HomeMy WebLinkAbout02/19/1991, 2 - ESTABLISHMENT OF INDUSTRIAL USERS PERMIT FEES FOR THOSE INDUSTRIAL USERS DISCHARGING TO THE CITY'S WASTEWATER SYSTEM. �IIIN�lyllll�l I In��II ill ATE:
D
city of San lues OBIspo EE MEETINGDATE: y
ITEM NUMBER:
COUNCIL AGENDA REPORT
FROM: William T. Hetland VT+\_ Prepared By: John E. Moss
Utilities Director Wastewater Division Manager
SUBJECT: Establishment of Industrial Users Permit Fees for Tho e
Industrial Users Discharging to the City's Wastewater
System.
CAO RECOMMENDATION:
By motion, adopt a resolution setting Industrial Users
Permit Fees for discharge to the City's Wastewater System
which includes the following:
1. Significant and Categorical Users
Annual Permit Fees . . . . . . . . . . . . . . . . . . . .$1, 140.00
2 . Class 1 Users Annual Permit Fees . . . . . .$ 570.00
3. Class 2 Users Annual Permit Fees . . . . . .$ 285. 00
4. Monthly Compliance Monitoring, sampling and
Follow-up Inspections for Noncompliance/Violations
to be billed at the hourly rates established in
the Public Works Department "Labor and Equipment
Rates" document.
5. Annual permit fees to become effective and due
immediately and on January 1st of each year
thereafter.
REPORT IN BRIEF
In 1982 the City established a federally mandated pretreatment
program for monitoring and control of industrial users
discharging waste to the City's wastewater collection and
treatment systems. In order to fund the program, and any future
increases in program cost, staff has developed a system of
industrial user permit fees based on the minimum number of
monitoring events (inspections and sampling) required to insure
industry compliance with Local, State and Federal regulations.
The proposed fees are detailed above in the recommendation.
The pretreatment program is currently being funded through the
sewer fund. Estimated annual cost of the program, including
direct and indirect costs, is $146,000. It is consistent with
Council policy that all costs associated with this program be
funded through a system of user fees. Council has previously
approved an upgrade of the pretreatment program contingent upon
establishment of industrial user fees. The previously approved
program upgrade is essential in meeting State and Federal
requirements for the program as well as insuring maximum
2 ��
���n���i� 01111;�►�' illllll city or San Lacs OBISp0
OftZe COUNCIL AGENDA REPORT
Industrial User Permit Fees
Meeting of February 19, 1991
Page 2
potential for reclamation of wastewater effluent and sludge (see
page A-25 of Appendix A, 1989-91 Financial Plan Supplement) . The
costs associated with the program upgrade have been included in
the proposed fee structure. The proposed fee program would
result in an increase in revenue of approximately $146,000.
Staff solicited comments from all currently permitted industrial
users on the proposed fee program. The response received was
largely negative as would be expected, citing the rising cost of
doing business as a primary concern. In addition, the proposed
fee structure was compared with that of other cities and was
found to fall in the mid-range of industrial user permit fees.
The proposed fee program does not affect the retail/commercial
and non-industrial businesses within the City.
Alternatives to establishing the proposed fee program would be to
(1) continue to fund the program through the sewer fund. This
would continue to place the burden for funding the program on the
non-industrial users in the City and would not provide a funding
mechanism for the required program upgrade. (2) Fund only a
portion of the program through permit fees and the remainder
through the sewer fund. This would reduce the impact of the fee
program on industry but still place the burden of a portion of
the program cost on the non-industrial users.
DISCUSSION:
BACKGROUND
In 1982 the City established a Pretreatment Program for
monitoring and control of industrial users discharging waste to
the City's wastewater collection and treatment system. The
City's Pretreatment Program is a federally mandated program under
the provisions of the Clean Water Act and is currently being
regulated by the Environmental Protection Agency (EPA) and the
California Regional Water Quality Control Board (RWQCB) . The
City is required under Federal regulation [40 CFR 403.8 (f) (3) ]
to provide adequate resources (funding and personnel) to carry
out the requirements of the program as identified in 40 CFR 403.
