HomeMy WebLinkAbout0160.095I
TO:
FROM:
DATE:
stJBIECT:
BEQUEST
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City of Palo Alto
City Manager's Report
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HONORABLE CITY COUNCIL
CITY MANAGER
March 6, 1995
DEPARTMJ'.J<.'T:PlF8L1C WORKS
CMlt,l60:95
Fmanci9llDcentives for PoDutaDt Ileduc:tioDs al the Regional Water
Quality Coulrol Plant
ThiJ is an infoonational report 10 update Council 00 staff'. evaluation 0( possible positive
tmaucial incentive programs, as a metbOO 0( reducing pollutant loadings from busil1eS5eS and
institutions 10 !he Regiooal Waler Quality Cootroll'\ant (RWQCI'}. No action by Cooneil
is being requested at this fimc.
llECOMMENDATIONS .
No recommendations are being !IllIde 10 Coon...iI at this time.
POYCY IMPUCATIONS
No new policies are being recommended at this time.
EXECUTIVE SUMMARY
The Sewer Use Ordinance was modified by Council OIl R"Cember 5, 1994; and new
requiremeuts were placed 011 businesses and institutions discharging poIhKants 10 the sewer
(' di'ICbarg= "), in order \0 further reduce the loading 10 San Francisco Bay. Slaff believes
tbaI these new requirements take tradifional "cOlllIIlBDd and control' requiremerus as far as
is practical and prudenL Further reductions needed \0 meet !he City's requirements must
come from oIher. largely OOD-CCgulatory, programs. Positive fiwmcial incentives are drus
being coosidered as I way 0( reducing pollutants without adversely impacting discbarg=_
In Nl'Vember 1994 (CMR:493-94), Counc~ was advised tbaI recommeodations on positive
!irumcial inceotiv ... would be for .. arded in early 1995. A report by Brian Stegliu,
cooIalnlng s detailed piau fur establishing a financial incentive program, was distributed 10
Jocal govemmenrs within the service area at tbaI time. It ",as envisioned that !he report
would generate CODllllCDts wbick could serve as I basis fer recOGlIllelldatioos \0 Council.
However, the plan contained in that report was sufIlCieDlly det3i1ed ~ complex tha t the
Partner Cities found it very difficult \0 commenL The plan involved !he submittal 0( bids
by companies interested in executing pollution reductioo projects, RWQ\.." funds wruld be
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u-<cd 10 cost-sbare pcojcct! meetins specified criteP-,-. A. fee per pooOO of a discharged
pollutant would be <:barged II> offset the cost of !he poogram, but would be waived for a
period 0( time foe paniclpating facilities as an added incencive \0 pmkipa1C. C~eXities
cllbis plan wauld me3lllllat substantiJll staff time woold be needed \0 administer it; but. !he
program ",auld apply 10 only approximaiely IS facilities <meW platers and pOnted circuit
board shops).
For Ihese reasons, slaff is now <:oosidering simpler op6oos 10 create incentives for Ihese
businesses 10 implctneIJ4 poIlu6oo preven!ioo po<>jecls. The simplest approoch ,,'ouId be 10
extend tile Pilot Demoostration Project poogram begun by the RWQCP last )'ear. This
program is cost Wring the deroonstration of pc!Jution prI'Ven/ioo projecls at Davila Circuits
and Tecbnitron, two Mounlain VieW prinled circuit board shops. A.notl>er app«r.cb would
be 10 cost shan: 00 a larger grrup 0( poojeclS (larger tban demonstration projects), but stop
short 0( the bid system proposed in !he Steglitz reporL A loan program is yet another
~ "'.ll businesses have advised staff lllat fma.'1Cing i. no! currently a !imiration. SbooJld
a loan program becOOle needed, i! is '''y likely lllat the RWQCP could participate in the
one being t:.1ablisbed by San Jose for !heir multk:iIy service area.
The alternatives described above >Te being given further consideration by the Partner Cities.
