked the REM staff to address, and was now comfortable with what the plan aimed to do. Her main concerns was for the system as a whole, to make sure than the effect on the entire system would be considered when making decisions regarding individual applications.

Chair Washington clarified that any new hazardous waste collection events would be collection only, not disposal.

Mr. Anderson said that was correct.

Councilor McLain asked if an applicant would need to have obtained all permits and have the approval of all the local jurisdictions before applying to Metro for final approval. She said she thought it would be important for Metro to make it clear at a pre-application hearing if an application was doomed to fail, to spare the applicant’s going through a futile process. She thought it would be unfair to require an applicant to obtain the Department of Environmental Quality and submit a land-use application only to find out the application clearly would not meet Metro’s requirements.

Mr. Petersen agreed, and said that a pre-application process was standard.

Councilor McLain said she thought this pre-application hearing should go beyond the existing standard. She thought that reasons for denial considered at that pre-application hearing should go beyond satisfying individual environmental conditions to effects of a new station on the whole system.

Mr. Petersen agreed, but he said he thought that several provisions in the ordinances address that. He added that the department needed to exercise caution not to pre-judge the Council’s decision on any particular application.

Councilor McLain said she wanted to have her concerns in the record, so the business sector would know that future decisions by the Council would be made based on the health of the entire system.

Chair Washington opened a public hearing on Ordinance No. 00-865, 866, and 867 at 2:07 PM.

Diana Godwin, Allied Waste Industries, 1000 SW Broadway, Ste. 1500, Portland, 97205, testified in favor of Ordinance No. 00-867. She said that this ordinance would change Metro’s regional system fees, adding for the first time a credit for disposal of “clean-up materials contaminated by hazardous substances that result from an environmental cleanup of a non-recurring event.” In the past, the system fees have burdened the cost-effectiveness of the cleanup of these events. Landfill disposal is the only option currently open for disposing of these substances. The fee has been an impediment to achieving the larger good of doing this cleanup. Those substances do not use Metro resources, so the credit offered not only makes sense, it would help achieve the larger good.

Merle Irvine, Willamette Resource, 10295 SW Ridder Rd., Wilsonville, OR 97070, testified in favor of all three ordinances based on increasing access to transfer stations and reducing transportation times. His station serves the public and accepts mixed waste, but has a 50,000-ton limit. Last year his station exceeded that limit, but he allowed that so as to continue serving customers who brought in loads that had a lot of recoverable material. In addition, he did not want to lay off staff during the holidays. Passage of these ordinances would open the way for his station to apply for a franchise as a regional transfer station. He said that last year his station brought in 5,421 trucks with re-load material that was taken to the landfill. He said that represented about a $325,000 haul-cost savings over having to haul that material to Metro South. He said Tualatin and Wilsonville passed the savings on to the ratepayers. He said if his station were to be approved as a regional transfer station, more cost savings would be passed on by more haulers. As to the 25% required recovery, his station has consistently exceeded that minimum by a good amount.

Councilor McLain said she had voted for his station to be a regional transfer station some years ago but the proposal lost. She said the location makes sense in terms of equity in the system. She asked about the savings on transportation and reloads. She asked how he based decisions on how far south to go.

Mr. Irvine said the “point of no return” was at the intersection of I-205 and I-5. Going to Metro South from that point versus going to Wilsonville was about two miles as opposed to 13 miles. He said in addition, Metro South often has long wait times and congestion. His estimate of $325,000 savings was based on a 45-minute round trip plus the wait time over one year.

Dean Kampfer, Waste Management, Inc., 5150 SW Alger, Beaverton, OR 97005, read his testimony into the record supporting Ordinances 00-865, 00-866, and 00-867. (His written testimony has been attached to the meeting record.)

