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HomeMy WebLinkAboutAgenda - 04-19-1994-IX-A 1 OR AN G E C O U N T Y BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 19, 1994 Action Agenda Item # =Y-g SUBJECT: Wastewater treatment oversight in Orange County DEPARTMENT: Board of PUBLIC HEARING: Yes No X Commissioners ATTACHMENT(S) : INFORMATION CONTACT: Alice Gordon-& Chart (Under separate cover) Verla Insko ext. 2130 TELEPHONE NUMBERS: Hillsborough - 732-8181 Durham - 688-7331 Mebane - 227-2031 Chapel Hill - 967-9251/968-4501 PURPOSE: To present recommendations from Commissioners Gordon and Insko concerning elements of the proposed Waste Treatment Operations Program and related issues. This report is a summary of their work and will be augmented by their oral report at the meeting. BACKGROUND: Orange County has, for several years, been working to develop and implement a waste treatment operation program. This effort has sought to: a) identify the types and causes of problems that affect various types of on-site systems; b) identify the potential effect of those problems on the environment and public health; c) identify the role and responsibility of various parties involved; d) evaluate the effectiveness of individuals and agencies having a role in the waste treatment operations and oversight as well as the effectiveness of the overall process; e) develop an effective regulatory program. To date, Orange County' s efforts to develop an oversight program have resulted in owner education about responsibility for conventional septic systems. 2 At the BOCC' s 21 September 1993 meeting, Commissioners Gordon and Insko provided a review of and recommended modifications to the Health Department' s proposals for a comprehensive waste treatment operation oversight program. Commissioners Gordon and Insko recommended that the BOCC adopt the Health Department' s proposed waste treatment oversight program if the following conditions were met: 1) development of an acceptable fee structure which would pay all program costs for all systems included in the program; 2) management of Type IV systems by private sector companies rather than the Health Department; 3) development of an education program for owners and operators of every type of system; and 4) response to the concerns and issues outlined in the 10 April 1994 and the 14 September 1993 memos from Commissioners Gordon and Insko. The issues and concerns as listed in the 14 September memo are outlined below, along with the staff responses. The issues and concerns outlined by Commissioners Gordon and Insko are denoted by bold type. ISSUE 1 - FEES - Develop a fee structure that includes charges for all monitoring (e.g. DER Type III systems) . Include a provision for regular evaluation of the schedule to assure costs are covered, including the cost of all new personnel hired to implement this program. Staff Response The proposed fee is $100 per inspection regardless of type. The fee is based on methodology established by David M. Griffith and Associates. A log of inspection times will be kept during the first twelve months of the inspections and the costs will be reviewed and adjusted based on that information. r - i 3 ISSUE 2 - MANAGEMENT ENTITY FOR TYPE IV SYSTEMS - The OCHD proposed that it serve as the management entity for Type IV systems. We were not persuaded that the private sector would not perform this function adequately. Private sector companies should be the management entity for DEH Type IV systems. The OCHD should inspect these systems every 18 months (or some other Justifiable period) and charge a fee to recover the cost of the inspection. Staff Response OCHD will inspect these systems at the DEH required frequency of once every three years and will not serve as the management entity for these systems. Any greater frequency than the DEH min'mum would be an additional cost to the home owner. NOTE: Commissioners Gordon and Insko were concerned by the failure of private management entities to submit the required operating reports to the Health Department. They also indicated they wished to revisit the question of who should provide service to Type IV systems. Staff Response One of the basic policy questions related to utilization of a public or private sector management entity is how much is the County willing to pay, or cause individual system owners to pay, to ensure that operational requirements of these systems are met. As a result of the review of this issue, County staff has developed three possible tiers of oversight assistance. Each tier is progressively more expensive but provides a correspondingly higher level of assurance of proper system functionality. Tier 1 service is represented by the County' s current practice whereby the private sector provides the least expensive and regulatory minimum level of system operational and maintenance service and the Health Department provides system inspection and operational oversight at the regulatory maximum frequency of three year intervals. As of this date, Health staff has received only a small percentage of the reports that these private sector organizations have been required to submit. This breakdown in the reporting process may be indicative of the newness of the operational process or it may be indicative of the failure of the private sector to provide adequate service. If private sector entities are failing to provide adequate service and if this failure transpires over a three years period before it is detected by the Health staff' s first system inspection, components (such as nitrification fields) of some systems may be severely damaged. 