CIWMB Agenda Item-20 February 13, 2007

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CIWMB Agenda Item-20 February 13, 2007

    California Integrated Waste Management Board

    Board Meeting

    February 13, 2007


    Consideration Of The Recycling Market Development Revolving Loan Program Application For

    Desert Solutions, Inc. (Recycling Market Development Revolving Loan Subaccount, FY 2006/07)


    This agenda item presents for consideration the Desert Solutions, Inc. (DSI) application

    to the Recycling Market Development Revolving Loan Program (RMDZ Loan). DSI is

    requesting a $1,809,000 loan to finance capital improvements and purchase equipment to

    start an enclosed composting facility in Cathedral City, California. DSI is projecting to

    divert 65,000 tons per year of green waste which will include grass cuttings, shrubbery,

    tree trimmings, palm fronds, discarded plant products, and food waste. Finished products

    will consist of compost and mulch. The company also expects to hire eight employees.

    The project is located within the Riverside County Recycling Market Development Zone.


    ? On December 12, 2001 the Board approved a Solid Waste Facilities Permit for

    Desert Solutions, Inc.

    ? On August 16, 2005, the Board approved a RMDZ Loan in the amount of

    $1,312,500 to Desert Solutions, Inc. for capital improvements and equipment. The

    loan was subsequently not funded because the company was unable to obtain a

    construction loan due in part to higher than anticipated construction, equipment and

    clean up costs.


    1. Approve the RMDZ Loan application for Desert Solutions, Inc.

    2. Approve with revisions the RMDZ Loan application for Desert Solutions, Inc.

    3. Take no action and provide staff with further direction.


    Staff recommends that the Board approve Option Number 1 and adopt Resolution

    Number 2007-39 to approve a RMDZ Loan to Desert Solutions, Inc. in the amount of



    A. Key Issues and Findings


    ? DSI was established as a California Sub-Chapter S corporation on

     November 1, 1999 and is owned 100 percent by Barbara Dawson.

    ? In September 2000, DSI purchased a 20-acre parcel in Cathedral City that was

    previously occupied by White Feather Composting Co.

    ? DSI had applied for and obtained a conditional use permit for operating a green

    waste composting facility from Cathedral City Planning Commission. The

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    conditional use permit dated February 21, 2001 to operate a compost facility

    required that DSI would clean up the green waste that was abandoned at the site

    by the previous tenant.

    ? Since purchasing the property, DSI has been actively working with the city to

    clean up the site and obtain all appropriate permits to operate the facility, and

    obtain financing. DSI has completed the clean up of the site. ? The permit arrangement requires DSI to share a percentage of the drop-off fees of

    waste material and the city will extend exclusive rights to all of Cathedral City’s

    yard waste that is under the city’s waste management franchise agreement.

    ? The principals have over 10 years experience in sand mining, concrete, gravel and

    composting businesses through their ownership and operation of Hampton Sand

    Corp., a 110 acre facility in Southampton township on Long Island, New York.


    ? DSI plans to build a 8,400 sq. ft. facility for an enclosed facility utilizing in-vessel

    composting technology to produce compost and specialty blended topsoil and

    topdressing. The business will accept drop off of green waste and other organic

    materials from Cathedral City and large generators such as golf courses.

    ? Funds will be used for the permanent financing of the capital improvements and

    for the purchase of equipment which consists of a remotely controlled overhead

    track mounted compost turning machine. Capital improvements include asphalt

    paving, concrete pads, electrical system and a cover. ? The total project cost is $3,222,753 which includes $1,809,000 from the Board,

    $713,753 from the borrower and $700,000 from a bank. The Board is providing

    approximately 56 percent of the project cost. ? The company has received approval of a $2,130,467 construction loan for the

    capital improvements and expects the construction to be completed within six to

    12 months at which time the requested RMDZ loan will be funded in the amount

    of $1,450,000 for the capital improvements and $350,000 for the equipment and

    the $9,000 loan fee. The bank’s permanent loan of $700,000 will be for capital

    improvements and working capital.

    Eligibility Criteria

    ? DSI qualifies under Board approved eligibility criteria as a recycling project using

    discarded green waste and food wastes and converting these materials into

    compost and mulch.

    Feedstock Sources

    ? DSI will be an exclusive receiver of all Cathedral City’s curbside green waste. ? Other sources of feedstock will include green waste from local landscape and

    gardening companies, golf courses (there are about 120 golf courses in nearby

    Palm Springs) and ground maintenance services.

    ? DSI will also accept organic residuals from restaurants, supermarkets and food

    processing/packing plants.

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    Value-Added Process

    ? To produce the compost, the ground material will be placed into the in-vessel

    composting system for up to four weeks, and then the material is placed in aerated

    curing bins for another four weeks. After the curing phase, the compost is

    screened and readied for the end user.

    ? Mulches will be derived from tree trimmings that are ground and screened.

