MEMORANDUM February 16, 2009 TO: MEMBERS, PORT COMMISSION Hon. Rodney Fong, President Hon. Stephanie Shakofsky, Vice President Hon. Kimberly Brandon Hon. Michael Hardeman Hon. Ann Lazarus FROM: Monique Moyer Executive Director SUBJECT: Informational Presentation Regarding a Proposed Agreement for a Construction Materials Recycling Center at SWL 352 between the Port and Sustainable Crushing Ventures, LLC DIRECTOR'S RECOMMENDATION: Informational Presentation; No Action Required Overview This reports describes a proposed agreement (“Agreement”) between the Port and Sustainable Crushing Ventures, LLC (“Sustainable Crushing Ventures” or "Tenant") that includes: 1. A services contract to process approximately 120,000 tons of material abandoned at the site by a former Port tenant (“Existing Stockpile”) into fill material (“Fill Products”) and other construction products for use or sale by the Port; 2. A lease for a recycling center for inert debris (“Construction Materials Recycling Center”) on 6.75 acres of land on Seawall Lot 352 (“SWL 352”) in the Port’s Piers 90-94 Backlands (“Backlands”), with a 4.26 acre buffer area, for five (5) years with a five (5) year option, pursuant to a competitive solicitation authorized by the Port Commission in October, 2007; and 3. Authority for the Port and Sustainable Crushing Ventures to enter into a construction contract to place and compact Fill Products on the unleased portions of the Backlands at an agreed price later this calendar year, subject to approval by the Port Commission and the Board of Supervisors and to permission from the San Francisco Bay Regional Water Quality Control Board. THIS PRINT COVERS CALENDAR ITEM NO. 9A
Sustainable Crushing Ventures is a joint venture of S.F. Recycling and Disposal, Inc. a wholly owned subsidiary of Norcal Waste Systems Inc. and Raisch Company, a California Corporation, DBA Raisch Products (“Raisch/Norcal”). This report explains the terms of the proposed Agreement, planned public outreach to the Port’s Southern Waterfront Advisory Committee, additional permitting and environmental review required prior to approval of the entire Agreement, and other required approvals by the Port Commission and the Board of Supervisors. Background On October 11, 2007, the Port Commission authorized Port staff to issue a request for proposals (“RFP”) for a leasing opportunity at Pier 94, SWL 352, to operate a construction materials recycling facility specializing in processing of demolition concrete and related construction materials. In addition to providing lease revenue to the Port, the project was designed to provide a means to process and reuse the Existing Stockpile pursuant to a defined Scope of Work (Exhibit A hereto). The RFP objectives are set forth in the staff report to the Port Commission for its October 11, 2007 meeting. Port staff assembled a five member advisory panel which reviewed proposals from four teams and found that the Raisch/Norcal proposal offered the Port a business model that best fits local market conditions, a strong economic return to the Port, the best environmental compliance record, strong local economic development benefits in the form of local hiring and LBE participation and a unique partnership with deep experience in construction materials recycling. On February 26, 2008, the Port Commission approved Resolution 08-14 authorizing Port staff to enter into an Exclusive Negotiation Agreement ("ENA") with Raisch/Norcal. The Port Commission subsequently approved extensions of the ENA term (Resolutions 08-75 and 09-02) to February 28, 2009, with an option for the Port Executive Director to extend for a period of one month, to finalize a proposed lease agreement and companion documents for Port Commission consideration. Joint Venture Raisch Products and S.F. Recycling and Disposal, Inc. are forming a joint venture (“JV”), Sustainable Crushing Ventures, to enter into the proposed Agreement with the Port Commission, subject to required approvals. Port staff has conducted its due diligence regarding the proposed structure of the JV and present findings at the March 10, 2009 Port Commission meeting when final approval of the proposed Agreement is requested. Norcal Waste Systems, Inc. was founded and is headquartered in San Francisco. Norcal has extensive construction and demolition debris recycling experience (it is the largest such provider in the City). Norcal’s subsidiaries, Sunset Scavenger Company, Golden Gate Disposal & Recycling Company, and S.F. Recycling & Disposal, Inc., provide waste and recycling collection and processing services in San Francisco and work in concert with the -2-
