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HomeMy WebLinkAboutItem 02 IMERF Presentation AGENDA ITEM SUMMARY Meeting Date: 11/20/2023 Meeting Type: Regular Meeting Staff Contact/Dept.: Dan Hurley/Lane County Public Works Staff Phone No: 541-682-6910 Estimated Time: 40 Minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Promote and Enhance our Hometown Feel while Focusing on Livability and Environmental Quality ITEM TITLE: INTEGRATED MATERIAL AND ENERGY RECOVERY FACILITY (IMERF) ACTION REQUESTED: To received feedback from the Council and provide answers to questions or concerns. ISSUE STATEMENT: Lane County is considering entering into an agreement with Bulk Handling Systems (BHS) to build and operate an Integrated Material and Energy Recovery Facility (IMERF) in Goshen, Oregon. The facility would process residential garbage, commingled recycling, and organic waste to produce marketable recycling commodities and biogas for transportation. The facility would divert over 80,000 tons of material from the County’s landfill annually and would serve as a regional recycling hub for southwest Oregon. ATTACHMENTS: 1. Memorandum Dated November 13, 2023 2. November 2023 IMERF Update 3. PowerPoint Presentation DISCUSSION/ FINANCIAL IMPACT: Provided in attachments 1 and 2. Page 1 of 6 AGENDA COVER MEMO Memorandum Date: November 13, 2023 Order Date: November 20, 2023 TO: Springfield City Council PRESENTED BY: Dan Hurley, Public Works Director Lane County Jeff Orlandini, Waste Management Division Manager Lane County AGENDA ITEM TITLE: Lane County’s Proposed Integrated Material and Energy Recovery Facility (IMERF) I. AGENDA ITEM SUMMARY Lane County is considering entering into an agreement with Bulk Handling Systems (BHS) to build and operate an Integrated Material and Energy Recovery Facility (IMERF) in Goshen, Oregon. The facility would process residential garbage, commingled recycling, and organic waste to produce marketable recycling commodities and biogas for transportation. The facility would divert over 80,000 tons of material from the County’s landfill annually and would serve as a regional recycling hub for southwest Oregon. II. BACKGROUND Lane County is the Solid Waste Authority for Lane County. Lane County owns and operates the Short Mountain Landfill as well as 15 transfer stations serving all of Lane County’s residents. In 2015, the Oregon State Legislature passed legislation updating the Opportunity to Recycle Act. As a part of this process, Lane County was required to provide a materials recovery goal to be achieved for 2025 and beyond. Recovery goals are used to encourage waste reduction, recycling, and diversion of waste from landfills. Lane County selected 63% recovery rate for this voluntary goal. This goal is listed in ORS 459A.010. Lane County currently achieves an approximate 53% recovery rate. In July 2019, the Lane County Board of Commissioners adopted the updated Solid Waste Management Plan (SWMP) as a Special Purpose Plan of the County’s Rural Comprehensive Plan (Ordinance No. PA 1377 & 19-04). The plan notes that the Department of Environmental Quality (DEQ) identified food waste as the single largest Attachment 1 Page 1 of 6 Page 2 of 6 waste stream entering the landfill. Organic wastes, including food waste, decay in the landfill and produce methane - a potent greenhouse gas. In December 2019, the Board approved the revised 2018-2021 Lane County Strategic Plan adding the following Key Strategic Initiative: Pursue programs to reach a 63% waste recovery rate by 2025. In February 2020, the Board adopted Order and Resolution 20-02-04-04, establishing a Climate Change Strategy for Lane County that included goals to reduce greenhouse gas emissions from County operations. In October 2020, the Board approved the first phase of the County’s Climate Action Plan. The plan identified the Short Mountain Landfill as the highest contributor (77%) of greenhouse gas emissions from County operations. The Action Plan recommended construction of an Anaerobic Digestion system at the Short Mountain Landfill as a key action for lowering emissions from the landfill. In December 2021, Waste Management Division staff presented on past action taken and next steps in advancing materials management in Lane County. A local manufacturer of waste processing systems, Bulk Handling Systems (BHS), presented on waste processing technologies in use in other communities that may be viable in Lane County. In March 2022, Waste Management Division issued a Request for Proposals (RFP) for Waste Recovery Facilities to help the County meet or exceed its 63% recovery goal. After a competitive process, the County selected Bulk Handling Systems (BHS) to enter into a contract to further explore building a Waste Processing Facility located near Short Mountain Landfill. In April 2022, the Board added the following