MINUTES OF THE METRO COUNCIL

SOLID WASTE & RECYCLING COMMITTEE MEETING

Wednesday, June 20, 2001

Council Chamber

Members Present:  Bill Atherton (Chair), Susan McLain (Vice Chair), Rod Monroe

Also present:    Rod Park

Absent:    

Chair Atherton called the meeting to order at 3:36 p.m.

1.  CONSIDERATION OF THE MINUTES OF THE JUNE 6, 2001 SOLID WASTE & RECYCLING COMMITTEE MEETING

2.  REGIONAL ENVIRONMENTAL MANAGEMENT DIRECTOR’S BRIEFING

Terry Peterson, Director, Regional Environmental Management Department, reported that Metro, the DEQ, and the City of Oregon City had received complaints regarding odors and piled up debris at Pacific Land Clearing and Recycling, whose license for roofing material and reloaded yard debris was approved in April by the Metro Council. He said Metro issued a notice of non-compliance on June 7, 2001, giving them 7 days to clean up the area. They had made progress by June 14, but had not completed the work. They were then issued a notice of fines, $100/day, which spurred them to finish up. He reported that the site had now been cleaned up and he hoped the problem would not reoccur.

Dr. Petersen reported that he had just received word that BFI/Allied Waste had just closed a deal to purchase River City Drop Box, and had started diverting the dry waste that had been going to Grabhorn Landfill to Allied’s Wilsonville facility. He commented it was a continuation of a trend that the region’s small haulers were being acquired by major companies.

3.  Resolution No. 01-3079, For the Purpose of Confirming the Appointments of Jean Estey-Hoops, Jason Graf, Susan Landauer and Trevor Nelson to Fill Four Expiring Terms on the North Portland Rehabilitation and Enhancement Committee.

Katie Dowdall, REM Community Enhancement Coordinator, presented the resolution and explained the selection and interview process that had been completed. (See biographies attached to the permanent record of this meeting).

Chair Atherton said he would ask Councilor Burkholder to carry the resolution to the full Council.

4.  STRATEGIC PLAN DISCUSSION

A discussion was held regarding how the different elements of the strategic plan were interconnected. Dr. Petersen said two key goals were waste reduction and making sure the region had adequate disposal capacity. He felt the key interrelation was how the delivery of the tonnage affected revenue. He felt revenue was key to meeting waste reduction goals. He said the regional systems fee paid for regional programs and the regional system fee, now $12.90, was being subsidized by the undesignated fund balance. He hoped to address those things in a comprehensive package.

Chair Atherton pointed out there would be a Rate Review Committee meeting June 27, primarily for informational and discussion purposes of the regional system fee and the interconnectedness, and then there would be a follow-up meeting on July 11, 2001, when they would consider any specific proposals that may come.

Councilor McLain said she had heard some good comments about some language and some areas of concern at the last SWAC meeting. She added that a commitment had been made to them to review it and go back to the next SWAC meeting on June 28^th with comments. She said how different elements integrated and related to the goals of waste reduction and disposal capacity were important questions.

Dr Petersen agreed that he would have to be able to explain the need for a rate increase. He said his department was doing an analysis now and would put together an executive summary for any interested persons to see.

Councilor McLain asked if it was legal for Metro to freeze the current caps for a month or two while they were working on the end product so there would be no violations that would hamper the industry in doing their work.

Dr. Petersen said from his operational perspective, they had some discretion on when to take enforcement action.

Marv Fjordbeck, Office of General Counsel, said the Council had discretion on every enforcement action, not just this one.

Councilor McLain said she was in favor of freezing the caps until their work was done.

Chair Atherton felt a critical issue would be what impact raising or removing tonnage caps would have on Metro revenues and the regional system fee.

Dr. Petersen said in general, Metro was much more sensitive to tonnage/revenue loss because of the way the current regional system fee was structured. He said Metro had been offsetting with a draw down of the undesignated fund balance. He said there were many reasons why the fee should be raised. He felt an ideal would be that funding would be independent of where tonnage was delivered, much like the excise tax. He reported there had been less tonnage this year, due in large part to the slowing local economy, but also due to an increase in recycling. He added that the decline in tonnage meant that after next year, the fee would not be adequate to cover costs.

Councilor Monroe asked how much it would cost to eliminate the subsidy to the $12.90 fee.

Dr. Petersen was hesitant to give a number without further study, but thought the total was about $16.25. He said the tip fee would then have to be increased as well.

Councilor Monroe asked if the undesignated fund balance would have to be rebuilt.

Dr. Petersen did not believe so, but added there was some danger in the general fund reserve being too low.

