United States	Air Programs Branch	EPA-904/9-79-039
Environmental Protection	Region IV	April 1979
Agency	Atlanta, Georgia 30308
& EPA An Analysis of
Inspection-Maintenance
Program Options for
Jefferson County,
Kentucky
Executive Summary

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AN ANALYSIS OF
INSPECTION-MAINTENANCE PROGRAM OPTIONS
FOR JEFFERSON COUNTY, KENTUCKY
EXECUTIVE SUMMARY
Submitted to
Jefferson County, Kentucky
Air Pollution Control District
Prepared by
Engineering-Science
7903 Westpark Drive
McLean, Virginia 22102
April 1979

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TABLE OF CONTENTS
Section	Title	Page
I	INTRODUCTION	1-1
Overview	1-1
Statutory Considerations	1-2
Public Perception of I/M	1-3
Phase I Results	1-4
Phase II Objectives and Limitations	1-5
II	PROGRAM DEFINITION AND ASSUMPTIONS	II-l
Inspection Operations	II-l
Program Administration	II-2
III	COST ANALYSIS OF PREFERRED OPTIONS	III-l
Government-Run Lanes	III-l
Contractor-Run Lanes	III-3
IV	EXPECTED VEHICLE REPAIR COSTS	IV-1
V	FUNDING	V-l
Requirements	V-l
Funding Opportunities	V-l
VI	BENEFITS OF INSPECTION-MAINTENANCE	VI-1
LIST OF ILLUSTRATIONS
Table	Title	Page
1	Capital Costs (Government-Run Lanes)	III-2
2	Operating Costs (Government-Run Lanes)	III-4
3	Annual Costs (Government-Run Lanes)	III-5
4	Additional Implementation Costs	III-6
5	Capital Costs (Contractor-Run Lanes)	III-7
6	Operating Costs (Contractor-Run Lanes)	III-9
7	Annual Costs (Contractor-Run Lanes)	111-10
8	Additional Implementation Costs to Government	111-12
9	Repair Costs for Existing Programs	IV-2
10	Recent Repair Costs	IV-3
11	Funding Requirements	V-2
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SECTION I
INTRODUCTION
OVERVIEW
Engineering-Science (ES) was engaged by the U. S. Environmental Protec-
tion Agency, Region IV, Atlanta, Georgia (EPA) in July 1978 under Contract
No. 68-02-2869 to assist the Jefferson County, Kentucky, Air Pollution Control
District (APCD) in the evaluation of motor vehicle emissions inspection-
maintenance (I/M) programs. This effort was intended to provide comparative
cost/benefit analyses which could be used by a joint city-county-state task
force as the basis for selection of a preferred option, there being many ways
to administer and conduct inspection-maintenance programs. It was expected
that the task force would report their preference to the City of Louisville
Board of Aldermen and the Jefferson County Fiscal Court and suggest an ordin-
ance which would establish an I/M program.
I/M has been found to be an effective means of identifying cars which
need remedial maintenance or adjustment and requiring the necessary repairs.
Tests have shown that hydrocarbon and carbon monoxide emissions of in-use
vehicles are much higher than expected under the Federal motor vehicle emis-
sion control program, partly because of malfunctions that went undetected,
partly because of too infrequent a maintenance schedule, and partly because
of tampering with the emission control devices. I/M programs in several
states and municipalities show that when vehicle exhaust emissions are mea-
sured at least once a year and high emitters are required to have their ve-
hicles repaired, the repaired vehicles' emissions conform to the rates pro-
jected by EPA. Deterioration in the intervening year appears to be less
than the improvement realized so that there is an increasing benefit over
the years.
Mandatory inspection-maintenance programs not only reduce emissions of
hydrocarbons and carbon monoxide to the level projected by the Federal motor
vehicle control program, they also result in a standardized baseline that
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will permit accurate assessment of the impact of transportation control mea-
sures, such as carpool/vanpool programs. The emission reduction will have
a beneficial effect on human health and reduce the damage to agricultural
products as well. It should result in improved visibility, giving a clearer,
brighter visual aspect to the entire community. Finally, improved mainten-
ance should lead to improved fuel economy. Estimates presented in this report
(page 11-25, Phase I) suggest a saving of 40 gallons of gasoline per year for
the average repaired vehicle. This not only defrays the cost of repairs but
promotes national energy conservation goals.
ES provided the necessary comparative cost-benefit analyses of sixteen
available emissions inspection options and issued a final report on the first
phase of this effort in early December 1978. Then, the task force in a series
of meetings selected two preferred options: a centralized idle mode inspection
managed for the county by a private contractor and a centralized idle mode
inspection managed by local government. These were the two low-cost options
when total program costs were considered. However, they present local govern-
ment with various financial requirements. The task force proposed presenting
both options to the City Board of Aldermen and the County Fiscal Court with
task force endorsement. Selection of a single option is expected to be made
by the legislators primarily on the basis of financial determinants. The
ordinance which establishes the program and its funding would be passed by
both bodies.
In February 1979 EPA requested ES to continue its support to the APCD
and prepare supplementary cost analyses for the two preferred options. These
analyses are sufficiently detailed and pertinent to local circumstances to pro-
vide the legislators the basis for selection between the options and the basis
