Approve the Amended and Restated Agreement with Northern Recycling for design, construction and operation of the composting facility, construction and demolition recycling facility, and operation of the County-owned food waste depackager. (No general fund impact) (Cormier/Juhler)

California set a statewide goal to divert 75% of waste from all landfills by 2025. This began in February 2007, when the California Department of Resources Recycling and Recovery (CalRecycle) adopted Strategic Directive (SD) 6.1, which called for a 50 percent reduction in the amount of organics being disposed in landfills by 2020. Since organic waste makes up approximately one third of the 35 million tons of waste that is currently landfilled in California, and to aid in meeting the statewide 75% goal, Assembly Bill 1826 was passed in September 2014 requiring businesses, including state agencies that generate threshold amounts of organic waste per week, to have organic waste recycling programs on or after April 1, 2016. To solidify these regulations, SB1383, the most significant landfill waste reduction mandate, was adopted in 2020. 

To meet these goals, the Division of Integrated Waste Management (DIWM) has implemented a two-part strategy, including operation of a composting facility for processing mainly green waste or green waste mixed with food waste (such as what comes from residential curbside carts) and an in-vessel digester for commercial generated food waste from businesses such as restaurants or grocery stores.  On April 23, 2019, the Board of Supervisors authorized the Director of the Integrated Waste Management Division to enter into negotiations with Northern Recycling, LLC, (Northern) to finance, construct and operate a Compost Facility and a Construction, Demolition and Inert Facility at the Yolo County Central Landfill (Landfill). On July 21, 2020, the Board of Supervisors approved Agreement No. 20-198 and the compost facility officially started operations on July 1, 2022.  Soon after, the facility began operating at near capacity, demonstrating the high demand for compost services across the region.  On April 18, 2023, the Board adopted Resolution No. 23-57, authorizing submission of a grant application to CalRecycle for the expansion of Northern's compost facility at the Landfill.  Northern was awarded a grant in the amount of $10 million dollars for the expansion, which represented approximately one-third of the overall expansion costs.  Construction of the expansion began in April 2024 and was completed in June 2025. The California Regional Water Quality Control Board officially authorized operation of the facility on July 9, 2025.

The attached amended and restated agreement with Northern includes contractual provisions for operation of the expanded composting operation, additional overall site controls for odor mitigation and provisions for operating the County’s food depackager, which is part of the in-vessel digester system, and the phase out of the anaerobic composting cells which have become economically infeasible to operate.  For the compost facility expansion, the attached agreement includes a new facility map (Exhibit D of Att. A) and consolidates all previous amendments into one restated agreement.  The agreement also incorporates the recently approved agreements with the County of Sacramento (Agreement 25-17) and City of Sacramento (Agreement 25-18) for long-term organics diversion services, as well as a steady and committed flow of funds to support this expansion, clarification of some additional contractual language, and updates to the payment provisions.

Since the initial opening of the compost facility in 2022, the Landfill has received a number of odor complaints from local residents describing an organic or compost odor.  In 2025, Northern updated their Odor Impact Minimization Plan (OIMP), which is a document all compost operations must prepare under California regulations.  In addition to the OIMP revision, DIWM required additional odor mitigation measures to be incorporated into this amended and restated agreement.  This includes a supplemental odor mitigation infrastructure plan (Att. B) that Northern has committed to complete in Fall 2025.  Also incorporated into this amended and restated agreement are updates to the liquidated damages section of the agreement that will allow the County to implement penalties more easily should future odor issues arise and are not remedied.  Even though a full odor circuit survey prepared by the state and local agencies confirmed that many odors emanating from compost are agriculturally exempt, both DIWM and Northern strive to go beyond these standards to reduce the potential for odor-producing nuisances as much as possible.  

Lastly, this agreement includes provisions (Exhibit E of Att. A) for Northern to take over operation of the County-owned food waste depackager.  The food waste depackager is a piece of machinery that can take commercial food waste from sources like restaurants or grocery stores and separate the organic food portion from the product packaging and/or inorganic items such as plastic bags.  This significantly helps local businesses, restaurants and grocery stores comply with SB 1383 without needing the labor to depackage food waste for direct haul to compost.  Currently, the operation of the food waste depackager is being run by B&D Geerts Construction as an additional task in their landfill operations agreement.  Northern’s operation of the depackager is advantageous because they have committed to providing additional infrastructure, including a ramp to help customers unload palletized food waste, are providing staffing 5-days a week, and have committed to obtaining and guaranteeing at least 6,000 tons per year of food waste to the facility.  Additionally, the cost proposal for this portion of the operation is lower than our current costs and is considered very competitive. 

Overall, the attached amendment includes some additional compensation but also cost savings and increased revenue for the Landfill.  Compensation includes operation of the in-vessel digester of approximately $500,000 per year, infrastructure work related to a pipeline to the adjacent City of Davis wastewater treatment plant with a one-time cost of approximately $100,000 for liquid waste discharge, and final excavation and phase out of the anaerobic composter cells, which totals about $370,000. To assist DIWM in sparing costs to rate payers, Northern has agreed to spread the anaerobic compost cell closure costs over the next three years. Long-term cost savings include approximately $700,000 per year for the elimination of the anaerobic composter cells and about $9,000 per year in permit fees.   Division staff also anticipate a cost savings with Northern’s operation of the depackager.  Based on a comparison of actual costs for the month of July 2025 and the rates included in this amendment, the savings could reach about $60,000 annually. Additional revenue includes approximately $60,000 per year for Northern sourced food waste due to increased compensation rates, approximately $225,000 per year for additional Northern sourced green waste, and approximately $20,000 annually in royalty payments for additional compost sales.

County Counsel has approved the agreement as to form.

Division staff worked extensively with the Yolo County Environmental Health Division (as the local enforcement agency), CalRecycle, and the Central Valley Regional Water Quality Control Board on the permitting necessary for the expansion of the composting facility.

The original agreement with Northern was negotiated as mutually beneficial to both the County and Northern, rather than as a competitive bid process.  This was based on Northern’s willingness to fully finance the project, transfer the YSAQMD permit from their Zamora Compost Facility, and to cease compost operations at their Zamora Compost Facility.  The Department confirms Northern has performed satisfactorily on the current agreement.