4 Tier 2 service would provide annual inspections of the individual systems and review of operator performance at a $100 annual cost to system owners or to the County. An annual inspection frequency could eliminate many, but not all, system failures. Tier 3 service would provide for virtual elimination of system failure. It would, however, probably require that Health staff serve as the maintenance entity for all individual systems. At this highest service tier, Health staff would provide semi-annual system inspections (at a minimum) and make all decisions as to the need for system repair and maintenance. However, staff would not actually perform complex maintenance or construction tasks or provide materials. Complex maintenance and construction activities would still be provided by private contractors under contract to the system owner. This level of service would eliminate the private sector as a management entity and cost system owners or the County a minimum of $200 per year per system for inspection/operation activities in addition to contracted repair service and materials costs. ISSUE 3 - EDUCATION - Establish an education program for all systems. Begin by summarizing the educational activities currently in place for all systems including the type of technical information given for system operation and the consequence to the owners if their systems fail. The OCHD is currently providing educational material to owners of Type II systems; i.e. , conventional single family systems > 481 gpd. Staff Response All new systems owners are given a packet of information detailing the operation and maintenance of their particular system and what to do if problems arise. All existing system owners were sent a informational flyer in 1992 which also detailed the operation and maintenance of septic systems. ISSUE 4 - FINANCIAL GUARANTEES TO INSURE REPAIRS - Develop and present to the Board of County Commissioners for their approval a plan that requires financial guarantees by owners to repair their failing systems. (omit DER Type I and II systems) Staff Response Although this plan would not necessarily come under the jurisdiction of the Orange County Health Department, local health regulations, procedures, etc. , already exist to insure repair of failing individual systems. Regulatory remedies include legal action, notices, fines, liens, etc. 1 5 Guidelines for developing a repair funding mechanism include basic assurances that: 1) the County General fund will not be the ultimate source of funding; 2) the funding process will be equitable to all citizens receiving benefits from the program; 3) the program can be administered without undue complication; and 4) the funding process utilizes every appropriate tool at the County' s disposal to leverage all of the required repair funds from owners. Orange County staff have reviewed several methods to provide financial surety. The methods reviewed include: a) performance bonding; b) up front payments by all system owners into "rainy day" or escrowed repair funds; c) acquisition of funds through a financial mechanism associated with the collection of property tax; d) leveraging repair funding from failing-system owners through a property lien process; and e) the lien process supplemented with the requirement that owners of treatment systems provide a long-term and renewable letter of credit or an escrow account in an amount sufficient to make major system repairs. Staff has concluded that the process combining the lien with the letter of credit/escrow fund would be most satisfactory. NEW SYSTEKS Developers of multi-home treatment systems and owners of individual systems would be required to provide the County with either a perpetual letter of credit or an escrow account repair fund. The amount provided by a letter of credit or escrow fund would be set at eighty percent of the construction cost of the system. To account for increased replacement or repair costs due to inflation, the amount of the fund or letter of credit would be increased periodically as indicated by increases in the Consumer Price Index (CPI) . In the case of a multi-user system, a percentage of the ownership of the fund or letter of credit would be conveyed from a developer to individual property owners as lots were sold. Eventually, ownership of a fund or letter of credit would be fully vested in the individual lot owners or an owners association. Initial costs of establishing a letter of credit or a repair fund would be built into the costs of lots, homes, etc. The owners of individual systems would probably be unable to establish a line of credit sufficient to secure a letter of credit. Financial surety for individual systems could be attained through the use of individual escrow funds. Owners of individual systems would also be required to provide funding equal to eighty percent of the replacement costs of their systems. However, individual systems owners would only be required to provide a deposit of one-half the total fund requirement initially, while the remaining half would be paid into the escrow fund at a rate of ten percent of the total required fund per year for five years. At the end of five years, the fund balance would have reached the required total. The required total of each fund would also be incrementally adjusted as per the CPI. 6 The owners of both multi-user and individual systems would also be required to enter a contractual lien/debt agreement with the County that would assure the availability of funding to cover any shortfall in letter of credit or escrowed funding for repairs. Combining the letter of credit/escrow fund strategy with the lien strategy would insure the availability of funds while minimizing the County' s exposure to collection problems. Both the lien and the letter of credit/escrow fund strategies could be legislated by inclusion into the County' s local health regulations. EXISTING SYSTEMS It is not known if strategies involving letters of credit or escrow funds will be suitable for dealing with existing systems. Much more research will be required to make a determination on this point. However, it may be possible to use the lien strategy or a combination of the lien strategy with the letter of credit/escrow fund strategies to assure the availability of funding for existing systems. If these strategies prove