Chats-fullMy name is Trevor Falk and I live in Chatsworth. I have been following matters related to the bio-digester closely since August 2012 when I first heard about its serious technical and financial problems. Since then, I have attended most of the Joint Management Board meetings.
I have comments today on the proposed by-law, but for the benefit of the residents here who do not know the full story, I have prepared some background information. I will only speak about a bit of the background today, but I did bring written copies for those who are interested. It is necessary to provide this background, of course, because taxpayers have been not provided with substantive information since October 2010.
On July 2, 2014 Chatsworth Council voted to take steps towards making it compulsory for septage originating within the Township of Chatsworth to be taken to the bio-digester. The vote on the motion was recorded, with three in favour (Mayor Pringle, Deputy Mayor McKay, Councilor Vlielander) and two opposed (Councilors Gamble and Mackey). This motion by Council and the apparent intention to pass a by-law at this point is very puzzling when taken in context, a summary of which follows.
1. The February 2, 2011 Agreement between Chatsworth and Georgian Bluffs created the egregious situation whereby Chatsworth became equally responsible with Georgian Bluffs for all costs associated with septage from the Sunset Strip businesses. In all the hoopla surrounding the bio-digester in late 2010 and early 2011, Chatsworth taxpayers and businesses were never told that they were subsidizing Tim Horton's, the Beer Store, the Galaxy Plaza and all of the rest, and taxpayers have not been provided any substantive information since then.
2. At the Chatsworth Council meeting on December 18, 2013 Council passed a motion to stop subsidizing the transportation and tipping fees of the businesses on the Sunset Strip as built into the Agreement. The vote on the motion was recorded, with four in favour of stopping the subsidies (Deputy Mayor McKay and Councilors Gamble, Mackey and Vlielander) and one opposed (Mayor Pringle).
3. It took Chatsworth and Georgian Bluffs five months (until May 28, 2014) to get around to having a meeting to discuss the December 18, 2013 motion and the underlying concerns. Meanwhile, the subsidies continued.
4. The May 28 joint meeting of the two Councils discussed a range of options in very general terms. Some of the options considered involved completely changing the financial foundation on which the bio-digester was built, including changes to the provisions of the Agreement that result in equal sharing of responsibility for Sunset Strip septage.

