COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

 

DATE:

November 16, 2009

BOARD MEETING DATE:

December 1, 2009

SPECIAL NOTICE/HEARING:

14-Day Notice of Public Meeting

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Implementation of an AB 939 Fee to Fund the County’s Costs of Preparing, Adopting, and Implementing the Countywide Integrated Waste Management Plan

 

RECOMMENDATION:

Adopt a resolution approving the imposition and collection of an AB 939 Fee on each ton of solid waste disposed of at landfills within the unincorporated areas of the County.

 

BACKGROUND:

Solid waste diversion goals for California’s cities and counties were established in 1989 with the passage of Assembly Bill 939 (AB 939). This legislation addressed the disposal of solid waste by setting diversion goals of 25% by 1995 and 50% by 2005. Diversion (diverting wastes from landfills) is accomplished through recycling, reuse, composting, source reduction, and other related activities or programs. Over the years, cities and counties, including this County and its cities, have established programs designed to help to meet the AB 939 goals. These programs (AB 939 Programs) have been successful and have resulted in a significant downward trend in the tonnage of solid waste disposed at landfills. Such diversion and other programs are described and coordinated through statutorily mandated Countywide Integrated Waste Management Plans. The San Mateo County Integrated Waste Management Plan (County Plan) has been in place for 20 years. The County Plan is reviewed and updated every five years. The latest five-year review report was issued by the C/CAG Local Task Force on October 15, 2009 and will soon be presented to your Board for adoption.

 

DISCUSSION:

AB 939 included the provisions of what is now California Public Resource Code Section 41901. This section permits a city or county to impose fees in amounts sufficient to pay the costs of preparing, adopting, and implementing a countywide integrated waste management plan. Such fees are generally referred to as AB 939 fees. Historically, the County has funded its AB 939 Programs, which include household hazardous waste, composting, diversion, Green Business, training and workshops, abandoned waste pickup and other programs, through a contractual arrangement with the owner/operator of the Ox Mountain landfill. The County has also funded other programs, which are not eligible for AB 939 support, through this contractual arrangement. These non-AB 939 programs include vector control, OES and hazardous materials response, operation of the transfer station in Pescadero, other programs specific to the unincorporated area of the County and the costs associated with the closing and monitoring of the County owned landfills in Pescadero and Half Moon Bay.

 

The original arrangements were made over thirty years ago, with then independently owned Browning Ferris Industries (BFI). BFI is currently owned by Republic Services, Inc. (Republic). The contractual arrangements provided for compensation to be paid to the County by the owner/operator of the Ox Mountain landfill for each ton of municipal waste disposed of at the landfill.

 

Through the contractual arrangement, BFI agreed to limit the total tonnage of materials that would be land filled at Ox Mountain in any year, to limit the amount of waste generated outside of San Mateo County that could be disposed of at the Ox Mountain landfill, and to limit the per ton disposal rates charged by BFI to customers who used the Ox Mountain landfill (tipping fees) to an amount that would not exceed an agreed upon rate. The fee paid to the County by BFI was part of the tipping fees charged. Pursuant to the current contract, the tipping fee charged at Ox Mountain cannot exceed $47.56 per ton, with a County compensation fee of $7.02 per ton.

 

The County compensation fee has not increased in five years and does not generate sufficient funds by itself to cover the costs of the programs it is intended to fund (programs in the Solid Waste Fund). In addition, due to the success of diversion programs, the tonnage disposed of at Ox Mountain has been annually decreasing; in 2000, a total of 906,000 tons were disposed. It is anticipated that the disposal tonnage for 2010 will be approximately 585,000 tons. The decline in tonnage has decreased the County’s compensation.

 

The current contract regarding the Ox Mountain landfill ends December 31, 2009. The current owner/operator, Republic, has indicated that it does not wish to renew or continue those contractual arrangements for a variety of reasons. With the expiration of the contract, Republic will no longer be subject to the disposal rate limitations nor to the waste amount limitations set forth in the contract.

 

Recognizing that the contractual arrangements will be terminating but that the County’s AB 939 programs still require funding and that such funding may be provided through the imposition of an AB 939 Fee on all of the landfill disposal in the unincorporated lands of the County, staff is recommending the adoption and imposition of an AB 939 Fee. The proposed AB 939 Fee is comprised of two distinct components. One component of the Fee would fund eligible Solid Waste Management and Diversion (SWMD) programs currently implemented by the Department of Public Works (SWMD Component). The other component of the Fee would fund Household Hazardous Waste and state mandated Local Enforcement Agency (HHW/LEA) programs administered by Environmental Health (HHW/LEA Component). The total AB 939 Fee income would replace the income derived from the expiring contract, but the use of the AB 939 Fee would be restricted to the County’s costs of preparing, adopting, and implementing the countywide integrated waste management plan. The County’s AB 939 Fee would be imposed only within the unincorporated County areas. Currently the Ox Mountain landfill is the only operating landfill in the unincorporated area.

