City, County, Local Affairs Joint House & Senate
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Chair
Unverified
0:30
If everyone would find their seats, we'll get started here in a moment. I'll call this meeting of city, county, and local a joint
meeting to order. um today uh we are going to talk about uh about waste tires and also we're going to talk about
block grants um this meeting will probably run a couple of hours and so we're going to have to cut it off close to the end about 11 30 and so we can talk about block grants also um at this time uh senator stubblefield have you got any comments i don't have anything okay All right, we have minutes from January 13th, 2020 minute. Got a motion, a second? Got a second. All in favor, say aye.
Those opposed, say no. Minutes pass. All right, we're going to discuss, and we've asked three of the tire districts to come and present today. And when we get through today, I'll probably have a statement I'd like to make here at the end. But we'll get started at this time. And Mr. Craig Douglas, Executive Director of the Regional Recycling and Solid Waste District, would you, I know you're on a time schedule today.
Please identify yourself for the record and make
Speaker 13
2:16
an opening statement if you would like. Thank you, Mr.
Representative John Payton
Unverified
2:21
Chairman. and I'm Craig Douglas, Executive Director of the Regional Recycling District in Pulaski County. You should have in front of you a handout. It looks like this, a little tire on the top of it. It says Inter-District Waste Tire Management Program. I'm going to briefly walk through a couple of points that this document makes.
I am not going to read it to you. It's for the record and for your reference as you see fit. But if I could, Mr. Chairman, let me start off by saying that we appreciate the opportunity to discuss the entire program with you this morning. the Regional Recycling District manages what is called the Inter-District Waste Tire Management Program,
as other districts, tire districts, do around the state. Our particular district is made up of nine counties, and that reference for those nine counties is on a map in the back of your handout and you can see the geographic district that we cover.
Also in your handout at the last page is a map of all of the tire districts in Arkansas just just for your for your reference last year our district managed by Pulaski County processed over 880,000 waste tires 900 a little over 9,000 of
those tires are called or classified as fee paid tires leaving 879,000 tires for which the district was reimbursed by the Department of Environmental Quality and the Tire Accountability Program. That DEQ reimbursement rate, which was approved by the DEQ from the business plan that we are required, and all districts are required,
to submit to DEQ by law, that reimbursement rate was $2.09 per tire. Of that reimbursement rate of $1,837,404 that was reimbursed to the district, over $1,750,000 was paid direct to our contract vendor, Davis Rubber Company here in Little Rock, who was hired and has been hired
for a number of years to haul the tires and to process the tires. I would mention here that consistent with the mission of the Regional Recycling and Waste Reduction District, Davis tire and rubber tire company has a recycling rate in excess of 90 percent of the tires they process the district's reimbursement from deq handled the processing of the actual tires that were processed
the district had other expenses we had maintenance and equipment expenses for tire trailers And then we also, as is required by the business plan in Regulation 36, we allocated a pro rata share of the Pulaski County Regional Solid Waste Management District, which is different from the tire district. We allocated a pro rata share of the district's expenses to the tire program based on the
amount of time and resources dedicated from district staff to manage that program we have listed those operating expenses for you on page one under item number five a through k so to kind of skip to the bottom line if i may just in the interest of time in 2019 you can see that the total reimbursement down at the bottom of page one was $1,837.00. We had other income that the district earned from trailer rentals. We charge
$150 as a service fee to retailers who use the district's trailers that then Davis hauls and swaps out to take tires to their processing facility, and we had other earned income which we used to offset our expenses in 2019. But you can see that the bottom line there is that our income and expenses left the district with a relatively small operating deficit of $5,600.
dollars. The way we handle or handled that in 2019 is we just simply did not allocate some of the operating expenses from the district to the tire program in the amount of five thousand six hundred and sixty four dollars. So that's a brief overview of what happened in 2019. 2020 is a different scenario you have asked the the staff asked the districts to comment on the policy for
funding cleanups on page two we have listed that for you the cleanup scenario that we undertake as other districts do follows regulation 36 that allows our board the tire district board to establish one community cleanup per year in the various jurisdictions in the in the district in the nine county district anything in addition to one cleanup per year tire cleanup per year
has to be submitted to to our office and then we also forward those requests to DEQ for approval because without their approval the district will not be reimbursed for cost and so the hauling and processing costs are reimbursed to the district based on the DEQ approved per tire rate which in 2019 was $2.09. That has changed. I'll get to that in just a second. You also ask about
illegal tire dumps. The public, law enforcement agencies, municipal and county public works departments, the Department of Environmental Quality, and our own illegal dumps control officer reports, as the public does, to the district when tires are seen on the road, in a ditch, illegally dumped on property. Our IDCO, Illegal Dumps Control Officer, investigates that and then notifies the property owner that those tires would have to
also be accompanied by a police report in order for the district to submit for approval to DEQ to have those tires cleaned up. And then our contractor, Davis, through our assistance and management, takes care of those cleanups if approved by DEQ. Also, the various jurisdictions, The municipalities in the counties and the county through the county judge's office also have cleanups, side of the road, if you will, cleanups, and those are submitted or can be submitted to the district for consideration and also submitted to DEQ for approval.
on page three we get into the tire trailers and the business plan versus the actual cost of this program i would note that in our nine county district there are over 450 retail tire tire dealers of those 450 the vast majority of them incur their own cost in transporting their waste tires to Davis for processing. The district owns 45 waste tire trailers, transport trailers.
Davis owns 35 trailers, meaning that we have 80 trailers throughout the nine-county area that are available to haul tires to the Davis processing facility. Now, what has facilitated probably part of this meeting this morning and other discussion at the county and municipal level and I can assure you at the district level is that the Department of Environmental Quality announced toward the end of 2019 that they would reduce our per tire reimbursement rate by 10
percent. That means that in our district, the per tire reimbursement rate for hauling and processing goes from $2.09 per tire to $1.88 per tire. We, in turn, notified Davis Rubber that we would be cutting their reimbursement by 10 percent, not considering cost, you understand, but arbitrarily, if I may use that word, cutting their reimbursement by 10 percent. Davis's revenue based on the number
of tires processed in 2019, they could lose as much as $175,000. We cannot pay Davis for actual tires processed if we are not reimbursed by DEQ for actual tires processed. We have no other source of income for the tire program, and that is in the contract with Davis, and they understand it. To further reduce the cost to the district, we eliminated or reduced from 26 public
tire collection centers to nine. The law requires that the district operate one public tire collection center per county, and that's what we are now doing. We can't afford with a 10% cut to operate any more than the one per county public collection centers. We will continue to pay Davis to haul and to process the tires from the public collection centers, but that will be at the $1.88
per tire rate, not $2.09, which was the previously approved rate in our business plan by DEQ. To allow Davis and our public-private partnership, if you will, to allow Davis to recoup the 10% reduction in their revenue, we discontinued the $150 a month service fee to retailers on the trailers that they have at their locations, which gave Davis full access to the
45 district-owned trailers. At the same time, we encouraged retailers in our district and Davis to negotiate a transport rate charged by Davis directly to the retailers for the hauling of their tires to the Davis processing facility here in Little Rock. The key point here is that this policy will allow the marketplace to govern the cost of transporting waste tires for processing and recycling. The marketplace will govern that, not the district. Now, if the volume of tires and
the number of retail collection locations previously serviced by the district in 2019 stays the same in 2020, we don't know that they will, but if they do, then the potential revenue that Davis, our private contractor in our public-private partnership, the potential revenue that they could gain from negotiating hauling rates directly with private retailers could be as much as $178,000. There is no guarantee for that. The marketplace will govern that.
There's an outline at the bottom of page three on the district costs. This gets rather confusing, convoluted, if you will, but suffice it to say that we know that our transport cost, and that's where that's the cost that we have attacked, if you will, to try to save this 10% cut from DEQ, we know our transport cost is 86 cents per tire. In 2019 it was 86 cents per tire with the processing cost to the district
of a to the district of $1.23 per tire that will equal the 209 we're no longer at 209 we're at $1.88 per tire now the district as I said will continue to pay Davis for public collection centers because the per tire rate has been reduced our revenue for that will be reduced we'll we'll lose around twelve thousand dollars uh for that for that policy but i want to make clear here at the top of page four my little red asterisk if you will i want to make clear here that the potential
marketplace revenue and district transport costs from public collection centers will be subject to whether private collection centers decide to take their tires to public collection centers. The law would allow, as it stands now, any retailer, tire retailer, to load their tires up and take them to a public collection center rather than paying Davis or some other private hauler to haul them to the Davis facility in Little Rock.
