CITY OF ELK GROVE CITY COUNCIL STAFF REPORT

Transcription

1 CITY OF ELK GROVE CITY COUNCIL STAFF REPORT AGENDA ITEM NO AGENDA TITLE: Consider a resolution approving the Solid Waste and Recycling Program Long-Range Strategic Plan; and Provide Direction regarding the Solid Waste Facility Option Analysis MEETING DATE: May 23, 2018 PREPARED BY: Heather Neff, Integrated Waste Manager DEPARTMENT HEAD: Robert Murdoch, Public Works Director / City Engineer RECOMMENDED ACTION: Staff recommends that the City Council: 1) Provide Direction on the Solid Waste Facility Options Analysis (Section 6.2 of the Strategic Plan) and the Consultant s recommendation to proceed with the Hauler Transfer Facility Development Plan (Section 7.2 of the Strategic Plan); and 2) Adopt a Resolution approving the Solid Waste and Recycling Program Needs Assessment and Long-Range Strategic Plan. BACKGROUND INFORMATION: On December 14, 2016, based on the results of a formal Request for Proposals process, the City Council authorized the City Manager to execute a contract with HF&H Consultants, LLC ( HF&H ) to complete a comprehensive long-range needs assessment, feasibility study, and strategic plan for solid waste and recycling services in an amount not to exceed $102,070. The goals of the study were to: Assess current conditions to review the current state of solid waste and recycling program and infrastructure needs; 1

2 Elk Grove City Council May 23, 2018 Page 2 of 17 Perform a Needs Analysis by projecting future waste generation estimates and determine what the City s future programs and infrastructure needs would be; Complete a feasibility study to determine which of the program and infrastructure needs identified would be the most feasible; and Determine whether there is a need to construct a solid waste facility on the property adjacent to the Special Waste Collection Center (SWCC). During the period in which this study was being completed, a significant change in solid waste legislation was approved by the State that led to a revision of the scope of this project. Senate Bill 1383 was signed by the Governor in late 2016, and the most recent draft regulations were published in May In short, the draft regulations require the City to implement mandatory organics recycling with standardized blue, green, and black containers; implement edible food recovery programs; create an inspection and enforcement program; purchase a minimum amount of recycled organic waste products (compost and renewable natural gas); purchase a minimum percentage of recycled content paper products; and ensure that all organic waste generators are in compliance with the regulations. Although the regulations have not been finalized by the State and the requirements may be different in the final regulations, it is clear that most of the City s solid waste and recycling program needs through 2025 will be related to ensuring compliance with SB Thus, a large portion of the scope of this Strategic Plan was shifted to incorporate the required programs and measures needed to implement SB Consequently, the end result is a study that addresses two important solid waste issues for the City: (1) SB 1383 implementation; and (2) the need for additional solid waste infrastructure. DISCUSSION ITEMS: Prior to providing an overview of the Strategic Plan, Staff believes it is important to note the key items for Council discussion and deliberation. 2

3 Elk Grove City Council May 23, 2018 Page 3 of 17 1) Facility Options As noted above, one of the goals of this study was to determine whether the City should construct a solid waste facility on the property adjacent to the Special Waste Collection Center (SWCC). Doing so could provide the City with a variety of benefits including more flexibility in solid waste providers, less dependence on contractors, and cost savings. After evaluating several options (discussed further in the Summary of The Report Section), the consultant recommended the City pursue a Hauler Transfer Station option that includes a hauler corporation yard. Cited advantages include: Wider choice of collection service providers since companies that do not own transfer facilities nearby could then be competitive; New opportunities to separately contract for processing and disposal services including those facilities with emerging technologies; Reduced transportation costs and air emissions with many processing facility choices within reasonable distance; Shorter haul distances will reduce growth-induced cost increases and greenhouse gas (GHG) emissions over time; and, Transfer methods and technologies are proven and have limited risk particularly if flexibility is designed into the facility. The conceptual site design includes area for a future organics building that can allow for construction and operation of an organics pre-processing facility. A pre-processing facility would accept and perform some minimal processing activities for organic waste such as removing packaging, and draining liquid; this would provide the City with more options in terms of final processing facilities to which it can transfer waste. A primary reason cited for the development of the Hauler Transfer Facility is the flexibility this option would give the City when soliciting for solid waste collection, transfer, processing, and disposal services. The City s current collection, transfer, processing, and disposal contracting system is essentially what is known as bundled pricing. This bundled pricing is streamlined but it effectively limits the number of companies that can compete to provide services to only those that 3