 

The meeting at which this matter is being considered has been noticed in accordance with the applicable statutory requirements. Those notices indicated that the Board would be requested to impose an AB 939 Fee of $9.83 effective January 1, 2010. In response to comments submitted during the public notice period, staff has revised its recommendation on the timing of what is effectively a fee increase. The comments indicated that solid waste service providers needed additional time to notify their ratepayers and meet Proposition 218 noticing requirements to allow them to adjust their rates to account for the proposed increase in landfill tipping fees. Based on those comments, staff now recommends that effective January 1, 2010, an AB 939 Fee of $7.02 per ton of solid waste land filled within the unincorporated area of the County be adopted for a period of six months. The $7.02 Fee is the same rate as the compensation fee paid through the current contract with Republic, so setting an AB 939 Fee at $7.02 should alone have no impact on landfill rates at Ox Mountain. However, we cannot predict what tipping fee changes, if any, Republic may choose to impose on its customers after the contract expires on December 31, 2009. It should be noted that the revenue from an AB 939 Fee set at $7.02 will not fully fund the County’s AB 939 programs. However, there are sufficient reserves in the Solid Waste Fund to cover the deficit for six months. During the first six months of 2010, staff will do outreach with the landfill customers – cities, waste haulers, SBWMA and others – to explain the AB 939 program funding situation.

 

To fully fund the AB 939 programs starting in FY 2010/11, staff recommends that effective July 1, 2010, the AB 939 Fee be increased to $9.83 per ton for each ton of solid waste land filled within the unincorporated County area. The $9.83 AB 939 Fee includes a $4.81 per ton SWMD Component to fund the SWMD Programs and a $5.02 per ton HHW/LEA Component to fund the HHW/LEA Programs. The $9.83 Fee effectively represents an increase to the owner/operator of the Ox Mountain landfill of $2.81 per ton (from $7.02 to $9.83). It is estimated that should the landfill operator chose to pass this increase on to its customers county-wide, and those customers pass the increase on to the residents of the County, the cost to the average single family dwelling ratepayer would be in the range of $0.22 per month. Annualized, this would be $2.64 per year on a garbage bill for a 32-gallon can per week of garbage service.

 

The County’s AB 939 programs and associated costs are outlined in the report prepared by the Department of Public Works provided as Attachment A. The increased level of the AB 939 Fee effective for FY 2010/11 will allow the County to continue to provide AB 939 services at current levels without further depleting the Solid Waste Fund reserves, which are earmarked for the monitoring and management of the County owned closed landfills in Pescadero and Half Moon Bay. Maintaining the AB 939 Fee at $7.02 beyond July 1, 2010 would require reductions in the service levels of the County’s AB 939 Programs.

 

The AB 939 legislation allows fees to be imposed on landfills and other waste handling activities. During the first six months of 2010, staff will analyze additional waste handling activities (e.g., construction and demolition debris, greenwaste, and recyclable materials) and their management to determine the appropriateness of imposing an AB 939 Fee on these activities as well. This analysis and consideration will be undertaken in concert with the cities and other entities involved in waste disposal and diversion efforts.

 

The proposed fees are exempt from CEQA and a finding to that effect is included in the proposed resolution. County Counsel has reviewed and approved the Resolution as to form and content.

 

Adoption of the AB 939 Fee contributes to the Shared Vision 2025 outcome of an Environmentally Conscious Community by providing a funding mechanism to support required and successful diversion programs outlined in the San Mateo County Integrated Waste Management Plan.

 

FISCAL IMPACT:

In the adopted FY 2009/10 budget, the AB 939 programs are funded with a combination of Solid Waste Fund revenue, Solid Waste Fund reserves, and County General Funds. The anticipated AB 939 revenues will replace the Solid Waste Fund revenue for the period January 1, 2009 through June 30, 2010. The Solid Waste Fund reserves contribution ($237,545 for SWMD Programs) and the General Fund contribution ($587,545 for HHW/LEA Programs) for this six-month period will remain the same as the amounts included in the adopted FY 2009/10 budget. There is no change in the net County Cost for the AB 939 programs associated with the imposition of the AB 939 Fee in FY 2009/10.

 

Setting the AB 939 Fee at $9.83 per ton effective July 1, 2010 will produce an estimated $5,756,000 in revenue for FY 2010/11. This amount will fully fund the AB 939 programs described in Attachment A for FY 2010/11. No contribution from the General Fund or the Solid Waste Fund reserves will be necessary in FY 2010/11 for the AB 939 programs. However, the non-AB 939 programs that have been supported by the Solid Waste Fund cannot be funded by the AB 939 Fee and additional funding will be required for these programs in future fiscal years. The General Fund contribution of $1,175,000 in the current fiscal year, which is funding programs that are AB 939 Fee eligible, could be appropriated in FY 2010/11 to support the non-AB 939 programs, which are estimated to cost $1,246,000. Because the cost of the non-AB 939 programs are greater than the current General Fund contribution, additional funding ($71,000) will be required to support the non-AB 939 programs. Recommendations for funding the non-AB 939 programs will be the subject of future budget recommendations for your Board to consider.

 

The Solid Waste Fund has a balance of over $4 million, a portion of which could be budgeted in future fiscal years to fund the additional required funding identified above ($71,000). Of the $4 million Solid Waste Fund balance, approximately $2 million has been allocated for required work at closed County landfills. Future responsibilities for these landfills in terms of regulatory and financial requirements must be considered as recommendations are developed for the use of the Solid Waste Fund reserves.

 

Attachment A:

Report supporting the Proposed AB 939 Fee and Programs