Staff will relUm 10 Council in the coming months following the evaluation.
FISCAL IMPACT
The cost 10 the Partner Cities is being alla]yz'oo.
EN\'Il!.QNME,NTAI. NiSfSSMF..Vf
h is _ envisioned lllat implementation 0( • positive financial lncendves prognm would
conslinite • project under the california EnvirOll1llelltal Quality Act. TberefO£e, an
en .. i<O!IIIICOtlI assessment is IIOl required.
AITACHMENJ'S
Executive Sunnnary of the Steglitz report 00 positive financial incentives.
DEPARTMENT HEAD RE\'1EW:
CITY MANAGER APPROY AL:
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City of Palo Alto
City Manager's Report
TO: HONORABLE CITY COlJNCn.
FROM: CITY MANAGER DEPAl.TMfNT: Pu~ Works ,
DATE.: November 10. 1~4 C.'dR:493:94
SUBJECT: Financial Iocentives for Pollutant RMucti0n5 at tM R.egional 'IV ater
Quality Control Plant
RfQIlESl:
This is an infonnational report and no request is !>eing made at this rime. A draft MmcW
incentives program to reduce po!luunts in industrial discb.rges to the sewer· is being
roviewed by the ~aI Water Quality Control Plant (RWQCP) p=er agencies.
Following !heir review and analysis by staff. recommend>tions .. -111 he fon· .. -do:! to Council
. in early 1995.
IlFOOMMF.NpATIONS
No recommendations ate being made to. Council at this time. It is envisioned that
recommendations will be made to Council in early 1m.
POl ICY IMPIJCUIQN5
Several policy issues will be embodied in r=nclations which will be ~arded to
Cocr.cil in early 199:'. The thr« key ones .. e:
1. Whether any financial incentives program sh<>uId be implemented to assist metal
finishing industries to redUQ poilu""'t discharges,
2. Whether financial incentives should be rued to help these industries meet the
ordinanco requiremems 01 to help them go beyood the minimum ordinance
requirements, anJ
J. 'Whrther a particulor fInanci:al incentive package ,bould be funded by ,he City in
.... hich the induStry r""ides J:l< by L'>e R WQCP budget.
EXECUTIVE SUMMARY
The RWQCP "' .. ~ • Ceas< and Desist Order L'l July 1993, ~'h;ch requires completion
of • number d '.iSh One ci those tasks ;. the study and ccnsi&ration ci positive financial
'''re 1 of 2
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iDcentives to ~ ind=ries to reduce copper and cickel discharges to the sewer. The
ee.... =! Desist Ord<t requites only that positive financial incentives be consi&red. DQt
that they be imptelUOted. Thus. the City and the R WQCP partn.-r agencies Iwr. the
flexibility '0 a&ofK an incentive< program. as they ..., fi •.
The Cus<: and Desist Order coctai ru m<>re ddinitiv< requirements relative to dischirge
stand",ds Cab:> called. 'local limits") 10< industry'. New requirements must be adopted
~t ",;OJ. the aWQq".limi .. for discIw-g. to the Bay. The new industrial limits are
cootained in ordin"""" revisions, for which the first reading .... held ., the Council =etiog
00 AUJ;USt'" 1994. ~~ 405:9-4). Due to the linkage between 1M new industrial disclmge
limits and the possible fuuociol incentives program. this informational item is being
providd. The disch"'1l< Iimi .. w:iII be forwarded for adopcion and the possible financial
incenuv<s program for considen15on of the three poL"-, issues descn1>ed .bove.
Brian Steg!itz. • Stanf<>rd grad""" 5tu<len, under contr>Cl to the City, produced. report to
fulfill the r<quit.men: th.t the City investigate the possibility of • positive financial
incentives program. Mr. St"!;!itz intervk",ed finam:e and program suff of the partner citk<,
industrial rep<esenutives and others in uploring program feasibility. Mr. 5<.eg1itz .hen
designed. program and described it in his report. The report has been focw.,.ded to the
p,.,.tner cities' staff foe review ... --<1 comrr,ent. Staff ",ill summariu the comments for
Council when presenting the polky option. in urly 199>.
