SUMMARY MINUTES OF CHAPEL HILL TOWN COUNCIL WORK SESSION

ON SOLID WASTE “PAY AS YOU THROW”

WEDNESDAY, DECEMBER 9, 1998 AT 5:30 P.M.

Mayor pro tem Capowski called the meeting to order at 5:30 p.m.

Council Members in attendance were Flicka Bateman, Pat Evans, Joyce Brown, and Edith Wiggins. Lee Pavão absent, excused. Julie McClintock arrived at 5:38 p.m. Kevin Foy arrived at 5:45 p.m. Mayor Rosemary Waldorf arrived at 6:20 p.m. Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Public Works Director Bruce Heflin, Public Works Field Operations Superintendent Richard Terrell, Public Works Administrative Analyst Randy Ballard, Public Works Sanitation Superintendent Harv Howard, Solid Waste Planner Blair Pollock and Interim Town Clerk Joyce Smith.

Bruce Heflin introduced the solid waste issue and noted that the Council had considered a pay-as-you-throw/unit price system in the past and had scheduled the present work session to discuss it in more detail. Mr. Heflin provided the Council with a staff report as well as several background reports. He then introduced Dr. MarieLynn Miranda from Duke University’s Nicholas School of the Environment and Mr. Jim Hickman, a specialist with the NC Department of Environment and Natural Resources in Raleigh, to update the Council on waste reduction issues.

Dr. MarieLynn Miranda discussed the traditional flat fee collection system and contrasted that with pay-as-you-throw/unit based pricing, which charges households based on the weight or volume of their trash. She pointed out that unit based pricing causes people to reduce the source of their garbage because it provides an incentive to recycle and compost and alter consumption/purchasing patterns. Dr. Miranda noted that pay-as-you-throw may lead some people to dispose of their waste illegally.

Dr. Miranda explained that virtually every community sets prices based on “average cost pricing” (total collection costs plus total disposal costs divided by number of expected bags). She added that within this there are three different pricing systems used: fully variable, whereby households pay for every bag or can they set out; multi-tier, where the Town estimates fixed costs, has a flat fee and base level of service (such as one bag), and charges extra for collecting additional bags; and additional base tax, where households pay a flat tax and have a lower fee per bag but do not get anything collected for free. She noted that the additional base tax can cause problems if people do not realize that they’re getting a lower price and then resent having to pay a tax as well.

Dr. Miranda explained that 25,000 households (28 million people) have access to unit based pricing. She displayed a table which gave disposal and diversion data for 212 communities which use unit based pricing. Dr. Miranda used the table to show that pay-as-you-throw decreases the amount of waste that goes into the landfill. She also discussed the “undesirable diversion” issue, and explained that there are many “urban legends” about pay-as-you-throw leading to littering.

Dr. Miranda displayed a chart showing that 48% of communities in one study reported no change in littering or illegal use of dumpsters with a pay-as-you-throw system. She noted that 19% reported that littering did increase, 6% said that it decreased, and 27% didn’t know, which she interprets to mean that it did not increase. Dr. Miranda remarked that the most common form of diversion was putting trash into other people’s dumpsters. She pointed out that this can be prevented by locking dumpsters. Dr. Miranda added that littering does not increase because people are either litterers or they’re not; they would not start simply because they have to pay for collection.

Jim Hickman stated that both the State and federal governments support the use of variable rate programs. He said that there are grant funds available, noting that between $10,000-$100,000 is available from the EPA for communities that are at the implementation stage. Mr. Hickman commented that the majority of programs in North Carolina are county-based systems which revolve around drop-off programs. He handed out a chart that listed 31 communities in North Carolina which have a variety of pay-as-you-throw/unit pricing systems. Mr. Hickman advised structuring the program to fit the community as well as the Town’s goals.