4 Elk Grove City Council May 23, 2018 Page 4 of 17 can provide the full range of collection, transfer, processing, and disposal services. Vertical integration is efficient for the firm but can be an impediment to free competition for the customer. If the City develops and owns a transfer station, the City could then unbundle its solid waste service package, which offers several options and benefits including: The ability to choose from a broader range of collection service providers through enhanced competition in the bidding process; and The ability to separately contract for one or more types of processing and disposal services (organics, recyclables, or mixed materials). These options can lead to a wider range of choice in service providers and collection and processing methods, which can lead to securing the best available pricing for each and lower rates for customers. It also allows the City control over choosing the types of collection programs and processing methods it believes best meets the community s needs rather than conforming to the collection/processing options that come with a bundled pricing package. Determining the estimated financial benefit that can be realized from pursuing such a facility is difficult due to the high number of variables regarding flow and alternate facility options, transportation to a number of different processing and disposal facilities, routing strategies, and other variables. As a follow-up to the Strategic Plan, in a separate Memorandum, HF&H provided three case study examples of cities that have constructed their own transfer station facilities and summarized the advantages, disadvantages, and economic benefits of municipal facility ownership. This Memorandum is included as Attachment 3. Common advantages for developing a municipally-owned solid waste facility noted amongst the case studies include: Long-term cost control; Ability to create a competitive environment; Transparency in pricing since the private sector often uses the bundled pricing model, which can make it difficult to assess the individual cost components; 4

5 Elk Grove City Council May 23, 2018 Page 5 of 17 Minimized collection costs with a facility located in their service area; Community benefits such as having a place for self-haul dropoffs, public drop-off recycling areas, and education centers for students and tours; and Lower customer rates. One important benefit that each agency noted was the value of the investment that was made years ago, since a similar opportunity would likely not be possible due to increased land values and population densities and decreased land with appropriate zoning. All of the agencies noted similar disadvantages of ownership including management cost, risk, and potential changes in technology. The economic benefits are variable and difficult to determine. Some examples noted include annual landfill savings of approximately $200,000 in one case and processing savings of approximately $275,000 in another. Additional savings may be realized by the agencies, but the agencies were not able to quantify the savings (e.g., reduced collection costs). If the City had the option to seek competitive bids on various solid waste cost components, similar savings could be achieved. For example, staff examined the cost of disposal and estimated an annual cost savings of $630,000 in landfill gate fees if Elk Grove s waste tonnage were taken to Kiefer landfill, which is about 20 miles closer than the Republic Landfill. An additional $130,000 savings may be realized in reduced transportation costs, for a total annual savings of $740,000. Additionally, HF&H has estimated that having the option to send Elk Grove s recyclables to an alternate processing facility could save anywhere between $250,000 and $700,000 annually. Project Cost Estimates The consultant s preliminary estimated cost for a transfer station project in Elk Grove is approximately $15 million, not including site investigation, architectural and engineering services, CEQA, permitting, equipment, and supplies. Figure 1 below provides an estimate of a Publicly Financed Scenarios demonstrating that after using the approximate $8 million in cash on hand, the City would still 5

