AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 18-000517
MEETING DATE:	06/26/18
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	2
SUBMITTING Agency/Department:	OC Waste & Recycling (Approved)
Department contact person(s):	Tom Koutroulis (714)834-4122
	Jeff Southern (714)834-4147

Subject: Selection of Developer for Coyote Canyon Landfill Energy Redevelopment

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

Discussion

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: N/A	County Audit in last 3 years: No

Prior Board Action: N/A

RECOMMENDED ACTION(S):

Select FuelCell Energy, Inc. as the primary developer and BioFuels Energy, LLC, as the alternate developer to further define its proposed design of an energy project for potential future development at the closed Coyote Canyon Landfill located at 20661 Newport Coast Drive, Newport Beach, California.

Authorize the Director of OC Waste & Recycling or designee to negotiate and execute an Option Agreement with FuelCell Energy, Inc. as the primary developer.

Authorize Director or designee to negotiate a Landfill Gas Delivery and Site License Agreement with FuelCell Energy, Inc. and return to your Board for approval upon successful negotiation and execution of the Option Agreement and FuelCell Energy, Inc. subsequently exercising the option to proceed with a proposed energy redevelopment project.

4.	Authorize the Director of OC Waste & Recycling or designee to negotiate and execute an Option Agreement with the alternate developer BioFuels Energy, LLC in the event agreement cannot be reached with the primary developer.

Authorize Director or designee to negotiate a Landfill Gas Delivery and Site License Agreement with BioFuels Energy, LLC and return to your Board for approval upon successful negotiation and execution of the Option Agreement and BioFuels Energy, LLC subsequently exercising the option to proceed with a proposed energy redevelopment project.

SUMMARY:

Selection of a developer will allow staff to negotiate and execute an Option Agreement leading to a Landfill Gas Delivery and Site License Agreement for a proposed gas-to-energy facility, to be brought back to the Board for consideration, that will be compatible with OC Waste and Recycling’s ongoing post-closure maintenance activities and community good neighbor program while maximizing revenue for the County.

BACKGROUND INFORMATION:

The Coyote Canyon Landfill (Coyote Canyon), located in Newport Beach, California, is a closed 395-acre Class III municipal solid waste landfill active between 1963 and 1990. Managed by OC Waste & Recycling (OCWR), the site has been undergoing post-closure maintenance in accordance with applicable regulatory requirements since 1995. One of the required regulatory activities involves collecting, controlling and destroying the methane-rich landfill gas generated by the decomposition of buried organic waste that will continue to take place for decades. The conversion of the landfill gas to energy provides a revenue stream, destroys methane which can contribute to global warming, and offsets fossil fuel use by providing an alternative renewable fuel source.

In 1989, a third party commenced operation of a steam turbine power plant under a gas lease agreement. During the term of this lease, the third party owner converted the generated landfill gas to electricity for export to the electrical grid. With the pending expiration of the agreement in 2015, OCWR posted a Request for Information soliciting developer interest in building a replacement power plant for the County in 2014. A total of six qualified responders indicated their interest and feasibility of energy redevelopment at this site. At that time the third party owner was required to demolish the power plant as required by the Site Lease Agreement. However, the County retained the utility infrastructure, for use by a new landfill gas-to-energy facility if that utility infrastructure was found to be beneficial by the selected proposer.

On December 30, 2016, OCWR issued a Request for Qualifications (RFQ) seeking qualified respondents to be invited to respond to a future Request for Proposals (RFP) on redevelopment of the energy facility at the Coyote Canyon Landfill. OCWR based the model contract on a landfill gas delivery agreement which provides the County revenue from the provision of landfill gas to the developer, but leaves responsibility for operation of the landfill gas collection and control system with the County, to ensure the County maintains sufficient control to comply with regulatory requirements.

On February 15, 2017, OCWR received seven Statements of Qualifications in response to this RFQ. A five-member evaluation committee comprised of public and private sector subject matter experts reviewed the written proposals. Five developers were prequalified for invitation to respond to the RFP.

On October 27, 2017, OCWR released the RFP to the five prequalified developers. On February 22, 2018, OCWR received three written proposals in response to the RFP from the following firms: (1) FuelCell Energy, Inc.; (2) Biofuels Energy, LLC; and (3) Ameresco, Inc. The evaluation committee compared the proposals to determine the project most compatible with the County’s goals for this solicitation, which included:

A partnership with a qualified developer that has sufficient experience, financial resources, and personnel to fully develop and realize the maximum value of the property, infrastructure and landfill gas available for energy production.

A suitable project and reasonable timetable to secure all necessary entitlements, permits, and regulatory agency approvals.

Community acceptance of the proposed project.

4.	Financial compensation to the County.

The following are the major programmatic components of each proposal:

FuelCell Energy, Inc.

BioFuels Energy, LLC

Ameresco, Inc.

-Landfill gas upgrading equipment

-Two 2.35 megawatt fuel cells

-Export 4 megawatts to SCE electrical grid

-Produce 2,450 kg/day of hydrogen

-Landfill gas upgrading equipment

-Natural gas pipeline injection

-Produce 833,540 million BTU/year of biomethane

-Landfill gas upgrading equipment

-Virtual Pipeline to LNG processing facility or natural gas pipeline injection

-Produce 859,296 million BTU/year of biomethane

After the evaluation team reviewed and scored the written proposals, all three respondents participated in an oral interview on March 14, 2018, to present their team members, to present their proposed project and to answer questions regarding their proposals. The evaluation committee carefully considered the information provided by each respondent. Based upon the evaluation and selection criteria set forth in the RFP, FuelCell Energy, Inc. received the highest combined written proposal and oral interview score.

Respondents	Total Score (Out of 5000 Points)	Rank
FuelCell Energy, Inc.	4,258	1
BioFuels Energy, LLC	4,171	2
Ameresco, Inc.	3,890	3

OCWR is requesting the Board's approval of selection of FuelCell Energy, Inc. as the primary developer and BioFuels Energy, LLC as the alternate developer, and is requesting authorization to negotiate and execute the Option Agreement between FuelCell Energy, Inc. and the County. The Option Agreement will allow the developer and the County to define a proposed redevelopment project for the energy facility at the Coyote Canyon Landfill and to perform due diligence on the viability of a proposed project. If the developer exercises the option, the County will perform an environmental review of the defined project. in compliance with CEQA. OCWR will return to the Board for approval of the CEQA documentation for the proposed project and a negotiated Landfill Gas Delivery and Site License Agreement.

Compliance with CEQA: This action is not a project within the meaning of CEQA Guidelines Section 15378 and is therefore not subject to CEQA, since it does not have the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not commit the County to a definite course of action in regard to a project since it authorizes the County to select a developer to enter into an Option Agreement only. This proposed activity is therefore not subject to CEQA. Prior to returning to your Board for consideration of the negotiated Landfill Gas Delivery and Site License Agreement, and once the redevelopment project is defined, staff will conduct the appropriate environmental review of the project in compliance with CEQA.

FINANCIAL IMPACT:

The current requests do not include any financial impacts. Any associated costs, funding or impacts will be identified when the proposed Landfill Gas Delivery and Site License Agreement is presented for Board consideration.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - Scoring and Ranking Form
Attachment B - Written Evaluation Sheets
Attachment C - Interview Evaluation Sheets