ElSCA! IMPACT
The cost to the panner cY.l<S is being analyzed and wi1l be presented in 1995.
ENVIRONMfN[Al. ASSFSSMF,NT
It is not envisioned th;ct imptementiuion of II positive financial incentives program would
constitute • project UDder the Californi. EEl vironmeotal Qu.ility Act. Therefore, an
environment~ asse!.Sment is OQ{ requIred.
PREPARED BY, Philip Bobel, Manager of Enviroruneri.ul Coml'func. Division
DEPARl"MEh'T Hl'...AD REVIEW: &---A'~~
. GLENN s. iOBERTS
1);.r=0< of Public Worb
CITY MANAGER Al'PROV}..L, ---'~~)'vl!."",aJ.JINOM...1\\~,~.~=~rl..Ut~-~, __
BERN . .vtDM. S~
.Assistan, City Manager
CMK;49):94 .p;&&C '1 of 1
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EXECUTlVf SUMMARY
The Canfomi. Fleg:on., Wale! Qua~ty Control Soard (!'!WOCS) reduced tN
copper and nicl<sl discharge Hmits for pubrtclY-<lwned traatrnen( worl<a IPOTWs}
to the South San Francisco Bay betweon Ju."y and OecernlM>r. 1~. The loW«(
discharge &mI!I placed 111<1 SoutII Bay POTWs ~ .•.• Polo ~lto fie glonal Water
Ouallty Control PlantcPARWOCPI. San JoE.! Santa Clara Water ponution
Con!lOl Plant. and Sunnyvale Water PoD .. 'tion Control F\antJ in vioIiJIion of both
~r and niCk'll discharges standards to the SooJth Bay. In an attempt to
prevent litigation, tile PARWOCP reached an agteement with Clean Sout." BaV
Ie coarltion of envilonmentalll'oups that was pre"",lng tN plant 10 actively
reduce metal cjiscflargesl L'>at estabrlStled a pTan and scru.dule for conducting
actlvities to attempt to meet tru. new discharge rtmits. The plan caned for
reduction from an source groups that contribute copper and nicl:e1 to the plant
(i ...... restdence.s~ commercial facilities, industrtal facilities .. and the water
supply}. Ifa'.., caned for the ;"'vestigatio<. of. ~lI\ancial incentive progr~m for
industrial dischargers that woukl encourage thair reduction of th8 target
ponutants !<:opper and.nlcl<eO. The PARWOCP decided to work in conjunction
with Stanford University to study the fmancial incentive program alternatives.
This thesis is 111<1 resu't of that study.
Many alternatives were .,vestigated prior to tile d"ve!opmen( of 8 proposed
financial incentive program. loan and 9"atlt pr",",ams. tradeable permits.
subsidies, cost sharing. taxes. toxic .charges, rebates~ and rate restructlKing are
example& of the options C(>nsi<!erec!. After me.ling wit" representatives of
government, tile PARWOCf>. and inOOstry. the aL>thoc developed a prog:am that
addressed the intorests of 111<1 involved partia •. The general prOll<am includes
elemel\1:5 of cost sN!ing. toxic -charges, mass rebates, 80d a goverrvnen::·
sponsored loan prog<am. This prog<am attempts 10 achieve regulatory
compnance without sigoifoca"t neg~ve iffip"cts 00 industry. Tt><; main
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program goal is to ).188 positive r.>anclallnce "tives where possible to encourage
1ndustrIai participation.
TtwI program recommended for the PARWQC$>'s service area .now. industries
to choose whether they want to parti<:ipate in tile ponution prevention program.
AS quanfying r.cmti •• (i.e., industrial cr1sch&lger. of copper and nickel) wouf<I
complete, at ~nment·. axpense, a ponutio<1 prevention study that evaluates
the potentialfo< reduction of copper and nickel discharges 10 the s ... , .. r. The
PAAWOCP hal already funded six .tU<lies for metal rlrlishing fac~ftie. in its
service are., and intaMS to fund stU<lies at tile remainIng industrial discharge,.