If that happens, Davis's potential for revenue would be reduced and district cost would go up because we will continue to pay for the hauling and processing of tires at public collection centers. If I were to make one recommendation to you today to consider in the next legislative session, it would be to restrict public collection centers to the public. and that would give the marketplace a chance to to work the way we think that it should
so um we've outlined district revenue and cost here on page four you can look at that uh when when you get a chance because others need to speak today from their perspective but as you can see in our calculations there our reimbursement right our reimbursement amount for 2020 is estimated based on the number of tires last year at a million six. We have no additional earned income this year. We have given all of that up. We do have savings because we will
no longer pay to transport tires from private retailers. Davis is negotiating that. So we have $191,000 in savings, and that's transport plus trailer maintenance cost. We have given Davis the opportunity to use our trailers, and they have to maintain them. So then you see our expenses at $1.6 million, the loss of our previously earned income, the loss of our public transport costs
because of the reduction in reimbursements but our administrative expense that we outlined on page one will continue showing that our expense and our losses would be a million nine fifty two which would give the district an operating deficit in 2020 of a hundred and eight thousand dollars now finally i wanted to make a comment on extra large tires because that has been discussed and this General Assembly appropriated last session $300,000 to address the extra-large tire situation
in Arkansas. The Regulation 36 definition states that extra-large tire means that a tire that due to its size or construction is more difficult to process for recycling or disposal than a large tire and costs substantially more to process than a large tire, and we would add it's also more difficult and expensive to haul because of size, weight, and construction, that these tires pose a particular problem for districts and for the state of Arkansas in terms of keeping waste
tires out of affecting the public health. So we would like to encourage the committee to consider taking a look at, continue to take a look at, an extra large tire program apart from the normal tire program. The hauling and processing of extra large tires for our district in 2020, in 2019, excuse me, was $162,000. Those numbers are in what I previously covered,
but the cost to haul and process these tires are all over the board, anywhere from $8.28 cents to process and recycle a bobcat tire to $40.66 for a large tractor tire. We're reimbursed $1.88. And some tires cost $100 or more to process because of their size and weight as far as XL tires are concerned. We are not recommending nor would recommend to you that
this legislature appropriate any more money for the waste tire program overall. We would suggest to you that you take a look at correcting the current revenue source by applying the three dollar rim removal fee to all tires sold with no difference between replacement tires being new or used. Right now, the rim removal fee for a tire that is replaced by a new tire is $3 across the
board, regardless of the size of the tire. If a tire is being replaced by a used tire, the rim removal fee is $1. We believe that the rim removal fee should be consistent across the board for all classes of tires at $3. If the legislature were to make that simple amendment to the revenue formula that funds the tire program, you could put an additional million dollars in this program and solve these problems. We believe that the revenue source needs to be tweaked rather than
you having to appropriate any additional money. So, Mr. Chairman and members, that is our brief synopsis of the tire program as it relates to Pulaski, the Pulaski-managed inter-district, which is our nine-county program, I'd be happy to answer any questions. Okay. Representative Love, you're
Chair
Unverified
23:12
recognized. Thank you, Mr. Chair,
Representative Fredrick J. Love
Unverified
23:18
and Craig, thank you for your presentation, because I think
we've been wrestling with this issue for quite some time. I want to start off by going back to what you said in regards to, I think it was a public drop-off sites or something? Public collection centers, yes sir. And so you were saying in order to allow the private sector piece to pick up, you
Speaker 19
23:47
would close these sites? Well, we had operated in excess of 25 public collection
Representative John Payton
Unverified
23:53
sites around the nine county area in order to save money because our total reimbursement
the lifeblood of the program is being reduced by 10 percent we decided to follow the strict letter of the law and reduce our public collection centers to one per county okay so there
Speaker 38
24:13
are nine public collection centers in the district okay so what was the what was the impact of that Did you see an
Representative Fredrick J. Love
Unverified
24:20
increased tire dumping? Because I'm going to tell you what I see when I drive around the county, but I want to hear from you
Representative John Payton
Unverified
24:29
first. This is all very new, of course, Representative Love, since January.
Actually, since late January when we started to institute this policy. What we have started to see and have been reported by the various jurisdictions is the possibility of an increase in tires being illegally dumped as well as private retailers
Speaker 22
24:55
taking their tires to public collection centers and dropping them off or attempting to drop them off.
We know of one instance where a retailer took a load of tires to a public collection center and they were refused. We're looking into that. uh but it uh
Representative John Payton
Unverified
25:14
the way the law reads uh as as in terms of the way the public collection center can operate anybody can use them now if you can't get a tire to
Speaker 22
25:26
that to a public collection center and you want to get rid of your tire out of sight out of mind i think you know where they're going
they're going to be illegally dumped someplace do we have actual experience of that so far as we sit here this morning uh no we don't have any documented yet but it certainly could happen okay so i'm
Speaker 42
25:51
going to tell you what i see when i drive around palazzi county i see tires laying in ditches
Representative Fredrick J. Love
Unverified
25:59
i see tires and everything just laying around and then what this causes because see i work in community services what this causes is my phone to ring off the hook
and then i have to call our public works officer to go down there and unstop ditches and and different things like that and so um i will tell you this we should have increased sites and not decreased sites because this this is becoming a big problem this is just in Pulaski County. Now, I can only imagine if we just multiply that by the number of counties we see, and I think this is going to become a very
Speaker 46
26:42
big, well, it's already an issue, but an even larger
Representative John Payton
Unverified
26:46
issue than we have right now. Representative Love, the nine county entire district that is managed by the Pulaski County District, we see our responsibility to the public, just as we do to private retailers, our responsibility to the public. If we could come up with a funding source to locate, properly manage, control, and operate public tire collection centers, we would be more
Representative Fredrick J. Love
Unverified
27:24
than happy to do that. Okay. All right. Thank you. Mr. Chair, I might need to be back in Cuba for
Speaker 50
27:38
right now. Thank you. Oh, it's my show. Oh,
Representative Frances Cavenaugh
Unverified
27:44
Frank Cavanaugh. Thank you, Mr. Chair. Can you, if you don't mind, just give us a little bit of breakdown of how you think increasing used tires to three dollars is actually going to increase and cover the deficit
that you need when by all accounts I only show that we collected like 350,000 dollars worth of used tire fees to
Speaker 54
28:07
begin with. Well if you if you were to if you were to multiply
Representative John Payton
Unverified
28:13
that 350,000 by two more dollars. I think you can see that's at least an additional $700,000 that would go into the program. We believe that that would more than take care of a statewide extra-large
tire program. We have proposed an extra-large tire program to DEQ, and the cost of that, The annual cost of that is estimated at $635,000. So that's why I think that if we applied the $3 rim removal fee across the board, we could, in fact, do a statewide Excel tire program and remove that cost from the district's cost,
which would allow the districts to have more public collection centers or to do other things that are responsible to the public. We see that as one possible solution to the funding problem. This is all about money. Right, but that doesn't necessarily
Representative Frances Cavenaugh
Unverified
29:17
cover the complete funding problem that you have. It's not just on extra large tires that you have a funding problem. You have a funding problem across the board on tires. Yes, we do. So increasing it on a used tire to $3 is not going to fix the problem.
Speaker 54
29:33
It will add at least between $700,000 to $1 million to the tire program
Representative John Payton
Unverified
29:39
if it were a $3 across the board. Is $1 million enough to fix the program? The pro rata share of that would help
Speaker 54
29:50
fix our program, but I can't speak for the other districts. Thank you.
Chair
Unverified
30:00
All right. Senator Stubblefield you're recognized. Thank you Mr.
Senator Gary Stubblefield
Unverified
30:04
Chairman. Craig what's the main causes
for the cost increases from 2017 until now? Well the
Speaker 25
30:13
in 2017 prior to the to the tire program the new tire
Representative John Payton
Unverified
30:18
program the the tire programs were funded by what was called an AB formula which is rather complicated but has to do with population in the various counties that are within the tire districts. What the AB formula allowed ADEQ at the time to do
was to put money into the tire districts not based on actual cost, but based on population and other factors that govern that formula. When we went to the new tire program and the law and regulation, Act 317 of 2017 and 36, required that each district have a business plan that business plan which is outlined in regulation 36 told us exactly what should be in the plan which included all of the costs of the tire
district for the first time the the tire districts were able to show their actual cost which was greater than what was being reimbursed prior to the new tire program. I'll give you an example. When the Regional Solid Waste Management District set up began after the 1991 General Assembly and the Solid Waste Management Districts were created and given the responsibility of tires,
our particular district was given a million dollar reserve to begin the program. Our district had to use that money over the next however many years that is to pay for the deficit created by between the AB formula funding and our actual cost. We ran out of that money in 2015 but what you're seeing from the districts for the first time since y'all passed the new tire program are actual costs
because those actual costs are required in the business plan by the law and by reg 36 and so it jumped up well under under
Senator Gary Stubblefield
Unverified
32:35
the old tire plan yes sir most districts lost money except for maybe white river or east and yet did
Speaker 63
32:42
any of those districts complain during that period of time I'm going
Speaker 13
32:49
to give you an answer you won't like. I wasn't in this job at the time. I don't know. Do you
Senator Gary Stubblefield
Unverified
32:57
think that ADEQ communicated clearly to the districts in those two years, 17, 18?
Representative John Payton
Unverified
33:04
There were a number of meetings called stakeholder meetings where we went through all of that. I think there was a lot of communication back and forth. I don't know what necessarily landed effectively on the ears of the department. Okay, I have some further questions later,
Speaker 59
33:22
Mr. Chairman. Thank you. Thank you. Okay, any
Speaker 68
33:27
other questions? Yes. Representative Payton, you're recognized. Thank you, Mr. Chair.