6 Elk Grove City Council May 23, 2018 Page 6 of 17 need to finance about $10 million yielding annual payments of $842,000. The consultant notes that costs can be reduced by increasing the number of tons processed by contracting with other agencies and contractors or scaling down the facility by eliminating the hauler corporation yard. Publicly-Financed Model Project Cost $ 15,000,000 Plus Site Investigation, Engineering, CEQA, Permitting $ 2,000,000 Less Equity Contribution $ - Less Grant Fund Contributions $ - Net Project Cost $ 17,000,000 Less Cash on Hand $ (8,000,000) Plus Debt Service Reserve Fund $ 842,858 Plus Capitalized Interest Fund $ 673,562 A Plus Cost of Issuance and Underwriters Discount $ 289,202 B Total Financing Costs $ 10,805,621 Estimated Annual Debt Service $ 842,858 C Return on and of Investment $ - Total Annual Financed Cost $ 842,858 Cost Per Ton, based on 130,000 Tons $ 6.48 Notes Figure 1. Publicly Financed Project Cost Estimate The City has operated with a single franchised hauler for 14 years and has gone out for a competitive bid only once during that period (in 2003 when responsibility for solid waste services were initially transferred from the County of Sacramento to the City of Elk Grove). The franchised hauler provides all residential solid waste services: collection, transportation, transfer, and disposal. The City essentially has two options: it can continue to provide solid waste services via a single provider (realistically there are only two providers in the region that can provide this level of service based on existing infrastructure), or the City can invest in infrastructure of its own to increase the number of service provider options. However, because the financial benefit from that investment is so difficult to quantify, staff is recommending that Council direct staff to pursue the development of Note A: Captilalized Interest over 18 months B: Cost of Issuance and Underwriter's Discount is assumed to be 2.75% of total Financing Costs C: Debt Service Assumptions - Interest rate = 4.156% Term = 20 Years Payment Frequency = semi-annual Principal payments begin at the 24th month (following three interest-only payments) ` 6

7 Elk Grove City Council May 23, 2018 Page 7 of 17 a Hauler Transfer Facility Development Plan to better characterize and quantify the benefits and then present those results to Council for consideration. 2) Collection Options Organics Collection Options To implement food waste collection, the City s current green waste collection route would be expanded to included food waste and, in order to become compliant with State Public Resources Code, would increase in frequency from biweekly to weekly. The inclusion of food waste requires changing the current practice of land application of green waste to composting of the green waste and food waste, which is an increased cost. In addition, the change to weekly organics collection is estimated to increase service costs significantly, thus increasing rates as well. Both of these changes were anticipated and were included as options within the existing Franchise Agreement with Republic Services at a cost of $1.90 and $3.05 per customer per month, respectively, in 2016 dollars (assuming an average annual inflationary adjustment, this will be approximately $5.18 total per customer per month when implemented in 2021/2022). To address the cost increases, two collection options were considered. Option 1 assumes that organics service is provided weekly with the continued provision of weekly garbage service and biweekly recyclables collection service. Option 2 assumes garbage service frequency is cut back from weekly to biweekly to offset some of the cost increase in providing weekly organics collection. However, this will require residents to make significant changes in behavior such as including food waste with yard trimmings, as well as separately bagging some waste types included as garbage to reduce odors (such as diapers, hygiene products, and pet waste). This in turn will require a significant public outreach campaign. While SB 1383 allows for biweekly garbage collection service to be implemented, it is important to note that this is a cutting-edge practice. It has been adopted as a full-scale program in only a few communities in the Northwest (most notably Portland, Oregon and Renton, Washington), as well as in several Canadian communities. In Northern California, pilot programs have been conducted by the Castro Valley Sanitary District and San Francisco. 7