for the financial planning associated with the I/M ordinance. This was consi-
dered Phase II of this effort, and the detailed cost analyses of the two prefer-
red options are appended to the basic report.
STATUTORY CONSIDERATIONS
The Clean Air Act Amendments of 1977 (CAA) require each state which has
areas within it which are not attaining the National Ambient Air Quality Stan-
dards (NAAQS) for any pollutant, as designated by the state and confirmed by
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EPA, to submit a revision to their State Implementation Plan (SIP) which will
outline the strategy by which the NAAQS will be attained as expeditiously as
practicable. Standards are to be attained no later than the end of 1982 except
in the case where a state can show that even with the application of all reason-
ably available control measures the carbon monoxide and/or the ozone standards
cannot be attained by 1982. The statutory limit may be extended through 1987
provided the state implements transportation control planning and a motor vehi-
cle emissions inspection program with mandatory maintenance of failed vehicles.
Consultation with the Department for Natural Resources and Environmental
Protection (DNREP) in Frankfort, Kentucky, has indicated that Jefferson County
is designated nonattainment for both ozone and carbon monoxide. Even though
the ozone standard has recently been raised from 0.08 ppm to 0.12 ppm, the
possibility does not exist that the ozone standard may be achieved by 1982.
Further, the SIP will show that despite the application of all reasonably
available control measures the ozone and carbon monoxide standards cannot be
achieved by 1982. Thus inspection-maintenance in Jefferson County will become
a statutory requirement of the responsible governmental agency.
A House committee of the 1978 Legislature of the Commonwealth of Ken-
tucky briefly considered and declined to pass on the floor of the General
Assembly legislation which would specifically require I/M programs where needed.
However, the legislature did enact Home Rule legislation, KRS 67.083, as amend-
ed, which could be used as local enabling legislation. In an opinion dated
August 18, 1978, the Attorney General concluded that KRS 67.083, as amended,
specifically authorizes the fiscal court of Jefferson County to enact an ordin-
ance establishing a mandatory motor vehicle emisison inspection/maintenance
program. Through the mechanism of KRS 77, Louisville and Jefferson County al-
ready jointly fund a local air pollution control board capable of administering
a city-county inspection program.
PUBLIC PERCEPTION OF I/M
In October 1976 the Urban Studies Center, University of Louisville pub-
lished in Community Priorities and Evaluations the results of a public opinion
survey on I/M. It showed that the public identifies cars and trucks as primary
sources of air pollution. A majority (68%) favor mandatory I/M in Jefferson
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County. Those who were opposed were primarily concerned about the proper
administration or effectiveness of the program.
These observations, made during late summer when half the days had air
pollution alerts, were closely repeated in early February when snow and cold
weather prevailed. In the March 1979 issue of the same publication a majority
almost as great (62%) indicated it favored mandatory I/M. The percentage of
support in both surveys is especially significant since the answers were given
in response to a question that made clear that vehicle inspections would cost
$3 to $5 and require maintenance and retest of those cars failing the test.
PHASE I RESULTS
Sixteen options were considered in Phase I with different approaches to
the problem, different ways of administering the program or different types of
inspection procedure. A cost analysis approach was used which considered the
cost of all I/M activities generated by the program to be borne by the motorist/
taxpayer. The most cost effective program was found to be the centralized idle
mode test administered by government. A close second was a centralized mode
test run by a contractor. Decentralized inspection, conducted by independent
private garages, though less expensive when cost to government alone was con-
sidered, comprised the most expensive options when total cost to the taxpaying
motorist was considered. This was primarily due to the large staff that would
be required for quality assurance and because of the large expenditures for
equipment required for most of the options.
The potential for reducing emissions seemed to be independent of the
option selected, provided the standards were stringent enough and inspection
was made at least annually. When an initial failure rate of 35% was consider-
ed, annual I/M had the potential to reduce hydrocarbon emissions in the Louis-
ville SMSA by 32% and carbon monoxide emissions by 41% by 1987, when compared
with annual emissions that would be expected in the absence of such a program.
In addition, some test results have indicated that fuel economy as a result of
maintenance would defray much of the cost of repairs. To achieve this addi-
tional benefit right away, however, it appears necessary to have a mechanics'
training program before inspection-maintenance is implemented.
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PHASE II OBJECTIVES AND LIMITATIONS
It was the objective of the Phase II analysis to present a fiscal basis
for deciding between a contractor-run or a government-run inspection-maintenance
program. It was further the intent that this analysis provide a basis for es-
