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HomeMy WebLinkAbout10-06-2015 Item 09 - Granting a Franchise to San Luis Garbage Company for Food and Green Waste Services Meeting Date: 10/6/2015 FROM: Carrie Mattingly, Utilities Director Prepared By: Ron Munds, Utilities Services Manager SUBJECT: GRANTING A FRANCHISE TO SAN LUIS GARBAGE COMPANY FOR FOOD AND GREEN WASTE SERVICES RECOMMENDATION Introduce an Ordinance entitled “An Ordinance of the City Council of the City of San Luis Obispo, California, granting a twenty-year franchise to San Luis Garbage Company for food and green waste collection, processing and/or disposal within the City of San Luis Obispo.” DISCUSSION Background At the August 18, 2015 City Council meeting, the Council conceptually approved a two phase organics diversion program to meet the state’s mandatory organics diversion requirements and adopted a solid waste rate increase to support the implementation. The first phase of the program, known as the “Interim Phase,” will expand the existing residential green waste collection program to include residential and commercial food waste. The material will go to Engle and Gray composting facility in Santa Maria. The second phase, or the “Permanent Phase,” will include the construction of an anaerobic digestion facility using Kompogas technology. In order to implement the Permanent Phase, the San Luis Garbage Company (“Garbage Company”) must enter into an agreement with the owners of the Kompogas technology, Hitachi Zosen Inova (HZI), that guarantees delivery of organics for a twenty year period once the facility is constructed and fully operational. This guarantee is necessary for HZI to obtain the financing to build a multi-million dollar plant (estimated to cost more than $12 million). The Garbage Company’s guarantee to HZI in turn requires the communities the Garbage Company serves to guarantee a waste stream to the Garbage Company for the twenty year period. The City’s current green waste franchise agreement expires in 2025. Granting of the Food and Green Waste Franchise The City’s Charter provides specific procedures for granting franchises. In accordance with the Charter, the City Council adopted a resolution of intent on September 15, 2015 to grant a food and green waste franchise agreement to the Garbage Company. As required in the Charter, the resolution provided the character of the franchise (food and green waste collection) and the conditions upon which it is proposed to be granted. The resolution also set the public hearing date for the regular City Council meeting on October 6, 2015. 9 Packet Pg. 63 The next step in the process is for the City Council to adopt an ordinance (Attachment A) which grants the franchise (Exhibit A) for food and green waste collection services to the Garbage Company. The new franchise agreement includes the collection of food waste and the mechanism to extend the franchise beyond 2025. The caveat to the implementation plan is if the Kompogas facility is not built, the food and green waste franchise agreement would not be extended beyond 2025 and the Interim Phase of transporting organic waste to Santa Maria for processing would continue. Section 2.3.1 of the franchise agreement provides the specific milestones and timeline for determining if and when the twenty year term of the agreement begins. The most significant date in this section is that the Kompogas facility must be built (or substantially completed) by January 2020 in order for the agreement to be extended. CONCURRENCES The San Luis Obispo Integrated Waste Management Authority concurs with the recommendation made in this report. FISCAL IMPACT There is no fiscal impact associated with the granting of the new franchise agreement. On August 18, 2015, the City Council approved the solid waste rate increase that will support the implementation of the organics diversion program. ALTERNATIVE The City Council could choose not to approve the granting of the franchise agreement to the Garbage Company’s and request staff to return to the City Council with other alternatives for organics recycling. Since it has taken many years of research to find the best long-term solution for the service area, the mandatory requirement for commercial food waste recycling, and the changing regulations for composting operations, this would not be a preferred alternative and therefore not recommended. Attachments: a - Franchise Ordinance Final a - Exhibit A - Green Waste Franchise Contract 2015 Final 9 Packet Pg. 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Granting of a Food and Green Waste Franchise Agreement to San Luis Garbage Company October 20, 2015 Organics Diversion Program Recap… •Closure of Cold Canyon Composting Facility – 2010 •Research, field trips and more research •Mandatory commercial food waste diversion starting 2016 •Waste Connections releases a RFP soliciting proposals to provide food and green waste composting services •Conceptual approval of program at the August 18th meeting. Organics Diversion Program Interim Phase – January 2016 Organics transported to a permitted Santa Maria Facility… •Residential Food Waste – January 2016 •Commercial Food Waste in the Spring Organics Diversion Program Permanent Phase – 2017 Kompogas Technology Organics Diversion Program KOMPOGAS ® system? Bio waste (green bin) Yard waste Commingled food waste (supermarket) Market and vegetable waste Commercial (catering, kitchen) Kompogas PF1500 digester at Chavornay (Switzerland) Tree clippings  Nearly all organic feedstock can be treated: think ‘solids’ 5 San Luis Obispo Good match for SLO organic waste Products and By-products Produced Biogas Digestate Quality Compost Liquid Fertilizer Gas Engine either HEAT Gas Upgrading …or CO2 CH4 6 San Luis Obispo Anaerobic Digestion Project 2015 Organics Diversion Program New Food & Green Waste Franchise Agreement •Long term agreement needed to secure financing for the project •If facility is not built, the agreement will not be extended & material would continue to go to Santa Maria facility •The amended agreement includes food waste Staff Recommendation Introduce an ordinance granting a franchise agreement to San Luis Garbage Company for food and green waste services.