Speaker 69
33:35
and some of this question I'm about to ask may be more suitable for ADEQ to answer but I'd like for you to do the best you can if I remember the legislation that passed on the used tire removal fee it was projecting over $3 million a year income so the $350,000 that Representative Kavanaugh referenced is that statewide?
For used tires, the cost of used tires, yes. Or the collection on the used tires. So do you know why the
Representative John Payton
Unverified
34:18
projected over $3 million is only equaled $350,000? Well, that's for the used tire category only. Remember, what the law says is that there will be a $3 rim removal fee for tires replaced by a new tire. the rim removal fee for tires replaced by a usable used tire not a waste tire but a tire
that can continue to be used will be
Speaker 69
34:45
one dollar so if i could ask you this do you think that we're successfully collecting that on on the used tire transactions or do you think some of them
Representative John Payton
Unverified
34:58
are getting around it we have not speaking for blasky district only we have not seen an aggressive enforcement by the Department of Finance and Administration of RIM removal fee collection. Well, so
Speaker 69
35:10
my point would be if we triple the cost of that and they're fighting
their ways around it now, I don't know that you're going to realize a $700,000 increase because you may find that they find more ways around it. So my other question would be how much do you think we've spent in managing and implementing that program that only brought in $350,000? On the
Speaker 13
35:41
used tire side, I can't answer that. I don't know. It's probably significantly
Speaker 69
35:46
more than $350,000. I'm sure answer that. Okay. Mr. Chair, if I could ask a couple other questions on a different line so on the new tires that we've been collecting for many years we have a lot of new tires that that get around that that that escape the new tire fee for one thing every new automobile that is imported into the states wearing four new tires and we don't collect a fee on that and then we have fleets that are ordering their tires online
and doing the service theirself and we're not collecting a fee on that do you have any ideas how much we could collect if we successfully did that on the new tires or any no sir
Representative John Payton
Unverified
36:33
we haven't done any calculations on that the law and regulation 36 covers import tires and those other categories but that would be a question for DEQ we're just dealing with I would speculate and I'd like
Speaker 69
36:44
to know if you would, too, that it would be more than the $700,000 that you're...
Speaker 66
36:50
It could be a significant amount. I don't know how to quantify that.
Senator Gary Stubblefield
Unverified
37:02
Okay. Thank you. Thank you, Mr. Chair. Any other questions? I have just one. Yes. Craig. Yes, sir. You mentioned raising the tire removal fee on used tires up to $3 tripling. You know who buys used tires? Yes, sir. Do you feel like that would place an undue burden on those individuals? I would hope that it wouldn't, Senator. You would hope that it wouldn't? I would hope that it wouldn't.
Speaker 54
37:20
How would it not? Two more dollars, I would hope, would not. I think that,
Representative John Payton
Unverified
37:27
I mean, it is either that or it is somehow looking at an increased formula
Speaker 13
37:34
for reimbursement on the cooperation of public tire centers, collection centers, and the reimbursement for the actual processing and recycling of tires. The money has to come from someplace. That's your decision. It has to come from someplace.
Senator Gary Stubblefield
Unverified
37:51
But let me tell you, the effects of this $3 increase on somebody making $20,000 a year versus someone making $100,000 a year, you would hope that it would not? I can assure you it would. it would be a two
dollar increase well two dollar increase irregardless someone making 20 you understand that i understand your point and i don't know of any legislator i would ask a
question any legislator in here that would carry that bill to raise the tire removal fee from used tires that's going to be a hard sell and i understand where you're coming from but i don't think that's
that's the uh road we need to go
Chair
Unverified
38:30
down thank you mr chairman representative rye you're
Representative Johnny Rye
Unverified
38:33
recognized Thank you, Mr. Chairman. Mr. Craig, I was going to go back to what Representative John was asking when I go about the $700,000 up against the $3
million that was projected. Are the people collecting and not turning it in,
Representative John Payton
Unverified
38:51
or what's going on there? Well, we don't know. We continue to get calls from folks at DF&A asking us to tell them,
to give them information on number of tires collected and information on what we're reimbursed. I would think DF&A would know that since they're responsible for collecting the rim removal fee. Well, I don't have
Speaker 13
39:16
an answer to that question, Representative. Thank you, sir. Representative
Speaker 69
39:25
Payton, you're recognized. Thank you, Mr. Chair.
So on the used tire, when they put it on, it's obviously not going to travel as many miles as a new tire would. It's already been 60% or 70% wore out. So if you have a fee of $3 on a used tire and you're only going to get a third of the life out of it, that would be the same as having a $9 fee on a new tire. am i wrong in figuring that probably so when somebody buys used tires
they're going to have to replace them more often they're going to be paying the fee more often but the other side of what that would produce and i'd like to know if you agree with me on this is tires that have reached maybe 20 or 25 percent of their life instead of being resold and put on another vehicle and worn out are now going to be coming to the collection center with more life left in them. So we're going to end up recycling and having more tires
and it's going to compound the problem. Instead of collecting more fees, you're going to have tires being disposed of that may have only been worth $10 to somebody that needs to get to work and they can't afford a new tire. Do you think that that could actually complicate the problem in the scenario that
Representative John Payton
Unverified
41:00
I pointed out there? Here is the real-life situation of funding for the tire program.
When the $3 rim removal fee and the $1 rim removal fee were put into the law, the research that was done showed that it would generate an additional million and a half dollars for the program that would be more than enough to cover the cost of the program. The fallacy in that, and I've talked to those who came up with the formula, was that the additional million and a half
was on top of a base figure from the old formula that was inadequate so the calculation of three dollars and one dollar was based on faulty information the three dollar rim removal fee if you leave it alone the one dollar rim removal fee for used tires if you leave it alone will not generate enough money to run this program statewide particularly from the district standpoint if reimbursements are cut 10 percent
Speaker 69
42:14
that's the problem well I would I would agree that it does not generate enough money to operate the program I argued against implementing the program because we dismantled a distribution system that was getting these used tires to the people that needed them whose budgets are limited and we've dismantled that distribution by requiring people to be licensed and regulated and keep logs and and I would argue that the reason we didn't collect a million and a half and we only collected
350,000 is because those tires are now being shredded and being recycled instead of being put on another vehicle and worn out and I think that I fear that if we triple the fee it's just going to get worse. And so I would encourage you to look at ways to collect on all the new tires rather than doubling down on this
Speaker 71
43:07
used tire thing. Thank you, Mr. Chair. The point we are
Representative John Payton
Unverified
43:11
attempting to make, just one more point on this, Mr. Chairman, the point we are attempting to make,
and apparently not very well, is that the fundamentals of the new tire program we believe are solid. We believe they're sound. The fundamentals are sound. The funding mechanism is a little off. That's our point. I could
Speaker 69
43:34
have one more comment. I agree with you on that. I do agree. I believe that the funding and and the new tire program worked for what 30 years? Well it
Speaker 13
43:45
still was the old the old formula was not covering cost. Right. It
Speaker 71
43:50
It had become a problem towards the end. Right. But anyway, thank you. Thank you,
Chair
Unverified
43:57
Mr. Chair. Thank you. Yes. Let me state this, that the program brought
in almost $7.8 million last year. Almost $8 million, yes, sir. And it was falling below $6 million previous to that. So it increased the revenue considerably at that point. Let me also say this, that I'll give you a breakdown later in this meeting of who gets what in this money, too.
That might be important for you to know. Yes, sir. But we're running pretty close on time right now. And unless someone else has a question right now, we will dismiss you. Is there any other questions for Mr. Douglas? Seeing none, we appreciate your testimony. Thank you very much. Yes, and at this time, we'll call up Melissa Rivers, the Executive Director of East Arkansas Planning and Development District. Ms. Rivers, if
you would, please state your name for the record.
And your guest there, if he's going to speak also, please have him state his name. it would be better maybe if he gets on the other side there's
Speaker 102
45:37
a microphone on the other side you may proceed please
Speaker 103
45:39
turn your microphone on thank you thank you thank you mr chairman my name is melissa rivers i'm the executive director representing the east arkansas regional solid waste management district
and part of that management district we operate the east arkansas waste tire excuse me interdistrict and that is
Speaker 102
45:59
three different waste tire management districts as a partnership between the east district which is the six southern counties in east arkansas and then the northeast arkansas Waste Management District and Mississippi County. In total, we serve 11 rural counties.
Collectively, we are focused on managing waste tire collection for this program and disposal for the benefit of our communities in partnership with our chief elected officials. We manage, from a district perspective, we manage compliance with the state law and regulations to the best of our ability and in doing so in a physically responsible way. So I'm just going to run through the different things that we were asked to comment on and then I'm glad to I'm not quite
as formal or as Mr. Douglas was. For the East District tire trailer policy we again like I said we have 11 counties like Pulaski back in 2013 we reduced the amount of publicly collected trailers from 43 to 11 and we currently have 10 public centers that are manned by county
employees as available and manifests are required
Speaker 103
47:29
to be completed at the time of disposal. A copy the manifest is retained by the generator, the
Speaker 102
47:39
collection center, and the district for reporting requirements. And then we collect, we, excuse me, we coordinate with our collection centers to dispatch replacement trailers when the trailers are full or nearly full. And then we collect and enter the manifest into the e-portal for statewide reporting requirements.