Dave White, Chair, Tri-county Council, 1739 NW 156th Ave, Beaverton, OR 97006, representing haulers in the Tri-County region, testified in support of Ordinances No. 00-865, 00-866, and 00-867. He said the Council had originally supported local transfer stations, but the 50,000-ton cap has restricted access for small haulers. The proposed ordinances would provide more equitable access. He said not all members of the Tri-County Council favored all the changes, but overall they thought good compromises had been reached. The Council also urged that Metro closely monitor scale houses and regulations at any new stations.

Chair Washington thanked all members of SWAC and staff of the REM department for working on these ordinances. He assured Mr. Petersen that his concerns would be in the record.

There were no further requests to testify, so Chair Washington closed the public hearing at 2:25 PM. He called for a motion on all three ordinances and announced that the vote for all three would be taken at the same time.

Chair Washington thanked the REM staff and all those in the industry who worked on these ordinances. He reassured Mr. Petersen that his cautions would be heeded.

Councilor McLain commented on Ordinance No. 00-867. She said it would be important for Metro to continue to deal with hazardous waste. She said she supported the credit for dealing with that. She expressed concern over setting the minimum recovery rate at 25%. She said she understood that the effects of these ordinances in terms of achievements and in terms of the budget would be monitored for the next year, but she thought the recycling minimum might be too low. She thought the key question would be whether the region was improving its recovery rates on hard-to-recycle materials.

Chair Washington will carry the motion to a meeting of the full Council.

6.  ORDINANCE NO. 00-857A, FOR THE PURPOSE OF AMENDING METRO CODE CHAPTER 7.01 TO CONVERT THE EXCISE TAX LEVIED ON SOLID WASTE TO A TAX LEVIED UPON TONNAGE ACCEPTED AT SOLID WASTE FACILITIES AND MAKING OTHER RELATED AMENDMENTS

Councilor Park thanked SWAC members and the REM department staff for hard work on crafting this ordinance. He highlighted the provisions of the ordinance. (A copy of Ordinance No. 00-857A has been attached to the meeting record.) Briefly, it provides tax incentives, encourages additional recycling, provides equity in the system by charging a flat fee per ton, ensures Metro’s tax system does not hamper achieving recycling goals, provides more predictable level of funding for Metro’s charter-mandated programs, and provides a simple method of calculating the annual tax rate. Elements include converting the current system of figuring the excise tax on a percentage based on the tip fee to a flat, per-ton tax; establishing a methodology for calculating the tax rate annually, based on the previous year’s solid waste tonnage and an aggressive-percentage recycling goal required by the state; setting the initial tax rate for fiscal year 2000-01 at a level designed to raise the same amount of revenue as the current tax system, i.e., $5.7 million, providing for increases indexed to inflation as defined by the Consumer Price Index; providing for a dedicated rate-stabilization reserve in the event revenues are over-collected; and establishing a tax-credit for recycling facilities. Regarding the rate-stabilization reserve, specific Council action would be required to spend any of that money, although collecting money to spend would not be the purpose of the reserve.

Mr. Petersen made a PowerPoint presentation summarizing the ordinance. (A hard copy of that presentation has been attached to the meeting record.) He highlighted three implementation elements: 1) the per-ton tax; 2) the tax on landfill waste, which does not tax recycled material; 3) the tax credit based on recycling level. He said this presentation was developed in response to the fact that even some of the veterans of the solid waste system had expressed confusion over the effects of the ordinance. On the per-ton tax, if a garbage truck goes to a landfill that charges a $50 tip fee under the current system that charges 8.5% of that, the tax to Metro would be $4.25. If that same truck were to go to a landfill that charges a $10/ton tip fee, the tax to Metro would be $0.85. Under the new ordinance, the percentage tax would be replaced by a per-ton tax, so the truck would pay the same to Metro regardless of which landfill it went to.

On taxing only that garbage that goes to the landfill, that intent has not changed from the current system. Currently facilities that do recovery are not taxed on the recovered material. Under the new scenario, if 10 tons were to go in the front door with six tons going to a landfill and four going to a recycling market, the tax would be collected only at the landfill. Only the six tons would pay the flat, per-ton tax of $4.63—or $27.78 for the four tons—to Metro at the landfill. Those facilities that achieve the minimum 25% recovery rate would be exempt from collecting any excise tax from their users. Those that do not have to meet the minimum recovery requirement—and that would include Metro Central, Metro South, and Forest Grove at the present time—would collect the excise tax on the entire 10 tons.