The objectives of the Pretreatment Program, as defined under 40
CFR 403.2, are to monitor and control industrial discharges to
Publicly Owned Treatment Works (POTWs) to:
(a) Prevent the introduction of pollutants into POTWs which will
interfere with the operation of the POTW, including interference
with its use or disposal of municipal sludge;
(b) Prevent the introduction of pollutants into POTWs which will
d�►�i�►►��IIlIIIIII��' ll�lll city of San lulS OBISp0
IIINGe COUNCIL AGENDA REPORT
Industrial User Permit Fees
Meeting of February 19, 1991
Page 3
pass through the treatment works or otherwise be incompatible
with such works; and
(c) Improve opportunities to recycle and reclaim municipal and
industrial wastewaters and sludges.
Current Funding
Since 1982 the City has funded it's Pretreatment Program through
the Sewer Fund. The sewer fund is an enterprise fund consisting
of rates and fees sufficient to fully cover the direct and
indirect costs of the wastewater programs. Initially the
Pretreatment Program was included as part of the Wastewater
Treatment Program and was operated out of the Wastewater
Treatment Budget. In the 1989-91 Financial Plan and Approved
1989-90 Budget the Pretreatment Program was separated from
Wastewater Treatment and its own budget identified and
established (Pg. D-31, 1989-91 Financial Plan and Approved 1989-
90 Budget) . This was done to more accurately identify the
required resources of the Pretreatment Program and provide a
basis for establishing Industrial Users Fees. The need to
establish Industrial User Fees was identified in the 1989-91
Financial Plan [Supporting Documentation pg. C-19 (a) ] .
Proposed Funding
In order to more equitably distribute the cost of the
Pretreatment Program operation to the industrial users, staff has
developed a system of Industrial Users Permit Fees which will
fully cover the cost of the City's Pretreatment Program.
The City currently has 328 total permitted industries made up of
significant and federal categorical industries such as metal
plating shops and printed circuit board manufacturers, class 1
industries such as service stations, dry cleaners and photo
finishing shops, and class 2 industries which are primarily
restaurants. The classification applied to individual industries
is primarily based on their potential to cause interference or
pass-through. Those types of industries under the federal
categorical industry classification have been identified by the
EPA and are governed not only by local discharge limits, but by
federal categorical pretreatment standards as well.
Staff has developed the system of Industrial User Permit Fees
based on the total cost of the Pretreatment Program operation and
the minimum amount of monitoring and inspection required to
insure industry compliance with Federal, State and Local
discharge limits. The amount of required monitoring is governed
by the classification of the industry and its potential to
interfere with the operation of the POTW.
7
�►►►nn���►I�111181I;i�iii�IlPi City of San LUIS OBISPO
COUNCIL AGENDA REPORT
Industrial User Permit Fees
Meeting of February 19, 1991
Page 4
Because of their potential to interfere with the POTW,
significant and federal categorical industries require a minimum
monitoring frequency of 4 times per year, class 1 industries - 2
times per year, and class 2 industries - 1 time per year. By
basing the permit fees on the minimum number of monitoring events
required per year, the rates will most accurately reflect the
demands placed on the Pretreatment Program by each industrial
user classification. A breakdown of the derivation of the Permit
Fees is provided in Table 1.