Speaker 103
48:01
collection trailers for our district are owned and operated maintained by our vendors in 2013 we we outsourced to vendors to to reduce our cost districts we use a vendor to that
Speaker 102
48:20
opens uses an open top trailer to collect and process oversized tires again for efficiency purposes as far as clean public policy or our policy on funding cleanup sites we do our best to comply
with reg 36 that on the new tab guidelines for cleanup sites we coordinate with adq and our local idcos illegal dumps control officers and our local chief elected officials we have some chief elected officials who've been pretty aggressive in working with their local sheriff's department uh and writing citations um and and facilitating cleanups uh and illegal dumps that way
Speaker 103
49:09
um we uh have worked with adq on the list of illegal dumps that they've sent to us and so i
think one one comment i would like to make on illegal dumps um i completely concur with mr Douglas that this is really a matter of our concerns are really revolving around cost the overall cost to operate the collection and processing of waste tires but the cost that we talk about does not include what it costs to facilitate the cleanup of a significant illegal dump and so when we put together our waste tire plans our business plans it really is that cost
per tire for our district is $2.89. And you've got, I'm glad Mr. Douglas put the map of the different districts in his presentation, because you've got significant differences. You're not really comparing apples to apples when it comes to transportation. We have an 11 county rural district that is heavily rural. We cover 8,000 square miles with really two to three significant
population centers. So outside of that, you're paying $4 a mile for transportation. So when you get into illegal dumps cleanup, that's a significant cost that's really not accounted for in that $2.89. So when we're talking about how do we improve this program, because I agree the bones of the program are on point. It just needs tweaking, needs some facilitation.
That illegal dumps are significant, and we recognize that. We want to work with our local elected officials to help clean up their communities as well as ADQ, but it's difficult when there's no funding there to do it. I want to point out here too, Mr. Douglas made a point about under the old program versus under the new TAP program. It's important to emphasize
that under the old program, it was a grant program that was facilitated by a very complicated AB program. And someone made the comment that the East District and the White River District did not lose money under that program. That's actually incorrect. We did lose money under that program. And that is the reason why in 2013, we modified our business model to facilitate as much as we could control in reducing our cost.
We were at a financial disadvantage under that formula because of our population and our geographic area. And so subsequently our grants never matched our expenditures. And so this was amplified by the business model that the district used at that time. Like I said before, we had 43 collection trailers, and we had two employees, and we were running trailers and employees. We had carrying costs for equipment, repairs and maintenance, and employment costs for two employees that we were able to outsource to vendors
so that that was picked up and collected and processed quicker and more efficiently. Under the new program, it is a reimbursement program, and so there's been some questions asked directly to me by different legislators and different officials why the difference in what we received prior in 2017. We did receive $250,000 more under the new program than we did
under the old program. Again, it goes back to cost under a reimbursement program versus an arbitrary grant program. Our expenses have remained consistent, somewhere between $2.85 and $2.95 over the life of the program. Our approved business plan is $2.89, cents and so and that is a pretty accurate reflection of our expenses. The slide that you
see in front of us is our actual cost broken down by the different components of our inter-district for 2019. Two things that I would or one thing significantly I would point out in quarter three If you look at the Northeast District, and I apologize, I cannot see, but you see a negative there of $72,000, and in the Northeast District, that is $70,000.
That is a waste tire cleanup that was directed for us to do by ADQ, and those expenses were incurred and swallowed by the East District. So that is reflected there, and so that brings our per-tire cost for annually to $3.33.
So I wanted to take this opportunity to express some challenges and concerns that I see in the district, I mean, for the districts through the new TAP program. one thing is the carrying costs for our district in particular is we have to have 250,000 cash on hand throughout a quarter and into the the next quarter and so because that's that's what it costs us to operate for a quarter and so if we don't pay our vendors it's a tight market right
now. If we don't pay our vendors, they won't pick up our tires. And so I would just want to make this committee aware that from the first day of a quarter until about a month and a half into the next quarter, so really about 185 days, we are incurring costs before we receive reimbursement for that cost. The 10% reduction that was announced in December of 19 would eliminate
our district's financial ability to deliver this program to our communities, and that has been supported by districts representing our counties plus, in total, 22 counties. The ongoing demand for timelines regarding cleanups for tire dumps that have been on the ADEQ books for 10 plus years that there are no funds available to accommodate the demand. We don't have any money to facilitate
these cleanups and some of the property owners when that cost is then pushed on to them they're going to refuse to clean it up and so but the threat of holding the district's money that we've already spent to clean up tires and process them in order if we are not able to clean up these dumps that really ties our hands when it comes to being able to perform the service for our
counties so with that i will do my very best to answer any questions you
Speaker 104
57:11
may have okay thank you melissa yes representing kavanaugh you're recognized
Representative Frances Cavenaugh
Unverified
57:16
thank you mr chair miss rivers you and i've had many conversations about this because i'm always asking questions about it so my real question to you is DEQ already takes 7%, and then now they want another 10%. What services do they provide the districts to justify a total of 17% of this money going to them?
Speaker 103
57:43
What services do they provide, y'all? You want me to answer that? Well, Chairman, I'm pretty sure my answer would be different than your answer, but go ahead go ahead uh you know i think again i want to go back to i think the bones of the program are are correct and on point um you know i think adq has has one perspective of their
responsibility and the and the services they provide and we have a different perspective and so you know we work we try to work as closely with ADEQ as possible but I can't answer how they spend their money that they they receive to run the program. Yeah
Representative Frances Cavenaugh
Unverified
58:35
that's not what I'm asking you what I'm asking you is what services does DEQ actually provide you that helps you to administer of this service. Seven percent is my understanding. I've got the definition of it. I've looked and had
it all researched, is to help with the management of the program. So kind of think of it as fixed cost. Now, if I ran a business with my salaries and fixed cost at seven percent, I'd be out of business. It should be more around three and a half percent. That's what we kind of use in business. So they're already getting seven percent to kind of help with the administration of the program. with this additional 10 percent that they're going to ask for that they're going to get what additional services are they going to provide for you i'd heard about an app maybe a e-manifest or
Speaker 102
59:25
something so the e-portal is currently in place and we use the e-portal
system they have presented the app to us uh in
Speaker 103
59:32
a meeting with us and i think with other districts we raised some concerns about that the app and its ability to actually serve the purpose that it's intended to serve and so and we were not that that feedback was not received in a positive way and so I would I would recommend and this is not again probably not the answer you're looking for
Speaker 102
59:59
but I would recommend again working with the people who have the boots on the ground actually working with the vendors and actually processing tires themselves because it goes back to just like Mr. Douglas said it goes back to cost and the true cost what is the goal of the program
Speaker 103
1:00:19
is the goal of the program to pick up and process tires because the east district has a hundred percent recycling rate because we use the vendors that we use and so if that is the goal then the majority
of the revenue in the program should be directed to picking up and processing tires and if adq's job is oversight and regulation of that then i would recommend that there be some very intentional dialogue, not dictation, as to how that process works and how we can make it more efficient together. Thank you. I have more questions, but I'll get back in the queue. Okay, Representative Kavanaugh, let
Chair
Unverified
1:01:02
me answer the question for you on the breakdown
of the money, how it's spent.
The 10% is abatement for abatement programs, cleaning up landfills. That's always been there, but they've always used it for propping up uh different districts that were in trouble that 10 again when the program changed over they quit doing that they were sending that money out to all the tire districts once realizing they don't have an abatement fund that's when they cut the 10 am
Speaker 103
1:01:37
i correct that's that's my understanding of it but i would also um yeah i would also
add to that that if the 10 percent was critical for abatement then why did they approve our business plans when our business plans reflect our actual cost additionally why would they direct all of the districts in the summer of 19 to stop picking up oversized tires because there was no money to pay for that cleanup for that pickup and processing so i agree with you on that that
that's what the 10 is there i agree that the 10 is in the law as of may and they
Speaker 102
1:02:24
have not done that and thankfully have not done that to date the reality
Chair
Unverified
1:02:29
is the need is there okay let me give you a breakdown of how the money the three dollar rim fee is broken down the dealer receives five percent the of the three dollars then the remainder 285 dfna gets three percent and then of the 276
that remains after that adq gets seven percent which is 19 cents and the remainder of that is $2.57 and then $0.26 goes for the abatement fund. And then at
the bottom there's $2.31 left for the program. Now I agree with her that there's maybe
too many people in this
and i might as well go ahead and say this now is planning on waiting to the end but i believe that we probably should move this program to to the local level because you if you listen all during this everyone every tire district is unique and different so maybe we should move it down to where it's on their level they levy their prices they work their program the way they want to instead of trying to make one size fits all. Now, as far
as going to a program where you do a cost basis, what we have done, and if anybody disagrees with me, please let me know, but we've identified the true cost of what it takes to operate tire processing. And I believe that. I don't think anybody will disagree with that. but again we probably need when we do this we probably need to appropriate a one-time fund in which to clean up all these landfills across the state all these tire dumps across the state a one-time thing and then let these districts be their responsibility to make sure that they
don't happen again I know there's probably one in every district I would think at least one in every district but again it seems that we keep we get something fixed here and somebody else has problems with it and again I think pushing it on the lower level down to the tie districts themselves I think might be a cure for it and that's one reason we're having these meetings I would like to discuss this before the next session and which may be to address that problem
then and senator stubblefield just made that statement you're not going to get a bill up here that's going to raise that fee that's that will not happen and what we need to do is make them the most out of the money that we do have in place is what i i feel like but that is the breakdown on that money it's not a new fee that adq is getting it's going into that abatement funds what that is. Okay, Melissa, I'll let you continue. Is there any other questions anyone
has of them, Melissa? Representative Rye, you're recognized.