Councilor McLain asked Mr. Petersen to explain why some stations would need to pay the tax on the entire load and why those stations do not have to meet the minimum recovery percentage. She said she knew the answer, but she thought it ought to be explained for the sake of the public.

Mr. Petersen said discussions at several committee meetings focused on who would and would not be subject to the 25% minimum. The Forest Grove facility was never designed to do that level of recovery, so until the current franchise expires that facility should not be subject to that. When the franchise come up for renewal eight years hence, the requirement would kick in. In the interim, the station could be made ready to do that level of recovery.

Councilor McLain said that because the station was not required to meet the minimum recovery, the excise tax would be charged on the full tonnage. She asked Mr. Petersen to explain more about the other two exception stations.

Mr. Petersen said that the Metro South facility, like the Forest Grove facility, was not designed to do that much recovery. However, he said that planned improvements should make that level of recovery possible in the near future. He added that the Metro facilities were full-service, full-scale, public facilities with no control over the incoming waste streams.

As to the tax credit system, using the example of 10 tons coming in and six tons going on to the landfill, with the $4.63/ton being paid on the six tons, the tax credit would be based on the recovery level back at the facility. In this case, that would be 40%. The tax-credit schedule in the ordinance would allow $1.53/ton credit for every ton going to the landfill, providing a total credit of $9.18 against the $27.78 tax. The net tax would then be $18.60, for an effective per-ton rate of $3.10.

Councilor McLain asked if there were more than one rate-stabilization account.

Councilor Park said that there would be two: the current rate-stabilization account, which exists behind the REM budget “firewall;” and a rate-recovery stabilization account, which would be a general-fund account. Because of the unpredictability of the recycling market and, consequently, of the recycling rate, there could be the potential to either over- or under-collect in any particular year. The largest fluctuation in the past has been 10% over two years. Based on that, the rate-recovery stabilization account was set at 10% and it would be used to stabilize the rate. In the off chance that money should collect beyond that, the money would go back into providing greater recycling tax credits. This account would never go unrestricted into the general fund. It could only be spent to stabilize the rates or to promote recovery. He said that the rate-stabilization account currently in the REM budget could be used to stabilize rates or promote recovery. He said that the rate-recovery stabilization account could legally be used that way, although that would not be likely at it would come under the general excise tax cap.

Councilor McLain said that she understood the difference between the two accounts, but she wanted to make sure the public understood. She requested that the difference be made clear in the staff report that goes with this ordinance to Council.

Councilor Atherton asked Mr. Petersen to explain the graduated tax based on recovery rate.

Councilor Park said the graduated scale was designed based on the current system fee credit scale, to encourage facilities to recover the difficult-to-recover materials.

Councilor Atherton asked why he had not simply set the burial fee high.

Councilor Park said it was thought that the graduated scale would help discourage facilities from enriching their waste streams with source-separated materials.

Councilor McLain said Metro had had a graduated scale in the past. What was new here was that the entry percentage was higher. She said questions remain about what the thresholds were and why.

Councilor Atherton said his main concern was that the graduated system seemed unnecessarily complicated to him compared with a high burial fee.

Mr. Peterson said the reason was to provide more money to the operator to use to do more recovery, rather than having it go to Metro in the form of a tax.

Councilor Atherton asked what the cost of administering such a complicated system would be.

Mr. Petersen said because a comparable system is already in place, the administrative cost difference would be minimal. He said some forms would need to be changed and a few procedures adjusted, but once the system was up and running, there should be no additional administrative costs.

Chair Washington opened a public hearing on Ordinance No. 00-857A at 2:52 PM.