TABLE 1
Total Pretreatment Program Cost . . . . . . . . . . . . $146r000
(Includes direct and indirect costs)
Total Inspections Per Year to Satisfy
Program Requirements . . . . . . . . . . . . . . . . . . 510
Program Cost Per Inspection . . . . . . . . . . . . . . . . $ 285.00
ANNUAL PERMIT FEE PER INDUSTRY CLASSIFICATION
Significant and Federal Categorical
Industries @ 4 Inspections Per Year . . . . . . $1,140.00
Class 1 Industries @ 2 Inspections Per Year . . . $ 570.00
Class 2 Industries @ 1 Inspection Per Year . . . . $ 285.00
In addition, staff is recommending establishing a system of fees
for monthly compliance monitoring and sampling and follow-up
monitoring and inspection resulting from industry non-compliance.
These fees will be based on the hourly rate established in the
Public Works Department Labor and Equipment Rates document dated
January 1990. The current labor rate for the Industrial Waste
Inspector is $35.65 per hour. These fees will be billed through
use of the Public Works Billing Statement. Assessment of
additional inspection fees resulting from non-compliance will
provide additional incentive for compliance as well as insure
equitable distribution of program costs to those industrial users
placing the most demand on the program resources.
Comparison With Other Cities
Staff has investigated the industrial user fee programs for other
cities and has found them to be greatly variable. Fees were
found to range from $25.00 per permit for all industries
regardless of classification to $3,000 for significant and
categorical industries. There was also some indication that
industrial users fees were often an indication of local policy
towards industrial growth. That is, low fees to encourage
industrial growth and high fees to discourage industrial growth.
2 —
��u�ib►i��ill!ll;li l►i ii;llll MY Of san LUIS OBI SPO
NIZA COUNCIL AGENDA REPORT
Industrial User Permit Fees
Meeting of February 19, 1991
Page 5
The fees being recommended at this time fall in the mid range of
those surveyed. The Goleta Sanitary District has based its
industrial user permit fee program on the same criteria as that
recommended here and has established fees consistent with or
slightly higher than those recommended here.
Citizen Participation
In order to evaluate industry response to the proposed fees,
letters were mailed to 300+ currently permitted industrial users
in the City explaining the fee program and seeking their
response. As anticipated, the response was negative towards
assessment of any additional fees. A majority of the respondents
felt the fees were unfair since the required monitoring and user
classifications were based on potential to cause harm to the POTW
and not actual pollutants discharged. In addition there was
significant concern over the escalating cost of doing business in
San Luis Obispo. A copy of the letter mailed and the letters of
response received are available in the Council Office for review.
In addition, staff met with the Chamber of Commerce to discuss
the proposed fee program. The Chamber understood the need for
the pretreatment program and felt the basis of the proposed fees
was reasonable, however, were reluctant to either support or
oppose the fee program.
CONCURRENCES
The City Finance department has reviewed the recommended fee
program and concurs with the recommendations herein. In
addition, staff has discussed the basis of the proposed fee
program with the State Water Resources Control Board and they
concur with the fees being based on inspection frequency.
FISCAL IMPACT
The recommended fee program will result in an increase in revenue
of approximately $146, 000 to the sewer fund. This increase in
revenue reflects the total cost of operation of the City's
Pretreatment Program. It is recommended that the fees be
adjusted annually to reflect any increase or decrease in cost of
the operating program.
ALTERNATIVES
1. Take no action and continue to fund the Pretreatment Program
through the current system of sewer rates. This option does
not place the cost of the program on the industrial users
for whom the program is required and places an additional
burden on the non-industrial users. The demands on the
pretreatment program will continue to grow and as such,
2 -5
�u�i�H►�ifl!IP,IIi�°j►��IIIII city of San LUIS OBISPO
COUNCIL AGENDA REPORT
Industrial User Permit Fees
Meeting of February 19, 1991
Page 6
so will the cost for operation of the program. On June 12,
1990 Council approved an upgrade of the Pretreatment Program
contingent upon establishment of industrial user permit
fees. Previously established goals for the program will not
be achieved if the permit fees are not established. This
will result in the City not achieving compliance with the
requirements for the pretreatment program as set by the
State and Federal regulatory agencies and may result in not
achieving compliance with the wastewater discharge
requirements as a result of inadequate pretreatment program
enforcement. In order to avoid this noncompliance, staff
recommends Council approve completion of the previously
approved program upgrades without an established fee program
if this alternative is selected. This alternative is not
recommended.