8 Elk Grove City Council May 23, 2018 Page 8 of 17 A specific concern in Elk Grove that does not exist in the Bay Area are the hot summers, which will lead to odor and vector concerns. In particular, the handling of pet waste, diapers, and hygiene products will need to be considered these materials can be separately bagged and put in the garbage container to reduce odors or a premium weekly garbage service could be offered to customers that generate a lot of these materials. Option 1 may result in a $5 to $6 per month increase to residents, whereas Option 2 may result in as little as a $1.90 to $2.20 per month increase (see Figure 4 later in this report for detailed cost estimates). While the Option 2 reduction in cost increases is attractive, there are risks associated with implementation of biweekly garbage collection. Before implementing such a significant change, it is advised that a cost proposal be obtained from Republic to confirm the cost savings and public input collected to assess residents preferences. At this time, Option 1 has several advantages including: Implementation of food waste recycling will be a significant behavioral change for residents. Adding reduced garbage collection (from weekly to biweekly), along with the required waste packaging, would amount to a significant amount of change in a relatively small amount of time. Residents are more likely to adapt to the change if it is undertaken in incremental steps. The difference in cost between Option 1 and Option 2 may not be significant enough to sufficiently motivate residents to make all of the necessary behavioral changes to move from weekly to biweekly garbage collection (separately bagging certain waste and ensuring there is no food waste in the garbage cart). Once regulations for SB 1383 have been finalized, staff will determine whether the flexibility to choose between these two options is still available. If so, staff will return to Council for direction on implementing a collection option. 8

9 Elk Grove City Council May 23, 2018 Page 9 of 17 SUMMARY OF THE REPORT: Waste Projections After assessing current conditions, the consultant used job growth and population data to project future waste generation data. Over the 20-year period studied, the total volume of waste material in Elk Grove is anticipated to grow approximately 130% from 130,000 tons to 300,000 tons. If Elk Grove implements the most stringent waste reduction programs, that number could be reduced to 167,000 tons, which represents only 28% growth. Unmet Needs Program Needs As noted above, the passage of SB 1383 will require the City to implement a variety of programs related to the diversion of organic material. Based on the October 2017 draft regulations, these programs include: Mandatory Organic Collection Service for residential, commercial, and government entities, which must be in place by January 1, 2022; Contamination Monitoring Program to ensure the organics waste stream has minimal contaminants; Food Recovery Program to meet SB 1383 s goal of recovering 20 percent of edible food for human consumption by 2025; Enforcement Program to ensure regulated entities compliance with mandatory requirements; and, Other Organics Programs as required to meet various other requirements of SB 1383 such as carpet and textile recycling, biosolids, and sludge. In addition to the above programs, the City will also need to amend requirements for commercial haulers to require processing organic materials and prohibit use of the materials as Alternative Daily Cover (ADC) at landfills. This change is recommended in response to Assembly Bill 1594, which mandates that green waste used as ADC at landfills be considered disposal and no longer be considered diversion beginning January 1,

10 Elk Grove City Council May 23, 2018 Page 10 of 17 Facility Needs In 2008, the City completed an analysis to determine a location for several solid waste facilities including a transfer station, materials recovery facility (MRF), recyclables drop-off facility, and a household hazardous waste (HHW) facility. The site of the City s current Special Waste Collection Center (SWCC), located on acres at 9255 Disposal Lane, was ultimately chosen as the preferred location. The following year, the City completed a Transfer Station Master Plan that anticipated the development of: a 60,000 sq. ft. transfer station; a 60,000 sq. ft. materials recovery facility (recyclable processing facility); a 30,000 sq. ft. HHW facility; a 10,000 sq. ft. office building and educational center; a 500 sq. ft. scale house; and other potential uses such as a recyclables drop off center, green waste drop off center, scrap metal yard, storage yard, and truck repair shop. In 2014, the City completed one element of the Master Plan, an 8,500 sq. ft. HHW facility known as the Special Waste Collection Center (SWCC) on approximately 5 acres, leaving 11 acres of the site undeveloped. As part of the scope of the 2017 strategic planning process, the Consultant identified the City s solid waste facility needs by evaluating four types of facility development options: Processing facilities; Transfer facilities; Public use transfer facilities; and Hauler corporation yards. 10