tablishing the funding requirements of this activity whichever option shall be
selected.
The analysis required first a detailed definition of the program. How-
ever, some decisions made for this analysis may be altered when the program is
actually implemented. For example, 35% stringency may be judged to be inappro-
priate at some later stage. In addition, certain assumptions were made in
drawing up cost figures which may prove to be inaccurate. For example, land
availability in certain zoning categories and locations could not be firmly
ascertained and assumptions made in this connection may have been reasonable
but change before the time of implementation. Finally, growth rates, failure
rates, cost of capital and other variables may prove to have different values
from those assumed here because of their stochastic nature. For these reasons
the costs estimated here must be considered approximate, and for planning pur-
poses only.
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SECTION II
PROGRAM DEFINITION AND ASSUMPTIONS
The basis for cost analysis of the programs, which is presented in
Section III, must be derived from operational and administrative parameters.
This was established in Chapter II of Phase I. The particular parameters
presented below were reviewed by the JAPCD and represent their tentative
program parameters. They apply whether the contractor-run lanes or govern-
ment-run lanes option is implemented.
INSPECTION OPERATIONS
o Program initiation date is January 1, 1981.
o An idle mode test will be given which would measure CO and HC con-
centrations in the exhaust.
o Affected vehicles are light-duty, gasoline-powered automobiles and
trucks registered in Jefferson County with gross vehicle weight (GVW) less
than 8,500 pounds. Excluded are motorcycles, new vehicles, vehicles more than
14 years old, diesel powered vehicles, and vehicles with GVW >8,500 pounds.
Special exemption is given owners if estimated repair costs exceed 10% of
vehicle worth.
o The number of affected vehicles in 1981 will be 444,387 and this will
require 631,030 inspections assuming 35% fail the first test and 20% of these
fail the retest. If these rates were constant and vehicle registration in-
creased by 2% per year, then in the fifth year there would be 490,639 vehicles
requiring 696,708 inspections.
o Personnel requirements will be specified in Section II of this report.
Classification has been varied slightly to conform to the City of Louisville
Civil Service specifications. Thus it is additionally assumed that the City
of Louisville will have fiscal responsibility for any joint city-county inspec-
tion program which may result, although the fiscal agent could just as well be
the county.
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o Inspections will be performed in facilities providing two inspection
lanes. Inspection rates will average 40,000 per year assuming a 40-hour
work week. Thus 16 lanes, or 8 two-lane facilities, will be required initially.
With no new building assumed, the work week would have to increase to 44 hours/
week during the fifth year.
o One exhaust gas analyzer will be provided for each lane (Tachometer/
CO/HC); eighteen total including two spares. Testing and recording of results
would be automated.
o Data recorded will be vehicle specifications, registration details,
test circumstances, test results including pass/fail decision, repairs per-
formed, cost of repairs, retest circumstances, and results.
o A government-operated challenge facility is necessary under the
contractor-run lanes program.
PROGRAM ADMINISTRATION
o Land purchased for the network is zoned industrial. Minimal facilities
will be constructed thereon to protect equipment and supplies from weather and
theft. OSHA requirements will be met.
o Mechanics may be certified upon successful completion of an approved
short course (8 hrs.); garages to be licensed must have a certified mechanic
on duty and approved emission analysis equipment. These actions are voluntary.
o Vehicle emission inspectors must successfully complete an approved
short course (40 hrs.).
o Maintenance of exhaust analyzers will generally be performed by program
personnel.
o A vigorous consumer protection program will be maintained to guard
against unnecessary repair or overcharge and to hear complaints.
o A vigorous quality assurance program will be maintained to guarantee
frequent calibration of instruments, linearity of response, and integrity of
calibration gases.
o A vigorous public relations program will be maintained with frequent
reporting of all aspects of the program.
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o Necessary training can be provided by the county vocational-techni-
cal schools for the estimated 500 mechanics and 35 inspectors to be certified
in the first year. Thereafter, a monthly offering for mechanics is assumed
adequate.
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SECTION III
COST ANALYSIS OF PREFERRED OPTIONS
In this section we consider the capital costs, those initial outlays
necessary to establish the program, and the operating costs, those expendi-
tures required for its continued operation. Then annual costs are estimated
which are simply the sum of the operating costs plus the amortization of the
capital costs. In the government-run lanes option, an alternate is consid-
ered in which capital costs are paid in the first year and an equipment re-
covery fund is established. First year and stable annual costs of this al-
ternate are also provided. Those initial costs which are necessary to the