5. I made a presentation to the Council at its meeting on June 18, 2014 (copy attached). At that meeting, Council agreed to develop terms of reference for an engineering/financial study and report on the viability of the bio-digester. The Council made this decision in light of the facts that:
a. The 2009 Design Report and the 2011 Agreement with Georgian Bluffs were based on numerous assumptions that were never subject to rigorous assessment;
b. Key assumptions in the Design Report have proved to be either grossly optimistic or just plain wrong;
c. There was never any business plan for the bio-digester – just a bunch of assumptions in the Design Report with financial implications that, in the last 3 years, have proved to be wrong to the tune of roughly half a million dollars per year for Chatsworth alone;
d. The key assumption of mixing corn stover with septage proved impossible to implement from the first day of operation. In addition, one component or another has been out of service much more frequently or longer than expected. Equipment (including the generator) has unexpectedly failed and required replacement. The overall result has been that capital costs are already about $1 million (40%) more than the original cost which was $2.3 million;
e. The Design Report said that the bio-digester would treat all of the septage in Chatsworth and Georgian Bluffs with operating costs of about $212,000 per year, but costs for the last three years have been between double and more than triple this estimate;
f. On the revenue side, it is abundantly clear that the bio-digester is incapable of delivering more than about half of the electricity revenue forecast contained in the Design Report;
g. In exchange for these costs, Chatsworth residents and taxpayers have received very close to zero benefits over the last 3½ years;
h. Based on figures presented by the Treasurer of Georgian Bluffs at the May 28 joint meeting, 96% of the septage received at the bio-digester in 2013 was from the Sunset Strip, and fewer than 3 loads of septage per month (on average) were from Chatsworth (this assumes only that domestic septage delivered to the bio-digester was in the same proportion as the number of households in the two townships (GB = 63%, C = 37%) and that the average septic tank holds 1,000 gallons);
i. The official Chatsworth Financial Information Reports (FIR) filed with the Province for 2011 and 2012 show that the Chatsworth share of bio-digester costs in 2011 was $305,094 and for 2012 was $381,196 (information for 2013 is not yet posted on the internet, but the figure will probably be upwards of $300,000);
j. Instead of the promised annual "profit" for Chatsworth of about $160,000 contained in the Design Report, the net cost to Chatsworth of more than $300,000 per year represents a negative swing of close to half a million dollars per year, so instead of paying for itse6. I expect that many or most Chatsworth taxpayers would support the concept of the bio-digester based on the information provided in 2010. I did – I thought it was great! But the actual picture is nothing like the rosy one that was painted for us back then.
7. At the same June 18 Chatsworth Council meeting, Council expressed a preference for one of the options put forward at the joint meeting on May 28 – the preferred option would see the elimination of tipping fees and elimination of the Sunset Strip subsidies. At the same time, however, eliminating tipping fees eliminates about 75% of the revenue assumed in the Design Report. Obviously, if the bio-digester remains in operation, the difference would have to be made up from another source (property taxes).
8. Even though removing the subsidies is important, (Therefore,) in light of the experience over the last 3½ years, I urged Council at the meeting on June 18 to take the time for a proper engineering and business study that includes realistic assumptions about costs, risks and environmental benefits, and that provides options for Chatsworth for the way forward, following which there would be meaningful consultation with taxpayers. I came away from that meeting with the understanding that Council agreed to do this but it would seem that, instead, effort has been put into the proposed by-law.
9. Also at the June 18 meeting, I urged Council to "come clean" about the problems, costs and obvious deficiencies demonstrated over the last 3½ years. At the very least, the bio-digester will not be capable of handling all of the septage from Chatsworth and Georgian Bluffs without a large but unknown amount of additional capital plus large but unknown increases in operating costs beyond the present amounts.
10. I was surprised, therefore, to learn about this public meeting on a proposed by-law. Since the actual situation has not been explained to taxpayers, how can Council expect members of the public to provide informed input? I am in favour of treating septage – who isn't – but how, and at what cost? And the honest answer to this question right now would be: "We have no idea."
11. In the apparent haste to proceed with a by-law, many aspects seem to have been overlooked. For example:
a. Eliminating tipping fees creates a positive incentive and will probably result in many or most citizens paying transportation fees to take their septage to the bio-digester, but what will those additional costs be?
b. Based on operating experience over the last 3½ years, it is obvious that the bio-digester will not be able to receive, store and/or process all of the septage that is going to arrive with the elimination of tipping fees. And if that point is reached without a by-law, what purpose does a by-law serve?
c. How will trucks waiting to unload be handled? What about holidays, weekends and periods of time when something is out of service unexpectedly, or even for scheduled maintenance? If the generator fails again and is out of service for 3 months like happened in 2013, or the membrane rips again and the whole thing has to be shut down, what are you going to do, and what is all of that going to cost? Once again, the honest answer right now would be: "We have no idea."lf in less than 10 years as promised, the bio-digester is the third highest expenditure item in the 2014 budget and accounts for about half of the 2014 tax increase.

In summary, it is premature to consider passing a by-law. The first priority for Council should be to commission a proper engineering and business study.
The other first priority, and I say this with all due respect, is to start being open and honest with taxpayers about the problems and the costs, and open to the possibility that the best way forward for Chatsworth might be for septage to be dealt with in some other way.
With regard to continuing operation of the bio-digester, why not see how the zero tipping fee works out in terms of loads brought to the bio-digester and the problems and potential costs that will inevitably arise? However, please don't pour more money than absolutely necessary into it before you have a coherent plan.
One final note: in my view, Council and staff would be well advised to stop misinforming taxpayers about the disposal of raw septage which is not spread on "farm fields." Rather, raw septage is spread on vacant non-agricultural land that has been approved by the Ministry of the Environment for that purpose. The MoE approval process involves ensuring that there are no nearby wells, rivers, ponds, lakes, streams or other watercourses that could be contaminated.
Representatives of the Township of Chatsworth should not imply that septage contractors are in the business of spreading raw septage on farm fields which would be both irresponsible and illegal.