11 Elk Grove City Council May 23, 2018 Page 11 of 17 After reviewing the nature of each type of facility; the number, proximity and capacity of processing and transfer facilities in the region; and the advantages and disadvantages of each facility type, a short-list of three options was developed: Facility Type Description 1 Hauler transfer station Develop transfer station for use by the City s residential hauler and/or commercial haulers for receipt and transfer of solid waste, recyclables, organics, and C&D. 2 Public use recovery and transfer facility Develop a public use facility for use by the City s residents and businesses to provide a location for delivery, recovery, and transfer of self-hauled solid waste, recyclables, organics, and C&D. Include a drop-off recyclables area, reuse area, and other facility components to the extent space is available. 3 Hauler corporation yard Develop collection vehicle parking, maintenance, and fueling to the extent space is available. Organics Processing Facility Excluded from Analysis With the passage of SB 1383 requiring jurisdictions statewide to implement mandatory organics collection programs, it is widely accepted there are an insufficient number of facilities to process the incoming organic waste stream. Consequently, it would seem that an organic processing facility would be an ideal opportunity for the Facility Development Option. However, the following factors led HF&H to recommend against the City developing an organics or any type of processing facility: 1) A number of processing facilities already exist in the region; and 2) It is likely that private-sector facilities will be developed, although this has yet to occur. There are also a number of risks involved with constructing and operating an organics processing facility such as: high capital and maintenance costs; uncertainty regarding current methods and technologies; stringent Air District requirements; impact on permitting, design, operations, and costs; potential of odors that may create future opposition; and uncertainty in the market for the end product. Feasibility Analysis The consultant analyzed the feasibility of the program and facility options separately; each is summarized below. 11

12 Elk Grove City Council May 23, 2018 Page 12 of 17 Program Analysis The consultant evaluated a total of 12 programs; ten related to draft SB 1383 requirements and two related to hauler service options (see Figures 2 and 3). Since SB 1383 requirements are mandatory, all but two of the organics programs are recommended for implementation during the Strategic Planning period. Two programs, which are not recommended, are considered optional. These programs are related to the food recovery goals of SB 1383 and are geared towards taking a proactive role in supporting food recovery with a level of effort that exceeds the minimum requirements of the draft SB 1383 regulations (see page 68 of the report for a full description). Figures 2 and 3 on the following pages detail the City and Hauler costs for each of the twelve programs evaluated. The last column indicates which customers will most likely be impacted by cost. Figure 2 details the costs on a total basis and Figure 3 details costs on a per customer per month basis (i.e. the likely impact of each program on a customer s monthly garbage bill). Based upon the number of new programs and requirements associated with draft SB 1383 regulations, the consultant estimated the City s likely staffing needs. HF&H analyzed staffing needs for both the implementation of programs as well as ongoing needs to maintain the requirements. It is likely that existing staff will be able to absorb many of the implementation tasks, but on an ongoing basis, HF&H estimates the City may need as few as 1.6 to as many as 2.8 FTEs to support draft SB 1383 requirements. 12

13 Elk Grove City Council May 23, 2018 Page 13 of 17 Figure 2. Program Options: Implementation and Annual Costs 13

14 Elk Grove City Council May 23, 2018 Page 14 of 17 Figure 3. Program Options: Customer Costs per Month 14

15 Elk Grove City Council May 23, 2018 Page 15 of 17 Facility Options Analysis As noted above, the Unmet Needs Analysis identified a short-list of three facility options: (1) a Hauler Transfer Station; (2) a Public Use Recovery and Transfer Facility; and (3) a Hauler Corporation Yard. The consultant evaluated two site layouts, both of which included the third option, a hauler corporation yard. The schematic plans for each option are presented on Figures 6-6 and 6-7 of the Report. A phased development option includes deferring the construction of the hauler corporation yard to reduce the initial capital investment and annual debt service. Construction cost estimates for each option are as follows: Hauler Transfer Option Public Use Option Total Estimated Cost $14.91 million $14.67 million Estimated Cost with Phased Option $15.12 million $15.02 million After evaluating the above two options, which both include a Hauler Corporation Yard, the consultant recommends the best use of the City site is the Hauler Transfer Station option. Advantages of developing and owning a Hauler Transfer Facility were noted earlier in the Discussion Items section of this report. Implementation Plan The final section of the report is a detailed implementation plan that lays out a suggested timeline for each element of the Strategic Plan. The most critical steps are those related to SB 1383 programs. Since the regulations take effect on January 1, 2022, the City must have its programs in place prior to that date so staff needs to begin drafting ordinances and addressing any needed franchise amendments immediately after the regulations are finalized in late 2018 or early It is estimated that additional staffing won t be needed until FY , as much of the initial implementation can be completed by existing staff. Staffing requests will be presented for Council approval during the FY annual budget approval process. 15