End Users

    ? Farmers in the Coachella Valley

    ? Nurseries

    ? Professional landscapers

    ? Golf courses

Diversion & Jobs:

    Diversion Current Projected Increase Total

    Tons Per Year 0 65,000 65,000

    Jobs 0 8 8

Interdivisional Reviews

    ? Staff from the Board’s Permitting and Enforcement Division (P&E) has reviewed

    the project. DSI (SWIS # 33-AA-0238) had previously applied for and obtained

    the Board permit under the Board Resolution Number 2001-472 dated

    December 11, 2001. According to staff from P&E, the local enforcement agency

    has completed a five-year permit review report in December 2006 and a copy of

    the report was received by the Board on January 5, 2007. No changes in design or

    operation are proposed.

    ? Staff from Diversion, Planning, and Local Assistance Division (DPLA) has

    reviewed the project and has determined that the feedstock materials used are

    normally disposed in a landfill.

    ? DSI has certified that the project complies with all local, state and federal laws,

    regulations, requirements and rules, including the California Environmental

    Quality Act.

Loan Committee

    ? The Loan Committee will meet on February 1, 2007 to consider staff’s analysis of

    DSI’s loan application and the applicant’s ability to repay and collateralize the loan.

    ? The results will be presented at the Sustainability and Market Development Committee

    meeting on February 6, 2007.

B. Environmental Issues

    ? The project site is located at 69780 Edom Hill Road, Cathedral City, California, thjust north of Edom Hill Road and 1/8 of a mile west of Edom Hill Transfer


    ? The company will operate on a 20-acre parcel that is zoned commercial with the

    composting activities enclosed.

    ? DSI acquired the real property that was formerly occupied by White Feather

    Composting Company who abandoned the site in 1995, leaving behind approximately

    100,000 cubic yards of green waste. The local enforcement agency required DSI to

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    remediate and clean up the site before constructing the composting facility. DSI has

    completed the clean up of the site.

C. Program/Long Term Impacts

    ? Based on the information in the jurisdiction’s Source Reduction And Recycling

    Element (SRRE), discarded green waste, food waste and clean wood debris in

    Riverside County that will be used in feedstock for this project are normally

    disposed of in landfills.

    ? DSI is projected to process 65,000 tons per year of green waste and will

    contribute to the diversion of that material from the waste stream, thereby

    assisting the local jurisdiction’s compliance with the disposal reduction mandate

    under the Integrated Waste Management Act, Assembly Bill (AB) 939.

D. Stakeholder Impacts

    ? Impact on the RMDZ is a success story of a company producing a value added

    product by utilizing local waste that would otherwise go to the landfill. ? The impact on Riverside County is additional diversion of 65,000 tons from its

    landfills and the creation of eight new jobs from the local workforce.

E. Fiscal Impacts

    ? Public Resources Code, Section 42023.1, provides the authority that funds this item. ? This item requests $1,809,000 is to be funded by the Recycling Marketing

    Development Revolving Loan Program Subaccount.

F. Legal Issues

    ? Based on information available, staff is not aware of any legal issues related to

    this project.

G. Environmental Justice

    Census data was not available on the actual address. The U.S. Census Bureau 2000

    depicts the following for Census Tract 450, Riverside County, California with the

    same zip code where the project is located:

    ? Demographics

    47.9% White

    48.9% Hispanic or Latino

     1.0% Black or African American

     0.7% American Indian & Alaska Native

     0.9% Asian

     0.1% Native Hawaiian and Other Pacific Islander

     3.7% Two or more races

? Economic Profile

    $38,964 Median household income

    $16,382 Per capita income

     20.4% Persons living below poverty

Staff is unaware of any environmental justice issues related to the project.

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    Project Site Information

    ? The 20-acre parcel is located at 69780 Edom Hill Road, Cathedral City,

    California 92234.

    ? The site is zoned commercial.

    ? There are no utilities at the site presently, but an abundant supply of

    water is readily available.

    ? The nearest residential area is more than a mile away.

    ? Board staff had visited the site on August 5, 2005.

    H. 2001 Strategic Plan

    This project will assist in the implementation of the Board’s 2005 Market Assessment

    Action Plan by providing an opportunity to a business that diverts a Board priority

    material, organics, as feedstock.


    1. Fund 2. Amount 3. Amount to 4. Amount 5. Line Item

    Source Available Fund Item Remaining RMDZ Loan $ 19,190,550 $1,809,000 $17,381,550 Direct Loan Sub Account

    (FY 2006/07)


    1. Resolution Number 2007-39


    A. Program Staff: Govindan Viswanathan Phone: (916) 341-6541

    B. Legal Staff: Shelly Bromberg Phone: (916) 341-6076

    C. Administration Staff: Kelley Tyack Phone: (916) 341-6095


    A. Support

    ? The Zone Administrator for the Riverside County Recycling Market

    Development Zone has provided input and support for this project.

    ? The Coachella Valley Small Business Development Center, Palm Springs, has

    provided input and support for the project.

    B. Opposition

    Staff has not received any written opposition at the time this item was submitted for


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