Respectfully Submitted,
Trevor Falk

The Bio-Digester: A Critical Juncture
Points for Discussion with the Council of the Township of Chatsworth at its Meeting on June 18, 2014

1. My Freedom of Information request on June 11, 2014 asked for documents including feasibility studies, financial risks, sensitivity analyses related to forecast costs and revenues, and analyses of assumptions related to all aspects of the February 2, 2011 Agreement (bio-digester, lagoon and Chatsworth landfill sites). All or most of these documents should have been part of Chatsworth's "due diligence" process before making a decision to proceed with construction.
a. In my opinion, the litany of problems experienced with the bio-digester would have been anticipated through a "due diligence" process that would then have led to a decision by Chatsworth along the lines of "thanks, but no thanks."
b. Based on my observations since August, 2012 (when I first started to pay attention to the bio-digester), I suspect that many of these elements were not given adequate (or any) consideration in the decision to build and in the negotiations between Chatsworth and Georgian Bluffs leading up to the Agreement. I truly hope the information returned from the FOI request proves me wrong.
c. As evidenced by: 1) the positive reception given to the presentation at the joint meeting on May 28th; and 2) the lack of insightful analyses and discussion of assumptions, uncertainties and risks in relation to either that presentation or the scenarios tabled at the last Council meeting (June 11th), it appears that there is a significant risk of repeating the same mistake.
2. In support of point 1 b), above, I would point out that the consultants' report (excerpts from which are included in the Agreement) said that for $3.8 million dollars and annual operating costs of $212,000 the bio-digester would process ALL of the septage from the two townships including the Sunset Strip, and bring in revenue of $322,000 per year. Chatsworth taxpayers were told that the capital cost would be repaid within 10 years.
Obviously, it isn't working out that way. At least another $1 million has been spent, operating costs are at least double the consultants' estimates (even though throughput has been less than half), and the Mayors have been trying for months to get a meeting with a Minister to beg the Province for more "free" money.
The original design included adding corn stover to septage for the simple reason that there isn't enough energy in human waste for production of biogas. But the corn stover posed extra costs and other difficulties (one would think that these should have been foreseen), so it was abandoned. Since then, taxpayers have been paying for some sort on ongoing experiment that has had limited success. Incidentally, the fact thathuman waste is entirely different from, say, cattle manure is the reason that it is fundamentally misleading to draw parallels with agricultural bio-digesters.
The bio-digester is now one of the largest expenses in the Chatsworth budget. In my view, the present situation developed because Chatsworth didn't exercise "due diligence." Many assumptions in the Design Report were never probed or tested, and no rigorous business planning process was carried out. I cannot explain the rush at that time, and I cannot understand the apparent rush now.
3. At its meeting on June 11th, Council discussed scenarios that would cost every residential taxpayer in Chatsworth in the range of $50 - $250 per year, depending on assessment.
As I understand them, all of the scenarios contain an embedded set of assumptions that may be unrealistic. No effort seems to have been given to quantifying the risks, financial and otherwise, in the event that some of these assumptions prove to be wrong. This seems to be exactly what took place in 2010.
For example, an arbitrarily high generator capacity factor is assumed and incorporated as if it were a certainty; if it is not achieved, which is likely to be the case, the electricity revenue will be lower than shown in the scenarios. Similarly, in the absence of an engineering assessment, there is a reasonable chance that the arbitrary allowances in the scenarios for capital equipment and facilities to handle much higher residential volumes are not very close to the mark.
What assurance does Council have that adequate recognition has been given to higher operating costs as a result of the much greater volumes that will result from the changes being proposed, or will this be another "surprise?" Are the assumed cost savings from re-negotiating the Veolia contract realistic? In my experience, it is risky to assume the outcome of a negotiation, even when the negotiations are already well underway.
Further to the point of arbitrary and optimistic assumptions, it is important to note that all of the scenarios assume that the very high feed-in tariff will continue indefinitely, whereas such rates will almost certainly be reduced in the long term, if not in the near future.
4. As I understand it, the presentation by the Treasurer of the Township of Georgian Bluffs on May 28th recommended that tipping fees be eliminated (in addition to other changes). This would be a profound change to the original "business plan" since, according to the 2009 Design Report (portions of which are incorporated in the Agreement), revenues from tipping fees comprise about 75% of the forecast total annual revenue.
Although I agree that tipping fees and transportation subsidies should be eliminated, and that it makes more sense to allocate operating costs on some other basis than at present (such as assessment), I think that the Council should take a deep breath at this juncture, and hit the "pause" button.
Council and staff know that the original design had major shortcomings. You know that capital and operating costs have been far higher than ever imagined. You know that there have been many other problems that were never anticipated. You know that more money will be required to handle much greater volumes. You know, or ought to know, that chances are pretty slim that the Province will "come to the rescue" with more "free" money.