Councilor Monroe understand the interplay between the tip fee and incentives for recycling, but wondered, if the tip fee was increased to the market rate and the recycling credit was sunsetted in July 2002, would the net affect be negative or positive in terms of incentives to recycle.

Dr. Petersen believed the key to waste reduction incentive was the price of landfilling. He had been hearing from the industry that there was not so much need for the credit as the tip fee raised back up. He recommended sunsetting the credit after the tip fee was raised. He added that a resolution had been adopted which extended the credit to 2002.

Chair Atherton asked if the sunset date gave enough lead time for the industry to smoothly accommodate the changes as they started looking at all the interconnectedness and started raising fees.

Dr. Petersen said the key thing he had heard in terms of timing was the connection back to the franchise collection rates.

Chair Atherton asked the true cost of service at the facilities.

Dr. Petersen said the current rate was $60.00, and that additional revenue was being combined with the undesignated fund balance to offset the other costs. He said by the end of the next fiscal year, that money would be gone and there would not be any additional revenue collected. He said he would then be faced with either reducing the cost of the programs in the department or having a rate increase of some kind.

Chair Atherton asked how they would know the reserve accounts were adequate.

Dr. Petersen said they had done a number of different reviews of reserve accounts to come up with some rules. He said garbage is fairly stable and he did not foresee the tonnage dropping 20-30 percent in one year, but he could see fluctuations of 5-10 percent, which was what they used to set appropriate reserve accounts.

Chair Atherton asked if there was a difference in the affect on Metro revenue of removing caps from wet waste or from dry waste.

Dr. Petersen responded that the dry waste and construction/demolition debris had the most potential for recovery. He said if there was dry tonnage going to the landfill and getting diverted there, it would mean there would be less tonnage to spread costs across. He said he would like to encourage more recovery and adjust Metro’s fees accordingly. He said the current cap was 50,000 tons on residual waste out the back door, whether it was wet or dry.

Councilor Monroe asked if there were checks on the misuse of the tonnage cap increase. He did not want the increase to be a disincentive to recycling. He asked if there was any validity to the argument that the cap became a disincentive to recycle more because loads of dry waste were not going to be 100% recyclable and that limited the amount of dry waste they could bring in to their facility.

Dr. Petersen said there was some validity to it, but it depended on the specifics of the facility and the company. He thought there was every incentive for a vertically integrated company to move as much of their own wet waste through their facility, first and foremost. He thought that helped squeeze out any dry waste they may be able to receive from third parties. He said a cap like they now had limited the ability of the operators to bring in dry waste from other haulers.

Councilor Monroe asked if there was an overall facility recovery rate requirement for recycling levels in the Metro contracts.

Dr. Petersen responded that there is requirement of 25% recovery on dry waste, but no minimum recovery rate on wet waste. He added that anything that increased the price of landfilling would add more incentive for recovery. A regional system fee increase would be passed through at the landfills and that would increase the cost of landfilling.

Councilor McLain thought there was a direct requirement on Metro’s part to look at some kind of recycling goal or requirement. She wanted summaries of some specific issues and hoped to have them as soon as possible so they could talk to SWAC and the industry and other interested parties.

Chair Atherton said timing was a key issue in terms of concerns of local jurisdictions setting their franchise agreements. He added they should also give partners in the industry enough time to plan. He commented that he had received comments from the public and the industry regarding a perceived or real conflict of interest in Metro’s being in the business and promoting recycling.

Dr. Petersen said when he had heard any suggestion regarding conflict of interest, it was usually been in the context of Metro as regulator and Metro as an operator/owner of a transfer station, not in the context of fees or waste reduction. He said if nothing else changed in the revenue requirements, with hopefully less and less tonnage, the per-ton rate would go up. He said as they had less and less tonnage, the waste that was left would be harder and harder to recover. He said it could take more of an economic incentive to recover that harder to recover waste. He did not see, from a waste reduction standpoint, any conflict of interest in regulator vs. ownership, or in how the fees were structured in the waste reduction goal.

Councilor McLain did not see a conflict either. She said nobody had ever come with a conflict issue that needed to be resolved. She added that all of their documents all clearly stated they were going to play on a fair and equal playing field to allow both public and private to prosper.

Chair Atherton announced that, due to the Fourth of July holiday, the next committee meeting would be July 11, 2001.

ADJOURN

There being no further business to come before the committee, Chair Atherton adjourned the meeting at 4:32 p.m.

Respectfully submitted,

Cheryl Grant

Council Assistant

Attachments to the Public Record for the

Solid Waste & Recycling Committee Meeting of June 20, 2001:

62001swr-01  Resolution No. 01-3079  Biographies of potential members of the North

           Portland Rehabilitation and Enhancement

           Committee.

Testimony Cards:

None.