objective to the 2022-2024 Strategic Plan: Fully vet the construction of a waste processing facility for the Short Mountain Landfill. In July 2023, the Division identified a potential property in Goshen for the IMERF and entered into a Purchase & Sale Agreement (PSA) pending approval by the Board of County Commissioners. In September 2023, County staff provided and update to the Board of Commissioners on the vetting status for constructing a waste processing facility including cost estimates from the 30% design plans for the facility. III. POLICY ISSUES Oregon Revised Statute (ORS) 459.015 (1) (d): “It is in the best interests of the people of Oregon to extend the useful life of solid waste disposal sites by encouraging waste prevention and the recycling and reuse of materials, and by requiring solid waste to undergo volume reduction through recycling and reuse measures to the maximum extent feasible before disposal. Implementation of waste prevention and recycling and reuse measures will not only increase the useful life of solid waste disposal sites, but also decrease the potential public health and safety impacts associated with the operation of Attachment 1 Page 2 of 6 Page 3 of 6 disposal sites.” Per ORS 459.085, with respect to areas outside of cities, the Board of County commissioners may adopt ordinances to provide for the regulation, licensing or franchising of salvage businesses or the operation of salvage sites where such action is found necessary to implement any part of a solid waste management plan applicable in the county. IV. FINANCIAL CONSIDERATIONS Approval of the IMERF would require increases to solid waste disposal fees (tipping fees) in order to maintain current levels of service while supporting the new facility operations. The County is continuing negotiations with BHS to develop an operating agreement. The final agreement will include revenues to Lane County including an annual host fee. The agreement will also include ongoing expenses in receiving the waste byproducts from the sorting facility. The proposed agreement would require the County to develop the site and construct a suitable building to house the sorting equipment. The 30% design for the facility estimated costs for site preparation and building construction at approximately $55 million. BHS would be responsible for supplying the sorting equipment and operating the facility to meet established performance thresholds. BHS estimates the processing equipment costs to be approximately $100 million. Final costs for the construction and operation of the facility will be reduced through tax credits, grant opportunities, and possible funding assistance from the State. Specific tax federal tax credits will only be available if construction of the facility begins by the end of 2024. V. ANALYSIS To fully vet the construction of a mixed waste processing facility, the project has been evaluated through the Strategic Lenses outlined in the Board’s strategic plan: Stewardship of Resources, Equity, and Collective Impact. Strategic lenses are perspectives from which strategic priorities and goals should be viewed, as well as questions that should be asked before strategies are implemented. Stewardship of Resources • How will we pay for this? The Waste Management Division operates out an Enterprise Fund. It is self- supported through user fees. The fund does not receive any money from taxes or the General Fund. The County estimates an increase in fees of 11% per year four years in order to maintain current levels of service and cover the costs of the IMERF. A 3% CPI increase is included in the 11% to account for projected inflationary adjustments needed for overall operations regardless of this project. Attachment 1 Page 3 of 6 Page 4 of 6 Tipping fee increases are predicted to reduce to 8% in year five, and 5% in year six. It has been estimated using data from the City of Eugene that for the typical customer using curbside waste collection, an 11% landfill fee increase would result in a monthly curbside increase of 50-60 cents. Rate impacts to commercial customers vary significantly depending on the amount of waste generated. Estimates provide by Sanipac calculated an average increase to commercial accounts from the IMERF at approximately 3% per year for the next 6 years for the average commercial customer. • Is what we are proposing sustainable? The proposed tipping fee increases would provide sustainable funding for the life of the facility. The processing facility is estimated to extend the life of the landfill by 20+ years while producing 1 million diesel gallon equivalent of natural gas per year via anaerobic digestion. Additionally, the facility will house a process line for recyclable materials that will be able to handle all of Lane County’s recycling as well as take from neighboring counties, meeting the standards of the