TO: Napa-Vallejo Waste Management Authority Board of Directors
FROM: Chris Celsi, Executive Director
REPORT BY: Chris Celsi, Executive Director
SUBJECT: C&D Facility Construction Loan and Term Length
RECOMMENDATION
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DISCUSSION AND POSSIBLE ACTION: Staff is seeking direction from our Board to pursue a loan and term
length for the construction of a proposed Construction and Demolition building at the Devlin Road Transfer
Station property. In addition, staff is also asking the Board to consider adjusting the required Operational
Capital Reserve Policy levels to allow the Authority to reduce the amount of funds needed for borrowing. If
directed, staff will evaluate and return with an analysis and recommendations.
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EXECUTIVE SUMMARY
The Napa Vallejo Waste Management Authority proposes to develop a new facility for processing Construction
& Demolition (C&D) waste materials at its Devlin Road Transfer Station (DRTS) facility in American Canyon.
The Authority owns the Devlin Road Transfer Station located at 889 Devlin Road in the City of American
Canyon.
The transfer station receives municipal solid waste for processing and transfer to a long-term disposal
site. The transfer station is operated by Northern Recycling Operations and Waste Services, LLC, under the
terms of a contract with the Authority.
The current operation includes separate processing of waste materials originating from construction and
demolition sites to recover recyclable products. This process is currently conducted in an open area of the site
and is exposed to public view and to the weather. The Authority desires to move the process into a dedicated
building to; improve employee and customer safety, remove it from public view, help control dusts and odors,
increase recovery of recyclables, and improve the quality of storm water runoff from the site. The goal is to
cover and partially enclose a working area of approximately 133,000 sq. ft. and provide associated site
improvements.
The Authority will need funding to pay for the construction costs of the proposed building with an estimated
cost of $38 million. The Authority has $17 million available in cash surplus, leaving a funding gap of $21
million. The Authority is seeking direction to pursue a financing plan.
At the April 2017 Board of Directors meeting, the Board authorized the Executive Director to enter into
negotiations for the possible purchase of additional property adjacent to the south property line of the DRTS.
That property is currently owned by Napa Airport Partners, LLC. The subject 17-acre parcel (“Property”)
would serve as buffer between DRTS and surrounding parcels and provide room for future expansion of DRTS
facilities if necessary. Staff subsequently engaged Bill Kampton of Colliers International to provide information
and advice and to interface with the Seller. This purchase was finalized in June 2017.
At the July 2018 Board of Directors’ meeting, the Board authorized a professional services agreement with J.R.
Miller and Associates, Inc. to conduct a predesign study of a potential processing facility for recycling of
construction and demolition debris at the Devlin Road Transfer Station. The facility currently processes C&D
in an outdoor area of the site that is not particularly well suited for such an operation. The study was initiated
due to the Authority's desire to improve the following factors:
- Safety of Customers and Employees
- Quality of Storm Water Runoff
- Control of Dust and Odors
- Weather Protection for Employees and Recycled Materials
- Site Aesthetics
- Traffic Circulation and Wait Times
At the March 2019 Board of Directors’ meeting, the Board gave direction for staff to proceed with
Environmental Review, Permitting and Design Development for the C&D facility.
In July 2019, the Authority entered into an agreement with RSA+ Sonoma to design the C&D facility. Due to
COVID, this project was put on hold for a period. This design was completed in October 2024. Included in this
design was to provide an engineer’s estimate of what the construction costs would be. RSA+ estimated this cost
to be approximately $32 million. Based on RSA+’s estimate, we added 10% contingency costs and additional
$1.8 million in soft costs, which includes construction management costs and other fees. The total estimated
cost of this construction is approximately $38 million.
Over the past several years, the Authority has been saving funds to pay for this construction project. Currently,
the Authority has approximately $17 million available for construction costs. The Authority must secure all
estimated funds needed to seek construction bids. Therefore, the Authority will need to secure financing for
approximately $21 million for the remaining estimated construction costs. A financing plan includes borrowing funds which will influence our current gate rates at the transfer station. Our current non-franchisee rates are $77 per ton. Our current franchisee (which are the members of the JPA) rates are $73 per ton. Both of these rates are scheduled to increase by $1 per ton on July 1, 2025 and October 1, 2025 respectively.
In July 2023, the Authority entered into an agreement with R3 Consulting Group to help negotiate a new
agreement with our transfer station operator and study this proposed construction project’s estimated costs and
the impacts it would have on our current rates. R3 was given our past years audited financial statements to
determine how impactful this project would be on the Authority’s rates, based on different financial modeling.
R3 also engaged with KNN Public Finance, LLC to determine estimated interest rates over loan term lengths of
10, 15, 20 and 25 years based on $21 million of borrowed funds. ATTACHMENT 1 is the Finance Memo from
R3 that outlines the financing plan. It is a working draft memo until all the terms are finalized. It is hopeful, we
can reduce the amount borrowed by either lesser bid costs, reduction of reserve amounts or both.
R3 has also provided a financial workbook that shows our estimated rate increases based on the interest and
term of the loan (ATTACHMENT 2). This workbook estimates our financial standing for the next ten years.
During R3’s presentation, they will provide the Board options of different loan term lengths. This will inform
the Board of the impacts the different term lengths will have on our Transfer Station rates in the near and
distant future.
Staff is seeking the Board’s direction on a financing plan with the preferred borrowing term, (10-, 15-, 20-, or
25-year term). Staff is also seeking the approval to revisit the Authority’s reserve policies and possibly use
current reserves to reduce the amount required to borrow, and to allow the Authority more flexibility with
funding future projects and continue with lower rates.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Construction of C&D building will improve site. Will need to increase rates. |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
Differing term lengths will affect DRTS rates |
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Consequences if not approved: |
Will not be able to construct new C&D building |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California
Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.