Merle Irvine, Willamette Resources, 10295 SW Ridder Rd., Wilsonville, OR 97070, said he had initially opposed the idea of a flat tax, because it appeared that it would raise their rates substantially. However, through the process, the ordinance was changed so that with the credits and incentives of the new system, it would only slightly increase the costs. Some questions remained as to how indexing to the CPI would work, which would not be answered until the new system had been in place for awhile. He said he was pleased to see that a review would be done in a year. He now supported the ordinance.

Dean Kampfer, Waste Management, 5150 SW Alger, Beaverton, OR 97005, testified in favor of the ordinance. He said Waste Management would likely pay a higher proportion of the excise tax under the new system, but the company recognized the benefits of establishing a healthy, predictable, and stable revenue stream for Metro’s general fund requirements. He also said a review in a year would be appropriate. He said the recovery rate of 25% seemed like a reasonable starting point, with the understanding that it could be changed if need be. He said Wastetech had invested a lot of energy and $1 million in capital to improve its recovery rate.

Dave White, Chair Tri-County Council, 1739 NW 156th Ave., Beaverton, OR 97006, said his group supported the flat tax based on the fairness issue. He said the goals seemed complicated, but he thought the new system should be tried for a year. He said his group’s prediction was that the recycling goals would be hard to meet. He predicted that Metro would likely be over-collecting. He asked what Metro might do with any extra revenues. He thought it should be used to offset the next year’s excise tax, so the customers would get it back. He said his group did not object to Metro’s keeping some of the money in a reserve. He thought 10% for two years, as proposed, seemed appropriate. He asked why a provision requiring Council approval for budgeting or spending from this account had been lined out of section 6.

Marvin Fjordbeck, Assistant Legal Counsel, said that the original ordinance had not specified where the funds would be allocated. He said now that the fund had been specified, that sentence was superfluous. Any action would require approval by the Metro Council. He said, however, there would be no harm in adding the language back in.

John Houser, Council Analyst, said the financial planning staff had just advised him that state law would not allow removal of any money from this type of reserve without Council approval.

Chair Washington requested that the sentence be added back in, to reassure those who might have concerns.

Ralph Gilbert, East County Recycling, PO Box 20096, Portland, OR 97294, testified in favor of the ordinance. He said passage would level the playing field. He said it would increase the costs for his facility by $30 to $40 thousand a year, but that could be reduced through recycling credits. He said he thought the minimum recycling rate was too low, but it might be a good place to start. Overall, he liked the policy and the program and would like to see it passed.

Councilor Atherton asked Mr. Irvine, who had testified earlier, why he had originally thought the flat fee would cause problems.

Mr. Irvine said the way the original ordinance had first been written, his costs would have been much greater. He said the residual from his facility went to Coffin Butte, where the disposal rate was $18/ton. At 8-1/2%, the excise tax was $1.76/ton. With the credits as written into the amended ordinance combined with the facility’s recycling level, the additional cost would not be so great.

Councilor Atherton noted that Mr. Irvine’s calculations had been based on the current system of figuring the excise tax on a percentage. He asked if the complications of the proposed system would cause problems. He asked if a straightforward charge per ton on the residual would be better and simpler.

Mr. Irvine said the effect would be the same, as current programs were set up to deal with the system as proposed in the ordinance.

Aleta Woodruff, 2143 NE 95th Place, Portland, Oregon, 97220, testified as a private citizen and as a board member of the Madison South Neighborhood Association. She asked that Metro reduce household user fees for curbside pickup. She said any small reduction would increase citizen acceptance of Metro’s rates.

On another subject, she thanked the Metro REM department, SOLV, and Waste Management, Inc., for help in the Madison South neighborhood cleanup on May 20. She said eight 30-yard dumpsters were filled by 1:30 PM, which meant many neighbors were turned away. She asked for more dumpsters next year.

Councilor Park reminded Ms. Woodruff that Metro does not set the curbside retail rates but that the cities do. Regarding neighborhood cleanups, Metro has put $100,000 toward that, but that is the total. It was hard to help everybody with only that much for the whole region.

Chair Washington closed the public hearing at 3:10 PM.