programs success, but which do not produce tangible assets, such as inspec-
tors training, are not capitalized when made by government. The recovery
of these costs by the contractor, however, is allowed.
The two programs are costed separately. They are identified by the short
titles: Government-Run Lanes and Contractor-Run Lanes. In this analysis
costs are estimated in 1979 dollars; salaries are computed at entry level;
and no allowance is made for construction contingencies. This establishes
baseline costs with a minimum of speculation. In Section V, when funding is
discussed, the effect of inflation, promotion, and construction contingencies
are considered. All costs are estimated to the nearest hundred dollars.
GOVERNMENT-RUN LANES
Capital Costs
Capital cost (Table 1) items include real and personal property. The
cost of land, 8 one-third acre sites, is estimated to be $82,500. The eight
buildings required for each site total $193,600. This is an average of
$24,200 for each building, including site preparation and utility hookup.
Equipment costs include $102,600 for the exhaust gas analyzers; $250,000 for
data processing equipment (comparable to IBM System One); and $42,700 for
support furnishings, office equipment, and vehicles. The total estimated
capital cost is $671,400.
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TABLE 1
CAPITAL COSTS (GOVERNMENT-RUN LANES)
(1979 dollars)
PROPERTY
COST
Land
Buildings, including site preparation
Equipment and furniture
Inspection equipment
Data Processing Equipment
Hardware
Software
Office Equipment
Furniture
Vehicles
$102,600
200,000
50,000
6,200
19,000
17,500
$ 82,500
193,600
395,300
Subtotal $395,300
Total $671,400
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Operating Costs
Operating costs (Table 2) total $714,800 of which $482,000 is required
for program operations and $232,600 is required for program administration.
Seventy-eight percent of the operations budget and 66% of the administration
budget are personnel salaries and benefits. Public relations, maintenance
of equipment and supplies are the only other major costs and they are esti-
mated at $137,700.
Annual Costs
Calculated annual costs are given in Table 3. Real property is amortized
over 10 years at 8 1/2% interest; equipment is amortized over 5 years at 10%
interest. The annualized capital costs are seen to total $146,400. When
added to annual operating costs, the total annual cost of the county-run lanes
option is obtained: $861,200. With a vehicle fleet of approximately 444,000
this amounts to $1.94 per vehicle. An alternative means of financing is con-
sidered in Note 3: capital costs are paid outright and and an equipment re-
covery fund is established. This results in first year per vehicle costs of
$3.36 and stable annual costs of $1.85.
Additional Implementation Costs
Table 4 contains a summary of first year costs that were not capitalized.
Start-up costs, figured on the basis of a six-month uniform buildup of person-
nel and property as one-quarter's annual costs, amount to almost 64% of the
$315,700 total. Other significant items are a vigorous public relations cam-
paign ($50,000), which is believed to be vital to the success of the program
gram on the basis of results in other programs; and procurement costs ($55,200),
calculated as 15% of the cost of equipment, which is an estimated cost of pur-
chasing by bid. Minor items include: mechanics' training ($5,300), inspec-
tors' training ($1,700), and a voluntary garage certification or licensing
program ($2,500). These additional costs add $0.71 per vehicle the first
year.
CONTRACTOR-RUN LANES
Capital Costs
Property costs for the contractor (Table 5) are essentially the same as
reported for government in the previous option, $678,000. However, the front-
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TABLE 2
OPERATING COSTS (GOVERNMENT-RUN LANES)
(1979 dollars)
ANNUAL
	OPERATIONS	COST
Operations
Personnel salaries and benefits	$374,900
Uniforms	2,200
Gas supplies	44,000
Equipment repair and replacement	43,700
Travel (local)	1,400
Miscellaneous (utilities, etc.)	16,000
Subtotal	$482,200
Administration
Personnel salaries and benefits	$153,200
Public Relations	50,000
Office supplies	10,000
Travel (local)	3,200
Rent	6,000
Uniforms	200
Miscellaneous (utilities, accounting	10,000
services, etc.)
Subtotal	$232,600
Total	$714,800
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TABLE 3<3)
ANNUAL COSTS (GOVERNMENT-RUN LANES)
(1979 dollars)
COSTS
TER21S
ANNUAL
COST
Capital Costs
Land and buildings
Equipment
Operating Costs
Operations
Administration
$276,100 for 10 yrs.
@ 8 1/2%(1)
$395,300 for 5 yrs.
@ 10% (2)
$ 42,100
104,300
Annual Cost/Vehicle
861,200/444,000
Subtotal $146,400
$482,200
232,600
Subtotal $714,800
Total $861,200
$	1.94
(1) f = i(l + i)n/(l + i)111-! = amortization factor, where i is the interest
rate and n is the number of years. This factor applied to the principal
yields the annual payment. For i = 0.185 and n = 10, F = 0.1524.
For i = 0.10 and n = 5, F = 0.2638.
(3) If capital costs were paid in the first year from other sources and an
equipment recovery fund were established to provide for extended opera-
tions without refinancing, then first year and stable annual costs would
be computed as follows:
Capital Costs
Land and buildings
Equipment
Operating Costs
Operations
Administration
Equipment Recovery Fund
Subtotal
Total
Annual Cost/Vehicle
First Year
$276,100
395,300
482,200
232,600
104,300
819,100
$1,490,500
$3.36
Other Years
482,200
232,600
104,300
819,100
$819,100
$1.85
TTT-S