Mr. Hickman stated that he looks at the strength of the existing recycling program when considering pay-as-you-throw for a community. He said that he also looks at source reduction efforts and noted that Chapel Hill and Orange County excel in this area. Mr. Hickman explained that staff availability is another important consideration, as is community receptivity. He suggested that the emphasis in a Chapel Hill program should be on source reduction. Mr. Hickman recommended that the Town consider whether it wants to control the residential waste stream only or holistically reduce the waste stream. Mr. Hickman also recommended that the Town look at the commercial waste stream which he said is twice the size of the residential waste stream in Chapel Hill.

Mr. Hickman advised the Council to involve the public early on and to keep them involved throughout the process. He stressed that citizens need to know up front whether or not costs are included in the tax base. Mr. Hickman said that he agreed with Dr. Miranda that illegal disposal has not become the problem that the public usually thinks it would be. He noted, though, that a “prima face” ordinance would allow garbage inspectors to open bags and find information to identify those responsible for illegal disposal. Mr. Hickman recommended identifying every potential problem that could arise from the start of the program and having a plan in place to deal with it.

Council Member Brown asked Dr. Miranda to address the concern expressed by some in Orange County that unit based pricing is regressive when compared to a property tax. Dr. Miranda replied that an income based phenomenon does exist whereby households with higher per capita income purchase more and, therefore, do produce more waste. She explained that the Town can mitigate the extent to which unit based pricing is regressive by providing a clear way for people to reduce the price burden on themselves by adjusting some of their behaviors—such as doing more recycling. Dr. Miranda also suggested limiting unit based pricing to single family homes and exempting some lower income residents in multiple family units.

Council Member Brown asked if any of the communities using unit based pricing had reduced taxes by the amount that they charge. Dr. Miranda replied that this is an issue in many communities. She cautioned that towns should let people know that they already are paying for the service, but added that telling them that and then charging them will lead them to complain that you are increasing their taxes. Dr. Miranda added that some communities have been “less than transparent” in their reaction to this, especially three or four years ago when the anti-tax increase sentiment in the U.S. was strong. She stressed the importance of involving the public and of having full cost disclosure, but warned that doing so without changing how property taxes are assessed will open the Town up to the argument that it is raising taxes in the name of garbage collection.

Council Member Brown asked if it is common practice to reduce taxes by the amount of the trash collection fee. Dr. Miranda replied that it may not be “common,” but it is not unusual to do so. Dr. Miranda added that the percentage of property taxes that goes toward trash collection in Orange County is probably quite small.

Mr. Hickman explained that a year before implementing their pay-as-you-throw program, Chatham County identified a $45 availability fee and a $45 disposal fee as a line item and devoted a section of the tax bill to solid waste costs. He added that they are following a two tiered approach and will take the $45 disposal fee out of the tax bill when they implement pay-as-you-throw.

Council Member Brown asked what exactly was being reduced. She asked if it was property taxes. Mr. Hickman replied that trash collection was charged more as a fixed fee per household than as a tax on assessed value. He added that this is a multi-tiered system.

Council Member Brown asked Mr. Hickman to describe how the most successful unit based pricing systems educate the public. Mr. Hickman replied that there are different areas of education which need to be looked at: the public needs to understand that things are going to change; and, they need to know that they will have to handle their garbage in a different manner and follow new guidelines or the Town may not pick up their trash. Mr. Hickman explained that it takes time to educate the public in this manner. He advised the Council to start educating early, and pointed out that this will be an ongoing process because new residents move into the municipality. Mr. Hickman added that it is necessary as well to continually educate citizens on issues such as recycling, source reduction, enviroshopping, and composting.

Council Member Brown asked for specifics on how the public would be educated. She asked if it would be door to door or through flyers. Mr. Hickman replied that this depends on the size and type of community as well as the level of community input the Town desires. He mentioned that some communities have gone door to door, but added that it also could be done through posters, mailings, public service announcements and newspapers, depending on what funds are available and the ultimate educational goal.

Mr. Hickman suggested focusing initially on the fact that the system is changing, adding that some North Carolina communities have not specifically told residents that not throwing away garbage would save them money. Dr. Miranda added that she has educational materials from many communities and would be happy to share this material with the Council.

