Reason for Recommended Action/Background
At the Board meeting of April 23, 2019, the Board authorized the Director, Division of Integrated Waste Management, to enter into negotiations with Northern Recycling, LLC, to finance, construct and operate a compost facility (CF) and construction, demolition and inert facility (CDIF) at the Yolo County Central Landfill, and also to submit a proposal to respond to a Request for Proposals (RFP), in partnership with Northern Recycling, LLC, to manage a portion of organic materials generated in the Sacramento region. At the April 23, 2019 meeting the Board also adopted the appropriate CEQA document for the proposed project.
Yolo County Division of Integrated Waste Management and Northern Recycling, LLC, are currently negotiating the terms of two agreements, one with the County of Sacramento and the other with the City of Sacramento, to manage a portion their organics, as was proposed. Those agreements will be brought before the Board of Supervisors at a later date. Additionally, staff is negotiating an agreement with Northern Recycling, LLC, to finance the construction of and operate a state-of-the-art compost facility that would maximize the permitted compost capacity at the landfill.
The recommended actions will allow the Department of Community Services, in conjunction with Northern Recycling, to submit a grant application for the CalRecycle Organics Grant Program in the amount of $3,000,000. This funding assistance will be used to reduce the capital investment, estimated at approximately $30 million. The reduction in capital investment will reduce the amount required to be financed by Northern Recycling, providing greater flexibility in establishing competitive rates for acceptance of organic materials. The Yolo County/Northern Recycling, LLC agreement will be brought before the Board before receiving notice from CalRecycle as to a funding award. If Yolo County and Northern Recycling, LLC are not able to reach agreement then the CalRecycle award would not be accepted.
Background
California has a statewide goal to divert 75 percent of waste from the Yolo County Central Landfill (YCCL) by 2020. In February 2007, the California Department of Resources Recycling and Recovery (CalRecycle) adopted Strategic Directive (SD) 6.1, which calls for a 50 percent reduction in the amount of organics being disposed in the landfills by 2020. Organic waste makes up approximately one third of the 35 million tons of waste that is currently landfilled in California. To aid in meeting the state wide 75 percent goal, Assembly Bill 1826 was passed in September 2014 requiring businesses, including state agencies that generate threshold amounts of organic waste per week to have organic waste recycling programs on or after April 1, 2016. To meet these goals, the Division of Integrated Waste Management (DIWM) has implemented a three-part strategy: 1) having an organic waste transfer facility, 2) an anaerobic composter facility, and 3) an in-vessel digester (liquid digester).
The Board of Supervisors approved the award of an agreement on July 12, 2016 to Northern Recycling, LLC (Northern) to operate an organic waste transfer facility at the YCCL with the composting activities occurring at an off-site facility, services which they continue to provide. However, Northern has expressed interest in entering into a long-term agreement with Yolo County to finance, construct, and operate a state-of-the art CF and CDIF at the landfill. This would entail ceasing composting operations at Northern’s Zamora Compost Facility and transferring the Yolo-Solano Air Quality Management District (YSAQMD) permit to the proposed facility.
Northern has prepared an Authority to Construct application for submittal to the Yolo Solano Air Quality Management District (YSAQMD) and a Technical Report for submittal to the Regional Water Quality Control Board (RWQCB) to obtain Waste Discharge Requirements for a compost facility. Having already undertaken these steps towards full permitting of a facility, Northern also covered the expense of preparing the proposal for submittal to Sacramento and is paying for the preparation of the grant application for the CalRecycle Organic Grant Program.
The County’s anaerobic composter facility will prioritize the receipt of food waste and would complement the proposed compost facility, which would prioritize green material. The County’s liquid digester would accept liquid food waste. Additionally, the compost facility would be able to accept the material excavated from the anaerobic composter cells and provide final curing before it is available as a soil amendment. These facilities will provide complementary services and secure different revenue streams.
Construction of the estimated $30 Million compost facility is anticipated to begin in Summer 2020 and be completed in Fall 2021. If CalRecycle were to award grant funding for the Yolo County compost facility, Northern Recycling would administer the grant, preparing reports, invoices and backup documentation for submittal to CalRecycle, while Yolo County would provide a license or lease to Northern to operate the facility. This type of relationship requires that a “cooperative grant application” be submitted. As explained in the grant guidelines:
Private entities, or private entities and public entities, may join together in a cooperative grant application in which two or more eligible entities join together for the purpose of grant implementation. A Lead Participant must be designated to act on behalf of all participating entities. The Lead Participant is the applicant/grantee who will be responsible for the performance of the grant and all required documentation. All participating entities will be grantees. CalRecycle will direct all official correspondence and grant payments to the Lead Participant (Lead must reimburse participating entities, then submit payment request to CalRecycle for reimbursement). All entities involved with a cooperative application will be required to execute a Grant Agreement.
In this case, Northern would be the Lead Participant and Yolo County a Participating Entity. CalRecycle requires that the Participating Entity provide a Letter of Authorization, dated within the last 12 months, to the Lead Participant authorizing the Lead Participant to act on its behalf for this cycle. CalRecycle also requires that any applicant that is subject to a governing body must upload a Resolution that authorizes specific grant-related matters. The recommended actions satisfy these requirements.
Additionally, during application assessment by CalRecycle, additional points are awarded to projects that incorporate a Community Benefit Agreement that is signed by the project applicant and a group representing residents of a priority population. The objective is to meaningfully address an important community need and provide direct, meaningful, and assured benefits to priority populations. The intent is to satisfy this criterion by entering into a Community Benefit Agreement with Davis Community Meals and Housing (DCMH), which operates a Pathways to Employment Program for the homeless population. Northern is committing to work with this program to provide employment to members of this local population. The agreement would be signed by Northern, the Executive Director of DCMH and Yolo County.
The $3 Million grant funding would be used principally to purchase stationary equipment for the compost facility (i.e. sorting equipment, grinder, screen, etc.). Regarding risk to the County, the liability is low. In the case of Failure to Perform or Termination of the CalRecycle grant agreement, the risk is that the 10% retention on prior payments is forfeited and any invoices that have not yet been paid by CalRecycle would not be paid. If the funds were improperly expended, then there is the possibility of repayment of the improperly expended funds. The County would contractually pass these risks through to Northern Recycling, LLC. |