16 Elk Grove City Council May 23, 2018 Page 16 of 17 Should the Council decide to move forward with a facility development option, the timeline assumes facility operations would commence in July of 2025, which coincides with the end of the seven year Franchise Agreement with Republic Services. Planning for a facility would need to begin in 2019 to meet this deadline. The implementation timelines are shown on pages of the report. FISCAL IMPACT: There are no fiscal impacts to the General Fund from the recommended actions. If Council directs staff to proceed with implementing the recommended program options, annual costs will vary over the study period; total estimated costs are shown in Figure 1 on page 9 above. These costs will impact the Solid Waste Residential (501) and Commercial (502) Funds. At this time, staff does not anticipate that any immediate residential rate or commercial hauler fee increases will be needed to fund the initial implementation steps identified. Below is a chart presented during an earlier report to Council depicting projected rate increase based upon the draft SB 1383 regulations to date. 16

17 Elk Grove City Council May 23, 2018 Page 17 of 17 Once the regulations have been finalized, and implementation costs are known, the future proposed rate increases and implementation options will be presented to Council for review. ATTACHMENTS: 1. Resolution a. Exhibit A: Long-Range Strategic Plan 2. Case Study Memorandum 17

18 ATTACHMENT 1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ELK GROVE APPROVING THE SOLID WASTE AND RECYCLING PROGRAM NEEDS ASSESSMENT AND LONG-RANGE STRATEGIC PLAN WHEREAS, the City of Elk Grove sought to assess its long-range solid waste needs and prepare a twenty-year strategic plan to provide recommendations of future programs, facility needs, and implementation strategies; and WHEREAS, in August 2016, the City of Elk Grove posted a formal Request for Proposals for consultant services to create the long-range strategic plan and the City received three submittals; and WHEREAS, the City Council determined that HF&H Consultants, LLC offered the most responsive proposal and met all of the criteria for the Request for Proposals; and WHEREAS, the City of Elk Grove contracted with HF&H Consultants, LLC for preparation of a comprehensive Solid Waste and Recycling Program Needs Assessment and Long-Range Strategic Plan (the Strategic Plan, Contract Numbers C and ); and WHEREAS, the Strategic Plan is now complete and is attached hereto as Exhibit A. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Elk Grove approves the Solid Waste and Recycling Program Needs Assessment and Long- Range Strategic Plan completed by HF&H Consultants, LLC, attached hereto as Exhibit A. PASSED AND ADOPTED by the City Council of the City of Elk Grove this 23 rd day of May STEVE LY, MAYOR of the CITY OF ELK GROVE ATTEST: APPROVED AS TO FORM: JASON LINDGREN, CITY CLERK JONATHAN P. HOBBS, CITY ATTORNEY 18

