AGENDA #11
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Report on “Pay As You Throw” Refuse
Collection Options
DATE: December 11, 2000
This report presents
information about a possible “pay as you throw” (PAYT) system for residential
refuse collection system. It includes
options for a PAYT system and suggests issues for the Council’s consideration.
The attached resolution
would inform the Orange County Board of Commissioners that the Town of Chapel
Hill wishes to pursue a PAYT system and ask the Commissioners: 1) whether or
not County recycling programs could accommodate potentially significant increases
in quantities and types of recyclables and 2) if so, how they would propose
such accommodation.
During budget hearings for
the 2000-2001 fiscal year, the Council expressed an interest in implementing a
PAYT system for residential refuse collection.
As part of the decision to change residential refuse collection to
weekly curbside service, the Council asked that the new system be designed in
such a way as to allow a PAYT component to the Town’s residential refuse
collection and disposal program. The
staff was asked to prepare a report outlining how PAYT could be implemented.
Solid Waste Management Plan
In the “Solid Waste Plan for Orange County, North Carolina”, dated July 16, 1997 and adopted by governing bodies of the County and three towns, the governments within Orange County affirmed waste reduction goals set in fiscal 1991-92 of 45% and 61% for 2001 and 2006 respectively. The plan also noted that a “materials recovery facility is a linchpin in future strategies to increase the amount of recycling since it would enable broader and more efficient collection of commingled recyclables from all economic and geographic sectors of Orange County.”
The adopted Solid Waste Plan referenced above also anticipated a particular sequence of events in order to attempt to meet the waste reduction goals. The plan anticipated changes in the number and type of waste diversion activities in the County. The order of these changes included development of a materials recovery facility (MRF) as the first element of the expanded program. Second, the plan called for expanded recycling programs in the residential and commercial sectors. The proposed increases in residential recycling include adding materials to be collected at the curb in urban areas and commingling these materials for more efficient collection. The commingled materials would then be delivered to the MRF for sorting and marketing. The increased recycling was planned as a voluntary program.
In the commercial sector, an aggressive public recycling program was envisioned, providing systematic collection of an array of materials. Again, this collection was to be a commingled collection, with sorting at the MRF.
After implementation of the voluntary recycling enhancements, the plan called for analysis of the results. If voluntary participation failed to make substantive progress toward the diversion goal(s), the plan called for consideration of mandatory programs such as PAYT and/or mandatory recycling.
Existing Solid Waste Programs
The Town currently participates in programs in curbside and drop-off recycling, now administered by the County. Commercial recycling is a mixture of private and publicly funded programs. County Solid Waste staff estimate that these programs plus other diversion efforts presently divert about 28% of the solid waste generated in Chapel Hill. The County estimates participation rates in the curbside recycling program at 90% per month.
We are in the process of implementing weekly curbside collection of residential refuse over the next two years. Research cited in material produced by the U.S. Environmental Protection Agency related to PAYT programs throughout the country suggests that the vast majority of successful residential PAYT programs operate at the curb.
DISCUSSION
This discussion provides an outline of a PAYT system, suggests some key issues for the Council to consider, and suggests some next steps in the process.
If the Council decides to proceed with a PAYT system, we would recommend the following outline of key elements. We would propose to receive guidance from the Council and proceed with detailed program design for possible consideration in the Manager’s proposed budget for Fiscal Year 2001 – 2002.
Bags, Tags and Cans
We believe a volume-based system would be the best for a PAYT system for the Town. Residential volume-based systems could use different sized cans, or stickers or coupons, or bags. All of these systems would establish a relationship between the amount of waste produced and the amount a resident would pay for collection service. Advantages of a can system include the relative absence of counterfeiting and possible disputes about whether an item is or is not properly prepared for collection. Cans can be “stuffed” to excessive volumes, regardless of size. Cans also require a billing system. Experience in other communities also shows that some restrictions would be required on the frequency with which residents would be allowed to change containers.
Advantages of a tag system include ease of administration. Tags could be acquired from Town outlets and/or retail outlets, without creation of a billing system. Tags can also be used for other materials, such as bulky items. They can be made to be readily identifiable to the collector and are arguably easiest for residents to use. Disadvantages include the possibility of counterfeiting and the possibility of tags becoming dislodged from bags placed for collection.
