May 16, 2006
SUBJECT: Reauthorization of Countywide AB 939 Fee and Househould Hazardous Waste Agreements.
REPORT IN BRIEF
Since 1992, a Countywide AB 939 Fee has been imposed on all solid waste landfilled in Santa Clara County. The County distributes the revenues from the fee to all of the cities in Santa Clara County based on how much landfilled waste each jurisdiction generated. Fee revenues are used by the cities and the County to implement programs and services designed to meet the state mandate that local jurisdictions reduce the amount landfilled by 50%. The collection, distribution, and use of the fee are governed by an Agency Agreement among the County of Santa Clara and the 15 cities in the county. The current AB 939 Fee agreement will expire on June 30, 2006.
The fee is divided into two parts 1) a Program Fee of $1.50 per ton to assist in funding the costs of preparing, adopting, and implementing integrated waste management plans in the fifteen cities and the unincorporated area of the county; and 2) a Household Hazardous Waste (HHW) Fee of $2.22 in FY 2006/2007 and $1.85 in FY 2007/2008 and FY 2008/2009 on each ton to provide funding to implement the Countywide HHW Program.
Separately, the City is one of 15 jurisdictions that participate in the Countywide Household Hazardous Waste (HHW) Collection Program. This program provides events at which residents may dispose of hazardous wastes. Sunnyvale relies on the HHW portion of the AB 939 Fee to fund participation by 3% of its households per year, and supplements this with direct payments to the Countywide Program to fund the remainder of its resident participation, which totals 7% of households. On April 22, 2003, Council authorized an additional $145,000 per year to accommodate this level of program use by Sunnyvale residents (RTC 03-127).
The Agency Agreements governing both the Countywide HHW Program and the AB 939 Fee will expire on June 30, 2006. In order to become effective again, both the Agency Agreement for the Countywide AB 939 Fee and the Countywide Household Hazardous Waste Collection Program Agreement must be approved by the County Board of Supervisors and by each of the 15 cities in the county.
The structure of the proposed fee collection and dispersal system results in Sunnyvale receiving back at least 100% of the $1.50 per ton AB 939 fee paid for disposal of City waste at Kirby Canyon Landfill. The $2.22 in FY 2006/2007 and $1.85 in FY 2007/2008 and FY 2008/2009 fee is to be retained by Santa Clara County and earmarked for HHW services. Without this funding mechanism, Sunnyvale HHW services would be paid directly from the Solid Waste Program budget. However, the service level, the total City cost to provide the service to residents and the funding source (Solid Waste Fund) would be unchanged. Thus, continuing to participate in this funding structure has no fiscal impact on the City or on refuse collection rates.
Staff is recommending that the Council authorize the City Manager to execute the Agency Agreements for the Countywide AB 939 Fee (Attachment A) and Countywide Household Hazardous Waste Collection Program (Attachment B) and to commit to the County the funds necessary to continue providing HHW collection services to Sunnyvale residents.
BACKGROUND
In 1992, Council approved the first Agency Agreement for a Countywide AB 939 Fee (RTC 92-359). All cities in the county and the County Board of Supervisors approved the Agreement, which provided for a fee of $1.00 per ton to be collected on solid waste landfilled in Santa Clara County. Revenues from the fee are paid to the County of Santa Clara, which then distributes the funds to each jurisdiction in the county primarily based on how much refuse was disposed of by each city (and the County, for unincorporated areas). A modest amount of revenue generated by waste imported from other counties and waste whose origin is unknown is distributed to the cities and the County based on population.
The initial two-year Agreement was extended for two years in 1994 and again in 1996 and 1998. In 1994, the fee was increased to $1.15. In 1996, it increased to $1.30 and was increased again to $1.50 in 2003. Each of the fee agreements and extensions was approved by Council.
On June 20, 2000, the City Council approved a new Agency Agreement that provided for an additional $1.50 per ton disposed to be collected and retained by the County to be used to promote and conduct HHW service to all residents in Santa Clara County. Prior to this, the Solid Waste Program was directly paying the County for the City’s share of the Countywide program. Thus, the new fee reduced the City’s direct program cost payments by roughly the same amount as the City’s increased fee expense at Kirby Canyon Landfill. The 2000 HHW agreement had a term of three years and Council approved its renewal in 2003 for an additional three years. Beginning in July 2006 the AB 939 fee and HHW increased fee are proposed to be $1.50 and $2.22 respectively, for a total fee amount of $3.72.
The proposed HHW increase in the fee amount is due to managing the increase in e-waste, specifically household batteries, mercury containing devices and fluorescent tubes and bulbs. The County HHW program has been directed by the participating cities to find other sources of funding by July 2007. This anticipated funding source (approximately $500,000) from solid waste, wastewater treatment plants and storm water agencies is the reason the HHW fee drops back to $1.85 in FY 2008 and 2009. If other sources of funding are not found, Sunnyvale’s enterprise fund structure would allow existing service levels to continue with no change in cost. In this case, the City could simply pay the Countywide program directly for HHW services instead of paying the same amount in the form of a landfill fee. However, other local cities that do not use enterprise funds would find it difficult to fund HHW services.
EXISTING POLICY
Solid Waste Sub-element, Policy 3.2E.3—Minimize illegal and inappropriate disposal of Household Hazardous Waste (HHW).