In these circumstances, I believe that Council needs engineering advice and a rigorous new plan, not just "scenarios" put together in haste. What is required is a thoughtful re-assessment from an engineering perspective, together with a realistic business plan the points the way forward.
5. In addition, something else is completely missing: an honest and straightforward discussion with the people who are paying the bills.
In this regard, I attach a copy of the "Project Summary" that was released to the media in October, 2010 with much fanfare. As far as I am aware, this is the last "official" information about the bio-digester from the Chatsworth Council. According to this, the bio-digester should be about half paid for by now.
Council has a responsibility to inform taxpayers that it hasn't worked out as they were told.
6. Therefore, I urge Council to commission a proper engineering and business study that includes realistic assessments of costs and environmental impacts, and that provides options for the way forward.
One of the options may be to make the bio-digester capable of handling much larger quantities of septage such as is being proposed in the scenarios discussed on June 11th, but it is possible that the best option for Chatsworth is to either withdraw from the Agreement or reach agreement with Georgian Bluffs to put the bio-digester in "mothballs."
After any such report is prepared and accepted, public input should be sought; however, I hasten to say that informing taxpayers about the present situation is required now, before the required study is initiated, not after the report has been prepared.
7. Finally, I am of the view that the Source Water Protection presentation at the meeting on June 11th has virtually nothing to do with the bio-digester. There are no fields in Chatsworth Township that are approved by the Ministry of the Environment for spreading untreated septage.
Untreated septage is spread on vacant fields, not farm fields, and there are requirements for setbacks from watercourses, water bodies, wells and the like. Furthermore, the digestate is not benign; according to my understanding, it is handled through a Nutrient Management Plan (same as manure). The difference in risk to source waters between spreading untreated septage on approved vacant fields away from water bodies, and spreading digestate or manure on agricultural fields has not been quantified by MoE (or anybody else), and may in fact not be quantifiable.
With respect, it is not the role of the Council of Chatsworth Township to assume responsibilities that belong to the councils of other townships or that are within the purview of the Province.
Respectfully submitted,
Trevor Falk

Project Summary

Georgian Bluffs and Chatsworth have partnered to build an anaerobic bio-digester on the site of the existing sewage lagoon in Georgian Bluffs. Under the Communities Component of the Build Canada Fund, the project was designed by Ross Slaughter of Genivar. Chatsworth and Georgian Bluffs have agreed to each cover half of the municipal share of the project, and partner to operate the facility.
A public meeting held at the Keady Community Centre Thursday October 1, 2009 provided opportunity for the public to discuss plans for the facility. A ribbon cutting was held on October 30th, and construction began in spring of 2010.
This green energy project will digest organic material with the biogas used to run a generator and produce electrical power. A variety of organic materials will be processed at the facility including septage, agricultural waste, and other appropriate materials that generate biogas.
The Anaerobic Digester includes a bio-digester system, biogas generator and pumphouse as well as associated septage screening, piping, roadways, storage bunkers and operation centre. Two certificates of approval have been issued for the project by the Ministry of Environment, and an air and noise approval on the generator is pending. The project is designed to produce up to 2400 kWh per day on the power grid. Connection agreements with the Ontario Power Authority and Hydro One are in place. The project is currently being commissioning so that it produces electricity before the end of this year.
The construction tender was awarded in December of 2009 at $3.15 million To Maple Reinders. There are about $670,000 thousand additional costs outside the tender. These included site clearing, tractor, material testing, soil analysis and engineering fees. The Federal and Provincial contribution to the project is $1,666,700 leaving each Township half of $2.13 million to finance. Projected operating budget for the facility shows a payback of the capital investment within 10 years.
The digestate bi-product following the treatment will be 99.5% pathogen free while retaining characteristics of a good land applied soil conditioner. It is considered a safe environmentally friendly alternative to direct application of raw septage on farm fields.
Georgian Bluffs and Chatsworth are represented on the Bio-digester Steering Committee by the Mayor Alan Barfoot and Deputy Mayor Dwight Burley of Georgian Bluffs, and Mayor Howard Greig and Deputy Mayor Bob Pringle of Chatsworth. CAO Will Moore of Chatsworth and Bill White of Georgian Bluffs and the Georgian Bluffs Operations Manager Rick Winters provide staff support to the Committee.


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