Santa Paula Times

Inquiring minds want to know

October 12, 2012

By Marsha M. Rea

Several weeks ago we touched briefly on the subject of the proposed sale of the former Sewer Treatment plant located on Corporation Street, to Crown Disposal Company, Inc. (CDI).  The terms of the sale are now being discussed and negotiated in closed council sessions at City Hall.

Contrary to the advice of two appraisers, the City Council decided at its first public discussion of this matter to proceed immediately with negotiations to sell the property to CDI, and not wait another year for property values to recover. The stated use for the property, per the staff report presented at the meeting, is for CDI to use the existing improvements for office space, and vehicle maintenance, and for the City to lease back a portion of the property for vehicle storage and maintenance. The property now functions as the City’s maintenance yard, with mechanics’ bays, hoists and other required equipment.  Having to re-establish a municipal maintenance yard and repair facility elsewhere, should we run into conflicts or cannot resolve lease issues with CDI in the future, may be very costly.  According to a source familiar with the site and its improvements, the cost to replace such a facility could run as high as $5 million. 

In the discussion of the proposal with Council members at the meeting, the City Manager, Mr. Fontes said that the indicated price was determined by taking the high appraisal value of over $2.4 million, and deducting what was a rough estimate of the cost of mitigating environmental issues on the property, should the city want to sell it in the open market.  He said that CDI proposes to purchase the property “as is” for $2.04 million, and will conduct all environmental mitigation required.  He said that the City’s Planning Commission had reviewed the proposed project, and given its blessing, by filing a “negative declaration” of environmental impact. Unfortunately the Planning Commission staff report was not provided in the Council’s packet for public scrutiny.

A source with knowledge of the Planning Commission’s deliberations subsequently stated that they had only been asked to assess the proposal with regard to the impact of vehicle parking on the site.  One would suggest that if the proposed use is for an activity that has not been openly acknowledged, but is known by the city administration, those anticipated future activities should be disclosed to the public, even before a formal review by the Planning Commission.  One wonders why the Planning Commission’s staff report was not made a part of the Council packet for public review as is standard procedure in virtually every other California municipality.  Clearly the Council takes the overall long-range plan seriously enough to send two of its members on a field trip to northern California to visit a similar site.  (...Yes, I know, again with the pesky transparency thing...) Mr. Fontes also cited as an added inducement for the sale, that the new facility would generate approximately 60 new jobs.

Several things have become clear from a review of the Planning Commission staff report, and further research in subsequent days. CDI’s plans for the property are far more substantial than was disclosed at the Council meeting. In three phases over the coming years the plans are: 

PHASE 1 - The vehicle service yard; which is the segment approved by the Planning Commission;  

PHASE 2 - CDI plans to modify the old wastewater treatment equipment on the property in order to build and operate an Anaerobic Solid Waste Digester plant to process food related waste products on the site. Such a plant is not a recycling operation, but would create a significant amount of bio-energy, among other marketable end use products, which CDI could sell - perhaps to the City, perhaps to local companies, perhaps to local agricultural buyers and/or directly to Southern California Edison.  This is a game-changing proposal for future use of the site that raises some very interesting issues, not all of which are negative, but they are interesting and will prove to be challenging, nevertheless.  

Here, as briefly as the writer can manage, is a primer on Anaerobic Digesters, which is a fairly recent use of an older technology for creating alternative “green” energy.

Anaerobic Digestion (AD) is not new; it has existed about as long as life has been present on earth. It is a naturally occurring process that takes many forms, which include: natural bogs, enteric fermentation (i.e. cows), dairy lagoons, landfills/bio-reactors, wastewater treatment plants, etc. AD is the process by which organic materials are broken down by microorganisms in an enclosed vessel in the absence of oxygen. AD plants produce biogas (consisting primarily of methane and carbon dioxide), and are often referred to as “biogas systems.”  Depending on the system design, biogas can be combusted to run a generator producing electricity and heat (called a co-generation system), burned as a fuel in a boiler or furnace, or cleaned and used as a natural gas replacement. The AD process also produces a liquid effluent (called digestate) that contains all the water, all the minerals and approximately half of the carbon from the incoming materials. It is currently accepted worldwide as a viable technological process for creating green energy. One purveyor of the technology indicates that their process will convert 60 to 90% of the organic solids fed to it to biogas. Any remaining solids have market value as a soil amendment or fertilizer additives.