Representative Johnny Rye
Unverified
1:05:41
Thank you, Representative Fyatt. The portion, Representative Fyatt, that you were mentioning about cleaning up all of the landfills or, you know, about the
tires that's existing. I misspoke if I said landfills okay what was it the tire dumps okay
tire dumps okay if you did that and then you pulled it back on the counties to take care of of the situation and knowing the cost and
things like that do you think that the first of all it would be a good thing to know how much it would cost for that cleanup and number two it would be a good thing to know individually how much each one of these particular county judges would have to look into paying within their area. No, Representative Rye, I may have misspoke again. I'm
Chair
Unverified
1:06:33
talking about the tire district doing the cleanups. The tire district? The tire district's doing the cleanups.
Representative Johnny Rye
Unverified
1:06:41
I just know the county judges here own this today. I don't want to get the county judges on
me. Go ahead and proceed. Okay, sir. But, Representative Fyde, it would be a good thing to know just this one thing. how much it would cost
Chair
Unverified
1:07:00
for that cleanup, sir. And ADQ probably has an estimate. They have those numbers. They have all these illegal tire dumps on record. And so that number could be handled. Yes. Yes. Yes. Representative Wien, you're recognized. Thank you, Mr. Chair. Just a real
Representative Carlton Wing
Unverified
1:07:17
quick question as we're trying to dive into some of these numbers and the districts are all different when you said four dollars per mile transportation was that one way or two ways and you know how that compares with some of the other districts that's one way that's one way one way and you know how that compares with any of the other districts i don't i know okay i cannot answer for other districts all right we're all
Speaker 102
1:07:40
trying to dive through all this but i would say i would say it look looking at i think representative fight makes a really great point you do have to
Speaker 103
1:07:48
understand the true cost per tire for each district and so if you look in our research it looks like processing as an industry standard is somewhere between 70 and 90 dollars a ton and so then you have to add in transportation cost on top of that and so if you look at we've looked at a breakdown of of the statewide numbers and so that cost per tire then has to be converted
to a cost per ton because everyone does business not based on per tire but per ton and so you there's some calculations that have to go there and so you're really looking at true cost of process somewhere between 190 and 220 dollars a ton depending on transportation for our district for the districts that that we've worked with in east arkansas you're really looking at 190 to 195 dollars per ton for our for our footprint our geographic footprint that's prior to and this
is important that's prior to the district covering its cost uh dfna pulling its cost and adq pulling its cost and so when you do that when you add in what it actually truly costs to collect and process a tire along with what it actually costs to to administer this program across the bureaucracy then you're looking at three dollars and 33 cents on average per tire so that's I agree we're not going to be able to add any new you know we're not going to carry any
new bills but I think it's important to know that your average cost truly is across the state three dollars and 33 cents per tire and so then when you're saying to the districts you've got to cut 10% that 10% is not being cut in the bureaucracy it's being cut to the processors just like Mr. Douglas just reported to you he's he's passing that cut along to Roger Davis and so then that really becomes is the processor able to facilitate the collection and processing
of those tires and then are you creating a back-end problem of additional tire dumps that are being created because now you've got rural districts who can't find a processor who can collect and process their tires. Yes, there are processors in the state, but then you have to ask the question, do
Speaker 102
1:10:28
those processors have the capacity to handle the influx of additional tires? Thank you very much. Thank
Chair
Unverified
1:10:35
you, Mr. Chair. Representative Kavanaugh, you're recognized. Thank you,
Representative Frances Cavenaugh
Unverified
1:10:40
Mr. Chair. Just a quick question.
when we talk about these fees that are getting collected per tire or whatever who's responsible for the collection of
Speaker 103
1:10:53
those fees honestly my impression is that that would
Representative Frances Cavenaugh
Unverified
1:10:58
be dfna okay the reason i ask is there is a disconnect between what the eq shows that collections were versus what dfna's website says there's about a 500 000 difference. So my question is who's collecting these fees or who's not collecting these fees, watching them, because
$500,000 is a substantial amount of money that could help the program. So I don't know if we know who is actually responsible to make sure that these fees are paid. DF&A is the one
Speaker 97
1:11:25
that collects and makes sure there's the enforcement in them. Yes. Thank you. Another question. Thank you, Mr. Chairman.
Chair
Unverified
1:11:48
Excuse me. We'd ask Jan Smith of
Representative Frances Cavenaugh
Unverified
1:12:39
Good morning. Please identify yourself for the record. My name is Jan Smith. I'm the Executive Director of the White River Planning and Development District, and we serve as the administrative staff to the White River Regional Solid Waste Management Board. This is our used tire manager, Tracy Wallace, that I have with me. We also have county judges that serve on our board in attendance to this meeting, and I would ask if any of them wanted to come up, if it would be okay if they joined us at the table.
Okay, thank you. We serve an area, a 10-county area in north-central Arkansas. We have White County as our southern county. Then we go to Fulton, Izzard, and Sharp County, Independence County, Jackson and Woodruff County on the Delta side, and then the hill counties of Van Buren, Stone, and Cleburne. Most of the district is quite rural. We have to travel through hills and two-lane small roads
and collect our tires, which adds, as Melissa was explaining earlier, the transportation costs in the more rural areas are an additional cost than when you're just in a single county and population base. What we did with our presentation today was addressed the questions that were sent out, so I'd like for us to go over that first. Tracy was going to do a four-slide PowerPoint answering those questions.
Chair
Unverified
1:14:22
The first slide that's up is our permitted public waste tire collection centers, which you asked us to discuss. And as Jen
Speaker 147
1:14:28
stated, we serve 10 counties in real Arkansas. Please turn your mic on, if you
Representative Frances Cavenaugh
Unverified
1:14:35
would. Turn the mic. And then I think the slide hasn't shown up. For the record,
Speaker 152
1:14:52
Mr. Chair, Robert Griffin and Penn State County Judge.
Representative Frances Cavenaugh
Unverified
1:14:55
Glad to have you here, Judge. While they're trying to get that up, let me explain our tire program just a little bit. We actually operate a tire monofill, which is totally different than anybody else of the tire district programs here in the state of Arkansas. When this initially started back in 1991 and 92, we tried all different areas and all
different ways to collect and get rid of our tires. Unfortunately, a lot of the trial efforts that we made did not work and did not handle all of the tires, and so we had a person come to us and suggest monofilling the tires in an old rock quarry just outside of Bald Knob. After some time, Mr. Strickland was unable to continue the monofill, and at that point, he asked the White River Solid Waste District to take it over and actually operate that tire monofill. At this point, that tire
monofill that we've been operating since about 2006 is almost completely full. We've had a permit for the monofill and have worked with ADEQ over the years to enforce and try to stay within the regulations. At this point, we are looking for other options to take our tires just because of the landfill becoming full and the state will not permit any additional monofills that will also change our costs that we are looking at so currently we are being reimbursed at a two
dollar and 38 cent reimbursement rate but when we change our program and either go to champlain liberty or any other alternative we see that those costs are going to be increased okay i understand we're having trouble getting
Chair
Unverified
1:16:42
the program to work am i correct that's okay If you all have a
copy, I'll just go over with you page by page that way. Everyone should have a copy in
front of them. If you don't, please let staff know. Okay, go ahead and proceed if you
would. If you'll just turn with me to the DEQ permitted public waste tire collection centers you inquired about.
Speaker 153
1:17:04
The White River District serves 10 counties in real Arkansas. Each county, we have one at each site. Eight of these centers are manned, owned, and operated by city-county government. Two of them are privately owned. There is no designated funding source from the tire program other than our business plan rate, which is at $2.38 per tire. Residents are allowed to dispose up of four tires of any size, including extra large, at no cost.