Advantages of a bag system are similar to those of a tag system. Bags could be sold at retail outlets and would not require a billing system. Bags could be provided so as to be readily identifiable (e. g., a different color or with a printed logo or message) and are not subject to counterfeiting. A disadvantage of bags is that they can be “overstuffed.” Another argument against bags is that they compete with commercially produced bags, which some citizens and retailers could object to.
We believe that a volume-based system with tags would provide a system that would be relatively easy and inexpensive to implement, while still creating a direct relationship between the amount of waste produced and cost implications for the producer. Tags would be least disruptive to residents’ daily lives, while still providing a means for collectors to differentiate between materials appropriate for collection and those not. In addition, tags could be used for other materials, such as bulky wastes or even yard waste, if the Council wished to expand a PAYT system.
We recommend a PAYT system based on residents purchasing and using stickers to be placed on bags of refuse placed for collection by the Town. By the end of fiscal 2001-2002, all residential refuse will be collected once per week from containers placed at the curb. The PAYT component could be added to the Town’s residential collection system at that time. Residents would place a sticker on each bag that they place in the container. The Town would not collect any bags that do not have the sticker.
Other features
Due to the relatively simple nature of a tag system, there are relatively few administrative considerations in creating a PAYT system. Thus, we would not foresee the need to create a billing system to support the sale of tags. Likewise, enforcement of a tag system would be predicated upon the ability to not collect untagged waste, a decision made by the collection crew rather than dedicated enforcement staff. If that sanction proved unenforceable, additional resources would be required to enforce compliance with PAYT regulations.
If the Council decides that a PAYT system should include retail sales of tags, we believe we would be able to absorb the sale and distribution of tags to retail outlets with existing staff.
Ordinances and Procedures
We would anticipate proposing revisions to Town ordinances and procedures related to a PAYT system. For example, the authority to levy a fee would require an appropriate ordinance.
We also would propose discontinuing the permits that allow residents to take household waste to the Orange Regional Landfill at no cost to them. Otherwise, once a resident left our office with a permit, they could take any number of unpaid-for bags to the landfill. The landfill does not control the number of bags of waste brought for disposal by private residents. Their charges are by the carload, trailer load, truckload, etc.
Implementation
We suggest that the implementation of a PAYT system could be scheduled to coincide with the complete conversion of the Town to weekly curbside service, a year and a half from now. During the interim, the staff could develop and conduct a public education program that would emphasize citizen awareness and participation. Based on national experience of jurisdictions with successful PAYT systems, a one-year period for public education is typical. We believe that implementation to coincide with final conversion to weekly curbside service is prudent because 1) we would have ample time for the public education component and 2) the materials would be at the curb, allowing for the most efficient use of a PAYT system and 3) residents would have had the opportunity to absorb the changes to the collection method before trying to acclimate to a fee-based system.
We believe that the Council may wish to consider some additional issues in deciding upon a PAYT system. These include fees, relief from fees for low-income families, and the effect of PAYT on waste volumes.
Fees/Cost Recovery
Some or all of the costs associated with refuse collection and disposal could be recouped through a fee for service. A variable fee, in which a resident pays a different rate depending upon usage, is at the heart of a PAYT-type of system. Under this kind of system, a resident would pay for some portion of his or her cost of collection and/or disposal. Disposal costs (tipping fees at the Orange Regional Landfill) are usually considered the variable portion of total costs for refuse collection, because those are the costs most affected by the quantity of waste produced, and which can change according to the practices of the producer of the waste.
Most of the costs of collection are fixed; labor, equipment and operating expenses are not greatly affected by marginal differences in the amount of waste placed for collection. The largest portion of collection cost is incurred in getting the collector to the residence. The amount the collector collects once there does not significantly affect collection cost.
Basis for Fees
A fee based on disposal cost recovery alone might be insufficient to encourage waste diversion. The Town’s disposal costs for residential waste last fiscal year were about $274,500. If that amount were equally distributed among the 9,600 single-family residences from which we collect, the annual cost per household would be about $28.50. Total costs for residential collection (including disposal) last year were about $1.4 million. Distributing this amount over 9600 households would equal about $145 per household per year.