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TABLE 4
ADDITIONAL IMPLEMENTATION COSTS^1)
(1979 dollars)
Mechanics training and certification
$ 5,300
Inspector training and certification
1,700
Garage certification or licensing
2,500
Public relations campaign
50,000
Procurement costs
55,200
Start-up costs
201,000

$315,700
(1) These implementation costs add $0.71 per vehicle to the first
year costs computed in Table 3, note 3.	If they could be
amortized over 5 years at 10%, then they would amount to
$83,300 annually or $0.19 per vehicle.
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TABLE 5
CAPITAL COSTS (CONTRACTOR-RUN LANES)
(1979 dollars)
COST TO
CONTRACTOR
COST TO
GOVERNMENT
Property
Land
Buildings
Equipment and furniture
Inspection Equipment
Data Processing Equipment
Hardware
Software
Office Equipment
Furniture
Vehicles
Implementation Costs
Mechanics Training and Certification
Inspector's Training and Certification
Garage Certification or Licensing
Public Relations Campaign
Procurement Costs
Start-up Costs
Subtotal
Total
$ 82,500
201,100
394,400
( 102,600)
200,000)
50,000)
5,300)
19,000)
17,500)
Subtotal $678,000
$ 1,700
$199,300
$201,000
$879,000
$10,000
24,200
57,600
(27,200)
( 4,400)
( 8,500)
( 17,500)
$91,800
$ 5,300
600
2,500
50,000
8,200
$ 54,200
$120,800
$212,600
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end cost of training inspectors ($1,700) and the start-up costs ($199,300),
calculated as before, one-quarter's annual cost, are included as capital
costs and may be recovered by the contractor. Together they bring the capital
cost to the contractor to $879,000, a 31% increase over the government-run
lanes option.
Also in this option, government would have the capital costs associated
with the establishment of a challenge lane, for consumer protection, and a
quality control unit. The total property cost to government is estimated at
$91,800 and this is amortized later. Listed in Table 5, however, are the
first year costs to government which do not produce tangible assets and are
not amortized later. These total $120,800 figured on the same basis.
Operating Costs
Operating costs for this option are given in Table 6. They total $842,400
compared with $714,800 for the previous option. Efficiencies of management
do not compensate for profit taken. Again, the dominant cost items are for
personnel: 80% of the cost of operating and 84% of the administrative costs.
The ratio of the contractor's operating costs to administration costs is
4.68; in the government-run option this ratio was 2.64. The contractor's
personnel costs are figured 20% greater than comparable civil service grades
and benefits are calculated at 12% instead of 16%.
Government operating costs, also in Table 5, total $247,300; $60,900 for
operations and $186,400 for administration of the program. The necessary
governmental functions provided for include: program direction, program eval-
uation, quality control, consumer protection, clerical support, mechanic
training, and garage licensing. A vigorous public relations program is the
largest item except for salaries.
Annual Costs
The annual costs for this option are presented in Table 7. Again, real
property is amortized over 10 years at 8 1/2%; equipment and the contractor's
implementation costs are amortized over 5 years at 10%. The contractor's
annualized capital costs are $200,200; government's annualized capital costs,
which do not include intangible first year costs, are $20,400. When these
are added to operating costs of $842,400 and $247,300 to contractor and govern-
ment, respectively, the total annual cost for this option is $1,310,300. For
a vehicle fleet of approximately 444,000, this amounts to $2.95 per vehicle.
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TABLE 6
OPERATING COSTS (CONTRACTOR-RUN LANES)
(1979 dollars)