Any additional tires are paid according to rates established by the district, and these rates were established based on actual cost to process and dispose of them and our district rates are posted at each location so the public will know if they have more than four that what the rates will be in their 250 750 and 35 for an extra large tire the policy and funding on the public cleanup sites we follow arkansas regulation 36
guidelines pertaining to the cleanup of sites referred to the district. We received many requests from the general public as to dispose of their waste tires. We're in a rural area so each case is different in all aspects but all are handled pertaining to the details as presented and we have worked with ADQ recently on the dump that a lady has in Higdon, Arkansas. She was left with 300 tires on a piece of property so we've got it worked out between us her
ADQ to clean that up within a six month time period that everybody's agreeable to to to get that resolved for her the district offers assistance of leasing a short-term trailer lease to accommodate larger cleanups the district is the district hopes that in the near future monies will be set aside for cleanups for individuals lacking the resources to complete the process in a timely manner like the lady I just spoke to you about. The last thing, the business plan versus actual cost. It's pretty
self-explanatory. If you look at it there, I did it, broke it down per quarter. We had 248,467 tires that were reimbursed to the district at $2.38 for a total of $5.91, $3.51. Our total operating costs, and this is for 2019 only, was $6.67, $1.99 with a per-tire cost of the four quarters, and I've got them broken down to you by quarter, is $2.70.
cents. The total deficit for our program for 2019 from tire funding sources was $75,848. We have additional revenue for the district for our trailer lease agreements that equaled $82,383 to offset that cost. And I think there was another page that I don't see
Chair
Unverified
1:20:15
that's on here the tire trailer policy that you
asked about this is just how we do our tire rental trailer policy that you'd ask about our
Speaker 153
1:20:29
trailers we have 55 trailers this particular one is talking about tire collection centers we also rent trailers to about 35 dealers a resident may again discard for automobile tires at a waste tire collection center per month it's actually any size tire they can take to a the public sites
and the other thing then the policy is just telling our dealers not to overload the trailers so it's not a risk to the district when they get out on the road they need to be a below the top rail waste tires should not be left on the ground surrounding the trailers skidder tires are not accepted tires on wheels are not accepted unless previous arrangement has been made and we are very accommodating to our district if we get somebody that's got some we'll work out a way to get them to take them off the wheel they can
dispose of the wheel however they want to and then we'll take the tires large volumes of truck tires would be taken directly to the collection center entire monofillip ball knob and not left at the collection
Chair
Unverified
1:21:38
trailer and I will try to to answer any questions you might
Speaker 68
1:21:46
have within our district as well thank you any questions yes representative
Speaker 69
1:21:51
pate you recognize thank you mr chair um i was considering what uh representative
fight the chair had to say earlier about localizing this program somehow could you give us any input on that or what that might look like well i think i'd
Speaker 153
1:22:06
defer that to judge griffin because it would fall in his lap if that's what i understand you're
Speaker 69
1:22:13
talking about and maybe the chair would expound on that a little bit but i'd just like to have to have a picture of what that might look like if we were to push it
Chair
Unverified
1:22:24
down to the local level okay and i wouldn't mind addressing that at all uh do i have a specific plan today no i do not that's one of the purposes
of having this meeting right here is to get input to, and if you'll notice, all three districts that we've heard from today, they're all quite unique and quite different. Again, maybe the plan should come from them up and they be the one preparing the plan, implementing the plan. I plan on having a meeting after the physical session where that we have ADQ here and also DF&A.
to talk about some of these issues also but as far as a plan in place no I do not but again who's better to address their problems than them locally instead of us make one size fits
all up here well and thank you
Speaker 69
1:23:21
Mr. Chair and that's one reason why I ask it of the district if it's in the very early development stages I understand I have complete confidence in the white river planning and development district you know and their input i think that being able to
charge for disposal of these tires like we do all the other waste instead of the money running through so many channels might be a more efficient way of handling things but i'd be interested in whatever suggestions we can get from the districts on on trying to localize this thank you
Representative Frances Cavenaugh
Unverified
1:23:58
one comment and I would like to make that we did work, as the regulation and the law stated, was to work with AEDC's manufacturing solution. Mr. Phil Plyart came up to the district a number of times and reviewed all of our numbers,
looked at all of our spreadsheets, and reviewed our business plan. And at that time, our cost of doing business was $2.90. At first, ADEQ did approve that business plan, and then after they were seeing, they felt there was a need to reduce it. they reduced us originally much lower than the 238, but we agreed with them to try to do it at 238. One of the problems that we experience, we have four trucks that run the district, the 10 counties. We have 55 trailers. We have two shredders down at the monofill and some very old
equipment at the monofill to move the tires. All this equipment is getting very old. Our tire trucks have over 300, 350,000 miles on them. With receiving this amount of money that we are now currently getting we are not able to replace those trucks um we do have a gentleman that is mechanically inclined that has been wonderful helping us maintain the trailers and keep them road worthy so they can be out on the road but we run a very tight ship and are actually at a deficit if it were not for the trailer rentals that we do with the tire dealers and the cost
Speaker 121
1:25:18
that we're able to pick up at the local level judge griffin
Speaker 158
1:25:25
i i think i see you over there wanting to speak, aren't you? Mr. Chairman, members, I appreciate the opportunity. One point I made to the Judges Association is in 89, the solid waste districts were put under the PDDs. That was legislative intent for ultimately the waste tire to be under them. And as a PDD, each of us are members of a PD to buy law. So the legislature itself has assigned us the duty to serve there.
And I know there's a various difference in how much different county judges work with their PDDs, such as I know as county judge, Mr. Chairman, Selene County worked with Davis Tires, so you had a little bit more minimal knowledge necessarily than we would. I want to tell a very brief story. One of the judges from up in northwest Arkansas and I had breakfast, and he said, Robert, I don't know anything about waste tires. I don't deal with that. When I got home, I said, I'm going to call that county and start trying to find out what to do with a waste tire. Seven calls later,
including going to the DEQ site going to the county's solid waste management board site everything I did I did not get an answer until the waste management called me from the pit he said Robert we send them to West Tire District so that particular county doesn't deal with them whatsoever the collection points the tire dealer had no clue where they went they thought they went someplace in Van Buren in that case. So there is a whole lot of difference in knowledge but what
I can tell you is that from the White River District operating at about 240 a tire you have one pickup go out that's an additional $28,000 expense at state bid. You have need knives on the shredder we just sent a thing for about a hundred grand down to Dallas and and we help assist with that so we're running bare bones at 240 and not a single cost that may increase is considered in that now i'm one of those and represent payton and mr chairman i believe in
solutions i believe that to cover the deficit that if the legislature would request the governor's office the 260 million uh surplus money that used to go to gif maybe we could get some assistance for this year from that. I don't know how that would go or not. Representative Richmond's laughing about that one, but that's a possible solution. And I will say this, every district's different. The Benton County District, they contracted out the contractors, and I have that email if I need
to send it to anybody. They contract with a kiln that makes cement, but that's a very unreliable thing, but they only have to pay $20 to transport their tires there. But then other than that, they deal with Champlain, which is $98. So just imagine that one district lose that one resource for a tire-derived fuel, and their cost goes up $70-something a ton. So there is truly, as you said, Chairman, there's not a one-size-fits-all. But the other thing, I think if you give every district a $3 fee directly, we can probably find a way to manage a whole lot better than we are
Chair
Unverified
1:28:31
right now i will accept any questions seeing none i hold it representative kavanaugh you're recognized
Representative Frances Cavenaugh
Unverified
1:28:41
thank you mr chair i just wanted to touch on the base where you you had talked about how you went through the process in the law to come up with your cost and then when it got submitted to deq they came back and said oh no we're not going to accept that we're going to want it to be of this amount did they give you any reasonings why they didn't accept what
you went through the process that we asked you to do why they
didn't accept that I really can't answer that because by the time we got there they had offered the the lower rate of what it was going to be and we said there's no way we could operate at that and we went over our costs again one of the things that we're finding ADEQ is not supportive of the tire monofill and they question a lot of our costs down there it is a for our total waste tire program
it includes the cost of placing tires in the tire monofill and covering them with dirt ADEQ has questioned the cost of dirt they felt that was an expense that should come outside of our tire program but unfortunately it is a cost of our tire program which was an approved program by ADEQ and our business plan that right now we run a monofill and that's part of the program so we don't have other resources to pay for the cost of the dirt that has to close the landfill or cover the tires on a weekly basis.
Chair
Unverified
1:30:06
Thank you. Okay, any other questions? Seeing
none, we appreciate you coming today. I know you had to come a long way and probably get up early this morning. And I appreciate the others presented today I think all of them had with the exception of Pulaski County had to come pretty good ways and again we will be working with the tire districts hoping to come up with a solution and I say we'll have a meeting sometimes after the physical session we'll
have ADQ here and I invite all of you back at that time and at this point we'll move into exhibit E an overview of community development block grant program and I've asked Jean Noble the director of the grant program to come forward also mr. Jim Hudson the executive vice president of operations and general counsel we'll give the
Chair
Unverified
1:31:14
All right. I would ask everyone to give them their full attention here, please.
Speaker 165
1:31:50
Ms. Noble, you're recognized. Please identify yourself for the record. Jim Hudson, EVP for operations for AEDC and general counsel. I'm
Speaker 168
1:32:05
Jean Noble. I'm the director of the grants division at AEDC and the program manager for the state CDBG program.