2. Develop a program of Industrial Users Permit Fees that is
based on a program cost recovery of less than 100 percent.
Staff has developed an inspection based fee program
sufficient to cover the cost of the pretreatment program
upgrade alone. The previously approved program upgrade
consists of the addition of one Industrial Waste Technician
and upgrading the existing Industrial Waste Inspector
position to Industrial Waste Coordinator. This would result
in the following fee schedule based on an increased program
cost of $54,000 including direct and indirect costs:
1. Significant and Categorical Users
Annual Permit Fees . . . . . . . . . . . . . . . . . . . . . . . $420.00
2. Class 1 Users Annual Permit Fees . . . . . . . . . $210.00
3. Class 2 Users Annual Permit Fees . . . . . . . . . $105.00
This alternative may be substantially more pallitable to the
industrial users, however opposition to any fee program
would still be anticipated. This alternative would still
place the burden for the bulk of the program, approximately
$92, 000, on the non-industrial users. This alternative is
not recommended, however Council may find this alternative
desireable as it would lessen the impact of the fee program
on the industrial users.
2 -�
Industrial User Permit Fees
Meeting of February 19, 1991
Page 7
RECOMMENDATION
By motion, adopt a resolution setting Industrial Users
Permit Fees for discharge to the City's Wastewater System
which includes the following:
1. Significant and Categorical Users
Annual Permit Fees . . . . . . . . . . . . . . . . . . .$1, 140.00
2. Class 1 Users Annual Permit Fees . . . . .$ 570.00
3 . Class 2 Users Annual Permit Fees . . . . .$ 285.00
4. Monthly Compliance Monitoring, Sampling and
Follow-up Inspections for Noncompliance/Violations
to be billed at the hourly rates established in
the Public Woks Department "Labor and Equipment
Rates" document.
5. Annual permit fees to become effective and due
immediately and on January 1st of each year
thereafter.
Attachment:
Resolution
Fee Survey
RESOLUTION NO. (1991 Series)
ESTABLISHMENT OF PERMIT FEES FOR INDUSTRIAL USERS
OF THE CITY. WASTEWATER COLLECTION AND TREATMENT SYSTEMS
WHEREAS, the Environmental Protection Agency (EPA) and the State
of California, Regional Water Quality Control Board (RWQCB)
require the City to establish and operate an Industrial
Pretreatment Program to control and monitor industrial discharge
to the City's wastewater treatment systems, and
WHEREAS, the City has established a pretreatment program that
complies with the State and Federal requirements as defined in
Part 403 of the Code of Federal Regulations(CFR) , and
WHEREAS, CFR 403.8 (f) (3) requires the City to have sufficient
resources (funding and personnel) to carry out the requirements
of the program, and
WHEREAS, 13 . 08.250 of the City Municipal Code provides the legal
authority to establish a system of charges and fees, and
WHEREAS, the cost of the pretreatment program shall be equitably
distributed to the industrial users through a system of
industrial user permit fees which reflect the actual demands
placed on the program by each classification of industrial user.
NOW, THEREFORE, BE IT RESOLVED, the City Council of the City of
San Luis Obispo does hereby adopt the following schedule of
Industrial User Permit Fees:
1. Significant and Categorical Users
Annual Permit Fees . . . . . . . . . . . . . . . . . . . . $1, 140. 00
2 . Class 1 Users Annual Permit Fees . . . . . . $ 570. 00
3. Class 2 Users Annual Permit Fees . . . . . .$ 285. 00
4 . Monthly Compliance Monitoring, sampling and
Follow-up Inspections for Noncompliance/Violations
to be billed at the hourly rates established in
the Public Works Department "Labor and Equipment
Rates" document.