A fee that would recover both collection and disposal costs could be set at a high enough level as to serve as an incentive to waste diversion if a fee could be created that would give the producer some control over the unit of cost for which the fee was being charged and if such a fee could meet the legal requirements for creating a fee, as we understand them.
Options for Fees
Converting the number of households to a per-unit charge over which the waste producer has some control is difficult. If one assumes a charge per unit such as per bag of waste produced, then one must estimate the total number of bags produced per residence or assume a different basis of charging for waste produced. One way to do that would be to estimate poundage per bag, in which case the key factor is the approximately 6,800 tons produced in the residential portion of Chapel Hill’s waste stream. If the goal were then to include costs of collection in the per unit fee, one would have to assign collection costs to each bag as an increment of total collection costs. Using this method, one calculation of full cost recovery would then be about $2 per bag.
Another option would be to attempt to recover disposal costs and some portion of collection costs. One could assign any portion of collection costs to the fee, which would result in a fee ranging from about $.40 for no collection costs up to about $2 per bag, which would cover all collection costs (plus the costs of the stickers themselves).
If the decision were made to charge for disposal costs only, given the legal restriction that the fee, or cost, for stickers must be determined based on the Town’s cost for the specific service, we estimate that the cost per sticker could be about $.50 to $.60 (including the cost of the stickers themselves). While these are the estimated amounts based on present tipping fees, the amount that would be necessary at the time of program implementation would have to be set given disposal costs in effect at that time.
If another basis of cost were chosen, the price per bag would vary accordingly. For example, if the Council decided to include a portion of collection costs, any price could be selected up to that which would allow for the full recovery of all costs. We believe a cost of $1 per bag could be an effective pricing level if the partial cost recovery goal were selected.
The Town would have to establish convenient places where residents may purchase the stickers. Suggested possible locations include Town Hall, the Public Works Department and private businesses, such as grocery stores. We would need to arrange such a purchasing system with local businesses, including setting an amount to be retained by the business as payment for the cost of the service.
Effects of Using Fees on Revenues and Taxes
If we attempted to recover all or a significant portion of collection costs through the fee, we would need to carefully analyze the results of the fee during budget cycles to assure that sufficient revenues are generated to cover the operational costs, especially those related to collection. If experience demonstrates that fees do not cover our costs, then we would have to raise the fees or find other funds to make up the difference.
A related issue might be whether or not the Council might wish to consider an offset to the ad valorem tax rate for Town residents if such a fee for service were set. As indicated above, if fee revenues do not cover operating costs, then general fund tax revenues would be the likely source to cover any deficit. Accordingly, we would need to consider the actual resource requirements annually, probably through the budget process.
Fee Relief to Low-Income Families
The Council may wish to offer relief to low income families accustomed to paying for refuse service through property taxes who would have to find other funds for the same service. Some communities have created programs to determine those eligible for relief from PAYT fees. If the Council wishes to pursue this type of program, we could provide additional information about possible options.
A related issue is that of rental properties and the relative burden on renters in a PAYT system. In a system in which the property owner pays for solid waste services through the property tax, the owner bears the direct burden of paying for said services. In a fee-based system, the renter as user bears the burden. This may exacerbate the problem of the relative burden of a fee-based system on lower income residents.
Waste reduction
The County Solid Waste staff has reported to us that Skumatz Economic Research Associates in Seattle, Washington (recognized in the PAYT literature as a leading research firm in this field) has found in their research of other programs around the country, that, in a community with a “mature” recycling program such as exists here in Chapel Hill, additional reductions through PAYT of 8% to 13% of the affected solid waste stream are typical. Using data for fiscal 1999-2000, the quantity of refuse collected from the residential sector of the Town was about 6,870 tons. Accordingly, the range of additional quantities of residential waste that could be diverted is 550 to 890 tons.
An analysis of the residential waste stream for Orange County residences completed last year (Attachment 1) indicated that an additional 16% of the residential waste stream could be recycled at the curb and an additional 16% could be recycled at drop-off sites, for a combined potential of 32% of the residential waste stream that could be diverted. These data were for Orange County as a whole, not just the Town of Chapel Hill. We believe that the Town’s potential for additional quantities of residential refuse to be diverted may be less than this total, because it would be reasonable to assume that the Town’s residents are now recycling at a higher rate than more rural areas that lack access to the same number and types of recycling programs as incorporated.