~1 ~ and nk:ket -faciiities that dec1de not to partk::;pate would face a toxic
charge once the program be"i"" The toxic charge is a donar per po<;nd charII'!
applied lIfInUally to the total mass of copper eOO nickel a facifity cI1scharges to
the plant. Next. the PARWOCP WO<Jld evaluate the racommendati<>ns from the
ponution pr.""ntion study, with input from the affected l>usiness. eOO decide
which recorrvnendations can be implemented cost·effectively. Tile criteria lor
cost-effe<:tive polIutio<1 reduction measures is specified in the aoreement with
Clean Soutl> Bay &S • five vear simple payback. t1terviews with five of the
facifrties lor wIIlch pollution prevention studies were completed irKflC8ted thet
the fIv. year payback is c<>nSiderably longer than the payback industry use, to
evaluate potential if'lve$tmeots. Thus, the recommended program inckJdes a
cost sharing component.
Cost sharil'l\l in tl,. recommended prooram takes the form of 811 annual rebate.
Each facility would submit a sealed bid to the PARWQC.P that represents the
amount of cost sharil'l\l tlley would require to redoce the payback of the cost·
effective fllC()(1VTl<lOOa\k>OS to 8 level no less than 2.5 years. The 2.5 year
criterion represents the average payback period that industries interviewed use
to evaluate invest."'nE!llts. The use of a ~Tnimum p.ay'bacic Cfiterion preIJents
governmentover-subsidizatk-o of ponut~ preventiOn projects. The bid would
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be II do"'" per P<>'-">d annua! robllte 8wroecS to the total rna ss <>f copper I rod
nickel red<Jced by the facalty ov, •• basefine ~.e", the amount dischar gael 1"10<
to program Bt5ft-up). The amount <>f COOl sharing wO'Jld therefore be trecS
directly to the aO'lOUOtof ponutant reduction thet O(;G~"S at a facility.
Or.ce the ~s have bee" 8CC"ptecl •• facilities would Implement the
reeornmen<!ations. Facilities would be enco<Jf8UecS to ob!ain f'onanc;ng from
thelt own """,ces; however. if • facility "annet obtain f'lnancinQ due to credit
problems, then It w<>u1d be able to gain access" to a QOvemment-sponsored loan
program. The loan program would be • test resort lii'.anciOjJ alternativo only.
because government does n<>t have the capital to f;nance projects for ,,~
industrial di.~rg.fS of c09P"r and nicker. If at any poln! • !acmt)' decide. to
exit the program, then it W<>UId face the toxic charge. If a facility conti ... .,es
with the pr<>g<am and impletT'8nts I~.e ponlllion prev.r>tion recommendations,
then it wou!cI receive iU selecled rebate for wee vears. and then face the toxic
charge. The chatoe serves as"s 'long farm incen-tive 10 minimize fllture copper
and nickel discherge •.
The recommendecl program may reQUire anywhere from six mont."s to several
ye",. to pr<>eeed from the identifICation of pon~'tion pr,,\lemion alt .... natives 10
the in»>letr,,"'tation of the recommended measLll'6S. The .. may be an additional
time delay <>f about • year before the savings aSsociate<! with the lY.ojects are
reanze<!.
Determining the toxic c!1arge and acceptable rebate lev.ls wi11 be the most
char'lenging part of the program~ To facilitate the process a FinanciallncelltNe
P,oi/fam Simvlatlon MOOel was <le"eloped that the P AAWQCP can use to
evaluate tfJe ""ogram parameters. This model simulate. the effects of different -.
programs 0<1 inOlVicIual faciliti<:s. and predicts their respons.es. ThoJs. the model
" can s.erve as • decislon-mal<;ng tool for both ",the rel{U!atOf.and the rel{U!ated.
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