Springwater Deputy Mayor Don Allen’s statement on the OPF/MMF

Deputy Mayor Don Allen’s presentation to Springwater Council regarding his motion regarding an Organics Processing Facility and Materials Management Facility – March 2 2016

Waste management is controlled and operated by Simcoe County for its 16 municipalities .

6 years ago in 2010, County Simcoe staff recommended and County Council agreed that part of the future Simcoe waste management strategy would include building in Simcoe somewhere a Materials Management Facility (MMF) and an Organics Processing Facility (OPF).

MMF is a location for consolidation and transfer of waste, organics and recycling from trucks that pick it up from your house, and then consolidate it for more economical shipment to other disposal or processing locations, which are presently outside of Simcoe.

OPF is a location where organics (green bin material) are processed into compost and fertilizer and biogas as by-products. This also presently processed outside of Simcoe. There is the potential some time in future to include leaf and yard waste (presently handled in the County at land fill sites) and maybe pet waste and diapers (presently put in the garbage). This will involve more advanced technology at additional future cost.

In 2014, previous County Council endorsed further work to proceed with development of a methodology to look for sites for an MMF and OPF. This siting progress was reviewed with County Council in March 2015 and a short list of sites was presented in August 2015.

Following this, a short list evaluation was done resulting in the recommendation yesterday (March 1) by GHD, consultants hired by the County, that both the OPF and MMF be located on one site and that they be located at 2976 Horseshoe Valley Rd West in Springwater.

Approval of this from County Council will be sought in its meeting next Tuesday March 8th. If approval is given, then we are told the following events will occur thereafter:

• Further consultation with Springwater re site and timeline for project development

• 23-3-16 (3 wks today) County meeting with neighbouring landowners within 500 meters of the selected site to discuss the project

• 19-4-16 – public info session to discuss process to date, details on preferred site and project timeline

• Spring/ Summer 2016 – continued Environment Impact Statement (EIS) work to support planning applications (need to understand what all is involved with this)

• Geotechnical and engineering studies to confirm site conditions – they state these are needed to create a vendor RFP package, to be approved by County Council, for anticipated release early fall of 2016.

• Response to RFP in fall / winter 2016

• Business case to be completed and presented to Council early 2017

I am a strong proponent of saving the environment and increasing diversion from landfills in whatever fiscally responsible way as possible.

We must continue to reduce our garbage generation and increase our diversion, especially of organics, to eliminate it from our landfill sites.

My test and report card to myself and my family each week as I carry out the garbage is to compare the volume and weight of recycled bins in one hand versus our garbage bag and how much is in our green bin in the other hand. It is a good week when the garbage bag is nonexistent or is a small one and the green bin and blue bins are heavier with waste being put out to be responsibly recycled – and that happens most often for us.

In Simcoe, we are doing well in certain areas of recycling but overall we remain relatively stagnant in our overall diversion rate over the past 4 years at 52% diversion.

Our goals are 71% diversion rate by 2020 (4 years from now) – 77% by 2030 and a minimum 1% reduction in the amount of waste we create per person. Simcoe residents on average generate an average of 574 kgs of garbage per household per year and that has remained at the same level as the 2012 average and is 8.5% greater than 2010 levels. So we need to do more to move in the right direction let alone be able to realistically reach our targets.

Organics is the bad component. In that bag of garbage you throw out each week – on average one half of that bag could be added to a blue box or a green bin AND 40% of that bag consists of food waste and other divertible green bin materials such as tissues, paper towels and paper cups and plates. And this is not factoring in anything about pet waste or diapers.

Our capture rate of green bin organics has reduced 6% from levels in 2010 of 47% to 2012 44% to 2015 38% – this is going in the wrong direction and into garbage bags.

So we need to examine how we can reduce the garbage we create and practice 100% organics diversion into the green bin recycling and recycle everything else that we can.

I agree that we will need an MMF and an OPF at some time – I am not convinced the time is now. Our existing contracts with our waste management service providers expire in 2018. What I am proposing in my motion is that the order of the process of this exercise be changed to first do a comprehensive business case for both the MMF and the OPF, including a risk analysis, market sounding process (basically looking at the potential markets for product coming in to be processed and the products coming out from the process), and look at the costs of various technology options and the operating costs and then compare that to the possibility of renewing our contracts to provide these services for a 7-10 year period after 2018 and until this is completed, deferring any other aspects of the process until this is completed and understood. If the logical choice is to renew the contracts, by the end of the future term our diversion rates will be where they should be and technology will be improved and there will be a revenue generating use in Ontario of the biogas byproduct, which there is not now. Plus, we may find a better location for the facilities to be built in the future.