Impact on Recycling
An important issue for consideration is how diverted materials would be handled. Clearly, in order to be successful, residents would need to be able to readily recycle materials they divert from the residential waste stream. Ideally, the recycling program could accommodate as much additional material as residents could place for collection. Given our previous experience with what works and what does not work in recycling, this “ideal” program would further allow for collection of materials in a way that is easy and convenient for residents. We believe that was anticipated in the Solid Waste Management Plan.
The increased residential recycling program described in the Plan included adding materials to curbside and providing a large enough container to allow for easy, straightforward collection of commingled materials. This easy, convenient plan would require a MRF to be successfully implemented.
We have met with Orange County staff who have preliminarily suggested that an increase in tonnage to be recycled as estimated above could exceed their contractor’s capacity, given the current configuration of materials and methods. They have not been able to fully assess the possible methods by which additional materials might be accommodated without commingling, nor have they been able to provide an estimate of cost to provide the additional recycling services. They have stated that they believe the impact upon their programs would be both on the curbside program and the drop-off program.
We believe this is a critical issue for the possible success of a PAYT system. Given the current arrangement of the County’s administration of the recycling programs, it seems that an important step would be to formally ask the County if they would be able to provide for the needed recycling of additional materials generated through a PAYT system. Additionally, we believe it would be important to know how that service might be provided, including determining possible costs, if any, to the Town for the additional service.
CONCLUSION
We believe that information related to Orange County’s capacity to support the likely increases in quantities of recyclables from the Town is essential before we proceed. For example, we believe that an additional 500 to 700 tons of recyclables could be generated annually if PAYT realized typical success rates based on national data.
County staff informed us that they believe there would be additional costs related to the added recyclables from the Town. Accordingly, we need to know from Orange County 1) whether or not they could accommodate added quantities and types of recyclables from the Town and 2) how they would proceed with such accommodation. The attached agreement adopted when the Solid Waste Services Department became part of Orange County indicates that the County could assess the Town for any added costs related to programs within the Town. At this point, we do not know what the additional costs might be or whether or how they would be assessed.
National experience suggests that a PAYT system could increase Chapel Hill’s reduction of waste sent to the landfill by 8 – 13% of the residential solid waste stream. Such a program would produce some perceived inconveniences and expense for residents and would cost the Town administrative effort. To make this inconvenience and effort worthwhile, we would want to maximize volumes and types of recyclables captured by the recycling programs. Before we proceed further towards implementing a PAYT program, we believe we should confirm that the Orange County Recycling Program would be able to accommodate these increases.
RECOMMENDATION
We recommend that the Council adopt the attached resolution requesting the Orange County Board of County Commissioners to advise the Town 1) whether or not the County could accommodate significant increases in quantities and types of recyclables if the Town were to adopt a PAYT system and 2) if so, how the County would propose such an accommodation. Pending final direction from the Council, we then could provide additional information concerning a possible PAYT system.
ATTACHMENTS
1.
Solid
waste composition study (p. 10).
2.
Agreement
between Town and Orange County transferring Solid Waste Services Department
(begin new page 1).
A RESOLUTION REQUESTING THE BOARD OF COUNTY COMMISSIONERS OF ORANGE
COUNTY TO ADVISE THE TOWN OF CHAPEL HILL ABOUT MATTERS RELATED TO RECYCLING
(2000-11-27/R-16)
WHEREAS, the Council is interested in implementing a volume-based fee system, referred to as “Pay As You Throw” (PAYT), for residential refuse service; and
WHEREAS, increases in the
quantities of residential refuse that are recycled are likely to result from
such a program; and
WHEREAS, recycling services
for jurisdictions within Orange County are provided by the Orange County Solid
Waste Services Department;
NOW, THEREFORE, BE IT
RESOLVED by the Council of the Town of Chapel Hill that the Council asks the
Board of County Commissioners of Orange County to advise the Town 1) whether or
not the County could accommodate significant increases in quantities and types
of recyclables if the Town were to adopt a PAYT system and 2) if so, how the
County would propose such accommodation.
This the 11th day of
December, 2000.