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125 ATTACHMENT 2 Managing Tomorrow s Resources Today 201 N. Civic Drive, Suite 230 Robert D. Hilton, CMC Walnut Creek, California John W. Farnkopf, PE Telephone: 925/ Laith B. Ezzet, CMC Fax: 925/ Richard J. Simonson, CMC consultants.com Marva M. Sheehan, CPA Robert C. Hilton, CMC MEMORANDUM Date: April 17, 2018 To: Heather Neff, City of Elk Grove Integrated Waste Manager From: Tracy Swanborn, HF&H Senior Manager Copy to: Rob Hilton, HF&H President Subject: Case Studies of Publically Owned Transfer Facilities The City of Elk Grove (City) City Council will be considering the development of a City owned transfer facility. The March 28, 2018 Solid Waste and Recycling Program Needs Assessment and Long Range Strategic Plan prepared by HF&H Consultants, LLC (HF&H) includes analysis of the transfer facility option. To supplement the Strategic Plan analysis, HF&H prepared three case studies of publically owned transfer facilities in the Bay Area. The case studies include advantages and disadvantages, and, in two cases, provide example economic benefits of the municipal agency facility ownership. Several commonalities surfaced among the three agencies, which are summarized below. Each agency has a strong policy interest in directly controlling its solid waste and recycling system. One of the major values stated by those agencies is long term cost control. The agencies value the ability to create a competitive environment when contracting for processing and disposal services; and, in two cases, when contracting for facility operations. (Note that one agency has a municipally operated facility.) Each agency values the investment made years ago, because the same opportunity would not likely exist now with increased population density, less space zoned for that type of use, and high land values. Agencies value transparency around the various cost components (i.e., collection, transfer, processing, disposal) rather than relying on the private sector, which often bundles services in such a way that the individual financial aspects are hard to assess. Agencies benefit from having a transfer facility (and, in two cases, recyclables processing facility) located in their service area as it minimizes collection costs to their rate payers now and into the future. This is particularly valuable in managing collection costs with increasing traffic impacts. 125

126 Advisory Services to Municipal Management Memorandum to Heather Neff April 17, 2018 Page 2 of 6 Agencies have committed to employment of highly qualified personnel to manage the facility and related processing and disposal agreements. The management responsibilities are an obligation of facility ownership and contract management. The facilities benefit their communities in different ways including acceptance of self haul materials, provision of public drop off recycling areas, and/or inclusion of an education center/tours. These agencies accept certain risks related to facility ownership and operation, which is more significant (e.g., due to fire risk) for the facilities that include recyclables processing operations. The case study summaries are provided on the following pages for the three facilities reviewed. {Remainder of page intentionally blank} 126

127 Advisory Services to Municipal Management Memorandum to Heather Neff April 17, 2018 Page 3 of 6 Berkeley Transfer Station Owner: Operator: City of Berkeley City of Berkeley Advantages Facility functions: Transfer station Contracting flexibility as reflected in the five contracts listed below. Other facility users: Self haul Ability to competitively procure collection, processing, and disposal services separately to obtain the best available pricing and desired processing options (e.g., 2011 and 2017 C&D processing procurements; 2010 and 2016 organics processing procurements). Creation of a competitive environment even when conducting sole source negotiations for a company, because the City has the option of working with another company. Minimization of collection costs with a transfer facility and hauler corporation yard in the City. Example Pricing Benefits Berkeley s landfill rate is about $2.50 per ton less than the rate recently secured by a nearby agency that does not have a transfer station. This amounts to an annual benefit of $200,000. Disadvantages Management staff and time to oversee the facility and six processing and disposal agreements. Municipal operations and limited economics of scale at the City s transfer station yield transfer and transport costs higher than larger, privately owned and operated transfer facilities. Accepting risks related to facility ownership and operation, such as funding and completing significant capital improvements and addressing a recent lawsuit regarding storm water runoff from the site. Contract Arrangements Residential recyclables collection: Recyclables processing: Organics composting: Disposal: C&D processing: Ecology Center (City provides all other collection services) Community Conservation Center Recology Blossom Valley Organics North Composting Waste Management Altamont Landfill Zanker Road Resource Management 127