Speaker 5
1:32:13
We appreciate y'all being here today, and you may proceed. All
Speaker 170
1:32:16
right. Mr. Chairman, thank you on behalf of Commerce Secretary Mike Preston for inviting us to be here today
to share with you information about our Community Development Block Grant Program. CDBG represents the largest part of our granting capability at AEDC. Often when we think about AEDC, we think about business recruitment and retention, which is our core mission at ADC. However, part of our core is also to assist communities and their development needs so they can be competitive in business recruitment and business retention. In addition to CDBG, we have several grant programs and rural services, including our new
community assistance grant program. We launched community assistance grant program this year and funded 23 projects throughout Arkansas. Depending on future availability, we think this program become a key flexible component to meet local development needs all these programs together represent over 20 million dollars in grant capability funded by both federal grants and by state gr at adc we know that community development is an integral part of economic
development we look forward to continuing to partner with you to benefit the quality of life for all arkansans and with that i'll turn it over to miss noble who is
Speaker 172
1:33:39
our expert on cdbg thank you thank you chairman and thank you representative love for inviting me to come and talk again about CDBG it's always a great opportunity to talk about state CDBG for small cities program that we administer in the grants division at AEDC that is our primary responsibility in the grants division is the management of the state CDBG program our mission is to improve the quality of
life for an economic well-being of the citizens of Arkansas through the effective management of federal and state grant programs again we primarily manage the cdbg program that comes to us from hud housing and urban development it's created by the housing and community development act of 1974 and congress appropriates these funds to us annually to states and to entitlement cities so we do manage the state small cities program there are 13 entitlement cities in arkansas that receive a direct allocation of cdbg funds so we again manage the program for
the smaller cities for the more rural communities within the 13 entitlement cities were unable to use our state small cities program funds so they these 13 cities represented on the map are in 13 entitlement cities so basically the 13 largest cities in Arkansas have their own CDBG department a manager and they set their own priorities for funding their CDBG funds but overall for the entire CDBG program every project must meet at one of these three national
objectives so this is the first criteria for receiving CDBG funds the project that's funded must benefit low to moderate income persons it must must be a project that eliminates its conditions of slum and blight or it must meet an urgent need in our program we meet that first one benefit to low to moderate income persons primarily I would say 99% of our projects can and do meet that first national objective benefit to LMI persons we fund through cities and
counties so a grant cannot be made directly to a for-profit company a nonprofit or to an individual but each of our projects certainly benefit could benefit one of those could benefit a nonprofit or for-profit company and we'll talk about each one of our set asides in our method of distribution for those so So this pie chart represents our 2019 allocation. We are currently in program year 2019 of our CDBG five-year plan.
This is the last year, the final year of our current five-year consolidated plan and we're actually in the planning processes now of our new five-year consolidated plan which will include an action plan for our 2020 funds. So in 2019 we received $17.85 million. The pie chart represents how we set up our method of distribution or our set-asides for the program. We currently, in 2019, set aside 55% of our funds for economic development, 36% for community development,
which is made up of residential water and wastewater, which is shown on the pie chart separately because we do set aside a minimum amount just for residential water and wastewater infrastructure. The other 11% or so is for general assistance, which is all other public infrastructure, and then vital public facilities, which house vital public services. So a variety of those, and we'll talk about examples of each one of those types of projects. 6% in the partnership we have with the Rural Services Division for fire trucks, fire stations,
community centers, for communities of 3,000 or less. And then the balance there is our administrative set-aside. so again we are in the process of planning for our new five-year consolidated plan our new 2020 action plan I'm happy to announce that just a few weeks ago we received notice that our 2020 allocation appropriation from HUD would be an increase we're expecting to receive 18.4 million dollars in 2020 which will be about a 550,000 dollar increase for CDBG and each one of our
HUD-funded state-administered grant programs are also receiving increases. So we were happy to see that. It's not often you see an increase in CDBG. We've been experiencing a sharp decrease since I've been involved in the program, down from about 24 million dollars a year. So in the consolidated plan, which is basically our application to HUD for the funds, we combine all of the priority setting for all aspects of non-housing community development, economic
development, housing, and homelessness programs into one plan. We know that it takes a comprehensive approach to meet all of these needs. We know that housing problems are closely related to the state and the availability of neighborhood facilities, infrastructure certainly, and it's also all tied to the availability of the jobs or the prospect of jobs locating in Arkansas. We do hold public focus group meetings throughout the year. We are in the middle of our planning process now. When that
plan is drafted, we make it available on our website. For public comment, we are in more of the public input stage right now. We kicked off our 2020 to 2024 five-year consolidated plan process with a meeting in October we've we will be preparing and updating our analysis of impediments to fair housing which is also a HUD requirement which will accompany our five-year plan in our 2020 action plan this time we have some expanded outreach and consultation that's required HUD is wanting us to
address our plans for implementing CDBG into the overall state disaster Recovering Resilience efforts, broadband expansion, Envision Centers, Opportunity Zones, and the opioid crisis. So these are areas in our Con Plan where we'll be expressing to HUD how we've enhanced our stakeholder input into those areas. We held a series of public input sessions and focus group meetings February 19th through 21st and we'll have our draft due to HUD in May
and we expect the plan to be available for review and public comment in April. April will constitute our 30-day public comment process or period. So for economic development the set-aside in which we set aside 55% currently in 2019 this is a very flexible set-aside CDBG funds are can be used in a very flexible manner to to address a wide variety of needs for a prospect a company looking to expand or locate in Arkansas again with that national
objective where at least 51% of the jobs made available or retained by as a result of the CDBG project are made available to low to moderate income persons at the time of hire it can include a grant to a city or county to make a grant or a loan to a company for a wide variety of purposes infrastructure public infrastructure to support the location or expansion of the company for site improvements, building improvements, or equipment purchases. What we look at
there is it is a year-round process. CDBG may be just one part of an incentive package that's offered to a company that's looking to expand or locate in Arkansas. Again, it must be a good fit for CDBG, so it won't be for every incentive project, but those that are able to make at least 51% of the jobs available to someone with just a high school education or the equivalent be considered for the for the job we do required underwriting on the project look at the cost
benefit analysis of the project the financial feasibility of the company and their ability to repay the grant should they not create the jobs required we work on this in a partnership with our business development division at aedc so if you have a prospect looking to locate or expand in Arkansas they go to the business development side first to see if CDBG is a good fit if CDBG is going to be a part of an expect part of a incentive package then it comes to us in the grants division to manage our partnership
Speaker 174
1:41:58
with the division of rural services there's four communities of 3,000 or less
Speaker 172
1:42:03
so here we have a population limit again all projects must benefit at least 51 percent low to moderate income person so we're using this for area-wide projects where community centers are being constructed fire stations it's for fire trucks for fire equipment or for life-saving fire gear worn by firefighters Megan Earnhardt is the grants manager in the division of rural services that manage the rural services block grant program so this is a set
aside of our overall CDBG program they have up to seventy five thousand dollars available it's a competitive set aside I believe the applications for 2020 are going to be due in August. It does require a 10% match and again we set aside approximately 6% of CDBG which equals about a million dollars and that's just some examples of block grant eligibility. Our general assistance set aside is our it's also a competitive set aside it gives us a chance to fund those
community development projects that aren't eligible under the other set asides. It's a very broad category of priorities in a local area both for infrastructure and public facilities. We have a minimum grant request of $75,000 and go up to $200,000 for most projects. New water and wastewater extension projects we do allow them to apply for up to a million dollars. Again this is just for 2019. We will be setting our new method of distribution. We may make
changes to our to our limits here all costs should be included there including design costs and architectural costs we do add administrative fees to the amount requested to cover the cost of a planning and development district or another nonprofit or for-profit grant administrator to administer the grants with all of their complex requirements for the local government again here activities must meet one of the national objectives. They must be eligible for CDBG
and address one of our high priority goals, but it's very broad. Our top high priority goal is public infrastructure and public facilities. So examples of public facilities that we fund, these are public facilities that house vital public services. We don't fund the services. We're more of a brick and mortar program here. Senior centers, child care centers, public health units, homeless shelters, youth centers, public libraries, food pantries, centers for abused children, centers for abused spouses, and centers for disabled adults and children. So these are
some of our most commonly funded public facilities. This is not an exhaustive list. This is just those we fund most often. On the public infrastructure side, certainly water and wastewater residential construction or rehabilitation, drainage, flood control, ditch clean-out projects, and projects for handicapped accessibility. Of these water, of the public infrastructure projects, water and wastewater involves a
slightly more complex procedure in that they have a more of a pre-application process. So in Arkansas water and wastewater projects do need to go and be reviewed by the Water Wastewater Advisory Committee, the WAC. It allows the WAC members, which is all of the state and federal funded partners that fund water and wastewater infrastructure projects in the state, and the regulatory side. The Department of Health, the Department of Environmental Quality, AEDC, USDA Rural Development, the Arkansas Natural
Resources Commission, Communities Unlimited as a nonprofit side that provide a lot of technical assistance to water and wastewater boards in managers we all sit on the WACC and we look at every application for water and wastewater in Arkansas to recommend to them who is the best agency to apply to and then again looking at the technical side our general assistance set aside so the water and wastewater projects and the public facilities we score competitively on this scoring based on this scoring criteria we look at the
need for the project, the impact of the project once it's completed, the readiness of the project to proceed is very important to us, the extent to which there is citizen interest and citizen participation, the amount, the extent to which the project is leveraged other state federal and local funds. A match is not required here but it's certainly recommended and part of our scoring. The extent to which the project benefits low to moderate income persons and we do have some bonus points that include additional capacity of the local
government the mayor the recorder and the treasurer to implement the project with significant capacity on the local level and then we also added a bonus point for projects in opportunity zones to show HUD our federal funding partner in how we are leveraging CDBG funds and opportunity zones so there are I think think it's one one bonus point for projects and opportunity zone. We have overall arching guidelines of the program, application packages for each
set-aside, this scoring criteria, the full package of exhibits that are required for CDBG, the income charts, the charts that say whether communities are 51% low to moderate income or not, all of this is located on our website at arkansasedc.com slash grants and we are looking at a deadline for general assistance March 27th so this is coming up at the end of this month these projects are well underway now there's probably not sufficient time to put together one of
these now our planning districts are busy putting together water and waste water applications and other public facility applications this is the staff of the grants division again I'm Jean I'm the director of the division the staff's direct phone numbers are listed here we would just like you to know and we do appreciate the opportunity to manage this federal very important federal program for the state but we're also there to answer any of your questions at any time about whether something is eligible or fundable
through CDBG but also just at large we know a little bit about what other agencies fund, state funding out there. We partner with the Division of Rural Services and our Community Development Division and everybody at AEDC. So just reach out to me, feel free to reach out to me at any time with any questions about grant funding or what potential funding sources there are
Chair
Unverified
1:48:53
out there. Committee, do you have any questions? Yes, I see. Yes, Senator Johnson, you're
Senator Terry Rice
Unverified
1:48:59
recognized. Senator Rice, do you have your hand up first? That's fine. Just going back to on the economic development part, and we appreciate all of the different programs you have in the grant processes to help our communities. On the particular ones that go to the private or what it calls for-profit
businesses, is there any periodic independent evaluations done by independent parties on economic development projects? In the legislature, we hire consultants to look at everything in the world, spend a lot of times, I think, a lot more money than we need to. beyond what the commissioners and the agency itself has expertise in?