COST TO
CONTRACTOR
COST TO
GOVERNMENT
Operations



Personnel Salaries and Benefits

$434,300
$ 45,900
Uniforms

2,200
300
Gas Supplies

44,000
400
Equipment Repair and Replacement

43,500
10,900
Travel (local)

1,400
1,400
Taxes

3,900

Miscellaneous (Utilities)

16,000
2,000

Subtotal
$545,300
$ 60,900
Administration



Personnel Salaries and
Benefits

$ 97,400
$120,200
Public Relations


50,000
Office Supplies

5,000
5,000
Travel (local)

3,200
3,200
Rent


3,000
Miscellaneous (Utilities,etc.)

10,000
5,000
Profit
Subtotal
$115,600
$186,400
15% x Capital Costs

$131,900

7.57o x Operating Costs
Subtotal
49,600
$181,500


Total
$842,400
$247,300
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TABLE 7
ANNUAL COSTS (CONTRACTOR-RUN LANES)
(1979 dollars)
CAPITAL COSTS
TERMS
ANNUAL
COST
To Contractor:
Land and Buildings
Equipment
Implementation
(Start-up) Costs
To Government:
Land and Buildings
Equipment
OPERATING COSTS
To Contractor:
Operations
Administration
$283,600 for 10 yrs.
@ 8 1/2%(D
$394,400 for 5 yrs.
@ 10%<2)
$201,000 for 5 yrs.
@ 10%
$34,200 for 10 yrs.
@ 8 l/2%(1)
$57,600 for 5 yrs.
@ 10%
$ 43,200
104,000
53,000
Subtotal $200,200
$ 5,200
15,200
Subtotal $ 20,400
$545,300
115,600
Profit
To Government:
Operations
Administration
181,500
Subtotal $842,400
60,900
186,400
ANNUAL COST/VEHICLE
Subtotal $247,300
Total $1,310,300
1,310,300/444,000 = $2.95
(l) F = i (1 + i)n/(l + i)n -1 = amortization factor, where i is the interest
rate and n is the number of years. This factor applied to the principal
yields the annual payment. For i = 0.85 and n = 10, F = 0.1524.
(2) For i = 0.10 and n = 5, F = 0.2638.
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Additional Implementation Costs to Government
The same cost items appear here as before: mechanics training, inspectors
training, garage certification, public relations campaign, procurement costs
and start-up costs. These costs are given in Table 8 and are seen to be much
smaller than in the previous option because the government is less involved.
The cost of public relations and garage and mechanic certification are un-
changed, however. The estimate for the total amount of first year costs to
government is $120,800. These additional costs would add $0.27 per vehicle
to first year costs. If amortized over five years at 10% they would add
$0.07 per vehicle annually.
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TABLE 8
ADDITIONAL IMPLEMENTATION COSTS TO GOVERNMENT(1)
(1979 dollars)
	ITEM	COST
Mechanic's Training and Certification	$ 5,300
Inspector's Training and Certification	600
Garage Certification or Licensing	2,500
Public Relations Campaign	50,000
Procurement Costs	8,200
Start-up Costs	54,200
Total $120,800
(1) These implementation costs add $0.27 per vehicle to the first year costs.
If they could be amortized over 5 years at 10%, then they would amount to
$31,900 annually or $0.07 per vehicle.
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SECTION IV
EXPECTED VEHICLE REPAIR COSTS
Mandatory inspection-maintenance programs have been in existence at
various locations in the country for several years. Some of the agencies,
those with centralized inspection programs, have maintained and published
records of the associated repair costs. Table 9, taken from a report by
EPA's Chief of Mobile Source Enforcement Division^) shows the associated
costs for vehicles tested by the Portland, Oregon, New Jersey, and Arizona
I/M programs through early 1976. These data show that repairs needed are
mainly of the carburetor adjustment and tune-up category. Over 70% of the
repairs in Oregon cost less than $10.00; in New Jersey 55% of the repairs
cost less than $25.00; and in Arizona 66% of the repairs cost less than $25.
These figures, however, do not reflect 1979 dollar costs, nor do they reflect
the repair costs for cars built after 1975, the first catalyst equipped model
year.
Data have recently become available for six months of 1978 in Portland,
Oregon^)} which are more representative of current costs and current models.
Their findings are presented in Table 10 and may be summarized as follows:
"The average cost of repair was $24 for newer cars and $35 for older
cars. Fifty percent of all failed cars had repair costs of $14 or less.'
(1)
(2)
The Need For and Benefits of Inspection and Maintenance of In Use Motor
Vehicles, by Michael P. Walsh, E.P.A. Mobile Source Enforcement Division,
November, 1976.
Portland Study Interim Analysis: Observations on Six Months of Vehicle
Operation, I/M Staff, Emission Control Technology Division, Office of
Mobile Source Air Pollution Control, U.S. EPA, January 1979.
IV-1

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TABLE 9
REPAIR COSTS FOR EXISTING
PROGRAMS
New Jersey (flunk rate = 12%)
less than $10	29.7%
$10 to $25	26.4%
$25 to $50	22.1%
$50 to $100	16.1%
more than $100	5.6%
Oregon (flunk rate
= 35%)
No cost
32%
less than $10
40%
$10 to $30
15%
$30 to $50
6%
$50 to $75
3%
$75 to $100
2%
more than $100
2%
N = 16,000
Avg. Repair Cost = $32.97
Median: 50% of repairs cost
less than $21
65% of repairs cost less than
average
N = 6,527 (primarily new cars)
Avg. Repair Cost - $18.86
Median: 50% of repairs cost
less than $6
79% of repairs cost less than
average
Arizona (flunk rate = 47%)
less than $5	24%
$5 to $10	17%
$10 to $25	25%
$25 to $50	20%
$50 to $100	11%
more than $100	3%
N = 4000 (does not include those
who performed their ownn repairs)
Avg. Repair cost = $25.42
Median: 50% of repairs cost
less than $15
67% of repairs cost less than
average
Source: Walsh, Need for I/M, 1976 op.cit.
IV-2