128 Advisory Services to Municipal Management Memorandum to Heather Neff April 17, 2018 Page 4 of 6 Sunnyvale Materials Recovery and Facility: SMaRT Station Transfer Station (SMaRT Station ) Owner: City of Sunnyvale Operator: Bay Counties Waste Services Advantages Facility functions: Transfer station, recyclables processing, MSW Competitive procurement for facility operations processing, yard trimming every seven years to ensure best pricing. pre processing, food waste Through competition, City determined it pre processing, wide range was more advantageous to take risk of of resident drop off options, recyclables revenues. It reduced buy back center, contractor s cost and provides control in educational program recyclables market decisions. Other facility users: Palo Alto, Mountain View, Flexibility in all contracting options, which Self haul allowed City to customize its residential collection system. Split cart collection results in separate food waste collection for residents and small businesses. Source separated food waste opens up more processing options, including processing food waste into animal feed materials, composting, and anaerobic digestion. Potential to deliver food waste to adjacent Sunnyvale water pollution control plant for anaerobic digestion and energy production, providing another processing option and independence from private sector options. Allowed for multiple organics processing contracts with different companies. Provision of stability for processing capacity (critical with limited organics capacity and potential organics facility problems) and involves reliance on different markets for end products, both of which will lead to more security in pricing. The organics processing facility that produces animal feed materials has sufficient capacity; is perceived to have a strong, long term market; and supports a higher and better use of food waste than composting. Combined facility operations and organics procurement in 2013 resulted in three proposals that allowed the City to mix and match operations and organics processing proposals to obtain the lowest combination of pricing. Ability to contract for different types of organics processing, which meets the varied needs of the Sunnyvale and the two other cities using the facility. Example Pricing Benefits Separate processing of Sunnyvale s residential yard trimmings and food waste will result in an annual savings of approximately $275,000 compared to the cost of processing mixed yard trimmings and food waste. 128

129 Advisory Services to Municipal Management Memorandum to Heather Neff April 17, 2018 Page 5 of 6 Disadvantages Management staff and time to oversee the facility and processing and disposal agreements. Technology risks related to recyclables and organics processing. Facility economics including fluctuations in recyclables market conditions and volume of materials delivered to the facility. Contract Arrangements Collection services: Facility operations: Landfill disposal: Yard trimmings composting: Mixed yard trimmings and food waste composting: Food waste processing (primary contract): Food waste processing (secondary contract): Organics fines composting: Bay Counties Waste Services Bay Counties Waste Services Waste Management Z Best Gilroy Recology South Valley Organics Sustainable Organics Solutions (SOS) processing of food waste into animal feed ingredients; SOS subcontracts with EBMUD for back up food waste processing capacity Recology Blossom Valley Organics North composting Z Best Gilroy 129

130 Advisory Services to Municipal Management Memorandum to Heather Neff April 17, 2018 Page 6 of 6 RethinkWaste (South Bayside Waste Management Authority) Shoreway Environmental Center 1 Advantages Ability to direct its future with direct control over selection of the facilities used to process their materials and how materials are marketed. Minimization of collection costs since the transfer facility and hauler yard are in the RethinkWaste service area. This is Facility: Owner: Operator: Facility functions: Other facility users: Shoreway Environmental Center RethinkWaste South Bay Recycling Transfer station, recyclables processing, public recycling center, education center, hauler corporation yard 12 RethinkWaste member agencies in San Mateo County; self haul particularly important as there are limited privately owned facility options and future development of a facility in the area is improbable given population density and limited inventory of available land. Ability to competitively procure facility operator and all processing and disposal services. Engagement of two organics processors, which provides back up capacity and allows RethinkWaste to leverage contract arrangements through the competition between the two processors. Disadvantages Management staff and time to manage contracts and contractor performance. Risks associated with facility ownership such as processing system upgrades, response to force majeure situations (e.g., earthquake, facility fire); etc. Contract Arrangements Transfer and recyclables processing operations: Disposal services: Organics processing: Organics processing: C&D processing: South Bay Recycling Republic for Ox Mountain Landfill Republic for Newby Island composting Recology Blossom Valley Organics North Composting Zanker Road Resource Management 1 RethinkWaste is a joint powers authority of 12 public agencies in San Mateo County, California. It is also known as the South Bayside Waste Management Authority (SBWMA). Agencies include: Atherton, Belmont, Burlingame, East Palo Alto, Foster City, Hillsborough, Menlo Park, Redwood City, San Carlos, San Mateo, the County of San Mateo and the West Bay Sanitary District. 130