to be useful, they could be implemented by: 1) modifying local health regulations to require periodic renewal of operating permits for all individual and multi-home systems; and 2) requiring that a letter or credit/escrow fund and a contractual lien agreement be a condition of permit renewal. As noted earlier, another strategy for dealing with existing system failures is the use of the Health Director' s authority to require system repairs as necessary to address a public health problem, to expend the necessary funds and to seek reimbursement for those expenditures through an adjudication process. IMPLEMENTATION The process of dealing with liens, letters of credit and escrow funds will require the development of procedures whereby the County coordinates its activities and requirements with financial institutions. In addition, the County will have to utilize the Revenue Collector' s office to pursue debt collection as well as the Finance and Budget Departments to provide the administrative tracking and oversight necessary to insure that each escrow account and letter of credit remains in force, is fully funded and is periodically adjusted to account for inflation. The additional resources required to provide for these types of administrative tasks have not been calculated nor has a strategy to fund these resources been developed. It may be possible to recover these expenses through permitting and inspection fees. In summary, there is no simple strategy which can assure the availability of funds, at no cost to the County, for repair of alternative technology waste treatment systems. The combination of strategies outlined above is as failsafe as possible but will require significant financial expertise and administrative oversight. 7 ISSUE 5 - DEN SYSTEMS - The state charges fees for some services; the County is proposing to charge for inspections. Regarding these systems: What services do owners receive from the state? For which services does DEN charge? How much do owners pay DEN? Do proposed Orange County services duplicate any services provided by DEN ? If OC inspects these systems, would the $100 inspection fee apply here also? What are the enforcement actions OC would initiate in case of a failure and in a worst case scenario, how much could this process cost OC? That is, does this proposal meet our outcome goal of having no substantial costs born by OC? Staff Response Currently, DEM charges system owners permitting fees at five-year permit renewal intervals and yearly operating fees which range from $600 to $1500. Yearly operating fees may be discounted approximately 15-20% if a system remains in compliance with the conditions of its operating permit. Fees are based on a combination of factors which may include waste source (domestic, agricultural, industrial, etc. ) , technology utilized, treatment capacity, etc. Fees are intended to cover costs DEM may incur with field inspections and in review of operating reports, etc. These fees will continue to be charged even if the County provides inspection services for the systems. Most treatment systems, other than large municipal systems, rarely receive field inspections by DEM personnel. DEM relies on a self- policing honor system to indicate inadequacies in system operation. DEM inspects a system only when complaints arise or when performance records submitted by operators show poor plant performance. If reports do not show operational problems or complaints do not arise, DEM personnel may never become aware of a problem system or conduct a site inspection. The Health Department proposes to develop a Memorandum of Agreement (MOA) with DEM whereby Environmental Health staff will inspect DEM-regulated treatment systems. The annual cost of the program, to system owners, will vary depending on the type of system and the number of inspections the system will receive per year. For example, at the proposed $100 fee per inspection, package plants that are inspected four times per year would pay $400 in annual inspection fees. Systems which discharge to surface waters may be subject to additional costs incurred by the quarterly sampling and laboratory analysis process recommended under the proposed monitoring program. The costs of sampling and analysis will be primarily limited to package plants and particular sand filter systems having a history of operational problems and poor quality effluent. 8 The County' s routine inspections will not be duplicated by DEM. By virtue of the provisions of the MOA, the County would become the local agent for DEM. The County would conduct DEM' s inspections and initiate any necessary enforcement actions. DEM would retain responsibility for sustaining enforcement actions, judicial proceedings, etc. , related to operating permit violations. All costs incurred by the County will be passed on to system owners and operators through the inspection fee and laboratory cost recovery process. The proposal meets the goal of having no substantial costs born by the County. ISSUE 6 - REGULATING THE LOCATION AND USE OF LARGE DEH- AND DEM-REGULATED SYSTEMS - The issue of determining the suitability of large systems for use in lieu of the extension of municipal utilities to serve rural communities will be dealt with in later sessions of the BOCC RECOMMENDATION: 1) Select the tier of service the Health Department should provide to owners of Type IV systems; 2) adopt the Type IV service tier and the remaining elements of the waste treatment operations monitoring program schedule of services, inspection frequencies and user fees as recommended by the County Health Department and as outlined in the attached chart; 3) direct Health Department staff to develop a Memorandum of Agreement with DEM (allowing the County to inspect DEM-regulated systems) for approval by the BOCC and the Board of Health; 4) direct staff to develop proposed rules, regulations, etc. , implementing financial surety strategy for approval by the BOCC and the Board of Health.