1. 1 Energy/Compost Facility Action Plan City Council Meeting July 2, 2012

2. 2 Overview  Background  Proposed Action Plan/Timeline  Request for Proposal (RFP) Process  Recommendations: – Accept Action Plan/Timeline – Approve a contract amendment with ARI – Initiate an Organics Resource Recovery Strategy  City Council Decision Points

3. 3 Background  Staff directed by Council to conduct Energy/Compost Feasibility Study  Preliminary Feasibility Study Completed  Palo Alto Landfill closes  Measure E passed by voters  Staff directed by Council to develop Action Plan April 2010 January 2011 July 2011 November 2011 February 2012 (Finalized September 2012)

4. 4 Byxbee Park and Water Quality Control Plant

5. 5 Measure E: Potential Site of Energy/Compost Facility

6. 6 Long-Term Footprint

7. 7 Coordinated Activities in Action Plan 1.Preparation of Action Plan 2.Long Range Facilities Plan (LRFP) for Water Quality Control Plant (RWQCP) 3.Organics Resource Recovery Strategy 4.Landfill Closure 5.RFP Process: Energy/Compost Facility or Export 6.Implementation of Selected Strategy

8. 8 Action Plan Timeline 2012201320142015 ~ 2018 Organics Strategy Landfill Capping Request for Proposal Complete 2018 Complete Late 2014 Energy Compost Facility Option Export Option OR Contracting Process Design & Construction Contracting Process

9. 9 Action Plan Timeline 1.Develop Action Plan 2.LRFP-RWQCP 3.Organics Strategy  Draft  Final 4.Landfill Capping  Decision on Capping Completed July 2012 January 2013 April 2013 January 2013

10. 10 Action Plan Timeline (continued) 5.RFP Process: E/C Facility  Finalize Performance Standards  Prepare/Release RFP  Companies Prepare Proposals  Proposal Evaluation/Financial Analysis  Council Consideration  Council CEQA Approval  Council Contract Approval January 2013 July 2013 January 2014 February 2014 May 2015

11. 11 Action Plan Timeline (continued) 6.Biosolids Facility Planning  Consultant Procurement  Additional Options Development  Preparation of Biosolids Plan 7.Implementation: Service Commences  If E/C Facility  If Export  Food Scraps/Yard Trimmings  Biosolids February 2013 February 2014 July 2014 April 2018 August 2014 February 2015

12. 12 E/C Facility Action Plan Recommendations 1.Accept Action Plan/Timeline (initiating an RFP process) 2.Approve $290,224 Contract Amendment with Alternative Resources Incorporated 3.Approve Related Budget Amendment Ordinance 4.Direct Staff to prepare an Organics Resource Recovery Strategy

13. 13 Wastewater LRFP Recommendations 1.Accept Long Range Facilities Plan (LRFP ) 2.Direct staff to prepare a Biosolids Facilities Plan and retire the Plant incinerators as soon as practical. 3.Direct staff to evaluate biosolids treatment options including those from the Energy/Compost Facility evaluation. 4.Direct staff to initiate a Financing Plan for the LRFP.

14. 14 City Council Decision Points Acceptance of Action Plan July 2012 Acceptance of LRFP-RWQCP July 2012 Council Study Session November 2012 Decision Landfill Capping January 2013 Approval Final RFP for Release January 2013 Approval Organics Strategy April 2013 Selection of E/C Facility or Export February 2014 CEQA Approval – E/C Facility May 2015 Contract Approval – E/C Facility May 2015 or Contract Approval – Export August 2014

15. 15 Energy/Compost Facility Timeline ARI Contract & BAO (RFP process) Organics Resource Recovery Plan Wastewater Plant Long Range Facilities Plan Biosolids Facilities Plan Financing Plan Summary

16. 16 Energy/Compost Facility Action Plan City Council Meeting July 2, 2012 FINAL SLIDE

17. 17 Energy/Compost Facility Action Plan BEGIN BACK-UP SLIDES

18. 18 10 Acre Development Area

19. 19 3.8 Acre Development Area

20. 20 Action Plan Timeline (detail)

21. 21 RFP Considerations (Process) 1.Obtain Firm Technical and Price Proposals for Consideration 2.Combined Procurement for Food Scraps, Yard Trimmings and Biosolids 3.Land Requirements 4.Performance Based 5.Performance Guarantees During Facility Development/Construction  Schedule  Performance Guarantees for Acceptance  Cost (Depending on Type of Project Delivery)

22. 22 RFP Considerations (Process) 6.Performance Guarantees During Facility Operation  Throughput  Environment Compliance  Energy/Product Output and Quality  Residuals Quantity  Other 7.Price Guarantees

23. 23 RFP Considerations (Process) 8.Proposal Evaluation  Key Evaluation Criteria — Company and Staff Qualifications — Demonstrated Use of Technology — Viability of Technical Approach — Environmental Mitigation — Conformance to City Business and Contract Terms — Price  Process allows choice of other than Lowest Priced Proposal (Value Analysis)  Process does not commit the City to any action.