DISCUSSION
The AB 939 Fee has proven to be an equitable and easily administered way to provide Santa Clara County jurisdictions with a portion of their funding for solid waste diversion programs. The agreements authorizing the current Countywide AB 939 Fee and HHW Services agreements will expire on June 30, 2006. In order to continue to collect the AB 939 fee and distribute its revenues to the cities after June 30, each city and the County must act to approve the Countywide AB 939 Implementation Fee Agreement (Attachment A). Similarly, each of the 15 jurisdictions participating in the Countywide HHW Waste Collection Program Agreement (Attachment B) must approve its agreement in order for the Countywide HHW Program to continue providing service to residents of Sunnyvale and the other participating jurisdictions. The proposed agreements have been reviewed and recommended for approval by the Santa Clara County Recycling and Waste Reduction Commission. Councilmember Howe is Vice-Chair of the Commission.
The key points of the proposed AB 939 and HHW Program agreements shown as Attachments A and B are summarized below.
- the AB 939 Fee is collected at landfills in Santa Clara County and at transfer stations from which waste is shipped to out-of-county landfills
- the participating cities make another three year commitment to the Countywide HHW program
- the amount of the AB 939 Fee is increased to $3.72 per ton landfilled, with $2.22 per ton earmarked for HHW services in FY 2006/07 and $1.85 in FY 2007/08 and FY 2008/09.
- HHW service to 3% of the households in each participating city is provided using the revenues generated by the $2.22 per ton portion of the AB 939 Fee
- Abandoned Waste Disposal Costs will fund disposal of HHW illegally abandoned at nonprofit charitable reuse organizations (e.g. Goodwill, Salvation Army, etc.). Over the years, the amount of money exceeded the non-profit cost of disposal. The existing fund balance of $120,000 from previous years will fund Abandoned Waste Disposal Costs for the duration of this agreement. The $.12 per household Abandoned Waste Disposal apportionment for FY 2006/07 will be redirected to the Facility Closure Cost Account. The apportionment for FY 2007/08 and FY 2008/09 will be redirected to augment HHW service.
- the $1.50 portion of the AB 939 Fee is returned to each jurisdiction based on how much waste is disposed by the jurisdiction
- cities (such as Sunnyvale) that fund participation by more than 3% of households continue to provide supplemental funding from other sources to whatever level is budgeted by each city ($145,000 to pay for up to 3,695 participants or 7% of households, in the case of Sunnyvale)
The City receives a portion, prorated by population, of the $1.50 fee on "undocumented" wastes that are imported to Santa Clara County for disposal, or “orphan” wastes for which the jurisdiction of origin is unknown. The $1.50 portion of the fee thus returns more in revenue to Sunnyvale than the City pays out in charges, producing a net benefit to Sunnyvale refuse collection ratepayers. This benefit will continue under the proposed AB 939 Fee Agreement.
The proposed HHW funding and service agreements promote an equitable regional cooperative approach to funding the services necessary to meet the State of California’s "50% by 2000" solid waste and household hazardous waste diversion mandate.
Sunnyvale has relied exclusively on the Countywide HHW Program for service to City residents for the six years. Customer satisfaction with the service has been high and costs have been as low, or lower than the City was able to achieve on its own in the past. In order to become effective, the AB 939 Fee Agreement must also be approved by each of the 15 cities in the county and by the County Board of Supervisors.
FISCAL IMPACT
The recommended agreements represent no change to existing levels of service and cost of service and thus have no fiscal impact on the City. The City’s total funding commitment to HHW services is not proposed to change from that presently authorized by the City Council. The $145,000 expenditure that the City presently commits to supplement fee funding will be reduced, dollar for dollar, by the amount of additional revenue produced by the new fee amount. If the County does not find alternate funding in 2007/08 and the fee per ton is reduced as contemplated in this agreement, then the reverse will happen. That is, the City’s supplemental funding will increase by one dollar for each dollar decrease in fee revenue. Thus, renewal of the agreements will have no fiscal impact on the City.
Conclusion
The current Countywide AB 939 Fee and the Household Hazardous Waste agreements will expire June 30, 2006. Council’s approval is requested to continue the collection and distribution of these funds for the City and the other Santa Clara County jurisdictions to meet the State mandate that local jurisdictions reduce the amount landfill by 50%. Continuation of the agreements and the fee will allow for uninterrupted delivery of HHW services to Sunnyvale residents.
2. Authorize the City Manager to execute the Agency Agreement for Countywide AB 939 Fee, but not the Agreement for Countywide HHW Collection Program. Assuming approval of the AB 939 Fee by the other jurisdictions, the fee would be collected and returned to the City (except for the $0.12 per household retained by the County to pay for the Facility Closure Cost Account in FY 2006/07. The apportionment for FY 2007/08 and FY 2008/09 will then be returned to the City. The City would not participate in the Countywide HHW Collection Program, and would have to separately contract and pay for HHW collection events.
3. Decline to authorize the City Manager to execute the Agency Agreement for Countywide AB 939 Fee. In this case, the AB 939 Fee could not be collected by the County and the HHW Collection Program Agreement would be nullified. The City receives a share of fee revenues generated by imported and “orphan” wastes, so elimination of the fee would adversely affect the Solid Waste Fund in the amount of roughly $4000 per year.