Council Member Brown pointed out that half of Chapel Hill’s residential recyclables and about seventy percent of commercial recyclables were still going into the landfill. She asked if pay-as-you-throw would help increase the amount the Town is recycling while it reduces waste. Mr. Hickman replied that two groups in North Carolina need to do a better job—those who are underutilizing the system and not recycling all that they can, and those who are not using it at all.

Dr. Miranda pointing out that you get “a lot of bang for your buck” when offices recycle because a lot of recyclable paper is ending up in the landfill. She noted that a Chapel Hill waste composition study included waste coming from outside of Chapel Hill. She pointed out that knowing the true percentage of unrecycled waste generated by Chapel Hill residents is compromised by the fact that the waste stream composition analysis was done based on agglomerated waste.

Mayor pro tem Capowski asked if the plan included subsidies. Dr. Miranda explained that, technically, people are being subsidized under the present system because those who do not generate much trash are subsidizing those who do. She stressed that beginning a pay-as-you-throw program would not mean that the Town would move from a system where everything is fair and equal to a system where it is not. Dr. Miranda reported that some communities had experimented with subsidies—typically in larger urban areas where it has been linked to participation in public welfare programs—but it is not common to subsidize lower income groups.

Mayor pro tem Capowski remarked that Dr. Miranda’s message was to keep the utility model where a bag of trash costs the same amount for everybody. Dr. Miranda replied that that is her inclination, but that it should be coupled with making good alternatives available to everyone in the community and perhaps even more to the lower income members. She pointed out that trash collection is a service which should be paid for. Dr. Miranda warned that subsidies get complicated administratively and advised addressing equity concerns in other ways.

Mayor pro tem Capowski said that reducing the amount of trash going to the landfill by recycling would mean increasing the amount going into recycling, which is expensive, and raising the price per ton of trash. Dr. Miranda replied that the tipping fee at the Orange County Landfill has already incorporated the cost of the recycling program. She suggested setting the unit based pricing fee in relation to the tipping fee at the landfill, and agreed that communities should avoid going into recycling programs that are so expensive that they do not make economic sense.

Mayor pro tem Capowski asked what people would gain if they recycle to reduce their trash utility bill and then cause a county-wide tax increase to handle the higher cost of recycling. Mr. Hickman replied that he was not sure there would be a large change in the cost of the recycling
program. He said that recycling programs are inherently inefficient when you compare the level of tonnage they collect with the number of trucks on the road. Mr. Hickman explained that the collection costs may go up slightly but the cost per ton is likely to decrease.

Dr. Miranda said that she agreed with Mr. Hickman, explaining that recycling programs are strongly characterized by economies of scale. She said that there are large fixed costs for having a truck come back half full. Dr. Miranda pointed out that it is not more expensive to have the truck come back full, and the cost per ton of trash is likely to decline as more people participate in recycling.

Mayor pro tem Capowski asked the speakers if they were saying that the grand total cost per ton of trash may not go up. Dr. Miranda replied that it may not. She added that the Town must be careful what kinds of materials it adds to the recycling program, noting that aluminum is the perfect item to recycle while glass may not be for some communities. Dr. Miranda added that the goal is not just to get people to stop generating trash but also to generate trash in a form that is easier to deal with.

Mr. Hickman explained that North Carolina is a good area of the country for recycling glass, paper, plastic and aluminum. He cautioned against going beyond that baseline list of materials to those which are extremely rare. Mr. Hickman also stated that recycling markets are cyclical and noted that cardboard was $150/ton in 1995, but is now $10/ton.

Council Member Brown, commenting that everything having to do with solid waste is extremely expensive, said that this year’s recycling budget for all of Orange County was about $1.39 million while the combined budget for collection and disposal for Chapel Hill was $2.3 million. Mr. Heflin answered that was correct and clarified that the $2.3 million was for all services.