County presently has spent $228K on a consultant to determine a site, then it wants do more studies to determine the technology, then do an RFP and go through procurement and then, 3 years after the process started, do a business case to see if it is workable or not and how much it will cost. To me this is the wrong process and order of events.

We are talking here of $3.5M to $5M for an MMF and $10M to $35M for an OPF facility. My estimate is that both together will cost no less than $50M to finalize to the first phase and that will not involve being able to handle pet waste or diapers – that will come later at greater expense. This is taxpayer money which will require debt to finance, I presume , which will need to be repaid and serviced in the interim by taxpayer dollars. The County has estimated that the MMF will save $13M over the next 20 years and have a 6 year payback. I believe that more in depth analysis of the costs needs to occur before making that claim.

I decided to reach out to find other similar projects.

I have investigated and continue to communicate with key people from existing similar projects to the proposed OPF – One is the City of Surrey (B.C.) biofuel project (which won in 2014 Sustainability Award from the Federation of Cdn Municipalities (FCM) and the City of Saint-Hyacinthe Que. Biomethanation Project (which was awarded an FCM Sustainability Award in 2015). Saint-Hyacinthe has a population of 55,000, the project timeframe is from 2009 to 2017 at a cost estimate of $48M.

Most of my research and dialogue has been with Surrey as my French is a little rusty these days. I have had numerous ongoing discussions and exchange of correspondence and reports provided by Rob Costanzo, the Manager Engineering Operations, who has lead the Surrey project from its beginning.

Some quick facts about the Surrey project in BC to put in context:

-Surrey’s Population 514,000 – Surrey is one of 21 municipalities within the Metro Vancouver Regional District. Trucks – 45 per day service the area with 102,000 single family households and 34,000 high-rise units.

-The organics plant is presently under construction. It is situated on 6.6 acre property owned by Surrey and it will be beside an existing MMF facility.

-Biofuel Processing Facility will process 115,000 metric tonnes source separated organics (SSO)/year, will produce 120,000 Gj renewable natural gas/year and will produce 40,000 to 50,000 MT of compost/year. So it is larger than what is contemplated initially for Simcoe.

-Capital cost = $68 million, with 25% or $17M being a federal contribution through Public Private Partnership Canada – P3 Canada – It will be a Public Private Partnership model.

-City’s private partner is responsible to design, build, finance, operate and maintain the facility under a 25 year agreement. City financial responsibilities are limited to providing 25% of the capital costs (which will come from the federal government $17M contribution), and paying disposal tipping fees at the facility for all the waste it delivers to the facility from curbside for the next 25 years at agreed upon competitive market rates for organic waste disposal of between $50 to $85/tonne.

-Outputs will be grid quality renewable natural gas (RNG) the City sells into the FortisBC gas grid and then buys back gas at pre-determined rates what it needs for its Waste Services, Fleet Services and other City facilities. The City is also looking into the possible sale to the Province of carbon credits. Net result will be zero net impact on what is being paid per household annually for waste.

Here in Simcoe, staff and the engineering consultants Conestoga Rovers (now GHD) have worked hard to get the MMF/OPF process to this point. Rob states this was the same initial approach taken by Surrey but early in the process, it was determined that a proper business case/risk assessment, involving both qualified financial and engineering experts was necessary.

Also, once Surrey decided to pursue the P3 Canada fund , the process required a business case to be completed for review by P3 Canada staff. Once P3 Canada staff where confident that the business case sufficiently addressed key issues pertaining to risk transfer and the financial viability of the project, Surrey’s business case was presented to the P3 Canada Board with recommendations for approval.

A quote from Rob – “In the end, the business case saved the City a lot of grief. It provided a pros and cons assessment of each technology, accurately predicted our true costs, which were much higher than what my internal team had originally estimated prior to the business case, and it clearly outlined how to minimize the impact of the higher costs, the risks involved, and the best procurement model based on what we wanted to achieve. In our case the design, build, finance, maintain and operate model via a P3 was our preferred choice. This all helped us immensely with our procurement process and provided the market with a high degree of certainty knowing that we had done our homework.”