Councilor Park closed by reassuring people that the ordinance would be reviewed in March of 2002, to review the cumulative effect of all the ordinances on the whole system. He thought this ordinance would help Metro reach its recycling goals. He urged committee support.

John Houser, Council Analyst, said he had been advised by financial planning that state budget law indicates the recovery-rate stabilization account should be more properly referred to as a recovery-rate stabilization reserve. That change should be made to section 6.

Councilor Park, as author of the ordinance, accepted the change.

Chair Washington expressed his appreciation to Councilor Park, members of the industry, and the REM staff for their hard work on this ordinance and the related ordinances.

Councilor Park will carry the motion to a meeting of the full Council.

7.  RESOLUTION NO. 00-2958, FOR THE PURPOSE OF AUTHORIZING RELEASE OF RFB #00B-19-REM FOR THE REPAIR OF THE PERIMETER DIKE OF ST. JOHNS LANDFILL

Mr. Petersen explained that the repair is part of a major construction project at St. Johns Landfill. He asked Dennis O’Neil to come forward to make his presentation on the need for the current repair, which would cost about $1 million.

Dennis O’Neil, Program Supervisor, REM Engineering and Analysis, explained that this resolution would authorize the release of a Request for Bids (RFB) and authorize the executive to sign a contract to repair three sections of the perimeter dike. (Information on this resolution can be found in the executive summary and staff report included in the meeting record.) He showed a series of slides of the landfill illustrating its history since 1936. He said $920,000 from the St. Johns Closure Account had been budgeted in the CIP to do this repair this year. He noted that the Army Corps of Engineers had not yet issued all the necessary permits to do the repair, although application was made about a year ago. He said the delay was not due to any objection, but rather to a delay in obtaining official approval from the National Marine Fisheries. He said that delay related to their workload rather than to any known objection. He said the department had received verbal approval. He said because of the urgent need to do the repair between about August 1 and September 15 when the water level was low, it was crucial to initiate the procedure now for selecting a contractor.

Councilor McLain asked how long the gas pipeline had been in the landfill.

Mr. O’Neil said since 1998. He said this request would be just the beginning of requests related to repairing the landfill.

Councilor McLain asked how much remained in the reserve account.

Mr. O’Neil estimated that it was $7 or $8 million.

Councilor McLain suggested looking ahead to predict what might be needed to fix future problems. She requested a review of the budget and future funding needs, with an eye to determining whether additional reserves might be needed. She said she understood that the St. Johns Closure Account had been set up to address these needs, but it might need more money from other solid waste sources in the future.

Chair Washington suggested that beyond that, it might be safer and more cost-effective to address more of the problem proactively rather than reactively and sooner rather than later.

Councilor McLain will carry the motion to a meeting of the full Council.

8.  RESOLUTION NO. 00-2957, FOR THE PURPOSE OF TRANSFERRING A SOLID WASTE FACILITY FRANCHISE ISSUED TO WILLAMETTE RESOURCES, INC., TO WILLAMETTE RESOURCES, INC., AS A WHOLLY OWNED SUBSIDIARY OF ALLIED WASTE INDUSTRIES, INC.

Chair Washington opened a public hearing on Resolution No. 00-2957 at 3:33 PM.

Mr. Irvine, Willamette Resources, Inc., offered to answer any questions about this resolution. No one came forward with questions.

Chair Washington closed the public hearing at 3:34 PM.

Councilor McLain will carry the motion to a meeting of the full Council.

9.  COUNCILOR COMMUNICATIONS

None.

There being no further business before the committee, Chair Washington adjourned the meeting at 3:36 PM.

Respectfully submitted,

Pat Emmerson

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF JUNE 7, 2000

Testimony Cards

Merle Irvine, Willamette Resources

David White, Tri-County Council

Diana Godwin, Allied Waste

Dean Kampfer, Waste Management, Inc.

Aleta Woodruff, Madison South Neighborhood Assn.

Ralph Gilbert, East Side Recycling