24. 24 RFP Considerations: Project Concept (Process) 1.Energy/Compost Facility  Type/Quantity of Feedstock  Type of Technology Acceptable by Feedstock  Site for Food Scraps/Yard Trimmings  Site for Biosolids 2.Export  Type/Quantity of Feedstock  Collection and Direct Haul (Food Scraps and Yard Trimmings)  Storage Loading Area for Dewatered Biosolids

25. 25 RFP Considerations (Technical & Environmental)  Scope of Service: – Permitting (CEQA by City; Other permits by the Company or City) – Company to Design/Build/Operate and Market Products or Design/Build only if Facility at RWQCP. – City to Buy Power  Facility Sized for Palo Alto (only) or regionally  Preference for Energy Production (Electricity, Gas, Fuel)  Use of Energy (City or export)

26. 26 RFP Considerations (Technical and Environmental)  Use of Landfill Gas (if beneficial)  Compost Digestate On-Site, Off-Site, or Flexible  Preferences for Compost Quality and Use  Environmental Controls – Enclosed Operations – Noise – Odor – Process Water – Stormwater – Air

27. 27 RFP Considerations (Technical and Environmental)  Land Requirements  Aesthetic Preference – Building Design – Buffer Zones  Performance Guarantees during Facility Operation — Throughout — Environmental Compliance — Energy/Product Output, Quality — Residuals Quantity — Other

28. 28  Preferences for Business Arrangements/Risk Allocation — Facility Ownership/Financing (Public or Private) — Term of Contract Operations (20 years, Options for Renewal) — Market Risk for Projects (Energy, Compost; Profit Share) — Contractor Compensation Basis (Unit Pricing; Annual Service Fee; City Put-or-Pay Obligation) — “Local Content” Purchasing (Construction and Long-Term Operations ) RFP Considerations (Business and Risk Allocation)

29. 29  Preferences for Contract Principles/Risk Allocation — Single Point of Responsibility by Company — Permitting (Permitability, Schedule) — Development Schedule (Pre-Financing, Post-Financing) — Site Conditions (Surface, Subsurface) — Construction–Related Contractor Guarantees Cost Schedule Design Standards/Quality Acceptance Guarantee Enforcement RFP Considerations (Business and Risk Allocation)

30. 30  Preferences for Contract Principles/Risk Allocation — Operations-Related Contractor Guarantees Cost/ Service Fees Performance Standards Asset Management Guarantee Enforcement — Alternative Disposal Sites and Arrangements, if Facility not operating — Capital Improvements over time Implementation Cost Increases Cost Savings RFP Considerations (Business and Risk Allocation)

31. 31  Preferences for Contract Principles/Risk Allocation — Project Security Insurance Bonds Company Guarantee Letter of Credit (LOC) Maintenance of Financial Capability — Uncontrollable Circumstances/Changes-in-Law Affecting Costs and Performance — Convenience Termination and Default Termination (Pre- and Post-Financing) — Financial Penalties for Non-Performance RFP Considerations (Business and Risk Allocation)

32. 32  Preferences for Contract Principles/Risk Allocation — City Step-in Rights (including Access to Technology Licenses) — Dispute Resolution — Facility Removal/Site Restoration RFP Considerations (Business and Risk Allocation)

33. 33 2012201320142015 ~ 2018 Organics Strategy Landfill Capping Request for Proposal Complete 2018 Complete Late 2014 Energy Compost Facility Option Export Option OR Contracting Process/EIR Design Construction Field Testing Contracting Process Action Plan Council Decision

34. 34 Draft Action Plan Apr 12 Review Draft RFP Nov12 Review Draft Organics Strategy Feb 13 Review Proposal Evaluation, Financial Dec 13 Action Plan Public Participation

35. 35 Public Participation Public Participation is scheduled throughout the process to include review of the: Draft Action Plan April 2012 Draft Performance Specifications September 2012 Draft RFP November 2012 Draft Organics Strategy February 2013 Proposal Evaluations & Financial Analysis December 2013

36. 36 Next Steps  Develop Performance Specifications  Develop Request for Proposals (RFP)  Issue RFP and Evaluate Responses  Decision

37. 37 Energy/Compost Facility Action Plan END BACK-UP SLIDES