This Business Case, which I have reviewed, is subject to a confidentiality agreement I signed as a condition of reviewing it – I have been authorized to share the Table of Contents, to get an idea of the depth and breadth of the study and I will share that with anyone who is interest in seeing it.

Surrey’s process started in Spring 2011 – Business case was completed by Dec 2011. P3 was on board by June 2012, receiving P3 Canada Board approval – RFQ went on from May 2013 to Jan 2014 – RFP process from Feb 2014 to early fall and subsequently awarded to an entity called Orgaworld Canada.. Winter 2014-2015 commenced construction which is scheduled to be finished by late 2016.

I believe The County needs to engage a reputable financial firm, like a PwC or E&Y with expertise in this field, to work in conjunction with our technical lead (GHD) and staff. Per Rob Costanzo- “Using only one of these professional disciplines, engineering or a financial firm to complete your business case, is a risky proposition – you need to have both the financial and engineering experts on your business case team – they work hand-in-hand.”

I have discussed this with staff and we have heard from the Warden that we can’t get costs until we select technology and that we can’t have an RFP until we select a site. To me this is the wrong order of events and not what other proven projects have done.

The purpose of a Business Case is to safeguard the County against the exact concerns expressed by staff and the Warden – to specifically determine the type of technology (or technologies) to consider in addition to deriving a cost benefit analysis – this is all done before going to tender. In the case of organic waste processing, there are a number of categories of technologies available, and in each category, there are differing variations – in short there is a lot to consider. Attempting to sort it out via a tender process is like someone going out to tender to purchase a car without specifying the vehicle category or price range – you’ll end up with anything from a smart car to an SUV and everything in between – all will do basically the same thing, but all have very different costs associated with capital, operations and maintenance.

Once you’ve gone down the tender process, it’s difficult to get out unless you cancel the process – and that can be costly and frustrating to both the market place and the County, not to mention the tax dollars wasted. The business case will take a lot of the guess work out of the equation. It will advise us as to the best path to take, i.e. design, build, operate versus contract (for the same period of the life of your facility), versus public private partnership, versus looking at renewing the existing contracts for the provision of service until sometime into the future. We need to know what all of the options will cost and involve. These are all questions and aspects that taxpayers will continue to ask and want to be assured we have thoroughly examined.

I spoke with Bob Kearse (Rob and Bob seem to be popular names in waste management!), anyway – this Bob is Manager of Capital Delivery ID&AM Solid Waste Mgt regarding the commercial potential of biogas in Ontario and where that is going. He reiterated that organics processing without any offset revenue for the gas produced, is tremendously costly. Disco Rd, which processes 76K tonnes, cost $76M to build. The present ongoing reconstruction upgrade of Dufferin, producing 55K tonnes, is estimated to be in the range of $70M. It is estimated that the Province will undertake a bid program in a couple of years for Large Renewable Processing (LRP) to possibly allow net metering and the potential of some revenue generation from an organics processing by-product but presently none exists – Ontario seems considerably behind BC and Que. Both Rob and Bob agree it is tremendously costly to proceed without the benefits derived from this revenue stream.

I tried to present a motion along these lines at County Council last week after being assured that it would require a 50% vote to pass. Just before presenting, the Warden determined that the motion constituted a reconsideration of Council’s previous decision and therefore required 2/3 approval to speak to the motion and then if that happened, then my motion would need 50% to pass. There was what is referred to as a weighted vote, where each municipality get a certain number of votes between its mayor and deputy, based on the number of voters in the last election. The votes for me to proceed to speak to my motion were 64 for and 39 against so I was 5 votes short of the 2/3 required so County did not hear my position and my motion.

In summary, I disagree with the process being followed here to date and think that we are waiting too far into the process to complete the key business case cost benefit analysis which is crucial for a $50M commitment and investment. County is progressing assuming these are going to be built in three years. Our waste methodology is not showing positive trends in organics collection results for sufficient potential feedstock into an OPF facility. We don’t know whether the volumes might include waste from Barrie and Orillia, we don’t know the costs of alternative possible technologies and the funding and comparing these to continuing to contract out for these services. The arguments of greenhouse gas emission of haulage, security of future costs and capacity of waste management providers can all be negotiated in advance into contracts over the next 7-10 year period. We need to change our existing waste management culture to increase diversion even before we spend $50M. The build it and they will come philosophy doesn’t work for such a significant undertaking. By addressing these aspects, it may become evident that waiting 7 to 10 years is the most sensible strategy to get the right process, model and location and diversion results for at least the OPF.