City to achieve its landfill diversion goals. S.F. Recycling & Disposal, Inc. has been a Port tenant at Pier 96 since June, 1998. Norcal provides integrated waste services to over sixty California communities, serving over 600,000 households and 50,000 businesses. Norcal is 100% employee owned. Raisch Products is a state of the art aggregate-producing company headquartered in San José, California. The company specializes in operating centralized concrete and asphalt recycling locations. Along with receiving recyclable concrete and asphalt materials from deconstruction projects, Raisch Products produces aggregate products for use in both private and public applications. The company’s advanced portable crushing V-Series plant is the highest producing portable crushing system in North America. Raisch Products operates recycling facilities in San José, Sunnyvale and Fremont and a quarry in Milpitas. Location A map of the proposed premises is contained in Exhibit B. Figure 1 below depicts the proposed location of the Construction Materials Recycling Center Lease: Figure 1: Backlands Context -3-
Backlands Site Improvements: A Market for Fill Products from the Existing Stockpile The Port has long envisioned a higher revenue and more productive use of the Backlands area, development of which is being undertaken in phases. Phase 1 began in late 2005, when Port staff pursued legal repossession of the premises through multi-party litigation and acquisition of the required approvals to remove the Existing Stockpile previously abandoned by a prior tenant. (See also Port Commission Supporting Documents for October 9, 2007, Item 10B). The Port obtained clear title to the Existing Stockpile in 2007. As part of Phase 2, Port staff has pursued a strategy for crushing and removing the Existing Stockpile through a third party tenant. As approved previously by the Port Commission, Port staff undertook a competitive solicitation and selected Raisch/Norcal. Port staff has negotiated a services contract to process the Existing Stockpile into Fill Products for reuse or sale by the Port. The Port considers the Existing Stockpile to be personal property, and not waste, for purposes of regulations of the California Integrated Waste Management Board (“CIWMB”). Given the anticipated value of the Existing Stockpile once crushed, Port staff proposes to work with Sustainable Crushing Ventures to identify a market for the Fill Products. During Phase 2, Sustainable Crushing Ventures will follow specific protocols to crush the Existing Stockpile and salvage as much as possible into Fill Products that can be sold or reused. Sustainable Crushing Ventures will appropriately dispose of any unusable product. Port staff projects that as much as 90% of the Existing Stockpile will be converted into saleable Fill Product, particularly in view of the condition of the existing local construction market. As part of Phase 3, Port staff has identified a potential reuse of the Fill Product in conjunction with our strategy to productively lease up the Backlands. Port staff has proceeded with design of a civil engineering project that will serve as the likely end use for much of the Fill Products. On October 28, 2008, Port staff presented an informational presentation to the Port Commission (Item 11B Southern Waterfront Leasing and Planning Update). It described certain proposed improvements to be made to 23 unleased acres of the Backlands such that the property can be leased for any use. Such improvements included application of fill, grading, development of a new driveway, stormwater management swales and basic utilities. To this end, Port staff has enlisted the Department of Public Works to design these improvements. Once the plans achieve conceptual design and 30% of preliminary engineering analysis, Port staff will seek permission from the San Francisco Bay Regional Water Quality Control Board to pursue these improvements on the former landfill site that underlies a portion of the Backlands. Port staff will return to the Port Commission with a proposed site design and project budget to obtain further policy direction, which may include advertising for a construction project to construct the improvements. To achieve this goal, the proposed Agreement requires Sustainable Crushing Ventures to store the Fill Product on adjacent Port property. However, if the proposed Backlands improvement project fails to gain regulatory or other required approvals, the proposed Agreement contemplates sale of the Fill Products to the private market as the ultimate means of effectuating removal of the Existing Stockpile. -4-
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