Recycling Modernization Act. Siting a processing facility in Lane County will avoid transportation of recyclable materials that are currently trucked to Portland/Vancouver area recovery facilities. Equity • How does this impact everyone in our community? The landfill is a resource for all residents to meet our community’s long-term needs for safe and responsible solid waste disposal. Extending the life of the landfill is a benefit for everyone and succeeding generations. Likewise, reducing the emissions and the long-term environmental liability of the landfill benefits everyone. Increasing fees also carries an impact. However, a $2/month increase spread over four years seems reasonable for the multiple benefits to be gained. In addition to the environmental benefits, the proposed facility would enable residents to again recycle plastics that were discontinued from collection in the current system, such as plastic tubs and plastic film. To help offset the impact to low income residents, a new discount is proposed at County transfer stations to offer a $1 off per load discount for customers receiving Supplemental Nutrition Assistance Program (SNAP) benefits by showing their Oregon Trail Card (EBT). • Have we sought feedback from key stakeholders? The Waste Management Division has held regular meetings with the Solid Waste Stakeholder Group which comprises of representatives from cities, waste haulers, and businesses and non-profits connected to the waste and recycling industries. County staff have regularly provided updates and solicited feedback since the inception of this project. Attachment 1 Page 4 of 6 Page 5 of 6 Collective Impact • Are we including the right partners? BHS was selected through a competitive process over two other proposals because of the quality of the proposal in achieving desired outcomes and the proven track record of the company. Each of following outcomes were met or exceeded with the proposed solution. • Increase diversion of materials from the landfill to achieve a 63% county-wide recovery rate. The solution will enable the County to achieve over a 70% recovery rate. • Significantly reduce greenhouse gas emissions from Short Mountain. The processing facility is estimated to reduce over 100,000 tons of CO2 equivalent emissions annually. • Create local, sustainable economic development and jobs. The project would provide approximately 190 construction jobs, 65 ongoing jobs to operate the facility, and over $270 million in economic impacts benefiting Lane County over the life of the project. • Construct and operate at an affordable cost to the rate payer. Annual fee increases will be kept to 50-60 cents per month for an average household using curbside garbage service. • Use proven processing systems. BHS is a worldwide leader in supplying waste processing equipment. The company has constructed numerous waste processing facilities, including several in California that staff have visited to observe the facilities in operation. • Achieve the above in a Public-Private Partnership format. The proposed agreement would partner Lane County as the owner of the facility and the landfill with BHS, as a private firm supplying and operating the equipment. BHS would shoulder approximately 70% of the investment into the facility. • Is this the most effective solution? Lane County’s recycling rate has plateaued in recent years, with the most recent annual analysis indicating a slight decrease in the recovery rate, despite numerous initiatives and education campaigns. A waste processing facility is the Attachment 1 Page 5 of 6 Page 6 of 6 only solution anticipated to enable the County to meet the goals described above. The County requested proposals and evaluated two other potential solutions. The BHS proposal was evaluated to be the most effective solution. VI. TIMING/IMPLEMENTATION On November 28, County staff will return to the Board to provide additional updates on the IMERF including a draft contract with BHS and proposed increases to solid waste disposal fees to support construction and operation of the facility. On December 5, the Board of Commissioners will have the opportunity to decide whether to approve a contract with BHS, increases to solid waste fees, and the PSA to acquire the proposed property. VII. ATTACHMENTS 1. IMERF 2-Page brief 2. A PowerPoint presentation will be provided Attachment 1 Page 6 of 6 On December 5, 2023, the Lane County Board of County Commissioners will decide whether to move forward on a state- of-the-art Integrated Material and Energy Recovery Facility (IMERF) to be constructed in Goshen, Oregon. The IMERF would be the most technologically advanced waste processing facility in the country and would utilize technology and equipment designed and built by a local manufacturer, Bulk Handling Systems (BHS). BHS is a world leader in developing sorting