Council Member Brown asked the speakers to address the whole question of cost considering those two budgets. Mr. Hickman replied that it often seems worth comparing the cost per ton of recycling to the per ton cost of solid waste collection, but stressed that it is only useful to examine the whole system. He said that the goal is to maximize the efficiency of the entire system while taking into account other things you are spending money on, such as finding new landfill space.

Council Member McClintock inquired about the 19-52% increase figure in a chart on page five of Dr. Miranda’s handouts. Council Member McClintock asked if this referred to an increase in the percent of recyclables or an increase in the entire waste stream. Dr. Miranda replied that it referred to recyclables. Dr. Miranda also pointed out this was in the “95% confidence” area of the report and stressed being cautious when looking at numbers based on percentages because they can be deceptive.

Council Member McClintock replied that it had seemed like a high figure to her. She wondered how that many more recyclables would be taken care of. Dr. Miranda replied that the recycling participation rate in Chapel Hill already is high compared to the rest of the country, as is per household tonnage.

Council Member McClintock asked how much tonnage is recycled in Chapel Hill. Mr. Hickman replied that Orange Community Recycling had reported more than nine thousand tons for the County in its annual report.

Council Member McClintock asked for a figure. Blair Pollock, Solid Waste Planner, answered that it is difficult to separate out just Chapel Hill figures, because drop off sites are used by a variety of residents and the contractor collects from Chapel Hill and other jurisdictions in the same truck. He noted that is why figures are presented as County-wide.

Council Member McClintock asked how much, on average, the educational component of the pay-as-you-throw program would cost the Town. Dr. Miranda replied that it depends on what kind of a system the Town puts in place and whether it requires a central billing system to track it. Dr. Miranda explained that a bag tag or sticker system is much easier to maintain and less expensive than one which uses trash cans, for example.

Council Member McClintock asked for an estimate on what the educational component of the less expensive system would cost. Mr. Hickman replied that he did not know the figure but could find out what other communities’ costs have been. Dr. Miranda stated that she does have this information at her office. Adding that it might sound like she and Mr. Hickman were trying to avoid answering, Dr. Miranda explained that costs would depend on what the Town decided to do.

Council Member McClintock asked the speakers to describe a simple program, such as a base level of service using only two bags for free. Dr. Miranda replied that the easiest program—from both the household’s perspective and the administrative perspective—is one where every bag put curbside has to be a special bag or has to have a tag or sticker on it. She added that a base level of service of two free bags would wipe out the price incentive.

Mr. Hickman agreed that the program described by Dr. Miranda is the easiest and most stable from the household’s perspective because people get into a set pattern of buying tags and bags when grocery shopping.

Mayor Waldorf noted that the Town already had passed an ordinance which requires households to put trash out in bags. She pointed out that households have to buy bags anyway.

Council Member Evans remarked that Chapel Hill is not a “typical community” and that about 20% of its population keeps changing. Noting that the speakers recommended limiting pay-as-you-throw to single family neighborhoods, she pointed out that those neighborhoods already do well. Council Member Evans suggested that limiting the program to them would put an additional burden on people who already are doing the right thing. She said that effort should be put into areas where people do not do as well, such as multi-family and commercial facilities, which is where the transient population is.

Mr. Hickman replied that multi-family and commercial are the “most worrisome aspects” of pay-as-you-throw programs. He suggested that the best approach is to come up with an idea, try it, and then continually fine tune it until you get something that works for the community. Mr. Hickman added that the burden in North Carolina apartment complexes is usually placed on the owner or management company, which is charged a tipping fee per pull (every time the dumpster

is picked up) and per size. He explained that the owners are given the tools to educate the residents on how to reduce and recycle, but it is the owner, not the residents, who would save money and it’s up to them whether or not to pass that savings on to residents.

Mr. Hickman added that the situation is similar with commercial establishments: If they see a direct economic incentive to not having their dumpster dumped often it would help to change their minds.

Dr. Miranda added that commercial establishments have always been structured as pay-as-you-throw because you pay more money if you have a bigger dumpsite or if the sanitation truck has to come more than once a week. She noted that this is a new idea only in residential areas.