It is not known at this point what type of AD plant CDI envisions for Santa Paula, although they do propose to utilize state-of-the-art technology; but the proposal does present some interesting options for the community. Here are some thoughts on the concept as it relates to Santa Paula: 1) With tangible assets such as a relatively large (almost 10 acre) parcel of land; ready access to a transport corridor (Hwy. 126); a relatively central location in western Ventura County, with direct access to the county’s agricultural community, and within easy reach of northern LA County; a new wastewater treatment facility down the street that could be integrated into a development plan; and a laissez faire local government, one can make a quite plausible business case for CDI to want the property for an eventual AD plant.  2) Some of the components to support an AD plant are already in place at the new wastewater treatment plant.  

PHASE 3 - CDI plans to build a 45,000 square foot building to house a Materials Transfer/Recycling Facility (MRF - pronounced “murf”) on the property. This is a specialized plant that receives, separates and prepares recyclable materials, including food waste, for marketing to end-user manufacturers or landfills. CDI estimates that initially up to 12 truckloads of refuse (upwards of 300 tons) would be processed daily at the site.  MRFs are notorious for producing noxious odors, and the most successful are built and operated away from developed areas, which is clearly not the case with the location of the subject site near the edge of a residential zone in Santa Paula.  

So, it seems to the writer that while there may be benefits to having an AD operation in town; the MRF... maybe not so much.  As some wise person once said, “Though the angels may be in the concept, the devil is in the details.”  The critical elements for mitigating the odor issues related to both an AD plant and a MRF are handled by taking proactive steps in three key areas: facility design, process control and odor control, which CDI indicates they will make priority goals.  Making stringent, concrete requirements for odor control and mitigation cost liability must clearly be a hard line drawn in the sand of the negotiating arena.  Allowing for anything less would, it seems to the writer, be a major failure of the fiduciary duties of the Council and the City Administration, and would be of extreme concern to local residents and businesses.  According to a local source familiar with the industry, CDI has a good reputation for innovation in waste processing and recycling programs. If that is indeed true, and having said that their acquisition of the property would create 60 jobs for local residents; AND, if a deal were properly structured, such an operation could potentially generate an income stream with significant impact for the city into the future.   

One other issue that bears examination is the likelihood that neither the AD plant nor the MRF will be economically viable if they take waste only from Santa Paula. To be successful, these types of facilities require economies of scale, and will eventually require CDI to import refuse from other communities, not unlike the Toland Road landfill.  Additionally, the County of Ventura is currently processing a request to approve a digester at the Agromin facility on Limoneira property, just south of Hwy. 126 at the Edwards Overcrossing. This location may be better suited for the type of operations planned, simply because it is farther from town, making refuse processing odors less problematic. Additionally, should both digesters be approved and established, logic anticipates that they would be providing service to the same market area, and one or both facilities may fail economically. It would seem to be valuable to question why what will be a competing operation with 5 miles of the one proposed in Santa Paula, has not surfaced in any materials or discussion related to the CDI plans.  One would hope that the Council is taking a careful and professional in-depth approach to analyzing all of the issues entangling their proposed sale of the property.  It really is not a straightforward cash for under-used land transaction; and the long-range outcomes are important to consider.

It seems to the writer that rather than selling the property outright, a possibly superior strategy might be for the city to negotiate with CDI to create a public/private joint venture partnership, in which the city would contribute the land it now owns, on a long-term leasehold basis, in return for a share of the eventual cash flow from the operation of the plant.  If it were positioned well, the deal would retain a measure of control for the city. 

Part of the justification for the low price recommended by staff, was the price CDI would have to pay to mitigate environmental issues related to the former use of the property.  Although the state’s environmental regulations will determine the level of mitigation required, it seems to the writer that, if the property’s future use is to be for basically the same class of operations, there may be little or no environmental mitigation to be done.  If that turns out to be the case, the estimated $1 million plus mitigation costs would be a moot issue, and the value of the property should be adjusted upwards accordingly. 

In a letter to the Santa Paula Times last Friday, Planning Commissioner John Wisda expressed an interesting perspective on the issue of selling the property, along with some very potent issues for the council to consider.  “Bravo!” sang the choir to the new baritone... One hopes that the council will heed Mr. Wisda’s letter as well as this column, and seriously consider alternatives to an outright sale of what is arguably a considerable community asset.  

A savvy negotiating team including, perhaps even lead by, community leaders with experience in the field, could surely MOVE FORWARD with a plan that would benefit both CDI and the city. 


Next time:  Digging a little deeper into the muck & mire...