systems for the solid waste and recycling industries, and is headquartered in Eugene, Oregon. The facility would process residential garbage, commingled recycling, and organic waste to produce marketable recycling commodities and biogas for transportation. The facility would divert over 80,000 tons of material from the County’s landfill annually and would serve as a regional recycling hub for southwest Oregon. The next update to the Board of County Commissioners is scheduled for November 28. PRINCIPAL GOALS OF PROJECT: • Significantly reduce greenhouse gas emissions from the landfill • Divert recyclable materials from waste that would otherwise be landfilled • Create local, sustainable economic development and jobs • Use proven recycling processing systems • Leverage public-private partnerships • Construct and operate at an affordable cost to the rate-payer BENEFITS FOR LANE COUNTY AND OREGON The IMERF represents a fundamental transformation for Lane County’s handling of municipal solid waste. Processing of waste to extract recyclables and energy is a major, comprehensive step forward. It will serve as a model for other counties in Oregon and across the country. Project benefits include: • Mitigation of methane from Short Mountain Landfill - the largest source of greenhouse gas (GHG) emissions from County operations. Equivalent reduction of taking 20,000 cars off the road for the next 25 years. • Achieve a materials recovery rate over 70% and extend the remaining life of the County’s municipal solid waste landfill by more than 20 years. • Produce over 1 million diesel gallon equivalents per year of renewable natural gas (RNG). Fuel would be available for use in local transportation fleets and would have a negative carbon intensity under Oregon’s Clean Fuels Program. • Two-year construction project utilizing local companies – creating 190 high-paying manufacturing jobs during construction and 65 ongoing family wage jobs for the operation of the facility for the next 25 years. • Over $270 million in economic impacts benefiting Lane County over the life of the project. PROJECT FEATURES • Advanced materials processing equipment to recover recyclable materials from solid waste headed to the landfill • Sorting equipment for commingled recycling to reduce long haul shipment of locally collected recycling for processing • Anaerobic digester to convert recovered organic wastes into Renewable Natural Gas (RNG) for transportation fuel • Visitor and Educational Center for schools, community groups and other interested residents and businesses LANE COUNTY INTEGRATED MATERIAL AND ENERGY RECOVERY FACILITY (IMERF) November 2023 Update Attachment 2 Page 1 of 2 PROJECT COSTS: TOTAL = $150 MILLION • Lane County will construct the building housing the processing equipment. o Building cost: $50 million - minus tax credit $15 million Construction cost to Lane County = $35 million Lane County would issue a Capital Improvement Bond in Spring of 2024 to cover up-front costs. Bond will be paid back over time through revenue from landfill tipping fees. • BHS will construct and install the equipment for the facility including the anaerobic digester; and provide all funding required. o Equipment cost = $100 million BHS will supply and operate the equipment and will generate revenue over time through waste processing fees, sale of recyclable commodities, and sale of biogas. IMPACT TO GARBAGE RATES Lane County currently has some of the lowest garbage rates in the state – primarily because the County owns the Short Mountain Landfill that does not operate to make a profit. Starting with low rates, the rate increases needed to fund the project would be a relatively low impact to the average residential customer. Lane County is proposing two 11% increases to landfill rates in the first two years of the project. The landfill disposal cost is approximately 20-30% of a customer’s residential garbage bill - so for most residents, these increases would amount to less than a $2/month increase in the first two years of the project. Additional increases are expected at roughly the same amounts in the following two years and tapering down in years five and six. The County is seeking federal and state funding to help offset future increases. Rate impacts to commercial customers vary significantly depending on the amount of waste generated. Estimates provided by a large local hauler estimate an average increase of 3% per year for the next 6 years for the average commercial customer. Low-income assistance is proposed to offset fee increases for self-haul customers at each of the 15 transfer stations operated by Lane County. Residents qualifying for Supplemental Nutrition Assistance Program (SNAP) benefits would receive $1/off each load with their Oregon Trail (EBT) Card. Bulk Handling Systems (BHS) is headquartered and has its main manufacturing