5. Annual permit fees to become effective and due
immediately and on January 1st of each year
thereafter.
Resolution No. (1991 Series)
Upon motion of seconded by
and on the following roll call vote: ,
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this day of ,
1991.
Mayor Ron Dunin
ATTEST:
Pam Voges, City Clerk
APPROVED:
ity Administrativ Offic
C' y for ey
City Finance Director
City Utilities Director
LIST OF I Nil!STR I AL USER FEE-4-:; FOR OTHER PRETREAT MENT PROGRAMS
1. :=ld.rit_a N( ria. - No fees atthis time.
�. lcRlarll!r, _. ,5 ,2,,41 -r.�_._. c2, Frr-mit. excludes r"estt-I_la.rlts.
Isle: ti1,t... G_iet.a - Fee is determined by class of farllity.
Class I - Rest.ruant..s: $2`111.4(11)
('lass II - rias Stat.iorls/Net.. Processes:
$`Iblh.41111
';lass III - Photo Finishinq/Higher Impact.:
$14114(.02
(:lasSIV - Cat.agor-ical IndUSt.rieS/':-igrlificant.
Users: 31500.00
Fees were calculat•ed by dividing marl rlUurs toy time needed
to in=c,ect. and Sample these facilities.
4. *31)10.4141 per permit.. Fee has not. ,_harlged sin=e 1977.
`. San_ Leandro - Fee for permit. dependant. on Total Suspended 'Solids
and Eiological Oxygen Demand discharged by each
facility.
6. Hayward - 214141.111111 per permit for first year with a $541.4141 annual
renewel fee.
7. Petaluma - Fee determined by Biological O:> ygen Demand, Total
SLk5pendeo 'Solids, samplinq and administration. Fines
are assesed by the concentratic,n of the discharge
V ir.1 at irin.
E ample:
Violation over :,4141 ppm of discharge limit, add 10% to
monthly billing.
V1c,Iatlon over 64141 ppm of discharge 11mit.. add 210% to
monthly billing.
Violation over 90111 ppm of discharge lirrlit•: add 30% to
monthly billing.
N. Citi of Fillmore - $700.0111 �- " t., t.- only t,.
per per"mi . r'er-fu n ly issued
catagor-ical industries and siq_nlficant
industrial users.
q. Nort.11 '=:an Mateo County Sanitation District - No fees or permits.
Z- �o
Val ler — 14c' fees
one for Significant. Industrial Users and
r:atagorical Industries and one for all others.
Old discharge permit fees:
Auto Repair and Restraunt.s; 00
$1 1 c,.Qi0
Significant Industrial Users and ratagorical
Industries: $500.00
New discharge permit fee;
Auto repair and Rest.raunts: $•700.00
_significant Industrial Users and i at.agorical
Industries: 83000.00
W. Thousand Oaks - annual di
- $<_�". discharge harge permit fee for
:significant Industrial users and Cat.agorical
Industries.
12. Oxnara - $1000.00 annual discharge permit. fee for Significant
Industrial Users and 4at.agorical Industries.
'EYING AGENDA
- uATE 2_i4'911TEM i
►-n L�In amus aA-\6 m -�LE ta�i*l C-
- --- ���5� __� � -f-o� haw 1. Cl g.�a.►ti�n.,�e..o��� Gt.m�o�,..��.
-
---
REC.EI V EL)
FEB 1 y MI �o �: .
c'm',rQc�o�u��pi".—_ __ 0
CmmncR
CaDE
- ...---- - -------- Lw O—.— ❑- RN.IRR-- - — --- ---....... --- ----- --- -...-
W ❑ FQtE C1 IIEF
O
Iff'CLEWORIC:0-
❑ MCMT M,'A ❑ Dom.
-- - - --- -- - ---- -- SRF/►DflLE ff�13jCT17 - -- -- ------- - -- -- - - ------
-T Lo Li