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TABLE 10
RECENT REPAIR COSTS
REPAIR COSTS
PERCENTILES
MODEL YEARS
SAMPLE MEAN
25
50
75
90
1972-74
$34.97
$5
$11
$41
$78
1975-77
$24.46
$7
$14
$37
$59
1972-77
$29.47
$6
$14
$38
$70
Source: Portland Study, U.S. EPA, January, 1979.
There is no data to indicate what maintenance costs would normally have
been incurred and what costs may be specifically due to I/H. However, such
figures would show that the cost of I/M repairs indicated above are actually
less than reported.
All programs show that the well-maintained vehicle should be expected to
pass. Most of the repairs needed are minor, but the cumulative result is
substantially reduced emissions.
IV-3

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SECTION V
FUNDING
REQUIREMENTS
The annual costs of I/M and the additional, first year, implementation
costs to government must be provided for before an I/M program can be pro-
mulgated. Baseline estimates of these costs have been presented in Section
III. For funding purposes, some consideration of contingencies and cost
escalation due to inflation and pay increases should be given. This is done
in Table 11.
The contingency allowance for construction imponderables adds $12,600
and $14,600, respectively, to the 1979 annual costs. Adjusting salaries
to the mid-range adds to the baseline $102,000 and $124,100, respectively,
and increasing the cost of operations 10% adds to the baseline $48,200 and
$60,200, respectively. The inflation factors are 1.166 from 1979 to 1981
and 1.469 from 1981 to 1985. Annual costs of the two options in the fifth
year become $1,754,900 ($3.65/vehicle) for government-run and $2,492,300
($5.18/vehicle) for contractor-run lanes.
The funding requirements are two: (1) provide for the escalating annual
costs by a mechanism that generates the requisite amount on an annual basis,
and (2) provide for the first year costs to government from funds-in-being or
grants.
FUNDING OPPORTUNITIES
Inspection Fee
The most obvious way to provide for the annual costs is by inspection
fee. Then the motorist bears the cost of the pollution control program.
Using average values for the cost per vehicle over the first five year period,
the minimum fees would be $2.98 for the government-run lanes option; $4.30 for
the contractor-run lanes option.The cost, under this plan, would have
to be increased every five years to allow for promotion and inflation. In
addition, refinancing would be necessary when equipment needed replacement.
$2.30/vehicle + $3.65/vehicle
	2	 = $2*98
$3.43/vehicle + $5.18/vehicle
	2	 = $4.30
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TABLE 11
FUNDING REQUIREMENTS(1)
GOVERNMENT-RUN LANES	CONTRACTOR-RUN LANES
Annual cost in 1981,(2)
baseline estimate
$1,004,500
($2.2b/vehicle)
$1,506,400
($3.39/vehicle)
Annual cost in 1981,
with contingencies^3)
$1,019,200
($2.30/vehicle)
$1,523,400
($3.43/vehicle)
Annual cost with
contingencies in
5th year of pro-
gram^* 4)
$1,754,900
($3.65/vehicle)
$2,492,300
($5.18/vehicle)
Implementation costs
to government(2)
$ 368,200
($0.83/vehicle)
$ 140,900
($0.32/vehicle)
1979 dollars are inflated to the year of reference. Analysis assumes
amortization of capital costs (land, buildings, and equipment) from
operating revenues rather than lump sum payment in first year from other
sources (see Table 3, note 3). Under this assumption equipment would
have to be refinanced when replaced.
(2) 8% per year inflation rate is applied to baseline values in 1979 dollars
(Tables 1 through 8). Implementation costs to Government appearing on
last line are not included in other estimates.
30% of costs of land and construction added before amortizing.
8% per year inflation assumed (factor of 1.4693); salaries first adjusted
to mid-range and cost of operations increased by 10% to allow for growth
of fleet.
V-2

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Grants
The Jefferson County Air Pollution Control District has been awarded a
special grant for the purpose of assisting in the implementation of an I/M pro-
gram. This is in the amount of $300,000. The grant may be used for the pur-
poses considered here to be implementation costs. With a $300,000 grant, imple-
mentation costs to government would be completely covered if the contractor-run
lanes option were selected. If the government-run lanes option were selected,
an additional $68,200 would be required, presumably from local funds.
V-3