facility in Eugene, Oregon. BHS has built some of the largest and most durable Material Recovery Facilities in the world – and they are achieving the highest throughput, recovery, and purity rates in the industry. Bulk Handling Systems was selected through a competitive Request for Proposal process to design, build and operate the IMERF. The public-private partnership between BHS and Lane County envisions an infrastructure investment that that will leverage tax incentives, along with state and federal funding opportunities to benefit all of Lane County’s residents. Attachment 2 Page 2 of 2 Material Recovery Facility and Anaerobic Digestion & Organics Processing Facility Attachment 3 Page 1 of 16 Objectives •Increase diversion of materials from the landfill to achieve a minimum 63% county-wide recycling rate •Significantly reduce greenhouse gas emissions from Short Mountain •Create local, sustainable economic development and jobs •Construct and operate at an affordable cost to the rate payer •Use proven processing systems •Achieve the above in a Public Private Partnership format Attachment 3 Page 2 of 16 Key Features •State-of-the-art materials processing facility to recover commodities from solid waste headed to the landfill •Processing of commingled recyclables from local collection programs to provide local capacity and reduce long haul shipments for processing •Recovery and conversion of organic waste into Renewable Natural Gas (RNG) through anaerobic digestion •Bio-drying of the pathogen-free organics for reuse as soil amendments, slope stabilization and daily cover at the landfill •A Visitor and Educational Center for schools, community groups and other interested residents and businesses Attachment 3 Page 3 of 16 Local Jobs & Economic Impact •$135+ million construction value with $35 million of site development and building work •Chambers Construction •Farwest Steel •BHS •Annual economic revenue from plant operations of more than $38 million •Total direct jobs estimated during design, fabrication, and construction of the IMERF is more than 190 high-paying manufacturing and construction jobs •Generates over $200m in Lane County regional economic activity •Facility employment for the next 25 years estimated at more than 65 at the facility; paying prevailing wages and benefits Attachment 3 Page 4 of 16 Regional Economic Impact Direct Jobs Annual Value Supplier Jobs Annual Value Induced Jobs Annual Value Total Jobs Annual Value Lifetime Impact Construction Jobs -Chambers 95 $12,160,000 84 $5,434,000 131 $4,588,500 310 $22,182,500 $33,273,750 Construction Jobs -BHS 75 $5,062,500 66 $3,300,000 104 $3,622,500 245 $11,985,000 $17,977,500 Construction Jobs -Farwest Steel 25 $1,500,000 22 $1,100,000 35 $1,207,500 82 $3,807,500 $5,711,250 Total Construction Jobs 195 $18,722,500 172 $ 9,834,000 269 $ 9,418,500 636 $ 37,975,000 $ 56,962,500 Operating Jobs 65 $4,875,000 29 $1,462,500 58 $2,024,750 152 $8,362,250 $145,613,094 Construction Materials $70,000,000 Projected Economic Impact $272,575,594 Economic Impact Model Asumptions Construction Jobs Duration = 18 months Operating Jobs Duration = 25 years which is the length of the contract * Model developed by Onward Eugene Attachment 3 Page 5 of 16 Greenhouse Gas Reductions •Decrease of 88,000 tons per year of CO2 emissions •Organics processing removes significant volatile organics through AD and aerobic composting •Reduction of carbon emissions from transport of materials to distant processors Attachment 3 Page 6 of 16 RNG Production •The facility will produce 1,150,000 diesel gallon equivalent (DGE) per year of biogas upgraded to pipeline quality Renewable Natural Gas (RNG) •Produces Negative Carbon Intensity RNG fuel under Oregon’s Clean Fuels Program Attachment 3 Page 7 of 16 Recyclables •Recyclables recovered from the system will be sold as commodities •Adding a separate system to process Commingled Recyclables under Oregon Recycling Modernization Act •Expanded list of acceptable materials to include wider range of plastics Attachment 3 Page 8 of 16 Education Center Dedicated Education Center for for community tours of the system and information about waste & recycling in Lane County Attachment 3 Page 9 of 16 Key Terms of Public Private Partnership •Lane County develops and owns the site and buildings •BHS to fund entire buildout of recycling and renewable energy infrastructure •Meets Lane County’s solid waste and climate action plans •Facility development and opening within 24 months Attachment 3 Page 10 of 16 Lane County IMERF Attachment 3 Page 11 of 16 Lane County IMERF Attachment 3 Page 12 of 16 Process Equipment Attachment 3 Page 13 of 16 Process Equipment Attachment 3 Page 14 of 16 Renewable Biogas Attachment 3 Page 15 of 16 Lane County Integrated Material and Energy Recovery Facility A Public Private PartnershipAttachment 3 Page 16 of 16