Is there any third-party things that look at any of those things at any time? On
Speaker 166
1:50:11
the CDBG funds, I don't believe so. For the other incentive packages, obviously we're going through a legislative audit with that,
Speaker 170
1:50:17
and so we're appearing before you annually to give an account for what the actual performance has been. We look at it on a pro forma basis, obviously, when we're proposing an incentive package. But on CDBG, I think the main thing there would be reporting out the job creation.
Speaker 172
1:50:34
Right. Several divisions touch a project. It goes from a business developer, project manager, to our business finance division. They have the incentives manager that does the cost benefit analysis project it does come to us at that time as a as a we're tending to use cdbg as part of this project so i have time before a commitment letter is written to make sure that it is a good fit for cdbg but no other independent look at each individual project if that's what
Speaker 178
1:51:06
you're asking basically you just go back and look and see if their plan fulfilled as far as employment and those those
Speaker 172
1:51:13
type things oh yeah we have um built-in reporting semi-annual or quarterly reporting, depending on how the deal is written.
Speaker 170
1:51:24
That's done within agency? Within the agency, yes. Okay. Senator Rice, if I may, the actual cost-benefit analysis tool that we use is a third-party developed tool, M-Plan, that forecasts what the benefit will be to the state in terms of income tax generation. So that is third-party built.
It's third-party authenticated. And we look at that to establish what pro forma numbers will be to see if a project will pencil out that there will be a net economic benefit to the state if we were to do
Senator Mark Johnson
Unverified
1:51:57
the transaction very good thank you thank you mr chair thank you mr chair uh miss noble mr hudson uh it's been a long time since i worked with cdbg i actually was on the planning committee that created acedp back in 1981 or two seems like
another lifetime i really just want to know about if there were changes in this i know that entitlement cities obviously are not eligible but i seem to recall something that was done about unincorporated areas or counties within an msa what is the status for example can a project be done in the unincorporated area of a county within an MSA. Is that eligible? I've got
Representative Love here probably knows more about it than anybody else, but could. Yes, certainly. Oh, he's looking at me because he wants to know the same thing. I'm just curious how that is set up. Is that
Speaker 172
1:52:58
a potential eligibility? Of course, yeah, that county would apply. a community would just go through the county the county county government or city government has to administer each grant so they would just go through the county to benefit an
Senator Mark Johnson
Unverified
1:53:14
unincorporated area but is is it a sliding scale or is there a minimum lmi benefit that's necessary for funding
Speaker 172
1:53:21
all projects must benefit at least 51 percent low to moderate income persons so in an unincorporated area that may require them to do an income survey of the service area it's all service related so it is based on the beneficiaries of the project so that's not always required for every type of project there are types of projects that benefit just based on the people that they serve limited clientele project for example but we generally if a project is expected to serve everyone in the area like a general public facility or an infrastructure project that
everyone would benefit from an unincorporated area again might have to look at census data down to the block or census tract group level or do a door-to-door survey the cities have an easier time they have the published lmi percentages that say the city is you know 51 percent or above counties might have a little communities might have a little bit more of a burden to to
Speaker 180
1:54:18
document their low to moderate income percentage but quick follow-up mr
Senator Mark Johnson
Unverified
1:54:28
project i worked on i learned there was some uh hud had some presumptive rules about for example people with disabilities were deemed to be lmi whether they were or not i guess you should say and there was also a similar thing for elderly
Speaker 172
1:54:48
is that still in place more or less yes those are limited clientele categories it includes elderly disabled adults homeless persons battered spouses migrant farm workers although i have not done one of those projects
i may be illiterate persons so those are all examples of and we do have an income limited clientele worksheet where that is kind of a self certification that projects that do exclusively serve those persons would be considered LMI based on the nature of who is served by the projects. So that's an example of a type of project where it could be funded in a city or a community that's not 51 percent LMI. Frequently they feel like they're being left out,
I'm not 51 percent, I'm not eligible for CDBG. Senior centers, homeless shelters, centers for abused children or abused spouses would be eligible, whether or not the area is 51% LMI. Okay, great. Thank
Speaker 188
1:55:50
Chair. Okay, any other questions? Yeah, Representative Rye, you're
Chair
Unverified
1:55:53
recognized. Yes, sir. Thank you, Mr. Chairman. Ma'am, you know,
Representative Johnny Rye
Unverified
1:56:01
I have a lot of towns that are are right above the uh the two the three thousand people and that if it's anything three thousand
Speaker 168
1:56:10
and above that's just for the rural services
Representative Johnny Rye
Unverified
1:56:16
set aside right is there any way do you not run
Speaker 172
1:56:21
into that too well for those types of projects that are funded through the rural services set aside those are eligible through the general assistance set aside so if you have a community of 3,500, and they want a fire station or community center or fire equipment, they can apply through the general assistance set aside, and they can actually apply for more money because the projects go up to 200,000 in that set aside.
Representative Johnny Rye
Unverified
1:56:45
Follow up, please. Yeah, follow up. Yes, ma'am, but what is the one, if you're over a certain amount, that you're ineligible? Is it 3,000 for 1,000 population?
Speaker 191
1:56:58
That might be some of our state funding program. rural services block
Speaker 172
1:57:03
grant that he's referring to there there is the rural services set aside in the cdbg program where it's for communities of 3 000 or less but the communities above 3 000 can apply for those same activities through the general assistance set aside so nobody's excluded
Speaker 193
1:57:19
in cdbg okay any other questions seeing
Chair
Unverified
1:57:24
none uh and for the committee a good starting place maybe with the planning and development district to touch base with them if you think you have something. And they're pretty good reference for that and applying for the grant also. Jean, we appreciate you and Jim coming today. If you would, could you send your PowerPoint to
staff here and then staff would send it out? We have it already. Okay. All right. Thank you very much. Thank you, Mr. Chairman. Okay, seeing no other business, we are adjourned.
Agenda
A. Call to Order
B. Comments by Committee Chairmen
C. Motion to Consider Approval of the January 13, 2020, Meeting Minutes [Exhibit C]
D. Discussion of Policy and Funding Concerning Public Waste Tire Collection Centers
E. Overview of Community Development Block Grant (CDBG) Program [Exhibits E1 and E2]
F. Other Business
G. Adjournment
Documents
Speakers
Chair
Unverified
Speaker 13
Representative John Payton
Unverified
Representative Fredrick J. Love
Unverified
Speaker 19
Speaker 38
Speaker 22
Speaker 42
Speaker 46
Speaker 50
Representative Frances Cavenaugh
Unverified
Speaker 54
Senator Gary Stubblefield
Unverified
Speaker 25
Speaker 63
Speaker 59
Speaker 68
Speaker 69
Speaker 66
Representative Johnny Rye
Unverified
Speaker 71
Speaker 102
Speaker 103
Speaker 104
Representative Carlton Wing
Unverified
Speaker 97
Speaker 138
Speaker 147
Speaker 152
Speaker 153
Speaker 121
Speaker 158
Speaker 5
Speaker 165
Speaker 168
Speaker 170
Speaker 172
Speaker 174
Senator Terry Rice
Unverified
Speaker 166
Speaker 178
Senator Mark Johnson
Unverified
Speaker 180
Speaker 182
Speaker 188
Speaker 191
Speaker 193