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SECTION VI
BENEFITS OF INSPECTION-MAINTENANCE
The benefits of I/M are realized primarily in the reduction of air pol-
lution. Periodic inspection and maintenance ensures that factory-installed
emission control devices and the general repair of the vehicle contribute to,
rather than inhibit, pollution control. Furthermore, it establishes a valid
baseline emission level which is necessary if the impact of transportation con-
trol measures, such as carpool/vanpool programs is to be accurately assessed.
The average reduction noted upon retest after repair has been found to
be quite significant, on the order of 70% reduction for both CO and HC emis-
sions. However, the real measure comes from modeling the annual emissions
from the Jefferson County fleet of vehicles with their typical travel charac-
teristics, and to follow this change over the years after I/M is installed.
This was done in the course of this study with the following results:
o the program proposed should reduce Louisville HC emissions by 7% and
CO emissions by 9% in 1982;
o by 1987 the annual reduction is expected to be 32% for HC and 41%
for CO.
Reduction of CO levels must enhance human health since it is toxic and
the affinity of blood hemoglobin to CO is much greater than to oxygen.
Hydrocarbons are precursors to ozone and feature prominently in the reac-
tions leading to the formation of secondary particulates. Thus reduction of
HC emissions will reduce the incidence and intensity of eye-irritating smog.
Damage to agricultural crops and gardens will be reduced and the hazy skies
will be less dominant due to the reduction of secondary particles.
Studies of on-going I/M programs have also shown improved fuel economy
as a side benefit of I/M. In Chapter II, Phase I the fuel savings was esti-
mated to be about $26 per repaired vehicle. As the cost of gasoline increases
this savings would increase too. This data must be viewed with cautious opti-
mism, however. The most recent Portland study shows little change in fuel
economy due to I/M. However, there was no mechanics training program there
and EPA authorities hold that to be the important missing factor. EPA is
convinced there is a positive fuel economy factor for a good I/M program
VI-1

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with trained mechanics. This leads not only to individual savings but fur-
thers national energy conservation goals.
Finally, there is every reason to believe that a well-maintained machine
will function better for a longer period. Certainly some preventive mainten-
ance will be done and this will reduce the number of breakdowns on the road.
Excessive wear associated with break down and malfunction will be avoided to
some degree. Improved, trouble-free operation and longer life for the vehicle
has not yet been established by hard data, but they ought to be expected.
VI-2

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TECHNICAL REPORT DATA
(Please read lAt&ucnons on the reverse before completing)
1. REPORT NO. 2.
EPA-904/9-79-039
3. RECIPIENT'S ACCE3SlCN»NO.
A. TITLE ANO SU3TITLE*
An Analysis of Inspection-Maintenance Program
Options for Jefferson County, Kentucky
5. REPORT OATS
April 1979
8. PERFORMING ORGANIZATION COOE
7. AUTHOHIS)
Alvan Bruch
8. PERFORMING ORGANIZATION REPORT NO.
9. PS3FORMING ORGANIZATION N.a.VlE ANO AOORE5S
Engineering-Science
7903 Westpark Drive
McLean, Virginia 22102
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
68-02-2869
12. SPONSORING AGENCY NAME ANO ADORESS
U.S. Environmental Protection Agency
Region IV
345 Courtland Street
Atlanta, Georgia 30308
13. TYPE OF REPORT ANO PERIOO COVEREO
Final Report
14. SPONSORING AGENCY COOE
15. supplementary notes
16. A3STRACT
Inspection-maintenance program options differing according to. concept, management
and type of inspection were identified, scaled to Jefferson County and comparative
costed using a modular approach. Total costs were considered, including repair
of vehicles, without regard for whom would meet these costs. Upon consideration
of these comparative costs, and comparative benefits as well, the two low-cost
options were' selected for fuller consideration. These options, government-run
and contractor-run central lanes, were then subjected to a more detailed and con-
ventional cost analysis: capital costs; operating costs; annual costs; and
first-year implementation costs to government. Finally, funding requirements and
opportunities were considered.
17.

KEY WORDS ANO DOCUMENT ANALYSIS
a.
DESCRIPTORS
|b.lOS.NTlr'SRS/C?S.N ENDED TERMS |c. CCSATI rieia/Group
Air Pollution
Motor Vehicle Emissions Control
Inspection-Maintenance
Carbon Monoxide
Hydrocarbons
Cost-3ene£it Analysis
Louisville
T3. ;iS~al3UT,CN STATEMENT
13. 5 5 C'J ^! TY Ci—ASo F.'ZOrx;
j 2 1. N C. Cr ,3aGs5
Release Unlimited
Unclassified
I 203
10. SECURITY Cl_ASS (Thi:
Unclassified
j22. .= 5ICE
£?A =arm 2220-1 (3-7Z)

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