More discussion of the Alternative Waste to Energy Project took place at the October 25th, 2016 Commission meeting. The project is estimated to cost nearly $4 million per year, based on the number of tons of class I garbage processed at the facility to be built by Freedom Energy Hernando. The county is to pay Freedom Energy $39/ton to process the garbage- who will turn it into a fuel pellet and sell it to industrial end users. The project was at one point on the verge of cancellation, as the county’s financial evaluation of the project determined it to be uneconomical. However, Attorney Jake Varn presented the figures in such a way at the October 11, meeting that negotiations now seem to be moving forward.
It should be noted that Freedom Energy Hernando is a newly created company (March 2016) formed by Nathan Leland Mundy. The company’s principal address is a residence in Clermont, FL (13044 HARTLE ROAD CLERMONT, FL 34711).
At the commission meeting on the 25th, Mr. Jake Varn, the lawyer representing Freedom Energy Hernando, explained that the he’d rather use an estimation of $99,600 tons processed per year instead of the previous estimation of 88,000 tons. At $39 / ton the cost per year would be $3,884,400.00 using the new estimation. This estimation may still be slightly low since in FY 2012-2013, the county stated that the amount of class I waste collected was 111,150 tons.
Varn stated that the county is still in the process of looking at the numbers he presented at the last meeting.
He also explained that Brian Malmberg, Assistant County Administrator, had taken exception to a 50% savings in class I operations and said he was more comfortable with 40%. Varn calculated that the 40% would be a $340,000 difference.
One subject discussed in length was about potential purchasers of the fuel pellets.
County Administrator Len Sossamon asked about who might be using the product and what guarantee if any will be included in the contract with the county so that the county isn’t left holding the bag so to speak.
Varn stated, ” We know the amount of product we can produce and based on the market area that we’re in it’s a very small percentage of what’s being used today… we are confident we will have someone purchasing the fuel but we’re also in the position where we will provide a guarantee, an assurance to the county that we have someone that’s going to be able to do it.”
Varn continued,
“One of the questions that we have not resolved is to what extent and how much information do we have to tell you about who the purchaser is, because that gets to be very confidential because we’re in a competitive market and we’d like to be able to get the most we can out of the deal in terms of the purchase price. On the other hand the point was made that the public has a right to know because they are participating in this. And this is what we’re trying to come to grips with. As I see it we’re in the weeds on this.”
“I would like the company to be bound to the fact that we have suppliers (for the product),” stated Dukes.
“It is our intention as a condition precedent to us moving into full time operation that we will give the county assurances that we have customers for our pellets,” stated Varn.
Varn explained,
“You can look around Hernando County and see how many cement kilns… all of them are likely candidates. If you sold all of the pellets we produced to one of those plants, we may provide them with 20% of their total demand. We are only a small portion, but the good news is that we will be cheaper. They can save money and in one case, they don’t have enough supply right now. So we could fill in that void for them. That’s not even leaving Hernando County. We could transport them to Sumter County or other places where it’s economically viable to provide this as a fuel as well.”
Nicholson stated that he did not need to know the name of the purchaser. “You don’t need an MBA degree to know they are not going to start building this thing unless they have a buyer. I mean why would they do that? It would just be throwing their money away. ”
Rowden asked, “Will there be language in the agreement to ensure that the county will not incur any financial liabilities by entering into the agreement other than being required to pay for the processing of the class I Municipal solid waste?”
Jon Jouben stated, “That would have to be negotiated and in large part depend on the financing that’s made available to the waste to energy company as to the terms.”
Varn responded, “We’re going to put a provision in there to that effect. We’re drafting it and it will come to the county for their blessing and approval.”
“The next draft I hope to have before the day’s over,” he added.
Chairman Adkins, did mention that he would like to see a financial evaluation by an independent firm, but the idea was squelched and Mr. Adkins did not pursue it.
Rowden asked, “Is it correct that the county will only have two major responsibilities: 1 is providing of the class I municipal solid waste and 2 the county will have to pay Freedom [Energy Hernando] $39 per ton for the processing the class I municipal solid waste.”
The lawyers were not aware of any other responsibilities other than providing the site in proximity to the weigh station and the cell 3 solid waste landfill.
Commissioner Rowden questioned again, “Under the agreement does the county have to guarantee any type of loan in connection with the alternative waste processing?”
“If you want us to say point blank, that the county will not use its full faith in credit for this, I’m glad to put that in the language,” stated Varn.
Finally Rowden asked about Freedom Energy providing performance bonds.
“We will have any performance bonds the county requires,” stated Varn.
Public comment from Charles Greenwell, Governmental Affairs Committee, Hernando Beach centered around performance bonds.
Greenwell stated, “Not speaking for Hernando Beach, I’m speaking as an attorney not licensed in Florida, but I’ve litigated for 44 years. A couple of things jump out and maybe it has been covered, maybe it hasn’t. The number 1 issue here is performance. Can the contract be performed?”
He questioned whether Freedom Energy can provide a performance bond if they fail to sell their contract.
Greenwell asked, “If they fail what is the county’s position at that point with respect to the tipping fees and your obligations and how quickly can you cure and what is the cost to cure the non-performance?”
“I get in cases where contracts are broken,” Greenwell explained. “I think the performance bond side of it is very important to consider here.”