Council Member Evans pointed out that Chapel Hill has more rental housing than the typical community because it is a university town. She stated that the burden for recycling may therefore fall on an absentee landlord. Dr. Miranda replied that if the rental property is single family then it’s not a problem but if it’s a multi unit then it is more complicated. Mr. Hickman said that individuals in those units would still have to purchase the bags and tags.

Dr. Miranda noted that some people do try to avoid having to pay by taking their trash somewhere else, but she pointed out that the joy of this wears of quickly after they have driven around with trash in their car. She said that such behavior tends to change after a few months when the thrill of evading the $1.22 charge wears off. Dr. Miranda also suggested that the Town look at the program in Santa Monica, California and also at some in Wisconsin and Illinois that are in college towns.

Council Member Evans, explaining that she is an advocate for a local bottle and plastic drink bill, asked the speakers if they had looked at these programs in states that have bottle, can, or plastic bills. She also asked if the costs were less in those states because individuals rather than the municipalities were recycling. Dr. Miranda replied that she is doing such a study, and pointed out that bottle bills are extremely costly.

Council Member Bateman asked if large stores, such as Harris Teeter, willingly sell bags and stickers. Dr. Miranda replied that grocery stores in the Triangle are so competitive they will stock these things simply because others will. Mr. Hickman added that chainstores typically add one or two cents to the cost of the stickers to cover their administrative burden.

Council Member Bateman asked if commercial firms had responded to recycling efforts. Dr. Miranda replied that some have made changes in their manufacturing processes because it saves them money on the cost of disposal. She said that some companies are selling their packaging as being more environmentally friendly, but she noted that “green packaging” is not a priority for many companies.

Council Member Evans mentioned a Triangle J Council of Governments study which is looking at the byproducts of industries located within the region in order to see if they can attract new industries to the region which would use those wastes in their manufacturing processes. She added that the power plant is the only industry in Chapel Hill and that the University is selling ash from there.

Mr. Hickman added that his group also is informally matching companies with others who might use their byproducts.

Council Member Foy asked how the Town would handle having to raise the price for bags and/or stickers, if necessary, while still giving consumers an economic incentive to recycle. Dr. Miranda replied that knowing the cost structure of the community before beginning a unit-based program is very important for conservatively predicting the outcome of the price incentive. She added that another option would be using an additional base tax program or a multi-tier system which would cover fixed costs with some base tax. Dr. Miranda explained that whether or not you provide a base level of service is the difference between a multi-tier system and an additional base tax system.

Dr. Miranda stressed that a pay-as-you-throw program should be launched with the community fully participating and that the Town should be honest about the fact that there might be some tinkering with the system during the first couple of years. She referred to a “rate-maker kit,” available through the EPA, which enables one to enter data and then gives a range of rates to cover costs for a fully variable system as well as an additional base tax system. Dr. Miranda noted that these kits let towns take advantage of the experiences of thousands of other communities. She added that Council Member Foy was correct when he said that raising prices would send a negative message. Dr. Miranda said that it was therefore important to set rates carefully.

Council Member Wiggins asked why some communities select stickers while others prefer using bags. Dr. Miranda replied that it is basically how particular people are about the kind of bag they put out curbside versus how worried they are about people stealing their stickers and tags. Mr. Hickman added that not everything can fit into a bag and you can slap a sticker on things that are larger.

Discussion by the Council

Council Member McClintock asked Mr. Horton to help the Council walk through what the options are. She also asked what key questions the staff needs to have answered. Mr. Horton replied that the staff had outlined that in their report and would like to just bring it back to the Council. Mayor Waldorf agreed that bringing it back was a good suggestion.

Council Member Evans asked Mr. Horton to obtain information on how Athens, Georgia collects trash in their multi-family neighborhoods and in their commercial districts and downtown area.

Council Member Brown suggested contacting other communities mentioned, such as Santa Monica, California about their educational programs. Dr. Miranda stated that she could provide that information.

The meeting was adjourned at 7:28 p.m.